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Determinants of International Activities: Are SMEs Different?

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  • Heinz Hollenstein

Abstract

In this paper we econometrically investigate the factors determining the choice of a specific internationalisation strategy. We distinguish four strategies, ranging from “serving foreign markets through exports only” up to “exporting and locating abroad several business functions such as distribution, production and R & D”. These strategies are evaluated against the reference category “domestic sales only” (multinomial logit model). The analysis, to a large extent, confirms Dunning’s well-known OLI paradigm. O-advantages turn out to be the main drivers of internationalisation, irrespective of firm size and internationalisation strategy. However, the knowledge-base on which O-advantages of smaller firms rests is more narrow than that of large companies. Whereas the former rely, in relative terms, primarily on capabilities related to incremental innovations, the latter draw to a higher extent on assets enabling them to be competitive in terms of far-reaching innovations. L-advantages (wages, regulatory framework, etc.) primarily are relevant in case of small firms; but even for this size class, O-advantages are dominant. Copyright Springer 2005

Suggested Citation

  • Heinz Hollenstein, 2005. "Determinants of International Activities: Are SMEs Different?," Small Business Economics, Springer, vol. 24(5), pages 431-450, June.
    • Handle: RePEc:kap:sbusec:v:24:y:2005:i:5:p:431-450
    DOI: 10.1007/s11187-005-6455-x
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    References listed on IDEAS

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    1. Heinz Hollenstein, 2001. "Patterns and Determinants of International Activities: Are SMEs Different?," WIFO Working Papers 155, WIFO.
    2. Spyros Arvanitis & Heinz Hollenstein & Marius Ley & Tobias Stucki, 2011. "Die Internationalisierung der Schweizer Wirtschaft," KOF Analysen, KOF Swiss Economic Institute, ETH Zurich, vol. 5(2), pages 51-62, June.
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