Internationalization patternsamong speciality food companies:some Italian case study evidence

Stefania TestaDepartment of Communication, Computer and System Science,

University of Genoa, Genova, Italy

Abstract

Purpose – The purpose of this paper is to contribute to a better understanding of internationalizationpatterns among speciality food small to medium-sized enterprises (SMEs), investigating dimensionsthat may have a bearing on such patterns, using a series of case studies. In particular the investigationseeks to gain new insights about differences among companies in their internationalization patterns.These differences are examined in a framework which tries to relate three company-level dimensions(market, technology and space) to internationalization patterns. The three dimensions are derived fromthe constructs developed by Storper and Salais, and Straete.

Design/methodology/approach – Two research questions (RQs) are formulated: Is there arelationship between the internationalization pace of speciality food SMEs and their technology,market, and space dimensions? Is there a relationship between the internationalization modes ofspeciality food SMEs and their technology, market, and space dimensions? A qualitative approach wasadopted and cases from a broad dataset were used. The present research is an explorative research: itis intended to provide insights from which hypotheses might be developed.

Findings – This paper provides an empirical and conceptual contribution to the foodinternationalization debate. On the empirical side, it provides new evidence on speciality foodinternationalization, showing a rather diversified set of internationalization patterns, both in terms ofpace and modes. On the conceptual side, it shows that the three dimensions of technology, market andspace may help to enrich the comprehension of internationalization phenomena. While data collectedseem not to provide insights from which hypotheses might be developed concerning RQ1, they seemon the contrary to provide useful insights concerning RQ2.

Research limitations/implications – Limitations of the research generally relate to the use of asmall sample. Future research should strive to obtain larger samples, develop a set of relevantfiner-grained hypotheses and test those using appropriate statistical techniques

Practical implications – Identifying the impact that the three dimensions might have oninternationalization patterns and vice versa may help to focus on these specific elements whencompanies make their internationalization decisions. On the same line, public policy agencies couldbenefit from these first results for better clustering companies targeting their internationalizationsupporting initiatives.

Originality/value – The findings add to the limited body of knowledge on the key influences oninternationalization patterns within the food sector.

Keywords Internationalization, Speciality food, Italian SMEs, Empirical case study,Worlds of production, Food products, Italy

Paper type Research paper

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0007-070X.htm

The author is grateful to Marco Mutinelli for his stimulating seminar on internationalization atthe University of Genoa, winter 2009. The author is also grateful to the anonymous reviewers fortheir constructive comments on an earlier version of the paper. Financial support provided by theItalian Ministry for Education, University and Research is gratefully acknowledged.

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Received February 10Revised June 2010Accepted July 2010

British Food JournalVol. 113 No. 11, 2011pp. 1406-1426q Emerald Group Publishing Limited0007-070XDOI 10.1108/00070701111180012

Describe your village and you will be universal (Lev Tolstoj).

1. IntroductionDue to new consumers’ needs such as increasing appreciation for variety and qualitywhich turn consumers away from standardized and commoditized industrial food(Venturini, 2002; Senauer and Venturini, 2004; Goodman, 2004), speciality products areexpected to absorb an increasing share of consumers’ spent on food in developedcountries (Slee and Kirwan, 2007). Speciality may cover a variety of different productswith rather “fuzzy” symbol-laden qualities such as organic, local, typical, high-quality,slow, ecological sustainable and fair trade food (Manniche, 2007; De Roest and Menghi,2000), which are subjects of a growing number of research publications[1]. Definitionsrange from restrictive to broader ones such as those provided by Kupiec and Revell(1998) and O’Reilly and Haines (2004). According to these authors, specialty productsmay include all non-industrial or non-mass products whose distinctive features can becreated through physical, sensory and aesthetic attributes such as raw materialquality, the technology and processes employed, presentation and packaging,organoleptic properties, identification and association of geographic origin withproduct image, availability and consumer perception as well as by selecting “special”distribution channels. Due to the non-industrial characteristics of speciality products,speciality producers are mainly Small and Medium Enterprises (SMEs). Therefore itmust not be surprising that the present paper limits its focus to them.

The speciality food sector has shown extraordinary levels of internationalizationover the years (Cembalo et al., 2007) and, due to its extreme variety (Mora, 2007), it hasalso shown rather variegated internationalization patterns. Data collected fromprevious broader research conducted by the author and her research team (see Massaet al., 2008; Massa and Testa, 2008; Massa and Testa, 2009a; Massa and Testa, 2009b;Manniche and Testa, 2010; Deak and Testa, 2010) on Italian speciality foodproducers[2] seem to confirm this. The main purpose of this paper is to contribute to abetter understanding of internationalization patterns among speciality food SMEs,investigating dimensions that may have a bearing on such patterns, using a series ofcase studies. In particular the investigation seeks to gain new insights aboutdifferences among companies in their internationalization patterns. These differencesare examined in a framework which tries to relate three company-level dimensions(market, technology and space) to internationalization patterns. Because the threedimensions are derived from the constructs developed by Storper and Salais (1997) andStraete (2008), the results confirm and enlarge the usefulness of these constructs,though this was not the author’s primary intention. These constructs have found anextensive application in the food sector (see, e.g. Murdoch and Miele, 1999; Marsdenet al., 2000; Morgan et al., 2006; Amilien et al., 2007) in order to explain companies’behaviors regarding, for instance, the type of competition and the organization ofproduction.

