Guest editorial

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Journal of Small Business and Enterprise Development

ISSN: 1462-6004

Article publication date: 9 August 2011

Citation

Fletcher, M. and Loane, S. (2011), "Guest editorial", Journal of Small Business and Enterprise Development, Vol. 18 No. 3. https://doi.org/10.1108/jsbed.2011.27118caa.002

Publisher

:

Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited


Guest editorial

Article Type: Guest editorial From: Journal of Small Business and Enterprise Development, Volume 18, Issue 3

1. Introduction

Since the early work of Oviatt and McDougall (1994) in the area, international entrepreneurship (IE) has now reached the stage that it is recognised as a field of study (Jones and Nummela, 2008). There has been an increasing number of smaller firms operating in international markets (European Commission, 2004), some more rapidly and earlier than before, this has generated a growing interest in understanding how these firms compete globally (Zahra, 2005). Research on IE and the internationalisation of small businesses has grown in recent years. Indeed, the importance of such activity is now well recognised (Cumming et al., 2009). Whilst a body of literature has emerged which identifies the phenomenon and defines its characteristics and influencing factors, understanding is still at an early stage. Historically, the study of IE emerged from the fields of entrepreneurship and international business (IB), it has been noted that early IE studies often failed to integrate research from both fields, whereby research has tended to be theoretically stronger in either entrepreneurship or IB (Coviello and Jones, 2004; Jones and Dimitratos, 2005). This led to calls for more holistic, integrated approaches to the study of small firm internationalisation for example Coviello and Martin (1999), and to incorporate into IE research perspectives from other disciplines. Andersson and Florén (2008, p. 37) comment that “rapid internationalisation is the entrepreneurial action that characterises the international entrepreneur”. Numerous definitions and approaches to understanding IE have emerged over time, which focus on an array of areas, such as firm level studies on the international sales of new ventures, innovation, risk taking and the entrepreneurial behaviour of firms (McDougall and Oviatt, 2000), the network approach (Johanson and Vahlne, 2006), the resource based view (Barney, 1991; Autio et al., 2000; Peng, 2001; Tolstoy and Agndal, 2010), the knowledge-based view (Kuivalainen, 2003) and entrepreneurial orientation and dynamic capabilities (Jantunen et al., 2005). In addition, studies have been applied in many geographical contexts including developing economies (Ibeh and Young, 2001; Loane and Bell, 2011). Clearly a body of literature has developed (Keupp and Gassmann, 2009), yet many questions remain unanswered and as Jones and Nummela (2008, p. 350) suggest:

Now […] it seems appropriate to launch a call for fresh ideas and questions that might extend understanding of IE as a phenomenon, and incorporate perspectives from other disciplines with the potential to add depth to understanding within the field.

Thus, for our call for papers, we draw from the Oviatt and McDougall’s (2005, p. 7) definition as “[…] the discovery, enactment, evaluation and exploitation of opportunities across national borders – to create future goods and services”, which supports our aim attract papers that widen or deepen our understanding of IE. We requested articles in the area with a particular focus on early stage INVs, born globals and high growth, rapidly internationalising small to medium-sized enterprises (SMEs). Papers could be purely theoretical, methodological or theory-driven empirical work, and either quantitative or qualitative. The initial idea for the special issue came from the IE special track which we chaired at the Academy of International Business (AIB) Conference held in at the University of Glasgow in April 2009. We thank the conference chairs Professors Marian Jones and Stephen Young for their support. We issued the call for papers at this conference and at the Institute of Small Business and Entrepreneurship Conference (ISBE) in November of that year with a view to attracting papers from both the IB and entrepreneurship/small business research communities. Our initial deadline was November 2009, which we extended to January 2010 to allow sufficient time for quality papers to be submitted. The review process involved either two or three sets of revisions and final revisions were completed by November 2010. Many thanks go to our reviewers for their time and commitment in assisting the authors progress their papers towards such high quality publications. We would also like to thank the editor of the journal, Professor Harry Matlay, for his support throughout.

