International_Marketing

The current issue and full text archive of this journal is available at www.emeraldinsight.com/0309-0566.htm International marketing behaviour amongst exporting firms Bo Rundh Division for Business and Economics, Karlstad University, Karlstad, Sweden Abstract Purpose – The increasing internationalisation and globalisation of business has forced many firms to reconsider what contributes to international success. The purpose of this paper is to study international marketing behaviour of firms within the exporting industry. Design/methodology/approach – The main study was conducted by a questionnaire within the Swedish manufacturing industry with respect to firms’ exports to Europe. Data was then analysed in relation to four areas – export stimuli, factors affecting market entry, market barriers and need for changes in the marketing strategy. Findings – The findings in this study indicate no general difference in the international marketing behaviour among small and large firms. The main factors affecting market entry relate to proximity due to local representation and a need for service in the local market. The main obstacles are administrative and technical impediment and a fierce competitive situation. Changing market conditions also have an impact on a need to change the marketing strategy. A conceptual model has been developed from findings in the study and by integrating internationalisation and marketing theory. Practical implications – The main implication is the importance of the fact that management has a commitment to and engagement in international activities especially when a firm is trying to establish a position in a local market. Another implication is that management needs to understand and meet service requirements in the local export market. Originality/value – This paper fulfils an identified need for recognising the importance of learning more about international marketing behaviour among small and large exporting firms. Keywords Exports, International business, International marketing Paper type Research paper International marketing behaviour 181 Received February 2005 Revised February 2006 Introduction The increasing internationalisation and globalisation of business has forced many firms to reconsider what contributes to their competitive advantage. Hamel and Prahalad (1996) have found that firms who achieve success in their international business are those that perceive the changes in the international environment and are able to develop strategies that enable them to respond accordingly. Globalisation refers to the shift toward a more integrated and interdependent world economy. Globalisation (Levitt, 1983) has two main components – the globalisation of markets and production. The firms that will survive base their success to a great extent on an early identification and analysis of changes in markets and industries in their international market environment. Kay (1993, p. 3) found in his studies that “corporate success is based on an effective match between the external relationships of the firm and its own capabilities”. The trend toward increased internationalisation of world markets emphasises the importance of understanding how firms behave and how they perform in international markets. An important research area has been export marketing research and in European Journal of Marketing Vol. 41 No. 1/2, 2007 pp. 181-198 q Emerald Group Publishing Limited 0309-0566 DOI 10.1108/03090560710718175 EJM 41,1/2 182 particular a focus on internal and external determinants of export performance. Some of the findings (Cavusgil and Zou, 1994) are that there is a positive relationship between export marketing strategy and export performance. Another important research area for many scholars has been the process of internationalisation. However, there is also a growing interest in and awareness of extending internationalisation research to meet new phenomena. In their research, Oviatt and McDougall (1997) argue that different changes due to technological, economic and social conditions lead to new research questions and alternative explanations of how firms internationalise their business. The unit for analysis in the internationalisation literature has, to a great extent, been the big and multinational firms (Coviello and McAuley, 1999; Chetty and Campbell-Hunt, 2003) despite the fact that small and medium-sized firms are internationalised to an increasing degree. Calof and Beamish (1995) have also found that changes in mediating variables such as resources, organisation, strategy or the environment will influence the process of internationalisation. Another research area of interest relates to international entrepreneurship, where scholars are reflecting on the internationalisation of the marketplace and the increasing prominence of entrepreneurial firms in the global economy. In this research (McDougall and Oviatt, 2000) the paths of international business and entrepreneurship are intersecting with increasing frequency. This paper seeks to contribute to an emerging body of research concerning the internationalisation of small and medium-sized firms (Holmlund and Kock, 1998; Chetty and Blankenburg-Holm, 2000). In particular, it is of interest to deepen our understanding of how different changes in the business environment will affect the marketing strategy. Influential scholars within strategy (Porter, 1996) literature have maintained that a firm’s strategy is a complex issue