The recognition of international opportunities among Italian SMEs: differences between European and Chinese markets

Abstract

This paper investigates how opportunities in foreign countries are identified by SMEs. The study aims to address the following research questions: 1 How do previous international knowledge and network of relationships influence SMEs’ recognition of opportunities in international markets? 2 Are there differences in the approach about opportunity recognition towards psychic distant countries compared to close ones? The methodology is based on a multiple case study of Italian SMEs operating in the manufacturing industry. Data collection involved semi-structured interviews to companies’ entrepreneurs. The findings suggest that while in close markets the lack of an extensive prior knowledge and experience leads to passive networking and unexpected discovery of business opportunities rather than a purposeful search for them, within psychic distant countries, the pattern of opportunity recognition differs and does not appear to be influenced by the stock of information and resources already possessed. Even though these results cannot be generalised, the study identifies a possible model of the opportunity recognition process, in which the different roles played by prior knowledge and the networks combined with psychic distance are stressed.