The papers were selected on significance, originality, relevance, and clarity, and fitted with the aim of special issue to broaden and deepen our understanding of the IE phenomena, by integrating entrepreneurship and international business perspectives and drawing from other disciplines/theories. Ten papers were selected for this special issue, which features papers from a variety of theoretical perspectives to extend our understanding of IE. Two papers employed quantitative methodologies, six qualitative papers used the case study method (two single case and four multiple cases), one mixed methodology and one paper is a country comparative conceptual article. Data sets extended the common focus of IE to research early and rapid internationalisation of technology intensive firms, to include manufacturing or low technology firms. The special issue highlights that IE research is international with authors from or representing universities in five continents; Africa, Canada, Denmark, England, Finland, France, Ireland, New Zealand, Sweden, Scotland, Taiwan and Tanzania.

Since the launch of our call paper, we sadly note the untimely death of Professor Jim Bell. His work had great influence on the development of IE as a field of study, and this work will continue to influence present and future scholars. Indeed, in this special issue 11 of Professor Bell’s articles (covering the time period 1995-2009) are frequently cited, often with co-authors from the UK, Ireland, Canada, Austria, Germany and Finland. As a member of the editorial board of the Journal of Small Business and Enterprise Development this special issue has been dedicated to him. Professor Stephen Young commences the special issue with a Foreword highlighting Professor Bell’s contribution to IE.

This introduction proceeds as follows: first we provide focused summaries of the papers included in the special issue. We identify key themes emerging from the papers and where they converge, and demonstrate their contribution to the field. Next, we discuss areas for further research emanating from the papers. Policy and managerial implications are also discussed.

2. Summary of articles, themes and contribution

The papers that are included in this special issue are representative of the diverse nature of the papers that were submitted and reviewed. The ten papers included in this special issue come from a variety of theoretical perspectives, such as, effectuation logic, networks, the dynamic capabilities perspective, resource based view, the knowledge-based view, absorptive capacity and knowledge assimilation, the business model and value creation, location and economic growth theories. A summary of the research focus, methods, location, areas for further research and contributions of the papers is provided in Table I.

Table I Summary of the articles presented in this special issue

The first paper by Tuija Mainela, Elina Pernu and Vesa Puhakka focuses on the development processes of a particular Finnish high tech INV and shows how this process is actually composed of events at three differing but highly intertwined levels. Mainela et al. employ a longitudinal case study approach, and put forward a conceptual framework which suggests that the evolution or development of an INV is influenced by the internationalisation process, how the entrepreneurs develop opportunities and also innovation development. The findings demonstrate that the internationalisation process is about the INV creating a presence in new international markets, whilst the opportunity centred process is focused around the creation of and subsequent changes to the business concept, culminating in new business opportunities, and the innovation process is concerned with the technical innovations which occur, in this case innovation with regard to the software offering. The findings show that as change in the business concept occurs new technological innovations take place, accompanied by new ways of organizing in the new international markets. What emerges as important is that the changes are related to specific behaviours which place emphasis on different networks, from those focused on internal problem solving, to external solution creation networks, opportunity selling and opportunity organizing. In addition the business is also embedded in virtual networks. Indeed, networks are seen as connecting the three levels under investigation. Mainela et al.’s contribution is threefold: first, they respond to the need for multi disciplinary research, with a balance of both international business and entrepreneurship theory (Coviello and Jones, 2004; Rialp et al., 2005). Second, they attempt to integrate the processes of IE, innovation and opportunity recognition, highlighting the importance of technological innovation, which is clearly important for the development of high tech INVs (Jones, 1999). Third, they respond to the calls for longitudinal research (Buttriss and Wilkinson, 2006; Rialp et al., 2005) and point to the need for dynamic conceptualisations when investigating INVs.

