Competitor influences on internationalizing SMEs

Abstract

How competitors influence the success of internationalizing small- and medium-sized enterprises (SMEs) is the focus of this thesis. Given that SME internationalization is often competitively-motivated, understanding how these firms compete and how competitors might influence their success are fundamental questions for International Business research, yet the assumptions implied within the extant explanations are problematic. To address unobservable competitive mechanisms and link these theoretically to competitive outcomes for internationalizing SMEs, the thesis builds from a critical realist ontology. Empirical data were gathered using a multiple case study of all the internationalizing firms, including internationalizing SMEs, in the Fleet Management Systems (FMS) industry in New Zealand in order to understand in context how firms in a population compete with one another. Using a systematic combining method for data gathering and theoretical development, data were analyzed abductively to theorize the mechanisms underlying the influence of competitors. The thesis is presented as a series of four academic journal papers (Chapters 4 to 7), preceded by a theoretical framework (Chapter 2) and the methods used (Chapter 3). Chapter 4 investigates how internationalizing SMEs compete - a necessary first step prior to understanding how competitors might influence internationalizing SMEs. Chapter 5 investigates how internationalizing SMEs select niches in which to compete, as a central element of SME competitive strategy. Chapter 6 considers changes in the population of competitors as the FMS industry in NZ evolved over 15 years, and how this changed firm outcomes, in order to understand the nature of competitors’ influence on internationalizing SMEs. Chapter 7 develops a conceptual model integrating contextual and firm factors in addressing how competitors influence internationalizing SMEs. This thesis contributes to international business theory by emphasizing how the competitive context influences the success of internationalizing SMEs, in terms of their survival outcomes. It goes beyond structural conceptions of competition as remote from firms and instead addresses “competing” as a process occurring within business networks and driven by socially-constructed mechanisms unable to be directly observed. By applying institutional theories to examine a population of firms in an industry, the thesis finds that the primary competitors of internationalizing SMEs are other SMEs, and that these competitors have a substantial influence on internationalizing SME success by changing the competitive context, limiting the strategic options available to internationalizing SMEs and by acting as models for learning.