Exploring the behaviour of SME entrepreneurs from emerging market economies in exit and re-entry experiences with specific reference to Pakistan and China

Abstract

Research and theory in international business (IB) increasingly stresses the importance of incorporating the role of an individual entrepreneur in the internationalising activities of the firm, particularly, when the entrepreneur’s actions lead to a firm’s exit and re-entry experiences. To address this, the present thesis seeks to explore the behaviour of international entrepreneurs during foreign market exit and subsequent re-entry. The aim of this thesis is to guide current IB thinking towards understanding the issue from the emerging market economy (EME) perspective. Thus, the broad research problem of this thesis is: “What factors influence small-medium sized enterprise (SME) entrepreneur behaviour in exit and re-entry experiences?” The existing research on internationalisation process (IP) model of the firm has examined the influence of internal and external factors based on forward moving activities, but has ignored alternative explanations of foreign market exits and subsequent re-entries. An extensive critical literature review revealed that alternative research to the IP model examines factors that drive exit and re-entry from a firm-level perspective. Yet little research has explored the experiences of an individual entrepreneur during these types of activities. SMEs play a vital role in the economic growth and prosperity of nations. Therefore, it is important to explore the internationalisation behaviour of an individual who is referred to as an entrepreneur/key decision maker and represents the heart and mind of his/her firm. Based on a qualitative research methodology approach, 33 interviews were conducted with entrepreneurs/senior managers, industry experts and government representatives from Pakistan and China. The thesis makes an original knowledge contribution in the following ways (it should be noted that the knowledge contribution specifically relates to the instances between Pakistan and China, not a wider generalisation). It indicates that combinations of the entrepreneur’s personal strategies are based on experiential learning that allows them to move through exit(s) to subsequent re-entry(ies). Furthermore, an entrepreneur’s foreign market knowledge increases as a consequence of their overall international experience. Commitment to internationalisation is emotionally embedded in an entrepreneur’s overall international experience. An entrepreneur’s firm-specific factors (such as orientation towards foreign market languages and communication capabilities, personal initiative to innovate, overcoming country of origin effects, reconfiguration through complementary products, risk-taking behaviour, individual knowledge and cognition) are associated with an increased likelihood of subsequent international re-entry experience. Factors that are associated with a decreased likelihood of entrepreneurial re-entry are; influences of intellectual property, entrepreneurial inertia, myopic vision, Seth mindset and self-serving bias. Entrepreneur’s decision to exit and re-enter are dependent upon changes in the external environment, such as financial crisis, war in host-country markets, and home-country environmental factors (lack of institutional strategy on exports stimuli, environmental turbulence, and energy crisis) with specific reference to Pakistan and China. Entrepreneurs’ strategic moves allow them to optimize international experience, resources and networks and create advantages: individual-level factors are more important than firm-level factors. The thesis presents a conceptual framework on foreign market exit and re-entry and concludes that re-entry is not independent of exit-specific factors.