This paper is organized as follows. It first provides theoretical insights oninternationalization patterns. The following section provides an explanation of theinvestigation framework. Then research methodology is described. Subsequently,cases are introduced and evidence from case studies is provided and then discussed.Finally, conclusions are pinpointed, and limitations as well as future researchsuggestions are depicted.

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2. Internationalization patternsThis section provides a brief review of literature on internationalization patterns (bothin terms of pace and modes) given that comprehensive reviews are available elsewhere(see, e.g. Bell et al., 2003; Hollenstein, 2005).

Concerning the pace, internationalization has been traditionally considered anevolutionary process ( Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne,1977). In this view, companies start in their home market and then export towards“psychologically close” and/or geographically close markets, increasing commitmentto international markets in a gradual, stepwise manner through a series of evolutionarystages. Although such models (also known as the Stage, Uppsala or Gradualist model,among others) seem to be widely applied in the business environment – and the foodindustry is not an exception (Cook, 1997; Bager, 1997)- recently, more and morecompanies have shown an international orientation from a very early phase of theirorganizational lives. This is often known as the “born global” phenomenon and inrecent years there has been a peak in diffusion, even though it cannot properly beconsidered a new phenomenon (Knight et al., 2003). As noted by Rasmussen andMadsen (2002), a born global company has not been clearly defined. Definitions rangefrom very restrictive to broader conditions such as those provided by McDougall et al.(1994, p. 470): “a business organization that, from inception, seeks to derive significantcompetitive advantage from the use of resources and the sale of outputs in multiplecountries”. Lastly, a third type of internationalization model has emerged: firms thathave been well established in their domestic markets, with apparently no greatmotivation to internationalize, which suddenly embrace rapid and dedicatedinternationalization, due to “critical” organizational events or due to changes in theexternal environment (Bell et al., 2001; Bell et al., 2003). Such companies are usuallyknown as either “born-again global firms” or “re-born global firms”.

Independently from pace, the international pattern of companies can be manifestedthrough several modes: exporting activity, joint ventures, non-equity alliances,minority or majority participation (acquisition), subsidiaries (either sales or productionsubsidiaries/facilities), outsourcing and sourcing of inputs from foreign markets etc.(e.g. Sterns and Peterson, 2001). Subsidiaries and acquisition are usually mentioned asFDIs (Foreign Direct Investments). The establishment of a new subsidiary in a hostcountry by another firm headquartered outside the country, alone or with one or morepartners (Barkema and Vermeulen, 1998), is also called “green-field entry”. In this way,a company can choose the site that meets its needs best, start afresh, and acclimateitself to the new business culture at its own pace. Acquisition is typically presented asthe alternative to green-field. It is defined as the purchase of stocks of an establishedfirm in the host country by another firm headquartered outside the country, alone orwith one or more partners, in an amount sufficient to confer control. Empirical findingsspecific to the food industry seem to confirm that the same options are available to foodproducers with some restrictions deriving from the fact that food manufacturers maynot be as “footloose” as other industries (see Fischer, 2003).

Internationalization patterns (both in terms of pace and modes) are influenced byseveral dimensions (e.g. Coviello and Munro, 1997; Mutinelli and Piscitello, 1998), atdifferent levels: at company-level, at industry-level, at country-level and so on.Concerning the company-level, dimensions range from resources to managementstyles, from networks to product characteristics etc. (Pulieva and Widen, 2007). For

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instance, Root (1994) states that highly differentiated products with distinctiveadvantages over competitor products favour export activity due to the fact that theseproducts can absorb high unit transportations costs and high import duties and stillremain competitive in a foreign target country. On the contrary, low differentiatedproducts push companies toward choosing other modes, such as equity investment orcontract manufacturing. In the same vein, Hollensen (2001) adds the concept of productcomplexity to the concept of product differentiation in order to better explain the choiceof internationalization modes.

