Internationalization strategy choice for micro-multinationals: a development framework

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IN

DEGREE PROJECT INDUSTRIAL MANAGEMENT, SECOND CYCLE, 30 CREDITS

STOCKHOLM SWEDEN 2018,

Internationalization strategy

choice for micro-multinationals: a development framework

GINÉS SÁNCHEZ

KTH ROYAL INSTITUTE OF TECHNOLOGY

SCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

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Internationalization strategy choice for micro-multinationals: a development

framework

by

Ginés Sánchez

Master of Science Thesis TRITA-ITM-EX 2018:510 KTH Industrial Engineering and Management

Industrial Management SE-100 44 STOCKHOLM

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Internationaliseringsstrategi för mikro- multinationella företag: ett

utvecklingsstrategiskt ramverk

Ginés Sánchez

Examensarbete TRITA-ITM-EX 2018:510 KTH Industriell teknik och management

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Master of Science Thesis TRITA-ITM-EX 2018:510

Internationalization strategy choice for micro- multinationals: a development framework

Ginés Sánchez

Approved

2018-06-14

Examiner

Bo Karlson

Supervisor

Kent Thorén

Commissioner

ChromaWay AB

Contact person

Henrik Hjelte

Abstract

Micro-multinational is a relatively new term and there are still very few studies about how micro- multinationals choose their foreign entry market modes when internationalizing. This thesis attempts to add new knowledge filling the gap between the internal resources of a company and the foreign entry market mode selected for its internationalization process. Furthermore, a systematic methodology that combines internal resources with the selection of the foreign entry market mode will be developed with the goal of aligning the competitive advantages of the company along its international structure.

The methodology that this research employs will show how to combine the internal resources of the case study company and its needs when internationalizing based on the characteristics of each foreign entry market mode. The first step of the methodology is determining the variables that categorize each foreign entry market mode that companies implement. Then, the application of the Resource-based View will show the possible competitive advantages of the case study company. Lastly, accounting for the requirements that the case study company has when internationalizing, the possible competitive advantages, derived from the Resource-based View, will be combined with the characteristics of each foreign entry market mode to determine effective recommendations for the case study company to implement in its internationalization strategy.

The results of this research show that when a company wants to enter into a foreign market, it should evaluate that decision based on its internal resources. Only then will the company be able to exploit its competitive advantages and be successful in the new market. The decision to internationalize is influenced by requirements such as the level of control, commitment, risk and flexibility that the parent company is willing to have in the new foreign market. Hence, these requirements must be taken into consideration carefully during the entire decision process.

Key-words

Blockchain, Business Internationalization, Foreign Market Entry Modes, Micro-Multinationals, Resource- Based View, VRIO tool

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Examensarbete TRITA-ITM-EX 2018:510

Internationaliseringsstrategi för mikro- multinationella företag: ett

utvecklingsstrategiskt ramverk

Ginés Sánchez

Godkänt

2018-06-14

Examinator

Bo Karlson

Handledare

Kent Thorén

Uppdragsgivare

ChromaWay AB

Kontaktperson

Henrik Hjelte

Sammanfattning

Micro-multinationals är en relativt ny term och det finns för tillfället få studier kring hur dessa företag ska bedriva sin utlandsexpansion när de internationaliserar verksamheten. Syftet med denna uppsats är att bidra med ny kunskap kring ämnet och medverka till att fylla kunskapsgapet som existerar i hur man kombinerar företagets interna resurser och valet av internationaliseringsstrategi. Vidare utvecklas en systematisk metodologi som kombinerar interna resurser med valet av internationaliseringsstrategi för att anpassa företagets konkurrensfördelar med dess internationaliseringsprocess.

Metodologin som används i denna rapport visar hur interna resurser hos företaget i den aktuella fallstudien kan kombineras med dess behov för internationalisering baserat på egenskaperna hos varje enskild typ av utlandsexpansion. Första steget i metodologin är att avgöra vilka variabler som karaktäriserar varje enskild strategi för utlandsexpansion som företag planerar att implementera. Nästa steg är att applicera en “Resource-based View” som visar de möjliga konkurrensfördelarna för företagen i fallstudien. Slutligen kombineras kraven som företagen har ställt för sin internationalisering samt de konkurrensfördelar som de visades ha enligt “esoruce-based view” med de olika typerna av utlandsexpansion som finns tillgängliga med syftet att avgöra lämpliga rekommendationer för fallstudieföretagen rörande hur de ska gå till väga i sin internationalisering av verksamheten.

Resultaten visar att när ett företag vill etablera sig på en utländsk marknad bör de evaluera beslutet med hänsyn till sina interna resurser. Först då kan företaget utnyttja sina konkurrensfördelar och bli framgångsrika på den nya marknaden. Beslutet av hur internationaliseringen ska gå till påverkas av krav som moderbolaget har för den nya marknaden såsom behov av kontroll, grad av åtagande, risk och flexibilitet. Dessa krav måste tas i noggrann beaktning under hela beslutsprocessen.

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Acknowledgements

Since I started this Master thesis, there have been several persons who I am very grateful to:

First, I would like to thank my supervisor Kent Thorén at the department of Industrial Eco- nomics and Management of KTH who has supported me throughout the whole research process providing invaluable help and guidance when I needed it. This report would not be completed without your contribution.

Second, I would like to express my gratitude towards ChromaWay team, in especial to Henrik Hjelte, CEO of ChromaWay, for the time, support and all the trust that you put on me, as well as for considering me as one of you since the first day. It is a pleasure to work with all of you.

Also, I would like to express my appreciation to the interviewees for their time. Also, your willingness and helpfulness have been admirable. Thank you for the knowledge and experience that you have provided to me.

Last but not least, I would like to thank my family, especially my parents, for the endless support and confidence in me. Without you this experience in Sweden would not have been possible.

I cannot thank you enough.

