The Internationalization Process of the Smaller Firm : Re-framing the relationships between market commitment, knowledge and involvement

Abstract * This paper offers an alternative and early approach at re-framing the relationships between three constructs widely used in models of the firm internationalisation process. It proposes the constructs, market commitment, market knowledge and market involvement interact and are difficult to differentiate in the firm internationalisation process rather than being discrete and displaying direct, causal relationships. * This approach recognises explicitly that the firm internationalisation process is not always deterministic. This notion of construct overlap is applied to understand better an evolving organisational culture of internationalisation in the internationalising smaller firm. Preliminary case evidence from Australia on small firm behaviour in foreign markets provides evidence for the re-formulation. Key Results * An overlapping of the constructs, the firm's commitment to the market, its knowledge of the market and its involvement in the market is proposed as an alternative to some existing interpretations of the firm internationalisation process. Previous representations have often been static and uni-directional, or iterative, and are generally deterministic. Introduction The internationalisation process of the firm has captured the interest of many researchers since the late 1970s, but it remains a relatively under-developed field of investigation (Johanson/Vahlne 1977, Bilkey/Tesar 1977, Wiedersheim-Paul et al. 1978, Luostarinen 1979, Cavusgil 1980, Reid 1981, Barrett/Wilkinson 1985, Miesenbock 1988, Luostarinen/Welch 1990, Calof/Beamish 1995, Eriksson et al. 1997, Liesch/Knight 1999). The concept, firm internationalisation, relates to the firm's international development over time. Firm internationalisation has been defined as ". the process of increasing involvement in international operations" (Luostarinen/Welch 1990, p. 249). This can be through inward and outward involvement, although the process of outward involvement is emphasised in this paper (Welch/Luostarinen 1993). Existing explanations of the internationalisation of the firm have been the subject of some debate. Conjecture has focused on the conceptual and theoretical soundness of the models (Andersen 1993, Luostarinen/Welch 1990, Leonidou/ Katsikeas 1996), methodologies used for analysis (Andersen 1993, Leonidou/Katsikeas 1996, Reid 1981, Welch/Luostarinen 1993, Wright/Ricks 1994) and contradictory research findings, particularly with internationalisation models that advocate incremental and sequential commitment to foreign markets (Turnbull 1987, Millington/Bayliss 1990, Sullivan/Bauerschmidt 1990, Luostarinen/Welch 1990, Bonaccorsi 1992). Few attempts, though, have been made at developing further the concept of the internationalisation of the firm (Johanson/Vahlne 1990). Johanson and Vahlne (1990, p. 14) suggest criticisms ". should perhaps not be primarily an argument against the process model . but rather an argument for the development and differentiation of the model. " Our purpose is to re-examine, and offer an alternative re-framing of, some components of the internationalisation process model, to contribute to a clarification of the nature of the relationships between these constructs, and in doing so to recognise a greater degree of interaction and dynamism between them. While ". interest toward internationalization processes was dynamic by definition from the beginning" (Oesterle 1997 p. 3), this interest appears to have been diffused somewhat by the imperative for operationalisation in quantitative, empirical research on this topic. The very dynamism that has characterised the firm internationalisation process often has been lost in the formal modelling. A focus on the smaller firm also seems appropriate in light of the increasing importance of small firms in internationalisation activity. Wright and Ricks (1994, p. 699) highlighted a ". …