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The Internationalisation Of U.K. And Canadian High-Tech Smes: A Comparative Study Of Planned And Unplanned Ventures
Martine Spence* and Dave Crick**
*University of Ottawa’s School of Management and **University of Central England’s Business School
Keywords: High-Tech; Internationalisation; Serendipity; SMEs;
Address for Correspondence: Dr. Dave Crick, Business School, University of Central England, Perry Barr, Birmingham B42 2SU.
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ABSTRACT This paper discusses the findings from a comparative investigation into the internationalisation strategies of U.K. and Canadian high-tech small and medium-sized enterprises (HTSMEs). Findings from 24 in-depth interviews, 12 in each country, suggest that strategy formation is not as systematic as some previous studies, notably those that focus on the ‘stage’ models, suggest. Management teams recognise and exploit opportunities in different ways, ranging from planned strategy formation through to opportunistic behaviour; as such, no single theory could fully explain international entrepreneurial decisions. The comparative findings support the literature that has suggested a more holistic view should be undertaken in international entrepreneurship research, including the role of serendipity in unplanned overseas market ventures.
INTRODUCTION While a single accepted definition of international entrepreneurship does not exist, McDougall and Oviatt (2000: 903) suggest this is "a combination of innovative, proactive and risk-seeking behaviour that crosses national borders and is intended to create value in organisations". This comparative study investigates international entrepreneurial activities in a sample of Canadian and U.K. HTSMEs; specifically, it focuses on internationalisation decisions, taken to mean modes of entry into particular markets. The concentration on HTSMEs results from the observation in a number of previous studies that suggest they typically internationalise more rapidly and follow market entry routes that are different to those operating in low-tech markets. Recent work includes Oviatt and McDougall (1994); McDougall and Oviatt (1996); McDougall et al (1994); Bloodgood et al (1996); Knight and Cavusgil (1996); Coviello and Munro (1997); Jones (1999); Crick and Jones (2000). The contribution of this comparative study is to provide evidence that questions the extent to which managers of HTSMEs really employ planned and forward moving internationalisation strategies as postulated in the ‘stage' models literature. Instead, it indicates that initial and
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subsequent strategies result from planned and/or unplanned opportunity recognition and exploitation, depending on the individual circumstances faced by managerial teams. As such, the findings suggest that care should be taken in reporting the results of large-scale surveys that do not take a ‘holistic view’ (Bell and Young, 1998; Bell et al, 1998). REVIEW OF THE LITERATURE Arguably, studies undertaken some while back into the internationalisation of SMEs may no longer be totally applicable in the current environment, that is, one in which technology has progressed, enabling firms’ websites to obtain an instant global exposure for the business (Chaudhry and Crick, 2002). For example, in the ‘stage’ models of internationalisation, it is suggested that SMEs enter and progress into overseas markets in a systematic and forward moving sequential manner. SMEs’ market entry strategies evolve to those requiring more commitment and to markets exhibiting more risk; these are addressed once a domestic presence has been established and enough management learning (experience) and resources have been acquired. Examples of early work involving the ‘stages’ approach includes Pavord and Bogart (1975); Bilkey and Tesar (1977); Cavusgil (1984); Johanson and Valhne (1977); Johanson and Wiedersheim-Paul (1975). Arguably, the general notion remains the same in respective 'stage' models, that is, firms evolve from being non-exporters to becoming large experienced exporters in several stages. However, the precise mechanism for doing so depends on each author’s classifications (summaries are provided by Andersen, 1993; Leonidou and Katsikeas, 1996; Coviello and McAuley, 1999). Criticisms have been offered since it has been suggested that the 'stage' models do not capture the complexity of internationalising SMEs, especially in the high-technology sectors (see, for example,