Stockholm, June 2018

Ginés Sánchez Navarro Department of Industrial Economics and Management Royal Institute of Technology

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List of Figures

1.1 The position of the mMNE . . . 9

2.1 Research process . . . 11

3.1 Research areas of International Entrepreneurship . . . 14

3.2 Foreign entry modes summary . . . 19

3.3 Resource portfolio . . . 26

3.4 Resource-based view model . . . 28

3.5 VRIO tool . . . 29

5.1 Case study implementation process . . . 35

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List of Tables

3.1 The characteristics of different entry modes . . . 15

3.2 Differences between joint ventures and strategic alliances . . . 17

3.3 Theoretical resources and capabilities of a firm . . . 27

3.4 Research model . . . 30

4.1 ChromaWay resources . . . 33

5.1 Step 1. Classification . . . 36

5.2 Summary RBV application (Step 1) . . . 38

5.3 Step 2. Valuable, rare and inimitable classification . . . 38

5.4 Foreign entry market modes summary . . . 40

5.5 Model implementation - part 1 . . . 41

5.6 Summary VRIO application (Step 2) . . . 41

5.7 Model implementation - part 2 . . . 42

5.8 Competitive advantages of ChromaWay from the application of the research model 42 A.1 Data gathering . . . 54

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Nomenclature

List of Abbreviations

BG Born Global

C&I Constellation and Investment CEO Chief Executive Officer COO Chief Operations Officer CTO Chief Technology Officer IE International Entrepreneurship IFA International Franchise Association INV International New Ventures

IP Intellectual Property IT Information Technology JV Joint Venture

mMNE Micro-multinational MNE Multinational Enterprise

OLI Ownership, Location and Internationalization R&D Research and Development

RBV Resource-based View RQ Research Question

SME Small- and medium-sized firm SQL Structured Query Language TCE Transaction Cost Economics

VRIO Valuable, Rare, Inimitable and Organized

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Chapter 1

Introduction

The main objective of this chapter is to establish a general overview for the creation of the thesis project. A brief introduction of companies internationalization will set up the framework and context of the research. Furthermore, an explanation of blockchain technology will be carried out as ChromaWay, the company where I wrote this thesis project, bases its services on this disruptive technology. Finally, the purpose and research questions that this research wants to answer will be presented.

1.1 Background

Thousands of years ago, the Phoenicians, Mesopotamians and the Greek established trade routes in the Mediterranean sea. Since then, commercial transaction have evolved constantly with new business techniques providing a broad variety of methods for the exchange of goods, services and capital.

In modern days, with the explosion of the Industrial Revolution, technology development created more efficient methods of production, new energy sources and new forms of transportation.

Those improvements accelerated the exchange of resources between countries and encouraged the growth of international business around the globe. New organizational entities were born and the first multinational corporations (MNE) emerged.

Due to this history, we can agree with the definition of international business as a business transaction that crosses national boundaries. This simple definition includes private companies, governments or a mixture of the two. (Ajami and Goddard, 2014).

In the twenty-first century, international business exploded and more and more companies expanded across national borders and now their business relationships span the globe. This phe- nomenon is not only seen within large corporations which have important annual sales levels, but also medium size companies and family-owned businesses are included in this field. In the last decades, companies have been dealing with the ups and downs of the global markets but the recent financial crisis have had a huge negative impact. Global markets and especially European markets

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gained relevance over the years among scholars due to the globalization of the world economy.

According to Oviatt and McDougall (2005a), "international entrepreneurship is the discovery, enactment, evaluation, and exploitation of opportunities, across national borders, to create future goods and services".

International entrepreneurship is extremely connected to the development of new small- and medium-sized firms (SMEs) that are growing internationally from inception. Figure 1.1 shows that there are different types of SMEs such as born globals (BG), international new ventures (INV), micro-multinationals (mMNEs) or born micro-multinationals due to a significant part of their revenues come from foreign markets. These classification considers three dimensions: (1) speed, so that it reflects if the company goes abroad from inception; (2) commitment, so that it shows the level of commitment that it is required for the foreign entry mode implementation and; (3) size of the company, small and medium versus large multinationals.

Source: (Vanninen et al., 2016) Figure 1.1: The position of the mMNE

Since the dot-com crash, these companies have integrated a culture of faster innovation and virtual integration in order to survive in this new business competitive environment. Also, their growth strategies provide lessons for many other organizations that seek early and rapid internationalization.

Such an innovative culture leads to a better response to market changes that can only be achieved with a rapid iterations of the firm´s business model or market proposal. Therefore, the aim of this master thesis is to generate new knowledge about the different foreign market entry modes that micro-multinationals can implement and how the choice of mode is influenced by the resources and capabilities of the firm that generate competitive advantages.

1.2 Purpose & Research Questions

In the last decades, a lot of research about SME internationalization strategies have been made.

BG and INV gained the attention of the scholars and a lot of researches have been done since

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then. But, the term micro-multinational was born recently so there is still a lack of literature and research in this field.

The main purpose of this thesis is to study and add new knowledge about the different entry market mode choices that mMNEs can implement to leverage their competitive advantages which are based on internal resources and capabilities. A case will be analyzed to find out how a software company can leverage its internal resources when selecting its internationalization strategy.

Furthermore, it will set up the base for a future researches in other fields or with other business models due to the framework and tools utilized in this thesis are general, so they can be used in other contexts.

The following research questions will be answered:

RQ1: What are the different entry modes that SMEs can use for becoming a mMNE?

RQ2: What would be the best market entry choice or choices for a software company startup?

1.3 Delimitations

Independently of the business models a SME may implement, this thesis is delimited to the study of a software company with a classic business model. Ideally, the analysis of different business model would be interesting in order to achieve more generalized results.

Another delimitation is that the case company, ChromaWay, is from Sweden. More research about companies from other countries would allow to do comparisons and see how the home country influences the company in its internationalization.

Lastly, this research only takes into account internal resources of the company to make the case and analyze the foreign market entry modes, but there are also other external factors that influence the company when internationalizing.

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Chapter 2

Methodology

This chapter explains the methodologies utilized to answer the research questions stated in the previous chapter and to realize the purpose of this study.

2.1 Research Process

Figure 2.1: Research process

The figure 2.1 illustrates the steps of this research process although there is more description as the analysis progresses. Firstly, a main problem is introduced which led to a problem formulation.

Secondly, the research questions are stated. Then, a literature and theoretical review will be conducted before the case presentation. Once the literature review is done and the case is presented, the theory will be implemented in order to analyze the case. Finally, the analytical results will form the basis for the conclusions and discussions.

The methodologies implemented in this study are categorized as qualitative research. These methodologies are focused on process, understanding and meaning. The researcher is the primary instrument of data collection and analysis, the process is inductive and the product is descriptive Merriam (2009).

In section 2.2.1, it is explained how the primary data is collected and also the different sources of information, mainly interviews with some heads of international growth and expansion from Swedish startups and meetings with the management team of the case company. Then, in section 2.2.2, it is described the secondary data sources of information used in this research and how they are aligned with the primary data collected.

Once all the data was gathered, the main objective is to apply the theoretical models to the information collected to answer the research questions. So, pieces of information from interviews,

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observations and documents were combined with the theoretical framework in order to answer the research questions stated in section 1.3.

2.2 Collection of data

2.2.1 Primary data

In order to gather qualitative information, two different sources have been used (see appendix A).

