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Differences in managerial behavior between small international and non-international firms

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Abstract

The main question raised in this article is whether there are any differences between the work activities of managers in small firms primarily operating on an international market and those managing firms doing business on a domestic market. If so, what are these differences, and what do they tell us about the internationalization of small firms? The comparative method used here is based on multiple approaches including interviews, diary studies, and direct observations. The conclusions indicate that managers in small international firms are more proactive in their networking behavior, delegate operative activities, and devote more time to planned strategic activities connected with their international expansion than managers in other small firms.

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Notes

  1. There is an extensive vein of research treating small firm internationalization and performance (Leonidou et al. 2002; Lu and Beamish 2006). Performance is a multi-dimensional measure and internationalization can have different effects on different aspects such as profitability and growth (Lu and Beamish 2006). While this study is focused not on performance but on behavior, we will briefly reflect on the effect of internationalization. The performance of the companies (information was collected through official documents, such as annual reports and interviews with CEOs) showed some clear patterns. The sales turnover grew in the international firms whereas the growth rate in the domestic firms was low. However, regarding profitability (return on sales and return on assets), no clear patterns could be identified. This is in line with the study by Lu and Beamish (2006) who found a positive relationship between export and growth, as well as between FDI activity and growth. They also found a negative relationship between export activity and profitability and a U-curve relationship between FDI activity and profitability. However, we could not find this pattern in our study. We discussed these findings with the CEOs in the international firms. The CEOs are also owners (one owns the company 100% and the other two are significant part-owners). All three companies have growth as an important long-term goal. As they were significant owners of the companies, they did not need to show short-term profitability for other owners or investors but could invest in international new markets. To sum up, profitability differences between the two types of firms are not shown in the financial figures, as the international growing firms are using their “profitability” to grow on international markets.

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Acknowledgments

The authors greatly acknowledge the constructive comments from the editor and two anonymous referees and want to thank The Knowledge Foundation and The Swedish Research Council for financial support.

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Correspondence to Svante Andersson.

Appendices

Appendix 1—Mintzberg’s (1973) managerial roles

Interpersonal roles:

  • ▪ Figurehead—symbolic head; the manager is obliged to perform a number of routine duties of a legal or social nature due to the fact that he/she is the head of the firm.

  • ▪ Leader—the manager is responsible for the motivation and activation of subordinates and responsible for staffing, training, and associated duties.

  • ▪ Liaison—the manager maintains a self-developed network of outside contacts and informants who provide favors and information that can be used to manage and operate the firm.

Informational roles:

  • ▪ Monitor—the manager seeks and receives a wide variety of special information (much of it current) that enables him/her to understand what is taking place in the organization and its environment. He/she materializes as a nerve center of internal and external information for the organization.

  • ▪ Disseminator—the manager transmits information received from outsiders or from subordinates to members of the organization; some information is factual while other information involves interpretation and integration of diverse value positions of organizational influencers.

  • ▪ Spokesman—while the disseminator role looks into the organization, in the spokesman role the manager transmits information to outsiders on the organization’s plans, policies, actions, results, etc.

Decisional roles:

  • ▪ Entrepreneur—in the entrepreneur role, the manager operates as initiator and designer of much controlled change in the firm. He/she searches the organization and its environment for opportunities and initiates “improvement projects” to bring about change. The manager also supervises the design of certain projects.

  • ▪ Disturbance handler—responsible for corrective action when the organization faces important, unexpected disturbances. Whereas the entrepreneur role concerns voluntary action by the manager, the disturbance handler role deals with involuntary situations and change that might be partially beyond the manager’s control. The types of disturbances are many and often hard to foresee.

  • ▪ Resource allocator—the manager is responsible for the allocation of organizational resources of all kinds (e.g., money, time material and equipment, manpower, and reputation)—in effect the making or approval of all significant organizational decisions. Through this role, the manager is operating the organizational strategy-making system. On an overall level, three elements can be identified in the resource allocation process: the scheduling of time, the programming of work, and the authorization of action.

  • ▪ Negotiator—responsible for representing the organization at major non-routing negotiations with other organizations or individuals; it is often the manager who leads the contingent from his/her organization.

Specialist roles:

  • ▪ Specialist role—the leader is often involved in operational activities due to his/her expertise in the area. The specialist role can also arise when the leader decides to keep control over a certain function, if the leader perceives the function to be crucial for the company.

  • ▪ Substitute role—in the substitute role, the manager must be prepared to step into a job when any one of a number of needs arises. This might happen, for example, when an employee is absent, the plant is operating at full capacity, and an extra hand is needed.

Appendix 2—deployed records

Chronological record:

figure a

Mail record:

figure b

Contact record:

figure c

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Andersson, S., Florén, H. Differences in managerial behavior between small international and non-international firms. J Int Entrep 9, 233–258 (2011). https://doi.org/10.1007/s10843-011-0074-1

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