Internationalization and performance
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5.1 Introduction In this book the outcome of internationalization is measured by financial performance. Measuring financial performance can give an overview of the effects of internationalization expressed in numbers. Hence, finding significant effects can have an impact on future strategic decisions by management teams. Whether internationalization has a significant effect on performance in Dutch SMEs will be investigated in this chapter. 5.1.1 Structure This chapter is structured as follows. First a short motivation for this chapter is given, followed by the research questions. The next paragraph presents a short literature review, with theories, definitions and concepts related to internationalization and performance. The hypotheses following from the integration of the literature review will be discussed in paragraph three together with some empirical studies and the research set-up. Paragraph four presents the methodology and data, followed by the analyses. The last paragraph ends with conclusions and policy implications. 5.1.2 Motivation It is believed that SMEs benefit from internationalization in terms of improving competitive and financial performance (Zahra et al., 1997). While SMEs for the most part lack the substantial tangible resources of large multinational enterprises, they appear to leverage a collection of fundamental resources that facilitate international success (Knight et al, 2004). The purpose of this chapter is to get more insight in the performance effects of SMEs and their internationalization. As a mode of foreign operation, the focus is on export activity and FDI. Export activity is the most common international expansion strategy among SMEs (Zahra et al., 1997) and is considered to be the first and most common step in a firm’s international expansion (Young et al., 1988). As it is believed that SMEs benefit from internationalization, investigation whether or not this holds is to be performed. Chapter 5
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