success in internationalization involves establishing the right mix of parent company control and local management in a foreign operation (Cooke, 48).
With increasing competition from local and foreign companies over the last decade, more and more small and medium size companies are being forced to look outside of their native country in order to survive. Much of the literature on the internationalization of the firm has focused on multinational enterprises. Many Small and Medium Size Enterprises (öSMEsö) still lack the resources, knowledge and networks needed to actively engage in even the first steps of internationalization, which is exporting. In fact, a lack of resources is one of the primary causes limiting the growth of small and medium-sized businesses in international markets. Internationalization theories have generally focused on entry mode selection criteria and the environment, resources and experience of the firm. According to the internationalization model, SMEs slowly and gradually increase their foreign market commitments because foreign or export sales are hindered by uncertainty resulting from a lack of market information, as well as by concerns about the differences in culture.
The success of any global expansion strategy depends in large part on the ability of the firm to form and maintain relationships with distributors and customers in foreign markets. Large multi-national companies often have the resources and the infrastructure in place to easily enter foreign markets by creating networks of foreign associates. The need to establish a healthy network of relationships is even more important to internationalization efforts for SMEs and in particular those SMEs that have not clearly defined their internationalization goals and strategy.
The relationship between firm size and the ability to be an exporter has attracted considerable research attention.á Evidence suggests a significant positive relati...