Perceived Application of Uppsala and Network Models in the Internationalization Process of SMEs

Abstract

Application of Internationalization theories explaining how companies decide to enter global markets and what type of entry mode chosen etc. has always been a debatable issue. The traditional theories has highlighted on various factors that influence the internationalization process in companies, that strive to enter international markets. Uppsala-Model illuminates on the basic understanding of the internationalizing requirements for Small and Medium Enterprises. The study attempts to analyze empirically and evaluate the applicability of the Uppsala Model and Network theory, in Indian SMEs in today’s vigorous business environment. The researcher used the deductive approach of application of the theories and its impact through empirical evidence from the results of 143 Pump and Motor manufacturing firms of Coimbatore district. The data collected from the selected firms helped to prove and to know the usefulness of the variables of the above-said theories. Thus, the general purpose of this paper is to study the usefulness and applicability of the two significant theories in the internationalization process of firms. The paper shows that Experiential Knowledge is perceived as useful to the firms, in their development of ongoing international business, and that this knowledge is embedded in networks of business relationships as also explaining different entry modes and market commitment emphasized in the Uppsala Model.