entry mode research and smes: a review and …internal resources may restrict a firm’s choice of...
TRANSCRIPT
Entry Mode Research and SMEs: A Review andFuture Research Agendaby Johan Bruneel and Robin De Cock
Research on SMEs’ entry modes remains limited and is spread across various, often discon-nected research fields using a broad variety of theories, sample characteristics, and methods. Thismakes it challenging for researchers to identify interesting research opportunities. Our study inves-tigates the current state of the SME entry mode literature by conducting a systematic literaturereview of 47 articles. Our review shows that scholars should be more careful when conceptualizingSMEs, and we recommend the use of both quantitative and qualitative longitudinal researchdesigns. We explain how new theories and perspectives might address existing problems and weak-nesses in this literature.
IntroductionEntry mode—the operational form used to
enter foreign markets (Brouthers and Hennart2007)—is a key issue in international businessresearch. Firms may choose to enter foreignmarkets alone through direct exports, in part-nership with other companies via contracts withdistributors, or by making a direct investment ina foreign country (FDI). In the case of equityinvestments, firms must decide on the mode(greenfield or acquisition) as well as the level ofownership (full versus shared ownership)(Dikova and van Witteloostuijn 2007). Researchon entry modes is valuable because entry modechoice is a very important strategic issue for aninternationalizing firm (Pedersen, Petersen, andBenito 2002). First, entry mode choices areimportant as forces of globalization that drivefirms to expand outside their home market toestablish effective firm boundaries (Brouthersand Hennart 2007). Second, entry mode choicehas a considerable influence on the
performance of internationalizing firms(Brouthers 2002; Lu and Beamish 2001;Brouthers and Nakos 2004). Over-investment inforeign markets (Petrou 2009), partners takingadvantage of the firm’s knowledge (Tan, Erra-milli, and Liang 2001), and coordination prob-lems caused by lack of control (Anderson andGatignon 1986) all imply inferior entry modedecisions that may significantly harm the per-formance of an internationalizing firm (Hill,Hwang, and Kim 1990).
While entry mode research has focusedmainly on multinational enterprises (MNEs),studies have increasingly identified specificcharacteristics of small and medium-sized enter-prises (SMEs) that influence not only entrymode choice but also entry mode change, man-agement and outcomes. Compared with MNEs,SMEs have a limited resource base, which exac-erbates the long-term impact of entry modedecisions (e.g., Burgel and Murray 2000;George, Wiklund, and Zahra 2005). This lack of
Johan Bruneel is assistant professor in entrepreneurship at the Department of Managerial Economics, Strategy,and Innovation at KU Leuven and senior researcher at the department of Management, Technology, and Econom-ics at ETH Zurich.
Robin De Cock is postdoc researcher at the Department of Innovation, Entrepreneurship and Service Manage-ment at Ghent University.
Address correspondence to: J. Bruneel, KU Leuven KULAK, Kortrijk, Belgium. E-mail: [email protected].
BRUNEEL AND DE COCK 135
Journal of Small Business Management 2016 54(S1), pp. 135–167
doi: 10.1111/jsbm.12291
internal resources may restrict a firm’s choice ofentry mode and force it to use inexpensivemodes such as exporting or agents (Agndal andChetty 2007). Furthermore, SMEs have differentmanagerial processes and structures that areless rigid, sophisticated and complex (Covielloand Martin 1999). They also tend to interact dif-ferently with their environment (Brouthers andNakos 2004). For example, Li and Qian (2008)find that market dynamics have different effectson the entry mode choices of small and largefirms. Small firms will show a greater preferencefor cooperative entry modes, while large firmswill prefer independent entry modes in dynamicmarkets. Therefore, SMEs will face differentchallenges during the internationalization pro-cess and are likely to make different decisionsfrom large firms. While large firms tend to followpredetermined strategic plans for internationalexpansion, SMEs internationalize in less foresee-able ways, often determined by serendipitousand uncontrollable events (Agndal and Chetty2007; Hutchinson, Quinn, and Alexander 2006).Prater and Ghosh (2005) have shown that largefirms are much more concerned about long-termstrategic planning and prefer strategic alliances,while SMEs use more short-term and informalrelationships to respond quickly to changingbusiness conditions and shorter-term operationalissues. Taken together, these findings show thatthe entry mode strategies of SMEs differ fromthose of their larger counterparts.
Although the literature points to clear dif-ferences in entry mode strategies betweenSMEs and large firms, no study has yet pro-vided a clear and comprehensive overview ofentry mode choices, processes, and outcomesin the context of SMEs. Previous review stud-ies of internationalization provide interestinginsights, but either focus only on the entrymode strategies of large, established compa-nies (e.g., Brouthers and Hennart 2007; Cana-bal and White 2008) or examine SMEinternationalization in general (Coviello andMcAuley 1999; De Clercq et al. 2012; Keuppand Gassmann 2009). This omission is surpris-ing, given that SMEs make a substantial contri-bution to economic development and growth(OECD 2009) and tend increasingly to expandoutside their home markets (George, Wiklund,and Zahra 2005). SME internationalization canbe expected to gain further momentum in anever more globalized world economy (Ripoll�eset al. 2012). Furthermore, the current litera-ture on SMEs’ entry modes is as yet limited,
calling for more extensive research (Brouthers2013; Hennart and Slangen 2014; Maekelbur-ger, Schwens, and Kabst 2012; Pezderka andSinkovics 2011; Ripoll�es and Blesa 2012).Studies in this domain have covered a widevariety of theories, sample characteristics,methods, and entry modes. However, thequestion confronting research scholars in thisfield is where to go from here.
The objectives of this article are twofold.First, we adopt the framework of De Clercqet al.’s (2012) review of the international entre-preneurship literature to review conceptual andempirical studies of the antecedents, processes,and performance outcomes of SME entry modes.We examine how these articles are distributedacross the three phases and explore the emerg-ing themes in the literature. These three phasesform our predetermined analytical frameworkfor a systematic literature review to reveal prob-lems, weaknesses, contradictions and controver-sies (Frank and Hatak 2014). Second, we seekto establish an agenda for future research. Ourreview shows that existing theories and sam-pling methods in the SME entry mode literatureoften lead to contradictory findings that requiredeeper examination and further refinement. Inaddition, the literature on SME entry modeswould benefit from introducing new theories tothe field, such as strategic decision-makingtheory, upper echelon theory, imprintingtheory, and the capability perspective.
Overall, the review offers a number of contri-butions to the literature on entry mode researchin the context of SMEs. First, we contribute tothe SME entry mode literature by pointing outinconsistent results and describing as yet unan-swered issues. Second, our review also showshow methodological and conceptual improve-ments, such as a better conceptualization ofSMEs, the use of longitudinal research designsand different levels of analysis, more consistentdefinitions of entry modes, and solutions toendogeneity issues may improve the field andhelp tackle current challenges in entry moderesearch. Finally, we contribute to the field byintroducing new theories and concepts. Entrymode research might adopt a strategic decision-making perspective to investigate individualantecedents of entry mode choice, or useimprinting theory to analyze how entry modeschange over time, or take a capability perspec-tive to gain a better understanding of the out-comes of entry mode choice.
JOURNAL OF SMALL BUSINESS MANAGEMENT136
MethodWe use a systematic literature review method
to identify, synthesize, and evaluate all relevantstudies using the transparent and replicable pro-cess explained below. Since the existing researchis heterogeneous in terms of theory, methods,and samples, we provide a narrative literaturereview with the objective of revealing problems,weaknesses, contradictions, and controversiesthat offer opportunities for future research (seeproblem identification, Frank and Hatak 2014).In the following sub-sections, we explain ourprocess of selection, screening, assessment, andcategorization of the articles to ensure transpar-ency, focus, and reliability.
Article Screening and SelectionFollowing previous review studies (e.g.,
Brouthers and Hennart 2007; De Clercq et al.2012; Jones, Coviello, and Tang 2011), weincluded only journal articles in our reviewbecause they provide more validated knowledgethan book chapters, dissertations or conferencepapers. In total, we considered five categories ofjournal: entrepreneurship, management, interna-tional business, marketing, and innovation (seeTable 1 for an overview of the journals). The firstfour categories were based on De Clercq et al.(2012), while the fifth was based on Keupp andGassmann’s (2009) review of international entre-preneurship. Entrepreneurship is considered tobe a rapidly growing but relatively young fieldthat has built up a strong knowledge of SMEs, andmore recently of international entrepreneurship.International business is a more established fieldthat is closely related to the management field(Keupp and Gassmann 2009) and is generally themost active in publishing studies on entry modes(Canabal and White 2008). Besides internationalbusiness and international entrepreneurship jour-nals, the field of marketing has proven to be afruitful place for market entry studies (Canabaland White 2008). By combining these five catego-ries of journal, we cross-referenced a broad set ofboth top-ranking and specific journals relevant toour review of SMEs and entry mode research.Two investigators, trained and guided by a seniorinvestigator, screened the journals for relevantarticles published in the last 20 years (1992–2012),as SME entry mode research grew rapidly fromthe beginning of the 1990s. We screened the jour-nals systematically using the following keywords:(1) “SME,” “start-up,” “young firm,” “new ven-ture,” “international entrepreneurship,” “early
internationalization,” “born global,” and “entrymode” in combination with theories and con-structs mentioned in a review of entry moderesearch by Canabal and White (2008); and (2)“transaction cost theory,” “resource-based view,”“institutional theory,” “foreign direct investment,”“licensing,” “exporting,” “performance,” “OLI,”“cultural distance,” “uncertainty,” “control,” “risk,”“capabilities,” and “knowledge.” We also identi-fied additional studies through manual cross-referencing (De Clercq et al. 2012). These proce-dures initially generated 901 articles.
In the second screening of articles, weretained those that addressed SMEs as theirmain subject or included SMEs in their data col-lection. Conceptual articles were included if thediscussion was specifically limited to SMEs orwhen the authors explicitly indicated that thetheoretical framework could also be applied toSMEs. Empirical articles were retained if theyinvestigated entry modes in the context ofSMEs. Empirical papers with mixed samples(both large firms and SMEs) were retainedwhen the authors explicitly stated that the find-ings could be applied to SMEs. As a result ofthis screening, the collection was reduced to245 articles. This procedure was carried out bythe two investigators independently to ensureobjectivity. In case of disagreement, the seniorinvestigator was consulted to reach consensus.
