The Impact of Market-Related Factors on the Entry Mode of Small and Medium Enterprises

Abstract

Understanding a firm's internationalization processes, including entry mode decisions, has attracted increasing attention from the literature in international business. This article researches the impact of market determinants on the entry modes choice of exporting small and medium enterprises (SMEs), specifically on the variables associated with the home market, the host market, and the proximity between them. Following a quantitative methodological approach, an Internet survey was applied to AIMinho's associates, a regional industry association in Northern Portugal. Principal components analyses and Mann-Whitney tests were performed to analyze data. The study's results reveal a patent preference of SMEs for export entry modes in detriment of both contractual and investment modes. Moreover, results reveal the lack of influence of market-related variables on the choice between exports or contractual entry modes. This research contributes to the current knowledge on SMEs internationalization by aggregating in one single study all market-related variables identified in the literature.

KEYWORDS:

• entry modes
• internationalization
• markets
• SMEs

Notes

Source: Authors.

Notes.: PM = Proximity between markets; HM = home market; Si = Size; CS = Competitive structure; MI = Marketing Infrastructure; PF = Production factors; GP = Government policies; ES = Economic structure; ED = Economy dynamics; PR = Political risk.

Source: Authors.