The contribution of cultural diversity in the internationalisation process of an SME in Sweden : A Case Study of the IT Company CodeMill

University essay from Umeå universitet/Företagsekonomi; Umeå universitet/Företagsekonomi

Abstract:

The business environment has been changing as it becomes easier to interact acrossboundaries with globalisation. One of the key elements of globalisation is the culturaldiversity resulting from the cross-cultural and ethnic interactions between individuals.This constant growing globalisation challenges small and medium-sized enterprises(SMEs) to interact with different cultural backgrounds in their foreign markets and withtheir local staff. This cultural diversity can bring both positive and negative outcomes toSMEs depending on how they approach these challenges.The purpose of our research is to discover the contribution of cultural diversity in theinternationalisation process of a Swedish SME, named CodeMill and to understand howthis contribution is ensured by this particular SME. Our research focuses on two specificcriteria of cultural diversity, which are expressed as (1) the individual's internationalexperience as an employee and (2) the SME's social network abroad. Our studyprovides them with practical contributions presented in a final framework, whichexplains how to take advantage of cultural diversity to enhance the positive outcomes ofit and strengthen their internationalisation process.A qualitative case study was conducted with CodeMill, a locally based InformationTechnology (IT). They fulfilled the principal requirements in terms of employees andyearly turnover in order to be categorised as an SME. Conducting seven semi -structured interviews in total, with people from different hierarchical levels and spheresenabled us to gain insights on how matters relating to cultural diversity are handled inCodeMill. Secondary Data served to confirm information we received from theinterviews and functioned as an additional source of information.The study proposes a framework that has been revised from the analysis of ourempirical findings. This framework is positioned within the field of Cultural DiversityManagement in an internationalisation context. The gathered findings implicate that thelevel of informational diversity, which needs to be used with a high synergy level,determines the importance of the contribution of cultural diversity. This can be ensuredvia three key elements: leadership, research & measurement, and follow-up. Thecompany’s Entrepreneurial Orientation (EO), especially included the three investigateddimensions of innovativeness, proactiveness and risk-taking proved to be applied inCodeMill. They were considered to have a positive influence on the internationalisationprocess of the company. CodeMill enhances its internationalisation process thanks to sixcompetitive advantages ensuing from its level of cultural diversity. However its socialnetwork hinders the opportunities to enter new markets. We found proof that CodeMillbenefits strongly from connections at an organisational level (e.g. partner companies,international customers); whilst an individual’s international experience, gathered fromliving abroad or just having personal international contacts, did not significantlycontribute to the firm’s internationalisation.

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