Implications of network position for internationalizing small- and medium-sized enterprises

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Method :Chapter overview

This chapter addresses the methods used in this thesis to answer the research questions introduced in Chapter 1 and developed in Chapter 2.  The initial section details the study’s critical realist ontology and epistemology.  Section 3.3 outlines the multiple case study design using systematic combining as the method for collecting and analyzing data, and abductive reasoning to build from existing theories. The selection of the Fleet Management Systems industry sector in NZ as the research context is explained in Section 3.4 along with the census approach to identifying case firms. Section 3.5 on data collection describes two phases of interviewing plus desk research of secondary data sources, while Section 3.6 on data analysis provides background on abductive analysis techniques and the operationalization of the systematic combining method.  Finally, the methods used in the thesis are compared against case study best practice.


This section explains the philosophical foundations in this thesis in understanding the reality of internationalizing firms and the competitive influences of other organizations upon them. The main research question, “How do competitors influence the success of internationalizing SMEs?” seeks understanding of the actions of two different organizations (internationalizing SMEs and their competitors) and the processes that interconnect them. Organizational theorists have noted two different ways to understand organizations (Tsoukas & Chia, 2002; Weick, 1969); as entities or objects comprised of smaller components that interact, so that organizations change by moving from one state to another (van de Ven & Poole, 2005), and as social processes comprised of smaller processes so that the organization is constantly changing – hence organizing as an activity. This second way of understanding organizations is based on the proposition that reality is best understood as processes rather than material entities, in which change is reality’s “pervasive and predominant feature” (Rescher, 1996, p.7).  Entities may be constantly changing, even though from an observer’s perspective such entities may appear static.  For example, a firm at the beginning of the week is not the same firm at the end of the week because, as the firm goes about its activities, staff learn, stakeholders change their opinions about the organization, customers are gained or lost, and organizational routines are modified (or reinforced) based on the firm’s activities during that week.  Internationalizing SMEs are organizations with change as their pervasive characteristic, particularly those SMEs that internationalize rapidly (Chetty & Campbell-Hunt, 2003), yet much of the extant research into internationalizing SMEs focuses on firm attributes, thereby emphasizing these organizations as relatively static entities rather than social processes (Knight & Liesch, 2016).  Two difficulties are apparent in understanding changing organizations such as internationalizing SMEs. Firstly, although we know that organizations have changed, exactly what caused the change and how it occurred are not generally observable. Secondly, because the English language favors the “object” view, we lack the vocabulary to talk with research participants and amongst scholars about change as a central understanding of reality (Tsoukas & Chia, 2002). Critical realism is an ontology that addresses both these difficulties, as is explained in the next section.

Critical realism

Realism is an ontology that assumes that the world exists independently of our experience of it, so“reality” is something, and that “something” can have a causal influence or ability to generate events (Ryan et al., 2012). Critical realism is an approach to social science that offers a middle path between the “spurious scientificity of positivism and idealist and relativist reactions to positivism” (Sayer, 2004, p.6) and distinguishes three domains of reality in the world; the real, the actual and the empirical (Sayer, 2000).  The real is what exists, whether or not we have empirical experience of it and regardless of whether we adequately understand it.  The real is the domain of objects having certain structures and powers that give them capacities or susceptibilities to behave in certain ways (although these powers may not be exercised).  The actual is the domain where these powers are exercised, along with their consequences, while the empirical is the domain of experience, which may or may not be related to the domains of the real and actual (Sayer, 2000).  Within social science, critical realism is concerned with causal explanation and contextualization (Sayer, 1992). Unlike research in the natural sciences where phenomena can often be measured accurately in controlled situations, many phenomena of interest in business are socially constructed; that is, produced through the interaction of humans and under constant revision (Bryman & Bell, 2011).  This means social phenomena, such as organizations and organizing, are imprecise, dependent on human interpretation and cannot be reduced to law-like generalizations like natural objects (Orlikowski & Baroudi, 1991). Observability makes business researchers more confident in their knowledge of what they think exists in the empirical domain, but what exists does not depend on it being observed (Sayer,2000).  Like critical realists, positivist researchers argue that reality exists separately from human experience of it. However, positivists only accept as knowledge those phenomena confirmed by the senses, and assume that objects in the real world can be accurately measured in controlled situations (Guba & Lincoln, 1994).  In contrast, critical realists are willing to accept unobservable phenomena as knowledge and in stressing that reality does exist in social objects, critical realists also differ from interpretivists, who argue that people’s actions are so determined by social constructions that researchers can only subjectively interpret what an individual’s reality might be (Bryman & Bell, 2011).  Thus, critical realist ontology addresses the difficulty of observing change by being willing to include theoretical elements unable to be observed directly into causal explanations (Bryman & Bell, 2011).  Accordingly:“We will only be able to understand – and so change – the social world if we identify the structures at work that generate those events and discourses … Those structures are not spontaneously apparent in the observable pattern of events; they can only be identified through the practical and theoretical work of the social sciences.” (Bhaskar, 1989, p.2) Because of perceptual and linguistic limitations that cause humans to focus on objects rather than underlying mechanisms that are not observable, reality is not perfectly apprehendable by humans (Tsoukas & Chia, 2002).  Critical realists further acknowledge that there is a difference between the objects themselves and the concepts and language used to explain them, with the latter subject to constant revision (Sayer, 1992).  Language, theories and institutions are socially-constructed objects interpreted from the researcher’s point of reference, yet still exist regardless of the researcher’s interpretation. Thus, critical realist ontology addresses the linguistic difficulties of talking about change as a pervasive reality by acknowledging that the production of knowledge remains a fallible, social practice because knowledge is only a representation of reality (Sayer, 1992).  Accordingly, critical realism makes both ontological and epistemological assumptions (Easton, 2010). Guba and Lincoln (1994) stress that resolving ontological questions about the nature of reality comes prior to answering epistemological questions about the nature of knowledge, but that both questions must be answered before determining an appropriate method for answering a given research question. Critical realist researchers need to adopt epistemic relativism (Ryan et al., 2012), reflexively accepting that their knowledge of organizations and processes is not the same as the nature of these phenomena in reality, and that past experiences and theoretical perspectives shape what researchers can and cannot “see”.  Unlike positivists, who argue that their methods prove their findings “true” critical realists claim only that their findings are “probably true” (Guba & Lincoln, 1994, p.109). Rather than simply identifying correlations between factors and events, critical realism seeks to answer the question “what caused those events to happen?” (Easton, 2010, p.121), with causal explanation identifying the connecting mechanisms.

