Pre-Internationalization and Performance Conditions of First-Time Exporting SMEs

  • Pierre-Xavier Meschi Department of Strategy, Aix-Marseille Univ, CERGAM, IAE Aix-Marseille, Aix-en-Provence, France; and Department of Strategy, Skema Business School, Nice, France
  • Antonin Ricard Department of Strategy, Aix-Marseille Univ, CERGAM, IAE Aix-Marseille, Aix-en-Provence, France
  • Ernesto Tapia Moore Department of Management, Kedge Business School, Marseille, France
Keywords: Aspiration-level performance model, Early internationalization, First-time exporting SME, Internationalization process, Late internationalization, Social and historical aspirations

Abstract

This article aims to determine whether pre-internationalization conditions improve the performance of first-time exporting small and medium-sized enterprises (SMEs). Two pre-internationalization conditions are discussed here: firm performance and age at internationalization. Building on the aspiration-level performance model of March and Shapira (1992) with sequential internationalization and international new-ventures approaches, this article develops two research hypotheses proposing an effective alignment with pre-internationalization performance and age at internationalization. These research hypotheses are examined using a panel database of 522 French SMEs that began export operations for the first time in 2014. The statistical results partially support our first hypothesis by showing that early-internationalizing SMEs with a lower performance relative to their peers significantly increase their post-internationalization performance. Contrary to what we predicted in our second hypothesis, we observe that late-internationalizing SMEs, which deliver a much higher performance than their historical aspirations, significantly reduce their post-internationalization performance.

Downloads

Download data is not yet available.

References

Bandeira-De-Mello, R., Ghauri, P., Mayrhofer, U. & Meschi, P.-X. (2015). South-South and South-North expansion strategies: What are the theoretical and empirical implications for research in management?. M@n@gement, 18(1), 1–7. doi: 10.3917/mana.181.001

Baum, J. A. C., Xiao Li, S. & Usher, J. M. (2000). Making the next move: How experiential and vicarious learning shape the locations of chains’ acquisitions. Administrative Science Quarterly, 45(4), 766–801. doi: 10.2307/2667019

Beer, M., Voelpel, S. C., Leibod, M. & Tekie, E. B. (2005). Strategic management as organizational learning: Developing fit and alignment through a disciplined process. Long Range Planning, 38(5), 445–465. doi: 10.1016/j.lrp.2005.04.008

Beleska-Spasova, E. & Glaister, K. (2010). Geographic orientation and performance. Management International Review, 50(5), 533–557. doi: 10.1007/s11575-010-0052-1

Carr, J. C., Haggard, K. S., Hmieleski, K. M. & Zahra, S. A. (2010). A study of the moderating effects of firm age at internationalization on firm survival and short-term growth. Strategic Entrepreneurship Journal, 4(2), 183–192. doi: 10.1002/sej.90

Chen, C.-I. & Yeh, C.-H. (2012). Re-examining location antecedents and pace of foreign direct investment: Evidence from Taiwanese investments in China. Journal of Business Research, 65(8), 1171–1178. doi: 10.1016/j.jbusres.2011.07.032

Chetty, S., Johanson, M. & Martín Martín, O. (2014). Speed of internationalization: Conceptualization, measurement and validation. Journal of World Business, 49(4), 633–650. doi: 10.1016/j.jwb.2013.12.014

Ciravegna, L., Lopez, L. E. & Kundu, S. K. (2016). The internationalization of Latin American enterprises—Empirical and theoretical perspectives. Journal of Business Research, 69(6), 1957–1962. doi: 10.1016/j.jbusres.2015.10.141

Crick, D. (2009). The internationalisation of born global and international new venture SMEs. International Marketing Review, 26(4/5), 453–476. doi: 10.1108/02651330910971986

Cyert, R. M. & March, J. G. (1963). A behavioral theory of the firm. Prentice-Hall.

