Title: Establishment mode choice of Finnish SMEs in Estonia: a case study approach

Authors: Faisal Shahzad; Tiit Elenurm

Addresses: Arcada University of Applied Sciences, Jan-Magnus Janssons Plats, 100560, Helsingfors, Finland ' Estonian Business School, A, Lauteri 3, 10114, Tallinn, Estonia

Abstract: In this article, we reveal how and why firm level and institutional distance influence the entry mode choice of Finnish SMEs in Estonia. This paper investigates the impact of firm characteristics and institutional distance on establishment mode choice decision of Finnish SMEs in Estonia. We use case study approach based on in-depth interviews with decision makers of SMEs operating in Estonia and follow-up interviews in order to deepen results of the first research stage. The results shows that formal institutional factors combined with firm level factors affect the decision of establishment mode choice in Estonia, while informal institutions have not had significant effect on choice between greenfield vs. acquisition in case of Finnish SMEs. Overall, our study contributes to a more nuanced view of choice of foreign market entry mode of SMEs and highlights future research opportunities that exist for considering strategy imitation and its implications in international business research.

Keywords: small and medium sized enterprises; SMEs; formal institutions; informal institutions; establishment mode; foreign direct investment; firm level factors; greenfield vs. acquisition.

DOI: 10.1504/IJBG.2020.106958

International Journal of Business and Globalisation, 2020 Vol.24 No.4, pp.452 - 471

Received: 10 Jun 2017
Accepted: 01 Jan 2018
Published online: 29 Apr 2020 *

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