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Gil Pechuán, I.; Expósito Langa, M.; Tomas Miquel, JV. (2013). International
entrepreneurship in SMEs: a study of influencing factors in the textile industry. International
Entrepreneurship and Management Journal. 9(1):45-57. doi:10.1007/s11365-012-0242-3.

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Springer Verlag (Germany)
International Entrepreneurship in SMEs: A Study of Influencing
Factors in the Textile Industry

Gil-Pechuán, Ignacio1, Expósito-Langa, Manuel2, Tomás-Miquel, José-Vicente3

Business Administration Department


Universitat Politècnica de València
Valencia (Spain)

1
Email: [email protected]
2
Email: [email protected]
3
Email: [email protected]

Abstract

International entrepreneurship is an incipient research area with a rapidly increasing body of


knowledge and contributions. An important part of this literature has focused on the analysis of the
contributing factors to IE development. From these studies, this work attempts to analyse and validate
through an integrative model the effect on this construct in SME of some of the main factors proposed
by the literature such as Skills and Competences, Attitude and Proactiveness, Creativity and Innovation,
Networking, Employees and Activity. To proceed with this aim, we conducted an empirical research
focused on 174 textile SME in Spain. The results obtained confirm a positive relationship between the
studied factors and the IE development. In consequence, this work agrees with previous literature that
point out the need to use multi-theoretical perspectives, combining multiple factors.