3. Investigation frameworkAs noted above, the speciality food sector shows rather variegated internationalizationpatterns and such differences, both in terms of pace and modes, can be related to variedand multifaceted dimensions. Nevertheless, it is intention of this paper to focus only onthree company-level dimensions: technology, market and space. In this paper, technologyand market dimensions are defined according to the definitions provided by Storper andSalais (1997) while the space dimension is defined according to Straete (2008). Accordingto Storper and Salais (1997), the technology dimension is about how the product isproduced and processed; the market dimension is about how this product is marketed. Inthe technology dimension, products are either “standardized” or “specialized” and in themarket dimension, products are either “generic” or “dedicated”. “Standardized” productsrely on general or local industrial standards that can be achieved by use of widelydiffused technologies. In contrast, “specialized” products rely on restricted forms ofknow-how and technologies that differentiate them from prevailing industrial standards.“Generic” products target a multitude of (similar) customer demands. By contrast,“dedicated” products target the demands of specific (groups of) customers. Thecombination of these two dimensions – technology and market- (see Figure 1) resultsinto four quadrants which represent four ideal-typical “worlds” of production (WOPs)

Figure 1.The four WOPs of Storper

and Salais (1997)

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which are characterized by specific “rationalities of behaviour” regarding, for instance,the type of competition, the organization of production as well as the creation andevaluation of products’ qualities. Competition in markets for standardized productstends to centre on price factors and production to be organized according to economy ofscale principles. Competition in markets for specialized products tends to focus onaspects other than price and production tends to be organized according to economy ofscope/variety principles. The qualities of generic products are well-known to customers,i.e. the information needed for sale and purchase is contained in the product itself, whichallows for sale on anonymous mass markets. The qualities of dedicated products areoften defined through interpersonal dialogue based on face-to-face contacts or mediatedby communication technologies between producer (or a trusted representative such asagent or distributor) and customer. This facilitates knowledge exchange, trust buildingand establishment of common expectations. Hence, dedicated products are not suitablefor sale via anonymous distribution channels but need an element of interpersonalproducer-customer contact.

Despite these concepts have been developed for other industrial sectors, they havefound an extensive application in the food sector (see, e.g. Murdoch and Miele, 1999;Marsden et al., 2000; Morgan et al., 2006; Amilien et al., 2007). Indeed, a third dimension(space) has been introduced by Straete (2008) when specifically speaking about thefood sector. The space dimension is about whether or not a product is associated withparticular places or regions (localized v. placeless). “Localized” companies rely on theconcept of localness to gain a competitive advantage, for example by means oflabelling and accreditation/certification schemes such as PDO/PGIs (ProtectedDesignation of Origin; Protected Geographical Indication)[3] which guaranteedistinctive character from area to area (Ilbery and Kneafsey, 2000; Banks andBristow, 1999; Murdoch et al., 2000). “Placeless” companies do not explicitly refer to aspecific area to gain their competitive advantage but rather they rely on broaderconcepts such as high-quality, environmental sustainability (e.g. organic), animalwelfare, luxury, nutrition, health, uniqueness and so forth (Parrott et al., 2002). Theaddition of this third dimension creates a framework made of eight quadrants whichcorrespond to eight WOPs, characterized by different rationalities of behaviour. Theclustering of companies in such WOPs is not static because firms can move amongthese worlds, as they develop over space and time. It is worth noting that theseframeworks involve some simplification. First, rationalities of behaviour are in practicenot as “pure” as described, e.g. regarding the choice between price-based competitionand quality-based competition as well as the choice between economies of scale versuseconomy of variety (in fact some authors speak about “hibridity” (e.g. Slee and Kirwan,2007)). Second, in their real worlds, firms have to operate in multiple theoretical worlds,being modern markets defined by not homogeneous products (Salais and Storper,1992). Third, the three dimensions go beyond the dichotomies introduced by theframeworks. For example, the space dimension forms a continuum of degrees rangingfrom very strong association with particular places or regions to total placelessness,where place has no relevance in the evaluation of the product’s qualities. However, asnoted by Straete (2008), these simplifications seem not to interfere with the principlesand usefulness of the frameworks.

It is opinion of this author that the three above introduced dimensions may help inunderstanding the speciality food SMEs’ rationalities of behaviour regarding

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internationalization patterns. Except for the application of technology and marketdimensions in explaining export performances in Storper and Salais (1997) book, to thisauthor’s knowledge these three dimensions have not been employed till now for thispurpose.

Based on the above considerations, two research questions (RQs) can be formulated.They can be summarized as follows:

RQ1. Is there a relationship between the internationalization pace of speciality foodSMEs and their technology, market, and space dimensions?

RQ2. Is there a relationship between the internationalization modes of specialityfood SMEs and their technology, market, and space dimensions?

Companies producing speciality products – according to the broad definition providedin the introduction – operate in six WOPs: the Interpersonal World, the Market Worldand the World of Intellectual Resources, both placeless and localized. On the contrary,companies producing products in the conventional mainstream operate in theIndustrial World.

