The internationalization of SMEs in emerging markets: Case Russia

Abstract

The Internationalization of SMEs in Emerging Markets: Case Russia The first goal of this study is to investigate and analyze the characteristics and challenges of the internationalization process of foreign small- and medium-sized enterprises (SMEs) to Russia. The second goal of this study is to create a model of the production unit establishment process, as designed especially for SMEs. Also, the key resources in succeeding in these processes are studied. The theoretical framework studies several mainstream internationalization theories, mainly from the perspective of SMEs: stage models, innovation models, network models, early internationalization theories, international entrepreneurship and international business. In order to better understand and help to describe SME internationalization process, the methods by which large corporations internationalize are also studied and contrasted. The source of data in the qualitative single case studies consists of four interviews based on semistructured questionnaires, two company visits and one factory (production unit) visit. These interviews center on Finnish SME-owner/CEOs operating partly or fully in Russia, and also include one Russian CEO and one work safety manager of two Finnish-owned SMEs. The empirical study reveals that stage models are the most suitable for studying the internationalization process of SMEs. However, given that stage models ignore the influence of entrepreneurs in the internationalization process, a new model is introduced – the entrepreneurial stage model of SME internationalization – in order to recognize the role of these key actors in the process. Additionally, a model of product unit establishment is introduced and described. This thesis’ case study widely supports previous studies focused on operating and internationalizing to Russia, and the study also introduces the main challenges and characteristics of the SME internationalization process to Russia. Finally, the key resources needed for successful SME internationalization and the establishment of production units are described. With respect to internationalization, the key resources are an SME’s and entrepreneur’s capabilities and networks, and also an entrepreneur’s will to continually learn and gain experience. For production unit establishment, key resources are highly qualified employees, organization, local business knowledge, distribution and logistics systems, financing, and business operations.