Erik Rasmussen, Jan Møller Jensen and Per Servais, explore the international activities (export and import) of 622 firms from Southern Denmark. In particular, this paper focuses on the effect of the firms’ location in the domestic market, their criteria for choosing these locations and their propensity for relocation. These authors employed a web-based survey, achieving a response rate of 25.5 per cent. Guided by insights from both IE and location/relocation theories, findings indicated that there was a significant relationship between the four types of infrastructure investigated with a positive relationship between export intensity and the importance of infrastructure. Similar correlation patterns were found between import intensity and the importance of infrastructure, except for those firms sourcing in Europe. As may be expected, findings indicated that the importance of a good location with regard to customers showed a negative correlation with the sales ratio derived from outside Europe. However, unexpectedly this study showed that a significant negative relationship existed between the importance of a good location in relation to customers and sourcing abroad. Rasmussen et al. find a significant positive relationship with sales derived from outside the European Union (EU) and the proximity of research institutions, supporting the earlier work of Nummela et al. (2005), which highlights that as many INVs are knowledge based or intensive, knowledge creation depends on relationships with such institutions. As was the case in the previous article (Mainela et al.) networks emerged as important, as the availability of local professional networks was positively related to sales within Europe, as firms were embedded in wider European networks (Coviello and Munro, 1997). Furthermore, respondents placed more emphasis on non-pecuniary measures, such as networks and the availability of skilled labour, as opposed to harbours and rail networks. These authors contribute to both the IE literature and also to our understanding of the implications of location/relocation theory as applied to INVs.

Knowledge is also important in Margaret Fletcher and Shameen Prashantham’s enquiry. Drawing on the knowledge based view of the firm, organizational learning and absorptive capacity they investigate the knowledge assimilation processes of Scottish rapidly internationalising SMEs. These authors employ a qualitative approach, where four case studies were selected from firms participating in an internationalisation programme run by Scottish Enterprise. Data were collected via semi-structured interviews with CEOs and programme providers, secondary data and from two focus groups. Fletcher and Prashantham make a valuable contribution, as whilst there has been conceptualisation and some studies with regard to how knowledge influences internationalisation at the individual, company and inter-organizational levels (Casillas et al., 2009), relatively few studies investigate how knowledge of the international marketplace is acquired and leveraged (Zahra, 2005). These authors find that knowledge sharing is important for rapidly internationalising SMEs and that the investigated firms adopted high levels of formality in assimilating knowledge. In addition two key aspects of formality were identified as important; formal planned events to share explicit and tacit knowledge and the codification of tacit to explicit knowledge. Findings also indicate that less formal knowledge assimilation occurs through the retention of tacit knowledge. Interestingly, Fletcher and Prashantham find that learning for internationalisation can be transferred to support domestic operations, an overlooked benefit of rapid internationalisation. This finding has implications for management in small firms undergoing internationalisation, as they need processes in place to embed the appropriate knowledge assimilation mechanisms within their management systems in support of internationalisation. Clearly, as this study suggests they should take the lead in marshalling commitment to learning processes and to cultivate an organizational culture that is supportive of learning.

The article by Natasha Evers sets out to explore INVs operating in a traditional low technology sector. This article addresses an understudied context in IE, as much research effort has focused on high technology firms and knowledge based or knowledge intensive firms. Evers adopts a qualitative approach utilising a multiple case study design and the critical incident technique (CIT). She draws on the dynamic capabilities perspective and the resource based view of the firm to investigate how three Irish seafood INVs develop and sustain competitive advantage, and what are the strategic attributes which may explain their rapid internationalisation. The findings indicate that the investigated case firms entrepreneurs’ subjective and objective capabilities emerge as a critical resource in order to strategically develop and manage the dynamic capabilities with regard to research and development (R&D), logistics and production. In addition, the focal firms’ ability to adapt and renew their offerings through product diversification strategies was also deemed to be critical for competitive advantage, especially as these firms operate in a highly dynamic and turbulent sub sector of seafood exporting. This author adds to our understanding of IE, as this enquiry presents an entrepreneurial dimension to the dynamic capabilities perspective. Findings also support the resource-based view of small firm internationalisation, indeed, managerial resources emerge as important (Castanias and Helfat, 2001) in the acquisition of economic rent for these firms. Evers posits that both the subjective and objective capabilities of low tech INVs owner/managers are central in explaining how they achieve international competitiveness.

