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Journal ArticleDOI

A combined focused industry and company size investigation of the internationalization-performance relationship: the case of small and medium-sized enterprises (SMEs) within the Swedish wood manufacturing industry.

01 Dec 2018-Forest Policy and Economics (ELSEVIER SCIENCE BV)-Vol. 97, pp 110-121
TL;DR: The current literature has failed to deliver a coherent explanation of the internationalization-performance (I-P) relationship as discussed by the authors, and the empirical findings are quite confusing and even contradictory.
About: This article is published in Forest Policy and Economics.The article was published on 2018-12-01 and is currently open access. It has received 14 citations till now. The article focuses on the topics: Internationalization & Manufacturing.

Summary (3 min read)

1. Introduction

  • The theoretical underpinning of the I-P relationship is discussed in the next section.
  • Following that, the methodology of the research is presented, which is followed by the results and discussion, and rounded off with the conclusions.
  • To summarize the applicable conclusions and build a foundation for future research, the managerial implications, research limitations and suggestions for further studies are discussed at the end.

2. Theoretical frame of reference

  • Summing up on the use of theoretical frameworks explaining the I-P relationship, there is no single theory with the potential to cover all the aspects.
  • Therefore, researchers are recommended (de Chernatony et al., 2005; Jack and Raturi, 2006; Ma and Norwich, 2007) to triangulate existing theories with respect to the company situations and the specific environmental contexts.
  • Theory triangulation consists of using more than one theory to interpret a phenomenon (Jack and Raturi, 2006) .
  • Therefore, when a research question is approached from more than one theoretical perspective, it is called theory triangulation (de Chernatony et al., 2005) .

2.2. Empirical studies of the I-P relationship

  • All in all, the shape of the nonlinear relationship is determined by the situation in which the companies are performing when the research has been executed.
  • By learning how to handle these initial costs through adjusting organizational structures, processes and systems, companies start to receive more income while keeping costs under control (Contractor et al., 2003) .
  • Unfortunately, firms do not experience the infinite increasing performance consequences of internationalization, because at some point they face an "internationalization threshold".
  • Proponents of both the linear and the nonlinear explanations of the U-shape and inverted U-shape use transaction cost economies and the resource-based view as theoretical underpinnings.
  • The S-shaped relationship takes a longer view and follows the rationale of the sigmoid 3-stage theory to reconcile the contradictions between the U-shape and inverted U-shape explanations.

3.1. Sample selection and data sources

  • The process of deciding upon total populations and executing the surveys was the same.
  • First, a list of all active companies in the Swedish wood manufacturing industry was received from the industry organizations Swedish Wood and the Swedish Federation of Wood and Furniture Industry.
  • These lists were also compared to the companies listed in the official SIC statistics.
  • To increase the probability of getting a high response rate, a letter from the CEOs of those industry organizations was attached to the questionnaires.

3.2. Variables and measures

  • Internationalization is an extremely complex phenomenon, and its effect on performance is very likely to appear over time.
  • Therefore, studying the phenomenon over time is considered to be the proper approach to investigate the I-P relationship (Glaum and Oesterle, 2007) .
  • In order to incorporate the time-effect relationship into their research, the authors combined two independent surveys with data from the Swedish wood manufacturing industry, one from 2001 and one from 2014.

3.2.1. Performance: dependent variable

  • Another aspect which conveys a deeper explanation is performance growth.
  • While most researchers measure growth objectively, there are other studies which focus on subjective growth of companies (Davis and Harveston, 2000) .
  • The authors define growth as the changes in ROC from the time at which the data were collected to one year later.

3.2.2. Internationalization: independent variable

  • International business studies consider international SMEs as predominantly exporting companies in the sense that major assets are still kept in the domestic market, such as development and production.
  • In other words, SMEs mainly rely on the entry modes with low initial investment such as exporting rather than the heavy investment choices like foreign direct investment (FDI) or opening a plant in a foreign market.
  • For this kind of company, the scale of export is deemed to be more relevant for I-P analysis than the scope.
  • Thus, the independent variable of this study is defined as the international sales ratio, which is consequently operationalized as the ratio of foreign sales to total sales.
  • Secondly, international scale is the most relevant measurement to helping reconcile previous research because it is by far the most common operationalization used (Fernhaber, 2013) .

3.2.3. Control variables

  • Hierarchical regression is a useful technique when the predictors' variables are correlated with each other or to analyze the pure effect of predictors after controlling for disturbing variables (Pedhazur, 1997) .
  • Research intensity, however, has been controlled through hierarchical regression analysis.
  • Firm size is measured as the number of employees, and research intensity as the physical and monetary resources a company spends on designing and developing new products.

