Academic journal article The International Journal of Business and Finance Research

Determinants of the Internationalization of the Firm: The Accelerated Model vs the Sequential Model

Academic journal article The International Journal of Business and Finance Research

Determinants of the Internationalization of the Firm: The Accelerated Model vs the Sequential Model

Article excerpt

ABSTRACT

The aim of this paper is to analyze the internationalization strategies followed by enterprises in the world, distinguishing between big enterprises and other firms (SMEs). In particular, we want to delve into determinants of internationalization and processes that allow companies to perform in international markets according to their resources. We developed an analytical framework based on the resources-based view of the firm and on two internationalization models, the Uppsala and Born-Global models, with the purpose of allowing the analysis of different typologies of internationalized firms. By the use of Probit, Logit and Linear regression models, the empirical results provide evidence supporting both theoretical models proposed. One group of firms presents a gradual internationalization, as suggests the Uppsala model. A second group follows an accelerated internationalization, consistent with the born-global approach. An interesting finding is that sequential internationalization is more common and that the structural factors explain international strategy better for SMEs than internal factors.

JEL: F23, M16

KEYWORDS: Resource-Based View, Intangible Assets, Internationalization, Bom-Global Companies, Uppsala Model

INTRODUCTION

This paper is part of a larger research project "Competitiveness and internationalization of SMEs" (Competitividad e intemacionalización de la PYME in Spanish), supported by the National Council of Science and Technology of Mexico (Consejo Nacional de Ciencia y Tecnologia-CONACYTin Spanish). This paper studies the internationalization of Mexican SMEs. We identify theoretical anomalies with respect to what is stated in the international literature. These anomalies include the presence of bom global firms in traditional and not very innovative sectors (Fong & Ocampo, 2010). In order to assess the implications of the anomalies found in Mexico about the behavior of companies in other regions, we look for evidence on internationalization strategies followed by firms in other countries. In Mexico, SMEs are an important sector with representing 99.3% of all companies. They generate88.9% of all jobs. They represent considerable opportunities for internationalization. Currently they represenet less than 1.4% of Mexican exports (INEGI, 2009; SIEM, 2013). For this reason, it is important to examine the theoretical and practical implications of internationalizing SME's and identify those reasons that allow companies to succeed in foreign markets.

On average across the OECD area, SMEs represent a major share of firms (99%), employment (approximately two-thirds) and value added (over one-half). These proportions vary by country. SME activity ranges from a minimum of 47.2% of employment in industry in Slovak Republic, 52.6% of employment in services in the UK and 49.9% of value added in Ireland. In contrast, SME's account for 85.4% of employment in industry, 88.8% of employment in services and 75.2% of value added in Greece, where SME are particularly significant (OECD, 2010).

It is clear the statistical relevance of SMEs is global. The present enterprise environment, characterized by a constant evolution in technologies of production, information, communications and transportation, the openness and homogenization of markets and a greater mobility of human and financial capital, affects methods of doing business. These factors force companies, to identify ways to take advantage of the prevailing conditions to survive, preserve their market position, diversify risks and grow. In the following section, we present the theoretical framework for the study, which includes a brief description of the enterprise success, the resource-based view of the firm (RBV) and models of accelerated and sequential internationalization. In the empirical section, we describe the econometric methodology used and discuss the reached results. The paper closes with some concluding comments. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.