and that it is necessary to understand the inter-dependent activities in relation to the context of the overall pattern for fulfilling the strategic intent. It is therefore of importance to get a better understanding on how these factors influence the firm and its international strategy. Sweden is a small and open economy that is to a great extent dependent on its international affairs both for exporting but also for importing different products and services. Export accounted for 44 per cent of the GDP in 2003 and 60 per cent of the production of goods were exported. When firms enter a foreign market, they are usually in a disadvantaged position in relation to the local business environment. The questions emphasised in this research concern the path used by firms when they internationalise their business. The research aim is therefore to seek a better understanding of market behaviour during the process of internationalisation. Which are the stimuli for starting international activities among manufacturing firms' Which factors is it necessary to consider when entering a market' Which market barriers affect the firms' What kind of adaptation is necessary in the marketing strategy as a result of changes in the marketplace' We argue that the path to internationalisation is a product of strategic decisions embedded in these configurations. To address these questions, this paper is divided into six parts and the next section reviews the related literature on the process of internationalisation. The following section deals with the research method followed by the results of the survey. The paper ends with a discussion and conclusions. A review of related literature Internationalisation The phenomena of internationalisation have been studied of many scholars and this has also lead to the fact that the term internationalisation is ambiguous and varies in relation to the scope of the study. The term has also been applied to a variety of elements in an organisation (Calof and Beamish, 1995) such as strategy, organisational structure, products and so forth. Welch and Luostarinen (1988, p. 36) have defined internationalisation “as the process of increasing involvement in international operations”. A different view is taken by Calof and Beamish (1995, p. 116) who define internationalisation as “the process of adapting firms’ operations (strategy, structure, resource, etc.) to international environments”. However, internationalisation is a dynamic and not a linear process. Due to rapid changes in the international marketplace a firm can also de-internationalise from a market by dropping a product (Calof and Beamish, 1995) or reducing investments in a particular market or by withdrawing from international activities altogether (Benito and Welch, 1997). A withdrawal can also lead to resources being used for activities in another market area or for a more competitive product that will contribute to a better competitive position. International market development The process of internationalisation and international market development has been described (Cavusgil and Nevin, 1981; Miesenbock, 1988; Johanson and Vahlne, 1990; Czinkota and Ronkainen, 1994; Coviello and Munro, 1995) and classified by many scholars. One research area has been devoted to describing this process in terms of a firm’s growth in international activities. The incremental approach (Johanson and Vahlne, 1977) considers internationalisation to be a gradual sequential process through different stages, where a series of steps reflect the firm’s increasing market knowledge and commitment over time. A second research area suggests (Johanson and Vahlne, 1992; Bell, 1995; Coviello and Munro, 1997) that internationalisation involves and is influenced by the set of connected relationships a firm develops as part of its business network. A third area (Young et al., 1989; Okoroafo, 1991; Bell, 1995) is contingency based and can be described by the company’s business strategy. Research by other scholars also considers the born global phenomena (Madsen and Servais, 1997; Moen, 2002) and the intersection of entrepreneurship (McDougall and Oviatt, 2000; Zahara et al., 2000) and internationalisation. Models of incremental internationalisation The notion that a company expanding to international markets in an incremental step-by-step manner is widely documented by research and in addition to the Johanson and Vahlne (1977, 1990) model, other researchers also support an incremental approach to internationalisation, e.g. (Bilkey and Tesar, 1977; Reid, 1981; Czinkota, 1982; Cavusgil, 1984; Calof and Beamish, 1995). In research by Cavusgil (1984) five stages are identified (pre-involvement, reactive/opportunistic, experimental, active and committed involvement) as differences in firm’s orientation and management attitude to international market expansion. The most cited of these stage models is the Uppsala model, which emphasises learning by focusing on market knowledge and commitment. In order to minimise risk and overcome uncertainty firms internationalise in a step-by-step process and when firms gain market knowledge, International marketing behaviour 183 EJM 41,1/2 184 they commit more resources to the market (no regular export/export via independent agents/own sales subsidiaries/overseas production facilities). Other researchers such as Andersen (1993) and Thomas and Araujo (1985) have concluded that this type of incremental approach is a result of innovation-adoption