An Analysis of Internationalization Theories and Behavior of Finnish Retail SMEs in Russia

An Analysis of Internationalization Theories and Behavior of Finnish Retail SMEs in Russia

Faisal Shahzad (Arcada University of Applied Sciences, Finland)
DOI: 10.4018/978-1-5225-8479-7.ch019

Abstract

The internationalization of large multinational retailers has been investigated and much intention has been given to their market entry mode choice and motives of internationalization. However, there is no enough research has been conducted to specifically describe the internationalization and market entry mode choice of small and medium-sized enterprises (SMEs) from retail industry. To cover the research gap, this chapter will describe the main theories of internationalization and then sheds light on motives, barriers, reasons, and mode of entry of Finnish retail SMEs in the Russian market. Data were collected through a mail survey questionnaire, and 145 usable responses were received. Findings, the implication of the study, and directions for future research are then discussed.
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Introduction

International business (IB) literature has acknowledged internationalization as one of the most important subject of firm’s progress and accumulated performance (Lu & Beamish, 2001), which has been perceived globally through fast internationalization of markets, industries and firms since the middle of the twentieth century (Olejnik & Swoboda, 2012). According to Fletcher (2001) internationalization process of the firms is one of the most regularly researched topics in international business over the past 40 years. Recently, internationalization developments have mainly been examined with reference to multinational corporations, but less for small - and medium-sized enterprises (SMEs) (Jansson & Sandberg, 2008; Wright, Westhead & Ucbasaran., 2007). The main reason for this was that smallness is frequently revealed as a problematic in internationalization, as SMEs often have a disadvantage in resource access (Jansson & Sandberg, 2008). Consequently, for SMEs internationalization is an attentive challenge, nevertheless many theories and approaches exist (Olejnik & Swoboda, 2012). Today SMEs are able and enforced to search for foreign markets though the foreign players enter their home markets. For the last two decades’ internationalization has been studied, the emphasis on has been moving from company related characteristics towards environment-related attributes and from large companies towards small- and medium sized companies.

Presently, SMEs represent the mainstream of firms in most countries, and therefore, they play a very significant role in the economic growth of their representative countries. Even, the number of small firms operating in international markets has been increasing (Nummela, Saarenketo & Loane, 2016). As a result, the internationalization process of SMEs has become a subject of educational, political, and governmental consideration and research (McDougall & Oviatt, 1996; Nakos & Brouthers, 2002). Indeed, the decision relating to international market selection (IMS) (Ellis, 2000; Sakarya, Eckman & Hyllegard, 2007) and entry mode selection (EMS) (Brouthers & Nakos, 2004; Lu, 2002;) are considered acute for a firm’s success abroad (Agndal & Chetty, 2007).

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