Exploring the internationalization of small and medium-sized enterprises as a discontinuous process

Abstract: Internationalization is an important growth strategy for small and medium-sizedenterprises (SMEs). Yet, it is also a complex process since it involves a large variety of decisions and addressing the diverse nature of and unfamiliarity with foreign markets can especially be challenging for SMEs. Because SMEs have fewer resources they tend to be less equipped for internationalization and become more vulnerable to changes in the external environment. Therefore, continued growth in foreign markets is not easy nor guaranteed and instead, SMEs can de-internationalize and potentially re-internationalize. Thus, internationalization can be described as a discontinuous process.To address the complexities of internationalization as a discontinuous process, this dissertation studies some key antecedents, mediating factors and performance effects associated with the discontinuous internationalization of SMEs. The dissertation comprises two quantitative studies, a qualitative study, and a conceptual essay. The first essay examines family involvement in SMEs as an antecedent of intermittent exporting building on the behavioral agency model and real options reasoning. Utilizing a unique longitudinal dataset of Swedish SMEs in the manufacturing and retail industry, it is found that family firms experience a higher degree of intermittent exporting than non-family firms. This relationship is moderated by the foreign background of the CEO, such that the degree of intermittent exporting reduces when family firms have a CEO with a foreign background.While research has addressed the motivations for de-internationalization, less is known about the de-internationalization process. The second paper studies the de-internationalization process building on two case studies. The findings indicate that attitudinal commitment can be a key mediating factor between motives for de-internationalization and the de-internationalization outcome. Different commitment profiles are identified in relation to the timing of de-internationalization, the effort put into executing the de-internationalization decision and the extent of de-internationalization.The third essay studies the performance effect of exit from exporting, using a longitudinal dataset of Swedish exporting SMEs in the manufacturing industry. This essay relies on the theoretical framework of the internationalization performance literature - which builds on transaction cost theory, resource-based view and learning theory – to hypothesize that exit from exporting can have benefits and costs and that the environmental circumstances influence whether the benefits or costs prevail. The findings show that exit from exporting can be beneficial for SME financial performance if the firm has high levels of available slack and when the firm is active in a dynamic environment.The fourth essay proposes that a focus on the behavioral theory of the firm can provide a basis for understanding the micro-processes in family firms that may affect discontinuities in the internationalization process. Family business internationalization literature has borrowed some aspects of the behavioral theory of the firm, like goal diversity and uncertainty avoidance. However, it has ignored others like problemistic search and learning. Building on the key concepts of quasiresolution of conflict, uncertainty avoidance, problemistic search and learning,future areas for research on family firm internationalization as a discontinuous process are identified in this essay.Overall, the dissertation responds to a call for research on the dynamics in the internationalization process and makes four important contributions to the literatures on SME internationalization, family business and internationalization performance. First, it shows how family control can influence intermittent exporting. Second, it adds to the discussion on de-internationalization of SMEs by highlighting the role of attitudinal commitment in the de-internationalization process. Third, it extends the socioemotional wealth perspective by adding a real options lens to it. Fourth, a more nuanced understanding of the relationship between exit from exporting and performance is provided by proposing that exit from exporting can have costs as well as benefits and showing empirically that under certain circumstances exit from exporting can be beneficial for SME performance.