The Born Global - Redefined: On the Determinants of SMEs Pace of Internationalization

Abstract

The objective of this study was to describe the process of internationalization of small- and medium-sized enterprises (SMEs) and to explore the reason for the differences in the pace of internationalization of firms. This is due to the fact that increasing evidence shows that in spite of small size and inexperience in international transactions, high value-adding manufacturing firms are capable of outrunning their larger, more resourceful counterparts in foreign markets. The problem studied were more specifically: Which factors influence the pace for SMEs to increase their resource commitment to a foreign market and which factors influence the pace for entering new country markets?

The international strategy an SME chooses is assumed to depend upon the firms’ key employees’ experience and network, the characteristics of the industry, how global it is and the characteristics of the product(s).

The problem was investigated using a case study design, more specifically by carrying out in-depth interviews of founders or other key employees in twelve case firms. The case companies were selected from a pool of respondents to a survey that was carried out in the Autumn 2001. The population of that survey was defined to be SMEs in Norway, founded after 1990 (registered in the Kompass database), an SME being defined as firms with less than one hundred employees. Based on preliminary findings of the firms’ export share and market selection the twelve case firms were categorized into four different groups: gradual international (GI), born global on the export dimension (BGE), born global on the market dimension (BGM) and true born global (TBG). This study thus gives a more nuanced view on the socalled born global. It is found that it might be useful see the born global as a more heterogenous group than has been done previously. In addition, the study departs from other studies in focusing on the market selection dimension in studying the increased international commitment as opposed to the entry mode dimension which most previous studies have focused on.