Breda Kenny and John Fahy’s study identifies and examines the relationship between network resources and the international performance of a sample of Irish high technology telecommunications SMEs. A quantitative approach is employed using a mail survey with 154 respondents. Three hypotheses are developed and tested using structural equation modelling. These authors put forward the network construct as comprising three dimensions: network human capital resources, network resource combination and information sharing. By integrating RBV and the role of network external resources and capabilities, this study addresses and presents a link between resources and opportunity exploitation (Rialp et al., 2005). While the literature is replete with the concept of networks facilitating internationalisation, few studies address which network resources are of most importance with regard to international performance. Kenny and Fahy offer a multi dimensionality to the network resource effect by measuring the direct effect of human capital resources (e.g. experience and network management capability), information and resource combinations (e.g. complementarities) on international performance. Findings suggest a positive relationship between a firm’s human capital resources and international performance. However, no support was found for the relationship between network resource combinations, and information sharing and international performance. Thus study contributes to the extant research on networks by highlighting the trade-offs that networks impose on firms who seek to leverage their network resources, and more research is undoubtedly required (see section 3 in this introduction).

Liisa-Maija Sainio, Sami Saarenketo, Niina Nummela and Taina Eriksson argue that the recent discussion around the business model construct, which has been under researched in the IE enquiry is taking value formation to centre stage. These authors combine two “metaphors” for understanding the core of a firm– the value chain and the business model – in order to understand value formation in internationalising firms. They adopt a case study approach focusing on three Finnish firms conducting group interview workshops with the key managers comparing the business models. In addition, background knowledge was sought regarding the product concept, internationalisation history, the way the customers bought the solution and how customer value was created. The findings of the study indicate that although the business models of firms with comparable positions may appear to be similar, there are fine-grained differences both in their activities and their value formation. It also emerged that firms tend to neglect the inspection of their incentives to their partners, as they concentrate on value formation to end customers. The contribution of this study to our understanding of IE is twofold. First, Sainio et al. introduce the construct of the business model, particularly with regard to how internationalising firms undertake value chain management. Second, they provide a framework for analysing value creation in IE firms, including not only the focal firm, but also its most important interfaces with value-adding partners. This work provides a useful addition to the literature by outlining the role of a clearly-framed business model in international entrepreneurial behaviour. The novelty of the approach lies especially in the fact that both inward and outward internationalisation processes (for example, see Korhonen et al., 1996) are simultaneously examined through upstream and downstream interfaces, thus highlighting a holistic approach to internationalisation (Fletcher, 2001) and evaluating the internationalisation configuration (Knudsen and Servais, 2007) from a new perspective. This work has implications for the managers of internationalising firms, as it points to the need to concentrate on the key process of value creation instead of managing disparate international activities and functions.

Ko-Min Kevin Tseng and Rhona E. Johnsen seek to examine the influence of the internet on the internationalisation process and international customer relationship interactions of manufacturing SMEs. These authors develop case studies on ten SMEs from different manufacturing sectors in the UK, which are categorised as high tech, medium tech or low tech according to Crick and Jones’ (2000) definition. The findings highlight that the influence of the internet differed, first, with regard to the way these SMEs invested in and utilised internet applications for internationalisation and customer relationship support. Second, with regard to the focal firms perceptions of the internet as a tool for international customer support, and thirdly they differed with regard to SMEs reliance on more personal and interactive contact with their international customers. While undoubtedly, the internet proved useful for establishing an international presence and in gathering customer intelligence, the findings suggest that the internet has a greater impact for high tech SMEs. These authors whilst broadly supporting previous research (Bell et al., 2004; Crick and Jones, 2000; Jones and Crick, 2004; Loane, 2006; McNaughton, 1996) provide evidence for differences in Internet applications adoption and subsequent utilisation amongst internationalising SMEs. As was the case in Fletcher and Prashantham’s enquiry knowledge was important as these varied according to the level of technological advancement of the product, the knowledge intensity and the strategic sophistication of the firm when building relationships and networks internationally. However, they highlight that traditional means of relationship development and management are still important.

