SME internationalisation from a network perspective : an empirical study on a Finnish-Greek business network

The study examines the internationalisation process of a contemporary SME firm and explores the impact of its business network on this development. The objective of the study is to understand SME internationalisation and its dynamics from a network perspective. The purpose of this research project is to describe and explore the development process of a firm and its business network by identifying the changes, critical events and influence factors that form this development. It is a qualitative case study, which focuses on a Finnish focal firm and its respective business network as it expands into the Greek market. It is a longitudinal research process, which covers a period of time from 1994 to 2004. The empirical study concentrates on the paper trading and converting business. The study builds on the network theory and the framework provided by Johanson and Mattsson's (1988) model on network internationalisation. The incremental internationalisation theories and network theories form the theoretical focus. The research project is organised according to a process view. The focal firm evolves from a domestically-oriented small subsidiary into an internationally experienced company, which has activities in several market areas and numerous business networks in various market segments and product categories. The findings illustrate the importance of both the domestic and foreign business network context in a firm's internationalisation process. The results of the study suggest theoretical modifications on a firm's internationalisation process by broadening the perspective and incorporating the strategic context of a firm. The findings suggest that internationalisation process is a non-linear process, which does not have a deterministic order in its development. The findings emphasise the significance of relational networks, both managerial and entrepreneurial, for establishing position in foreign markets. It implies that a firm's evolution is significantly influenced by its business network and by critical events. Business networks gain coherence due to common goals and they use accumulated capabilities to exploit market opportunities. The business network sets constraints and provides opportunities, which makes the related decision making strategically important. The firm co-evolves with its business network. The research project provides an instrumental case study with a description of an SME internationalisation process. It contributes to existing knowledge by illustrating dynamics in an international business network and by pinpointing the importance of suppliers, customers, partners, ownerships and competition to the internationalisation process.

SME internationalisation from an emerging market to a developed market : a case study from Ghana

This study focuses on understanding the internationalisation of small and medium-sized enterprises (SMEs) from an emerging market to a developed market. In particular, it examines the internationalisation process of a firm in the clothing and textile manufacturing industry in Ghana. Theoretically, the study is limited to the network internationalisation approach (e.g. Johanson & Mattsson, 1988; Johanson & Vahlne, 2009) and the industrial network approach (Håkansson & Snehota, 1995). Methodologically, a qualitative abductive case study approach is employed. The research process relies on a longitudinal method involving primary and secondary data and critical event analysis. Primary data has been collected from relevant informants at two different times in the internationalisation process. The research findings highlight the significance of both domestic and foreign business relationships in the internationalisation of an SME from an emerging African market to a developed country market. They show the greater importance of exogenous critical events than has been found in the research regarding firms in developed countries. Institutional actors were essential in the network and as sources of exogenous critical events. In addition, the successful SME should possess unique resources in the form of an entrepreneurial spirit, sufficient knowledge of internationalisation, and specific product knowledge. Theoretically, the present study contributes to business network research through providing an understanding of the process of developing network relationships and their impact in an African context. By focusing on SMEs, a contribution has been made in relation to the advancement of SME research. This research reveals empirical insight into SME internationalisation in a setting where an SME is internationalising to a developed country market from a newly emerging African market. Methodologically, the study provides an example of longitudinal research based on abductive methodology. The results provide implications for firms, managers, and policy-makers within the industry, especially on how to manage and use network relationships to promote SME internationalisation from newly emerging markets.

