Internationalization of small and medium-sized enterprises in Iran

Abstract: The growing role of small and medium-sized enterprises (SMEs) in both advanced market economies and economies in transition and their considerable contribution to employment and economic dynamism in the most industrialized countries suggest that this experience can be used for sustainable development of developing countries. Meanwhile, due to changes in the international business environment, SMEs are experiencing increased competition as foreign firms gain access to local markets. In the present world economy, this means that no market is forever safe from competition and no company can afford to stake its future on the assumption that it ‘owns’ its home market. Therefore, due to increasing competitive pressure and reduction of the direct subsidies and protection they formerly received from their governments, it is particularly necessary for SMEs in developing countries to internationalize. Lack of similar studies in Iran creates the foundation for the purpose of this research: “to gain a better understanding of the process of internationalization of SMEs in Iran”. In order to check the possibility of research an exploratory case study including 16 cases was conducted during the pilot-test phase. With respect to the key role of entrepreneurs in the process of internationalization of SMEs, new perceptions of opportunities for economic success that identify the entrepreneurs as the persona causa of economic development and findings of the pilot study, the research problem is defined as: “how can the entrepreneurs’ impact on the process of internationalization of the SMEs in Iran be described?” Five research questions and a theoretical frame of reference describing internationalization were developed based on the literature review and integration of three theoretical approaches: internationalization, entrepreneurship and social networks analysis. A qualitative research approach has been adopted, and case studies have been conducted in 20 Iranian SMEs active in international markets. The empirical data have been collected through personal interviews and questionnaires. The findings of cross-case analysis are supported by descriptive statistics and t-test of difference in two means. With respect to the findings, we conclude with some confidence that the process of internationalization of SMEs in Iran is an entrepreneurial and opportunity-based process. In this process, due to the initiating forces and entrepreneurs’ alertness, entrepreneurs perceive and subsequently due to their skills and experience realize and take advantage of international opportunities. This is reflected in the receptiveness attitude, entrepreneurial orientation, proactive behavior of the entrepreneurs and the international orientation of the firm. Therefore, it would appear that entrepreneurs generally have an impact on internationalization of SMEs in two different ways: one impact reflect the mental orientation or “way of thinking” and the other impacts indicate the behavior and “action-oriented function” of the entrepreneur resulting in realization of the international market opportunities and internationalization of the SMEs. Finally, the findings of the study result in modification of the theoretical frame of reference, theoretical implications and suggestions for future research.