behaviour, where the perceptions and beliefs of managers influence and are shaped by involvement in foreign markets. Like the Johanson and Vahlne (1977, 1990) model, these studies emphasise the role of managerial learning in the process of internationalisation. Internationalisation via the business network Whereas the stage models focus the attention on the number of markets developed and the involvement by the firm in these markets, the network approach is more concerned with the business network’s relationships and knowledge of the markets. As defined by Axelsson and Easton (1992) a network involves sets of two or more connected exchange relationships. Following from this, markets are systems of social and industrial relationships among, e.g. customers, suppliers, competitors and other actors. According to the network perspective, the nature of the relationships established between various parties will influence the strategic decisions and the network involves ˚ resource exchange among its members (Hakansson and Snehota, 1995). Members of the network value relationships rather than discrete transactions, and opportunistic behaviour is expected to be controlled and minimised. Johanson and Mattsson (1988) suggest that a firm’s success in entering new international markets is more dependent on its position in the network and relationships within current markets, than on market and cultural characteristics. They argue that when the firm internationalises its business, the number and strength of the relationships increases between the parties in the network. Johanson and Vahlne (1992) found foreign market entry to be a gradual process resulting from interaction between parties and the development/maintenance of relationships over time. The network perspective goes further than the models of incremental internationalisation by suggesting that a company’s strategy emerges as a pattern of behaviour influenced by a variety of network relationships. The contingency approach As a result of increased globalisation and influences from radical structural changes in many industries, firms do not always follow the evolutionary or step-by-step explanations of internationalisation. In many cases, it has been obvious that firms do not make market entries step-by-step (Okoroafo, 1991; Bell, 1995). Rather management makes strategic decisions in the form of acquisitions, alliances or mergers to develop their international activities. The phenomena of born global also suggest a different pattern. For firms marketing niche products it is obvious (Lindmark et al., 1994) that they need to start international activities at an early stage due to a limited domestic market. The incremental models have therefore been questioned by different ¨ ¨ researchers (Nordstrom, 1991; Vahlne and Nordstrom, 1992; Andersen, 1993). The contingency approach (Robertson and Chetty, 2000) is based on the premise that the company’s international development is contingent upon a wide range of market or company-specific factors. External situations or local market opportunities may cause companies to leapfrog stages or to enter markets that are distant from the domestic market or the prevailing international market activities. In response to the developments in the international environment, more complex forms of international market behaviour have evolved. International marketing strategy The intention to internationalise is influenced by managerial experience and belief in the firm’s competitive advantage (Jaffe and Pasternak, 1994), but also due to readiness to export and the associated risks of internationalisation. Perceived internal and external barriers (Leonidou, 2000) will influence different management decisions. Factors that are perceived as obstacles for international activities and relationship building can be explained by insufficient knowledge about the procedures connected with international business (Kedia and Chockar, 1986; Korth, 1991; Ramaseshan and Soutar, 1996). Other factors can be explained by a low demand (Ramaseshan and Soutar, 1996), difficulties in financing (Bilkey, 1978; Bauerschmidt and Sullivan, 1989), high cost of transportation (Ramaseshan and Soutar, 1996), strong competition (Bauerschmidt et al., 1985; Kedia and Chockar, 1986) or lack of suitable distribution channels (Bilkey, 1978). Commitment to internationalisation requires that a firm devotes resources and management capacity to fulfilling the strategic intent (Douglas and Craig, 1989) of the firm. International marketing activities need to be focused on the objectives and resources of the firm in relation to the opportunities in various local markets. The marketing concept requires more than being able to meet customer needs – it requires meeting them better than competitors. The basic goal is therefore to develop a competitive advantage and to create customer value by maintaining focus on its key customer group. This has been researched in the area of export competitive advantages (Katsikeas, 1994; Zou et al., 2003). Strategy building and strategic market planning are concerned with adapting the organisation to a changing environment. Organisations succeed when they meet the needs of customers more effectively than competitors. Czinkota and Ronkainen (2004) define that “the marketing manager’s task is to plan and execute programs that will ensure a long-term advantage for the company” (p. 17). Greenley (1993) argues that strategic market planning can be explained by the stages