On the one hand, a workshop with ChromaWay was carried out to specify the stage of the company and to analyze its internal resources and capabilities. Also, the participation in several meetings was useful to understand the future intentions and expectations of the company that influenced this research.

On the other hand, different interviews have been done to collect empirical examples from ChromaWay and other startups with similar business models and relevant opinions from experts in this field.

2.2.1.1 Workshop with ChromaWay

The workshop (see section 4.1) was useful for knowing the tangible and intangible resources which ChromaWay posses. This is the first step of the research so, it is really important to think carefully and not forget any important points during the process because it would influence the next steps.

To collect all the possible resources of the firm, Henrik Hjelte, CEO of ChromaWay, was engaged in the workshop.

2.2.1.2 Interviews

According to Collis and Hussey (2014), qualitative interviews are one of the most usual methods to get qualitative information. For the purpose of this thesis, semi-structured interview will be used (see appendix B) because it has a flexible structure of the questions. The interviews will last between 30 - 40 minutes and they will be done in person or by a phone call.

Before starting the interview, the topic will be introduced and what are the outcomes expected from the interview. The purpose of the interviews is to get insights from the experience of the company´s managers about how their companies are structured and how they faced that process.

2.2.2 Secondary data

Secondary data was needed to support the empirical data collected from interviewees and work- shops. This kind of data is collected throughout the research process but mainly at the beginning.

Besides, these sources are articles, reports and even the web pages of companies. Therefore, this will allow not only to build an understandable reasoning for this thesis project, but also the reader will be able to understand easily the final outcomes of this research and how they have been achieved.

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Chapter 3

Literature & Theoretical Framework

This chapter covers the theory and literature that this research uses to answer the research questions. It can be featured that there are two main branches, international entrepreneurship and internationalization methods and theories, which set the principles for this research. Finally, these two branches are combined in the research model that allows to answers to the stated research questions.

3.1 International Entrepreneurship

With the Internet as a game-changer, we have seen a tremendous evolution in business ecosystems.

Not only the quality of products and services has increased but also the availability throughout the world. With such a globalization of the world economy, the international entrepreneurship (IE) term has gained relevance over the years interrelated with international business and entrepreneurship. It started when Morrow (1988) defined international entrepreneurship as a technological advances and cultural awareness that make untapped foreign markets accessible for new ventures.

Soon after that, additional empirical studies by (McDougall, 1989) were conducted and, since then, the definition of IE has evolved. Oviatt and McDougall (1997) offer a definition excluding governments organizations. Then, a research by McDougall and Oviatt (2000) established international entrepreneurship as a combination of innovative, proactive, and risk seeing behavior that goes beyond national boarders to create value in organizations. Other researchers such us Zahara and George (2002) include corporate entrepreneurship into their definitions of IE. The scholars have been studying the theory and some changes in the definition have been made to improve the potential of the definition. Therefore:

"International entrepreneurship is the discovery, enactment, evaluation, and exploitation of opportunities, across national borders, to create future goods and services" (Oviatt and McDougall, 2005b).

Trying to categorize international entrepreneurship, some scholars say that IE is placed between different disciplines in the academic field such as international business and entrepreneurship (Keupp and Gassmann, 2009). Others add strategic management as part of the disciplines that compound IE (Gubik and Wach, 2014; Wach, 2015). However, all the researches about IE were grouped by Jones et al. (2011) into three major types of research: A) Entrepreneurial internationalization, B) International Comparisons of Entrepreneurship and C) Comparative Entrepreneurial of Internationalization.

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Source: (Allen, 2016)

Figure 3.1: Research areas of International Entrepreneurship

As we can see in the image 3.1, these three different branches of research embrace several areas. Entrepreneurial internationalization (Type A) mainly differs from International Comparisons of Entrepreneurship (Type B) in its focus on internationalization whereas Type B analyses how entrepreneurial behavior differs by country and culture. In contrast, Comparative Entrepreneurial of Internationalization (Type C), which is the most recent field of research, examines and compares cross-border entrepreneurship across countries and cultures.

This thesis will focus on entrepreneurial internationalization (Type A) and more specifically on the branch of Venture type which is the first thematic area to emerge in the IE literature. Venture type research includes different terms such as International New Ventures (INV) defined as "a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries" (McDougall, 1989). Another important term that appears in the Venture type area is Born-global (BG) which was introduced by Knight (1996). Born-globals are firms that from inception exploit opportunities in multiple countries. However, the line between INV and BG is really unclear so it is possible to find some research that unify those terms.

The newest term that is part of the Venture type branch is micromultinational (mMNE). It was introduced by Dimitratos et al. (2003) as "a small- and medium-sized firm (SME) that controls and manages value-added activities through constellation and investment (C&I) modes in more than one country". Also, born mMNEs which are "resource-constraint SME that own or control value-adding activities in two or more countries in less than three years after their foundation"

(Dimitratos et al., 2003). C&I modes embrace high commitment methods to service foreign markets such as licensing, franchising, strategic alliances, joint ventures and subsidiaries. This new term, mMNE, along with the different foreign market entry modes will be the core of the development of this thesis so they will be explained with more details in the next sections.

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3.2 Foreign market entry modes

Human, structural/organizational and customer/relationship capital form the intellectual property (IP) assets that are the enablers of business strategy within a company. In order to protect and defend the strategic position of the company in the different markets, IP assets management needs to be built and improved continuously. Furthermore, this will maximize shareholder value and allow for the creation of new markets, distribution channels and revenue streams (Sherman, 2011)

Organizational structure is key for international companies in order to manage their foreign activities effectively (Anderson and Gatignon, 1986). So, firms can choose among different foreign markets entry modes, including exporting; contractual agreements such as licensing and franchising; joint ventures; acquiring an existing company, and establishing a wholly-owned subsidiary from scratch (Pan and David, 2000). The selection of the entry market mode is extremely important because it will determine the firm´s degree of resource commitment to the foreign market, the risks the firm will face in that new country, and the level of control the firm will be able to have over its foreign activities (Hill et al., 1990).

According to Laufs and Schwens (2014), and opposed to large multinationals (MNEs), foreign market entry mode choice of small and medium-sized firms has specific characteristics. For SMEs it is difficult to find an entry mode that allows them to deal with that risk due to SMEs have an high level of sensitivity to external influences (Cheng and Yu, 2008). Also, the chosen entry mode will dictate the level of control over the foreign activities. In this context, control is determined by the level of responsibility for operational and strategic decision making in the foreign country (Anderson and Gatignon, 1986).

With regard to (Hill et al., 1990), some entry modes require a large commitment of resources while others allow resource commitment to be shared among partners (see table 3.1). So, the more resources the firm commits, the greater the risk of losing valuable resources if the foreign market engagement fails.

