De-internationalization of Small and Medium Sized Enterprises : How do the drivers and determinants affect the form and the path of de-internationalization for SME’s?

Abstract: More and more SME’s, which create entrepreneurial spirit and innovation, which are primarily responsible for wealth and economic growth, are internationalizing. This increases their probability of business closure due to the increased risk they face from operating in foreign markets. Much of the world blames the U.S. financial excesses for these business closures, but at the same time there are also SME’s withdrawing activities from foreign markets in economic stable times. This indicates that there are more and other reasons for de-internationalization and raises the problem of how do SME’s close their businesses in foreign markets. The purpose of this study is to explore how the drivers and determinants of deinternationalization affect the form and the paths of de-internationalization for SME’s. The aim is to provide and contribute to a better understanding of deinternationalization. This was studied through developing four case studies with Dutch SME’s with a qualitative research approach. For empirical data collection interviews were conducted with the persons closely involved with the de-internationalization of the SME’s. This in combination with the developed theoretical framework, based on a theory discussion and synthesis, provided more insight into the de-internationalization topic. The findings of this study show that a unique combination of drivers and determinants of de-internationalization is present in each case study and the relative influence of them differs. Most of the de-internationalization took place in a voluntary way, due to the nature and predictability of the occurring drivers. Moreover, it was found that the drivers of de-internationalization combined with the determinants influence the form in which de-internationalization can take place. It was also found that the form of deinternationalization, which SME’s have chosen, determines the two paths of deinternationalization, which are partial divestment and full market exit. This study contributes to the better understanding of de-internationalization, by identifying the forms and paths which SME’s can choose when withdrawing activities in foreign markets. Moreover, the main drivers and determinants have been identified and it was analysed how they affect the different forms and paths of de-internationalization and this was conceptualized in a model. The recommendations are, that deinternationalization should be seen as a strategic option SME’s have and should be considered in corporate strategies. Therefore, the associations with this phenomenon could be seen (more) positive.