(Family) SMEs & Internationalization

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Method & Methodology

We will discuss the research philosophy, research purpose and the approach that we chose to use for our study in this chapter. Moreover, we will discuss the criteria we set for firm selection and the strategies chosen to reach the selected firms. Finally, this chapter will highlight the methods used for data collection as well as the methods used to analyze the data in coherence to the ethical standards toward this research.

Research Philosophy

For this thesis we aim to study and bridge the knowledge on the concept of internationalization strategies for European (family) SMEs that venture toward China with the perspective of social capital. This Chinese perspective on intra-cultural social capital provides us with additional aspects on building, nurturing and utilizing social capital when European (family) SMEs are choosing to expand their businesses to China. Therefore, it is of high importance to set the foundation and to discuss the topics of ontology and epistemology. In accordance to Easterby-Smith, Thorpe & Jackson (2015), ontology is referred to the views about the nature of reality, while epistemology is toward the views about the most appropriate ways of enquiring about the nature of reality. Regarding ontology, we chose to apply the relativistic perspective as our starting point for our thesis. We observe that there is no single ‘truth’ and that the phenomena depend on the perspectives from which we observe them to further produce different truths (Easterby-Smith et al., 2015). Social capital is a human construct, therefore many ‘truths’ exist surrounding the observation of the nature of social capital. We further argue that different researchers embrace different realities, as the individuals being studied craft individual realities (Creswell & Poth, 2018).
In line with the topic that we researched through the understanding of reality from a humanistic perspective, the importance of acknowledging the individual person’s unique perspective and consideration must be taken into account. Therefore, we argue that perceptions are based on individuals and their intrinsic beliefs on social capital. This humanistic approach to business underscores the relativistic perspective of ontology that guides us throughout our philosophy.
On the other hand, we neglect the realism position because it would suggest that there is one single truth that all of the observers would have to agree upon ignoring the particular individual and contextual factors influencing the observer’s reality (Easterby-Smith et al., 2015; Saunders, Lewis & Thornhill, 2012). A nominalist viewpoint would suggest that there is no truth, disregarding the belief about the person who the study is done on and their perspective on reality, is moreover only their ’own truth’ (Easterby-Smith et al., 2015; Saunders et al., 2012). Moreover, the perspective of nominalism would then greatly restrict us in the comprehension and consideration of the data gathered from the individuals whom are observed due to the perspective of reality it has. Since we have established that social capital encompasses a truth, but it is dependent on the observer and their perspective we decided to continue with relativism as our ontology.
In relation to epistemology, we will view this research from the social constructionism perspective as we acknowledge the individual truths of all observers and therefore comply with the fact that reality indeed is socially constructed by humans (Creswell & Poth, 2018; Easterby-Smith et al., 2015). Furthermore, with a social constructionist epistemology we can investigate the individual and subjective perceptions more thoroughly and experience formed from interactions with others with regards to their observed truth about social capital (Creswell & Poth, 2018). Throughout the social constructionist epistemology, it is important to acknowledge that situations are given a meaning and the process among individual interactions are to be considered. These situations in social contexts are experienced in unique, individual ways which further emphasizes our choice of the social constructionist epistemology.
As we are aiming to build a framework for European (family) SMEs to venture toward China, we must be open to diverse viewpoints of social capital to gain a better understanding of the complex topic. Moreover, the integration of ontology and epistemology will allow us to obtain a different viewpoint on social capital. Furthermore, the data gathered from the firms will give the foundation for the development of concepts and ideas. This will help us to provide a conclusion on how social capital and understanding of Chinese culture characteristics can benefit European (family) SMEs internationalization to China.

Research Design

The purpose of this thesis is to provide a theoretical framework for European (family) SMEs emphasizing social capital in internationalization strategies. This study will focus on collecting qualitative data from several cases. In order to collect the appropriate data, we need to include the voices of the participants, the reflexivity of the researcher, a complex description and interpretation of the problem, and its contribution to the literature and what gap has been filled (Creswell & Poth, 2018). The analysis of the study can be both or either inductive and deductive to establish patterns or themes for the final framework (Creswell & Poth, 2018). We have decided to disregard a quantitative study because of the ontological and epistemological nature of our research (Easterby-Smith et al., 2015; Creswell & Poth, 2018). We have designed our research around a multiple case study, which will be further argued for in the approach.