David Crick, Godwin E. Kaganda and Harry Matlay focus on firms from an under-researched geographical context, highlighting that whilst a body of knowledge has emerged over the last couple of decades on IE (Keupp and Gassmann, 2009) the tendency has been to focus on firms in developed countries. In order to address this gap in our understanding, these authors investigate internationalising SMEs in Tanzania. The purpose of this study is to examine whether differences exist between low and high export intensity Tanzanian internationalising SMEs in respect of their perceived competitiveness in overseas markets. In Crick et al.’s study, export intensity (the percentage exports make towards total turnover) is viewed as a representation of the firms’ commitment to serving overseas markets. This study adopted a multi-stage mixed methods research approach. In the first instance a questionnaire was administered (involving 205 respondents; 112 low intensity (exporting < 50 per cent of their sales) in comparison to 93 high intensity exporting firms (exporting 50 per cent > of their sales); followed by interviews with international entrepreneurs in a subset of 23 firms. Crick et al.’s findings indicated that low intensity exporters, tended to operate a spreading strategy by diversifying risk selling to a number of international buyers. In contrast, high intensity exporters tended to operate a concentration strategy focusing on larger customers in fewer markets. Nevertheless, perceptions towards competitiveness were found to vary between firms due to sectoral conditions. Notwithstanding, common themes did emerge, for example, the Tanzanian entrepreneurs actively looked for overseas opportunities (Kuanda and Sorensen, 1999; Owusu-Frimpong and Mmieh, 2004), also export intensity alone did not reflect the entrepreneurs’ commitment to international activities. Other factors also emerged as important, for example, cultural and political/legal issues were perceived as problematic, for example corrupt practices both domestically and internationally. This provides support for Ibeh and Young (2001) who caution that some issues may be “under reported” in this context. Crick et al provide an important contribution as they provide insights into the strategic objectives, opportunity search activities and decision-making in internationalising SMEs from an LDC.

Mizan Rahman and Nafeez Fatima review the various dimensions of entrepreneurship and the empirical models that try to explain the relationship between (international) entrepreneurship and growth in cities for both developed (the USA and Europe) and developing countries. Four dimensions of entrepreneurship are identified. First, for entrepreneurial studies on economic growth, cities are considered to be appropriate economic units rather than countries. Second, there are several definitions and measurements of entrepreneurship available in the literature, therefore empirical models and their results may vary depending on the model specification. Third, the relationship between employment growth (a proxy for economic growth) and innovative activity is dynamic in nature and thus the problem of endogeneity needs to be addressed. And, finally, as Rasmussen et al. also highlight (international) entrepreneurship has a spatial dimension and that characteristic must be incorporated into the urban and regional models of entrepreneurship. Rahman and Fatima contribute a critical and in-depth summary of existing quantitative work on entrepreneurship and economic growth in different cities. Large numbers of people, as in cities, permits numerous personal interactions that in turn can generate new ideas or new ventures or INVs. Therefore, in a city, ideas can flow quickly from person to person. If transmission of knowledge is spatially bounded, these authors posit that knowledge spillovers to be particularly important in cities. This begs the question, how do new technologies, such as web 2.0 affect knowledge spillover and new venture creation, as nascent entrepreneurs may no longer have to be in close contact.