Entry modes Control Resource Commitment

Dissemination Risk

Licensing Low Low High

Joint Venture Medium Medium Medium

Subsidiary High High Low

Source: (Hill et al., 1990)

Table 3.1: The characteristics of different entry modes

In the next sections, the choices that a SME has to entry to a foreign market will be explained.

Besides, the main advantages and disadvantages of each foreign entry mode will create a theoretical framework that will serve to sustain all the future discussions and conclusions of this thesis.

3.2.1 Direct Exporting

Exporting is not considered as a C&I mode but it is interesting to take it into consideration to compare it with C&I modes such as licensing, franchising, strategic alliances and joint ventures.

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Although more and more small- and medium-sized firms are setting up their internationalization strategy through C&I modes, exporting is still being well acknowledged when SMEs enter into foreign markets as it is the most common path of internationalization (Mittelstaedt et al., 2003).

Exporting is considered as a low commitment internationalization mode (Melén and Nordman, 2009). However, it allows firms to gain knowledge about their foreign markets so it reduces uncertainty if future direct investments are needed (Johanson and Vahlne, 1977). With this knowledge of the market, firms could turn to high commitment modes as a protection of markets previously served through exporting (Phillips McDougall et al., 1994).

3.2.2 Franchising & Licensing

According to the International Franchise Association (IFA), "franchising is simply a method for expanding a business and distributing goods and services through a licensing relationship. In franchising, franchisors (a person or company that grants the license to a third party for the conducting of a business under their marks) not only specify the products and services that will be offered by the franchisees (a person or company who is granted the license to do business under the trademark and trade name by the franchisor), but also provide them with an operating system, brand and support".

As is suggested in Sherman (2011), when a firm chooses a franchise system, the decision is taken in consideration of the following reasons:

• The business wants to obtain operating efficiencies and economies of scale.

• The business wants to increase market share and build brand equity.

• Building and improving customer loyalty.

• More rapid market penetration with a relatively low cost.

• Using cooperative advertising and promotion to reach the targeted costumers more effectively.

• Sell products and services through a dedicated distributor network.

• Replace the need for internal personal with motivated owners.

All franchising agreements have three critical components: (1) Brand, (2) Ongoing support provided by the franchisor to the franchisee and, (3) Operating system. Sometimes, the difference between franchising and licensing agreements is very small. So those critical components dictate the final decision when doubts about what kind of agreement is more appropriate arise.

On the other hand, a license is a contract through which one party grants another permission to use its IP such as patents, trademarks, copyrights, designs or trade secrets without the transfer of ownership. The licensee compensates the licensor by paying a flat fee, royalties, or a combination

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cost. Also, these methods allow the parent company earning initial fees and ongoing royalty pay- ments thus, the capital that would be required for internal growth and expansion could be used in other areas of the company. Finally, another benefit that both methods share is that it is a way for building and improving customer loyalty.

Nevertheless, in comparison with franchising agreements, there are some disadvantages that licensing agreements suffer such as a lower ability to enforce quality control and standards, or a dependence on the skills, abilities, and resources of the licensee.

3.2.3 Joint Ventures & Strategic Alliances

"Especially in periods of market or operational uncertainty, joint ventures can be used effectively as an alternative to a merger, acquisition or even organic growth" (Deloitte, 2010).

On the one hand, joint ventures "are typically structured as a partnership or as a newly formed and co-owned corporation (or limited liability company) in which two or more parties are brought together to achieve a series of strategic and financial objectives". On the other hand, strategic alliances "can be any number of collaborative working relationships in which no formal joint venture entity is formed but rather two independent companies become interdependent by entering into formal or informal agreement built on a platform of mutual objectives, strategy, risk or reward"

(Sherman, 2011). The following table shows the key differences between joint ventures and strategic alliances:

Joint Ventures Strategic Alliances

Term Usually medium to long term Short term

Strategic Objective Often serves as a precursor of a merger More flexible and non-committal Legal Agreement and Structure Actual legal entity formed Contractual drivers

Extent of commitment Shared equity Shared objectives

Capital resources Each party making a capital contribution No specific capital contribution

of cash or intangible assets (may me sharing budgeting or even cross-investment) Tax ramifications Possible double taxation unless No direct tax ramification

pass-through entities are utilized

Table 3.2: Differences between joint ventures and strategic alliances

In spite of the differences of the table above, joint ventures and strategic alliances have some benefits in common:

• Develop a new domestic/international market

• Develop a new product or technology

• Combine complementary technology

• Pool resources to develop a production or distribution facility

• Acquire capital

• Execute a government contract

• Gain access to a new distribution channel or network or sales/marketing capabilities In her study about organizational levels attributes of micromultinationals, W¸asowska (2017) argues that SMEs will increase their potential participating in international cooperation R&D using equity-based entry modes such as joint ventures. It means that those firms can face the liability

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of smallness and foreignness by tapping into technological resources from foreign partners.

For instance, when the decision of implementing a joint venture is made, there are some challenges that should be taken into consideration by every partner of the new entity. In accordance to Deloitte (2010), the previous identification and also a well executed preparation for the challenges that will arise are critical for the potential success of the joint venture. Agreeing with (Kumar and Seth, 1998; Brechbühl, 2006) there are some mechanisms to control the structure of the joint venture and ensure an adequate implementation such as strategic alignment of the partners, direct contact between the executives from the parent company and the joint venture, the internal role of the joint venture board of directors, training sessions for managers and meeting with the parent company and design of incentive plans.

Therefore, a well structured monitoring procedure that covers control, clarity of the purpose and how to manage people is really important for overcoming all the pitfalls that may arise during the setting up process of the joint venture and also during its life cycle (Deloitte, 2010).

3.2.4 Subsidiaries

Overall, the international SME literature is characterized by the study of the commitment, risk and control dimensions of the different market entry mode choices. The decision of entering into a foreign market by a whole-owned subsidiary is considered as a maximum level of commitment but it is one of the most riskier decision as well. One of the main convectional reason for opening a subsidiary is to gain visibility and reputation (Vanninen et al., 2016).

On the other hand, entry modes involve different levels of control over the foreign activities.

In this context, control is determined by the level of responsibility for operational and strategic decision making in the foreign country (Anderson and Gatignon, 1986) which is an important dimension to take into account. For example, some researches about family-owned firms assert that those kind of firm are less willing to share control in their internationalization decisions (Fernández and Nieto, 2006). Additionally to that, having a physical presence in key markets is important for marketing and customer-relationship reasons due to firms can co-operate more closely with their key clients. The global mindset and also often the given previous international experience of the firm´s management team are a key characteristic for opening a subsidiary. Normally, the lack of knowledge about the new market is compensated by hiring local employees who have the knowledge about the local networks. Therefore, trust building between the old and new members of the management is a prerequisite for efficient learning, creation and commitment decisions (Vanninen et al., 2016).