In the third screening, we further limited theset of articles to those that included a discussionof entry modes, articles addressing international-ization in general, without specifically discus-sing entry modes, were therefore removed fromthe set. We observed that a considerable num-ber of articles limited their discussion to SMEsand exporting, and we decided not to retainthese because the focus of our review is on theconcept of entry mode, which extends beyondexporting. Inclusion of these would haveresulted in a review with too great an emphasison exporting and too little on other types ofentry mode. However, articles that consideredexporting in combination with alternative entrymodes were included. The third and finalscreening resulted in a final set of 47 articles, ofwhich 13 were published in entrepreneurshipjournals, four in management journals, 13 ininternational business journals and 17 in mar-keting journals.
Article Analysis and CategorizationThe 47 articles were content analyzed and
coded relative to a predetermined analytical
BRUNEEL AND DE COCK 137
Table 1Overview Journals
Journal Conceptualarticles
Quantitativearticles
Qualitativearticles
Total
Entrepreneurship JournalsEntrepreneurship and Regional Development 0 0 0 0Entrepreneurship: Theory and Practice 1 2 0 3International Small Business Journal 0 1 1 2Journal of Business Venturing 0 0 0 0Journal of International Entrepreneurship 0 3 2 5Journal of Small Business and
Enterprise Development0 0 0 0
Journal of Small Business Management 0 2 0 2Small Business Economics 0 1 0 1Management JournalsAcademy of Management Journal 0 2 0 2Academy of Management Review 0 0 0 0Administrative Science Quarterly 0 0 0 0Canadian Journal of Administrative Sciences 0 0 0 0Journal of Management 0 0 0 0Journal of Management Studies 0 1 0 1Management Science 0 0 0 0McKinsey Quarterly 0 0 0 0Organization Science 0 0 0 0Scandinavian Journal of Management 0 0 0 0Sloan Management Review 0 0 0 0Strategic Management Journal 0 1 0 1International Business JournalsHarvard Business Review 0 0 0 0International Business Review 2 3 1 6Journal of Business Research 0 1 0 1Journal of International Business Studies 2 1 0 3Journal of International Management 0 0 0 0Journal of World Business 0 2 0 2Management International Review 0 0 0 0Multinational Business Review 1 0 0 1Review of World Economics 0 0 0 0Marketing JournalsAdvances in International Marketing 0 1 0 1European Journal of Marketing 0 1 1 2Industrial Marketing Management 0 1 0 1International Marketing Review 1 2 1 4Journal of International Marketing 2 3 3 8Journal of Marketing 0 1 0 1Journal of Marketing Research 0 0 0 0Journal of the Academy of Marketing Science 0 0 0 0Innovation JournalsEuropean Research 0 0 0 0Journal of Product Innovation Management 0 0 0 0Research Policy 0 0 0 0Total 9 29 9 47
JOURNAL OF SMALL BUSINESS MANAGEMENT138
framework. Similarly to De Clercq et al. (2012),the articles were coded depending on whichstage of entry mode strategy they addressed: (1)antecedents of first entry mode choice, (2) proc-esses following first entry mode choice, and(3) outcomes of entry mode choice. Next, wecoded each article according to the key per-spective used to frame the discussion of thesethree stages of entry mode choice. Buildingon Brouthers and Hennart (2007), we consid-ered five key perspectives used in studies offirm internationalization: transaction costtheory (TCE), eclectic theory (OLI), resource-based view (RBV), stage theory (STAGE), andnetwork approach (NA).1 We also coded thearticles as either conceptual (9 articles) orempirical (38 articles). For the nine conceptualarticles, we described the theoretical perspec-tives and central ideas. The empirical articleswere coded as either quantitative (29) or qual-itative (9), and we recorded information about(1) sample specifications, (2) home country,(3) nature of data collection (cross-sectional/longitudinal), (4) supported predictions relat-ing to antecedents, processes, and outcomesof entry mode, and (5) unsupported predic-tions. We collated this information in tablesorganized by phase and by type of article:conceptual, empirical qualitative, and empiri-cal quantitative (see Tables 2–4).
Following previous studies (e.g., Keupp andGassmann 2009; Street and Cameron 2007), weclassified the antecedent, process, and outcomevariables into conceptual groups. Groups wereretained if they appeared in at least two articlesincluded in our review. Figure 1 provides anoverview of these groups in each entry modephase. The acronyms in each block of Figure 1refer to the underlying key perspective.
Review of SMEs and EntryMode Research: Antecedents,Processes, and Outcomes
We found that 38 articles (81 percent of allarticles) discussed the antecedents of entrymode choice, while 14 (30 percent) discussedentry processes, and 10 (21 percent) discussedthe performance implications of entry mode
decisions. We discuss the main findings by stageof entry mode below.
Antecedents to Entry Mode ChoiceThe most common types of antecedent are
embedded in TCE and OLI. Two TCE-relatedconcepts surface as important factors influenc-ing entry mode choice: environmental uncer-tainty at the level of industry and country, andasset specificity. The results regarding a relation-ship between environmental uncertainty andentry mode choice are inconclusive. In line withTCE predictions, the findings of most articlesare that SMEs tend to prefer non-equity entrymodes when environmental uncertainty is high(Bradley and Gannon 2000; Brouthers andNakos 2004; Li and Qian 2008), as partnershipsspread SMEs’ risks and thereby reduce theirdirect exposure to uncertainty in foreign mar-kets. However, one study has shown thatgreater uncertainty leads to equity-based entrymodes, as these allow more adaptive decisionmaking than partnership-based entry modes(McNaughton 1996). Results regarding the influ-ence of asset specificity on entry mode choiceare in line with TCE predictions, as SMEs optfor high-control entry modes when asset speci-ficity is high to gain greater control over the useof their knowledge (Bradley and Gannon 2000;Brouthers and Nakos 2004; McNaughton 1996).Some studies have established a link betweenthese two concepts by showing that greaterenvironmental uncertainty strengthens thechoice of high-control entry modes when assetspecificity is high (Erramilli and Rao 1993;Maekelburger, Schwens, and Kabst 2012).
Research using OLI has shown the impor-tance of ownership and location advantages.SMEs with greater ownership and locationaladvantages are more likely to adopt equity-based entry modes (Bradley and Gannon 2000;Brouthers, Brouthers, and Werner 1996; Pinho2007; Shrader, Oviatt, and McDougall 2000). Inan interesting extension to the above-mentionedstudies, Pezderka and Sinkovics (2011) haveconsidered “active online internationalization”as an entry mode in the context of online busi-nesses. In contrast to traditional entry modessuch as partnerships or subsidiaries, active
1Not every article included in this review adopted one of these five perspectives. Five papers employed analternative theory, such as institutional theory (Huang and Sternquist 2007), or the business model literature(Ojala and Tyrv€ainen 2006) to frame the study. We indicate clearly in Tables 2, 3, and 4 which theories wereadopted in each article.
BRUNEEL AND DE COCK 139
Tab
le2
Conce
ptu
alA
rtic
les
(9)
Auth
ors
Th
eori
esFocu
sC
entr
alid
eas
Zac
har
akis
1997
TC
E,A
gency
theo
ryM
anag
emen
t-
Par
tner
ship
sto
ente
rfo
reig
nm
arket
sal
low
sle
vera
geof
reso
urc
esfo
ren
trep
reneu
rial
firm
s-
Both
entr
epre
neu
rial
firm
san
dex
port
agen
tsw
illtr
yto
reduce
thei
rri
skby
usi
ng
contr
acts
-Entr
epre
neu
rial
firm
sw
illpre
fer
outc
om
e-bas
edco
ntr
acts
wher
eas
export
agen
tsw
illpre
fer
beh
avio
r-bas
ed-
Bondin
gst
ipula
