International strategy for SMEs: criteria for foreign markets and entry modes selection

Abstract

Purpose - The purpose of this paper was to examine the internationalization of small and medium-sized enterprises (SMEs) in regard to the international market selection (IMS) and entry mode selection (EMS) processes. \ud Design/methodology/approach - To achieve this, an examination of the degree of systematic/active behaviour during IMS and EMS on a sample of 221 SMEs was conducted. Moreover, we sought to comprehend whether SMEs select foreign market and entry mode in a separate and sequential way, and whether there is a relationship between the sequentiality of IMS and EMS, on one side, and SME behaviour during these two processes, on the other side. Findings - Results revealed that SMEs have a non systematic and passive behaviour during IMS and EMS, respectively. Moreover, a high predilection in performing the two processes contemporaneously or without any logic was found. Finally, a strong relation between sequentiality of IMS and EMS and degree of systematic and active behaviour during the processes existed. \ud Originality/value - In this study, using a sample of SMEs located in a region of Italy, SME behaviour in the international market selection and entry mode choice processes was tested.\ud Keywords - International Market Selection, Entry Mode Selection; Small and medium size enterprises; International Marketing Strategy\ud Paper type - Research pape

SMEs and Marketing: A Systematic Literature Review

“…Most of the reviewed articles followed an international marketing perspective, which is focused on IMS and exporting strategies. In this internationalization perspective, papers highlight that SMEs still do not follow a systematic strategic approach towards the market (Musso and Francioni ); however, relationships with key international customers are presented as one of the main drivers of increased strategic awareness in SMEs (Cegarra‐Navarro ; Clercq and Rangarajan ).…”

“…The vast majority of reviewed studies adopted an international perspective, with a particular emphasis on the IMS process (i), that is, the adoption of a formalized decision‐making process and objective criteria to both analyse and select export markets (Musso and Francioni ). Three studies attempted to identify the most important elements influencing IMS, such as geographical distance, psychological distance (Brock et al .…”

“…International market selection and EMS affect all subsequent strategic decisions, such as segmentation and positioning. Despite the importance of IMS, Musso and Francioni () claimed that the majority of SMEs did not adopt a systematic market approach, not only because entry decisions are often made for ‘non‐rational’ reasons that apparently defy the optimizing logic of the market, but also because of the SMEs’ lack of human and financial resources for gathering information. The issues of segmentation and targeting are again mainly examined as part of the internationalization process (Papadopoulos and Martín Martín ; Yamakawa et al .…”

Exploring Risk Perception and Degree of Internationalization of Brazilian Small-and-Medium Enterprises

“…One may argue that the lack of effect is due to entry mode effects on the relationship between risk perception and degree of internationalization, and research should take into account other factors, such as commitment, risk, and control (Figueira-deLemos et al, 2011;Jones & Young, 2009;Laufs & Schwens, 2014). Still, factors such as previous market knowledge, network partnership availability, foreign investments and equity shares, reactive behavior, and host market incentives and favorable conditions (Kiss et al, 2013;Laufs & Schwens, 2014;Musso & Francioni, 2014) could also affect this relationship.…”

“…On the other hand, exportation is the most likely form of internationalization for SMEs, since they usually have limited resources, information, and capabilities (Cavusgil et al, 2012;Knight & Liesch, 2016;Malhotra, Agarwal, & Ulgado, 2003;Morgan, 1999), and tend to engage in exportation activities more reactively than proactively (Child & Hsieh, 2014;Morgan, 1999;Musso & Francioni, 2014).…”