3.2.5 Foreign market entry modes summary

Based on the table 3.1, the figure 3.2 is a summary of the foreign market entry modes that a firm can implement when going abroad. It is categorized by four variables which are the level of commitment, control, risk and flexibility that a firm is willing to have in that new market. Also, understanding the previous theory, this summary adds a scale from 0 to 5 which is more objective

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Figure 3.2: Foreign entry modes summary

the new market entry mode. Additionally, the level of risk increases at the same time that the commitment level as the firm assumes a huge responsibility when it invests a great amount of resources. Finally, the flexibility usually goes in the opposite way than the level of commitment because when firms invest a lower amount of resources, that resources can be invested to achieve other objectives.

3.3 Micromultinationals

Traditionally, large internationalized firms were the only ones that used constellation and investment (C&I) modes in their international activities. The term "multinational" was used especially for those kind of firms. Nevertheless, SMEs started to service their international clients through C&I modes. This attracted the attention of scholars and, consequently, the term of micromultinational (mMNE) was born. For example;

"Micromultinationals are small- and medium-sized firms that control and manage value-added activities through constellation and investment (C&I) modes in more than one country"(Dimitratos et al., 2003). In this definition, value-added makes reference to activities such as sales, marketing, R&D and production.

"Micromultinationals are small to medium sized enterprises that use higher commitment entry modes beyond exporting"(Prashantham, 2011a).

Thus, mMNEs are smaller entrepreneurial firms that implement their international expansion through advanced (non-exporting) modes. That offers them some advantages such as a better international customer service or a better way to collect direct feedback to exploit and serve those new markets with more efficiency. Therefore, this sets the basis of this new term which allows to establish the differences between multinationals and other types of firms such as born-globals or international new ventures. According to (Dimitratos et al., 2003), micromultinationals differ from multinationals in the following aspects:

• The "focal" firm of a mMNE does not need to be the owner of its international value-added activities. For mMNEs, such ownership may not be easy because of its limited amount of

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resources.

• Compared with multinationals, mMNE are likely to commit through higher degrees of networking activities with small and large firms globally.

• mMNEs seemingly operate more in technological sectors such as software, telecommunica- tions and computer-related services.

Another important difference according to HSBC (2016) is that usually mMNEs have fewer levels of decision makers than MNE as they typically have simpler organization structures. This means that mMNEs are more agile than multinationals (MNEs) so they can take advantage of new opportunities more quickly.

A difference between born-globals and micromultinationals is that BGs focus on the speed of internationalization while mMNEs refer to the use of advanced modes of entry into foreign markets (W¸asowska, 2017). So, mMNEs are not defined by their time, speed or pace to internationalization.

Furthermore, as SMEs, mMNEs face the "liability of foreignness" which becomes more complex as they also face the "liability of smallness" because they have limited resources in comparison to large corporations. Some scholars have focused their researches on the determinants that make micromultinationals face and overcome those constraints. For instance, having access to the technological resources of partners and participate in international networks can allow mMNEs to confront the "liability of smallness and foreignness"(W¸asowska, 2017). Furthermore, risk-taking is other determinant that is correlated to a high probability to become a mMNE and overcome those constraints (Dimitratos et al., 2014).

3.3.1 Types of micro-multinationals

In accordance to the study realized by Dimitratos et al. (2003), there are seven types of micro- multinationals depending on the objectives they want to achieve when expanding to new markets:

1. Network seekers: their international success is because of their access to core competences such as marketing or technological know-how achieved from their C&I modes.

2. Market hunters: the objective is to serve clients around the globe. Discovery and exploitation of new market opportunities and superior customer service are their priorities.

3. Flexibility pursuers: which wants to enter into new markets with flexible organizational structure. Remaining small is essential for SME managers who wants to retain control and flexibility in their firms and it can be done through C&I modes.

4. Resource trackers: are firms that seek to get low-cost inputs or high-quality resources in different countries.

5. Global market chasers: with the objective of attain economies of scale these firms understand the presence in lead international markets of their industries, and exploit this knowledge to be successful internationally.

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7. Competition players: which takes into consideration the strategy of their competition when going abroad. Thus, entering into foreign markets with C&I modes is related to the intention of following their key competitors.

Many mMNEs may be included in more than one type simultaneously. This is due to mMNEs can seek to fulfill many different objectives at the same time. For instance, a mMNE could want to pursue new market opportunities while keeping the smallness of being a SME. So, it would fall into the categories of "market hunters" and "flexibility pursuers" respectively. Therefore, the mMNE objectives are mainly influenced by its internal resources.

3.3.2 mMNEs success characteristics

This new era of global alliances presents opportunities for superior performance across market niches. In order to take advantage of those opportunities, SME managers should have a risk-taking propensity and be determined when venturing in the global competitive marketplace (Dimitratos et al., 2014; Ratajczak-Mrozek, 2015). The following characteristics can be found in successful mMNEs:

• Experience of the founders: the previous international experience of the founders or top management brings better results because they usually know better what to do when there are contingencies.

• Strong determination: the strong determination to become a international player in their industry is a vital component of all successful mMNEs.

• Human capital: recruitment and retention of highly skilled people is crucial for the success of the mMNE. Those managers and employees are needed in order to control and manage the value-added activities that the company creates through C&I modes in foreign markets. Hence, creating appropriate reward systems to key employees with monetary and non-monetary incentives is really important.

• Financial capital: the access to financial capital in such as foreign countries is a challenge that mMNEs have to face to grow internationally due to their "liability of foreignness".

• Networking capability: creating network alliances with competent partners in each country is one of the most important things to succeed internationally. That brings new market opportunities and also it allows to know more about the foreign market´s conditions.

• Strategy flexibility: sometimes there is a need to adapt between countries. Being flexible and implementing selected C&I modes allow the company to adapt the strategy to the international markets.

3.3.3 Factors behind the decision to become a mMNE

Top management usually face the following questions at some point during the first years of the foundation of their company: (a) when should we seek to go international? and/or (b) why not stay at home as long as possible?

According to the study made by Dimitratos et al. (2003), mMNEs need to develop and implement their key resources and capabilities in order to solve, usually in an unique way, the needs of

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their customers. Also, another studies like (Ratajczak-Mrozek, 2015) or (London Business School, 2008), where a dozen of high-technology companies located in Greater Cambridge Area Cluster were analyzed, reveal some factors that help to answer why companies decide to become a mMNE:

• New market conditions: globalization brings a new set of networks. An effective use of networks allows the company to create an ecosystem of companies beyond its clients.

