The Internationalization of SMEs

Abstract

This chapter aims at providing a theoretical explanation for the observed heterogeneous internationalization behavior of small and medium enterprises (SMEs). In this chapter, the authors propose a conceptual framework of how the entrepreneurs' cognitive systems affect the internationalization decision making in SMEs, and supplement extant normative theories of venture's internationalization with entrepreneurial and psychological constructs. The proposed framework suggests that entrepreneurs' cognitive systems (expertise-based intuition System-X and the analytic System-C) moderate the relationship between the perception of environmental validity and the venture's internationalization decisions. This approach explains how entrepreneurs perceive the environment in such a way that some will recognize an international business opportunity, evaluate alternatives and, finally, decide to start and grow an international venture by following any of the extant patterns of internationalization, namely a sequential, gradual and slow pace or an accelerated and not necessarily sequential approach.