Finally, drawing from work by Gartner (1988) and effectuation logic, Svante Andersson’s Research note aims to improve our understanding of born global internationalisation and the decisions made by entrepreneurs in these firms. He adopts a single explorative case study that is longitudinal in nature. Research regarding entrepreneurial decision making must necessarily focus on the concepts of risk and uncertainty. Sarasvathy (2001) argues that effectuation logic suits situations with high risks and uncertainty while the more dominant causation logic is more suitable when the future is predictable. Effectuation logic is characterised by emergent strategies and includes a selection of alternatives based on loss affordability and strategic alliances. The entrepreneur’s decision to enter foreign markets at or close to a firm’s inception is a decision with high risk in an uncertain situation. Andersson asserts that as effectuation theory focuses on the entrepreneurs’ ability to create opportunities together with network partners, it is a useful tool to understand the development of the born global firm. The research note shows how the focal born global firm entered many markets in a short time, by co-operating with local network partners. Like Kenny and Fahy’s work, networks were important and Andersson discusses how the network partners have an important role in the entrepreneurs’ ability to create opportunities. Indeed, the founders’ prior knowledge and networks were found to be important in understanding the rapid international expansion. The CEO as an effectuator used his own and his companies resources and networks to take advantage of opportunities when they are created or observed. By using resource lean entry modes, the effectuator can enter many markets in a short time with a low risk. Indeed, the CEO of the focal case study firm co-operated with distributors, in order to take advantage of their knowledge and networks, preferring strategic alliances with local partners instead of carrying out its own market research on the different markets (Sarasvathy, 2001). As with Mainela et al.’s work, Andersson highlights the need for greater understanding of how international entrepreneurs identify opportunities thereby affecting the development of the firm and effectuation logic presents a promising avenue for further investigation. However, until further research is undertaken it may be unwise to view causation and effectuation logics as being at opposite ends of a spectrum.

3. Areas for future research

The papers highlight some interesting areas for future research at the level of the entrepreneur, firm and networks. The following section brings together some convergent themes that have emerged from the research.

The role of networks

The importance of networks and relationships is well established as having a central position in theory regarding the internationalisation of firms (Johanson and Vahlne, 2003; Oviatt and McDougall, 1994). Indeed several papers in this special issue identify the importance of networks. Rasmussen et al. discussed the influence of networks on small firms choice of location. Mainela et al. trace the processes of problem solving and opportunity organizing as a multi-level process that embed the venture in various networks. Kenny and Fahy establish the effect of different types of networks resources on performance. Andersson discusses how networks partners have an important role in Effectuation theory and on the entrepreneurs’ ability to create opportunities. From a dynamic capabilities perspective, Evers identifies the importance for firms to mobilise networks to access resources and capabilities in low tech sectors. This is supported by Tseng and Johnson, who highlight the importance of relationships to facilitate knowledge sharing and resource exchange in high and lower tech SME internationalisation. Where fundamental business relationships are built on trust and years of mutual relationship experiences, this raises issues of the role of the internet in network development and its influence on the internationalisation process. Tseng and Johnson’s findings suggest that future studies are needed to investigate the specific internet strategies for high and low tech firms for supporting international customer relationship and network development. Kenny and Fahy find that some types of network resources are more effective than others in facilitating internationalisation and/or international performance. Prior research highlights that a firms’ internal and external networks, the form of individual and company knowledge sharing networks, and external relationships with customers, suppliers and institutions, have an important role enabling INVs to acquired new knowledge to expand internationally (Jones and Coviello, 2005; Prashantham and Young, 2011). However Kenny and Fahy’s finding of no support for the relationship between information sharing and resource combinations, and international performance warrants further research. Future research could investigate fruitfully the effectiveness and limitations of network behaviour and the effects on firm performance, in the context of different firm characteristics. Mainela et al.’s findings suggest further research should investigate how entrepreneurs’ different patterns of network behaviour are used to discover and exploit different types of business opportunities in different industries.

Knowledge, learning and capability development

At the level of the firm, Fletcher and Prashantham’s paper draws from the knowledge based view of the firm, organizational learning and absorptive capacity. The importance of knowledge and learning features strongly in the IE approach to internationalisation. Although there has been increasing number of studies and conceptual development, there is still much research needed to increase our knowledge of what and how entrepreneurial firms learn the global market place (Zahra, 2005). Fletcher and Prashantham’s findings on how firms use internal knowledge assimilation to facilitate rapid organizational learning suggests that the processes developed for internationalisation are useful for domestic operations. Future research would benefit from recognising that internationalisation is part of and inseparable from the overall growth and development of smaller firms. The study of the interrelationships between domestic and international activities is an under-research theme for the smaller firm (Karafyllia, 2009). Fletcher and Prashantham show how firms may need to develop their internal structures and processes along with the growth. Knowledge transfer within the growing organization is one of the key processes of successful internationalisation.

