An Exploration Into NZ Small/Medium Sized Enterprises’ Experiences As a Smaller Partner in International Collaboration
Internationalisation is an important consideration for SMEs, due to rising competition in domestic and international markets as well as the development of information and communication technologies. However, due to knowledge and resource constraints, collaboration is often part of the internationalisation process for SMEs. Often, these collaborations involve a larger partner organisation. The processes of networking on the side of the MNE is well researched, however the perception of the SME is understudied. The aim of this study is to examine how SMEs perceive and manage unequal size in collaborative strategies in internationalisation.
In this research, a multiple case study methodology was adopted. In depth semi-structured interviews were conducted with participants from three New Zealand SMEs who engage in international collaboration. The data was analysed using a thematic content analytical strategy, which was to used address the research questions in this study. This data analysis process used the data analysis spiral from Creswell (2013).
The result of this study suggests that although there are benefits to SMEs internationalisation through networking, there are still challenges SMEs face from managing their unequal size difference. Because SMEs are new to foreign markets and lack resources and legitimacy, this often leaves them being resource dependant to their partners who are then perceived to have more power in negotiations. This power difference can result in uncertainty and opportunistic behaviour, to the detriment of the SME, which in turn negatively affects their internationalisation progress and development of independent competitive advantages.
However, the findings of this study also provide insights into how SMEs can use informal relationships in order overcome the challenges of size difference. Participant SMEs found that informal relationships and face-to-face interactions can build synergies of trust and support between alliance partners towards a mutual goal. By using informal methods of networking with key industry members, participants perceived that this had increased their legitimacy in international markets, advancing their negotiation power with larger partner firm. Participating firms stated how informal communication strategies with the staff involved in field operations gave them a means to monitoring progress and updates in alliance operations. These aspects of informal relationships represent a theoretical contribution to the informal management of networks.