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Turnbull, 1987; Bell, 1995; Knight and Cavusgil, 1996; Bell and Young, 1998; Bell et al, 1998). HTSMEs typically operate in fast moving environments and emergent strategies may be utilised by taking advantage of ‘windows of opportunity’ that may not stay open for long periods of time. It has been argued that in such an environment, opportunistic strategies bring more value than systematic ones (Teece et al, 1997; Bhide, 1999). Indeed, because of their narrow product scope, the fast obsolescence of their products and a limited domestic demand, especially in small countries, HTSMEs need to have an international or even a global focus from inception (Litvak, 1990). These businesses, that are also known as ‘born globals’, or ‘international new ventures’ have been described as business organisations that, from inception, seek to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries (Oviatt and McDougall, 1994). A factor contributing to the fast international expansion of these companies may have been the absence of strong industry structure and lengthy company history; therefore, industry factors have been found to be important (Boter and Holmquist, 1996). In fast moving environments the ‘learning advantages of newness’ or how quickly firms learn to adapt is sometimes more important than prior acquired knowledge (McDougall et al, 1994; Autio et al, 2000). Recent work has identified a further group of firms that cast doubt on the 'stage' models of internationalisation. Companies, known as ‘born-again globals’ (Bell et al, 2001) may have internationalised in the past, but have pursued a domestic strategy for some time. Critical incidents such as a change in management or ownership, a fresh infusion of capital or a
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change in scope of a domestic customer, may have affected their internationalisation strategies. After being moved from their initial path of trading overseas, these firms underwent rapid and structured internationalisation typically by using newly acquired networks. Merrilees et al (1998) argued that aspects of internationalisation strategy are not always planned in the way much of the strategy literature suggests. Instead, chance encounters, events and what might be termed as ‘serendipity’ have a somewhat understated role to play in explaining some firms’ internationalisation; indeed, an 'opportunity' for one person may be considered as 'hopeless' by others! In short, the realisation that internationalisation strategies are influenced by a multitude of factors has led to several authors arguing that a ‘contingency view’ goes some way to explaining firms' internationalisation (Reid, 1983; Woodcock et al., 1994; Yeoh and Jeong, 1995; Kumar and Subramaniam, 1997). Nevertheless, the 'resource based view' has also received a good deal of support in previous studies. Essentially, this takes an 'inside-out' firm perspective (Dicksen, 1996) and resources that are valuable, rare, inimitable and non-substitutable allow the firm to develop and maintain competitive advantages (Barney, 1991). In terms of internationalisation strategies, studies have suggested that internal resource advantages can be developed in certain ways; a major influence is the international orientation of the entrepreneur and/or the management team plus the resources they are prepared to invest (Reuber and Fisher, 1997; Francis and Collins-Dodd, 1999). A related point refers to entrepreneurial learning, that is, how the key decision maker or management team learns over time. Slater and Narver (1995) see this as the process by which 'knowledge and insights' are developed by employees within a firm.
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Moorman and Miner, (1998) view this as an 'organisational memory’. As entrepreneurial and organisational learning takes place over time, managers develop intellectual capital that can be used in the development of internationalisation strategies and allocation of resources. As such, elements of the 'resource based view' of the firm can, arguably, go some way to explain firms' internationalisation. Even so, it might be argued that the management teams’ previous international experience can affect the rapid expansion of firms through established international networks (Lindqvist, 1997). These personal or business networks act as communication infrastructures where common interests are shared (Hallén, 1992). It has been suggested that managers of SMEs rely rather greatly on networks at the beginning of the internationalisation process, for example, to select and expand into foreign markets (Lindqvist, 1997). The use of networks can speed the internationalisation process by providing business and social ties. Specifically, networks enhance synergistic relationships with other firms that complement each other’s resources at various stages in the value chain (Wilson and Mummalaneni, 1990; Dana et al, 1999; Jones, 1999). Moreover, the influence of advisors and policy makers should not be overlooked in facilitating network activities. Various events are organised, e.g. trade missions, aimed at facilitating contacts between domestic and overseas managers (Welch et al, 1997; Spence, 2000). Therefore, particular aspects of the networking approach to business strategy can help explain SMEs' internationalisation. RESEARCH FOCUS A review of the literature indicated that HTSMEs operate in a fast moving environment and strategy formation is influenced by a number of both internal and external considerations.