tions
will
be
incl
uded
inth
eco
ntr
acts
tore
conci
leth
ediffe
rent
pre
fere
nce
sin
contr
act
type
bet
wee
nen
trep
reneu
rial
firm
san
dfo
reig
nex
port
agen
tsM
alhotr
a,A
garw
al,
and
Ulg
ado
2003
IPLC
,M
arket
imper
fect
ions
theo
ry,St
rate
gic
beh
avio
rth
eory
,R
BV
,TC
E,O
LIth
eory
,St
age
theo
ry,N
etw
ork
appro
ach
Chan
ge,ch
oic
e,m
anag
emen
t-
The
fore
ign
mar
ket
entr
ym
ode
(FM
E)
choic
esh
ifts
asa
pro
duct
pro
-gr
esse
sth
rough
diffe
rent
IPLC
phas
es:new
(exp
ort
ing)
,m
aturi
ty(c
ontr
actu
alag
reem
ents
),st
andar
diz
atio
n(F
DI)
-M
oder
atin
gin
fluen
ces
on
FME
choic
e:m
arket
risk
fact
ors
,gl
obal
stra
tegi
cfa
ctors
,tr
ansa
ctio
n-s
pec
ific
fact
ors
,go
vern
men
tim
pose
dfa
ctors
-Sm
allfirm
sw
illuse
contr
actu
alag
reem
ents
asFM
Ech
oic
eto
ove
r-co
me
reso
urc
eco
nst
rain
tsan
dac
cele
rate
inte
rnat
ional
expan
sion
Gao
2004
Plu
ralis
mgo
ver-
nan
ceper
spec
tive
Choic
e-
Intr
oduce
bar
gain
ing
pow
eran
dtr
ust
asnon-e
quity
sourc
esof
con-
trolin
FME
choic
e-
Hig
her
bar
gain
ing
pow
er/t
rust
will
low
erth
enee
dfo
rco
ntr
ol
thro
ugh
equity
invo
lvem
ent
-Fi
rms
with
limited
reso
urc
esca
nm
ake
use
of
thes
enon-e
quity
sour-
ces
of
contr
olto
ente
rfo
reig
nm
arket
s,w
hic
hoth
erw
ise
would
not
be
consi
der
edEkel
edo
and
Siva
-kum
ar20
04R
BV
Choic
e-
Dig
ital
serv
ice
firm
sw
illfa
vor
export
ing
and
licen
sing
wher
eas
par
tial
-dig
ital
serv
ice
firm
sw
illfa
vor
full
ow
ner
ship
or
fran
chis
ing
asFM
Ech
oic
e-
Firm
ssi
zehas
no
effe
cton
the
FME
choic
eof
dig
ital
serv
ice
firm
sw
her
eas
smal
lpar
tial
-dig
ital
serv
ice
firm
sw
illfa
vor
licen
sing
and
join
tve
ntu
res
JOURNAL OF SMALL BUSINESS MANAGEMENT140
Tab
le2
Con
tin
ued
Auth
ors
Th
eori
esFocu
sC
entr
alid
eas
Jones
and
Covi
ello
2005
Inte
rnat
ional
iza-
tion
theo
ry,
Entr
epre
neu
r-sh
ipth
eory
Choic
e,ch
ange
-FM
Ech
oic
ean
dch
ange
isin
fluen
ced
by
inte
rnal
and
exte
rnal
envi
-ro
nm
enta
ltr
igge
rsan
das
par
tof
anad
apta
tion
pro
cess
inre
sponse
toorg
aniz
atio
nal
lear
nin
g-
FME
of
entr
epre
neu
rial
firm
sre
pre
sents
the
exte
nt
of
inte
rnat
ional
i-za
tion
beh
avio
r-
Import
ant
influen
ceof
the
entr
epre
neu
rin
shap
ing
inte
rnat
ional
iza-
tion
beh
avio
rA
khte
ran
dR
oble
s20
06TC
E,R
BV
Choic
e-
Hig
hin
tern
alco
mpet
ency
,gr
eate
rcu
ltura
lco
nte
xtsi
mila
rity
,an
dhig
her
per
ceiv
edin
tern
alunce
rtai
nty
lead
sto
alo
wer
pro
pen
sity
touse
aco
llabora
tive
mode
of
FME
-G
reat
erorg
aniz
atio
nal
culture
sim
ilari
tyan
dhig
her
per
ceiv
edex
ter-
nal
unce
rtai
nty
lead
sto
ahig
her
pro
pen
sity
touse
aco
llabora
tive
mode
of
FME
Huan
gan
dSt
ern-
quis
t20
07In
stitutional
theo
ryC
hoic
e-
FME
choic
eis
influen
ced
by
coer
cive
,norm
ativ
e,an
dm
imet
icis
om
orp
his
m-
Diffe
rent
types
of
isom
orp
his
mar
ere
flec
ted
indiffe
rent
dim
ensi
ons
of
the
inst
itutional
envi
ronm
ent:
regu
lative
(law
and
gove
rnm
ent
pol-
icy)
,norm
ativ
e(n
atio
nal
and
busi
nes
scu
lture
),co
gnitiv
e(o
rgan
iza-
tional
impri
nting
and
imitat
ion)
Johan
son
and
Vah
lne
2009
Stag
eth
eory
,net
-w
ork
appro
ach
Choic
e,ch
ange
-The
inte
rnat
ional
izat
ion
pro
cess
dep
ends
on
the
firm
’sre
lationsh
ips
and
net
work
posi
tion
-B
usi
nes
sre
lationsh
ips
impac
ta
firm
’sch
oic
eof
FME
-C
han
gein
rela
tionsh
ipco
mm
itm
ent
will
be
visi
ble
inch
ange
inFM
EPez
der
ka
and
Sin-
kovi
cs20
11O
LIC
hoic
e,per
form
ance
-D
evel
ops
afr
amew
ork
on
how
OLI
-fac
tors
influen
ceth
ech
oic
ebet
wee
nonlin
eve
rsus
trad
itio
nal
FME
mode
-A
rgues
aposi
tive
rela
tionsh
ipbet
wee
nO
LI-p
redic
ted
FME
choic
ean
dper
form
ance
-Per
ceiv
edin
tern
atio
nal
e-ri
skis
anim
port
ant
moder
ator
influen
cing
FME
choic
ean
dsu
bse
quen
tper
form
ance
BRUNEEL AND DE COCK 141
Tab
le3
Qual
itat
ive
Em
pir
ical
Art
icle
s(9
)
Auth
or
Th
eory
Focu
sSa
mp
leH
om
eD
ata
Fin
din
gs
Covi
ello
and
Munro
1997
Stag
eth
eory
,N
etw
ork
appro
ach
Choic
e,ch
ange
Softw
are
SMEs,
size
range
:25
–140
FTEs,
age
range
:13
–18
year
s
New
Zea
land
Cro
ss-s
ectional
case
s:4
SMEs
-In
itia
lFM
Em
ode
isth
ere
sult
of
leve
ragi
ng
the
initia
lre
lationsh
ipw
ith
ala
rger
firm
-C
han
geof
FME
modes
isre
sult
of
dev
elop-
men
tof
net
work
of
info
rmal
and
form
alco
nta
cts
Covi
ello
and
Mar
tin
1999
TC
E,St
age
theo
ry,
Net
work
appro
ach
Choic
e,ch
ange
Know
ledge
-bas
edse
rvic
eSM
Es
size
range
:23
–250
FTEs,
age
range
:5–
25
New
Zea
land
Cro
ss-s
ectional
case
s:4
SMEs
-In
itia
lFM
Em
ode
isex
port
ing,
subse
quen
tFM
Em
odes
evolv
eto
allia
nce
sor
join
tve
ntu
res
-FM
Em
ode
choic
ean
dch
ange
isst
rongl
yin
fluen
ced
by
net
work
rela
tionsh
ips
-Fo
rmal
clie
nt-se
rvic
epro
vider
exch
ange
rela
tionsh
ipem
erge
sfr
om
the
SME’s
info
r-m
alan
dfo
rmal
net
work
rela
tionsh
ips
Bel
l,C
rick
,an
dY
oung
2004
Busi
nes
sst
rate
gyC
hoic
e,ch
ange
Indep
enden
tknow
ledge
-bas
edan
dtr
aditio
nal
man
ufa
cturi
ng
SMEs,
size
<25
0FT
Es
United
Kin
gdom
Cro
ss-s
ectional
case
s:10
SMEs
-N
etw
ork
rela
tionsh
ips
influen
ceFM
Em
ode
choic
eth
rough
pre
exis
ting
conta
cts
of
dec
isio
n-m
aker
san
dcl
ient-fo
llow
ersh
ip-
The
influen
ceof
rela
tionsh
ips
on
FME
mode
choic
eis
hig
her
among
know
ledge
-in
tensi
veSM
Es
-K
now
ledge
-inte
nsi
veSM
Es
chan
geto
hig
her
/oth
erco
mm
itm
ent
modes
while
trad
itio
nal
SMEs
pre
fer
usi
ng
low
com
mit-
men
tFM
Es
Obad
iaan
dV
ida
2006
TC
E,
Age
ncy
theo
ry
Man
agem
ent,
Per
form
ance
Var
ious
indust
rial
SMEs,
size
range
:35
–200
Arg
entina
(2),
Fran
ce(2
),B
razi
l,C
olo
mbia
,Is
rael
,Sw
itze
rlan
d,
Uru
guay
,U
nited
Kin
gdom
Cro
ss-s
ectional
case
s:10
SMEs
-The
scop
ean
dsi
zeof
the
asse
tsof
SME’s
fore
ign
subsi
dia
ries
and
insu
ffic
ientin
cen-
tives
can
caus
eop
por
tuni
stic
beh
avio
r;in
for-
mat
ion
asym
met
rybet
wee
npar
entSM
Es
and
subsi
diar
ies
rein
forc
esth
ese
effe
cts
-The
econom
icper
form
ance
of
afo
reig
nsu
bsi
dia
ryof
anSM
Eis
neg
ativ
ely
affe
cted
by
endoge
nous
(intr
a-firm
)opport
unis
m
JOURNAL OF SMALL BUSINESS MANAGEMENT142
Tab
le3
Con
tin
ued
Auth
or
Th
eory
Focu
sSa
mp
leH
om
eD
ata
Fin
din
gs
Hutc
hin
son,
Quin
n,an
dA
lexa
nder
2006
RB
V,
Net
work
appro
ach,
Stag
eth
eory
Choic
eR
etai
ler
SMEs
Max
.sa
les
turn
ove
rof
£24
mill
ion
United
Kin
gdom
Cro
ss-s
ectional
vase
s:9
SMEs
in4
diffe
rent
sect
ors
-Im
port
ant
fact
or
influen
cing
FME
choic
eis
reso
urc
eav
aila
bili
ty-
SMEs
emphas
ize
the
influen
ceof
the
leve
lof
cost
invo
lved
and
the
amount
of
risk
inFM
Ech
oic
e-
low
-contr
olFM
Es
seem
tobe
more
attr
ac-
tive
:ex
port
ing,
licen
sing,
whole
sale
,an
ddis
trib
ution
agre
emen
ts-
When
pro
duct
asse
tan
dbra
nd
excl
usi
vity
are
import
ant,
SMEs
chose
for
FDI
Chet
tyan
dA
gndal
2007
Net
work
appro
ach
Chan
geH
igh-
and
low
-te
chnolo
gym
anu-
fact
uri
ng
SMEs,
size
<25
0FT
Es
Swed
en(1
0)N
ewZea
land
(10)
Cro
ss-s
ectional
case
s:20
SMEs
-The
effica
cy,se
rendip
ity,
and
liabili
tyro
leof
soci
alca
pital
of
aSM
Etr
igge
rsa
chan
geof
FME
mode
-Eff
icac
yan
dlia
bili
tyro
les
are
more
likel
yto
chan
geto
hig
her
contr
olm
odes
-Se
rendip
ity
role
induce
sch
ange
toboth
incr
easi
ng
and
dec
reas
ing
contr
olm
odes
Agn
dal
and
Chet
ty20
07
Net
work
appro
ach
Chan
geM
anufa
cturi
ng
SMEs,
size
<25
0FT
Es,
Foundin
gye
arra
nge
sfr
om
1938
to19
96
Swed
en,
New
Zea
land
Cro
ss-s
ectional
case
s:20
SMEs
-M
ajori
tyof
FME
mode
chan
gein
volv
esa
switch
tohig
her
com
mitm
ent
mode,
oft
ena
chan
gefr
om
dis
trib
uto
rto
sale
ssu
bsi
dia
ry-
Busi
nes
sre
lationsh
ips
are
more
likel
yto
influen
cea
chan
geof
FME
than
soci
alre
lationsh
ips
-D
irec
tre
lationsh
ips
are
more
likel
yth
anin
dir
ect
rela
tionsh
ips
toin
fluen
ceFM
Ech
ange
sbec
ause
of
ast
ronge
rim
puls
efo
rch
ange
-C
han
geis
most
oft
entr
igge
red
by
anin
di-
rect
rela
tionsh
ipw
ith
ath
ird
par
tyorg
aniz
atio
ns
BRUNEEL AND DE COCK 143
Tab
le3
Con
tin
ued
Auth
or
Th
eory
Focu
sSa
mp
leH
