The Impact of Network Relationships on Smes' Internationalization Process: A Case Study of Malaysian Firms

Today most business activities are global in scope. A firm that fails to make a global profit may well go out of business. Therefore, more and more Malaysian firms are striving to have an international presence. But when firms decided to explore international market, they begin to face a lot of challenges that require them to take strategic decisions. Therefore, this study intended to look into bow indigenous software firms use their network relationships to facilitate their internationalization process. This research used a multi-site case study methodology to more effectively identify and understand detailed international growth patterns and processes. Three respondent software finns were randomly selected from MSC (Multimedia Super Corridor) status SMEs (Small Medium-sized Enterprises). On top of that, a manufacturing firm was conveniently selected to compare differences on network relationships' influence on its internationalization process with those of manufacturing firms. In each case, upper level managers were interviewed. Information was also collected from printed documents or Internet to increase source validity. In summary, the evidences from the three software firms were found to support the firms' internationalization process in the following: • Network relationships trigger international opportunity. • Network relationships motivate firms to internationalize. • Network relationships influence firms' market selection decision. • Network relationships influence firms' entry mode decision. • Network relationships allow firms' to access additional relationships. • Network relationships allow firms' to access established channel. • Network relationships help lower cost and minimize risk. • Network relationships influence firms' internationalization pace and pattern. Therefore, managers need to have a better understanding of the impact of network relationships on firms' internationalization process as it facilitates their internationalization process through the above. A limitation of this study is that it focused on a single sector, software development firm, with only a manufacturing firm taken for comparison. It would be inappropriate to generalize the results too widely. Although case research provides a richness and depth of understanding, to enhance the qualitative approach, it is suggested that a quantitative research is adopted in future research to enhance or further reinforce the findings

New venture internationalisation and the cluster life cycle: insights from Ireland’s indigenous software industry

The internationalization of new and small firms has been a long-standing concern of researchers in international business (Coviello and McAuley, 1999; Ruzzier et al., 2006). This topic has been re-invigorated over the last decade by the burgeoning literature on so-called ‘born globals’ (BG) or ‘international new ventures’ (INV) – businesses that confound the expectations of traditional theory by being active internationally at, or soon after, inception (Aspelund et al., 2007; Bell, 1995; Rialp et al., 2005). Until quite recently, this literature had not really considered how the home regional environment of a new venture might influence its internationalization behaviour. However, a handful of recent studies have shown that being founded in a geographic industry ‘cluster’ can positively influence the likelihood of a new venture internationalizing (e.g., Fernhaber et al., 2008; Libaers and Meyer, 2011). This chapter seeks to build on these recent contributions by further probing the relationship between clusters and new venture internationalization. Specifically, taking inspiration from recent work in the thematic research stream on clusters (which spans the fields of economic geography, regional studies and industrial dynamics), the chapter explores how the emergence and internationalization of new ventures might be affected by the ‘cluster life cycle’ context within which they are founded. This issue is examined through a revelatory longitudinal case study of Ireland’s indigenous software cluster. The study investigates the origins and internationalization behaviour of ‘leading’ Irish software ventures but, in contrast to many existing studies, it seeks to understand these firms within the context of the Irish software cluster’s emergence and evolution through a number of ‘life-cycle’ stages

The impacts of network relationships on SMEs' internationalization process.

In today's globalization era, more and more firms are striving to have an international presence, even though they face many challenges. Based on a multisite case study method, this article examines how indigenous Malaysian small and medium-sized enterprises (SMEs) use their network relationships to facilitate their internationalization process. The evidence from the case of three software firms and one control firm in this study support the firms' internationalisation process in the ways that network relationships trigger and motivate them to internationalize, influence their market-selection decision and mode-of-entry decision, help them gain initial credibility, allow access to additional relationships and established channels, help in lowering cost and reducing risk, and influence their internationalization pace and pattern

Comparing Chinese and the Indian Software MNCs: Domestic and Export Market Strategies and Their Interplay

China and India are emerging as major new entrants in the international software industry. Both are rapidly learning through outsourcing with multinational enterprises from advanced nations. Yet, their paths to this dynamic sector are very different. Chinese software firms have focused on their domestic market by working with foreign MNCs, while they move cautiously abroad. Indian firms, despite already being large, continue to expand overseas as well as to climb the value chain. We show that a macro perspective on the global movement of work can be gained by utilizing concepts from different approaches to the MNC. At the same time, the innovation systems perspective is necessary to explain the foundations of the industry. The paper provides hypotheses and performs an initial validation of them. It concludes that the internationalization and learning processes are somewhat different in the Chinese and Indian MNCs, and provides explanations for the different patterns.outsourcing, software industry, industrial development, MNCs, MNEs, multinational enterprise, China, India

The internationalization of Chinese and Indian firms: trends, motivations and strategy

