The Internal Change Process : Exploring the Inside of Firms as They Grow to International Markets

Abstract: This study examines how the internal change process unfolds in firms as they grow beyond country borders and into international markets. With the help of theories on resource management and dynamic capabilities, a conceptual framework of the internal change process in the context of internationalization is developed. The study takes a qualitative, multiple-case study approach, and is conducted on five Swedish food and beverage SMEs. The study’s findings report that firms change internally by discovering a change in the external environment, reacting to the change by activating the resource management process, and take action against external environmental changes by implementing value creating strategies based on the resources and capabilities that were developed in the resource management process. The process of discovering, reacting, and taking action is found to be a valid proof of the possession of dynamic capabilities, which help the firms in the internal change process. As the firms gain experience on the international markets they develop a proactive behavior, which also is found to be a valuable part of possessing dynamic capabilities and undergoing the internal change process cyclically, learning and benefiting from past experience.