om
eD
ata
Fin
din
gs
Oja
laan
dTyr
v€ ain
en20
06
Busi
nes
sm
odel
Choic
eso
ftw
are
SMEs,
size
<50
0FT
Es
Finla
nd
Cro
ss-s
ectional
case
s:ei
ght
SMEs
-Pro
duct
stra
tegy
mat
ters
for
FME
choic
e:ta
ilore
dpro
duct
sso
ldvi
are
pre
senta
tive
s,se
mi-st
andar
diz
edpro
duct
sso
ldvi
asa
les
subsi
dia
ries
,an
dm
ass-
mar
ket
pro
duct
sso
ldvi
aco
oper
ativ
eFM
Es
-O
ther
busi
nes
sm
odel
elem
ents
(rev
enue
logi
c,se
rvic
ean
dim
ple
men
tation
model
,dis
trib
ution
model
)sh
ow
edw
eak
or
no
connec
tion
toth
eFM
Em
ode
Kontinen
and
Oja
la20
11N
etw
ork
appro
ach
Choic
e,ch
ange
Fam
ily-o
wned
man
ufa
cturi
ng
SMEs
with
size
<25
0em
plo
yees
Finla
nd
Cro
ss-s
ectional
case
s:ei
ght
SMEs
-In
itia
lFM
Em
ode
isex
port
ing,
whic
hev
olv
esto
hig
her
com
mitm
ent
modes
ove
rtim
e-
For
initia
lFM
E,SM
Es
with
stro
ng
ties
take
on
aef
fica
cyro
leof
soci
alca
pital
wher
eas
wea
kties
are
rela
ted
toth
ese
rendip
ity
role
of
soci
alca
pital
-Post
-entr
y,th
ero
leof
stro
ng
and
form
alties
isim
port
ant
for
FME
mode
chan
gean
dso
cial
capital
gener
ally
had
effica
cyan
dlia
bili
tyro
les
JOURNAL OF SMALL BUSINESS MANAGEMENT144
Tab
le4
Quan
tita
tive
Em
pir
ical
Art
icle
s(2
9)
Auth
or
Th
emes
Focu
sSa
mp
lesp
ecif
icat
ions
Hom
eD
ata
Sup
port
edp
redic
tions
Unsu
pp
ort
edp
redic
tions
Err
amill
ian
dR
ao19
93TC
EC
hoic
eSe
rvic
efirm
s;30
.4per
cent
of
sam
ple
firm
sar
eSM
Es
United
Stat
esC
ross
-sec
tional
surv
ey:11
4firm
s
-Se
rvic
eSM
Es
favo
rsh
ared
-contr
olFM
Em
odes
more
when
asse
tsp
ecific
ity
islo
w-
This
inte
nsi
fies
when
(1)
serv
ices
are
inse
par
able
,(2
)w
ith
incr
easi
ng
countr
yri
sk,an
d(3
)as
SMEs
bec
om
esm
alle
r
-C
ultura
ldis
tance
does
not
stre
ngt
hen
the
inve
rse
rela
tionsh
ipbet
wee
nas
set
spec
ific
ity
and
choic
efo
rsh
ared
-contr
olFM
Em
ode
Bel
l19
95St
age
theo
ry,
Net
work
appro
ach
Choic
e,ch
ange
Smal
l,in
dep
enden
tso
ftw
are
SMEs;
size
<20
0FT
Es
Finla
nd,
Irel
and,
Norw
ay
Cro
ss-s
ectional
surv
ey:88
SMEs
-Exp
ort
ing
ispre
ferr
edFM
Em
ode
-SM
Es
are
not
likel
yto
chan
geth
eir
FME
mode
-C
hoic
eof
FME
mode
rest
rict
sm
any
of
the
(lar
ger)
SMEs
inte
rnat
ional
expan
-si
on
capab
ilities
Mcn
augh
ton
1996
TC
EC
hoic
eSo
ftw
are
firm
sof
whic
h70
per
cent
has
less
than
25FT
Es
Can
ada
Cro
ss-s
ectional
surv
ey:11
2firm
s
-C
han
nel
volu
me
isposi
tive
lyas
soci
ated
with
the
use
of
fore
ign
sale
ssu
bsi
dia
-ri
esan
dneg
ativ
ely
asso
ciat
edw
ith
the
use
of
shar
edco
ntr
olm
odes
-A
sset
spec
ific
ity
isneg
ativ
ely
asso
ciat
edw
ith
the
use
of
join
tve
ntu
res
and
posi
-tive
lyas
soci
ated
with
the
use
of
fore
ign
sale
ssu
bsi
dia
ries
-M
arket
vola
tilit
yis
posi
tive
lyas
soci
ated
with
the
use
of
fore
ign
sale
ssu
bsi
dia
ries
-D
iver
sity
isnot
asso
ciat
edw
ith
choic
eof
mar
ket
chan
nel
-V
ola
tilit
yis
not
asso
ciat
ew
ith
the
use
of
shar
edco
ntr
olm
odes
Bro
uth
ers,
Bro
uth
ers,
and
Wer
ner
1996
OLI
Choic
eU
.S.-bas
edco
mpute
rso
ftw
are
SMEs,
annual
sale
sra
nge
:1
mill
ion
to1
bill
ion
United
Stat
esC
ross
-sec
tional
surv
ey:25
SMEs
-O
wner
ship
adva
nta
ges
are
posi
tive
lyas
soci
ated
with
use
of
more
inte
grat
edFM
Em
odes
-Per
ception
of
loca
tional
adva
nta
ges
are
posi
tive
lyas
soci
ated
with
the
use
of
more
inte
grat
edFM
Em
odes
Burg
elan
dM
urr
ay20
00
Stag
eth
eory
,TC
E,
RB
V
Choic
eH
igh-tec
hst
art-ups,
age�
10ye
ars
United
Kin
gdom
Cro
ss-s
ectional
surv
ey:24
6SM
Es
-SM
Esi
zeis
posi
tive
lyas
soci
ated
with
the
use
of
inte
rmed
iari
es-
SMEs
usi
ng
dis
trib
uto
rsdom
estica
llyar
em
ore
likel
yto
use
inte
rmed
iari
es-
clie
nt-sp
ecific
cust
om
izat
ion
isneg
a-tive
lyas
soci
ated
with
the
use
of
inte
rmed
iari
es
-SM
Ean
dm
anag
eria
lin
tern
atio
nal
exper
ience
,te
chnolo
gym
aturi
ty,
and
tran
sact
ion
cost
sar
enot
asso
ci-
ated
with
the
use
of
inte
rmed
iari
es
BRUNEEL AND DE COCK 145
Tab
le4
Con
tin
ued
Auth
or
Th
emes
Focu
sSa
mp
lesp
ecif
icat
ions
Hom
eD
ata
Sup
port
edp
redic
tions
Unsu
pp
ort
edp
redic
tions
Bra
dle
yan
dG
annon
2000
TC
E,O
LIC
hoic
eco
mpute
ran
dfu
rni-
ture
com
pan
ies
Den
mar
k,
Ger
man
y,Ir
elan
d,
United
Kin
gdom
Cro
ss-s
ectional
surv
ey:10
5firm
sof
whic
h79
are
SMEs
-M
arket
div
ersi
fica
tion(c
once
ntr
atio
n)
stra
tegy
isposi
tive
lyas
soci
ated
with
the
choic
efo
ra
low
-contr
ol(
hig
h-c
on-
trol)
FME
mode
-D
eman
dunce
rtai
nty
isposi
tive
lyas
so-
ciat
edw
ith
the
choic
efo
ra
low
-contr
ol
FME
mode
-H
igh-tec
h(h
igh-touch
)pro
duct
sar
eposi
tive
lyas
soci
ated
with
the
choic
efo
ra
hig
h-c
ontr
ol(l
ow
contr
ol)
FME
mode
-The
amount
of
upst
ream
activi
tyof
the
SME
isnot
asso
ciat
edw
ith
the
choic
efo
ra
hig
h-c
ontr
olFM
Em
ode
Shra
der
,O
viat
t,an
dM
cDouga
ll20
00
OLI
Choic
eN
ewve
ntu
res,
alm
ost
90per
cent
hig
h-tec
h,ag
e:�
6ye
ars
old
United
Stat
esA
rchiv
al:87
SMEs
-V
entu
res
that
exper
ience
acce
lera
ted
inte
rnat
ional
izat
ion
chose
less
com
mit-
ted
FME
modes
-N
um
ber
of
fore
ign
mar
ket
sen
tere
dis
neg
ativ
ely
asso
ciat
edw
ith
FME
com
mitm
ent
Mcn
augh
ton
and
Bel
l20
00
TC
EC
han
geSo
ftw
are
SMEs
Mea
nsi
zeof
37FT
Es
Can
ada
Cro
ss-s
ectional
surv
ey:12
0SM
Es
-Sw
itch
ing
toa
low
erco
ntr
olm
ode
isneg
ativ
ely
asso
ciat
edw
ith
know
ledge
-bas
edas
set
spec
ific
ity,
inve
stm
ent
nee
ded
inphys
ical
asse
ts,an
dth
ere
la-
tive
contr
ibution
of
am
arket
toove
rall
sale
-Sw
itch
ing
toa
low
erco
ntr
olm
ode
isposi
tive
lyas
soci
ated
with
mar
ket
div
ersi
ty
-Sw
itch
ing
toa
low
erco
ntr
olm
ode
isnot
asso
ciat
edw
ith
vola
tilit
y,th
ecu
stom
softw
are
segm
ent,
and
the
U.S
.m
arket
-Sw
itch
ing
toa
low
erco
ntr
olm
ode
isnot
asso
ciat
edw
ith
the
pac
kag
edso
ftw
are
segm
ent
and
ove
rsea
sm
arket
s
Zah
ra,Ir
elan
d,
and
Hitt
2000
RB
VPer
form
ance
Corp
ora
tean
dpri
-va
tely
ow
ned
hig
h-tec
hnolo
gynew
ventu
res�
6ye
ars
United
Stat
esA
rchiv
aldat
aan
dcr
oss
-se
ctio
nal
surv
ey:32
1SM
Es
-H
igh-c
ontr
olFM
Em
odes
are
posi
tive
lyas
soci
ated
with
the
bre
adth
,dep
th,an
dsp
eed
of
tech
nolo
gica
lle
arnin
g-
Know
ledge
inte
grat
ion
enhan
ces
the
effe
cts
of
hig
h-c
ontr
olFM
Em
odes
on
the
bre
adth
,dep
th,an
dsp
eed
of
tech
-nolo
gica
lle
arnin
g-
Lice
nsi
ng
and
export
sar
eposi
tive
lyas
soci
ated
with
RO
E-
Acq
uis
itio
ns,
licen
sing,
and
export
sar
eposi
tive
lyas
soci
ated
with
sale
sgr
ow
th
JOURNAL OF SMALL BUSINESS MANAGEMENT146
Tab
le4
Con
tin
ued
Auth
or
Th
emes
Focu
sSa
mp
lesp
ecif
icat
ions
Hom
eD
ata
Sup
port
edp
redic
tions
Unsu
pp
ort
edp
redic
tions
Luan
dB
eam
-is
h20
01TC
E,
Net
work
appro
ach
Per
form
ance
19in
dust
ries
,SM
Es
with
export
activ-
itie
s,si
zera
nge
:58
–499
FTEs
Japan
Arc
hiv
al,lo
ngi
-tu
din
aldat
a,16
4SM
Es,
19se
ctors
-Ther
eis
aU
-shap
edre
lationsh
ipbet
wee
nth
ele
velof
FDI
and
per
form
ance
-The
num
ber
of
allia
nce
sw
ith
host
countr
ypar
tner
shas
aposi
tive
influ-
ence
and
the
num
ber
of
allia
nce
sw
ith
hom
eco
untr
ypar
tner
shas
aneg
ativ
ein
fluen
ceon
the
per
form
ance
-Exp
ort
ing
activi
ties
hav
ea
neg
ativ
em
oder
atin
gin
fluen
ceon
the
rela
tion-
ship
bet
wee
nFD
Ian
dper
form
ance
of
anSM
E
-The
leve
lof
export
ing
activi
ties
isneg
ativ
eas
soci
ated
with
per
form
ance
Nak
os
and
Bro
uth
ers
2002
OLI
Choic
em
anufa
cturi
ng
and
serv
ice
SMEs,
size
<50
0FT
Es
Gre
ece
Cro
ss-s
ectional
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Tab
le4
Con
tin
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Auth
or
Th
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Focu
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lesp
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online internationalization takes place in the vir-tual domain (Yamin and Sinkovics 2006). Sur-prisingly, few studies have included onlinemarket entry in their analysis of SME entrymode decisions, even though SMEs are morelikely than larger firms to adopt online marketentry (Pezderka and Sinkovics 2011).
