Critical Literature Review; How Do Smes Internationalise? a Review of the Stages Model, the Network Theory and the Born Global Phenomenon

Critical Literature Review;
How Do SMEs Internationalise? A Review of the Stages Model, the Network Theory and the Born Global Phenomenon
During the past five decades, the internationalisation of firms, with particular interest in small to medium sized enterprises (SMEs), has received a considerable amount of research interest (Bell, 1995) as a result of the evident increase in internationalisation of firms and industries (Johanson and Vahlne, 1990). Resulting from multiple research studies, three different literature streams were developed. The first stream, often referred to as the ‘Uppsala Model’ (Johanson and Vahlne, 1977), depicts that firms will follow multiple incremental stages when going abroad, whereby the ‘psychic distance’ largely influences the choice of country for expansion. Approximately twenty years later Coviello and Munro (1995; 1997) introduced the ‘Network Theory’ concept, claiming that a key determinant of the internationalisation process of small firms are its formal and informal network relationships. More recently, studies found evidence indicating that firms nowadays internationalise rapidly and almost directly after inception (McDougall and Oviatt, 2005; Bell et al, 2003), leading to a whole new approach to internationalisation, the ‘Born Globals’.
Throughout this literature review, the three different internationalisation approaches will be critically discussed in chronological order of their establishment. Subsequently, the three approaches will be compared to one another in order to integrate them with each other and create a better understanding. Finally, the observations of this article will be summarized and a conclusion will be provided.

As indicated in the introduction, the first theory is the ‘Stages Model’ to which Johanson and Wiedersheim-Paul (1975) have contributed significantly with their concept of the ‘establishment chain’, which posits a series of evolutionary stages through which firms internationalise

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