Research Approach

Regarding the topic that this thesis is based upon, the end goal of the study is to develop theory due to the inquisitive and qualitative nature of our research. Moreover, there are different approaches a researcher can pursue when conducting research within the qualitative spectrum. Two approaches are distinguished as inductive and deductive reasoning (Saunders et al., 2012). The deductive reasoning is a top-down approach by using pre-existing theory and further formulating a hypothesis and then designing a research strategy to test it. In addition, the deductive approach is considered being moving from the particular to the general, in other words, a particular link or relationship is tested to see if it may be true in multiple cases (Saunders et al., 2012; Creswell & Poth, 2018). Because of the nature of deductive reasoning, we decided to not continue with this approach. We consider to approach this research by first collecting data from which we generalize the findings.
On the other hand, inductive reasoning involves researchers working back and forth between themes and the database until they have established a comprehensive set of themes, but it may also involve working together with the participants interactively, so they have a chance to shape the themes (Creswell & Poth, 2018). Inductive approach seeks specific patterns or relationships from many different observations in literature and data. Through inductive reasoning on the topic of internalization toward China, we have been able to build theory from interviews and literature (Creswell & Poth, 2018). It will help to identify relationships, themes, patterns and use these results to further compare them and draw conclusions to construct a suitable conceptual framework as our end goal. With specific regards to social capital, we aim to interview companies so we may establish relationships or patterns that emerge throughout the interview process. Therefore we found inductive reasoning with specific regards to social capital more appropriate.
Our decision on the design of our study originated from the choice of inductive reasoning. A single-case study explores a phenomenon throughout time or on its uniqueness, but our relativistic view suggests that there are multiple truths (Easterby-Smith et al., 2015), therefore we do not pursue a single case study. Since we sought to have patterns emerge throughout several cases as well as discovering relationships within the topic of social capital in internationalization, we decided on using a multiple case study method as our research design (Easterby-Smith et al., 2015; Creswell & Poth, 2018; Daymon & Holloway, 2011). By using a multiple case study method as our research design, we were able to examine our findings throughout cases, as well as comparing results between cases. This has led us to find causality and patterns between the different aspects of social capital which affect internationalization strategies of (family) SMEs in the context of China (Daymon & Holloway, 2011). The theoretic development that resulted as an outcome of the research design will contribute to the existing theoretical framework, managerial approaches to internationalization towards China and the assessment of current strengths and weaknesses for (family) SMEs and SMEs in their internationalization efforts towards China.
Yin (2012) argued for the need of triangulation when combined with our chosen ontology and the social constructionism epistemology. External validation by triangulation will lead to the validation of our research which will furthermore enhance the quality of the research (Saunders et al., 2012; Easterby-Smith et al., 2015; Yin, 2012). Denzin (1978) and Patton (1999) identified four types of triangulation, namely; method, investigator, theory and data source triangulation (Carter et al., 2014). Our research included triangulation based on data source. We identified four different primary sources that all granted us with unique insights and experiences within the scope of our study. The individuals that were interviewed were based in separate geographical areas of China, had different positions among their own companies and previous employers and fluctuated in their experience within China from five to fifteen years. The interviewees all had either experience in, or with (family) SMEs and their internationalization paths towards China, which displays the relevancy and uniqueness of the data sources. Triangulation between these multiple cases had a positive effect on our final analysis in which we provided a theoretical framework of the utilization of social capital in internationalization strategies towards China. To a lesser extent, we have used theory triangulation that supports our framework within the topics of strategic considerations, Chinese culture, and social capital.

Research Purpose

The study that we conducted was made through exploratory research, which implies that it is meant to provide details where small amount of information exists (Saunders et al., 2012). In addition, it ensures that the field of study is given new insights or extended regarding an occurring problem (Easterby-Smith et al., 2015). It was convenient for us to choose this perspective because we believe that China is an emerging market and may be very attractive for (family) SMEs in the upcoming future, so we want to highlight and investigate into internationalization to China for European (family) SMEs. As the phenomenon of internationalization strategies have been researched extensively as well as the concept of social capital and Chinese cultural characteristics, they have not been merged together to enhance and tailor these strategies for the sole reason of venturing toward China.