of planning at three different levels: (1) Corporate mission. (2) Corporate strategy. (3) The actual marketing strategy. This paper concerns the third level – the actual marketing strategy. Internationalisation of SMEs To a great extent the literature on internationalisation has the large company as the basis for analysis. However, a growing number of researchers (Holmlund and Kock, 1998; Coviello and McAuley, 1999) have focused their attention on the differences when small firms internationalise their business. One field focuses on how small firms adapt to foreign markets (Calof and Beamish, 1995), but most of the effort has been devoted to the market entry (Coviello and Munro, 1997; Chetty and Blankenburg-Holm, 2000; Zahara et al., 2000; Chetty and Campbell-Hunt, 2003) of the small firms. Cavusgil and Nevin (1981) have also found two internal determinants for internationalisation. The first concerns management’s expectations about growth and the second a need of high commitment to internationalisation. However, one important barrier for SMEs is lack International marketing behaviour 185 EJM 41,1/2 of resources (Welch and Luostarinen, 1988) and lack of knowledge (Rabino, 1980; Ramaseshan and Soutar, 1996). Following from these discussions two areas have been researched. The first area relates to whether size of the firm makes a difference to its international behaviour. H1. The size of the firm indicates different market behaviour among small and large exporting firms. The second area of research relates to a response in market development related to the international business environment whereas more complex forms of market behaviour have evolved when firms enter a market. H2. Organisational characteristics (e.g. type of industry, experience of export, export quotient) indicate an influence on market behaviour among exporting firms. Research design In order to facilitate this study a number of steps were conducted. The first step involved an extensive preliminary study through the collection of various secondary data. A number of interviews were also conducted with experts both in Sweden and abroad. Altogether 15 interviews were conducted. This knowledge was then used in planning the rest of the study. In the next step a questionnaire was conducted in the Swedish export industry with respect to firms’ exports to Europe (Western Europe accounts for 64 per cent and Eastern Europe for 7 per cent of the export within the manufacturing industry). Various databases were studied in order to obtain the necessary addresses to firms. One criterion was that is should be possible to distinguish manufacturing from service firms. Another that it should be possible to select the addresses randomly since it was not possible to fund a total survey. In order to meet the requirements placed on the firms to be included in the survey, a systematic random selection was made on the basis of information from the Swedish Export Council’s database. This database is based on the register of exporters. The questionnaire was sent to the managing director of the firm. The firms were also to be grouped according to number of employees for later analysis. It was also necessary to have a list for of all the companies selected for monitoring purposes. Results In order to meet the requirements placed on the firms to be included in the survey, a systematic random selection was made on the basis of the information in the database. This resulted in a total of 886 firms, 400 of which were large firms and 486 small and medium-seized. The criterion used for small and medium seized refers to firms with less than 250 employees, which is the new definition of SMEs within the European Union after January 1st 2005 (annual turnover less than e50 million, or annual balance sheet total less than e43 million). After two reminders, the response frequency was 48.4 per cent (429 firms completed the survey). Having excluded incomplete questionnaires and those from firms that had gone bankrupt/had little export to Europe etc., there remained 356 responses that could be used (40.2 per cent) (Table I). To discover the reasons for the fall-out, ten randomly selected firms from the follow-up list were contacted. In three cases, the management felt that they did not have the time to 186 Industry Textile Chemical Food Building Electrical Forest Other manufacturing Engineering Total Number of companies 8 15 20 22 25 40 95 131 n ¼ 356 Percentage 2.3 4.2 5.6 6.2 7.0 11.2 26.7 36.8 100.0 International marketing behaviour 187 Table I. Industries studied complete the questionnaire; in three other cases exports to Europe was limited whilst three other firms had been bought up by larger firms. In one case, the firm was being wound up. Even though there is a risk that non-responding firms may differ from the firms included in the survey, the analysis of the fall-out nevertheless shows that the reasons given may be considered representative of the whole selection. Thus, there would seem to be less risk that the selection is skewed as a result of the fall-out. One feature of interest in the selection process was to ensure that the firms studied had varying experience of international activities and represented both small and large firms since they may be expected to be at different stages of internationalisation. The sample used for analysis included 212 small and 144 large firms. The largest category of firms in the survey is engineering and the second largest is firms with other