4. MethodologyIn order to answer the questions RQ1 and RQ2, a qualitative approach has beenadopted and cases from the research mentioned in the introduction have been used.This case-based approach is justified by previous calls for greater use of qualitativeapproaches in research on internationalization (Bell et al., 2003). This makes sensegiven that the potential benefits of properly conducted case studies in terms of datarichness, depth and quality, generally compensate for their associated shortcomings;notably limited representativeness and generalisability (Miles and Hubermann, 1984).It is worth noting that the present research is an explorative research therefore it isintended to help researchers formulate a problem in such a way that it can beresearched. Explorative research may develop hypotheses but it does not seek to testthem.

Due to space limitations, only six companies (whose names have been withheld) outof the complete dataset are presented in what follows. In line with exploratory researchguidelines, the cases have been selected not because they are a representative sample instatistics terms but because they are considered able to provide insights concerning therelations among the concepts introduced. Five of the six cases involve producers indifferent subsectors and one a retailer. In this paper, the food sector refers to allbusiness classes involved in production, processing and delivery of food to endconsumers (Sterns and Peterson, 2001). In fact, according to Fischer (2004), problemsthat occur in the international food business do not depend on business class,i.e. business class is not the determinant factor in explaining differences betweenmanufacturers and traders as well as between subsectors (with fresh produce asexception due to highly perishable products).

Data collection was performed by an average of five in-depth semi-structuredinterviews per case with persons which are considered highly knowledgeable such asentrepreneurs, founders and/or other key informants both inside and outside(e.g. consultants) the companies (Yin, 2003). During the interviews, detailed notes andobservations were taken and audiotape recordings were made. Subsequently, fullwrite-ups were constructed on each company in the form of a detailed case study.

Internationalizationpatterns: Italian

evidence

1411

Reliability requirements were assured, first, by using a protocol for each case whichincluded transcripts of the audiotape recordings from all the interviews, field notes andobservations as well as secondary data, and, second, by the development of a completedatabase. Secondary data were collected in accordance with the literature on socialscience research methods, advocating the use of different sources of data and methodsto validate one another. In particular, data extracted from the firms’ websites and otherpublications (annual reports, news papers, articles, master theses etc.) were used tocapture a complete, holistic and contextual portrayal of the units under study.

5. The casesThe companies selected for this paper cover different food subsectors and differentages (the youngest company was founded a few years ago and the oldest has about 150years of history) and are internationalized according to variegated patterns, both interms of pace and modes. The sub-sectors chosen are among the most important Italiansub-sectors in terms of internationalization (Di Tullio, 2007) All but two arefamily-owned businesses. Due to space limitations, the basic profiles of the companiesused as descriptive cases in this paper are summarized in Table I.

5.1 Internationalization patternsCheese is an example of the Stage model. Originally set up in the 1970s with a domesticfocus, over the years the executive entrepreneur identified potential opportunities inforeign markets. The products of Cheese are sold in 23 countries and the British RoyalFamily is among the company’s customers. Export amounts to 30 percent of total sales.Its products have received international awards for their high quality and uniqueness.

Hifood is an example of the born-global phenomenon, according to the definitionprovided by McDougall et al. (1994). In just one year, Hifood entered the Japanesemarket, with two points of sales. In the words of the founder:

It was a difficult choice, both costly and brave. But then, without courage you do not goanywhere. Furthermore, we think our format is universal and that means it is applicableworldwide without local adjustments. The merit is not ours but of Italian food!

The founder proudly says that his local partner in Japan is an Italian emigrant:

[. . .] who speaks Japanese as well as I speak my local dialect!

The journey to London and New York presented several difficulties but, despite initialfailures, Hifood is finalising the opening of a shop in New York, in partnership with afamous Italian cook, who migrated to the USA in the late 1950s. Hifood created its owndistribution channel and shops (green-field FDIs).

Ice is another example of the born-global phenomenon, according to the definitionprovided by McDougall et al. (1994). In the four years following its inception, Iceentered two leading foreign markets concurrently (France and the USA). Ice created itsown distribution channel and shops (green-field FDIs).

Jam is an example of the Stage model. Once its market positions becameconsolidated, the company turned its attention towards other European countries.Export of Jam amounts to 30 percent of total sales and products are sold by means oftwenty-five agents, mainly in the B2B market. Jam created a specific company withinits group to handle export activities, which has since also taken on the export activities

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Ch

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Hif

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Ice

Jam

Oil

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2003

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114

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Table I.Basic profiles of the six

companies

Internationalizationpatterns: Italian

evidence

1413

of other speciality high-quality food producers. Jam recently decided to sell a shareparcel to a larger company, another Italian family business, a speciality coffee producerto whom Jam now refers for a variety of problems connected to growth andinternationalization.