Therefore, network development is crucial not only for international success, but also for the overall international growth of the company.

• Technological advances: such a technological development in information, communica- tions and new business models using Internet like e-commerces, has allowed the creation and profitability of C&I modes to expand internationally. (Also, it has reduced the cost of old and traditional businesses).

• Customer service improvement: some companies need to have physical presence in its client´s country to remain competitive. Thus, it also improves the satisfaction of their high demanding clients located overseas because it provides a better understanding of their home markets.

• Global recognition: although these companies are relatively small, they also recognize the importance of being acknowledged internationally within their niche. This prompt them to expand internationally during its early years.

• Smaller domestic markets: modern companies like software and hardware IP companies implement business models which need a huge volume of transactions to be profitable. So, the absence of a strong home market pushes high-technology companies to go international from their inception. For example, this is the case for Sweden.

Therefore, it seems that successful mMNEs use C&I modes to carry out their competitive advantages (which come from their internal resources) internationally. Key decisions, such as re- cruiting and retaining valuable people or locating source of capital are easier when C&I modes are used in such as international strategy.

The study about the different choices of modes of entry into foreign markets is important because it is related to the control of the foreign activities and thus to performance (Dhanaraj, C.,

& Beamish, 2003). Although studies about mMNEs are still scarce, there are some researches that suggest mMNEs leverage the potential of abroad opportunities following complex internationalization pathways modes rather than exporting (Ibeh et al., 2009). However, according with Coviello and Jones (2004) the selection of entry mode by a firm "is too complex and too broad in scope to be accommodated by any one model or any one perspective". This means that when selecting the entry mode, mMNEs shall leverage its unique set of resources in order to focus on their competitive advantages. For this reason, the following sections will review the international business literature of internationalization which embraces models that leverage the resources of the firm such us the Resource-based View or Ownership, Location and Internationalization (OLI) model.

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3.4 Internationalization methods and theories

Research asserts that resource scarcity limits the ability of small and medium firms to implement more advanced and committed modes of internationalization (Calof, 1994; Johanson and Vahlne, 1977). Furthermore, the review made by Laufs and Schwens (2014) examines the extent to which the characteristic of SMEs such as lack of resources, sensitivity to external influences, ownership structure and management characteristics have been considered in SME entry mode research due, as these characteristics represent key aspects of firm´s decisions.

Regarding to Laufs and Schwens (2014), there are four theoretical frameworks that dominate this field: Transaction Cost Economics (Williamson, 1985, 1991, 1998), the Electic Paradigm (Dun- ning, 1988), Institutional Theory (Li and Abiad, 1990; Scott, 1995), Social Capital Theory/Network Theory (James, 1990; Adler and Kwon, 2002).

3.4.1 Transaction Cost Economics (TCE)

TCE is the most used theoretical framework in researches about SMEs international entry mode choice (Brouthers and Hennart, 2007). TCE is based on three main causes: asset specificity, be- havioral and environmental uncertainty, and frequency creating market transaction and control costs. This theoretical framework supports that firms choose their entry mode in order to protect themselves against risk opportunism (Williamson, 1985).

The studies that use TCE suggest that companies choose a certain organizational structure with the objective to minimize controlling and monitoring costs (Laufs and Schwens, 2014). Besides, TCE asserts that foreign market entry mode choice depends on the degree of foreign investment´s asset specificity. That means they internalize transactions and implement high-control entry modes in circumstances in which the risk of opportunism is higher, whereas they implement a low-control entry mode such as exporting if that risk is low. Making reference to the uncertainty cause, some studies affirm that international experience have an impact as a mechanism which allows to reduce internal uncertainty that limits the foreign entry market mode choice of firms (Laufs and Schwens, 2014). The last cause, frequency creating market transaction and controlling costs, appears in studies such as (Erramilli and Rao, 1993) where TCE is used to examine how high-commitment entry modes allows SMEs to gain control over the host country activities.

3.4.2 Eclectic Paradigm

In the research made by Dunning (1988) it can be seen a combination of insights from resource- based, institutional and transactional cost theories. Based on the context where Laufs and Schwens (2014) agree with Dunning (1988), firms choose the most appropriate entry mode into an international markets by the consideration of the OLI framework: ownership (O), location (L) and, internationalization (I).

Methodologies such as resource-based view (RBV) are used to find out the ownership advantages which are specific competitive advantages of the firms. These advantages must be unique and sustainable (Mahoney and Pandian, 1992). Location advantages, which refer to institutional theories, are country-specific advantages of the international market. Internationalization advantages, which refers to transaction cost theories, come from the benefits a firm obtains by choosing high- commitment entry modes rather than internationalizing by the implementation of low-commitment

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entry modes such as exporting (Dunning, 1988).

Some scholars, using the OLI framework, affirm that SME´s perceptions about the risk in the host country influence their entry mode choice. With high-commitment modes, those host country related risk and contingencies can be internalized (Nakos and Brouthers, 2002). So, that is in accordance with the conclusion that the level of ownership and locational advantages reinforce the propensity of SME to choose high-commitments entry modes (Shi et al., 2001).

3.4.3 Institutional Theory

Institutional theory suggests that a firm must behave according to their country´s institutional environment as it reflects the "rules of the game" (Brouthers and Hennart, 2007). Institutional theory suggests that a firm entering into a new market pursues legitimacy and acceptance by agreeing with the conditions of that new foreign market (Yiu and Makino, 2002).

Schwens et al. (2011) affirms that SME´s foreign market entry mode choice is influenced by the challenges that arise from the host country context which impact the resource-base of the firm.

However, institutional studies have demonstrated that firms which implement high-commitment entry modes improve their ability to deal with the institutional challenges (Brouthers and Nakos, 2004).

3.4.4 Social Capital/Network Theory

In spite of the firm specific advantages, entry mode choice is also aligned with a firm´s network relationship (customers, suppliers, competitors...). Thus, social capability and network theory makes reference to the ability a firm has to acquire and exploit resources from its network (Chetty and Agndal, 2007). Moreover, social capital helps to reduce barriers to internationalization due to the reduction of external uncertainties associated with contractual hazards as social ties are based on trust as Prashantham (2011b) confirms in his survey of 102 Indian software SMEs.

Other studies about this theoretical framework argue that not only SMEs leverage their partners´ resources in order to overcome their own lack of resources but also SMEs can use social capital to learn about condition in the host country. That enables SMEs to choose high-commitment mode of entry into foreign markets (Ripollés et al., 2012; Prashantham, 2011b).

