Post-entry speed of internationalization and export performance of small- and medium-sized enterprises

Small and medium-sized enterprises (SMEs), which, traditionally, have been considered as firms characterized by domestic focus and limited geographic scope, are increasingly extending their focus across national borders and becoming more active in international markets. In this fast-changing business environment, rapid international expansion can serve as an important strategic weapon for managers, in the quest to establish a competitive advantage. This thesis aims to advance the current understanding of the performance implications of the dynamics of internationalization by examining the two concepts of post-entry speed of internationalization and perceptual export performance in the context of SMEs. This thesis is guided by the following research question: What are the performance consequences of SMEs’ speed of internationalization? The purpose is to investigate how SME managers perceive export performance, and how different levels of post-entry speed of international expansion affect SMEs’ export performance. This overarching research question is further divided into three distinct, yet interrelated, research questions, which are individually addressed in three research papers. Three papers are self-contained and use different datasets, analytical techniques, and theoretical perspectives, although a common thread links them to the overall research objective. The first paper explores how SME managers make sense of, and evaluate, export performance. This paper adopts an inductive qualitative approach to gain a deeper insight about perceived export performance. The data for this study were collected primarily using in-depth, semi-structured interviews with the managers of 10 New Zealand-based exporting SMEs. Our findings revealed that managerial assessment of export performance is a complex, multifaceted, and dynamic phenomenon characterized by interrelated issues. We also found that appropriate measure of export performance is idiosyncratic to individual firms. The second paper builds on the insights gained from the first, to develop an individualized perceived export performance (IPEP) framework. This framework attempts to measure export performance based on the stated priorities of managers through explicit incorporation of manager- and firm-specific differences in the type and importance of goals, indicators, and benchmarks. In this paper, we use a fuzzy analytic hierarchy process (AHP) approach for modeling the managers’ perception of export performance based on a hierarchical structure, and for operationalizing the weights of goals, criteria, and indicators based on managers’ judgments. Adopting fuzzy logic in this approach enables us to incorporate some of the uncertainties and imprecision inherent in subjective export performance assessment. We illustrate the application of the proposed framework using data from 48 exporting SMEs. The second paper concludes by proposing a simplified approach for export performance measurement that incorporates some of the benefits of the IPEP framework, but is more applicable for large-scale empirical studies. The final paper investigates the concept of post-entry speed of internationalization (PSI) and examines its performance consequences. Despite the practical and theoretical importance of the issue, there has not been clear evidence, to date, regarding whether, and in what ways, rapid internationalization helps or hinders export performance. This paper contributes to addressing this gap by adopting a multidimensional view of speed and performance, and examining, in depth, the relationships among different dimensions of speed and SMEs’ financial and non-financial export performance. Based on a survey of 170 exporting SMEs in New Zealand, we found that the form of relationships tends to be quadratic, rather than linear. Our findings suggest that not all of the dimensions of PSI are equally beneficial for performance. In other words, a uniform effort in different dimensions of PSI does not necessarily have consistent performance implications. The questions tackled in this thesis add to the growing body of literature on the international development of SMEs in several ways: (1) uncovering the process of SME export performance evaluation, as perceived by managers, and investigating the dynamic interrelations among different aspects of performance; (2) proposing a more comprehensive measurement framework for export performance, tailored to each firm by incorporating multiple, and potentially conflicting, goals, and accounting for different approaches to export performance assessment; (3) providing a deeper understanding of PSI and its constituent dimensions and examining the financial and non-financial export performance consequences of PSI’s dimensions; and (4) introducing a novel methodology (i.e., fuzzy AHP) to the context of exporting literature