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Chapter 3 Research Design
This Chapter discusses about the structure and framework of our research and the interview outline regarding the international decision, process and management of SME. Our case selection and research process are presented in the subsequent section with an explication on our case selection criteria and the demographics of our case interviewees.
3.1 Tentative Research Framework and Interview Outline
The journey to internationalize is often initiated by internal and external factors such as home‐country market restriction, founder’s ambition, competitiveness and profitability. Once the decision to go global is made, firm would have to determine their entry strategy based on environmental factors and firm’s resources and capabilities such as their bargaining power and international experience. The entry decision is also affected by the amount of resources the firm willing to commit, amount of control the firm is willing to retain, and the existence of external complimentary resources. On the other hand, resources and capabilities of the firm and external resources would also affect entry strategy and host country selection.
In other words, many factors affect how the firm would internationalize and how it will be managed, their relationship are shown in Fig 3.1‐1.
Figure 3.1‐1 Tentative research framework
The research is to evaluate the internationalization process of a firm. Interviews
Firm resources and capabilities
Internationalization decision Going International Choice of foreign market Choice of entry strategy
Managing of international operation Environmental
factors
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were conducted with representative from case companies using open‐ended questions, addressing the main themes outlined in the case study protocol. Some questions are revised during the interview according to the interviewees’ responses.
The questions were open‐ended to encourage in‐depth details responses which include:
1. Internationalization decisions and market entry strategies
2. Environmental factors that will possibly influence internationalization decision and market entry choices
3. Resources and capabilities of the firm and how it affects entry strategies and host country selection
4. International management on how to govern human resource and marketing functions of SME in international operation
The environmental factors that could influence the company to internationalize and its market entry strategy are:
1. customer and market environment 2. competitive and bargaining power 3. industry cost
4. government intervention
The resources and capabilities that could influence the company to internationalize and its market entry strategy are:
1. immobile resources in host country
2. company’s asset specificity and the need to retain control 3. company experience and capability
The entry strategy of the firm involves determining entry modes, and conducting internationalize process, Entry modes involve evaluating the amount of control and commitment that a firm would like to devote upon considering the
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3. Joint Venture: considerable amount of resource committed to partnership and retains significant of control in decision making and operation
4. Foreign Direct Investment: direct investing in host country and retains total control over operation strategy of the production and sales subsidiary.
Internationalize process covers how and where company internationalize and the factor considered regarding the host country environment and existing resources, and also how current capabilities and resources of the firm affects the entry mode and host country selection.
International management involves governing organizational functions such as human resource, financial and marketing activities. International human resource management includes recruiting and managing expatriate in host country considering factors such as qualification and competency of the manager/expatriate and also company’s goal alignment with managers’ characteristics. International marketing management for SME involves determining the marketing mix‐the four Ps starting from product, pricing to place and promotion in host country market.
When company internationalize successfully, it should experience increase in overall sales and be able to find its product in foreign markets. Therefore, sales volume and foreign market exposure can be an indicator of the success of internationalization process.
This research was conducted using open‐ended questions. Since the concept of the research was broad, not all of the questions are listed in the interview outline;
and only a few representative questions from each concept were listed instead. The interview outline is listed below:
1. Internationalize decision
a) Why does the firm want to internationalize?
b) What environmental factors affect the decision to internationalize?
c) How to choose countries to serve and enter?
d) Which entry strategy was selected?
2. Internationalize process
a) What is the entry process?
b) How do resources and capabilities affect decision entry mode and
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management?
c) How do firms manage internationalization in host country?
d) How does SME manage expatriates in host country?
e) What are the marketing strategies in host country?
f) How does firm respond to changes in environment during internationalization?
g) What are the key issues to deal with during internationalization?
3.2 Case Selection and Research Process
Owing to the nature of our research, a qualitative approach is considered most appropriate as it allows discovering of insights to “why” and “how” of decision making process (Eisenhardt, 1989). Two cases were selected given that our study focuses primarily on process and behaviors rather than outcomes of SME drawn from the natural context. The research is based on qualitative research on two case companies through analyzing and comparing the conditions found to construct a theoretical approach. The replication condition discovered during analytical process will be used to answer our research questions.
Considering the purpose of this study, firms were selected primarily from the industry they operated, the Taiwanese bicycle parts and components industry. These locales were selected for several reasons. First, little is known about the manufacturing output of bicycle parts and manufacturers in Taiwan. Second, the prevailing strategies adopted by the firms to overcome the liability of smallness attached to its home country could be served as a benchmark for firms in other countries.
The criteria for selecting companies were size – less than 250 employees and independence, bearing the sole responsibility of their decision‐making process and
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industrial companies that have internationalize through any of the four entry strategies were qualified.
The respondents’ main demographic features are summarized in Table 3.2‐1. The two case companies selected are King Sword and Chance Good, which are both in the suppliers of bicycle lights parts. These two firms are the first two bicycle lights manufacturer founded in Taiwan and had internationalized as early as early 1980s and remained competitive in their industry. Further details of the companies would be addressed in chapter four case description.
Table 3.2‐1 Demographic features of interviewee
Name of Company Major Products Interviewee’s position King Sword Manufacturer Bicycle Lighting
Equipments
Mr. Chiu, Director and Founder of the company Midway Pacific Trading company of
bicycle accessory
Mr. Shi, Director and Founder of the company Chance Good Bicycle Lighting
Equipments
Mr. Lin, Director and Founder of the Company
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