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These include managers' international orientation (and risk assessment), use of resources and networks; also, how management teams react to a number of potentially unforeseen 'contingencies' and ‘chance’ events. Therefore, the internationalisation process is not always as systematic as certain ‘accepted’ concepts, e.g. the ‘stage’ models, would suggest. Internationalisation can take place via planned or unplanned strategies and it the way that entrepreneurs and management teams identify and exploit opportunities that is important. In contributing to the international entrepreneurship literature two issues were investigated in the course of this comparative study: first, HTSMEs’ initial internationalisation strategies and timing; and second, subsequent international expansion strategies. The two countries were chosen since they are, arguably at least, both significant but not dominant in terms of being seen as bases for technological products in their respective economic groupings. Moreover, both have a limited domestic market for high-tech products, suggesting that firms need to internationalise in order to exploit niche opportunities. METHODOLOGY A qualitative, comparative methodological approach was undertaken in the course of this study in order to address the ‘how and why’ issues associated with U.K. and Canadian HTSMEs’ internationalisation strategies. Indeed, the use of 'extreme' examples drawn from case study research is an established methodological approach in demonstrating key points from management studies (Eisenhardt, 1989). This approach is consistent with a number of recent studies in the growing body of work involving international entrepreneurial research (see, for example, McDougall et al, 1994; Coviello and Munro, 1997; Crick and Jones, 2000).
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The specific sample selection criteria for this study were based on several factors. First, firms employed less than 100 staff to help avoid resource bias. Second, it was recognised that no single agreed definition exists of HTSMEs or sectors (Baruch, 1997; Baldwin and Gellatly, 1998) and this meant that the choice of sample would be subjective. In this comparative study firms were operating in sectors perceived to be 'high-technology' oriented (i.e. electronics, software and related sectors) to reduce trade sectoral bias. Third, they were independently owned to avoid potential bias from parental decision-making. Fourth, the firms were committed to internationalisation, i.e. to avoid those with a marginal involvement, and a subjective measurement of 25 percent or more of turnover coming from international sales was used to measure this. In reality, most firms had very high percentages of international business, i.e. in the region of 70 percent. Semi-structured interviews of about 60 to 90 minutes in length were undertaken either with the owner/manager or the senior member of the managerial team responsible for international activities within 12 HTSMEs in the U.K. and the same number in Canada. The U.K. sample was drawn from an existing database that was compiled from survey data undertaken in the past. The original sampling frame had utilised the FAME database (this allows various fields of enquiry such as trade sector, number of employees, and international involvement to be accessed). The Canadian sample was drawn from Ottawa Region database and this allowed firms to be selected based on the same fields of enquiry as the U.K. sample. The number of interviews was based on time and cost considerations, plus an ability to identify firms meeting the desired profile and employing executives that were willing to discuss potentially sensitive issues associated with their internationalisation strategies. Other data sources such as information from the firms’ websites and reports were also used to 7
supplement the interviews. Selected profiles of the firms in both countries are detailed in Tables 1 and 2. The major observation when comparing Tables 1 and 2 is that the Canadian sample contained several slightly older firms whose internationalisation strategies (initially at least) may have been subject to different environmental conditions vis-à-vis those that internationalised some time afterwards. While this potential bias was noted, it was not deemed to be a significant limitation to the study since interviewees were in a position to comment on internationalisation strategies over time as they had been employed in a senior role or owned the businesses from the outset. ANALYSIS OF INTERVIEW DATA In order to reduce the findings section of this paper in line with space limitations, only an overview of the key issues are discussed and therefore individual cases and quotes have been omitted. The sequencing of the points covered are not prioritised in terms of importance and reflect the general way in which many of the interviews covered areas of significance to entrepreneurs. Perceptions of Overseas Markets: Culture, Distance and Ways of Doing Business An initial observation from the interviews was that there appeared to be a different attitude towards dealing with overseas markets between the two groups of business people. A number of the Canadian interviewees had seemed and to still extent did seem reluctant to cross the Atlantic citing the perceived expense and problems of culture, particularly in respect of language. Others took a different view and claimed English was the language of business and irrespective of the main language spoken, translation could be used in many cases. No such attitudes were found in the U.K. firms, as these believed counties with potential and in
