A knowledge-based perspective on SME foreign market entry mode choices and changes

Abstract

Purpose: Despite the importance of foreign market entry mode (FMEM) decisions for the internationalisation of small and medium-sized enterprises (SMEs), there is insufficient understanding of the knowledge types and sources necessary for such decisions. This study addresses this issue by investigating the knowledge configurations that underpin FMEM initial choices and subsequent changes in SMEs.

Design/methodology/approach: This study adopted an interpretive approach and analysed empirical data from 37 in-depth interviews with decision-makers in internationalised SMEs from the United Kingdom.

Findings: The findings reveal that different knowledge configurations drive FMEM decisions in SMEs. Based on the analysis conducted for this study, initial FMEM choices draw on prior experiential knowledge combined with knowledge from desk research and knowledge acquired from peers, competitors and international partners. However, unlike many previous contributions, this research shows that foreign market experiential knowledge does not influence mode changes. Within-mode changes rely mainly on mode-specific knowledge and on knowledge about exploiting the benefits of the internet and digital platform ecosystems. Conversely, between-mode changes draw on diverse knowledge that is frequently created in interaction with international stakeholders or acquired externally.

Originality/value: This study contributes to the SME internationalisation literature by highlighting the knowledge configurations that inform not only initial choices but also between- and within-mode changes. Moreover, it reveals the importance of distinct types of digital technology-based knowledge for facilitating mode changes. It also adds to the knowledge-based perspective by underscoring that dynamic and heterogenous knowledge configurations, often created in interaction with international stakeholders, promote firm internationalisation.