Data Collection and Sampling
Sampling Methods

As derived from the design and approach to our research, we have thoroughly crafted the way we sample and target firms to potentially collect data from. According to Luker (2008) the sampling method aims to identify reasonable situations of the phenomena, which is researched (Easterby-Smith et al., 2015). A population is defined as a set of similar items or events, which is of interest for some question or experiment (Easterby-Smith et al., 2015). By choosing a sampling strategy it has allowed us to minimize the population and therefore enhancing the quality of the data to be collected. The sampling methods chosen were combined from few basic sampling strategies one could apply during the preparations for data collection (Easterby-Smith et al., 2015).
The companies that we have targeted for our research had to comply with several criteria crafted by the researchers. Critical elements in our sampling approach included; company should comply with our understanding of the characteristics of (family) SMEs or have experience in supporting (family) SMEs (1), company must have obtained experience in internationalization strategies towards China (2), and company must have had or currently are in contact with suppliers and/or local agents (3). Ideally, the companies we have targeted would have a base of operations in Mainland China or a neighboring country from which the operations in China were handled. Moreover, Chinese employees or managers were installed, which displays extensive cooperation with Chinese individuals. Therefore, the sampling strategies we decided upon consist of a combination of purposive and theoretical sampling.
The defined sample units within purposive sampling that are needed for our research are chosen through the specific criteria we set. Moreover, the criteria we defined for our sample in the population are European family SMEs that currently have or had activities in China with a supplier or local agents. Furthermore, we chose to extend the purposive sampling with theoretical sampling due to our current research approach encompasses an inductive approach of developing theory. Therefore, theoretical sampling suggests that it is the process of data collection for generating theory (Easterby-Smith et al., 2015; Gentles, Charles, Ploeg & McKibbon, 2015). It constitutes that the researcher simultaneously collects, codes and analyses the data to further decide what the next set of data to collect is next in order to develop theory as it emerges, in other words theory saturation (Gentles et al., 2015). Although, theoretical sampling is a type of purposive sampling it attempts to discover emerging categories and their specific characteristics in order to identify and describe the relationships between them, unlike a standard purposive sampling (Easterby-Smith et al., 2015; Gentles et al., 2015). Furthermore, we aspired to obtain knowledge from the most typical cases with regards to this extremely specific research.

Data Collection

For our study, we decided on collecting the data through primary and secondary data collection methods. Primary methods consist of qualitative research methods which do not involve numbers but rather words, sounds, and non-quantifiable elements, whereas secondary methods consist of previously published data such as journals or articles to name a few (Easterby-Smith et al., 2015; Saunders et al., 2012). Secondary data is not gathered by us first hand, therefore we had to evaluate and review the contents and sources to decide whether or not to include it. Relevant secondary data sources include theory and relevant articles, whereas primary data include the interviews we conducted. Our objective was to obtain secondary data from the company directly, but sensitivity and confidentiality prevented us from accessing this secondary data. Secondary data collection on literature can be found in Appendix 1.
By utilizing our sampling methods, we identified and approached one hundred companies as can be reviewed in Appendix 2. We interviewed four companies that can be categorized by the elements in our sampling approach and the combination of sampling methods that were willing to voluntarily participate in our research. The process of reaching out to potential companies and interviewees started first with using our personal contacts and networks including using social media (LinkedIn and Facebook) to get in contact with a set population. Additionally, we reached out to the Chamber of Commerce of Sweden, England, Netherlands, Finland, Norway and Denmark in order to ensure an adequate amount of respondents would participate by emailing responsible party for China relations. The chosen companies were based on the aforementioned criteria to match the aim of our research. Approaching the type of data collection was far more straightforward. When companies agreed upon partaking in our research, we would conduct semi-structured interviews to collect our data. These interviews were conducted by using Skype and WeChat, since our interviewees were all based in Mainland China.
A topic guide in form of a questionnaire was created to roughly guide the interview, which can be reviewed in Appendix 3. We addressed general and strategic topics in the first part of our questionnaire and addressed cultural and social capital aspects in the second part. By guiding the interviewees through these two parts several unique insights and experiences could be unveiled without using academic language throughout the entire interview process. The concept of laddering either up or down by going deeper into certain topics has also been applied, to obtain a deeper understanding of interesting aspects of the research. By approaching the interview from a neutral perspective, we avoided becoming biased regarding our research. We researched from an exploratory perspective which granted us to explore a new area of previously under-researched area of studies. It implies that this perspective is meant to provide information in areas where research has not been thoroughly conducted to ensure that this specific field of study is explored, given contemporary insights as well as extending the current field where is problem is occurring (Easterby-Smith et al., 2015; Saunders et al., 2012). By providing each interviewee with a form of informed consent (Appendix 4) we shield the privacy, anonymity and confidentiality of companies and interviewees (Easterby-Smith et al., 2015).