Da Rocha, A., De Mello, R. C., Pacheco, H. & De Abreu Farias, I. (2012). The international commitment of late-internationalizing Brazilian entrepreneurial firms. International Marketing Review, 29(3), 228–252. doi: 10.1108/02651331211229741

Degryse, H., De Goeij, P. & Kappert, P. (2012). The impact of firm and industry characteristics on small firms’ capital structure. Small Business Economics, 38(4), 431–447. doi: 10.1007/s11187-010-9281-8

Dominguez, N., Mayrhofer, U. & Obadia, C. (2017). Les antécédents de l’échange d’information dans les réseaux d’entreprises exportatrices. M@n@gement, 20(5), 463–491. doi: 10.3917/mana.205.0463

Eriksson, K., Johanson, J., Majkgård, A. & Sharma, D. D. (1997). Experiential knowledge and cost in the internationalization process. Journal of International Business Studies, 28(2), 337–360. doi: 10.1057/palgrave.jibs.8490104

Eriksson, K., Johanson, J., Majkgård, A. & Sharma, D. D. (2000). Effect of variation on knowledge accumulation in the internationalization process. International Studies of Management and Organization, 30(1), 26–44. doi: 10.2307/40397467

Fiegenbaum, A., Hart, S. & Schendel, D. (1996). Strategic reference point theory. Strategic Management Journal, 17(3), 219–235. doi: 10.1002/(sici)1097-0266(199603)17:3<219::aid-smj806>3.0.co;2-n

Figueira-de-Lemos, F., Johanson, J. & Vahlne, J.-E. (2011). Risk management in the internationalization process of the firm: A note on the Uppsala model. Journal of World Business, 46(2), 143–153. doi: 10.1016/j.jwb.2010.05.008

Gankema, H. G. J., Snuif, H. R. & Zwart, P. S. (2000). The internationalization process of small and medium-sized enterprises: An evaluation of stage theory. Journal of Small Business Management, 38(4), 15–27.

Håkanson, L. & Kappen, P. (2017). The « Casino Model » of internationalization: An alternative Uppsala paradigm. Journal of International Business Studies, 48(9), 1103–1113. doi: 10.1057/s41267-017-0113-9

Hennart, J.-F. (2014). The accidental internationalists: A theory of born globals. Entrepreneurship Theory and Practice, 38(1), 117–135. doi: 10.1111/etap.12076

Heracleous, L. & Werres, K. (2016). On the road to disaster: Strategic misalignments and corporate failure. Long Range Planning, 49(4), 491–506. doi: 10.1016/j.lrp.2015.08.006

Hough, J. R. & Ogilvie, D. (2005). An empirical test of cognitive style and strategic decision outcomes. Journal of Management Studies, 42(2), 417–444. doi: 10.1111/j.1467-6486.2005.00502.x

Iyer, D. N. & Miller, K. D. (2008). Performance feedback, slack, and the timing of acquisitions. Academy of Management Journal, 51(4), 808–822. doi: 10.5465/AMR.2008.33666024

Johanson, J. & Vahlne, J.-E. (1977). The internationalization process of the firm – A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23–32. doi: 10.1057/palgrave.jibs.8490676

Johanson, J. & Vahlne, J.-E. (1990). The mechanism of internationalisation. International Marketing Review, 7(4), 11–24. doi: 10.1108/02651339010137414

Johanson, J. & Vahlne, J.-E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9), 1411–1431. doi: 10.1057/jibs.2009.24

Knight, G. A. & Cavusgil, S. T. (2004). Innovation, organizational capabilities, and the born-global firm. Journal of International Business Studies, 35(2), 124–141. doi: 10.1057/palgrave.jibs.8400071

Kontinen, T. & Ojala, A. (2011). International opportunity recognition among small and medium-sized family firms. Journal of Small Business Management, 49(3), 490–514. doi: 10.1111/j.1540-627X.2011.00326.x

Kuivalainen, O., Sundqvist, S. & Servais, P. (2007). Firms’ degree of born-globalness, international entrepreneurial orientation and export performance. Journal of World Business, 42(3), 253–267. doi: 10.1016/j.jwb.2007.04.010

Lamotte, O. & Colovic, A. (2015). Early internationalization of new ventures from emerging countries: The case of transition economies. M@n@gement, 18(1), 8–30. doi: 10.3917/mana.181.0008