manufacturing, which also is on par with the industry’s total export. The experience of export and international market development are conditions supposed affecting the international behaviour even if every firm’s position is unique. The firms included in this survey have also a considerable experience of export and international activities. For the small firms the average experience of export is 23.5 years and for the large firms 31.1 years. Another measure of the degree of internationalisation is the export quotient that is the proportion of exports in relation to the total turnover. The export quotient is 42.5 per cent for the small and 57.6 per cent for the large firms. In order to analyse the hypothesis that there is a difference between small and large firms a comparison between these two groups was conducted by a statistical function for comparing means (ANOVA). This function uses an analysis of variance in order to find out if the difference between the groups is due to chance, or if it is a real difference between the responses from each group (Hair et al., 1998). Four different categories of the variables studied (export stimuli/entry strategy/market barriers/market strategy) were analysed by ANOVA and the hypothesis of a difference between small and large firms could be rejected in general. The statistical analysis by ANOVA could not account for any real differences due to size (measured by the number of employees) since the ETA value and ETA squared had low values. For each category the highest ETA squared values were for export stimuli ¼ 0:018, entry strategy ¼ 0:042, market barriers ¼ 0:006 and for marketing strategy ¼ 0:022. One explanation of this result can be the great experience of exporting (mean ¼ 23:5 year) among the small firms that means that they adopt similar market behaviour as large firms in the local market place. The data was also analysed for firms with more than 500 employees, but the statistical analysis by ANOVA could not explain any real differences since the ETA EJM 41,1/2 188 value and ETA squared had low values for all single variables (ETA squared ¼ 0:000 ÿ 0:022). In the further analysis firms are treated as one category irrespective of size. In order to describe and analyse the firm’s international competitive behaviour, the respondents were asked to indicate each variable asked for on a five-degree semantic differential scale (less importance 1-greater importance 5). Since the scale is in the form of a graph with equidistant markings, it can be considered a reasonable approximation of an interval scale. The 50 variables used for analysis are categorised into four areas. Factor analysis based on principal component analysis has been used to analyse the results and Varimax Rotation to determine the respective factor loading. The criteria that have been used to determine the number of factors mean that those factors with Eigenvalues greater than one have been taken into account (Hair et al., 1998). According to Hair et al. (1998) it is possible to consider factor loading down to 0.11 as significant where the selection is greater than 300 respondents. In this case, however, only factors greater than 0.5 have been taken into account. Stimuli for exporting and international activities Taking part in international business is not the same as struggling in the domestic market and management needs good reasons and stimuli for engaging in international activities. The competitive situation is also different in the international field and a competitive advantage in the domestic market can have a different value in other market areas. This section analyses the findings of this study in relation to four areas – export stimuli for the firm, factors affecting market entry, market barriers and ends with changes that might be needed in the marketing strategy. Against this competitive situation, the respondents in this study were asked to indicate the factors that had influenced export to Europe and the measures they deemed necessary to adapt to. Altogether 50 competitive variables were provided and the respondents were required to indicate on a five-point scale whether they felt they would have no importance (1)-crucial importance (5). For the fourth area they were to indicate if they felt they would have less importance (1)-greater importance (5) during the next three years. In order to obtain more insight into the different stimuli affecting the firm’s international activities, a factor analysis was carried out. Starting with fourteen variables, the factor analysis with Varimax rotation reduced the number of dimensions to four factors, which accounted for 54.2 per cent of the total variance. These factors were used for subsequent analysis. The factor analysis revealed four factors and a new variable was created by the weighted mean for each of these factors and tested statistically by a two-sided t-test to significantly differentiate it from a neutral rating. The Chronbach alpha coefficient was estimated on each extracted factor to assess the reliability of the formative scales and the resulting alpha values ranged from 0.654 to 0.784, which are considered satisfactory. The results of the new variables are shown in Table II. The first factor refers to the possibilities of growth in export markets following from the fact that the firms have a considerable experience in export to Europe. The factor loadings include variables as long-term possibilities for growth and profit, but also the