4. Results and discussion

  • To check the presence of homoscedasticity in the data, both Breusch and Pagan (BP) (1979) and Koenker (1981) tests were used.
  • Therefore, when there is a conflict between these two, the authors rely on the Koenker test.
  • To check the autocorrelation, the Durbin-Watson test was used which revealed no autocorrelation among errors in all the regression models.
  • A quick look at the descriptive statistics reported in Table 1 shows that the size of the companies which participated in the second survey is bigger and their export share is larger.
  • Regarding the scale of internationalization, the authors can conclude that, on average, about 17.9% of companies' sales in the sample come from the international market, which is a high rate for SMEs.

4.1. Performance and internationalization

  • The regression coefficients of square and cubic internationalization in all the models are not significant.
  • These results suggest that the connection between the degree of internationalization and performance among Swedish wood manufacturing companies is a persistent negative linear relationship.
  • Time in the pooled analysis and all its interactions with internationalization, square internationalization, and sigmoid internationalization are not statistically significant, indicating that the shape and direction of the internationalization-performance connection remains unchanged over time.
  • To summarize, the shape of the internationalization-performance relationship among Swedish wood manufacturing companies is linear and the direction is negative.

4.4. Segmented analysis

  • Figure 2 indicates a negative relationship between internationalization and growth for low internationalized companies in 2014 until the turning point is reached (7-8 percent).
  • This relationship becomes positive when the companies suppress the first turning point and is continuous until the maximum point (19-20 percent).
  • Generating more than 20% of total sales from international markets again reduces the growth of low internationalized companies.
  • This could be due to the costs associated with the liability of newness.
  • The experience and benefits gained from increasing involvement in international markets (from 7 to 20 percent) compensates for the costs of being new in these markets, and the new costs arising from managing the complexity of internationalization outweigh the benefit and reduce growth.

5. Conclusion

  • Perhaps the first limitation, which is actually an advantage of this study, is its limited focus on the Swedish wood manufacturing industry.
  • While the discussion of using a multi-dimensional measure of internationalization is well spoken for, supplemental empirical considerations such as availability and applicable guidelines to compose different measures of internationalization are lacking, which limits the use of such measures.
  • Third, this research follows a repeated cross-sectional design of longitudinal study which means taking independent samples from the same population over time.

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Citations
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Journal ArticleDOI
TL;DR: In this paper , an explorative study on secondary data related to 746 Italian SMEs is conducted for testing via structural equation modelling (SEM) the positive relationships between SME's investment in information and communication technologies (ICT), number of languages available for the SME website and number of language available for SME social pages and SME return on sales (ROS) in foreign countries.
Abstract: PurposeRecognising the increasing relevance of digital platforms in socio-economic dynamics, the paper aims at investigating in which ways digital platforms can influence the economic performances of Italian small and medium enterprises (SMEs) actively engaged in foreign countries.Design/methodology/approachThe paper adopts the interpretative lens provided by the exploration–exploitation dichotomy within current studies in knowledge management for defining knowledge-based factors able to influence the economic performance of Italian SMEs in foreign countries. An explorative study on secondary data related to 746 Italian SMEs is conducted for testing via structural equation modelling (SEM) the positive relationships between (1) SME's investment in information and communication technologies (ICT), (2) number of languages available for the SME's website and (3) number of languages available for SME's social pages and SME's return on sales (ROS) in foreign countries.FindingsThe results underline the key role of exploitation factors in terms of influence on SME's performance in foreign countries.Originality/valueThe paper enriches current studies about international marketing providing preliminary evidence about the key role of exploitation factors in influencing SME's performance in foreign countries.

11 citations

Journal ArticleDOI
07 Apr 2021-Forests
TL;DR: Wang et al. as discussed by the authors used the time-varying parameter autoregressive (TVP-VAR) model to estimate the dynamic impact of the COVID-19 pandemic on log prices at different time points.
Abstract: China’s wood industry is vulnerable to the COVID-19 pandemic since wood raw materials and sales of products are dependent on the international market This study seeks to explore the speed of log price recovery under different control measures, and to perhaps find a better way to respond to the pandemic With the daily data, we utilized the time-varying parameter autoregressive (TVP-VAR) model, which can incorporate structural changes in emergencies into the model through time-varying parameters, to estimate the dynamic impact of the pandemic on log prices at different time points We found that the impact of the pandemic on oil prices and Renminbi exchange rate is synchronized with the severity of the pandemic, and the ascending in the exchange rate would lead to an increase in log prices, while oil prices would not Moreover, the impulse response in June converged faster than in February 2020 Thus, partial quarantine is effective However, the pandemic’s impact on log prices is not consistent with changes of the pandemic After the pandemic eased in June 2020, the impact of the pandemic on log prices remained increasing This means that the COVID-19 pandemic has long-term influences on the wood industry, and the work resumption was not smooth, thus the imbalance between supply and demand should be resolved as soon as possible Therefore, it is necessary to promote the development of the domestic wood market and realize a “dual circulation” strategy as the pandemic becomes a “new normal”

