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Firms are affected by resources access, capability and unfavourable business environment, but there is little research on how institutions affect small and medium enterprises (SMEs) internationalisation process in developing countries. Drawing on institutional theory, this chapter reviews the variety of institutions (internal and external barriers) and how it affects SMEs’ internationalisation process in the developing world. First, it explores the stages of internationalisation, modes of entry and benefits of internationalisation. Second, it explains the Cultural, Administrative, Geographic and Economic (CAGE framework) distances and theories of internationalisation. Third, it examines the evidence on the role of government in promoting SMEs and drivers of internationalisation. These have significant practical and policy implications, especially for policymakers that are concerned with business reforms and ease of doing business.

Using data from a survey of a stratified random sample of 900 internationalising firms carried out in 2008, this chapter examines the barriers to internationalisation faced by young innovative SMEs. The results indicate that young technology-intensive firms are more likely than non-technologically intensive firms to report barriers to internationalisation. When compared with the whole sample, young technology-intensive SMEs are significantly more likely to experience difficulties in obtaining basic information about doing business in an overseas country, and with the costs of doing business overseas. Factor analysis suggests that young technology-intensive SMEs which internationalise through non-traditional modes differ with regard to their perceptions of barriers to internationalisation from those who sell directly to customers overseas.

In this chapter, we embrace the recent phenomenon of early internationalizing firms with the goal of understanding these firms in light of decades of research on multinational firms, which has long stressed liabilities of foreignness. It is often implicitly assumed that the only way to reduce liabilities of foreignness is by doing business in foreign markets and learning about the local business environment. However, in this chapter, we focus on several distinctive antecedent firm characteristics that have been shown to facilitate early international expansion by firms, but which are not commonly considered in the international business literature. We perform a systematic review of the literature on early internationalizing firms (following David & Han, 2004), based on the seminal work of Oviatt and McDougall (1994) to guide our analysis of early internationalizing firms and to identify important ways in which these firms differ from multinational firms. We argue that long-standing arguments about the impact of liabilities of foreignness on firm foreign expansion apply to newly internationalizing firms, but that these liabilities are reduced by the experiences and knowledge of the founders and top managers in these firms acquired prior to the inception of these firms.

Understanding how and why firms behave differently during re-internationalization has increasingly been at a premium in international business research. The authors conducted a case study of 11 Chinese international small and medium-sized enterprise and explored how they learned and recovered from involuntary de-internationalization. From case data, the “complete” re-internationalizers learned the lessons of foreign market exits more proactively than “partial” re-internationalizers. The complete re-internationalizers adopted internal and external sources of knowledge acquisition, “middle-up-down” information distribution and ambivalent information interpretation, while the partial re-internationalizers relied on internal sources of knowledge, “top-down” or “bottom-up” information distribution and univalent information interpretation. This study contributes by identifying the crucial role of learning processes to complete re-internationalization, which is absent in existing re-internationalization research.

Current internationalisation and international business (IB) theories are silent on the intermittent internationalising experiences of small and medium size enterprises (SMEs) from emerging economies (EEs). The aim of this chapter is to examine the role that networks play in facilitating SMEs from EEs subsequent behaviour following intermittent (exit and subsequent re-entry) internationalising experiences, and to build the theory of this process. Internationalisation of SMEs is a complex phenomenon. Utilising qualitative interview-based data from 15 Pakistani and Chinese SME entrepreneurs, industry experts and government representatives, this study concludes the following: SMEs from EEs continuously reconfigure existing products, resources and markets through networks while reducing and reviving levels of commitment with partners in international markets. Additionally, entrepreneurs from these markets proactively choose to dissolve existing relationships, withdraw from foreign markets to seek new partnerships and diversify resources to reduce foreign market uncertainty. However, some SME entrepreneurs seek to re-enter into previous markets utilising prior relationships and networks. Hence, successful management of network relationships over time is a challenge for internationalising SMEs.