fact that the firms have a competitive advantage in marketing and that the international activities are also supported by management’s interest in exporting. A second important stimulus is possibilities for sales due to a small or stagnating Exporting stimuli 3.85 * Proximity Need for proximity to customers Demand for local representation Cultural factors (language, attitudes) Customers need of service in the local market 2.19 * Costs of distribution Competitive situation in the local market Available distribution channels 3.26 * Product features Features of the product Customers need of service in the local market Competitive situation in the local market Cost disadvantages/local producers Technical obstacles 3.54 * Differentiation Product differentiation (e.g. trade marks) Customer loyalty Competition 3.04 * Local needs Relations to authorities Local content Strategic alliances National policy Technical obstacles (e.g. standards) Service to the market Proximity to customers 3.42 * Trade barriers Administrative obstacles 2.33 * Local service Service in the market 3.79 * Market entry strategy Market barriers Need for change in marketing strategy Growth Long term profit opportunities Long term growth Management’s interest in exporting Competitive advantage in marketing 2.97 Sales Over-capacity Seasonal sales Competitive advantage in marketing Competitive situation Capital requirements (e.g. for * stocks, credit) 3.24 Advantage of local production Conversion costs (e.g. for changing supplier) Access to distribution channels 3.96 * Domestic market Small domestic market Technology 3.04 * Product quality Technological leadership Specialisation Stagnating domestic market 2.43 * Uniqueness Contact via trade association Unique product/technology Sporadic enquires Pricing Price policy Cost position Financial strength Distribution Brand name identity Distribution channel Market communication 3.83 * 3.72 * Cronbach’s alpha Variance explained (%) 0.654 54.2 0.690 62.8 0.726 55.2 0.784 53.3 Note: *p , 0.001 (two-tailed) International marketing behaviour 189 Table II. Factors affecting internationalisation activities EJM 41,1/2 domestic market. Firms are also taking advantage of the uniqueness of its product or technology in relation to a local market. Factors affecting market entry strategy Another important issue in relation to a firm’s international activities is the strategy used for entering the local market since most of the choices made are investments with long-term consequences for the firm. In the factor analysis it was possible to identify three factors with an Eigenvalue greater than one that explained 62.8 per cent of the total variance. Proximity was the first factor revealed and the factor loadings indicate the demand for local representation and the need of service in the local market. This can also depend on the cultural differences in the export market. Competition due to cost factors and product features has also influenced market entry for the firms. Further analysis has also shown the necessity of a consistent distribution system. The predominant activity is carried out by a permanent representation (24.6 per cent) either in the form of an agent or a distributor. For markets with little economic distance (Norway, Finland, Denmark) direct exporting is used (11.8 per cent), whereas many firms use partially or wholly owned firms in their main markets like UK and Germany (13.7 per cent). In some local markets (2.4 per cent) they need a combination of distribution outlets. Market barriers The competitive situation in different local markets means that a firm can expect to meet various obstacles working as market barriers, which will affect the opportunities for successful entrance. These market barriers can be in the form of cost advantages due to local production or prevailing technology within the local industry. Other obstacles include conversion costs to switch to another supplier or obstacles hidden in a national policy (local standards). In this study the analysis found three different types of market barriers that explained 55.2 per cent of the total variance. The first factor concerns trade barriers in the form of administrative and technical obstacles but also national policy in the local market. The second factor refers to the competitive situation due to the need of capital requirements and conversion costs. Access to a suitable distribution channel can also influence the possibilities in relation to the local production. The local firm’s differentiation by product and customer loyalty also affects the activities of the exporting firm. Need for change in marketing strategy A further integration within the European Community (new members) and an increasing competition from Asia and North America has affected the competitive situation for exporting firms to Europe. Another important factor has been major political changes within Eastern Europe, which has created new patterns for trade. Changes in the market environment will force management to act in relation to a new competitive situation. In relation to this competitive situation respondents were required to indicate the measures they deemed necessary to adapt to the firm’s marketing strategy. Altogether 18 variables were provided and the respondents were required to indicate whether they felt these would be of less importance (1)-greater importance (5) during the next three years. The results reduced the numbers of dimensions to five factors, which