Oil is an example of the re-born global phenomenon. Changes at global levels, whichmainly started in the 1990s, in terms of demand, supply and regulation, forced thecompany to consider an international evolution. Oil started its internationalization bysourcing inputs from foreign markets i.e. buying olives and olive oil from selectedproducers in the Mediterranean area in order to face increasing demand. This causedthe firm some legal problems as other producers charged Oil with unfair competitionand misleading labels which specified the geographical indication of the company’slocation (which was not necessarily the place of origin of raw materials or theproduction site). In 2008, the company changed its internationalization mode (inputsourcing) into acquisitions, namely acquisitions in France (brands of olive oils localproducers, sold through large retailers). The export rate amounts to 8 percent of totalsales (in France, Germany, Austria and UK). It was 2 percent in 2003 and the goal is toreach 30 percent in the medium-to-long term.

Rice is another example of the re-born global phenomenon. The company was foundedmore than one century ago when the need for internationalization was not as strong as itis now. Over the last few years its export rate has increased from almost nothing to 34percent and now Rice exports in over 50 countries, from Russia to the USA. Such exportmainly originates from functional and convenience products[4]. In the beginning of 2000,the company launched a green-field FDI in Romania. The first subsidiary opened in 2003,involving the whole rice production cycle from rice cultivation to commercialisation.Romania serves as a production base at lower costs and also as a gateway for thecompany’s introduction into Eastern Europe commercial channels.

Table II summarizes the internationalization patterns (both in terms of pace andmodes) of the six case companies.

5.2 Mapping the cases according to technology, market and space dimensionsIn what follows, brief explanations for positioning the cases according to technology,market and space dimensions are provided. As the focus of present research is onspeciality food, no cases are classified, as explained in section 3, in the Industrial World(standardized-generic), whether localized or placeless.

5.2.1 The technology dimension. All six companies belong to the specializedquadrants. This means that what they produce or sell is made relying on restrictedforms of know-how and technologies, applied in the realisation of product qualities thatdifferentiate them from prevailing industrial standards. For example, Cheese’sproducts remain faithful to traditional composition and the main aspects of productionprocesses. Each individual pat of butter is imprinted manually with the traditionalwooden moulds of flowers, cows, etc. and then manually packaged. Cheese forms incellars are regularly turned, scrutinized, caressed and massaged by master cheesemakers. Dozens of different types of wood are used for planks and their varying originsand acidities trigger particular biochemical processes that have a precise influence oncheese flavour.

5.2.2 The market dimension. Five cases out of six belong to the dedicated quadrantsand one to the generic quadrant even though, as it will be clear in the discussion, some

BFJ113,11

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Ch

eese

Hif

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Ice

Jam

Oil

Ric

e

Inte

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np

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(pro

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are

30%

––

30%

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2B8%

34%

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por

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ket

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ran

ceR

oman

ia

Table II.International patterns of

the six companies

Internationalizationpatterns: Italian

evidence

1415

of them are targeting themselves to other quadrants in order to pursue a competitiveadvantage in international markets. Concerning companies in the dedicated quadrants,this means that they target the demands of specific groups of customers and define thequalities of their products through strong interpersonal forms of dialogue with theircustomers. For example, Oil adopts a direct distribution channel which allows it tomaintain direct contact and build an exclusive relationship with customers based onfidelity and care. As the head of marketing affirms:

An important element of exclusivity for our customers is that you cannot find our products inthe shops. We are perceived as a small olive oil producer that you can directly call to receiveoil at home. The front-line personnel are the main conveyor of the company’s image. Thus it isnot surprising that our company has an over-sized correspondence department: eight fulltime employees that have been in the company for a long time who have the task to politelyreply to all possible requests of our customers!

In the same vein, Ice founders claim:

We carefully plan how to present our products, thinking about the way we arrange the shops,including who serves the ice-cream and how it is served in order to pamper our high-spendingconsumers.

Concerning the company in the generic quadrant, this means that it sells its productsthrough conventional large retailers. The marketing manager of Rice claims: “Ourproducts are self-explanatory. Their value-added component consists in time-saving andhealth-oriented properties which our customers can easily discover and appreciate!”

5.2.3 The space dimension. Three companies belong to localized quadrants and threeto placeless quadrants. Concerning companies in the localized quadrants, this means thattheir products are strongly associated with particular places or regions. For example,Hi-Food mainly sells products made in the local area (in their first and largest shop,located in Turin, this percentage amounts to 70 percent). The manifesto itself of thecompany emphasizes the importance of localness. The first point claims: “We are peoplethat love high-quality foods. We love their histories, traditions, the women and men whoproduce them, the places where these products are made, the kids who grow up in thoseplaces.” The company is also strongly adverse to private labels that are considered tomake producers anonymous and to be “placeless brands”. Concerning companies in theplaceless quadrants, this means that they leverage features other than geographical originin order to gain their competitive advantage. For example, Jam emphasizes the fact thatthey use only high quality raw materials and they source their suppliers from anywherehigh quality conditions are guaranteed. In their marketing campaign, they never refer to aspecific place and one of the company’s entrepreneurs admits that the factory is locatedwhere it is only because his family was used to live there in the past. They do not haveany preferential relations with local suppliers. Suppliers are continuously monitored toguarantee the quality, but if Jam buyers are not satisfied they look for supplierselsewhere. It is worth noting that when speaking about Italian food companies theconcept of “placeless” should be considered in a softer way because a certain level ofpositive “country of origin effect” (Gabrielsson et al., 2008) is always present.

