Small firms more often develop strategies for opportunities instead of opportunities for strategies, which frequently leads to no-go decisions: a comparative case study on foreign entry into China

Abstract

In an uncertain, unknown foreign business environment small firms face a high chance of faillure, as they base international expansion more often on one local opportunity. A total of 25 Dutch firms are studied while making Go/No-Go decisions for 54 business activities in or with China. The research is unique in that it follows firms of different size over time, while they make highly strategic choices in an uncertain and unknown foreign business environment. Insight is gathered on firm characteristics, opportunity identification, the strategic advantage, the Go/No-Go decision and the strategy process leading to these choices. The study shows how small firms more often build an international business strategy around one concrete opportunity in China. Other firms first identify a strategic advantage beneficial for the firm, after which they search for opportunities in China to fulfill these. When faced with disappointment, firms who seek opportunities in China for a strategic need, frequently postpone plans or continue to search for opportunities elsewhere. Small firms who develop a strategy that is triggered by a concrete opportunity in China, cancel the internationalization plan entirely when the opportunity considered is disappointing.