accounted for 53.3 per cent of the total variance. The 190 first factor is related to the need of local service both in the meaning of service to and in the market in order to reach proximity to the customers. The second factor local need was not found to be significant. Technology in the form of product quality and technological leadership can be used for specialisation in relation to local competition. Pricing (cost position, financial strength) and distribution (channel, market communication) are also factors that need to be changed depending on the competitive situation in the local market, e.g. due to brand name identity. Organisational and internationalisation effects on international activities Based on the extracted factors from the principal component analysis and the new variables created from that, the effects of two organisational parameters were analysed in relation to the variables and their dimensions connected with international activities (Table III). These parameters were previously identified from the exporting literature and referred to type of industry and total turnover, since size of the firm was excluded for further analysis. To analyse the impact of organisational factors on the different identified international activities, a statistical analysis of ANOVA was employed. Among the identified organisational parameters studied, the type of industry exhibited the greatest effect overall, significantly affecting four of the international activities. Analytically the greatest impact was on market barriers (trade barriers F ¼ 4:113, p ¼ 0:000, competitive situation F ¼ 4:083, p ¼ 0:000 and differentiation F ¼ 4:083, p ¼ 0:000). The type of industry also had an impact on the exporting stimuli (growth F ¼ 1:763, p ¼ 0:094 and sales F ¼ 4:19, p ¼ 0:000). The influence on market entry strategy and the need for change in marketing strategy was smaller. The total turnover often works as an indicator of the size of the firm and significantly affected two of the variables, in this case, the market entry (competition F ¼ 1:487, p ¼ 0:006) and in relation to a need for change in strategy (distribution F ¼ 1:391, p ¼ 0:018). International activities were analysed in relation to two aspects of exporting identified from the pertinent literature. Of the exporting parameters analysed experience of export significantly affected three of the extracted variables and their dimensions related to exporting stimuli (growth F ¼ 1:604, p ¼ 0:006), market entry (product features F ¼ 1:350, p ¼ 0:056) and need for change in marketing strategy (local needs F ¼ 1:375, p ¼ 0:046). Similar results apply to the effect of the export quotient related to proximity (F ¼ 1:435, p ¼ 0:038) and local service (F ¼ 1:330, p ¼ 0:080). The analysis shows that only certain types of international activities are influenced by organisational and exporting parameters specifically; organisational effects were more evident from the type of industry in which the firm operates than the export quotient. The size of the firm also plays a more minor role than expected and these findings are consistent with previous research by Leonidou (2000). The results indicate, on the contrary, that organisational parameters play a minor role on the international activities. Even the exporting parameters analysed in this study seem to have a small impact on the international activities. The greatest observed influence from organisational and exporting parameters among the extracted variables was on the possibilities for long-term growth and the need for local service. A conceptual model developed from the findings in this study The conceptual model in Figure 1 has been developed by relating the findings in this study to the relevant literature on internationalisation. Previous research has International marketing behaviour 191 192 EJM 41,1/2 International activity F ¼ 1.763, p ¼ 0.094 F ¼ 4.19, p ¼ 0.000 NS NS NS NS NS NS NS F ¼ 1.487, p ¼ 0.006 NS NS NS NS NS NS NS NS F ¼ 1.391, p ¼ 0.018 NS NS NS NS F ¼ 1.375, p ¼ 0.046 NS NS NS F ¼ 2.535, p ¼ 0.015 NS NS F ¼ 4.113, p ¼ 0.000 F ¼ 4.083, p ¼ 0.000 F ¼ 4.083, p ¼ 0.000 F ¼ 1.604, p ¼ 0.006 NS NS NS NS NS F ¼ 1.350, p ¼ 0.056 Exporting stimuli Growth Sales Domestic market Uniqueness Market entry strategy Proximity Competition Product features Market barriers Trade barriers Competitive situation Differentiation Need for change in marketing strategy Local service F ¼ 1.887, p ¼ 0.071 Local needs NS Technology NS Pricing NS Distribution NS Table III. Organisational and internationalisation effects on international activities Type of industry Total turnover Experience of export Export quotient NS NS NS NS F ¼ 1.435, p ¼ 0.038 NS NS NS NS NS F ¼ 1.330, p ¼ 0.080 NS NS NS NS International marketing behaviour 193 Figure 1. A conceptual model of internationalisation suggested several important factors as necessary for internationalisation (Zou and Stan, 1998) and these can be summarised in terms of the firm’s characteristics and stimulus for international activities. These are linked by the marketing strategy for entering different markets. As observed, a firm entering the market meets different barriers in relation to the market and the marketing strategy needs to be adjusted to the competitive situation. The outcome of these external and internal drivers is the firm’s approach to internationalisation. The integrated approach in this model will help to enhance a better understanding of the internationalisation