In her doctoral dissertation, Eriikka Paavilainen-Mäntymäki M.Sc. (Econ. and Bus. Adm.) studied what happens in industrial SMEs during the stage of international growth. According to the research, slow growth is strategically worthwhile in the long term. This doctoral dissertation of economic science belonging to the field of International Business 'Unique Paths. The International Growth Process of Selected Finnish SMEs' will be defended at the Turku School of Economics on Friday 18 December 2009.
A company can grow without internationalising or internationalise without growing. Usually, however, internationalisation brings with it company growth.
In the companies researched by Eriikka Paavilainen-Mäntymäki, the reasons for internationalisation and growth stemmed from their objectives and market situation. There was insufficient demand in the Finnish market for the companies' products or the companies' growth objectives could not be achieved by operating solely in the domestic market.
International growth meant an increase in revenue, market share, production volume and capacity as well as a need to reorganise the company. In many companies, growth led to operations becoming more efficient as the achievement of international growth required major investments.
An entrepreneurial culture as a driver for growth
The research found factors that boosted the international growth of companies. In particular, these were an entrepreneurial culture, entering the market at the right time, good timing of operational expansion and the ability to spot international growth opportunities and to control the entire process of international growth.
– A mark of an entreneurial culture is innovation in product development and strategy, the ability of management to take risks and a will to compete on one's own initiative. Such a business culture explained why the researched companies succeeded in growing internationally despite changes in the global economy or as a result of them, says Eriikka Paavilainen-Mäntymäki.
Each growth story is unique
Many international research projects have observed that rapid company growth would be the most productive way for them to get involved in international competition. Paavilainen-Mäntymäki's doctoral dissertation shows otherwise.
– Slower growth is more strategically beneficial for companies in the long term. It enables the maintenance of an entrepreneur-oriented culture. Achieved growth can be integrated more comprehensively and effectively into the company's existing organisation, says Paavilainen-Mäntymäki.
Slow growth creates for a company stability and competitiveness in changing market situations and gives the opportunity for the company to stay on a path of growth. Growth achieved rapidly on the other hand weakens a company's ability to integrate growth into its organisation. The risk of rapid growth is that it will result in the company becoming slower and less flexible, and the entrepreneurial culture will decline.
Each company has different characteristics and makes internationalisation and growth decisions in different circumstances. This creates challenges, especially for sources of company finance and for providers of support services.
– Providers of public funding and support services too often concentrate on supporting young companies just starting to internationalise. The potential for international growth is, however, also plentiful in older, more established companies, says Eriikka Paavilainen-Mäntymäki.
Further information
Eriikka Paavilainen-Mäntymäki
(02) 481 4290, eriikka.paavilainen(a)tse.fi
The doctoral dissertation can be read at http://info.tse.fi/julkaisut/vk/Ae17_2009.pdf
Enquiries about press articles by e-mail to viestinta(a)tse.fi