The Internationalization Process of Small and Medium-Sized Enterprises:An Evaluation of Stage Theory

By Gankema, Harold G. J.; Snuif, Henoch R. et al. | Journal of Small Business Management, October 2000 | Go to article overview

The Internationalization Process of Small and Medium-Sized Enterprises:An Evaluation of Stage Theory


Gankema, Harold G. J., Snuif, Henoch R., Zwart, Peter S., Journal of Small Business Management


The aim of this study is to provide better insight into the internationalization process of small and medium-sized enterprises (SMEs). Using a five-year panel dataset and a relatively new technique, DEL analysis, the predictive validity of the export stage concept of Cavusgil's innovation-related internationalization model (the I-model) is examined. This stage theory conceptualizes the internationalization process using five stages: a domestic marketing stage, a pre-export stage, an experimental involvement stage, an active involvement stage, and a committed involvement stage. In addition, the time period to be considered in moving from one stage to another is explicitly tested. The results suggest within certain limits that Cavusgil's stage theory holds for European manufacturing SMEs. According to the considered time frame, the results are slightly in favor of a two-year period.

Since 1992, the European Union (EU) has become a reality for European firms. Within this free trade zone, even more steps are being taken to unite the countries, both economically and politically. This transition changes the national and international business environment. For small and medium-sized firms(SMEs)--and for their competitors-it has become easier to broaden the firm's activities internationally. Besides the establishment of the EU, the democratization of Eastern Europe also brings new opportunities as well as threats, because some of these countries are likely to enter the Union. An internal market of nearly 500 million consumers, reaching from the Atlantic Ocean to the Russian border and from the North Pole to the Black Sea, will emerge. For large and small firms, these changes will result in a need to cope with international competition as well as with increased opportunities to go abroad.

Several theories and concepts have been suggested to capture the process of internationalization. Among these, the socalled stage models receive much attention. These theories assume that the process of internationalization should follow a prescribed path to be successful. Knowledge about the validity of this assumption is of great interest to firms facing important strategic decisions. However, research to date has some important limitations. Most of the research has concentrated on large firms, using case studies or cross-sectional studies and often concentrating on a specific country of origin (Zwart and Gankema 1990).The actual progression though the stages has been underexposed, and little attention has been paid to the time dimension of the process (Anderson 1993). Lack of longitudinal data and appropriate research techniques seems to be the main cause for these limitations.

The aim of the current study is to provide better insight into the internationalization process of SMEs. This study gives the SME owner/manager, public policy makers, and researchers some data on the validity of Cavusgil's stage theory for SMEs. Some opponents of stage theory argue that the concept is no longer relevant. Indeed, there is a possibility that some firms skip stages because global niches have become narrower and transportation and communication costs have rapidly decreased (McDougall, Shane, and Oviatt 1994; Oviatt and McDougall 1994). According to Reuber and Fischer (1997), firms with an internationally experienced management team can skip the first two stages. We believe that in general the stage theory holds for existing SMEs and that the model is particularly useful for giving SMEs a successful pattern to follow though the export process. To test the predictive validity of the export stage concept for SMEs, this study analyzed a five-year panel data set from 144 European manufacturing SMEs us ing the DEL statistical method.

Background

The process of internationalization has been the subject of widespread theoretical and empirical research (for example, Johanson and Wiedersheim-Paul 1975; Johanson and Vahlne 1977; Bilkey 1978; Cavusgil 1980; Turnbull 1987; Welch and Loustarinen 1988) and finds a general acceptance in the literature (Bradley 1991; Buckley and Ghauri 1993; Leonidou and Katsikeas 1996). …

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