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The overestimated role of strategic orientations for international performance in smaller firms

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Abstract

This article examines how market orientation (MO) and entrepreneurial orientation (EO) relate to international performance in small firms. Empirically, the article draws on survey data from 188 Swedish SMEs. Results show that strategic orientations have a very limited influence on international performance in these firms. Proactiveness and, to some extent, a market orientation proved positively associated with international performance, while innovativeness and risk taking show no such relationship. Our findings highlight the problems associated with using “traditional” MO and EO constructs in an SME setting and point to the need of developing more appropriate constructs tailored to this context. We also note that the MO construct was developed from a “causal view” of marketing, while successful small international firms rely more on effectuation logic. The article also contributes to the debate between the two dominant perspectives that address firms’ early internationalization processes: the process theory of internationalization and the international new venture perspective, where our results are in favor of the latter.

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Notes

  1. Size was an important selection criterion for two reasons. First, we opted for firms not being too large (≤250 employees) as we relied on single key informants, thus making it possible for them to have an overview of operations. Second, too small firms (<50 employees) were considered inappropriate as well since our key independent variables are “collective” constructs.

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Acknowledgments

The authors greatly acknowledge the help, assistance, and constructive comments provided by Professor Hamid Etemad and two anonymous JIEN referees.

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Correspondence to Johan Frishammar.

Appendix: Operational measures

Appendix: Operational measures

Market orientation

  1. 1.

    Our business objectives are driven primarily by customer satisfaction.**

  2. 2.

    We constantly monitor our level of commitment and orientation to serving customer needs.

  3. 3.

    We freely communicate information about our successful and unsuccessful customer experiences across all business functions.**

  4. 4.

    Our strategy for competitive advantage is based on our understanding of customers’ needs.**

  5. 5.

    We measure customer satisfaction systematically and frequently.

  6. 6.

    We have routine or regular measures of customer service.

  7. 7.

    We are more customer focused than our competitors.*

  8. 8.

    I believe this business exists primarily to serve customers.**

  9. 9.

    We poll end-users at least once a year to assess the quality of our products and services.

  10. 10.

    Data on customer satisfaction are disseminated at all levels in this business unit on a regular basis.

(Response format: 1 = strongly disagree; 5 = strongly agree)

Innovativeness

  1. 1.

    At my firm, there is a strong emphasis on the marketing of true and tried products or services vs. At my firm, there exists a very strong emphasis on R&D, technological leadership, and innovations.

  2. 2.

    How many new products or services has your firm marketed in the past 5 years? No new products or services in the past 5 years vs. Hundreds of products or services in the past 5 years.

  3. 3.

    Changes in products/services have been mostly of a minor nature (e.g., putting in towel with the soap) vs. Changes in products/services have usually been dramatic (e.g., changing from mechanical to electronic calculators).

Proactiveness

  1. 1.

    In dealing with its competitors, my firm typically responds to actions which competitors initiate vs. Typically initiates actions which competitors then respond to.

  2. 2.

    In dealing with its competitors, my firm is very seldom the first business to introduce new products/services, administrative techniques, operating technologies, etc. vs. Is very often the first business to introduce new products/services, administrative techniques, operating technologies, etc.

  3. 3.

    In dealing with its competitors, my firm typically seeks to avoid competitive clashes, preferring a “live-and-let-live” posture vs. Typically adopts a very competitive, “undo-the-competitors” posture.**

Risk taking

  1. 1.

    My firm has a strong proclivity for low-risk projects (with normal and certain rates of return) vs. A strong proclivity for high-risk projects (with chances of very high returns).

  2. 2.

    My firm believes that owing to the nature of the environment, it is best to explore it gradually via timid, incremental behavior vs. Owing to the nature of the environment, bold, wide-ranging acts are necessary to achieve the firm’s objectives.

  3. 3.

    When confronted with decision-making situations involving uncertainty, my firm typically adopts a cautious, “wait-and-see” posture in order to minimize the probability of making costly decisions vs. Typically adopts a bold, aggressive posture in order to maximize the probability of exploiting potential opportunities.

(Response formats for Innovativeness, Proactiveness, and Risk taking: paired statements, 1–7)

Quantitative international performance

  1. 1.

    We have met our international market-share objectives.

  2. 2.

    We have achieved the turnover objectives we set for internationalization.

  3. 3.

    In general, we are satisfied with our success in the international markets.

  4. 4.

    Internationalization has had a positive effect on our company’s profitability.

Qualitative international performance

  1. 1.

    Internationalization has had a positive effect on our company’s image.

  2. 2.

    Internationalization has had a positive effect on the development of our company’s expertise.

*Item was deleted based on EFA results.

**Item was deleted due to reliability considerations.

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Frishammar, J., Andersson, S. The overestimated role of strategic orientations for international performance in smaller firms. J Int Entrep 7, 57–77 (2009). https://doi.org/10.1007/s10843-008-0031-9

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