Lin, S.-H., Chen, Y.-J., Hsu, A.-C., Liu, Y.-C. A. et al. (2012). Foreign direct investment behavior: Problemistic or slack search. African Journal of Business Management, 6(28), 8250–8260. doi: 10.5897/AJBM10.1627

Lin, S.-H. & Mercier-Suissa, C. (2018). Comment les Born Global chinoises identifient-elles et développent-elles des opportunités de croissance à l’international? Cas de la perspective de l’orientation entrepreneuriale. Finance Contrôle Stratégie, NS-2, 1–23. doi: 10.4000/fcs.2272

Lin, W.-T., Liu, Y. & Cheng, K.-Y. (2011). The internationalization and performance of a firm: Moderating effect of a firm’s behavior. Journal of International Management, 17(1), 83–95. doi: 10.1016/j.intman.2010.12.004

Lin, W.-T. T. (2012). Family ownership and internationalization processes: Internationalization pace, internationalization scope, and internationalization rhythm. European Management Journal, 30(1), 47–56. doi: 10.1016/j.emj.2011.10.003

Lin, W.-T. T. (2014). How do managers decide on internationalization processes? The role of organizational slack and performance feedback. Journal of World Business, 49(3), 396–408. doi: 10.1016/j.jwb.2013.08.001

Löfving, M. (2016). Homogeneity of manufacturing choices in subcontractor SMEs. Journal of Manufacturing Technology Management, 27(2), 261–286. doi: 10.1108/JMTM-03-2014-0024

Lu, J. W. & Beamish, P. W. (2004). Network development and firm performance: A field study of internationalizing Japanese firms. Multinational Business Review, 12(3), 41–61. doi: 10.1108/1525383X200400015

Lu, J. W. & Beamish, P. W. (2006). SME internationalization and performance: Growth vs. profitability. Journal of International Entrepreneurship, 4(1), 27–48. doi: 10.1007/s10843-006-8000-7

Lu, J. W., Beamish, P. W. (2001). The internationalization and performance of SMEs. Strategic Management Journal, 22(6–7), 565–586. doi: 10.1002/smj.184

March, J. G. (1988). Variable risk preferences and adaptive aspirations. Journal of Economic Behavior & Organization, 9(1988), 5–24. doi: 10.1016/0167-2681(88)90004-2

March, J. G. & Shapira, Z. B. (1992). Behavioral decision theory and organizational decision theory. In M. Zey (Ed.), Decision making (pp. 273–303). Newbury Park, CA: Sage.

Marchand, M. & Vieu, M. (2018). Chemins d’internationalisation des multinationales émergentes: vers une extension des modèles théoriques d’internationalisation. Finance Contrôle Stratégie, NS-2, 1–20. doi: 10.4000/fcs.2421

Meschi, P.-X., Ricard, A. & Tapia Moore, E. (2017). Fast and furious or slow and cautious? The joint impact of age at internationalization, speed, and risk diversity on the survival of exporting firms. Journal of International Management, 23(3), 279–291. doi: 10.1016/j.intman.2017.01.001

Miles, R. E., Snow, C. C. & Pfeffer, J. (1974). Organization-environment: Concepts and issues. Academy of Magagement Review, 13(3), 244–264. doi: 10.1111/j.1468-232X.1974.tb00581.x

Miller, K. D. & Chen, W.-R. (2004). Variable organizational risk preferences: Tests of the March-Shapira model. Academy of Management Journal, 47(1), 105–115. doi: 10.2307/20159563

Mudambi, R. & Zahra, S. A. (2007). The survival of international new ventures. Journal of International Business Studies, 38(2), 333–352. doi: 10.2307/4540423

Oviatt, B. M. & McDougall, P. P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), 440–459. doi: 10.1057/palgrave.jibs.8490193

Oviatt, B. M. & McDougall, P. P. (2005). Defining international entrepreneurship and modeling the speed of internationalization. Entrepreneurship Theory and Practice, 29(5), 537–554. doi: 10.1111/j.1540-6520.2005.00097.x

Prashantham, S. & Young, S. (2011). Post-entry speed of international new ventures. Entrepreneurship: Theory and Practice, 35(2), 275–292. doi: 10.1111/j.1540-6520.2009.00360.x

