Constraints facing small western firms in transitional markets

Abstract

Purpose -To provide an Asia-Pacific viewpoint of the key constraints associated with large geographic distances for smaller westerns firms entering central and eastern Europe (CEE), described as a turbulent transitional environment. Design/methodology/approach -An exploratory study was used within a qualitative methodology, using eight case studies across multiple industries. Semi-structured interviews were the main method of data collection conducted in 2003/2004. Open, axial and selective coding was used for the analysis to identifying issues. Findings -Key internal constraints for smaller western firms (mindset of western management and middle management in CEE; and lack of management in CEE with decision-making authority) related to managements' inability to recognize geographic and psychic distance as major external constraints. Largely overcome by enhancing communication between various functional groups; adapting organizational structure; maintaining frequent communicational; developing partnerships in international joint ventures; finding reliable distributors and commitment from re-sellers and working with government. While no single international business theory adequately explains this process, there is overwhelming support for the network perspective and international entrepreneurship.Research limitations/implications -The study is limited by small sample size. The explanatory phase is proposed with further western companies, such as the UK, operating in CEE to identify geographic distance, and additional CEE markets to verify dimensions in this environment. Practical implications -The paper provides a checklist of strategies for overcoming constraints facing managers of smaller firms, entering emerging markets with geographic distance. Originality/value -Previous studies, using a European or Nordic viewpoint, fail to identify the constraints associated with large geographic distances. This paper provides practical assistance to managers starting out in CEE from the Asia-Pacific.

The impact of financial accessibility constraints and government regulations on the organisational performance of small-and-medium-sized enterprises

“…This result does not support the hypothesis of the study, H2. However, this finding is inconsistent with the viewpoints of researchers such as Al-Hyari et al (2012), Freeman and Reid (2006), Huggins (2000), Kitching (2006) and Mag and Varothayan (2015), who reported that government regulations are an outside factor affecting firm performance. Furthermore, the result is inconsistent with an institutional theory which assumes the impact of government and professional associations on the outcomes of organisation (DiMaggio and Powell, 2000;Mizruchi and Fein, 1999).…”

“…This can consequently impact the national economic performance on the whole (Fiori et al, 2012). Freeman and Reid (2006) found that government regulations and bureaucracy were a key constraint facing small firms in Europe. Also, in investigating the impact of regulation on the performance of small firms, Kitching (2006) reported that regulation has both direct and indirect significant impact on organisational performance.…”

Impact of psychic distance to the internationalization behavior of knowledge‐intensive SMEs

“…In this study, the case firms were well prepared for the impact of psychic distance because the Japanese market is well known of its entry barriers and cultural differences (cf. Freeman and Reid, 2006). However, by analyzing entries to other major markets or nearby markets would give information of the impact of the so-called psychic distance paradox (O'Grady and Lane, 1996), different strategies applied, etc.…”

Factors Wavering Internationalizations of SMEs: Indian Context

“…Large firms may perform better in international market as compare to small firms because of better financial position. Freeman and Reid (2006) indicated that, lack of "financial resources" influence the internationalization process of SMEs. Saixing et al (2009) have proposed that, high-level managers, the management expertise and the capacity of financing are crucial factors in internationalization.…”