The Effect of SME Internationalization Motivators on Initial and Successive International market Entry Mode Choice

Abstract

The paper investigates the international expansion of small and

medium-sized enterprises (SMEs) taking a sample of United Kingdom (UK)

manufacturing SMEs. It focuses on the critical first and less risky step towards

internationalization and separates the motivators in Home country and Host

country. Using correlation and regression analysis it investigates 44 specific high

impact pre-selected internationalization motivators from the literature and tests

their effect on the firm’s initial entry mode decision and latest entry mode

decision. Contrasting the Uppsala and Resource-based view perspectives (using a

sample of UK independent manufacturing SMEs and utilizing a survey, correlation

analysis and binomial logistic regression analysis), the paper finds and describes

the effect of the most recurrent motivators from the literature on the SMEs’ first

and latest decision to internationalize. The literature and empirical work on the

topic has been fragmented and conflicting focusing on specific motivators but not

necessarily justifying the selection or origin of variables even less on SMEs or

taking into account regionalization. Results show that first entry mode choice

affects subsequent entry mode choices and both are mostly affected by home

country-specific, internal, motivators as opposed to host country-specific reactive

motivators. The paper presents significant results for policy and management

regarding SME internationalization and promotion of international activity.