Puig, F., González-Loureiro, M. & Ghauri, P. N. (2014). Internationalisation for survival: The case of new ventures. Management International Review, 54(5), 653–673. doi: 10.1007/s11575-014-0209-4

Rasheed, H. S. (2005). Foreign entry mode and performance: The moderating effects of environment. Journal of Small Business Management, 43(1), 41–54. doi: 10.1111/j.1540-627X.2004.00124.x

Ref, O. & Shapira, Z. (2017). Entering new markets: The effect of performance feedback near aspiration and well below and above it. Strategic Management Journal, 38(7), 1416–1434. doi: 10.1002/smj.2561

Rennie, M. W. (1993). Global competitiveness: Born global. McKinsey Quarterly, 4, 45–52.

Ricard, A. & Zhao, Y. (2018). Processus d’internationalisation et performance: Apport de la théorie Springboard au paradigme Uppsala. Finance Contrôle Stratégie, NS-2, 1–23. doi: 10.4000/fcs.2317

Rowley, T. J., Greve, H. R., Rao, H., Baum, J. A. C. & Shipilov, A. V. (2005). Time to break up: Social and instrumental antecedents of firm exits from exchange cliques. Academy of Management Journal, 48(3), 499–520. doi: 10.5465/AMJ.2005.17407914

Schwens, C., Zapkau, F. B., Bierwerth, M., Isidor, R. Knigth, G. & Kabst, R. (2018). International entrepreneurship: A meta–analysis on the internationalization and performance relationship. Entrepreneurship Theory and Practice, 42(5), etap.12280. doi: 10.1111/etap.12280

Shinkle, G. A. (2012). Organizational aspirations, reference points, and goals: Building on the past and aiming for the future. Journal of Management, 38(1), 415–455. doi: 10.1177/0149206311419856

Sleuwaegen, L. & Onkelinx, J. (2014). International commitment, post-entry growth and survival of international new ventures. Journal of Business Venturing, 29(1), 106–120. doi: 10.1016/j.jbusvent.2013.01.001

Stremersch, S. & Tellis, G. J. (2004). Understanding and managing international growth of new products. International Journal of Research in Marketing, 21(4), 421–438. doi: 10.1016/j.ijresmar.2004.07.001

Sui, S. & Baum, M. (2014). Internationalization strategy, firm resources and the survival of SMEs in the export market. Journal of International Business Studies, 45(7), 821–841. doi: 10.1057/jibs.2014.11

Sullivan Mort, G. & Weerawardena, J. (2006). Networking capability and international entrepreneurship. International Marketing Review, 23(5), 549–572. doi: 10.1108/02651330610703445

Tan, A., Brewer, P. & Liesch, P. (2007). Before the first export decision: Internationalisation readiness in the pre-export phase. International Business Review, 16(3), 294–309. doi: 10.1016/j.ibusrev.2007.01.001

Vaona, A. & Pianta, M. (2008). Firm size and innovation in European manufacturing. Small Business Economics, 30(3), 283–299. doi: 10.1007/s11187-006-9043-9

Wagner, H. (2004). Internationalization speed and cost efficiency: Evidence from Germany. International Business Review, 13(4), 447–463. doi: 10.1016/j.ibusrev.2004.05.001

Wennberg, K. & Holmquist, C. (2008). Problemistic search and international entrepreneurship. European Management Journal, 26(6), 441–454. doi: 10.1016/j.emj.2008.09.007

Wiedersheim-Paul, F., Olson, H. C. & Welch, L. S. (1978). Pre-export activity: The first step in internationalization. Journal of International Business Studies, 9(1), 47–58. doi: 10.1057/palgrave.jibs.8490650

Zucchella, A., Palamara, G. & Denicolai, S. (2007). The drivers of the early internationalization of the firm. Journal of World Business, 42(3), 268–280. doi: 10.1016/j.jwb.2007.04.008

Published
2021-03-19
How to Cite
Meschi, P.-X., Ricard, A., & Tapia Moore, E. (2021). Pre-Internationalization and Performance Conditions of First-Time Exporting SMEs. M@n@gement, 24(1), 31-43. https://doi.org/10.37725/mgmt.v24i1.4507
Section
Original Research Articles