The Role of Foreign Market Knowledge in Internationalization of B2B Born Global SMEs : A Case Study of Deep Tech Companies

Abstract: The subject of internationalization of Born Global small and medium-sized enterprises (SMEs) that start cross-border business operations shortly after the company’s foundation has received growing scholarly attention in the last decades. Although the research of the influence of the market knowledge - information a firm has about a specific foreign market, on internationalization decisions was developing rapidly to account for the challenges of the established internationalization theories, multi-factor comprehensive analysis of the influence of all the interlinked factors of the market knowledge remains overlooked by research. Therefore, the main purpose of this thesis is to contribute to the understanding of the impact of foreign market knowledge on the decisions of business-to-business (B2B) Born Global SMEs regarding when, where to, and how to internationalize, and concerning the ways of operating in the foreign market(s). To fulfill the purpose of the paper, the authors carried out a qualitative multiple case study with six Born Global SMEs working in the deep tech industry which has started international operations up to one year after the establishment. Fieldwork consisted of 14 virtual interviews with the Marketing Managers and Founders of the firms. The results of this study show that the process through which the studied B2B Born Global SMEs internationalize is very similar among all companies: it starts between a few weeks up to one year after the inception of the company, and it follows a typical progressive process (first, the firms have one of their employees or external representatives physically going to the foreign market of interest; then establish the partnerships with local companies; later appoint a local representative to the market, and lastly establish a subsidiary company). Next, the research illustrates that the studied Born Global SMEs acquire foreign market knowledge from external parties by the method of grafting. Furthermore, the study also concluded that there are three groups of factors of the foreign market, which are categorized based on the firms’ perception of the factors’ influence on decisions of B2B Born Global SMEs about when, where to, and how to internationalize. These groups are: important (economic opportunities, networks, political context), disregarded (language, culture, and legal regulations) and overlooked (political context, legal regulations, and language) factors. Lastly, such foreign market knowledge factors were found to influence the decisions of B2B Born Global SMEs’ about ways of operations in the foreign market(s): political situation, economic opportunities, and legal regulation impact the companies’ decisions about operations in the foreign market(s).