process. This supports the view of Fletcher (2001) and others that internationalisation cannot be explained by one theory. Discussion and conclusions Some of the research in the area of internationalisation has been focused on factors that can affect or be a trigger for a firm to start developing an international market. One conclusion from that research is that it is rare that an isolated factor or motive will trigger a company to start an internationalisation process (Czinkota and Ronkainen, 1995). In most cases it is a combination of factors that results in an internationalisation process. One important issue is also management’s experience of previous international affairs. A decision to enter a market or to further invest in developing an international market can be seen as a decision process during which management make several separate decisions. Previous research suggests that internationalisation can be explained (Bilkey and Tesar, 1977; Bilkey, 1978; Reid, 1981; Cavusgil, 1984; Johansson and Vahlne, 1977, 1990) by an incremental or step-by-step development. Other researchers (Young et al., 1989; Robertson and Chetty, 2000; Fletcher, 2001) have found that the individual firm can base its decision on other factors in relation to their business strategy. From it follows that a decision to increase international involvement needs to be an integrated part of the business strategy since increased international activities require a long-term commitment by the management. Building relationships is a demanding and complex task (Wilson, 1995), especially if it is done in an international environment. However, the intention to reach strategic objectives by further international activities will be dependent on the firm’s competitiveness in the local market structure. Faced with challenges in the international business EJM 41,1/2 194 environment, firms in this study chose to meet changing market conditions by adopting different marketing activities. The hypothesis that there would be an overall difference in market behaviour due to size of the firm has not been confirmed in the study. Only a few dimensions were significant. The main explanation for this could be that even the small firms had considerable experience of exporting and other international marketing activities. The main stimuli for exporting among the firms are the possibility of growth in other markets, which may depend on a small or stagnating domestic market. A unique product or technology can make the firm competitive in relation to the local market and stimulate further international activities. This is also in congruence with previous studies (Bilkey, 1982; Katsikeas, 1994). The main factors affecting market entry for a firm are in relation to the proximity due to local representation and a need for service in the local market. The competitive situation resulting from cost factors and product features also favours the local firms. Different obstacles can be overwhelming market barriers for a small firm, as found by Rabino (1980), and the first revealed factor in this area refers to trade barriers in the form of administrative and technical obstacles. The competitive situation is also affected by the need of capital requirements and conversion costs for switching to a new supplier. Other barriers can be in the form of differentiation or customer loyalty. The different demands and changing market conditions also have an impact on a need to change the marketing strategy. This is manifested by a need for service to the customers in the local market. Other influencing factors are relevant technology and technological leadership used for specialisation in relation to local competition. Pricing and distribution are other factors that need to be adapted to a changing market environment. The conceptual model implies that a firm needs an internal or external stimulus to work up international markets. The possibility of a successful internationalisation also depends on the characteristics of the firm explained by its different resources and capabilities for creating a competitive advantage in relation to the local export market. The need to adapt the marketing strategy varies between different industries and product areas, which will also have an influence on other variables in the marketing mix. In order to meet the local competition, it is necessary to be able to meet the demand from customers in relation to required technology and product quality. The need for customisation and specialisation is great, but can, at the same time, offer the possibility for a small firm to be competitive in a niche. In the manufacturing industry it is also important to build up long-term relationships with customers in the local market. This stresses the need for a marketing strategy with a high commitment from top management. At the same time, it requires different resources and capabilities that can be a drawback for a small firm. It is also obvious that the entry mode must be adapted to local requirements and proximity in the form of local representation and service to the customers. All market efforts by the firm are affected by different obstacles and the most important are trade barriers and the competitive situation (existing market structure in the form of business networks). Differentiation within the local industry also seems to create obstacles in the form of customer loyalty and existing products sold by local firms. 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