3.4.5 New Theories

Following the review of Laufs and Schwens (2014), it exhibits that most of the researchers choose a mix of theories to study foreign market entry mode of SMEs. These authors argue the employment of new theories such as learning theory, effectuation and upper echelons theory is needed to get a better understanding on how SMEs face the decisions about foreign entry mode choice.

Learning theory (Easterby-Smith et al., 1999), according to Laufs and Schwens (2014), has the potential to move forward the literature about SMEs foreign market entry mode. That means that

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Upper echelons theory (Hambrick, 2007) focuses on how SMEs´ top management influence SME entry mode choice. Demographics, cognitions and values of top management are studied in order to learn how they impact the key strategic decisions. Future researches might reveal insights about how CEOs‘ characteristics such as age, functional experience, overconfidence or self-efficiency can impact the foreign market entry mode choice of SMEs (Reuber and Fischer, 1997).

Effectuation theory (Sarasvathy, 2001) is a suitable concept when the uncertainty factor of a decision is high such as entry into a foreign market (Harms and Schiele, 2012). Effectuation logic assumes that the future is unpredictable, so firms have to deal with uncertainties by relying on what they can control, instead of trying to predict the unpredictable (Mitchell et al., 2007).

Agreeing with Laufs and Schwens (2014), sometimes scholars interlink the theories depicted above. So, some of the gaps in the literature of foreign market entry mode can be supported by different theory frameworks. For the purpose of this study, the Electic Paradigm will be followed as a main guide. Specifically, because the resource-based view (RBV) will be used to find out the resources of the firm that can become into competitive advantages. In addition, other theories such as upper echelons and effectuation theory will be used to categorized the case study company.

3.5 The Resource Based View (RBV)

Firm growth is defined as an increase of the firm size from one point to another (Penrose, 2009).

Growth is important for the development of the firm and it allows firms to gain legitimacy in order to success in the long term and thus, it reflects the value created by a firm (Nason and Wiklund, 2018). Furthermore, firms are a collection of resources which are useful for developing products, services and strategies (Barney, 1991; Penrose, 2009). The RBV, coming from the eclectic paradigm (see section 3.4.2), will be used to find out the resources of the company that can become into a competitive advantage. It classifies resources as tangible or intangible, but in order to be precise in such classification it is important to understand what kind of resources can be found in each group.

3.5.1 What is a resource?

In accordance with (Galbreath, 2005), a resource is a factor which has the potential to contribute economic benefit to a firm.

Tangible resources are those factors that have financial or physical value and appear in the firm´s balance sheet. On the other hand, intangible resources are those factors that are non- financial or non-physical so it is rare to see them in the firm´s balance sheet (Galbreath, 2005).

Hall (1992) offers a method to classify intangible resources. He suggests that intangible resources break down into assets and skills or capabilities. As it is shown in the figure 3.3, if the resource is something that the firm "does" it is a capability and if the resources is something that the firm

"has" it is an asset.

To summarize the theoretical explanation and to support the figure 3.3, the table 3.3 was created to illustrate the possible resources and capabilities that any firm of any industry could posses. Agreeing with (Del Valle Pérez, 2016), such classification is broken down as:

1. Tangible resources which include (a) financial assets and (b) physical assets.

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Source: (Galbreath, 2005) Figure 3.3: Resource portfolio

2. Intangible resources that are assets which are classified as (a) human and (b) non-human:

technological, organizational, cultural and reputation.

3. Intangible resources that are skills which allow the firm to exploit and combine their resources.

Tangible resources Capital and liquidity

Investment capacity Capacity to raise equity Financial

Borrowing capacity Firm´s facilities Stock

Productive capacity

Favorable manufacturing locations Physical

Machinery and equipment

Intangible resources (assets) Employee´s experience and capabilities Trust and loyalty

Motivation and commitment Managerial and technical skills Human

Firm´s specific practices and procedures Effective strategic planning process Databases

Organizational

Effective evaluation and control systems

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Cultural

Innovation capacities Brand name

Reputation

Quality and reliability customer reputation Intangible resources (skills) Competences the firm employs to transfer inputs to outputs

Capacity to combine tangible and intangible resources to attain a desired end Table 3.3: Theoretical resources and capabilities of a firm

It is clear that the internal resources of the firm are not only the ones that influence managers when they have to come up with a foreign market entry mode. For instance, institutional theory (section 3.4.3) shows that the institutional environment of the new market also influence the choice of the market entry mode. However, the internal resources of the firm are extremely related to the factors behind the decision to become a mMNE (section 3.3.3).

3.5.2 Methodology framework

RBV theory emerged in strategic management but in the last decades, it is being implemented in entrepreneurship as well (Kellermanns et al., 2016). This perspective (RBV) argues that superior performance is the result of firm-specific resources and the exploitation of competitive advantages (Wernerfelt, 1984). RBV is based on VRIN resources that are (1) Valuable, such that they can be leveraged to increase customer value or cut cost; (2) Rare, such that competitors do not have access to the same or similar resource; (3) Inimitable and (4) Non-substitutable. These resources become competitive advantages that allow companies to exploit unique growth opportunities for superior firm performance. Firms with VRIN resources will be able to generate more value for customers than firms with lack of VRIN resources (Barney, 1991; Peteraf and Barney, 2003). Conversely, firms without these valuable and inimitable set of resources will not be able to implement similar growth strategies (Barney, 1991).

A new version of the RBV (Barney, 1995) suggests that companies must be efficiently organized to be able to take advantage of their resources and achieve their full economic potential. Accord- ing to Barney and Mackey (2005), "organizational structure" is formed by the skills and resources used to implement strategies. Thus, managers have to bear in mind that it plays a pivotal role in achieving superior performance. These skills and resources ("complementary resources") are important for building competitive advantages although they can be imitable.

The figure 3.4 represents the steps of the RBV model. On the one hand, it basically classifies resources in two types: tangible resources and intangible resources.

On the other hand, the RBV also specifies that resources must be heterogeneous and immobile.

Heterogeneous means in this context that the resources that a firm posses are different from other firms. Therefore, these resources allow firms to develop their own strategies which are not easy to copy by competitors. Furthermore, immobile resources means that resources do not move from company to company, at least, in the short term. Intangible resources such as brand recognition, intellectual property or internal processes are usually immobile.

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Source: www.strategicmanagementinsight.com Figure 3.4: Resource-based view model

However, a set of resources which are heterogeneous and immobile is not enough for a company that wants to sustain its competitive advantage. So, in order to be able to sustain a competitive advantage, the VRIO framework asks the following question: "is a firm organized to exploit these heterogeneous and immobile resources?".