The purpose of the study is to develop an understanding of the interplay between multinational enterprises (MNEs) and informal institutions on a firm–industry level. “Interplay” here means how responses to institutions develop in a particular context and how this development is interrelated with stakeholders’ reactions and activities. To study this interplay between MNEs and informal institutions, the authors draw on literature on institutional complexity, as well as on a co-evolutionary perspective. Two case vignettes are presented on MNEs’ post-entry strategies and behaviors in their new host markets, with a view to understanding how and under what conditions informal institutions in the host market may compel MNEs to alter their initial strategies and behaviors in the market and, on the other hand, how and under what conditions MNEs’ strategies and behaviors may act as catalysts of change in these informal institutions.

This paper examines how personal networks influence the internationalization process of Russian multinational corporations.

We identify and review 78 articles published in five International Business journals that address the role of networking and relationships in firm internationalization. We then use the network perspective to examine how Russian multinationals internationalize.

Combining the key conclusions of the reviewed studies with insights from the network perspective, and adding insights that we have gained both through first-hand experience and by following the Russian business media, we develop a model that links personal networking and Russian multinationals’ internationalization. We outline four functions that personal networking plays – access to information and knowledge, resource commitment, development of marketing and sales capabilities, and further network expansion.

This paper challenges established views of how firm internationalization occurs. It combines two previously unrelated streams of literature, the network model of internationalization and the role of personal networking within the Russian business environment, and argues that personal networking plays a much larger role in how Russian MNCs internationalize than has the International Business literature has acknowledged.

This chapter conceptually addresses outward internationalisation of small and medium sized enterprises (SMEs) from the emerging markets (EMs) by focussing on the role of prior contract manufacturing relationships with a developed market multinational enterprise (DMNE). The internationalisation of SMEs originating from EMs is a rather under-researched area and the role of prior contract manufacturing experience specifically has not been addressed in prior studies. Based on a literature review, the authors identified four capabilities developed by EM SMEs during their contract manufacturing relationships with DMNE(s) that potentially help in later outward internationalisation. The authors incorporate some insights from dynamic capabilities theory, and develop propositions addressing the role of relational capital, human capital, manufacturing productivity capabilities and product innovation capabilities in this specific context. Despite being conceptual in nature, this chapter is one of the first to explicitly highlight the role of these specific capabilities developed during contract manufacturing relationship for outward internationalisation, setting bases for future studies to further empirically investigate them in different contexts.

Business networks are of critical importance to firms and essential to the internationalisation of born-global and international new venture firms. Networking literature focuses on what are, generally, co-operative relationships and their effects between actors, activities and resources and illustrate the importance of quality and change in the networking process. Utilising Fletcher and Harris’ (2012) framework for understanding knowledge acquisition processes in internationalisation, this study investigates the importance of direct and indirect roles played by third parties in the networking for internationalisation processes of three different firm types within the knowledge-based natural health products (NHPs) (pharmaceutical) sector in Canada. The research presented here examines nine case studies of Canadian NHP firms and reveals that they utilised all network-related internationalisation processes simultaneously to internationalise including Johanson and Mattsson’s (1988, 1994) network theory, Johanson and Vahlne’s (2003) updated the Uppsala Model and the resource-based perspective on network theory (Ruzzier et al., 2006). They networked with and extensively utilised third parties, including government bodies, trade associations, government advisors, consultants and other domestic networks with international ties, in Canada and internationally to gain technical, market and internationalisation knowledge, and direct and indirect experiential knowledge which contributed to the internationalisation process confirming the study by Fletcher and Harris (2012). In a departure from the literature, this study found that weak ties (Granovetter, 1973) developed with third parties who were new to the networks allowed the NHP firms to develop competitive advantages necessary for them to overcome the liability of outsidership in entering new international markets. The type of technical, market and internationalisation knowledge gained, its content and the direct and indirect sources of knowledge from third parties were all shown to contribute to the internationalisation process.