Data Analysis

By choosing the method and research strategy, it will clearly outline the logical approach we want to move forward with in the study. In regards to the four rings model of research which includes ontology, epistemology, methodology and methods there are either qualitative or quantitative ways of analyzing the data we collected. (Creswell & Poth, 2018; Easterby-Smith et al., 2015). As mentioned above, we decided to move forward with an exploratory research design encompassing the involvement of social capital into internationalization strategies toward China. As a result, exploring the nature of a phenomena in this context theory development was required from our perspective. By opting for a qualitative study as is argued in the design and approach we aim to complete this objective. We sought to understand perceptions of our interviewees and their views on social capital and its role in internationalization for (family) SMEs. Statistics would be irrelevant in our research, since we aim to identify the phenomena in a practical context without predicting the outcome of a certain stance towards social capital in internationalization efforts. Therefore, using a quantitative approach by assessing the validity based on predetermined assumptions about social capital would not benefit our research. As our understanding was aimed to enhance the understanding of social capital in several cases, a qualitative study was found to be most suited for our research design and analysis (Daymon & Holloway, 2011).
Due to the aforementioned reason, we chose to pursue a multiple case study method as a research format. We chose to disregard the other research strategies due to the fact that we plan to take a well-known phenomenon into a new research setting (internationalization strategies with social capital) and that we aim to develop theory from our empirical investigation by analyzing multiple cases as specific cases, yet provide an in-depth analyses of cross-case similarities and differences. Yin (2015) defines case study method as an empirical inquiry that investigates a contemporary phenomenon within its real-life context by addressing “why” and “how” questions concerning this phenomenon. This research method can be pursued through single or multiple cases, where single cases puts the focus on unique or critical events while multiple cases moves further to research into many different events to achieve replicable results in the end (Yin, 2015). Our research wants to look closer into different companies and their experiences and expertise with a contemporary phenomenon in a real-life context (Yin, 2015; Mathison, 2011), therefore multiple cases are a necessity.
The analysis of a case study can be approached in several ways but we have decided upon a cross-case analysis (Creswell & Poth, 2018) in which the design is a multiple case study and the unit of analysis is holistic (Yin, 2015). By applying a holistic unit of analysis we aim to research one interviewee per company, whom can provide us with information on their views and experience on social capital and its role in internationalization towards China. Therefore, by using one (1) source per company we aim to gather case-specific knowledge through similar contexts in the multiple cases that we will research. If we were to choose an embedded unit of analysis we would use multiple sources per company, but we could not confirm that we were able to interview the similar types of people within an organization. This strengthens our choice of a holistic unit of analysis (Yin, 2015). The choice to cross-analyze the cases will be beneficial to provide a complete picture of the phenomenon. The information and data gathered are then evaluated and compared among the cases to further draw steps in order to make generalizations that would provide an understanding of the implication of social capital onto the internationalization strategies for (family) SMEs (Mathison, 2011). As was first displayed by Creswell (2009, p. 209), an in-depth portrait of cases will be provided once we have established the contexts and descriptions of the cases, provided interpretations, cross-case theme analysis and the assertions and generalizations that arise from the cases (Creswell & Poth, 2018).
The process of cross-analyzing the cases took up a substantial amount of time, since we have executed it in several steps. The first step of this cross-case analysis was to highlight the most important aspects of each individual interview after summarizing the interviews (Appendix 5). After both of us went through all four of the interviews, we found the main themes that had been addressed in our interviews. The second step was the creation of an excel sheet in which we had combined the four interviewees and their stances on each of the theme that was identified. A total of seventeen themes were identified across the four topics of our questionnaire (developments & attractiveness of China as a market, strategic issues, cultural aspects and social capital) and is outlined in Appendix 6. After we had completed this, the third step included to distinguish the similarities and differences found between the themes in the cases. By distinguishing these, we could provide generalizations of our findings which were triangulated with secondary data in the fourth step. In the fifth step, we combined these generalizations into a comprehensive framework that was established to answer the research question in the conclusion of our research.

1. Introduction
1.1 Background
1.1 Problem Statement
1.2 Purpose
2. Literature Review
2.1 (Family) SMEs & Internationalization
2.2 Culture and Society in China
2.3 Dynamics & Specifications of Social Capital
2.4 Summary of Key Findings
3. Method & Methodology
3.1 Research Philosophy
3.2 Research Design
3.3 Data Collection and Sampling
3.4 Data Analysis
3.5 Research Quality
3.6 Ethical Implications on Research
4. Case Description & Findings
4.1 Company A
4.2 Company B
4.3 Company C
4.4 Company D
4.5 Summary of Interpretations
5. Cross-Case Analysis & Interpretations
5.1 Identification of Themes
5.2 Similarities in Themes
5.3 Differences in Themes
5.4 Generalizations
5.5 Extending Current Theory on Internationalization
6. Conclusion
7. Discussion
7.1 Extension of Parachuting Internationalization
7.2 Practical & Theoretical Contributions
7.3 Limitations
7.4 Future Research
8. Reference List
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China: Destination (Un)known? Utilization of Social Capital for European (family) SMEs regarding Internationalization towards the People’s Republic of China

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