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particular North America, justified the time and expense in seeking opportunities in these markets. A bigger problem was the way in which business was undertaken, for example, one Canadian firm in the software industry dealing with ‘e’ government solutions believed there were problems in the way in which different governments work across Europe. Another Canadian firm had to adapt various aspects of its software between languages e.g. French, Belgium French etc and this caused numerous problems, e.g. in respect of time and resource constraints given the small potential of each market. In respect of expenses, one Canadian firm had a relationship with a German distributor that did not work out, largely due to cultural differences in business practices. It had a limited marketing budget so a decision was made to undertake as much of the business activities as possible in Canada and leave everything else to overseas distributors. Cultural difficulties appeared to be far less of a problem with the UK firms and most cited support agencies such as government advisers and the like that could assist in overcoming perceived barriers associated with culture and business practices. Internationalisation Routes: Experience, Networks and Serendipity Most of the firms in both countries took a relatively cautious route towards modes of market entry, that is, typically via agents or distributors. There were exceptions that are worthy of discussion. For example, in both Canadian and UK firms, sales offices/subsidiaries were set up where customers required this local presence. The exploitation of technological advantages had played a role in the internationalisation of most firms from both countries. There were examples where overseas customers approached the firms due to the reputation gained in their respective domestic markets. In other cases, it was not unusual for managers to be able to tap
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into networks or utilise previous international experience they had obtained. In some cases unsolicited order arrived after firms based overseas had seen the respective Canadian and UK firms' website. Serendipity played a part in some firms and the importance of this should not be understated. One Canadian entrepreneur was on the same industry committee as an executive from a U.S. firm and this meeting led to an order being placed. In another Canadian firm, the entrepreneur met someone from a government body and was told of opportunities in China. In another Canadian case serendipity was combined with planning in the sense that in addition to serving the U.S. market the manager planned to attend trade shows particularly in Spanish speaking markets to increase international sales, but received orders from a number of different markets. Indeed, by chance the manager found that by also targeting the U.S. market, it is not only a lead market but also a reference point that if successful there, other firms overseas will notice it and contact the supplier rather than the supplier actively needing to find customers. In the UK firms similar 'chance' events were recognised. This even extended to chance meetings: in one firm an entrepreneur met an overseas executive while taking his family on vacation that led to the formation of a joint venture. In another case the recruitment of an executive with overseas experience enabled the firm to break into international markets based on this executive's networks, although this had not been the purpose of recruiting him. Pace of Internationalisation and Markets Served In most, i.e. nine of the U.K. and seven of the Canadian firms interviewed, internationalisation occurred early (within three years of start-up) mainly as a planned decision. Firms from both countries that internationalised early typically served a small niche,
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that is, in terms of the size of the overall market and number of competitors. Therefore, growth and for that matter survival required firms to internationalise rapidly. The choice of market served was in some cases linked to perceptions of customers’ ability to pay. In one Canadian firm involved with financial software for governments, the company made sure that the contract was supported by an international agency and that this agency’s payment scheme was adequate. In another Canadian firm, financing opportunities were linked to agencies and government contracts, like the case of components for hydro-electric plants in Brazil. However, after a while it became clear that international organisations and contractors were not interested enough in this component or had the ability to pay, so the country was no longer considered as having potential. Examples were noted in both groups of firms where executives had been fairly well informed from the outset about business procedures in certain markets based on either experience in prior employment or research via government agencies and the like. For example, it was known from prior research that in some markets there was no perceived loyalty and a lot of transactional costs and therefore little point existed in bidding in markets like these where managers knew prices would be undercut and there was little future potential to recoup costs. In other cases there was a loyalty effect based to some extent on relationships and customers’ knowledge of product quality for a fair price. In some firms there was a gradual development in reaching some markets as technology evolved in these countries and obsolete products in developed markets could be sold in emerging ones. As such, it was observed that many entrepreneurs were more informed about internationalisation issues than perhaps some earlier studies have suggested; specifically, those that indicate learning from experience. By this it is meant that some executives already had this experience from previous employment or other 11
