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Internationalization and performance of Korean SMEs: the moderating role of competitive strategy

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Abstract

Drawing upon the liabilities of newness and smallness perspective, we explore the impact of the degree of internationalization (DOI) on the performance of small- and medium-sized enterprises (SMEs) and the moderating impact of competitive strategies. An analysis of data from Korean SMEs reveals an S-shaped relationship between DOI and performance. Moreover, SMEs emphasizing a differentiation strategy may have better performance when increasing the DOI, whereas the opposite is true for SMEs emphasizing a cost leadership strategy. The findings support a three-stage internationalization theory in the SME context and provide a contingency perspective on the performance implications of the optimal DOI.

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Notes

  1. There are two sets in previous researches in regard to the link between DOI and SME performance: one is linear, whereas the other is curvilinear. We provide a review of important empirical studies on this link in Table 1.

  2. We briefly summarize all measurement methods in Table 3.

  3. We measured CEO educational level using a seven-point scale, reflecting the highest degree of education had (1 = elementary school, 2 = junior high school, 3 = high school, 4 = two-year college, 5 = four-year university, 6 = master’s degree, 7 = Ph.D. degree).

  4. To control institutions’ impact, we used the Worldwide Governance Indicator (WGI) established by Kaufmann et al. (2011). We employed regulatory quality among six dimensions of WGI since it captures directly the soundness of regulations and policies that affect the decisions of corporate internationalization. This index is widely employed in the current studies on the influence of institutions (e.g., Lu et al. 2014).

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Authors and Affiliations

  1. Department of Management, Kyungpook National University, 80, Daehak-ro, Buk-Gu, Daegu, South Korea

    Jaeyoung Cho & Jangwoo Lee

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  1. Jaeyoung Cho
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  2. Jangwoo Lee
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Correspondence to Jangwoo Lee.

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Cho, J., Lee, J. Internationalization and performance of Korean SMEs: the moderating role of competitive strategy. Asian Bus Manage 17, 140–166 (2018). https://doi.org/10.1057/s41291-018-0036-8

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