Internationalization of Software Firms Finnish Small and Medium-Sized Internationalization of Software Firms

Ojala, Arto Internationalization of software firms: Finnish small and medium-sized software firms in Japan Jyväskylä: University of Jyväskylä, 2008, 57 p. (+ articles) (Jyväskylä Studies in Computing, ISSN 1456-5390; 89) ISBN 978-951-39-3251-0 (PDF), 978-951-39-3130-8 (nid.) Finnish summary Diss. This dissertation investigates internationalization of small and medium-sized software firms first from a general point of view and, thereafter, from the point of view of the Japanese market particularly. The quantitative findings in this dissertation suggest that small and medium-sized software firms enter the large software markets very early in their internationalization process. However, the Japanese market seems to differ from this trend. For this reason, qualitative case studies were employed to elaborate the market entry and entry mode choice of Finnish small and medium-sized software firms in the Japanese market. The findings imply that these firms entered Japan at a very early stage by using direct entry modes. This was mainly due to the market size, sophisticated industry structure, and requirements for intensive cooperation with the customers during the sales process. The firms’ product offering was also found to be closely related to the entry mode choice in the market. Despite of the psychic distance between Finland and Japan, the firms were able to enter the market by hiring local employees and western managers who already had working experience in the Japanese market. Moreover, the findings suggest that the firms actively seeking market opportunities in Japan used formal or mediated relationships, whereas the passive firms were invited into the market through their informal relationships. Investigation to the success factors and entry barriers in the Japanese market revealed that the success factors and entry barriers are mainly related to the firms’ business execution capabilities to operate in the market. The summary part of this dissertation analyzes how these findings can be explained by using the Uppsala internationalization model, the network model of internationalization, and the international new venture theory. Based on the findings, none of these theories alone does adequately explain the internationalization behavior of small and mediumsized software firms. For this reason, a new model that integrates these three theories, to the appropriate extent, is being developed. The model emphasizes the software firms’ product strategy as the main driver for the internationalization behavior.