sources; an issue arguably not fully accounted for in some studies that argue managers start with little knowledge when their firms' internationalise. A finding in respect of internationalisation behaviour that has not received wide coverage in earlier studies relates to what might be termed as the ‘spill-over’ effect into different markets. In one UK firm, the Canadian market was actively targeted due to perceived potential and relative ease of access vis-à-vis the US and this effort led to US firms learning of the organisation and making contact with the entrepreneur. The US became the firm's main overseas market. In contrast, for one Canadian firm the main market was the U.S. but this in fact led to opportunities in the Canadian market that otherwise would not have been realised i.e. due to the reputation gained in the lead market. As such, overseas sales led to domestic market opportunities. Managerial Objectives, Risk Assessment and the Effect on Internationalisation A further issue that is not fully highlighted in previous studies is what are the objectives of entrepreneurs/the management team i.e. why was the firm created, the aims and did these influence internationalisation? Previous studies tend to focus on businesses looking for growth via an internationalisation route. Findings from both the Canadian and UK firms indicated that in some firms, this could be to maintain a lifestyle, but also to build and sell the business; therefore, risk is seen in different ways. Entrepreneurs from both countries indicated that some markets result in losses whereas others compensate for these. Some encounters may be serendipitous but others are to some extent created by hard work and risk taking i.e. attending events, expanding networks, seeking out distributors etc. Challenging existing ways of doing things can differentiate some firms (irrespective of their country of origin) as
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managers overcome psychological barriers, although this can be conditioned by industry norms in some sectors. The social cost of international entrepreneurship is perhaps another under researched area and one that was found in this study to affect internationalisation. For example, in one Canadian firm the two owners were working long hours and putting a strain on relationships with their respective spouses and this influenced the founders’ strategy decisions. Their wives threatened to leave them if they did not reduce their hours of work and balance work with family life. The result was that they planned to get the firm in a position that was ready to sell, whereas this had not previously been the goal. Consequently, from mainly serving the Canadian market, a large-scale move was made to enter the U.S. market. A similar example was found in a firm based in the UK, but in this case the entrepreneur chose to 'call his wife's bluff' which was a social error since she left him. It was nevertheless, profitable in a business sense since the time that was not devoted to family life was put into building his business into overseas markets and this became very profitable. This can be compared with the conservative approach taken by a Canadian firm where the owner was risk averse. This meant that while the firm had an international ratio (international to total sales) of 62%, of this 50% was in the U.S., not because of proximity or potential but rather perceived risk. The remaining 12% was spread over quite a number of markets based on ad hoc orders received from customers that had seen the firm’s website. A similar example was found in the UK sample and the owner/manager was risk averse and basically seeing his time out until retirement; this affected perceptions of costs and risks in entering certain markets.
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This attitude towards risk and market coverage may be a factor influencing recent studies on export withdrawal. For example, recent work by Osterle (1998) and Crick (2002) indicates that some firms demonstrate 'episodic' internationalisation rather than the linear path suggested by some studies, notably the 'stage' models. Export withdrawal can occur whereby markets may be dropped and others served in their place; in other situations overseas sales may stop completely so the firm can focus on the domestic market. Several firms in this comparative study constantly revised assessment of market opportunities withdrawing from some and exploiting others in the face of changing circumstances. In short, it might be argued that the managers took a more entrepreneurial stance than some of the static 'stage' models indicate. SUMMARY A Holistic View Of Internationalisation The comparative results indicated that the 'major' initial catalysts for pursuing an international strategy and the subsequent triggers for international development could be classified into three categories. Firstly, the existence and utilisation of existing contacts; this supports the networking view (e.g. Coviello and Munro, 1997; Dana et al, 1999). Secondly, the utilisation of resources, defined in a general sense to include financial and managerial resources (experience), enabling firms to become prepared for international development, e.g. targeting growth markets, supporting the resource based view of the firm (Dicken, 1996; Barney, 2001). Thirdly, serendipitous events go some way to support the contingency view (Reid, 1983; Merrilees et al, 1998).