11 citations

Journal ArticleDOI
TL;DR: In this article, the authors focused on whether the different combinations of the micro, small and medium-sized enterprises' (SMEs) international scale and scope affect their international performance differently.
Abstract: The present research focuses on whether the different combinations of the micro, small and medium-sized enterprises’ (SMEs) international scale and scope affect their international performance differently. The major purpose of this research is to study the paramount relationship between the SMEs’ international strategies and international performance. With a sample composed of 307 international SMEs, our empirical analysis defines three different strategic groups regarding the scale and scope of internationalization, that is, a high, medium and low international exposure of the firms. The scope, as an important international strategic dimension, is taken from two angles, the number of countries and the number of regional blocs where the firms operate. We assessed the strategic groups’ implications on the firms’ international performance. The latter was taken as a multidimensional construct composed of the financial, strategic and overall international performance respectively. We used the hierarchical regression analysis to test our hypotheses, and major results emerged. Higher levels of commitment with the international markets lead to better financial, strategic and overall international performances. These results are of utmost importance from the theoretical point of view and for the strategic decision-making of SMEs, opening new avenues for future studies.

6 citations

Journal ArticleDOI
TL;DR: In this article, the authors use the data from the Spanish Survey on Business Strategies (ESEE) to investigate the impact of e-commerce on both profitability and revenue of companies.
Abstract: E-commerce has grown significantly in recent years. Although the factors that contribute to the implementation of e-commerce have been studied in prior literature, little has been done about the impact that the introduction of e-commerce has on both profitability and revenue. This is important because, as Solow (1987) points out, the information technology expenditures do not always allow firms to achieve a better performance. For this purpose, the authors use the data from the Spanish Survey on Business Strategies (ESEE). The research covers an eight-year period (2008-2015). 2,544 Spanish companies belonging to the manufacturing sector were analysed. Results show that neither business-to-business (B2B) nor business-to-consumers (B2C) e-commerce seem to have influence on the revenue growth. Therefore, a substitution effect may exist between the sales by physical channels and e-commerce sales. However, the authors have found evidence that companies which adopt a high level of e-commerce (B2C and B2C simultaneously) immediately experience increase in their profitability. Moreover, if firms adopt only B2B or B2C the positive effects on profitability are achieved in the year subsequent to that of the measurement of the e-commerce status.

5 citations

Journal ArticleDOI
01 Dec 2019
TL;DR: This paper conducted an academic literature review on strategic approaches of sawmill industries in these countries and mapped the drivers of competitiveness that they could identify from the studies published between years 1990 and 2019.
Abstract: The two Nordic European Union countries, Finland and Sweden, have common features and similarities based on their rich forest resources and sizable sawmill industry with internationalization mainly through exports. We compared the Finnish and Swedish sawmill industries and market developments since 1990 and discussed the most eminent country and firm-level differences. In this context, we conducted an academic literature review on strategic approaches of sawmill industries in these countries and mapped the drivers of competitiveness that we could identify from the studies published between years 1990 and 2019. In our study, drivers of competitiveness were identified to stem dominantly from the firm-level strategic decisions and use of internal resources and capabilities, whereas the factors related to the external environment were found to be less prominent. From a methodological perspective, the use of qualitative methods has become more common towards the present date, while the use of mixed approaches is very rare. Research on sawmill industry strategies is quite versatile, but more comparative studies are needed to increase understanding of the developments and state of complex sawmill business that is influenced by a myriad of internal and also external factors.

