International Market Entry: How Do Small and Medium-Sized Enterprises Make Decisions?

Abstract

Choosing the right international market entry mode is of utmost importance for an internationalizing firm. However, there is a lack of analysis concerning the decision-making process (DMP), specifically with regard to small and medium-sized enterprises (SMEs). The authors study the DMP among SMEs intent on entering international markets and how it affects each firm's international market development strategy. Using six cases based in Finland and Italy, the authors develop a model of the SME DMP. Their results imply that the DMP evolves and goes through various phases. By focusing on the postentry phase, this study enhances knowledge on decision-making frameworks by linking the traditional international marketing literature related to initial entry mode with “mainstream” international business literature. Furthermore, the study reveals that SMEs adopting a more rational DMP are more likely to succeed in foreign markets, and consequently, it demonstrates the importance of real options reasoning as a theoretical lens for making entry mode decisions in the context of SMEs.