Research design

This section explains the interrelated sub-elements in the design of this study.  To sequence what is, in practice, an iterative cycle of design decisions, this section moves from the conceptual to the empirical yet necessarily refers to other design sub-elements. The section begins by comparing abductive reasoning to inductive and deductive patterns, then outlines the method of systematic combining (Dubois & Gadde, 2002).  Key design requirements that emerge from the research sub-questions are presented and the section concludes by explaining the multiple case approach used.

Industry-based case selection

Previous studies of internationalizing SMEs have often used case study methods to compare the characteristics of clearly successful SMEs across multiple industries. Such cross-industry sampling has a number of limitations.  Firstly, by separating SME cases from their competitive context, the impact of the environment on firm processes cannot be understood (Fernhaber et al., 2007).  Secondly, there is an inherent survivor bias in selecting only successful SMEs (Denrell, 2003; Nummela et al., 2016) because it is unclear whether unsuccessful SMEs also followed the same processes. Thirdly, researchers lack universally-agreed definitions of success for internationalizing SMEs (Cesinger et al.,2012) with predefined “success” thresholds of speed, scale and scope of internationalization acknowledged as arbitrary (Crick, 2009; Knight & Cavusgil, 2004) and lacking contextual embeddedness (Cesinger et al., 2012). Instead of cross-industry sampling, this thesis uses case studies of all the internationalizing firms in a single industry segment in a single country to develop theory on how competitors influence internationalizing SMEs.  The approach taken in systematic combining is similar to theoretical sampling in grounded theory (Charmaz, 2006; Dubois & Gadde, 2002); in this case deliberately selecting a population of competing firms for study that were likely to replicate or illuminate extant theory (Eisenhardt, 1989). Investigating all firms in an industry segment provides the means to understand the competitive dynamics of firms within their environment while maintaining a perspective of all the competitors (McKendrick, 2001). This single industry census design also avoids preselecting cases according to size, speed, scale and scope thresholds because all firms are included, regardless of their performance outcomes.  The approach for selecting the country and industry is described next.

Selection of country and industry

For practicality, the industry selected needed to operate in New Zealand (NZ), given the researcher’s location and limited budget.  This is not a research limitation, however, since NZ is recognized as an ideal country for conducting research into internationalization because of its small and open market (Chetty & Campbell-Hunt, 2004; Gerschewski, Rose, & Lindsay, 2015).  Further, because the small domestic market constrains growth, firms in NZ are motivated to expand to foreign markets. NZ is small enough to gather data on all the firms in an industry sector yet, in technology industries, NZ firms are able to compete in global markets.

1.1 Chapter overview
1.2 Understanding competitor influence on internationalizing SMEs
1.3 Research sub-questions
1.4 Thesis contribution
1.5 Thesis structure 
2. Theoretical framework and research questions
2.1 Chapter overview
2.2 Introduction to the theoretical framework
2.3 Internationalizing SMEs
2.4 Competitive strategy
2.5 Success outcomes of internationalizing SMEs
2.6 Competitive context
2.7 Mechanisms of competitor influence
2.8 Chapter summary & conclusions
3. Method
3.1 Chapter overview
3.2 Ontology
3.3 Research design
3.4 Industry-based case selection
3.5 Data collection
3.6 Data analysis
3.7 Best practice case studies 
4. Competing on the edge: Implications of network position for internationalizing small- and medium-sized enterprises
4.1 Chapter overview
4.2 Introduction
4.3 Literature review
4.4 Method
4.5 Case Findings
4.6 Discussion
4.7 Conclusions
5. Niche targeting through competitive rivalry and social construction Internationalizing SMEs in the Fleet Management Systems industry
5.1 Chapter overview
5.2 Introduction
5.3 Theory development
5.4 Method
5.5 Findings
5.6 Discussion
5.7 Conclusions
6. Competitor influences as a population of internationalizing SMEs evolves The case of the Fleet Management Systems industry in New Zealand
6.1 Chapter overview
6.2 Introduction
6.3 Theoretical background
6.4 Method
6.5 Findings
6.6 Discussion
6.7 Limitations and future research
6.8 Conclusions
7. A process perspective of competitor influence on the success of internationalizing SMEs: Social construction in an international context
7.1 Chapter overview
7.2 Introduction
7.3 Perspectives of competing
7.4 Model assumptions*
7.5 Competitive engagements within a firm-competitor-customer triad
7.6 Institutional structures and evolutionary pressures in the competitive context
7.7 Firm processes influenced by competitive engagements
7.8 Competing internationally
7.9 Conclusions: Synthesis of contextual and firm level processes driven by competitive engagements
7.10 Limitations and future research
8.1 Chapter overview
8.2 Introduction
8.3 Research contributions 
8.4 Managerial implications
8.5 Research limitations
8.6 Future research
Competitor influences on internationalizing SMEs

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