Preview

Strategic decisions and risk management

Advanced search

RUSSIAN SMES’ DECISION TO ENTER FOREIGN MARKETS

https://doi.org/10.17747/2618-947X-2024-3-214-225

Abstract

This study focuses on analysing the decision-making processes of Russian small and medium-sized enterprises (SMEs) when entering international markets. Key aspects of internationalisation are examined, including market selection, entry strategies and the factors that influence these decisions. Particular attention is paid to the characteristics of SMEs, such as resource constraints and limited opportunities, which affect their behaviour in international markets. Concepts of internationalisation of new international ventures (INVs) are explored, including different types of start-ups and the concept of  ‘born globals’. The role of entrepreneurial dynamism, flexibility, and motivation in overcoming competitive disadvantages against large corporations is discussed. Issues related to the impact of operating in foreign markets on knowledge accumulation and improved business efficiency, particularly under conditions and restricted access to resources, are also addressed. 

An analysis of 421 Russian SMEs revealed that the choice of internationalisation strategy is significantly influenced by factors such as the effectiveness of innovation activities and the industrial sector of the company. Despite successes in international operations, the current situation poses challenges that are leading to reduced investment in innovation. Geopolitical risks increase costs and discourage companies with a horizon-expanding strategy from exploring new markets. Decisions about external market choices are based on personal and inter-firm networks. Long-term experience in foreign markets facilitates the transition to developed country markets and promotes innovation. It is common for Russian SMEs to establish subsidiaries and branches abroad without a step-by-step approach. 

About the Authors

A. V. Trachuk
Financial University under the Government of the Russian Federation (Moscow, Russia), JSC “Goznak” (Moscow, Russia)
Russian Federation

Doctor of economic sciences, professor, head of the Department of Strategic and Innovative Development, Faculty of Higher School of Management, Financial University under the Government of the Russian Federation (Moscow, Russia); general director of Goznak JSC (Moscow, Russia). ORCID: 0000-0003-2188-7192. 

Research interests: strategy and management of the company’s development, innovation, entrepreneurship and modern business models in the financial and real sectors of the economy, dynamics and development of e-business, operating experience and prospects for the development of natural monopolies.  



N. V. Linder
Financial University under the Government of the Russian Federation (Moscow, Russia), JSC “Goznak” (Moscow, Russia)
Russian Federation

Doctor of economic sciences, professor, professor of the Department of Strategic and Innovative Development, Faculty of Higher School of Management, Financial University under the Government of the Russian Federation (Moscow, Russia); head of the Marketing Department of Goznak JSC (Moscow, Russia). ORCID: 0000-0002-4724-2344. 

Research interests: strategy and development management companies, formation of development strategy of industrial companies in the context of the fourth industrial revolution, innovation transformation of business models, dynamics and development of e-business development strategies of companies in the energy sector in the fourth industrial revolution, exit strategies of Russian companies on international markets.  



References

1. Andersson S. (2011). International entrepreneurship, born globals and the theory of effectuation. Journal of Small Business and Enterprise Development, 18(3): 627-643. DOI: 10.1108/14626001111155745.

2. Appiah E.K. (2023). Social media usage and entrepreneurial opportunity recognition among internationalising SMEs. In: Decision-making in international entrepreneurship: Unveiling cognitive implications towards entrepreneurial internationalisation: 1-30. Emerald Publishing Limited.

3. Barlett Ch., Goshal S. (2000). An empirical test and extension of the Barlett and Ghoshal typology of multinational companies. Journal of International Business Studies, 31(1): 101-119.

4. Barney J. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1): 99-120. DOI: 10.1177/014920639101700108.

5. Belso-Martínez J.A. (2006). Why are some Spanish manufacturing firms internationalizing rapidly? The role of business and institutional international networks. Entrepreneurship and Regional Development, 18(3): 207-226.

6. Buckley P., Casson M. (2019). Decision-making in international business. Journal of International Business Studies, 50: 1424-1439.