Studies using RBV have echoed the findingsof studies employing TCE and OLI: SMEs tendto prefer full-ownership entry modes to protectresource-based advantages such as proprietaryknowledge and capabilities (Akhter and Robles2006; Ekeledo and Sivakumar 2004). Knowl-edge and capabilities have a tacit componentwhich may result in value erosion or loss ofcompetitive advantage when transferred to part-ners (Ripoll�es and Blesa 2012). This relationshipis stronger when the level of uncertainty in thehost market is higher (Schwens, Eiche, andKabst 2011). However, results for the level ofSME resources are inconclusive. Whereas Hutch-inson, Quinn, and Alexander (2006) have shownthat limited resource availability may force SMEsto adopt low-control entry modes, Gleason and
Wiggenhorn (2007) have found that, contrary totheir expectation, larger firms tend to preferjoint ventures over acquisitions.
Finally, some studies have emphasized therole of networks to explain the use of differenttypes of entry mode early in the internationaliza-tion of SMEs, especially those operating inknowledge-intensive industries (e.g., Bell, Crick,and Young 2004). Rather than following astaged internationalization process (Johansonand Vahlne 1977), these studies have shownthat SMEs tend to internationalize early on,using a broad set of entry modes (e.g., Eriksson,Hohenthal, and Lindbergh 2006; Ibeh et al.2004; Prater and Ghosh 2005). The importantrole of networks of formal and informal rela-tionships in the entry mode choices ofknowledge-intensive SMEs has been furtherestablished in several empirical articles usingcase study designs (Coviello and Martin 1999;Coviello and Munro 1997; Kontinen and Ojala2011).
In summary, we note that TCE and OLIare the most frequently used theoretical
Figure 1Literature Overview Framework
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perspectives, followed by RBV and NA. Assetspecificity (TCE), ownership and location advan-tages (OLI), and networks (NA) are importantpredicators of entry mode choice. Comparedwith MNEs, SMEs have lower resource availabil-ity and restricted information-collecting andinformation-processing capabilities, whichmeans that they interact differently with theirenvironment (Li and Qian 2008). However, howthese factors influence SMEs’ entry mode choiceand their approach to environmental uncertaintyremains unclear.
Processes Following Entry Mode ChoiceThe literature on processes following SMEs’
entry mode choices encompasses (1) entrymode change and/or (2) management of entrymodes. Entry mode change is strongly influ-enced by both formal and informal networkrelationships (Coviello and Munro 1997) and bychanges in relationship commitment (Johansonand Vahlne 2009). Network relationships allowSMEs to move quickly to high entry modes suchas sales subsidiaries, enabling them to leapfrogstages in the internationalization process (Bell1995; Coviello and Martin 1999; Coviello andMunro 1997). However, existing studies havebeen based on samples of software- andknowledge-based service SMEs. Studies in thecontext of manufacturing SMEs have found con-tradictory results, as they conclude that mostentry mode changes involve a switch to highercommitment modes such as sales subsidiaries(Agndal and Chetty 2007; Chetty and Agndal2007; Kontinen and Ojala 2011).
Changes in entry mode are primarily theresult of reactions by SMEs to pressure from for-mal relationships (Agndal and Chetty 2007).SMEs typically move to sales subsidiaries inresponse to problems with distributors, such asunsatisfactory performance or opportunisticbehavior. This role of network relationships ininducing entry mode change reflects the liabilityrole of social capital (Chetty and Agndal 2007).In addition, SME’s network relationships mayalso induce changes in entry mode as a result oftheir usefulness (efficacy role) or by generatingunexpected opportunities for change (serendip-ity role). Kontinen and Ojala (2011) providesupport for these roles of social capital in entrymode change in the context of family SMEs.
However, it is not only SMEs’ networks thatinfluence entry mode changes. Building on RBVand international product life-cycle theory(IPLC), conceptual work indicates that entry
mode changes may also be shaped by matura-tion of SMEs’ products (Malhotra, Agarwal, andUlgado 2003). Empirical evidence suggests thatSMEs tend to switch to lower-control entrymodes when knowledge-based assets can beprotected and when there is little investment inproduct marketing (McNaughton and Bell2000). These studies have also shown importantdifferences between knowledge-based and tradi-tional manufacturing SMEs. Knowledge-basedSMEs exhibit a higher propensity to changefrom direct and indirect exporting to higher-commitment modes, whereas traditional manu-facturing SMEs follow the predictions of STAGE(Bell, Crick, and Young 2004).
Studies focusing on the management of entrymodes have drawn mainly on TCE. TCE high-lights the potential problems and risks relatingto opportunism for companies entering intopartnerships or other types of entry mode. Inthe case of parent-foreign subsidiary relation-ships (Obadia and Vida 2006), insufficientincentives and the value of the assets of foreignsubsidiaries may cause endogenous opportun-ism, which is exacerbated by information asym-metries due to inadequate monitoring by theparent firm. In the case of SME-foreign agentrelationships (Zacharakis 1997), it is concludedthat contracts mitigate opportunistic threats.Agents prefer behavior-oriented contracts,whereas SMEs prefer outcome-based contracts.However, agents have a stronger bargainingposition than SMEs because the former are ableto diversify their relationships with differentSMEs and are more familiar with the marketthan the SMEs.
We conclude that NA, RBV, and IPLC arefrequently-used perspectives to explain entrymode change in SMEs. SMEs’ network rela-tionships (NA) and the maturation, protectionand marketing investments of SMEs’ products(IPLC) explain entry mode changes. Studies ofprocesses of entry mode change have notonly shown differences between SMEs andMNEs, but have also found differences in thespeed and propensity of entry mode changebetween SMEs in knowledge-based and tradi-tional manufacturing industries. Researchfocusing on management of entry modes hastended to use the TCE concept of“opportunism” to understand how SMEs han-dle their weaker bargaining positions andincreased vulnerability to opportunism com-pared with MNEs.
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Outcomes of Entry Mode ChoiceThe most important perspective in analysis of
outcomes of SMEs’ entry mode choices is TCE.Researchers using the TCE perspective haveanalyzed the impact of various entry modes onfirm performance, such as non-equity versusequity (Brouthers and Nakos 2004; Rasheed2005) and export versus FDI (Lu and Beamish2001; Majocchi and Zucchella 2003). Entrymode choice based on TCE predictions provesto be normative: SMEs that adopt entry modesbased on TCE tend to perform better than SMEsthat do not. Other studies have considered therole of the environment and have shown thatSMEs benefit more from non-equity modeswhen domestic munificence is high, and morefrom equity entry modes when foreign marketrisk is high (Rasheed 2005).
Some researchers have found more complexrelationships between the type of entry modeused by SMEs and firm performance. Using arare longitudinal data set, Lu and Beamish(2001) found a flattened U-shaped relationshipbetween degree of FDI and firm performance.They further report that export activities have anegative impact on the relationship betweenFDI and performance, and argue that the combi-nation of exporting and FDI increases coordina-tion costs. A study by Majocchi and Zucchella(2003) provides further insights into the rela-tionship between exporting, FDI, and the per-formance of SMEs. They have shown that thenegative relationship between FDI and SME per-formance becomes positive when FDI is pre-ceded by a high level of exporting. Thisresonates with stage theory.
Other work has discussed the performanceof internationalizing SMEs’ affiliates from a TCEperspective. This line of inquiry argues that theperformance of SMEs is negatively affected byendogenous opportunism in foreign subsidiaries(Obadia and Vida 2006), and that a higherdegree of control over foreign affiliates has apositive effect on performance (Beamish andLee 2003).
Despite the dominance of the TCE perspec-tive, researchers have also used RBV to under-stand the relationship between SMEs’ entrymode choice and firm performance. Articlesusing RBV have focused mainly on the linkbetween SME capabilities and performance(Ripoll�es and Blesa 2012), and the influence ofinternational activities on learning (Zahra, Ire-land, and Hitt 2000). Ripoll�es and Blesa (2012)
have shown that marketing capabilities enablegreater benefits to be gained from a choice ofhigh-commitment entry modes, while Zahra,Ireland, and Hitt (2000) find that high-controlentry modes have a positive effect on thebreadth, depth, and speed of technologicallearning.