4 citations

References
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TL;DR: The authors examined how strategy scholars have measured and tested industry effects and found that there has been a decrease in the proportion of articles that do not control for industry effects at all and at the same time noting a significant increase in the number of single industry studies.
Abstract: The authors examine how strategy scholars have measured and tested industry effects. They report findings from three studies. First, they replicate the Dess, Ireland, and Hitt (1990) article on industry controls in strategic management research using a new sample of studies published during 2000 to 2009, finding that there has been a decrease in the proportion of articles that do not control for industry effects at all and at the same time noting a significant increase in the number of single-industry studies. Second, they employ a fine-grained content analysis of articles published in the Strategic Management Journal at three different points during the study period to identify the different ways that industry effects have been considered. Findings depict a myriad of highly diverse industry-level measures that researchers have applied. Third, they test the empirical implications of applying different measures of one particular industry characteristic, industry performance. They demonstrate that empirical...

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TL;DR: In this article, the impact of firm resources on the internationalization performance of Indian manufacturing firms has been investigated and it was found that a firm's capabilities in cost efficiency and marketing have a moderating impact on this relationship.
Abstract: The previous decade has been characterized by emerging market firms expanding into international markets This trend has led to scholars in the IB arena to grapple with the new phenomenon of emerging multinational enterprises (EMNEs), specifically the relationship between internationalization and performance of the EMNEs This paper seeks to add to the literature by capturing the impact of firm resources on the internationalization‐performance relationship Empirical analysis on a sample of 787 Indian manufacturing firms indicates that there is a non‐linear relationship between internationalization and performance Findings also indicate that a firm’s capabilities in cost efficiency and marketing have a moderating impact on this relationship

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TL;DR: In this article, the causal relationship between inflow foreign direct investments in the forest sector and host country-specific factors affecting the geographical aspects of the FDI was examined for developed (the US and Canada) and developing (Brazil and Chile) countries in the Americas.

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TL;DR: The more recent interpretation of triangulation in social and educational research was summarised and examined with reference to theory triangulations applied in an empirical study by as mentioned in this paper, where the construction of special educational needs (SEN) from the individual experiences of a sample of SEN co-ordinators and SEN teachers, parents, and adolescents with emotional and behavioural difficulties or physical disabilities were interpreted from the perspectives of personal construct theory, bio-psycho-social model, socio-psychological analysis, bioecological model of human development and a developmental model of selfunderstanding.
Abstract: The more recent interpretation of triangulation in social and educational research was summarised and examined with reference to theory triangulation applied in an empirical study. The construction of special educational needs (SEN) from the individual experiences of a sample of SEN co‐ordinators and SEN teachers, parents, and adolescents with emotional and behavioural difficulties or physical disabilities were interpreted from the perspectives of personal construct theory, bio‐psycho‐social model, socio‐psychological analysis, bioecological model of human development and a developmental model of self‐understanding. Their points of convergence and divergence enriched and extended theoretical understanding. The focus on the ‘verstehen’ psychological level of analysis and on forging closer theory, concept and data connections influenced the range of theory choice. This instance of theory triangulation casts doubts on the Duhem‐Quine thesis of underdetermination.

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TL;DR: In this article, the authors revisited the dynamic capabilities perspective to consider whether the relationship between new venture internationalization and survivability is more complex than previously assumed, and they confirmed that the level of new-venture internationalization exhibits an inverted U-shaped relationship with survival, while the opposite U -shaped relationship exists with sales growth.
Abstract: To help untangle the inconsistency in prior performance studies for new venture internationalization, the dynamic capabilities perspective is revisited to consider whether the relationship is more complex than previously assumed. While internationalization requires the reconfiguration of routines and resources, survivability is argued to peak at moderate levels of internationalization where the associated resources and risk is balanced between local and foreign markets. In contrast, sales growth is suggested to peak at either low or high levels of internationalization where a singular market focus and set of capabilities is being exploited. The results confirm that the level of new venture internationalization exhibits an inverted U-shaped relationship with survival, while the opposite U-shaped relationship exists with sales growth.

32 citations

Frequently Asked Questions (1)
Q1. What are the contributions mentioned in the paper "A combined focused industry and company size investigation of the internationalization-performance relationship: the case of small and medium-sized enterprises (smes) within the swedish wood manufacturing industry" ?

Building on the resource-based view and the S-shape theory of internationalization, this paper aims at such an empirically focused investigation of SMEs within the Swedish wood manufacturing industry. A repeated cross-sectional survey study using hierarchical regression analysis has revealed a linear negative relationship between internationalization and performance. In addition, the follow-up tests of ANCOVA ( analysis of covariance ) and piecewise regression revealed a non-linear relationship between ( 1 ) internationalization and performance for highly internationalized firms in 2001, ( 2 ) internationalization and growth for low internationalized companies in 2001, and ( 3 ) internationalization and performance for highly internationalized groups in the pooled dataset.