External and internal factors influencing SMEs´ choice of foreign market entry mode : two case studies of Swedish companies

Improvement in communication, faster travel and lower tariff barriers as well as other drivers of globalization have made foreign markets more accessible to smaller companies and have provided more opportunities for SMEs to go international. A major decision in SMEs’ internationalization is that of foreign market entry mode selection.The consequences of the entry mode choice can have strong effects on the success of the firm. For instance an insufficient entry mode can reduce opportunities and limit important options open for the firm and could lead to high financial losses as well as loss of control of the foreign market. The purpose of this study is to provide a deeper understanding of the factors that influence SMEs’ choice of foreign market entry mode. Two research questions regarding how the market entry mode is influenced by external and internal factors were developed. A literature review led to the construction of a conceptual framework which in turn became the basis of data collection. Two qualitative case studies of two Swedish SMEs namely Plannja and Minelco were undertaken. The main findings show the clear connection between what existing theories claim to be the internal and existing factors influencing market entry selection by SMEs. However the study’s findings at times weaken the existing theory, i.e. when external factors such as image support requirement do not influence the SMEs choice of entry mode or when internal factors such as profit target do not influenc SMEs’ choice of entry mode.Validerat; 20101217 (root