When Size Does Matter - Trends of SMEs Internationalization Strategies in Chinese Economy

Abstract

The strategies of internationalization have been one of hottest topics in managerial literature in the last decade. Interestingly to notice how deep and unexpected changes have challenged the mainstream of international management theories. This paper illustrates a framework and some preliminary results aim to comprehend how and why MMNEs (Medium-size Multinational Entreprise) internationalization strategies deviate from the more established strategies of multinational and global companies (MNC). We study a sample of Italian SMEs, analyzing the strategy choice and the governance models adopted in China businesses. Qualitative analysis highlights both the feasibility and sustainability of governance models (criteria and components) and forms (model execution and implementation). This paper investigates the specificities of SMEs: The adaptation process and, in some cases, the innovative governance forms analyzed in our sample of cases (described in the paper) are strongly affected by the following factors: first, the size does not fit the potential or actual dimension of market (size factor); Second, increasing difficulties to access to the countries? institutional externalities and strong reliance on the efficiency of markets in order to purchase product and services which they can not internalize (make or buy factor);. Third, negative effects of size preventing to reach arrangements with local and national government (government and local shareholders factor); Fourth, being part of the supply chain of larger firms (MNC) is a common entry mode in Chinese market. Last factor refers to the lack of resources (human, market and relational capital).