Global integration strategies of small and medium multinationals: Evidence from Taiwan

This study replicates and extends Birkinshaw et al.’s (1995) model of the predictors of business unit integration of large Western multinational corporations (MNCs). Our study investigates the global integration strategies of Taiwanese small and medium sized enterprises (SMEs) competing in the global information technology (IT) industry. It confirms the importance of some structural forces (i.e. economies of scale and standard market demands) in the global integration strategies of Taiwanese SMEs thereby expanding the applicability of existent internationalization theories developed primarily in the context of large Western MNCs to non-Western SMEs. This study finds three results that add new knowledge to the current SME literature and provides managerial implications. First, it finds a negative relationship between competitive actions and business unit integration. Second, it finds that in the optimally globalized IT industry there is no direct effect of business unit integration on performance. Third, it finds a direct effect of differential comparative advantage on performance.