Internationalization and Performance among Small and Medium-sized Firms A study of furniture producers in Sweden

Abstract: Furniture production in Sweden still exists on a comparably small scale. The majority, or more than 99 percent, of all furniture producers in Sweden are small and medium sized enterprises (SMEs) with less than 250 employees. Despite their size, these firms are, to a large extent, involved in export. This is fully in line with the accelerating trend of internationalization found among firms of all sizes. However, research focused on internationalization has been primarily concentrated on larger firms, which is unfortunate considering that the vast majority of all firms within the European Union can be described as SMEs. The purpose of this research is, therefore, to extend our understanding of internationalization and performance among small and medium sized firms by explaining export involvement and performance among small and medium sized furniture producers in Sweden.This research is completed within the theoretical framework of the modified PSE model, which consists of four components: perception of export barriers, strategy competence, export involvement, and performance. A quantitative survey was conducted among 324 firms, yielding a response rate of 56 percent. The empirical data was analyzed using the methods of multiple linear regression, logistic regression, and ordinal regression.The result suggests that strategy competence, measured in terms of relatedness and market knowledge, explains the main export mode and performance among exporting SMEs. In addition, main export mode seems to explain performance. The main findings of this research are visualized through a new model, SCEMPER. Another finding is that barriers originating with the owner/key decision-maker of a firm seem to prevent firms from becoming involved in export. In addition, attitude towards export and the age of the firm appear to be important determinants of export involvement and performance among SMEs.