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How well do Traditional Theories Explain the Internationalisation of Service MNEs from Small and Open Economies? – Case: National Telecommunication Companies

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Abstract

  • This paper discusses international market and operation strategies of service MNEs from small and open economies (SMOPECs). The focus in the analysis will be on the special challenges that these type of companies face in their internationalisation process.

  • A conceptual framework and propositions are developed based on earlier research of internationalisation of manufacturing companies and companies in different service sectors. A multicase study of four service MNEs, which are telecommunications operators (telcos), is used to illustrate and test the propositions.

  • International processes of the case companies deviate in many areas from those suggested by traditional theories, especially their market strategies. Several industry specific characteristics played an important part in this, as they further enhanced many challenges common to internationalising companies from smaller countries.

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Notes

  1. SMOPECs include Austria, Belgium, Denmark, Finland, Ireland, Israel, the Netherlands, New Zealand, Norway, Portugal, Sweden and Switzerland. A broader definition can also include countries such as Australia, Hong Kong and Singapore, as the challenges they face with regards to their internationalisation are similar (Liesch, et al. 2002, Merret, 2002, Dick/Merret 2007).

  2. For example, in 2006 75 percent of the Fortune Global 500 MNEs originated in the largest developed countries; that is, the G7 countries (USA, Japan, Germany, UK, France, Italy and Canada). (Fortune, July 24th, 2006 Issue).

  3. One of the traditional internationalisation economic theories, Vernon’s (1966) product cycle theory, is similar to process theories in that it also sees internationalisation as a process. The theory originated at a time when the US was clearly the most developed country in the world after World War II. The US based multinational companies used their experience from sophisticated domestic markets to, first, export their products to other markets, and later, to establish production facilities internationally. As its main focus was on large MNEs and FDI, it is listed among the economic models.

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Authors and Affiliations

  1. Adelaide Graduate School of Business, University of Adelaide, Adelaide, Australia

    Riku Laanti,  Fred McDougall &  Georges Baume

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  1. Riku Laanti
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  2. Fred McDougall
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  3. Georges Baume
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Additional information

This study is a part of a larger on-going research project (Laanti, 2008, forthcoming), which analyses internationalisation strategies of SMOPEC telcos. The research project is funded and supported by The Foundation for Economic Education, The Finnish Cultural Foundation, HPY’s Research Foundation and the International Telecommunication Union. The authors want to also acknowledge the key interviewees of each case company for their valuable support for the project.

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Laanti, R., McDougall, F. & Baume, G. How well do Traditional Theories Explain the Internationalisation of Service MNEs from Small and Open Economies? – Case: National Telecommunication Companies. MANAGE. INT. REV. 49, 121–144 (2009). https://doi.org/10.1007/s11575-008-0128-3

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