Breaking down the barriers to firm growth in Europe: The fourth EFIGE policy report. Bruegel Blueprint 18, 28 August 2012

Large firms contribute disproportionately to the economic performance of countries: they are more productive, pay higher wages, enjoy higher profits and are more successful in international markets. The differences between European countries in terms of the size of their firms are stark. Firms in Italy and Spain, for example, are on average 40 percent smaller than firms in Germany. The low average firm size translates into a chronic lack of large firms. In Italy and Spain, a mere 5 percent of manufacturing firms have more than 250 employees, compared to a much higher 11 percent in Germany. Understanding the roots of these differences is key to improving the economic performance of Europe’s lagging economies. So why is there so much variation in firm size in different European countries? What are the barriers that keep firms in some countries from growing? And which policies are likely to be most effective in breaking down those barriers? This policy report aims to answer these questions by developing a quantitative model of the seven European countries covered by the EFIGE survey (Austria, France, Germany, Hungary, Italy, Spain and the UK). The EFIGE survey asked 14,444 firms in those countries about their performance, their modes of internationalisation, their staffing decisions, their financing structure, and their competitive environment, among other topics.

Internationalisation, innovation and productivity: how do firms differ in Italy?

This paper addresses the issue of intra-industry heterogeneity and internationalisation. We show that, after controlling for sector, location, firm age and size, Italian manufacturing companies exhibit different economic and innovative performance according to their involvement in foreign activities. In particular, exporters show intermediate innovative performance between non-internationalised firms and those carrying out foreign production. Multinationals with a lower commitment to foreign markets, i.e. with non-manufacturing activities abroad only, exhibit a higher productivity than exporters but they do not appear to innovate more than the latter. Heterogeneity in productivity is robust to controlling for innovation inputs and outputs, suggesting that the difference in economic performance cannot be entirely attributed to different innovative activities, and that the involvement in international operations can be a distinct channel of knowledge accumulation.

Bank regulation and the process of internationalisation: a study of Japanese bank entry into London

The paper provides a theoretical insight into bank regulation and the process of internationalisation by examining the concepts of regulatory push and market pull within the context of Japanese bank entry into London during the 1980s. Rugman and Verbeke's [(1998). Corporate strategy and international environmental policy. Journal of International Business Studies, 29(4), 819–833] Consistency of Home and Host Government Goals model is utilised to structure the discussion, which centres on a situation where there is a conflict of goals between multinational enterprises (MNEs) and the home government but goal alignment between MNEs and the host government. As such the paper examines a relatively under-researched aspect of internationalisation and concludes that in certain circumstances internationalisation can occur despite great ‘psychic distance’. The paper also argues that although bank regulation can lead to a conflict situation it can also be conducive to the development of a strong home base and the development of firm specific advantages.

The firm. Techno-organizational changes, industrial relations and performances. An enquiry on Reggio Emilia local industrial system