Entrepreneurs and top management teams bring to the new firm their prior international knowledge, abilities and experience, and are influenced by their backgrounds. This prior knowledge has featured in IE. Entrepreneurs and top management teams support a new firm’s early internationalisation with their particular prior international knowledge, abilities and experience (Oviatt and McDougall, 1995), however, this prior experience may become outdated or less relevant over time (Reuber and Fischer, 1997; Anand et al., 2002), and thus new learning is required. Indeed two of the papers address this issue. Drawing from work by Gartner (1988) and Effectuation theory, Andersson asserts that entrepreneurs are individuals with cognitive limitations, who are influenced by their earlier experiences and have developed heuristics and inductive logic that leads to the decision that their firms should expand internationally. More research that focuses on the individuals’ traits and characteristics and managers’ intentions, aspirations, motivation, behaviour and roles is recommended. Research on management and leadership that focuses on management behaviour could enhance the understanding of development in growing born global firms. Fletcher and Prashantham show how firms adopt a combination of formal and informal learning processes over time to support speedy decision making required for rapid internationalisation. Two studies highlight the need for more research into international opportunity recognition. Mainela et al. suggest that the way international entrepreneurs use internal and external processes for problem solving and opportunity creation in an area for further research. Andersson supports the view that a focus on opportunity discovery will enhance our understanding of born global firms.

Decision-making processes

Firm specific capabilities and resources have featured in several of our papers. The paper by Sainio et al. addresses the topic of value creation of internationalising entrepreneurial firms from the perspective of the business model, which has had little attention in the IE literature. Their study is an interesting and innovative way to look at INV cases whereby although firms in comparable positions may appear similar, fine-grained differences both in their activities and their value formation were found. The authors suggest an interdisciplinary approach where IE researchers build on the supply management literature to examine international upstream supply issues Andersson discusses early internationalisation process and the entrepreneur’s decisions regarding internationalisation where opportunities are created in a effectuation processes driven by an entrepreneurs characteristics, knowledge and skill and network relationships. This is an alternative perspective to a causation logic derived from rational decision making in the form of traditional planning activities. Whilst the papers of Sainio et al. and Fletcher and Prashantham identify formal planning activities of entrepreneurial firms, we suggest that effectuation logic should be viewed as something that incorporates some of the existing decision-making approaches, rather than a replacement, avoiding the danger of Effectuation being interpreted as and “either or” approach. We suggest that decision-making in an international and entrepreneurial context is an area that needs further investigation. Furthermore, Crick et al provide insights into strategy-making, opportunity search and decision-making from the perspective of a less developed country from which other IE researchers can build.

Locational issues

Two of the papers consider locational and spatial issues of IE. In their literature review article for the special issue on entrepreneurship and urban economic growth, Rahman and Fatima consider the role of cities as a unit of analysis for the focus of their study. Entrepreneurship is viewed one of the mechanisms by which a city can grow dynamically. Knowledge that is created in cities plays an important role, and can be translated into profitable market ventures by (international) entrepreneurs. Future research could address knowledge spillover and its implications for the born global firm, (particularly where knowledge spill-over may be spatially bound) and the role of multi national enterprise and international SME linkages in IE. The development of social capital, networks and clusters in relation economic growth is also worthy of further research. Continuing on this theme, Rasmussen et al.’s findings highlight the importance of non-pecuniary factors in choice of location such as access to knowledge, networking, skills, particularly from research and education institutions. In addition research is required with regard to the relationships between knowledge-based INVs and their relationship with research and educational institutions, and the flows of knowledge between these parties. Rasmussen et al. suggest that further research is required to fully understand the interplay of IE and location/relocation theories, they also suggest that the list of dimensions to be studied could be expanded to include other criteria.

