The McGill International Entrepreneurship series
Edited by Hamid Etemad, Stefano Denicolai, Birgit Hagen and Antonella Zuchella
Chapter 3: Risk-seeking behaviours in SMEs’ internationalization
In a business environment of ever growing uncertainty, SMEs are constrained, and have to find new markets to grow and survive. Pushed to internationalize, they are traditionally seen as reactive entities engaging gradually in foreign markets to reduce risk and uncertainty. Analyzing the role of risk in the internationalization process, some authors found that firms were not completely risk averse, but they were rather willing and ready to take risks up to a certain point, in order to maximize their returns or to gain market power. Contrary to previous findings, it appears that conscious risk-taking strategies could be one of the key variables explaining SMEs’ success abroad. The aim of this chapter is to analyse the importance of risk-seeking behaviours in SMEs’ internationalization. In this study we found that, contrary to risk-averse firms that only take subjective financial risks, if compelled to do so, risk-seeking entrepreneurs – that is, looking for risky alternatives when taking a decision to get greater outcomes – are targeting high-risk markets by taking objective political, financial, social and business risks abroad. Our findings indicate that, even if they look like natural risk-takers to outsiders, risk-seeking entrepreneurs are not gamblers. Their privileged access to unique assets and assessment of information allows them to identify a wider range of alternatives and therefore to enter untapped or overlooked markets. Expectedly, risk-seeking entrepreneurs manage to achieve greater performance and internationalization than their risk-averse counterparts, by implementing several efficient risk-management techniques.
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