Internationalization readiness - a study of Icelandic SMEs

Abstract

The aim of this study is to identify the factors that Icelandic SMEs use to evaluate their readiness to compete within international markets. In particular, which barriers are confronted at the pre-stage of internationalization and to deepen the understanding of how the markets’ knowledge affects the readiness of the firm to start working in international markets. In order to reach this goal a qualitative research was performed through in-depth interviews with seven individual decision makers from six Icelandic SMEs, which market their products internationally. The main findings are that limited knowledge is on particular entry markets and a lack of available finance in the pre-process of internationalization. A bilateral trust is an important aspect when SMEs partner with a foreign distributer that is selling its products overseas. The companies interviewed were convinced of their readiness to go abroad, and that being unique works in their advantage and as a driver towards internationalization. The conclusion is that limited international experience limits firms’ motivation of going abroad. The participants agreed on four critical factors as a platform for internationalization: knowledge about the market, network relationships, unique products, and reliable production process. This study attempts to guide Icelandic firms in the process of going international.Keywords: Internationalization, readiness, SMEs, barriers, market knowledge