3.5.2.1 The VRIO framework

VRIO is among the different tools that allow to analyze a firm competitive advantages. It was designed by Barney (1995) as an improvement of his previous work (Barney, 1991). In addition to the heterogeneity and immobility of a resource, it has to be valuable (V), rare (R), inimitable (I) and the firm has to be organized (O) to capture its value. The schema of the figure 3.5 shows the steps of this tool:

• The first step is to know if a resource is valuable. That means the resource allows the firm to exploit opportunities or defend against threats. If the resource helps the firm to increase customer value (increasing differentiation or decreasing the price of the product/service) is also considered as valuable.

• A resource categorized as a rare is a resource that only can be acquire by one or a few companies. These resources are competitive advantages allowing the companies design and

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Source: www.managementmania.com Figure 3.5: VRIO tool

exact resources that cause the competitive advantage and; (3) social complexity, the resources which come from the culture of the firm.

• This last step makes reference to the internal organization of the firm. In order to maintain the competitive advantages provided from the resources that have passed all the previous steps, a firm must organize its management systems, policies, processes and culture. Only then, the firm would be ready to exploit its resources.

In order to overcome the "liability of foreignness and smallness", mMNEs need to have access to unique intangible resources and/or capabilities. However, these resources do not need to be possessed, but may be accessed by external partners (W¸asowska, 2017). The RBV helps managers to figure out what set of resources can be an important basis for competitive advantages. So, the main point is that with the RBV a manager would have a better understanding of whether or not the situation meets necessary conditions for a competitive advantage by analyzing the resource position of the firm (Peteraf, 1993).

3.6 Research model and chapter summary

On the one hand, this chapter starts with the IE theory (section 3.1) and the foreign market entry modes (section 3.2). Further, it is the introduction to the new term, mMNE (section 3.3) that also belongs to one of the IE research branches (see figure 3.1). It is also explained how some foreign market entry modes from section 3.2 are key in the definition of mMNEs, those are called C&I modes.

On the other hand, section 3.4 sets the basics of internationalization theory and thus, the reason for selecting the RBV (section 3.5) as the main method for developing this research. Given these

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two different branches coming from the literature, the following research model has been created to combine them and answer the research questions stated in section 1.3:

Entry modes: Licensing Franchising Strategic Alliance Joint Venture Subsidiary

Company Requirements

Control Y/N Y/N Y/N Y/N Y/N

Commitment Y/N Y/N Y/N Y/N Y/N

Risk Y/N Y/N Y/N Y/N Y/N

Flexibility Y/N Y/N Y/N Y/N Y/N

Company Resources

Resource 1 Y/N Y/N Y/N Y/N Y/N

Table 3.4: Research model

The first part of the table 3.4 (part 1) is about the requirements of the company. Those company requirements would be set up previously through a workshop or a meeting with the management team. Then, as each foreign entry market mode has a specific level of such requirements (see figure 3.2), the comparative (yes/no) can be done. The foreign entry market modes that do not comply with all the requirements will not continue to the second part.

The second part of the table 3.4 (part 2) is about the resources that could become into competitive advantages of the company. To complete this part, the following question should be answered:

is this foreign market entry mode suitable for this resource?. This is again a yes/no answer.

Finally, after this part, it would be possible to know what the best foreign entry market modes are and what resources could become into competitive advantages applying such foreign entry market modes.

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Chapter 4

Case Presentation

The main objective of this research is to assess what would be the best market entry choice or choices for a software company startup? (RQ2). To do so, first it is needed to answer the RQ1:

What are the different entry modes that SMEs can use for becoming a mMNE?

To answer these research questions, ChromaWay (see section 4.1) will serve as a case study because it is a software company that aim at becoming a mMNE.

This point, is where this thesis will add new knowledge to the literature. For SMEs like mMNEs and BGs, the organization of the firm in its first years is actually one of the most important keys for success in the long term because they need to focus on what they are good at and not waste their limited resources. So, in order to leverage its internal resources and capabilities internationally, the firm needs to find out the foreign market entry modes that allow the exploitation and sustainability of such resources. Therefore, regarding the internationalization path of a firm, this research will combine and asses the foreign market entry modes available for ChromaWay, and the organization structure, management and control systems necessary to transform its resources into competitive advantages.

4.1 ChromaWay

ChromaWay is a blockchain technology company that works with both public and private sectors.

The company was established in 2014 by Henrik Hjelte (CEO), Alex Mizrahi (CTO) and Or Perel- man (COO) and since then, ChromaWay has kept innovating and working on projects mainly in real estate and finance industries. As blockchain pioneers, ChromaWay was part of the first project to have a bank issue a currency in the Bitcoin Blockchain.

ChromaWay delivers advanced blockchain solutions in a secure way. Its blockchain software is characterized by being minimally disruptive, broadly compatible and with the scalability necessary to meet enterprise requirements. ChromaWay main products are Postchain, Esplix and Token technology.

Internationalization strategy choice for micro-multinationals: a development framework

Internationalization strategy

choice for micro-multinationals: a development framework

GINÉS SÁNCHEZ

Internationalization strategy choice for micro-multinationals: a development

framework

by

Ginés Sánchez

Internationaliseringsstrategi för mikro- multinationella företag: ett

utvecklingsstrategiskt ramverk

Ginés Sánchez

Acknowledgements

Contents

List of Figures

List of Tables

Nomenclature

List of Abbreviations

Chapter 1

Introduction

1.1 Background

1.2 Purpose & Research Questions

1.3 Delimitations

Chapter 2

Methodology

2.1 Research Process

2.2 Collection of data

2.2.1 Primary data

2.2.2 Secondary data

Chapter 3

Literature & Theoretical Framework

3.1 International Entrepreneurship

3.2 Foreign market entry modes

3.2.1 Direct Exporting

3.2.2 Franchising & Licensing

3.2.3 Joint Ventures & Strategic Alliances

3.2.4 Subsidiaries

3.2.5 Foreign market entry modes summary

3.3 Micromultinationals

3.3.1 Types of micro-multinationals

3.3.2 mMNEs success characteristics

3.3.3 Factors behind the decision to become a mMNE

3.4 Internationalization methods and theories

3.4.1 Transaction Cost Economics (TCE)

3.4.2 Eclectic Paradigm

3.4.3 Institutional Theory

3.4.4 Social Capital/Network Theory

3.4.5 New Theories

3.5 The Resource Based View (RBV)

3.5.1 What is a resource?

3.5.2 Methodology framework

3.6 Research model and chapter summary

Chapter 4

Case Presentation

4.1 ChromaWay