In conclusion, we find that TCE has domi-nated research on the relationship betweenentry mode and SME performance. Similarly tothe findings on the performance implications ofMNEs’ entry mode choices, SMEs adopting entrymodes based on TCE tend to perform better. AsSMEs’ capabilities differ significantly from thoseof their larger counterparts (Coviello and Munro1997; Forlani, Parthasarathy, and Keaveny2008), RBV also provides useful insights intothe importance of certain types of SME capabil-ities for SME performance. Interestingly, onlyone study has used a longitudinal data set tomeasure performance and found a more com-plex and nuanced relationship.
Future ResearchIn this section, we suggest several avenues
for future research based on our literaturereview. First, we explain future research oppor-tunities by considering methodological issuesfound in our literature review. Then, based onthe analytical framework adopted, we identifyseveral directions for future research on theantecedents, processes, and outcomes of entrymode choice.
Methodological Considerations: SMEs,Sector, and Home Country, Concepts, andData Collection Methods
Empirical studies should seek theoretical con-sensus on the concepts employed and use simi-lar operationalization to ensure comparability offindings between studies to move the field for-ward. Our literature review reveals great diver-sity in the conceptualization of SMEs. Withregard to the age of SMEs, our findings appearsimilar to those of Keupp and Gassmann (2009)and De Clercq et al. (2012): generally, the age ofSMEs is not considered as a sample criterion,and only five articles explicitly mention age as acriterion specifically addressed in the context ofthe entry mode strategies of new ventures. Incontrast, in the studies included in our literaturereview, size proves to be an important criterionfor defining SMEs. The maximum size of an
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SME ranges from less than 200 employees toless than 1,000 employees. These differences insize as a selection criterion for SMEs hindercomparison of the findings of different entrymode studies. However, we suggest that futureentry mode research should be more consciousof conceptualizing SMEs. The use of arbitraryquantitative definitions of SMEs, such as thenumber of employees, considers SMEs as ahomogeneous group of firms. The differing andsometimes even contradictory findings of thesestudies may be caused by their failure to con-sider the heterogeneity of SMEs attributable toqualitative characteristics. Future studies mighttackle the problem of heterogeneity either bytaking a descriptive approach to defining differ-ent typologies of SMEs, or by using a prescrip-tive method to define the type of SME on whichthe study focuses (Frank and Roessl 2015).2
For example, future studies might focus onage differences in sample firms. Older SMEsentering foreign markets will already havedeveloped certain routines and capabilities indomestic operations, while new internationalventures will not be hampered by establishedroutines and structures (Autio, Sapienza, andAlmeida 2000). The learning advantages of new-ness may allow new international ventures tomake bolder moves when entering foreign mar-kets. Age at entry may also influence a firm’sability to change entry mode in response tochanging environmental conditions. Inertia maycause older SMEs to be slow to change entrymode when necessary, whereas new venturesmay have greater ability to respond quickly tochanging requirements. Age at entry may alsohave an impact on the extent to which the SMEis able to reap the benefits of using differenttypes of entry mode. The learning advantages ofnewness may accelerate young internationaliz-ing SMEs’ learning from foreign marketsthrough different types of entry mode. Thisaccelerated learning, in turn, may result inhigher firm performance. Similarly, future stud-ies might provide a more nuanced perspectiveon the role of size in entry mode research. Forexample, size may be an important moderatorin the relationship between transaction costs orresource-based variables and entry mode choice,as resource constraints may prevent SMEs fromadopting the best entry mode according to these
theories. This raises the important question ofwhether SMEs really face an entry mode“decision,” or whether, owing to financialresource constraints, they actually have nochoice.3 Quantitative studies that focus on therole of financial resources might deepen ourunderstanding of how these resources shapeSME entry mode decisions and subsequentchanges for internationalizing SMEs.
In addition to differences in definitions ofSMEs across studies, our review also revealssample heterogeneity with respect to industrysectors, with most empirical articles (25 of 38)relying on samples consisting of SMEs fromboth high-tech and low-tech sectors. Industrysector matters: a key finding of empirical studiesis that knowledge-based SMEs do not follow thesequential stages of internationalization buthave a notable preference for high-control entrymodes (Bradley and Gannon 2000) and buildstrongly on their networks to serve foreign mar-kets (Coviello and Munro 1997). However,industry sector is often relegated to a controlvariable in quantitative studies, while there isgreat potential for further exploration of theinfluence of sector characteristics on entry modechoice and change. Industry characteristics call-ing for more detailed examination include theappropriability regime and the distribution ofcomplementary assets (Teece 1986). Interestingissues include how the strength of the appropri-ability regime or level of specialization of com-plementary assets influence entry mode choice;the moderating effect of the appropriabilityregime and the distribution of complementaryassets on the extent to which SMEs may reapthe benefits of adopting certain entry modes;and the influence of the interplay betweenappropriability regime and distribution of com-plementary assets on the entry mode strategy ofSMEs.
Our literature review shows that mostresearch has been carried out on SMEs with ahome base in Europe or the United States. Apartfrom three articles that include New Zealand asthe home country, no other articles compareEurope, the United States, and the rest of theworld. We therefore suggest an examination ofentry mode strategies for SMEs from emergingeconomies, which are growing at a much fasterpace than advanced economies, and are
2We thank the editor for this suggestion.3We thank an anonymous reviewer for this suggestion.
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increasingly integrating into the worldwideeconomy (Aulakh and Kotabe 2008). The stud-ies included in this literature review show thatmanagers’ experience and networks of informalrelationships influence entry mode choice (Bell,Crick, and Young 2004; Burgel and Murray2000; Coviello and Martin 1999). However,entrepreneurs and managers in emerging econo-mies often do not have relevant business exper-tise and business-related knowledge (Kiss,Danis, and Cavusgil 2012), which raises someinteresting research questions regarding whatmechanisms SMEs in emerging economies relyon to make entry mode decisions. Are they dif-ferent from their counterparts in advancedeconomies and, if so, how? The role of institu-tionally based differences between emergingand advanced economies provide particularopportunities for future research, and such stud-ies might, perhaps, explore the effect of regula-tive, normative, and cognitive burdens on entrymode choice (Kostova and Roth 2002). Ourreview indicates that few studies have examinedentry modes from an institutional perspective,even though this is a core perspective in inter-national entry mode research (Brouthers andHennart 2007). Entry mode research on SMEsfrom both emerging and advanced economiesfrom an institutional perspective would be awelcome extension to the current literature.
Similarly to Brouthers and Hennart (2007),we observe some ambiguity in definitions ofjoint ventures. Some articles treat joint venturesas a stage between a hierarchical and marketgovernance structure (e.g., Forlani, Parthasara-thy, and Keaveny 2008), while others considerthem as purely hierarchical (e.g., Gleason andWiggenhorn 2007). The contradictory findingsof Bradley and Gannon (2000) and Brouthersand Nakos (2004) on the one hand andMcNaughton (1996) on the other hand regard-ing the influence of environmental uncertaintyon entry mode choice are caused by differentdefinitions and operationalizations of environ-mental uncertainty.
Finally, the empirical articles in our reviewhave made use of case studies (8), surveys (25),archival data (4), and a combination of surveyand archival data (1). This shows that the litera-ture has tried to maintain diversity in data col-lection methods, yet the vast majority ofquantitative empirical articles have been basedon cross-sectional data. Only two articles in ourreview have used longitudinal data: Lu andBeamish (2001) used data from 1986 to 1997
and Rasheed (2005) used data from 1992 to1994. Consequently, there is only a limited viewof the effect of changes to factors influencingentry mode antecedents, processes, and out-comes. Further empirical research using quanti-tative and qualitative longitudinal researchdesigns would be valuable to examine thedynamics of entry mode strategies deployed bySMEs and to allow examination of causal ratherthan correlational relationships.
Future Directions for Research onAntecedents
Our literature review reveals five broad ante-cedent categories, ranging from individual- tomeso-level (firm and business relationships), andfinally to broader macro-level (industry and coun-try). While some articles include individual-levelvariables, such as preexisting contacts of decisionmakers (Burgel and Murray 2000), previous man-agerial international experience (Gleason andWiggenhorn 2007), or the entrepreneurial orien-tation of the CEO (Ripoll�es, Blesa, and Monferrer2012) as antecedents, only one paper explicitlyemphasizes the role of the entrepreneur/managerin the decision-making process of entry modechoice (Pinho 2007). This is somewhat surprising,as the small business management and entrepre-neurship literatures emphasize the role of theentrepreneur in firms’ decision-making processes(Shepherd 2011).
Future studies on SMEs’ entry mode strat-egies should draw on the strategic decision-making perspective (Eisenhardt and Zbaracki1992) and upper echelon theory (Hambrick andMason 1984), since these take into account thecharacteristics of managers, the nature of thedecision-making process, the internal powerand politics in an organization, the organiza-tional culture, and the influence of stakeholders.The influence of characteristics of entrepreneursor managers may be of special interest forSMEs, as it is widely considered that entrepre-neurs have an important imprinting effect, notonly on the general strategy of SMEs but also onthe internationalization of small firms (Gilbert,McDougall, and Audretsch 2006). Entrepre-neurs’ characteristics or traits and their roles inidentifying, accessing and leveraging resourcesin the pursuit of opportunity creation and inno-vation are relevant to the body of internationali-zation research (Jones and Coviello 2005).
Decision making may also be influenced bythe personalities of entrepreneurs (Zhao andSeibert 2006). Individuals are confronted by so
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many stimuli, laden with so much ambiguity,complexity, and contradiction, that their person-alities influence how they distill and process thisinformation (Nadkarni and Herrmann 2010).This filtering process influences their strategicchoices and is considered to be central to devel-oping strategies (Shimizu and Hitt 2004). Forinstance, conscientious individuals have a strongneed for achievement and may make differententry mode choices from those with high levelsof openness to experience and a strong toler-ance for ambiguity and flexibility.
Our literature review also reveals that littleattention has been paid to the influence of teamdiversity and team processes on SMEs’ entrymode strategies. Future studies should thereforefocus on how the sum and diversity of individ-ual characteristics lead to certain decisions inthe internationalization process through well-developed intermediary team constructs such asconflict and cohesion (for an overview, seeKlotz et al. 2014). For example, conflict mayhelp teams to consider and thoroughly analyzemore and better entry mode options, but mayalso lead to team exits and loss of the experi-ence and knowledge necessary to guide theSME through the internationalization process.As entrepreneurial teams are dynamic and tendto change over time (Ucbasaran et al. 2003), theimpact of team exits and entries at differentstages of the internationalization process mayshed new light on changes in SMEs’ entry modestrategies.