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In pragmatic terms, these catalysts should not be viewed in isolation, as one theory could not adequately account for firms' internationalisation behaviour. In other words, a combination of issues affected both the initial and subsequent internationalisation decisions of both groups of firms. Placing this into context, it might be argued that international entrepreneurship decisions are formed as a result of trade-offs between subjective risk assessments against the pursuit of opportunities. Entrepreneurs may view the same opportunity in different ways depending on their perception of risk - which could be a function of a number of issues e.g. their ability to absorb losses, experience, and growth/profit objectives. While planning may be important as the strategy literature suggests, serendipity and the importance of emergent strategies should not be overlooked in research studies into internationalisation behaviour. However, its importance should not be over stated either. For example, in the context of this comparative study, it was found that even if a serendipitous event was the main catalyst for internationalisation, the firms still had a product ready for overseas development. Furthermore, entrepreneurs ensured the financial and human resources were put in place to enable opportunities to be pursued. Arguably, the correct ingredients were present at the time when these serendipitous events were encountered, so that partrationally and part-intuitively, a potential synergy was recognised and opportunities were exploited. Consequently, it would be incorrect to suggest that any existing theory could fully explain the firms' internationalisation and that a 'holistic' perspective should be taken (Bell and Young, 1998; Bell et al, 1998).
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Similarities and Differences Between the Comparative Groups A number of similarities and differences were apparent between the two groups of firms. Starting with the similarities, first, there was a mix of planned internationalisation strategies compared with those that could be termed 'opportunistic' in nature. Within the opportunistic behaviour, some of this arose from events that might be labelled 'serendipitous'. Second, both groups of firms' strategies were influenced by the objectives of the key decision-makers, i.e. whether they were risk takers or risk averse. Third, while both groups of firms tended to compete on reputation and address perceived lead 'niche' markets, each group also contained firms that internationalised more gradually. Fourth, the issue of trading blocks was not important to both groups of firms, but rather lead markets. Finally, no single theory could fully explain either group's internationalisation behaviour. Turning to differences between the two groups, first, there was a different mindset in terms of cultural and geographical distances. Indeed, this influenced Canadian firms to be more cautious in their mode of entry and market choice. Second, price advantages were available to the Canadian firms in certain markets, particularly the U.S. in comparison to the U.K. firms due to the relative strength of the currencies. This said, the U.K. firms did try to find ways to reduce costs to allow a competitive price to be offered for their high-tech products. Canadian firms perceived themselves as technology leaders and tended to have larger margins from value added activities. Contribution of the Study and Areas for Future Research This comparative study has contributed to the literature in the area of international entrepreneurship by providing an overview of the internationalisation strategies of 12 U.K.
