Post on 18-Aug-2015
Internationalization and entry strategies for SMEs in Sub-Saharan AfricaA study on foreign market selection and entry by Zeldah SchramaMarch 12, 2015
Recommendations for Future Research
Research Methodology
Findings 2: Theoretical Blueprint
Findings 1: Doing Business in SSA
Introduction
Findings 3: Empirical Blueprint
Findings 4: New SME BlueprintPR
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EN
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VER
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Zeldah Schrama
How can SMEs set a clear strategy and roadmap for entering the Sub-Saharan African
market?
RESEARCH OBJECTIVE
Zeldah Schrama
Zeldah Schrama
KEY RESEARCH QUESTIONS
What are the considerations for choosing a target market and an entry mode strategy?
What are the key risks and challenges that foreign companies will face when entering the SSA market?
What does academic literature say about internationalization strategies for SMEs?
What metrics should be used in assessing foreign markets?
Zeldah Schrama
Zeldah Schrama
Qualitative study with prescriptive approach
RESEARCH METHOD
Choice of design
“Inductive approach emphasizes the richness, texture and feeling for the raw data collection and is concerned with the generation of new theory emerging from the data”
Glaser and Strauss (1967)
Target population1. Small enterprises have less than 50 employees and an
annual turnover and/or balance sheet total below €10 mln
2. Medium sized enterprises have less than 250 employees and an annual turnover below €50 mln and/or a balance sheet total below €43 mln
EU Commission (2005)
“
”
Zeldah Schrama
3. Africa Experience / Ambition
FINAL SAMPLE
1 3
Sikuphi Investments
2
2 Consulting Companies
2 Western HQ Companies
1 SSA HQ Company
Zeldah Schrama
DATA COLLECTION METHOD
Semi-structured telephonic interviews for 45-60 minutes 1. Respondents were selected on their participation and
involvement in the internationalization of their company2. Interviews took place either after hours or at the most
convenient time to avoid procedural bias.
Reporting bias was countered by an accurate recording of the interview notes and peer debriefing
Main sections of the interviews
1. Company characteristics/operations2. Doing business in SSA3. Process of internationalization
2/4
RISK
Literature
Operational RiskStrategic Risk
Sustainability Risk
Selecting markets is a stage based process
Psychic distance
Resource-based theoryCybernetic approach
Network theory
Empirical Research Information, infrastructure Systems, social structures,
contracts Not applicable
Process-driven? Entrepreneur-specific
Demand-led
Firm-specific factors Industry norms Country factors
Regulatory requirements
DOING BUSINESS IN SSA
Conclusion: Africa is as equally risky as other regions that are publicly perceived to be more stable /less risky!
3/4
MARKET SELECTIO
N
4/4
MARKET ENTRY
Conclusion: Potential for growth, growing middle class, following clients and personal interest of management
Conclusion: Potential for growth, growing middle class and personal interest of management
Zeldah Schrama
LITERATURE
Uppsala model & Innovation-related theory
Johanson and Wiedersheim-Paul (1975) found empirical evidence for an “establishment chain” of international penetration
Network theory (Johansen and Mattson, 1998)
New venture theory (Bell, 1995) : ‘Born Globals’
Stage 1 No regular exports
Stage 2 Export via
agents
Stage 3 Overseas subsidiary
Stage 4 Overseas
production
1. Highlights the importance of the entrepreneur2. Preference of early and active internationalization
1. Networks predict, steer and facilitate international activities
2. Network relationships and strategic alliances are key resources associated with early exporting
Zeldah SchramaZeldah Schrama
“By combining multiple observers, theories, methods, and empirical materials, researchers can hope to overcome the weakness or intrinsic biases and the problems that come from single-method, single-observer, single-theory studies. Often the purpose of triangulation in specific contexts is to obtain confirmation of findings through convergence of different perspectives. The point at which the perspectives converge is seen to represent reality.” Jacob (2001)
Zeldah Schrama
Role of network relationships for SMEs in SSA
SME franchising models specific to SSA
FUTURE RESEARCH