6. Findings and discussionConcerning RQ1, what emerges from data seems to suggest that a relationship betweenthe internationalization pace of speciality food SMEs and their technology, market, and

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space dimensions does not exist. For example, “born global” can be companies bothplaceless and localized such as Ice and Hi-food and “re-born global” can be companiesboth generic and dedicated, such as Rice and Oil. The years the companies werecreated seem to have a relationship with internationalization pace but it is not theintention of this paper to focus on this aspect.

Concerning RQ2, what emerges from data seems to suggest to generate thefollowing general hypothesis that later can be tested with confirmatory approaches:

H0. There is a relationship between the internationalization modes of specialityfood SMEs and their technology, market and space dimensions.

In the following, some considerations about the relations among the conceptsintroduced are provided.

6.1 The technology dimensionConcerning the technology dimension, specialization is confirmed as the elementgreatly helping speciality food SMEs in internationalization because it places them inprofitable market niches protected from competition by large industrial groups(Fischer, 2007; Ninni et al., 2006). In fact, even though the complete dataset alsoincludes speciality food companies placed in the standardized-dedicated quadrants(Market World), both placeless and localized, they do not have any internationalactivity. This is the case, for example, of a small wine producer, producing wine withstandard techniques and providing a highly customized service for meeting specialdemands of a limited range of local customers, such as demand for home-deliveries,small batches deliveries, night and day as well as weekday and holiday deliveries.Maintaining such a kind of dedication in international markets could prove extremelydifficult and expensive and thus often unfeasible for SMEs. Therefore the ensuing lossof dedication would move such SMEs from the Market World to the Industrial Worldand thus in direct competition with large conventional food companies.

Therefore, data collected seem to suggest that not only there might be a relationshipbetween the internationalization modes of speciality food SMEs and their technologydimension but that there might be a relation between the decision itself of specialityfood SMEs to enter international markets and their technology dimension.

It is worth noting that Rice operates in multiple theoretical worlds. In fact, it isleveraging both standardization (in rice production) and specialization (in convenienceand functional rice-based food production) and this is also manifested in itsinternationalization efforts. With the Romanian production FDIs, Rice aims at pursuingstandard production and cost reduction while its exports rely on hyper-specialization bothin terms of convenience and functionality of its innovative products.

Therefore, such data seem to suggest that standardization might be an impedimentto SMEs internationalization when speaking about export but not necessarily whenspeaking about production FDIs.

6.2 The market dimensionConcerning the market dimension, dedication is the element which is subject to thegreatest changes when companies go international. In fact dedication implies “special”customer relationship management, often based on interpersonal producer-customercontact and dialogue that allow trust-building and the establishment of common

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expectations. This type of producer-customer relationship is expensive to maintain anddifficult to implement in foreign markets and it implies full financial and strategiccommitment of the company. Cheese and Oil have chosen to reduce the intensity of thededication and to move from dedicated to generic producer-consumer relationships,respectively. On the one hand, Cheese still sells its products through speciality shopsbut it cannot provide shops abroad for direct sales and all those interconnectedactivities such as agro-tourism and hotel, restaurant, teaching courses, guided toursand tastings etc. which it offers in the home market. Nevertheless, a certain level ofdedication (a sort of “virtual” dedication) is maintained in the way products arecommunicated and marketed abroad through branding, packaging and story-telling(Godin, 2005) about factors like exquisite raw materials, authenticity of recipes andplaces, good animal living standards and so forth. On the other hand, financially strongOil grew internationally by means of acquisitions, buying other brands which itmaintains completely autonomous from the national brand and which it sells by meansof generic distribution channels. Jam’s choice is the opposite of those implemented byOil and Cheese. In fact, Jam aims at reinforcing its dedication abroad both by focusingon customized products for the confectionery industry and by merging with anotherspeciality food company which experienced exceptional growth abroad throughproprietary luxury coffee shops. Jam’s entrepreneur affirms:

We were looking for a partner, but not a mere financial one. We needed a partner that sharedour philosophy on the extreme quality of products and that was able to teach us something interms of marketing and growth. We look at our partner as an example of how a familybusiness can reach worldwide success while leveraging quality.

