Expanding a business to foreign markets can be both beneficial and challenging for a company. Patel (2018) argues that nowadays, even small businesses are exploring the opportunities of internalization. Due to the size, these enterprises encounter specific issues associated with expanding their operations. Patel (2018) offers strategic sourcing practices that should help small businesses internationalize without the typical problems. In addition, there are three main frameworks used in internalization, “the Uppsala model, transaction cost analysis, and the business strategy approach” (Patel, 2018, p. 6). Therefore, regardless of the size, companies that internationalize encounter problems.
The most commonly used is the Uppsala model as stated by Santangelo and Meyer (2017) it has been utilized by organizations since 1977. The focus of this approach is on increasing international activity with time. The factor that influences the process is the knowledge of the company, which is developed over time (Patel, 2018). Therefore, it suggests a relatively slow framework for internalization. However, the method does not explain the “non-linear and discontinuous dynamics” (Santangelo & Meyer, 2017, p. 1). The second model’s objective is quantitative analysis (Patel, 2018), therefore, it is associated with lower transactional costs. The final model is the most general of the three (Patel, 2018). The focus of the method is on specific criteria that allow for identifying the strategy for entering the market.
Businesses owned by families can become global as well. Ivanova, Dentchev, and Todorov (2015) conduct their research on the family businesses that plan on expanding to the international level. Theories applicable to the issue are “international entrepreneurship, stage theory of
Internationalization, resources, and capabilities, stewardship theory, agency theory” (Ivanova et. al, 2015, p. 299). The authors emphasize that a small family business that plans on internationalizing experiences many problems due to the lack of resources when compared to large family businesses.
Ivanova, Y., V., Dentchev, N., A., & Todorov, K., A. (2015). Family business internationalization in the new millennium: Achievements and avenues for future research? International Review of Entrepreneurship, 13(4), 299-332.
Patel, V. (2018). Small business internationalization through strategic sourcing. Web.
Santangelo, G., & Meyer, K., E. (2017). Internationalization is an evolutionary process. Journal of International Business Studies, 48(9), 1114-1130. Web.