4. Policy and managerial implications

Rahman and Fatima’s findings highlight the importance of entrepreneurship for economic development by creating employment opportunities and growth in cities. The importance of internationalisation and IE as a mechanism for new firm formation and growth is gathering momentum in regional support initiatives. However internationalisation is a high-risk activity. The internal capabilities of SMEs are being increasingly recognised as barriers to internationalisation and as a source of market failure; and that the pace of internationalisation associated with INVs poses particular challenges (UKTI, 2006; Raines and Brown, 2001). These barriers are reflected to a limited extent in public policies around the world; however there are still gaps in provision, for instance, in the important area of networking and in developing management capabilities for internationalisation, and support in implementation (Young and Tavares-Lehmann, 2007). As Kenny and Fahy’s findings suggest, policy makers need to allow for the possibility that firms may need support with networking before a network may reap the desired outcomes. It could be of interest to policy makers to determine the extent of (and potential to support) network experience and capability, resource sharing and information exchange between firms. Networks should be analysed to determine if they match the firms’ requirements for international business development. In order to address some of the barriers to international trade, SMEs would benefit from programmes that help to develop entrepreneurial skills, expertise and networking capabilities (Loane et al., 2008). Fletcher and Prashantham support this view, recommending that learning capabilities should be included in support for internationalising SMEs, to increase their absorptive capacity to support international growth. Turning to low and medium technology sectors, Ever’s findings that knowledge creating and development is important for the competitiveness of LMT has important challenges for policy makers, where the focus has often been on high technology sectors. This has important implications for the support of rural and peripherally located internationalising firms.

Rasmussen et al. highlighted a potential negative policy implication, whereby increased outward internationalisation of indigenous firms may increase the likelihood of firms relocating internationally. Of particular importance for policy makers, is that import intensity may lead to a firm, which purchases from outside Europe, to consider relocating, due to the learning effect of their international activity. Rasmussen et al.’s findings also suggest that where infrastructure is sufficient firms look for other factors in a location such as knowledge, networking etc to enhance their competitive. In the case of less developed countries, Crick et al. recommend that policy makers need to understand how best to overcome both perceived and actual barriers to internationalisation, motives that might stimulate international business activities, and infrastructural and cultural issues to assist Tanzanian exporters’ competitiveness in overseas markets. A sectoral approach may be needed where conditions with sector specific rather than generic policies being formulated.

For entrepreneurs and managers a recurring theme of papers is the need to build capabilities. Kenny and Fahy and Evers highlight the role of formal planning and audits to determine firm strengths and weaknesses of resources, networks and other capabilities. Sainela et al. advocate that firms systematically analyse their business model in an integrated approach, rather that disparate international activities and functions. Firms should focus on value exchange in both upstream (supplier) and downstream (customer) relationships and may benefit from examining the business models of similar organizations. Andersson on the other hand, emphases the importance of the entrepreneurial attributes of the decision maker in the early development of international firms where the focus may be on opportunity recognition and creation rather then traditional planning activities, particularly in unpredictable conditions. These tensions of formal (to enable efficiently) versus informal (entrepreneurial, opportunity driven) approaches are addressed by Fletcher and Prashantham who report that firms may combine these processes. These findings suggest the need for firm specific approaches to the support for rapidly internationalising SMEs. Finally, with regard to the use of internet technology, Tzeng and Johnsen warn that the internet may not be a replacement for traditional means of relationship development and management (face to face communication, discussion, negotiation), where pre and post sales service is required for both low and high tech customers.

Margaret Fletcher, Sharon LoaneGuest Editors

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Further Reading

Johanson, J. and Vahlne, J.-E. (2009), “The Uppsala Internationalization Process Model revisited: from liability of foreignness to liability of outsidership”, Journal of International Business Studies, Vol. 40 No. 9, pp. 1411–31