The impact of ownership: Location‐specific advantages and managerial characteristics on SME foreign entry mode choices

This paper aims to analyse the growing body of literature on small and medium‐sized enterprise (SME) internationalisation by considering a set of propositions regarding the drivers and inhibitors of an entry mode decision.

Following a quantitative methodological approach, a survey was applied to a sample of SMEs to empirically test the proposed conceptual model. Logistic regression analysis was used to analyse the data.

Results from the study revealed the importance of the firm's international experience, its ability to innovate, the market potential for growth and market‐specific knowledge as key predictors for choosing an equity‐entry mode. SMEs are rather flexible in nature and tend to perform activities with low‐cost structures, thereby minimising the relevance of the perceived risk associated with the host country.

Empirical findings are relevant as they may assist SME managers to make financially sound entry mode choices, which, if effectively made, enable a firm to gain important competitive advantages.

This study contributes to the current body of knowledge in the area of SME internationalisation by combining two key dimensions of Dunning's eclectic framework, while also including the managerial and ownership structure characteristics, whose dimensions have been assumed to be important drivers for SME internationalisation.