Orientation, Environment and Strategy
The McGill International Entrepreneurship series
Chapter 1: The Emerging Context of International Entrepreneurship: An Overview, Interrelations and Extensions
Hamid Etemad INTRODUCTION TO THE VOLUME Markets used to be segmented: large companies competed in international markets while smaller businesses remained local or regional. However, the global competitive environment is changing dramatically. The drivers of globalization are removing the barriers that segregated the competitive space of the small and the large firms in the past. Firms of all sizes have begun to share the same competitive space. It is becoming increasingly difficult for independent small firms to thrive in their traditional markets unless they are globally competitive (Etemad, 1999, 2003a). As smaller firms are forced to compete with global players even at home, the tendency is to seek successful patterns of internationalization, experiment with them and even emulate them, in the hope of becoming globally competitive. In spite of their obvious benefits, such practices may also be fraught with dangers. Although emulating successful strategies is likely to reduce short-term risks and costs, they may also expose SMEs to the hazards of herding behavior (Knickerbocker, 1973), where competitors emulate each other to avoid the risk of falling dramatically behind. When the successful strategies of multinational enterprises (MNEs) are emulated, or even variants of their models and strategies are adopted, the added danger is that SMEs may suffer doubly: not only may their relatively smaller size and inexperience disadvantage them, they may also find themselves strategically defenseless in direct competition with the much larger and more competitive MNEs, especially those whose integrated strategies were emulated in order to enter and compete in...
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