The internationalization process of small firms: A study of the interaction of the manager, firm and environmental characteristics

This dissertation studies the internationalization process of small firms in order to discuss the underlying variables that affect the internationalization of small firms. Do certain variables correlate with firms that derive higher levels of revenue from international activity?; A review of the literature shows that the internationalization of large firms has been studied, however, there is a gap in the research with regards to the internationalization of small firms. Small firms have become more important today and they are going international sooner thanks to cheaper transportation and communication costs. A number of factors or variables that have been found in the past to be associated with the internationalization of firms is studied for a relationship to the internationalization of small firms. Most previous studies focused on the relationship of these variables to large firms. These variables consisted of both internal firm variables and external environmental variables and were classified into three dimensions, the need, desire and ability to internationalize. The result was to test seven independent variables in these three dimensions. (1) Need to Internationalize: (a) Available domestic market; (b) Concentration of the domestic market; (c) Research and Development intensity; (d) Marketing Intensity. (2) Desire to Internationalize: Managerial Orientation. (3) Ability to Internationalize: Formal international Functional and Strategic Planning.; The dependent variable taken as an indication of international commitment was the amount of foreign sales.; Small firms were defined as a firm with between one and 50 million dollars per year in revenue.; Data was collected using a mail survey to 1,000 randomly selected small manufacturing businesses. A preliminary survey to 1,000 businesses yielded a low response rate of 4.8% with 3.5% fully completed and 1.3% partially completed returned questionnaires. Since this response was too low, a second survey was done in order to increase response rate, the source of respondents was changed, survey questionnaire revised and other methods, such as telephone interviewing were used to increase the response rate. The second survey had a total response rate of 11.6% with 10.2% fully completed questionnaires.; The variables in the second survey were analyzed with correlation and regression analysis. There was a significant correlation with management decision orientation, research and development dollars, marketing dollars and strategic and functional planning. Four regression models were run and marketing dollars and ability entered the models. Since management decision orientation is highly correlated to ability as measured by functional and strategic planning and marketing intensity is highly correlated to research and development intensity, it is hypothesized that there are two dimensions to the model that explains the internationalization of small firms and the important variables are internal firm variables.; Future research avenues proposed included a longitudinal study to establish causality, research on high technology firms and research on service firms.