Factors Influencing the Internationalization Choices of Small and Medium-Sized Enterprises: The Case of the Irish Hotel Industry

Abstract

The objective of this study is to explore the usefulness of Dunning's (1977, 1988, 1993) eclectic paradigm of international production in explaining the pattern and extent of internationalization by small and medium-sized enterprises (SMEs). A study of Irish hotel groups suggests that the resource deficiencies that characterize SMEs impact on the internationalization choices made by management, affecting the what, where and how of their foreign value-added activities. The results of this study are contrasted with the findings of Dunning and Kundu's (1995) study of international hotel groups. The findings suggest that SMEs may lack ownership advantages that can readily be developed into sustainable competitive advantage in international markets. It is concluded that SMEs seeking success in international markets must develop both an ownership advantage that will transfer to international markets, and the organizational capacity necessary to support an internationalization strategy.