Is Perceived Domestic Market Attractiveness a Growth Impediment? Evidence from the German Software Industry

Abstract. The German software industry is vital to the German economy's success. However, it has missed some current trends where software companies lack broader international activity. Existing models that take domestic market size into account can only partially explain the different degrees of internationalized companies between different countries. In addition, they are unable to explain individual companies ’ internationalization within a specific country. In our empirical study, an online survey of 869 German software companies, we examined the impact of perceived domestic market attractiveness as an impediment to internationalization. We found that it accounts for a considerable share of companies ’ variation in their internationalization activities. Based on our findings, we discuss policy and management implications