Jam’s products are now also distributed in the partner company’s coffee shops. Theseshops have been opened in prestigious locations and offer customers new sensorialexperiences, satisfying taste with new-concept food delicacies, and sight withstructures designed by celebrated Italian architects as well as objects of art such ascoffee cups and saucers designed by contemporary artists. Since their inception, bothIce and Hi-food have replicated the dedication implemented in national markets bycreating their own distribution/sales channel abroad through FDIs. Points of salesbecome the places where controlling the dedication process is easier, by building anintimate customer relationship. This is not surprising because contemporary trendstoward the so-called “experience economy” (Pine and Gilmore, 1999) incite new formsof production and business models in mature manufacturing industries wherebycritical added value is created through services, experiences and stories attached to theproducts and not through the physical manufacturing process. The food industry is notan exception (Allaire, 2003): boundaries between products and services are becomingincreasingly blurred and efforts are redirected towards food-related services, makingthe “dedication” dimension very critical.

Data collected seem to suggest that there might be a relationship between theinternationalization modes of speciality food SMEs and their market dimension andthat this relationship might be bi-directional.

6.3 The space dimensionConcerning the space dimension, localized and placeless elements seem to influenceinternationalization modes’ options. Cheese, Oil and Hi-food have intrinsic limitationsto their growth and international expansion because of their reliance on the localness

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concept, and neither production FDIs nor international sourcing are feasible options.However, other options are available. Regarding Cheese, the founder underlines:

We would like to satisfy the growing demand of our customers, both old and new and both inItaly and abroad, but we can’t. First of all because there are physical limits in terms ofproduction processes and facilities and, second, because we are already fully committed inwhat we are doing. The little time that is left is devoted to finding new niche products that, inour opinion, deserve to be developed. Our products, which are so related to natural cycles andharvest rotations, are limited in quantity and we want them to remain as such. Thus we areconstantly searching for new cattle and sheep farmers and trying to convince young people toremain in the countryside and work, while respecting the environment and natural resources.Our product portfolio includes more than 35 kinds of cheese, marmalades, honeys,mushrooms, liquors, vegetables, chestnuts, cold cuts, fruits of the forest etc.

Thus, internationalization growth is insured by high diversification. Regarding Oil,diversification appears to be more difficult, due to both product typology (oil vs.cheese) and to company decisions, as the following episode illustrates. Oil wasplanning to introduce a new line of products, namely espresso coffee machines andcoffee capsules. This business seemed to be interesting for Oil because of distributionchannel synergies. Therefore, the marketing department decided to test the idea in acustomer focus group. The head of marketing reports:

The customers expressed their utter disappointment. They couldn’t accept that we wanted tosell coffee as it was perceived as unrelated to the territory in which the company is located.The customers were worried that we could lose our typicality. As a consequence, we stoppedthe diversification project.

Thus, internationalization expansion is achieved by means of acquisitions,maintaining a clear distinction in brands and strategies adopted in national marketand abroad. Regarding Hi-food, growth and internationalization limitations are lesssevere than in the two previous cases, since “local” is as broad as Italy is, but they arenot absent.

In the case of Jam, Rice and Ice there are not any intrinsic limitations to theirinternationalization expansion due to the fact they do not explicitly refer to a specificarea for their competitive advantage; rather, they rely on broader concepts, asunderlined in the investigation framework section. In this case, production FDIs can bea valuable option, as the case of Rice demonstrates. Jam does not exclude a productionFDI in its future as well.

Therefore, data collected seem to suggest that there might be a relationship betweenthe internationalization modes of speciality food SMEs and their space dimension.

It is worth noting that, concerning Ice, not only there are not intrinsic limitations toits international expansion, but internationalization is actually its main path to growth.This is because the artisanal ice-cream sector in Italy is very strong, making thehigh-quality, high-price of the company’s products more suitable for a global niche.

Table III classifies the cases according to technology, market and space dimensionsand highlights changes (represented by arrows) occurred in international markets.

7. Conclusions, limitations and future developmentsThis paper aimed at investigating dimensions that may have a bearing on speciality foodproducers’ internationalization patterns, by using a series of descriptive case studies. This

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Table III.Classifying the sixcompanies according totechnology, market andspace dimensions