It is not unknown that the evolution of firm theories has been developed along a path paved by an increasing awareness of the organizational structure importance. From the early “neoclassical” conceptualizations that intended the firm as a rational actor whose aim is to produce that amount of output, given the inputs at its disposal and in accordance to technological or environmental constraints, which maximizes the revenue (see Boulding, 1942 for a past mid century state of the art discussion) to the knowledge based theory of the firm (Nonaka & Takeuchi, 1995; Nonaka & Toyama, 2005), which recognizes in the firm a knnowledge creating entity, with specific organizational capabilities (Teece, 1996; Teece & Pisano, 1998) that allow to sustaine competitive advantages. Tracing back a map of the theory of the firm evolution, taking into account the several perspectives adopted in the history of thought, would take the length of many books. Because of that a more fruitful strategy is circumscribing the focus of the description of the literature evolution to one flow connected to a crucial question about the nature of firm’s behaviour and about the determinants of competitive advantages. In so doing I adopt a perspective that allows me to consider the organizational structure of the firm as an element according to which the different theories can be discriminated. The approach adopted starts by considering the drawbacks of the standard neoclassical theory of the firm. Discussing the most influential theoretical approaches I end up with a close examination of the knowledge based perspective of the firm. Within this perspective the firm is considered as a knowledge creating entity that produce and mange knowledge (Nonaka, Toyama, & Nagata, 2000; Nonaka & Toyama, 2005). In a knowledge intensive organization, knowledge is clearly embedded for the most part in the human capital of the individuals that compose such an organization. In a knowledge based organization, the management, in order to cope with knowledge intensive productions, ought to develop and accumulate capabilities that shape the organizational forms in a way that relies on “cross-functional processes, extensive delayering and empowerment” (Foss 2005, p.12). This mechanism contributes to determine the absorptive capacity of the firm towards specific technologies and, in so doing, it also shape the technological trajectories along which the firm moves. After having recognized the growing importance of the firm’s organizational structure in the theoretical literature concerning the firm theory, the subsequent point of the analysis is that of providing an overview of the changes that have been occurred at micro level to the firm’s organization of production. The economic actors have to deal with challenges posed by processes of internationalisation and globalization, increased and increasing competitive pressure of less developed countries on low value added production activities, changes in technologies and increased environmental turbulence and volatility. As a consequence, it has been widely recognized that the main organizational models of production that fitted well in the 20th century are now partially inadequate and processes aiming to reorganize production activities have been widespread across several economies in recent years. Recently, the emergence of a “new” form of production organization has been proposed both by scholars, practitioners and institutions: the most prominent characteristic of such a model is its recognition of the importance of employees commitment and involvement. As a consequence it is characterized by a strong accent on the human resource management and on those practices that aim to widen the autonomy and responsibility of the workers as well as increasing their commitment to the organization (Osterman, 1994; 2000; Lynch, 2007). This “model” of production organization is by many defined as High Performance Work System (HPWS). Despite the increasing diffusion of workplace practices that may be inscribed within the concept of HPWS in western countries’ companies, it is an hazard, to some extent, to speak about the emergence of a “new organizational paradigm”. The discussion about organizational changes and the diffusion of HPWP the focus cannot abstract from a discussion about the industrial relations systems, with a particular accent on the employment relationships, because of their relevance, in the same way as production organization, in determining two major outcomes of the firm: innovation and economic performances. The argument is treated starting from the issue of the Social Dialogue at macro level, both in an European perspective and Italian perspective. The model of interaction between the social parties has repercussions, at micro level, on the employment relationships, that is to say on the relations between union delegates and management or workers and management. Finding economic and social policies capable of sustaining growth and employment within a knowledge based scenario is likely to constitute the major challenge for the next generation of social pacts, which are the main social dialogue outcomes. As Acocella and Leoni (2007) put forward the social pacts may constitute an instrument to trade wage moderation for high intensity in ICT, organizational and human capital investments. Empirical evidence, especially focused on the micro level, about the positive relation between economic growth and new organizational designs coupled with ICT adoption and non adversarial industrial relations is growing. Partnership among social parties may become an instrument to enhance firm competitiveness. The outcome of the discussion is the integration of organizational changes and industrial relations elements within a unified framework: the HPWS. Such a choice may help in disentangling the potential existence of complementarities between these two aspects of the firm internal structure on economic and innovative performance. With the third chapter starts the more original part of the thesis. The data utilized in order to disentangle the relations between HPWS practices, innovation and economic performance refer to the manufacturing firms of the Reggio Emilia province with more than 50 employees. The data have been collected through face to face interviews both to management (199 respondents) and to union representatives (181 respondents). Coupled with the cross section datasets a further data source is constituted by longitudinal balance sheets (1994-2004). Collecting