7. Camuffo A., Furlan A., Romano P., Vinelli A. (2007). Routes towards supplier and production network internationalisation. International Journal of Operations & Production Management, 27(4): 371-387. DOI: 10.1108/01443570710736967.

8. Cannone G., Ughetto E. (2014). Born globals: A cross-country survey on high-tech start-ups. International Business Review, 23(1): 272-283. DOI: 10.1016/j.ibusrev.2013.05.003.

9. Castellacci F. (2014). Service firms heterogeneity, international collaborations and export participation. Journal of Industry, Competition and Trade, 14(2): 259-285. DOI: 10.1007/s10842-013-0153-1.

10. Chang H.J. (2011). Institutions and economic development: theory, policy and history. Journal of Institutional Economics, 7(4): 473-498.

11. Coviello N., Munro H. (1997). Network relationships and the internationalisation process of small software firms. International Business Review, 6(4): 361-386. DOI: 10.1016/S0969-5931(97)00010-3.

12. Crick D., Spence M. (2005). The internationalisation of “high performing” UK high-tech SMEs: A study of planned and unplanned strategies. International Business Review, 14(2): 167-185. DOI: 10.1016/j.ibusrev.2004.04.007.

13. Crick J.M., Crick D., Chaudhry S. (2020). Entrepreneurial marketing decision-making in rapidly internationalising and de-internationalising start-up firms. Journal of Business Research, 113: 158-167.

14. Dunning J. (1988). The eclectic paradigm of international production: A restatement and some possible extensions. Journal of International Business Studies, 19(1): 1-31. DOI: 10.1057/palgrave.jibs.8490372.

15. Finkelstein S., Lawton T.C., Harvey C. (2007). Breakout strategy: Meeting the challenge of double-digit growth. New York, McGraw-Hill.

16. Fernandes C., Veiga P.M., Gerschewski S. (2023). SME internationalisation: Рast, present and future trends. Journal of Organizational Change Management, 36(1): 144-161.

17. Francioni B., Musso F., Vardiabasis D. (2013). Key decisions and changes in internationalization strategies: The case of smaller firms. Journal of Strategic Marketing, 21(3): 240-259. DOI: 10.1080/0965254X.2013.790466.

18. Heydari E., Rezaei M., Pironti M., Chmet F. (2023). How does owners’ personality impacts business internationalisation in family SMEs? In: Decision-making in international entrepreneurship: Unveiling cognitive implications towards entrepreneurial internationalisation: 331-347. Emerald Publishing Limited.

19. Hessels J., Terjesen S. (2010). Resource dependency and institutional theory perspectives on direct and indirect export choices. Small Business Economics, 34(2): 203-220. DOI: 10.1007/s11187-008-9156-4.

20. Ibeh K., Kasem L. (2011). The network perspective and the internationalization of small and medium sized software firms from Syria. Industrial Marketing Management, 40(3): 358-367.

21. Jeannet J.-P., Hennesey H. (2003). Global marketing strategies. Boston, Houghton Mifflin.

22. Johanson J., Vahlne J.E. (1977) The internationalization process of the firm - A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8: 23-32.

23. Johanson J., Vahlne J.E. (2003). Business relationship learning and commitment in the internationalization process. Journal of International Entrepreneurship, 1: 83-101.

24. Kaur S., Sandhu M. (2013). Internationalisation of born global firms: Evidence from Malaysia. Journal of the Asia Pacific Economy, 19(1): 101-136. DOI: 10.1080/13547860.2013.818426.

25. Knight G.A., Liesch P.W. (2016). Internationalization: From incremental to born global. Journal of World Business, 51(1): 93-102.

26. Kollmann T., Christofor J. (2014). International entrepreneurship in the network economy: Internationalization propensity and the role of entrepreneurial orientation. Journal of International Entrepreneurship, 12(1): 43-66. DOI: 10.1007/s10843-013-0118-9.

27. Kotler F., Berger R., Bickhoff N. (2015). The quintessence of strategic management. Russ. transl. Moscow, Alpina Publisher.