Finally, not only do individual and team char-acteristics have an impact on decision making ininternationalizing SMEs, but the preexisting net-works of managers may also explain how SMEsenter new international markets. Studies in ourreview have focused on how firm networksinfluence entry mode decisions and have foundevidence that foreign entry choices are drivenby the networks of relationships that venturesestablish (e.g., Coviello and Munro 1997). How-ever, a more detailed approach is needed toinvestigate how personal relationships withinnetworks are built and how personal interac-tions between partners influence entry modechoices.
Our review shows that the current literatureon entry mode strategy draws primarily on TCE,OLI, RBV, STAGE, and NA perspectives. Weencourage future studies to employ other per-spectives to provide novel insights into SMEs’entry mode strategies. The influence of businessmodels and business strategies on entry mode
choices and entry processes offers an interestingavenue for further investigation. Although onlyone study in our literature review devoted atten-tion to the impact of business models on entrymode choices (Ojala and Tyrv€ainen 2006), webelieve that the burgeoning literature on busi-ness models offers an interesting frameworkwithin which to explain variations in the entrymode strategies of SMEs. A business model maybe defined as an organization’s architecture ordesign for creating, delivering and capturingvalue (Zott, Amit, and Massa 2011). It distin-guishes several components or structural ele-ments: (1) the technology and featuresembedded in a company’s product or service,(2) the customer segments targeted, (3) the mar-ket approach, (4) the way in which customersare served and hence value is captured throughcustomer relationships, and (5) the company’scost structure and revenue model (Chesbroughand Rosenbloom 2002; Osterwalder and Pigneur2009). Although not explicitly referencing busi-ness model scholarship, various studies in ourliterature review have pointed to possible rela-tionships between the components of a businessmodel, particularly product characteristics, andthe choice of entry mode (Bell 1995, 1997).These studies indicate that few steps have so farbeen taken to investigate the impact of particu-lar characteristics of an SME’s business modelon entry mode choice, and much more needs tobe done to explore the impact of each of thefive business model components, separately orin concert, on entry mode choice. Future studiesmight, for example, focus on how characteristicsof customer segments targeted in the businessmodel influence entry mode choice. Businessmodels targeting high-end customers requireSMEs to be close to their customers, therebypotentially demanding a different entry modestrategy from SMEs adopting a business modelfocused on low-end customers. The customerrelationship component might also influenceentry mode strategy. For SMEs adopting a busi-ness model that requires dedicated personal cli-ent assistance, equity-based entry modes maybe more appropriate, while for SMEs adopting asoftware-as-a-service (SAAS) model followingthe principles of self-service, non-equity-basedentry modes might be preferred.
Future Directions for Research onProcesses
Initial work in this field has observed thatentry modes change over time as a result of the
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development of network relationships (e.g.,Coviello and Munro 1997). Subsequent qualita-tive studies have examined the role of networksin greater detail and have provided insights intohow the types of relationship and social capitalroles impact entry mode changes (Agndal andChetty 2007; Chetty and Agndal 2007; Kontinenand Ojala 2011). An alternative explanation hasbeen offered by Jones and Coviello’s (2005) con-ceptual work. Entry mode change is invoked byinternal and external triggers and as part of anadaptation process in response to organizationallearning. These two conceptual mechanismsprovide several opportunities for empiricalresearch. For example, attracting venture capitalincreases the resource availability of SMEs sig-nificantly, allowing them to switch from low-control to high-control entry modes. Anotherinteresting internal trigger is negative perform-ance feedback from the current entry modestrategy. When performance falls below a cer-tain aspiration level, firms will take strategicactions to address the performance problem athand (Cyert and March 1963). Building on this,SMEs may change their entry mode strategy ifthe current strategy fails to meet expectations.The behavioral theory of the firm and the con-cept of problematic search might provide afresh perspective on entry mode change.
Complementarily, researchers might studythe impact of external triggers such as environ-mental jolts. While our review shows that spe-cific entry modes are preferable under certainenvironmental conditions, we know very littleabout how change in the environment in whichSMEs operate forces them to adjust their entrymode strategies. Future research might analyzethe impact of environmental changes by makinga distinction between the home country and thehome base, which is the combination of coun-tries in which the SME is active and has accumu-lated operational experience (Zhou and Guill�en2015). For example, imprinting theory(Stinchcombe 1965) might provide the neces-sary theoretical background to analyze whetherthe mode used to serve customers in the homecountry might have long-lasting effects on entrymode strategies in the home base, despitechanges in the external environments of homebase countries.
Our literature review also points to an inter-esting but under-researched topic: the manage-ment of risk associated with foreign marketentry modes (Figueira-de-Lemos, Johanson, andVahlne 2011). Such risk may be the result of
uncertainty relating to potential opportunisticbehavior and information asymmetry whenworking with partners to serve foreign markets(Anderson and Gatignon 1986). This gap is sur-prising, given the importance of agents and dis-tributors to SMEs entering foreign markets (Bell,Crick, and Young 2004). In particular, largepartners provide opportunities for market entry,raising issues about the vulnerability of SMEsand their potential dependence on large part-ners (Coviello and Munro 1997). Future researchmight study how SMEs manage such relation-ships, with a specific focus on non-equity sour-ces of control such as trust. Trust might offer avaluable alternative to equity- or contract-basedcontrol in managing networks of business rela-tionships, and might thereby provide SMEs withthe ability to enter, via intermediaries, foreignmarkets that would otherwise be impossible toaccess (Gao 2004). Future studies might investi-gate the extent to which sharing of knowledge-based assets with intermediaries and environ-mental uncertainty, conceptualized as psychicdistance, might hinder the development of trustand its subsequent use as a control mechanism.Empirical work on such questions might pro-vide novel insights into the boundary conditionsof trust as a non-equity source of control.
Our review shows that all qualitative andquantitative studies on the processes followingentry mode choice have taken a cross-sectionalresearch approach, while longitudinal researchdesigns might reveal more interesting resultswhen studying entry mode processes over time.Longitudinal case studies that examine the inter-play of influence between formal and informalnetworks would bring novel insights into entrymode research. Such studies might movebeyond the observation that networks matter(Agndal and Chetty 2007; Chetty and Agndal2007) and shed light on the dynamics and inter-play between informal relationships at the indi-vidual level and formal relationships at theorganizational level, and how these may influ-ence entry mode change.
Finally, the business model literature alsostresses the dynamic nature of business models(Zott, Amit, and Massa 2011). In fast-paced,globally competitive environments, consumerneeds, technological opportunities, and compet-itor activity are in a constant state of flux. Newopportunities for value creation open up, whileestablished SME profit streams are put at risk(Teece 2007), forcing firms to change or inno-vate in their business model to remain
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successful. This implies that the business modelframework might also be used to explainchanges in entry mode. Future studies mightfocus on how certain components of a businessmodel evolve alongside changes in entry modestrategy.
Future Directions for Research onOutcomes
Similarly to the literature on entry mode strat-egies of MNEs (Brouthers 2013), this reviewshows a lack of research on SME entry modeand performance. The number of articles cover-ing performance outcomes (10) is considerablylower than the number covering the antecedents(38) and processes (14) of entry mode strategy.A potential reason for this lower number is thedifficulty of collecting performance data onSMEs. This gap in the literature is important,since entry mode change is particularly difficultfor resource-constrained SMEs, and thus entrymode choice has long-term implications for firmperformance. Future studies on entry mode–per-formance relationships should pay careful atten-tion to the issue of endogeneity (Brouthers2013). Entry mode choice is often not randombut the result of a managerial decision-makingprocess that includes the analysis of internal andexternal factors. There is a plethora of statisticaltechniques to address endogeneity, rangingfrom relatively simple methods, such as includ-ing control variables and fixed effects, to moreadvanced econometric methods, such as match-ing and propensity models and the instrumentalvariable approach (for an overview, see Reeb,Sakakibara, and Mahmood 2012). However, sta-tistical methods are often used as “crutches orsubstitutes for critical thinking” (Reeb, Sakaki-bara, and Mahmood 2012, p. 216), whereasendogeneity ought to be addressed in terms oftheoretical predictions and mechanisms. Com-parison of the performance of the entry modechoice predicted by theory (e.g., based on TCE,OLI, or RBV) and the actual entry mode used istherefore a fruitful avenue for future research.
Various objective and subjective performancemeasures have been used by the empiricalarticles in our review. These include financialmeasures, such as return on assets and returnon sales (Lu and Beamish 2001), profitability(Majocchi and Zucchella 2003), and interna-tional revenue growth (Rasheed 2005). Otherstudies have used subjective measures, such asthe manager’s overall satisfaction (Beamish andLee 2003) and relative performance compared
to the main competitors (Ripoll�es and Blesa2012). An important consideration when usingfinancial performance measures is the age of thesample firms. Whereas older SMEs may be moreconcerned about the implications of entry modechoice for profitability, their younger counter-parts may be more growth-driven. Future stud-ies should go beyond financial performance toconsider other performance variables such asemployment growth and survival. Studies usingemployment growth as an outcome variablewould be able to examine the influence of entrymode strategy on organizational complexity andresource and knowledge accumulation (Delmar,Davidsson, and Gartner 2003). We find it sur-prising that no study in our review of entrymode research on SMEs has considered survivalas an outcome variable, given its importance inthe literature on small business and entrepre-neurship (Shepherd, Douglas, and Shanley2000). We therefore strongly encourageresearchers to study how SMEs’ entry modestrategies influence firm survival. Although thegrowth and survival of internationalizing SMEsare closely intertwined, they are conceptuallydistinct: “survival does not guarantee growth,and not all growth is profitable” (Sapienza et al.2006, p. 915). The type of entry mode employedby an SME may increase its opportunities forgrowth, but at the same time may expose it togreater survival threats. For example, sales sub-sidiaries may have a positive influence on reve-nue growth but may be detrimental to firmsurvival owing to the greater complexity andrisks associated with managing foreign salesoffices. Consequently, future studies shouldexamine how different types of entry modeinfluence the growth and survival of SMEs.
One study has focused on the effects of dif-ferent types of entry mode on technologicallearning (Zahra, Ireland, and Hitt 2000). Webelieve there is a great opportunity to explorefurther how SMES’ entry mode strategies influ-ence organizational processes. Future studiesmight, for example, use a capability perspectiveto examine whether the heterogeneous experi-ences resulting from the use of different typesof entry mode stimulate the development ofinnovative and marketing capabilities.
LimitationsDespite our attempt to analyze the received
literature on SME entry modes rigorously andobjectively, this review has several limitations.