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and 12 Canadian HTSMEs. The findings suggest that international entrepreneurial decisions can arise from a number of issues that are consistent with previous studies, for example, relating to the use of networks and resource based considerations. The findings are also consistent with studies that found strategies to be contingent on a multitude of factors that affect the pace and mode of internationalisation. However, a major issue that arises from the findings is that arguably the consideration of 'serendipity' has been under stated in terms of the contingency view and this may play more of a role than a good deal of previous work suggests. Much of the earlier work involving the internationalisation process of firms has to a large extent suggested that this is a planned strategy. Indeed, the 'stage' models suggest that firms move from the pre-export stage to more committed international involvement based primarily on experiential learning. Studies involving international new ventures have suggested that while firms internationalised quicker than the 'stage' models had indicated, this was nevertheless, still typically based on planned decision making e.g. to exploit market niches quickly. In comparison, the comparative findings of this study suggested that while the majority of the HTSMEs had similar planned strategies, unplanned, serendipitous encounters were important to several firms. This was exhibited either initially and/or in later periods after they had internationalised their operations. While the issue of serendipity per se was not the important factor, of more importance was whether managers were entrepreneurial enough to identify and exploit these opportunistic events. Some management teams may not recognise and exploit these international opportunities that are presented by chance in the same way as others. Indeed, some
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management teams may see the same issues as opportunities that others view as problems; this is perhaps a key issue in international entrepreneurship that is under researched in comparison to planned decision making. Moreover, it is perhaps difficult to communicate to managers in business school training courses unless research takes a more holistic approach to recognise these issues. This comparative study has gone some way to address Autio et al.’s (2000) suggestion that a need exists to examine the dynamics of opportunity seeking among SMEs in fast changing environments. The findings suggest that firms may not follow a systematic and linear pattern. Instead, internationalisation may follow a less logical path influenced by, among other things, opportunities that present themselves in existing networks and serendipitous encounters; an issue consistent with Bell and Young (1998), Bell et al (1998) and Crick and Jones’ (2000) findings that advocated a ‘holistic’ approach. In taking this ‘holistic’ approach further, both in terms of research and the provision of trade assistance, instead of attempting to categorise HTSMEs’ internationalisation patterns into a stage model or some other classification, the importance of networks and resource bases should be recognised, together with the contingencies associated with changing environmental conditions. Indeed, within this two-country study, a number of differences were observed between firms in each country highlighting the varied nature of HTSMEs' internationalisation strategies. Some managers are more entrepreneurial than others, i.e. viewing opportunities and risk in different ways and this is also a function of their resource base including the experience of their managerial team. In turn, this affects their internationalisation strategies in terms of rate, mode, countries served, etc. This perspective will help facilitate the need for tailored support in assisting firms with varying degrees of experience to internationalise in a manner that is appropriate to individual firms. Indeed, this has been recognised by particular 18
government trade bodies (Chaudhry and Crick, 2002). The findings of this exploratory, comparative study provide a basis for further research in the area of international entrepreneurship to examine in greater detail the holistic way in which internationalisation strategies are undertaken in management teams in various sectors and in particular countries.
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Table 1: U.K. Firms’ Internationalisation Strategies Initial Internationalisation Strategies Firm and Start up Date UK1
Timing/ Years From Start-Up
Entry Strategies
First Market
Subsequent Markets
Motives/ Incentives/ Stimuli
Expansion Method
Strategic Orientation
Concerns
Limited domestic market
Networks
Agents
US and several EU markets
EU markets and Far East
Exploit niche markets
Agents
Planned
Competition under-cutting prices
1 year
Limited domestic market
Networks
Agents
Several EU markets
EU markets and US
Exploit niche markets
Agents and subsidiaries
Planned
Competition under-cutting prices
2 years
Limited domestic market
Gov't support
Subsidiary
US
EU markets
Exploit niche markets
Agents
Initially unplanned now planned
Competition under-cutting prices
1998 UK3
Motives/ Incentives/ Stimuli
1 year
1997
UK2