28. Leis T. (2024). The influence of decision-making logic on the internationalisation of Born Globals: Bolt. In: Cases on born globals: 112-129. Edward Elgar Publishing.

29. Liesch P.W., Welch C. (2024). Asynchronicities of growth: A process extension to the Uppsala model of internationalisation. Journal of International Business Studies, 1-9.

30. London K. (2010). Multi-market industrial organizational economic models for the internationalization process by small and medium enterprise construction design service firms. Architectural Engineering and Design Management, 6(2): 132-152. DOI: 10.3763/aedm.2009.0111.

31. Meyer K.E., Fang T., Panibratov A., Peng M.W., Gaur A.S. (2023). International business under sanctions. Journal of World Business, 58(2): 101426.

32. Meyer K.E., Nguyen H.V. (2020). Foreign investment strategies and sub-national institutions in emerging markets: Evidence from Vietnam. In: Multinational enterprises and emerging economies: 67-97. Edward Elgar Publishing.

33. Nabi M.N.U., Nyaoro B., Zohora F.T. (2024). Analysing the decision approach of the SME entrepreneurs relating to internationalisation of firms: The study of Kenyan SME entrepreneurs. Journal of Research in Marketing and Entrepreneurship, 26(1): 140-162.

34. Ojala A., Tyrväinen P. (2008). Market entry decisions of US small and medium-sized software firms. Management Decision, 46(2): 187-200. DOI: 10.1108/00251740810854113.

35. Paul J., Parthasarathy S., Gupta P. (2017). Exporting challenges of SMEs: A review and future research agenda. Journal of World Business, 52: 327-342.

36. Peng M.W. (2003). Institutional transitions and strategic choices. Academy of Management Review, 28(2): 275-296.

37. Peng Y.-S., Yang K.-P., Liang C.-C. (2011). The learning effect on business groups’ subsequent foreign entry decisions into transitional economies. Asia Pacific Management Review, 16(1): 1-21.

38. Pinho J. (2007). The impact of ownership: Location-specific advantages and managerial characteristics on SME foreign entry mode choices. International Marketing Review, 24(6): 715-734. DOI: 10.1108/02651330710832676.

39. Root F.R. (1994). Entry strategies for international markets. New York, Lexington Books.

40. Rugman A., Verbeke A. (2004). A perspective on regional and global strategies of MNEs. Journal of International Business Studies, 35(1): 3-18.

41. Santos-Alvarez V., García-Merino T. (2010). The role of the entrepreneur in identifying international expansion as a strategic opportunity. International Journal of Information Management, 30(6), 512-520. DOI: 10.1016/j.ijinfomgt.2010.03.008.

42. Spence M., Manning L., Crick D. (2008). An investigation into the use of collaborative ventures in the internationalization of high performing Canadian SMEs. European Management Journal, 26(6): 412-428. DOI: 10.1016/j.emj.2008.09.006.

43. Vlačić B., González-Loureiro M., Eduardsen J. (2023). The process of the process of internationalisation: Сognitive and behavioural perspectives in small ventures. European Journal of International Management, 19(3): 307-337.

44. Wind Y., Douglas P.S., Perlmutter V.H. (1973). Guidelines for developing international marketing strategies. Journal of Marketing, 37(2): 14-23.

45. Xie Y., Amine L. (2009). Social networks and the internationalization of Chinese entrepreneurs. Global Business and Organizational Excellence, 29(1): 61-78. DOI: 10.1002/joe.20299

46. Zacharakis A.L. (1997). Entrepreneurial entry into foreign markets: A transaction cost perspective. Entrepreneurship Theory and Practice, 21: 23-40.


Review

For citations:


Trachuk A.V., Linder N.V. RUSSIAN SMES’ DECISION TO ENTER FOREIGN MARKETS. Strategic decisions and risk management. 2024;15(3):214-225. https://doi.org/10.17747/2618-947X-2024-3-214-225

Views: 445


ISSN 2618-947X (Print)
ISSN 2618-9984 (Online)