Going Abroad to Innovate? The Role of Entrepreneurial Orientation in Foreign Business Expansion for Japanese Small and Medium-Sized Manufacturers

The first version of this paper was presented at the 34th Euro-Asia Management Studies Association’s (EAMSA) annual conference: “The Turning Tide Of Globalization: Implications For European-Asian Business Collaboration,” Copenhagen Business School, Denmark, November 17, 2017. The second version was presented at the 8th Leuphana Conference on Entrepreneurship: “Evidence-based Entrepreneurship”, Leuphana University, Luneburg, Germany, January 19, 2018.This paper explores why a specific group of highly specialized Japanese toolmakers have chosen to expand their limited customer base to include Germany, despite strong cultural and geographical differences. Analyzing the phenomenon through the theoretical lens of International Entrepreneurship research, we find that compared to existing Japanese customers, Japanese SMEs perceived the German customers as less hierarchically dominant and more open and appreciative of their products. Japanese SMEs cited a highly interactive learning relationship with their German customers as a strong potential source for product and process innovation. In sum, we find that this the aspiration for innovativeness is a key motivator for these specialized Japanese SMEs to expand their business to Germany.21 p