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paper provides an empirical and conceptual contribution to the food internationalizationdebate. On the empirical side, it provides new evidence on speciality foodinternationalization, showing a rather diversified set of internationalization patterns,both in terms of pace and modes. Behaviours range from exports to green-field FDIs, fromglobal sourcing to acquisitions, from born global to re-born global, and include stagemodel patterns. Such new evidence helps to enrich existing knowledge aboutinternationalization among firms in the food industry, in line with calls made by Ibehet al. (2006) and Fischer (2003). Furthermore, such new evidence is an attempt to cover agap in the internationalization literature of Italian speciality food (e.g. Belletti, 2002;Bernetti et al., 2006; Bertolini and Giovannetti, 2006; Belletti et al., 2007; Malorgio et al.,2007; De Blasi et al., 2007; Stefani et al., 2006; Mora, 2007; Capitello and Agnoli, 2007)where the greatest amount of papers refers to the range of products that are associatedwith a particular place or region, often neglecting specialities which are not. On theconceptual side, this paper shows that the three dimensions of technology, market andspace as introduced by Storper and Salais (1997) and Straete (2008) may help to enrich thecomprehension of internationalization phenomena. While data collected thus far seem notto provide insights from which hypotheses might be developed as regards RQ1, theyseem on the contrary to provide useful insights as regards RQ2. Concerning thetechnology dimension, data seem to suggest that there might be a relationship betweenthe internationalization modes of speciality food SMEs and their technology dimension(e.g. standardization might be an impediment to SMEs internationalization whenspeaking about export but not necessarily when speaking about production FDIs).Concerning the market dimension, data seem to suggest two hypotheses. First, theremight be a relationship between the internationalization modes of speciality food SMEsand their market dimension (e.g. high level of dedication seems to require investments indistribution/sales FDIs or mergers with companies with highly developed dedicationabroad). Second, this relationship might be bi-directional, as testified by changes in themarket dimension enacted in international markets (e.g. internationalization might inducetransforming dedication into “virtual” dedication i.e. a kind of dedication obtained bymeans of communication, branding and storytelling that is more related to what thecustomer perceives than to a real interpersonal producer-customer contact). Such changesin the market dimension are in line with Mora (2007, p. 767) when claiming “Given thatintrinsically a speciality product is not easy to adapt, it is the service content rather thanthe product itself that has to be modified”. These changes also highlight that SMEs mayhave to move among different WOPs (e.g. from dedicated WOPs to generic WOPs), asthey develop over international markets. Such changes may require time, great effort andcommitment. Concerning the space dimension, data seem to suggest that there might be arelationship between the internationalization modes of speciality food SMEs and theirspace dimension. For instance, for companies in localized quadrants, production FDIs arenot an option (Fischer, 2003) and international sourcing may cause serious damages to thebrand. Localized companies may use “locality as value added for export” (Morris andBuller, 2003, p. 559) but they must be aware that their growth and internationalizationpatterns are prone to the concept of localness. Limitations seem to be both physical(limited quantities in limited areas) and related to brand image. On the contrary, placelesscompanies cannot benefit from territorial origin effects but they can leverage productionFDIs and international sourcing, which are made easier by fewer potential geographicalobjections from consumers.

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Limitations of this research are acknowledged and conclusions should beconsidered in this context, also bearing in mind that the cases used in this paper consistonly of Italian-based firms. Future research should strive to obtain larger samples,develop a set of finer-grained hypotheses, and test them by using appropriatestatistical techniques. A quantitative-based approach could beneficially complementthe qualitative insights provided in the present research and help provide practicalinternationalization guidelines for speciality food SMEs seeking to improve theirpresence in international markets. Research should also investigate public policyinitiatives that can facilitate and promote the international development and progressof enterprises acting in different WOPs.

Notes

1. See for example themed sections and special issues published in International PlanningStudies, Vol. 4 No. 3, 1999; Sociologia Ruralis, Vol. 40 No. 2, 2000; Vol. 40 No. 4, 2000; Vol. 41Vo. 1, 2001; Vol. 42 No. 4, 2002; Journal of Rural Studies, Vol. 19 No. 1, 2003; Environmentand Planning A, Vol. 35 No. 3, 2003 and the British Food Journal, Vol. 105 No. 8, 2003; Vol. 106No. 10, 2004.

2. Advanced models for knowledge management in small and medium enterprises, supportedby the Italian Ministry for Education, University and Research (2005-2008).

3. PDO/PGI certifications were introduced by the European Union by means of regulations2081/92 (recently substituted by 510/2006) with the aim of pointing out the link between theproduction process of an agro food product and its territorial origin. Both PDO and PGIshare the same normative system and procedures for the application, and give the sameguarantees to consumers, and the same rights to producers; however, differences betweenthese two signs depend on how closely the quality specificities of the products are linked tothe geographical area of which they bear the name. The PDO is meant for those productswhich show an objective and close link between their features and the area whose name theybear (including human and natural factors, such as climate, soil quality and local know-how);the PGI also designates products linked to the area whose name they bear, but with a moreflexible link.

4. Functional products are any healthy food claimed to have a health-promoting ordisease-preventing property beyond the basic function of supplying nutrients. Convenienceproducts are commercially prepared food designed for ease of consumption (ready-to-eatdishes).

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About the authorStefania Testa is an Assistant Professor at the University of Genoa (Italy), where she received herPhD. Prior to joining the University as a faculty member, she was a consultant in a leadingAmerican consultancy firm. Her research interests include innovation management in small andmedium enterprises in the food sector. Stefania Testa can be contacted at: stefania.testa@unige.it

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