Reasons for Timing
International Market Expansion Strategies
1996
Marketing expertise UK4
3 years
To this point the firm was not ready for overseas sales
Gov't support
2 years
To this point the product was not ready for overseas sales
New manager recruited
Distributors
US and several EU markets
EU markets and Far East
Exploit niche markets
Distributors and joint ventures
Planned
Financial resources
1 year
Limited domestic market
Networks
Agents
Several EU markets
EU markets and US
Spread sales risk over a number of markets and for growth
Agents
Planned
Financial resources
1995
UK5 1997
UK6 1998
Distributors
US
EU markets
Exploit niche markets
Distributors and subsidiaries
Planned
Competition under-cutting prices Managing planned growth
Competition under-cutting prices
UK7
Late
Serendipitous encounter
Taiwan
EU markets and US
Growth and profit potential
Agents
5 years
Growth and profit potential
Joint venture
1994
Initially unplanned now planned
Financial resources
UK8
Late 4 years
Growth and profit potential
Serendipitous encounter
Agents
Germany
EU markets and Far East
Growth and profit potential
Agents
Initially unplanned now planned
Competition under-cutting prices
1994
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UK9
1 year
Limited domestic market
Networks
Agents
Several EU markets
EU markets and US plus ad hoc orders globally
Growth and profit potential
Agents
Majority planned with a few ad hoc unplanned sales
Capacity to serve demand
UK10
Late
Serendipitous encounter
US
EU markets plus ad hoc orders globally
Growth and profit potential
Agents
6 years
Growth and profit potential
Agents
1993
Majority planned with a few ad hoc unplanned sales
No major concerns
UK11
2 years
To this point the firm was not ready for overseas sales
Gov't support
Distributor
US
EU
Exploit niche markets
Subsidiaries and license agreements
Planned
Overseas gov't legislation for subsidiaries
3 years
Growth and profit potential
New executive team after buy-out
Distributors
Several EU markets
EU markets plus ad hoc orders globally
Growth and profit potential
Distributors
Majority planned with a few ad hoc unplanned sales
Financial constraints
Subsequent Markets
Motives/ Incentives/ Stimuli
1998
1997 UK12 1996
Table 2: Canadian Firms’ Internationalisation Strategies Initial Internationalisation Strategies Firm
C1
Timing/ Years from start-up 15 years
1981
Reason for Timing
Captive home market
Motives/ Incentives/ Stimuli Internet
Entry Strategies
Distributors
International Market Expansion Strategies First Market
US
Mexico
Internet
Internet
Expansion Method
Distributors
Strategic Orientation
Unplanned
Internet
Concerns
Financial resources Marketing expertise
C2
1 year
1996
Limited home market
Networks
Integrators
Captive home market
Vertical market, similar context
1 foreign office in Washington
Pro-active search for partners
Distributor in Denver, telemktg agency in Texas
US
Internet
Italy
Internet
Integrators
Unplanned
Marketing expertise
Planned
Knowledge of foreign markets, way of doing business
Planned
Assessing potential in foreign markets
Internet
Japan France
C3
6 years
1984
US
Eastern Europe
Vertical market, new context
EU
New product, similar context
Internet
Internet Office
Networks C4 1996
3 years
Growth and profit potential, US clients needed as reference
US
Negotiations with Japan but firm sold before fruition
Serendipitous encounter
NA
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C5
12 years
1985 C6
6 years
1990
C7
3 years
1982 C8
3 years
1996
C9
1 year
2000
C10
0 years
1998
C11
4 years
1996 C12 1992
0 years
Captive home market
Serendipitous encounter (Internet)
Distributors
Serendipitous encounter
Distributors
Growth and profit potential
Serendipito us encounter
Distributors
Limited home market
Pro-active search for partners
Distributors
Few clients around the world, in industrialised countries
Networks
Direct sales as product is new in an emerging market. Education needed
US
Growth and profit potential
Serendipito us encounter (networks)
Direct sales
China
Limited home market , Few clients around the world
Networks
Direct export
Growth and profit potential
Pro-active search for partners
Captive home market
France
Integrators
Vertical market, similar context
Offices
Japan
US
Planned
Working harmoniously with foreign cultures
US
Vertical market
Distributors
Ukraine
Networks
Internet
Unplanned
Financial resources
Distributors
Unplanned
Conservative owner, no need to change
Distributors
Planned in the US
Financial resources, fear of being copied in Asia, but not in South America
Internet
Internet US
Internet
Pseudopresence US
Internet
Australia
Internet
EU US
Internet
Korea
Internet
Strategic alliances in the US and France
Brazil Others (only 5% sales outside US) EU Asia
Unplanned elsewhere
Same but evolution in channels
Networks
Distributors in Asia, EU
Planned
None as market is standardised and new
Poland
Networks
Direct sales
Unplanned
Arranging for financing
Vietnam
Gaining a full understanding of country issues
Central America US
Japan
Networks
Office in US, Distributors in Japan, China, EU
Planned
Time difference Asia and North America
Pro-active search for partners
No change in entry strategy
Planned
Customs regulations
China EU Distributors Internet
US
EU Asia
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