The last two decades have seen significant internationalization of firms from developing economies, in terms of their greater participation in international trade, growing outflows of foreign direct investment (FDI), and a recent surge in their cross-border mergers and acquisition activity. Outward investment from developing countries is not a new phenomenon but in recent years there has been a marked increase in the magnitude of flows and a qualitative transformation in their pattern. Within this broad trend, the growing internationalization of firms from two fastgrowing developing countries, China and India, is particularly notable. Exports have been a central feature of the growth of the Chinese economy over the last three decades and, more recently, they have made a visible contribution to Indian growth too. Outward FDI from China and India has grown rapidly in recent years, and firms from these two countries are increasingly involved in overseas mergers and acquisitions

The impact of international marketing on SME's

Keynote presentation on the international marketing of SMEs (small and medium business enterprises)

The role of internationalization as a determinant of innovation performance: an analysis of 42 countries

This paper analyses the impact of internationalization on the innovation performance of 42 countries. Innovation performance – the dependent variable – is measured by the number of triad patents and PCT applications that originate from a country. The following internationalization variables – independent variables – are used: inward and outward stock of FDI, exports and imports as well as the number of parent companies in a country. Information on patents and the internationalization variables, together with further explanatory variables, including the number of scientific articles in a country, the number of Internet users, the R&D intensity and the share of value added in services, are collected for the years 1990 to 2008. Regressions are performed for all countries together, and, then, for two groups of countries clustered on the basis of their GDP per capita. We estimate two linear models, one based on pooled data estimating the classic linear model, and one on panel data, estimating a fixed effects linear model. The values of our dependent variables lead by up to six years for two reasons: to account for the time that elapses between an invention and the recording of the patent statistic, and, to address at least to some extent, issues associated with endogeneity in our independent variables. The paper finds support for a positive impact of internationalization on countries’ innovation performance. Our analyses suggest that competing in international markets via outward FDI and exports increases the scope of learning and the need to innovate. We find evidence of a negative relationship between patenting and inward FDI as well as imports. We interpret our results to indicate that (a) the inward inflow of investment or products can be less innovation-intensive than a country’s domestic activities which would be the case for more advanced and innovation-active countries; or (b) that a country does not have a sufficient absorption capacity to benefit from inflows

Models of internationalisation: The New Zealand experience

This paper examines the models of internationalisation adopted by thirty firms from New Zealand. Analysis of the international model is based on five key dimensions: firm sector and size; international market scope; market entry and servicing strategies; and speed of internationalisation. Drivers and constraints to internationalisation are also considered in the analysis. Evaluation of these dimensions over time finds evidence of both traditional ‘stages’ and emergent ‘born (again) global’ models of internationalisation, and reveals that over one third of these firms experience dramatic change to their international activities and resources initiated by divestment or change of ownership. We refer to the alternative internationalisation trajectory adopted by these firms as the ‘transformational’ model of internationalisation. The paper makes a contribution to the extant literature by providing synthesis of the New Zealand internationalisation and by building on our understanding of how patterns of internationalisation from a small open economy are changing in response to global environmental pressures

Knowledge acquisition for the internationalization of the smaller firm: content and sources

Internationalization process research emphasizes accumulated experience and networks as sources of knowledge for internationalization. Our understanding, however, as to what this knowledge is in practice for smaller firms, the challenges they face in acquiring it, and how they address those challenges is limited. Integrating organizational learning concepts with our theoretical understanding of the small firm internationalization process, we develop a new framework for understanding knowledge acquisition processes, which are examined with a case study of 10 Scottish internationalizing firms. We find smaller firms may not have relevant experience or useful networks, and rely on sources rarely recognised before. Firms used recruitment, government advisors and consultants to acquire indirect experience. Recruitment is a source of market and technological knowledge and government advisors and consultants a source of internationalization knowledge. Accessing internal information is important for firms that have internationalized. Our integrated theoretical framework identifies knowledge content and sources that are critical for internationalization, but that may be absent

The role of human capital and strategic intent in internationalisation scope of new technology-based firms

This paper explores the internationalization scope of new technology based firms (NTBFs) during their early years of operation. Internationalization is considered as a growth strategy in its own right whose successful implementation requires relevant resources and capabilities. We focus on the role of human capital in the form of the international experience of the firm founders, and its interaction with the strategic intent to internationalize from the outset. Our analysis of a sample of 466 cases of UK and German NTBFs shows that human capital is a key success factor for international growth strategies. This human capital is an asset strongly facilitating the penetration of foreign markets, but it also appears that it is much more influential when backed up by a deliberate strategic intent to internationalize from the inception of the new venture. Similar conclusions can be drawn for the scale of entrepreneurial resources dedicated to the start-up: the higher they are, the higher the scope of internationalization, and scale is also leveraged by strategic intent