Internationalization of SMEs: the challange of selecting foreign market entry modes

Abstract: This thesis focuses on how SMEs select foreign market entry modes. To be able
to gain a better understanding of the subject, research questions concerning
SMEs’ motives for internationalization, approaches to foreign market entry
mode and influence of internal factors were formulated. The empirical data
consisted of case studies of two Swedish companies active within the wood
industry and located in northern Sweden. Findings show the main motive for
SMEs to go international is the level of demand for SMEs’ products in foreign
markets. In order for the SMEs to be able to compete on the foreign market
they have to have unique products with flexible price setting. SMEs, due to
their small size and limited resources, are more or less forced to use more
simple and less costly entry modes, thus, most companies begin their
internationalization with various forms of the export mode where less control
and fewer resources to move abroad is needed.