Innovative Behaviour of Small Firms Essays on Small Firms’ Internationalisation and Use of Online Channels

The spread of information technology and the dissolution of international borders have had a significant impact on the challenges and opportunities faced by today’s small and medium-sized enterprises (SMEs). Innovative behaviour on the part of SMEs is a prerequisite for a successful transformation of the opportunities offered by these structural changes into growth and profitability. Thus, the overall aim of this thesis is to advance the understanding of small firms’ innovative behaviour as manifested in the adoption of online channels and internationalisation. This doctoral thesis consists of an introductory chapter and six selfcontained essays. The introductory section develops a general analytical framework for the thesis by reviewing the literature on innovation and organisational innovativeness and identifying key determinants and processes. The first four essays seek to explain a firm’s propensity to adopt online channels and suggest that firm size and a firm’s willingness to cannibalise, i.e. a firm’s readiness to reduce the actual or potential value of its earlier investments, differentiate between adopters and non-adopters of online channels. Expectations of alienating resellers through online channel adoption may prevent a firm from adopting. Customers’ pull, competitors’ push and previous use of the Internet turned out to be strong drivers of online channel use. The fourth essay employs a two-wave research design and highlights that changes that occur in the technological and economic environment in which firms operate can, over time, change a firm’s pattern of decision-making from innovation adoption to conventional cost-benefit approach. Essays five and six focus on the internationalisation of SMEs. In particular, essay five focuses on the process aspects of internationalisation and suggests that early importing has a modest direct influence on exporting, and that early importing activity indirectly enhances a firm’s international experience and capabilities. Essay six investigates how competitive interactions affect internationalisation and suggests that cooperation with competitors, or coopetition, is a noteworthy internationalisation motive. This thesis contributes to the literature on innovation, internationalisation, electronic marketing and small business management and demonstrates that the dynamic forces associated with innovative behaviour affect SMEs adoption of online channels and how they work with customers and suppliers abroad.