reliable data that in turn provide reliable results needs always a great effort to which are connected uncertain results. Data at micro level are often subjected to a trade off: the wider is the geographical context to which the population surveyed belong the lesser is the amount of information usually collected (low level of resolution); the narrower is the focus on specific geographical context, the higher is the amount of information usually collected (high level of resolution). For the Italian case the evidence about the diffusion of HPWP and their effects on firm performances is still scanty and usually limited to local level studies (Cristini, et al., 2003). The thesis is also devoted to the deepening of an argument of particular interest: the existence of complementarities between the HPWS practices. It has been widely shown by empirical evidence that when HPWP are adopted in bundles they are more likely to impact on firm’s performances than when adopted in isolation (Ichniowski, Prennushi, Shaw, 1997). Is it true also for the local production system of Reggio Emilia? The empirical analysis has the precise aim of providing evidence on the relations between the HPWS dimensions and the innovative and economic performances of the firm. As far as the first line of analysis is concerned it must to be stressed the fundamental role that innovation plays in the economy (Geroski & Machin, 1993; Stoneman & Kwoon 1994, 1996; OECD, 2005; EC, 2002). On this point the evidence goes from the traditional innovations, usually approximated by R&D investment expenditure or number of patents, to the introduction and adoption of ICT, in the recent years (Brynjolfsson & Hitt, 2000). If innovation is important then it is critical to analyse its determinants. In this work it is hypothesised that organizational changes and firm level industrial relations/employment relations aspects that can be put under the heading of HPWS, influence the propensity to innovate in product, process and quality of the firm. The general argument may goes as follow: changes in production management and work organization reconfigure the absorptive capacity of the firm towards specific technologies and, in so doing, they shape the technological trajectories along which the firm moves; cooperative industrial relations may lead to smother adoption of innovations, because not contrasted by unions. From the first empirical chapter emerges that the different types of innovations seem to respond in different ways to the HPWS variables. The underlying processes of product, process and quality innovations are likely to answer to different firm’s strategies and needs. Nevertheless, it is possible to extract some general results in terms of the most influencing HPWS factors on innovative performance. The main three aspects are training coverage, employees involvement and the diffusion of bonuses. These variables show persistent and significant relations with all the three innovation types. The same do the components having such variables at their inside. In sum the aspects of the HPWS influence the propensity to innovate of the firm. At the same time, emerges a quite neat (although not always strong) evidence of complementarities presence between HPWS practices. In terns of the complementarity issue it can be said that some specific complementarities exist. Training activities, when adopted and managed in bundles, are related to the propensity to innovate. Having a sound skill base may be an element that enhances the firm’s capacity to innovate. It may enhance both the capacity to absorbe exogenous innovation and the capacity to endogenously develop innovations. The presence and diffusion of bonuses and the employees involvement also spur innovative propensity. The former because of their incentive nature and the latter because direct workers participation may increase workers commitment to the organizationa and thus their willingness to support and suggest inovations. The other line of analysis provides results on the relation between HPWS and economic performances of the firm. There have been a bulk of international empirical studies on the relation between organizational changes and economic performance (Black & Lynch 2001; Zwick 2004; Janod & Saint-Martin 2004; Huselid 1995; Huselid & Becker 1996; Cappelli & Neumark 2001), while the works aiming to capture the relations between economic performance and unions or industrial relations aspects are quite scant (Addison & Belfield, 2001; Pencavel, 2003; Machin & Stewart, 1990; Addison, 2005). In the empirical analysis the integration of the two main areas of the HPWS represent a scarcely exploited approach in the panorama of both national and international empirical studies. As remarked by Addison “although most analysis of workers representation and employee involvement/high performance work practices have been conducted in isolation – while sometimes including the other as controls – research is beginning to consider their interactions” (Addison, 2005, p.407). The analysis conducted exploiting temporal lags between dependent and covariates, possibility given by the merger of cross section and panel data, provides evidence in favour of the existence of HPWS practices impact on firm’s economic performance, differently measured. Although it does not seem to emerge robust evidence on the existence of complementarities among HPWS aspects on performances there is evidence of a general positive influence of the single practices. The results are quite sensible to the time lags, inducing to hypothesize that time varying heterogeneity is an important factor in determining the impact of organizational changes on economic performance. The implications of the analysis can be of help both to management and local level policy makers. Although the results are not simply extendible to other local production systems it may be argued that for contexts similar to the Reggio Emilia province, characterized by the presence of small and medium enterprises organized in districts and by a deep rooted unionism, with strong supporting institutions, the results and the implications here obtained can also fit well. However, a hope for future researches on the subject treated in the present work is that of collecting good quality information over wider geographical areas, possibly at national level, and repeated in time. Only in this way it is possible to solve the Gordian knot about the linkages between innovation, performance, high performance work practices and industrial relations.

