Opportunity-based internationalization of SMEs : Foresee the unforeseeable and expect the unforeseen

Abstract: Resource restricted Small and Medium sized Enterprises (SMEs), face unpredictability when entering foreign business networks. However, some SMEs are better equipped to develop higher number of opportunities with better qualities than others, and come across to seemingly ‘surprises’ shaping distinct internationalization paths. I claim that the variation to SMEs’ internationalization paths is better understood if described as opportunity-based. To advance this idea, the thesis introduces the overlooked attributes of international opportunities, namely the opportunity serendipity, novelty and value, constituting the essential elements of the internationalization of SMEs. I claim that opportunity attributes are dependent on the ways SMEs behave toward the development of opportunities, distinguishing between planning and systematic search as opposed to improvisational logic, which are in turn dependent on internal and external factors of the international firm. Explaining the internationalization of SMEs as opportunity-based enables the inclusion of ‘lucky incidents’ and irregular behavior as part of the standard decision logic when the circumstances require.  The thesis answers the research questions: How do internal and external factors influence the decision-making logic of SMEs for developing international opportunities? How does the decision-making logic of SMEs for developing international opportunities affect the heterogeneity of the developed opportunity? To answer the research questions, qualitative and quantitative methods have been used to explore the phenomenon of SME internationalization by integrating Entrepreneurship elements to traditional Internationalization conceptualization. Initially, SMEs’ internationalization is explored by a qualitative study of 9 Swedish SMEs entering new country markets, comprising the first paper of the thesis. Four additional studies, comprising the five papers of the thesis, following a quantitative method are presented, covering the different factors relating to the logic of SMEs when deciding how to search and develop new opportunities. Empirically, 258 international opportunities are examined by on-site survey of Swedish SMEs. The findings of the thesis suggest that SMEs’ decision-making logic is influenced by the redundancy of the network knowledge found in relatively closed structured business networks. While international experiential knowledge was traditionally described as a key driver of internationalization, this is not confirmed by the findings of this thesis as a determinant of the logic SMEs decide and act toward international opportunities. But under unpredictable circumstances of markets, SMEs that abandon predefined plans and goals and improvise, find opportunities that have higher value and novelty. On the contrary, SMEs that follow systematic, and goal oriented approach, overlook serendipitous and novel opportunities.