SME’s International Market Entry: How do they make decision?

Making the right decision on international market entry mode is of utmost importance to an internationalizing firm. However, there is a lack of analysis concerning the actual decision making process, specifically with regard to internationalization of Small and Medium-sized Enterprises (SMEs). Accordingly, based on four decision-making process (DMP) models, namely, reactivity, incrementalism, bounded rationality, and real options, we study the DMP of SMEs on international market entry mode and the subsequent change in strategy. In addition, we explore the factors affecting the use of a certain entry mode decision-making approach and seek to find out how the decision-making process adopted by the firms affect their international market development strategy. To do so, we conduct a qualitative study of six SMEs from Finland and Italy, taking into consideration their DMP and internationalization strategies. Our findings indicate that SMEs that adopt a more rational process in their decision-making are more likely to succeed in foreign market.