Essays on Regional Development and Internationalisation

This collection of essays examines various aspects of regional development and the issues of internationalization. The first essay investigates the implications of the impressive growth of China from a rural-urban perspective and addresses the topic of convergence in China by employing a non-parametrical approach to study the distribution dynamics of per capita income at province, rural and urban levels. To better understand the degree of inequality characterizing China and the long-term predictions of convergence or divergence of its different territorial aggregations, the second essay formulates a composite indicator of Regional Development (RDI) to benchmark development at province and sub-province level. The RDI goes beyond the uni-dimensional concept of development, generally proxied by the GDP per capita, and gives attention to the rural-urban dimension. The third essay “Internationalization and Trade Specialization in Italy. The role of China in the international intra-firm trade of the Italian regions” - deals with another aspect of regional economic development: the progressive de-industrialisation and de-localization of the local production. This essay looks at the trade specialization of selected Italian regions (those regions specialized in manufacturing) and the fragmentation of the local production on a global scale. China represents in this context an important stakeholder and the paper documents the importance of this country in the regional intra-firm trade.

The influence of utilising government initiatives, servicing foreign MNCs and internationalisation on strategic planning process of local companies in Singapore

This research focuses on two groups of local companies; namely, high-growth local companies and other local companies, to examine and compare the influence of utilising governmental initiatives, servicing foreign MNCs and internationalisation on their strategic planning process. The theme of this thesis argues that the approach of an organisation towards strategic planning is not only determined by the internal influences; namely, its firm size and the planning behaviour and attitude of an entrepreneur, as revealed in the literature, but it can also be affected by external influences. The theoretical contribution of this research determines this unique situation in Singapore, and tests the robustness of the conventional models of planning in smaller companies. As a result of the external influences, this study reveals that local companies are more likely to undertake a much more formal strategic planning than the conventional Western literature and models would indicate. High-growth local companies, in comparison, however, had undertaken a more formal and rigorous strategic planning process than other local companies.

The relationship between internationalisation and innovation:internationalisation strategies, foreign firms', patenting behaviour and FDI spillovers

This thesis aims to contribute to the understanding of the relationships between internationalisation and innovation. Based on large comprehensive firm level data from China, this thesis comprises of three empirical chapters examining internationalisation from different aspects. Specifically, the first empirical work studies how firms internationalise. It links the choice of firms’ internationalisation strategies with firm characteristics. Additionally, it re-examines the stepwise internationalisation theory by distinguishing different foreign direct investment (FDI) motives. It proposes two pecking orders of firm performance in internationalisation strategies. The second empirical study investigates what kind of innovation activities internationalised firms do. It analyses the factors that drive foreign firms to patent in an emerging host country context. It stresses the importance of the intellectual property rights protection aspect of business environment at regional level in promoting patents, the role of industry dependence on external finance in shaping foreign firms’ patenting behaviour, as well as links foreign firms’ patent production with FDI motivation. The third empirical research examines the effect of internationalisation by examining the links between inward FDI and domestic innovation in a host country. It specifically examines technology spillovers from inward FDI through the direct lens of innovation (captured by grant patents), instead of adopting the indirect productivity approach widely employed by the literature. Distinguishing different types of innovation, it provides direct evidence of heterogeneous innovation spillovers from FDI.

Influence of the technological innovation degree on knowledge creation: Evidence from a Brazilian firm

The aim of this paper is to analyze the process of knowledge creation when developing high technology products in projects having various innovation degrees. The main contribution to the literature is the systematization of an approach to analyze knowledge creation during the product innovation process. Three innovation projects developed by a company specialized in industrial automation systems were investigated using case studies. The knowledge creation processes, which took place in these three projects, were analyzed comparatively. As a distinctive result of this paper, the main features of the knowledge creation processes influenced by a degree of technological innovation are identified.

Indirect certainty equivalents for the firm facing price and production uncertainty

Producer decisionmaking under uncertainty is characterized using indirect objective functions. The characterization is for the class of producers with continuous and nondecreasing preferences over stochastic incomes who face both price and production uncertainty. (C) 2002 Elsevier Science B.V. All rights reserved.