From Resources to Results: The Road to International Performance for Norwegian SMEs

Abstract

The international performance of small and mediums sized enterprises is becoming increasingly important. With growing international trade and more small and medium sized enterprises joining the world trade, the international performance of these firms has considerable impact on the development of the world economy. Still, their resource shortage complicates the internationalisation process, making it hard to succeed abroad. Accordingly, what is vital for managers of small and medium sized enterprises is to identify the internal firm factors leading to enhanced international performance, as these are the factors managers can directly control and affect. Thus, this study contributes to research on the salient topic of international performance of small and medium sized firms by investigating what internal factors ensure high international performance for small and medium sized enterprises?A quantitative and deductive research strategy was applied to address the research question by conducting statistical analyses of survey data on a sample of 280 Norwegian small and medium sized firms with international activities. The resource-based view was used as a starting point to identify internal factors determining performance, and insights from various theoretical perspectives were used to further understand their relation to international performance. Factor analyses and multiple regression were utilised to operationalize and test theoretically developed hypotheses on the relations between internal firm resources and international performance. Three performance dimensions were incorporated leading to three regression models.The analysis shows that different resources are needed to ensure high performance for the various performance dimensions of the study, leading to a threefold answer to the research question. Small and medium sized firms seeking high Market establishment performance should focus on acquiring international vision, international commitment, intermediary competencies and market communication whereas Market position performance can be improved by obtaining international vision, international commitment, cooperation orientation, market communication and value chain coordination. International revenue growth performance is found to be related to firms having strong financial sufficiency, international vision and market communication.These results provide implications at the firm level for theory and managers of international small and medium sized firms. Two resources influence all performance dimensions, international vision and market communication, and are sources of competitive advantage due to their intangibility and unique characteristics. Apart from these, the individual performance goal of the firms determine the resources required to ensure high performance, implying that SMEs must adapt their resource base to changing firm objectives. Some resources, although being proposed by theory to enhance performance, are found to have negative or no influence on international performance. Managers need to be aware of their potentially deteriorating effects, and theory should further investigate their unexpected effect. Risk is also found to influence international financial performance and should be taken into account in performance studies to prevent risky ventures biasing results and recommendations.