The role of SME owner-managers’ leadership self-efficacy, cultural intelligence and emotional intelligence in foreign market entry mode

Abstract

Small and medium-sized enterprises (SMEs) internationalize to pursue growth opportunities, diversify revenue sources, and enhance competitiveness. Choosing an appropriate foreign market entry mode (non-equity modes such as direct exports, or equity-based modes such as acquisitions) is crucial, as it affects resource allocation, control, and risk in new markets. However, existing literature on entry modes focuses on large firms, limiting the understanding of how SME owner-managers’ individual competencies influence these decisions. Drawing on upper echelons theory, this study examines how individual-level competencies shape SMEs’ foreign market entry mode choices. Specifically, it highlights how leadership self-efficacy (LSE) drives SME owner-managers toward equity-based entry modes, while cultural intelligence (CQ) and emotional intelligence (EQ) strengthen this relationship by equipping leaders to navigate cultural and emotional complexities in international markets. Data were collected from 399 SME owner-managers in Norway and Azerbaijan and analyzed using binary logistic regression. The results confirm that high LSE is positively associated with equity-based entry modes, with CQ and EQ amplifying this effect. This study contributes to the literature in three ways. First, it introduces LSE as a novel factor in SME foreign market entry. Second, it extends the understanding of CQ and EQ as critical amplifiers in SMEs’ entry mode decisions. Finally, by applying upper echelons theory to SMEs, the study addresses a gap in the literature, demonstrating how individual-level competencies uniquely shape SMEs’ strategic choices in foreign market entry.