BRUNEEL AND DE COCK 159
Tab
le5
Ave
nues
for
Futu
reR
esea
rch
Ante
ceden
tsP
roce
sses
Outc
om
es
Th
eore
tica
l�
Stra
tegi
cdec
isio
n-m
akin
gper
spec
tive
and
upper
eche-
lon
theo
ry
Inve
stig
ate
the
role
of
the
entr
epre
neu
r/m
anag
erin
the
dec
isio
n-m
akin
gpro
cess
of
entr
ym
ode
choic
eTak
ein
toac
count
the
nat
ure
of
the
dec
isio
n-m
akin
gpro
-ce
ss,th
ein
tern
alpow
eran
dpolit
ics,
the
org
aniz
atio
nal
cul-
ture
and
the
influen
ceof
stak
ehold
ers
Focu
son
how
the
sum
and
div
ersi
tyof
indiv
idual
char
ac-
teri
stic
sle
adto
dec
isio
ns,
by
incl
udin
gte
amco
nst
ruct
san
dan
alyz
ing
team
pro
cess
esan
ddyn
amic
sC
onsi
der
the
impac
tof
pre
-ex
isting
net
work
sof
man
ager
son
dec
isio
nm
akin
gin
inte
rna-
tional
izin
gSM
Es
�B
usi
nes
sm
odel
fram
ework
Res
earc
hhow
busi
nes
sm
odel
com
ponen
ts,se
par
atel
yor
inco
nce
rt,in
fluen
ceen
try
mode
choic
e
�B
ehav
iora
lth
eory
of
the
firm
Consi
der
neg
ativ
eper
form
-an
cefe
edbac
kan
dpro
ble
m-
atic
sear
chas
am
echan
ism
for
entr
ym
ode
chan
ge
�Im
pri
nting
theo
ry
Exa
min
ew
het
her
entr
ym
ode
inth
ehom
eco
untr
ym
ayhav
elo
ng-
last
ing
effe
cts
on
entr
ym
ode
choic
esin
hom
ebas
eco
untr
ies
des
pite
envi
-ro
nm
enta
ldiffe
rence
san
dch
ange
sin
hom
ebas
eco
untr
ies
�B
usi
nes
sm
odel
fram
ework
Focu
son
how
cert
ain
busi
nes
sm
odel
com
ponen
tsev
olv
eal
ongs
ide
entr
ym
ode
chan
ges
�C
apab
ility
per
spec
tive
Anal
yze
whet
her
the
het
eroge
-neo
us
exper
ience
sre
sultin
gfr
om
the
use
of
diffe
rent
types
of
entr
ym
ode
stim
ula
teth
edev
elopm
ent
of
innova
tive
and
mar
ket
ing
capab
ilities
JOURNAL OF SMALL BUSINESS MANAGEMENT160
Tab
le5
Con
tin
ued
Ante
ceden
tsP
roce
sses
Outc
om
es
Conce
ptu
al�
Avo
idam
big
uity
by
def
inin
gco
nce
pts
ina
consi
sten
tw
ay
Def
ine
join
tve
ntu
res
ina
con-
sist
ent
way
Def
ine
and
oper
atio
nal
ize
envi
ronm
enta
lunce
rtai
nty
toav
oid
contr
adic
tory
resu
lts
�In
troduce
new
conce
pts
toth
efiel
d
Anal
yze
how
entr
epre
neu
rs’/
man
ager
s’per
sonal
itie
sm
ayin
fluen
ceim
port
ant
stra
tegi
cch
oic
essu
chas
entr
ym
ode
�SM
Eag
e
Consi
der
SME
age,
asold
erSM
Es
hav
eal
read
ydev
eloped
capab
ilities
and
routines
while
younge
rones
are
unham
per
edby
esta
blis
hed
capab
ilities
�SM
Esi
ze
Inve
stig
ate
the
impac
tof
SME
size
,as
smal
ler
firm
sw
ith
few
erre
sourc
esm
aynot
be
able
toad
opt
the
bes
ten
try
mode
acco
rdin
gto
TC
Eor
RB
V
�In
troduce
new
conce
pts
toth
efiel
d
Inve
stig
ate
the
impac
tof
exte
rnal
trig
gers
such
asen
vi-
ronm
enta
ljo
lts
on
entr
ym
ode
chan
ges
Anal
yze
how
trust
support
sSM
Es
inm
anag
ing
the
risk
sas
soci
ated
with
fore
ign
mar
ket
entr
ym
ode
�SM
Eag
e
Exa
min
eag
eat
entr
y,an
dw
het
her
this
may
det
erm
ine
the
abili
tyto
chan
geen
try
mode
inre
sponse
toch
angi
ng
envi
ronm
enta
lco
nditio
ns
�SM
Esi
ze
Anal
yze
how
avai
labili
tyof
finan
cial
reso
urc
esin
fluen
ces
entr
ym
ode
chan
ges
�In
dust
rych
arac
teri
stic
s
Res
earc
hhow
indust
rych
arac
-te
rist
ics
(appro
pri
abili
tyre
gim
e,co
mple
men
tary
asse
ts,
emer
ging
or
not)
influen
ceen
try
mode
chan
ge
�In
troduce
new
conce
pts
toth
efiel
d
Consi
der
oth
erper
form
ance
mea
sure
ssu
chas
surv
ival
and
emplo
ymen
tgr
ow
thIn
vest
igat
ehow
diffe
rent
types
of
entr
ym
ode
influen
ceboth
surv
ival
and
grow
th
�SM
Eag
e
Tak
ein
toac
count
the
age
of
sam
ple
firm
sw
hen
consi
der
-in
gfinan
cial
per
form
ance
mea
sure
s,as
old
erSM
Es
may
be
more
conce
rned
about
pro
fita
bili
tyw
hile
younge
rones
may
be
more
grow
th-
dri
ven
BRUNEEL AND DE COCK 161
Tab
le5
Con
tin
ued
Ante
ceden
tsP
roce
sses
Outc
om
es
�In
dust
rych
arac
teri
stic
s
Inve
stig
ate
how
indust
rych
ar-
acte
rist
ics
(appro
pri
abili
tyre
gim
e,co
mple
men
tary
asse
ts,
emer
ging
or
not)
influen
ceen
try
mode
choic
eExa
min
een
try
mode
stra
tegi
esof
SMEs
inem
ergi
ng
econom
ies
Met
hodolo
gic
al�
More
consc
ious
sam
plin
gof
SMEs
Acc
ount
for
age,
size
,an
dty
pe
of
indust
ryas
import
ant
sam
ple
criter
iafo
rSM
Es,
eith
erby
def
inin
gdiffe
rent
types
of
SME
or
by
def
inin
gth
ety
pe
of
SME
on
whic
hth
est
udy
focu
ses
�C
onduct
more
empir
ical
rese
arch
usi
ng
quan
tita
tive
and
qual
itat
ive
longi
tudin
alre
sear
chdes
igns
�M
ore
consc
ious
sam
plin
gof
SMEs
Acc
ount
for
age,
size
,an
dty
pe
of
indust
ryas
import
ant
sam
ple
criter
iafo
rSM
Es,
eith
erby
def
inin
gdiffe
rent
types
of
SME
or
by
def
inin
gth
ety
pe
of
SME
on
whic
hth
est
udy
focu
ses
�C
onduct
more
empir
ical
rese
arch
usi
ng
quan
tita
tive
and
qual
itat
ive
longi
tudin
alre
sear
chdes
igns
�M
ore
consc
ious
sam
plin
gof
SMEs
Acc
ount
for
age,
size
,an
dty
pe
of
indust
ryas
import
ant
sam
ple
criter
iafo
rSM
Es,
eith
erby
def
inin
gdiffe
rent
types
of
SME
or
by
def
inin
gth
ety
pe
of
SME
on
whic
hth
est
udy
focu
ses
�C
onduct
more
empir
ical
rese
arch
usi
ng
quan
tita
tive
and
qual
itat
ive
longi
tudin
alre
sear
chdes
igns
�Endoge
nei
tyis
sues
Com
par
eper
form
ance
of
theo
ry-p
redic
ted
and
actu
alen
try
modes
JOURNAL OF SMALL BUSINESS MANAGEMENT162
First, we excluded empirical papers that limitedtheir discussion to SMEs and exporting. The aimof our study was to focus on entry mode as aconcept that extends beyond exporting, andincluding these studies would have resulted in areview with too great an emphasis on exporting.Second, we only reviewed entry mode studiespublished in the last 20 years (1992–2012).Third, we screened papers in five different cate-gories of journal. Although this is in line withother reviews on internationalization (De Clercqet al. 2012; Keupp and Gassmann 2009), theremay be other relevant papers and journals thatwe did not consider. However, as we combinedkeyword searches with a cross-referencingsearch, we are confident that we identified themost important articles in the SME entry modeliterature. Fourth, many existing studies havefocused on the entry mode choice of MNEs,while their samples also include smaller firms.We brought together a team of three investiga-tors to assess whether or not we should alsoinclude studies with mixed samples. Weretained those that explicitly reported insightsinto SMEs. While this process was rigorous, westill see this as a limitation of this study.
ConclusionDespite the growing importance of SMEs
choosing, changing and managing entry modestrategies effectively, the literature on SMEs’entry mode strategies is as yet immature: it doesnot provide answers to compelling issues, butreports inconsistent results. We have provided acomprehensive, systematic literature review ofresearch on SMEs’ entry mode strategies organ-ized by antecedents, processes, and performanceoutcomes. Based on our review, we have devel-oped a research agenda by highlighting severalinteresting opportunities at all three stages, andhave provided guidance on how to pursue thesein future studies (for an overview, see Table 5).
From a methodological point of view, moreempirical studies using quantitative and qualita-tive longitudinal research designs are needed toprovide a better understanding of the effects ofchanges in factors influencing entry mode antece-dents, processes, and outcomes. Future studiesshould also pay close attention to endogeneityissues when analyzing entry mode–performancerelationships. From a conceptual point of view,entry mode scholars should be more carefulwhen conceptualizing SMEs, either by describingdifferent types of SMEs or by defining the types
of SME on which their study focuses. Inconsistentresults in the entry mode literature have alsooften been caused by varying definitions of entrymodes and other important concepts.
Finally, introducing new theories and per-spectives might address the existing problemsand weaknesses in this literature. Futureresearch might use a strategic decision-makingperspective to investigate individual antecedentsof entry mode choice, or apply imprintingtheory to analyze how entry modes change overtime, or adopt a capability perspective to gain adeeper understanding of the outcomes of entrymode choice. We hope that the research agendaput forward in our review may inspire furtherexploration of SMEs’ entry mode strategies.
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