Keywords: International Entrepreneurship, SME, Textile Industry

1. Introduction to the traditional patterns of firm


International Entrepreneurship (IE) is a topic internationalisation (Oviatt & McDougall,
which is of interest to academics, business 1994; McDougall et al., 1994).
people, and governments around the world. Businesses in an increasing number of
According to Zahra & George (2002) this term countries are seeking international competitive
first appeared in a short article by Morrow advantage through entrepreneurial innovation
(1988). (Simon, 1996). Many national governments are
IE research emerged as a response to the striving for improved living standards for their
dynamic nature of newly internationalising citizens through the discovery and acquisition
firms, which is perceived as being anomalous of new technologies and through attempts to
replicate regional entrepreneurial aggregations. McDougall (1994) identify
Academics are observing accelerated Skills/Competences as a major resource and
internationalization even among the smallest one of the four necessary and sufficient
and newest organizations (Oviatt & elements in their proposed model for
McDougall, 1999). The use of efficient sustainable international new ventures.
worldwide communications technology and Developing skills and knowledge has been
transportation, the decrease in governments’ identified as a key source of international
protectionist policies, and the resulting competitive advantage by several scholars (for
decrease in the number of geographically example, Autio et al., 2000; Bell et al., 2003;
protected market niches have made it possible Coviello and McAuley, 1999; Jones, 1999).
if not necessary, for many of today’s McNaughton (2001, 2003) found that
entrepreneurial firms to view their operating knowledge-intensive firms achieved a wider
domains as international. The upshot is that the reach in international markets and a faster pace
intersection of international business and of internationalization.
entrepreneurship is of increasing importance In their study on the learning advantages of
for all those interested in either topic. newness, Autio et al. (2000) identify two
In this paper, our contribution is to empirically reasons which make it possible to "amplify"
validate some of the influencing factors on the intensity of internationalization through the
International Entrepreneurship in SMEs competences generated:
extracted from the extensive research literature Firstly, companies that focus on building
(Peiris et al., 2012) such as competences based on training and their use as
Skills/Competences, Attitude/Proactiveness, a source of competitive advantage are more
Creativity and Innovation, Networking, likely to develop learning skills that are helpful
Employees and Activity. for adaptation and successful growth in
The paper is structured as follows. First, we international environments than companies
explain the theoretical framework and the that are more dependent on tangible resources.
derived hypotheses. We then describe the Secondly, because the knowledge gained is a
research method and findings. Finally, we mobile resource since it can be combined with
outline its possible contribution and existing fixed assets such as distribution
implications. channels or manufacturing resources in foreign
markets at relatively low prices (Liebeskind,
2. Theoretical framework and hypotheses 1996; McDougall et al., 1994). This means that
companies committed to obtaining
Skills and International Entrepreneurship competences based on greater knowledge can
take advantage of greater international growth
The first variable in our model is use of
opportunities and with greater flexibility
knowledge (Skills/Competences) as a key
through such combinations. Hence companies
influencing factor in the willingness to
that develop competences through the
undertake projects internationally. Oviatt and
intensive use of knowledge are less limited by and organizational perspectives, they have
distance or national borders (Autio et al., 2000, rarely been viewed through an entrepreneurial
p. 913). lens. This paper fills this gap in the literature
In our research we explore the role of the by examining Spanish firms’ corporate
acquisition of knowledge-based skills and entrepreneurship (CE) activities in
competences on international entrepreneurship international markets. Even though
development. entrepreneurial activities might permeate every
Thus, we propose: aspect of a firm’s operations (Pinchot, 1985;
Hypothesis 1: Skills/Competences will be Zahra, 1991), this study focuses on CE
positively associated with International undertaken primarily in a company’s
Entrepreneurship. international operations. We refer to these
activities as Attitude/Proactiveness towards
Attitude, Creativity and Innovation for international corporate entrepreneurship (ICE).
International Entrepreneurship This study views ICE as being highly
influenced by the sum of a company’s
Success in global business operations requires
innovation, risk-taking, and proactiveness
creativity, ingenuity and calculated risk-taking
(Miller, 1983; Covin & Slevin, 1989; Zahra,
(Bossak & Nagashima 1997), because
1991). These activities usually seek to increase
domestic strengths do not always guarantee
the firm’s innovativeness, adaptation, and agile
success in foreign markets (Hu, 1995; Vlasic,
strategic responses to changes in the external
1998). Consequently, when expanding
environment. Innovation refers to the firm's
internationally, U.S. companies have explored
ability to create new products and successfully
new models of production, management, R&D,
introduce them to the market. It also indicates
human resources, and marketing systems
the company’s commitment to process and
(Bannon, 1998; Porter, 1990). They have also
organizational innovations (Zahra, 1993a).
learned and utilized different skills from those
Proactiveness shows a firm's aggressive pursuit
that have been used in their home markets
of market opportunities and a strong emphasis
(Smart, 1996; Williamson, 1997). Developing
on being among the very first to undertake
and exploiting these capabilities requires
innovations in its industry. Risk-taking is
experimentation and risk-taking (McGrath et
defined as the firm's disposition to support
al., 1995; Shama, 1995). Entrepreneurial
innovative projects (e.g., international
activities are, therefore, closely linked to firms'
ventures), even when the payoff from these
global operations (Dean et al., 1993).
activities is uncertain. Collectively, these
The continuing globalization of business
activities can enhance the company's ability to
provides an important opportunity to study
recognize and exploit international market
Spanish companies’ entrepreneurial activities
opportunities well ahead of its competitors.
in international markets. Even though the
In consequence, we propose the following two
motivations for, and effects of, these global
hypotheses:
activities have been explored from economic
Hypothesis 2: Attitude/Proactiveness will be research organizations and other companies.
positively associated with International This will transfer and redirect the return on the
Entrepreneurship. research potential of our universities and
enable technology transfer offices to operate as
Hypothesis 3: Creativity and Innovation will entrepreneurship sales centres. This will
be positively associated with International showcase their know-how through research
Entrepreneurship. contracts with companies, cooperation with
technology parks and centres, the mobility of
Networking and International researchers and experts and the founding of
Entrepreneurship innovative companies.
Accordingly, we can propose:
Companies need to combine entrepreneurial
Hypothesis 4: Networking will be positively
and strategic behaviour at the same time.
associated with International
While business strategy involves actions or
Entrepreneurship.
commitments to generate competitive
advantage, entrepreneurship means creation.
Entrepreneurship and International
That is to say, strategic management consists
Performance
of deciding how to maintain and sustain a
competitive advantage based on something that International entrepreneurial orientation
has already been created. Hence the business reflects the firm's overall proactiveness and
factor, namely entrepreneurship, and strategic aggressiveness in its pursuit of international
management focus on how companies adapt to markets. It is associated with managerial vision,
changes in their environments and exploit innovativeness, and proactive competitive
opportunities created by discontinuities and posture overseas (Khandwalla, 1977; Miller &
uncertainty (Hitt et al., 2001). Friesen, 1984; Covin & Slevin, 1989; Davis et
We know little about the process of innovation al., 1991). It reflects the firm's propensity to
in companies and even less in SMEs. The first engage in innovative, proactive, and
incentive is market pressure, in other words risk-seeking behaviours in order to achieve
competition is much more important than competitive and strategic objectives. The
grants. An innovator’s motives are more innovative dimension refers to the pursuit of
precise than those of a researcher creative or novel solutions to challenges
(implementation, fulfilment, performance, confronting the firm, including the
service, emulation, etc.) because they seek to development or enhancement of products and
create value and are aware that every services, as well as new administrative
innovation provides a temporary competitive techniques and technologies for performing
advantage, which means they have to keep on organizational functions (e.g., production,
innovating. marketing, sales, and distribution). For
Consequently it is important for SMEs to example, most key informants described how
establish stable links and partnerships with an entrepreneurial mindset was critical to
undertaking the generally challenging entrepreneurship–performance relationship
activities associated with entering a new (Zahra, 1993b; Zahra et al., 1999). This holds
foreign market. Proactiveness is the opposite especially for studies dealing with
of reactiveness and relates to aggressive entrepreneurship and international
posturing relative to competitors, with performance of the firm. Researchers suggest
emphasis on execution and follow-up of tasks that this association is positive (McDougall &
in pursuit of the firm's objectives. Risk-seeking Oviatt, 2000; Dimitratos & Plakoyiannaki,
involves the planning and implementation of 2003), however empirical evidence is scant.
projects entailing significant chances of costly Given the importance of entrepreneurship to
failure (Khandwalla, 1977; Miller & Friesen, researchers, business managers and policy
1984; Davis et al., 1991). makers, understanding its role in the
More generally, entrepreneurial orientation is a environmental conditions of the international
fundamental posture, potentially applicable to and domestic domain for superior
any firm and instrumental to strategic organizational performance abroad is a
innovation (Miles & Snow, 1978; Miller & significant and timely research objective.
Friesen, 1984; Covin & Slevin, 1991). Studies There is no unanimity among researchers on
have found a positive association between the terms used to describe entrepreneurial
entrepreneurship and expansion of strategic behaviour, as Zahra et al. (1999) conclude in
activities (Miller & Friesen, 1984; Davis et al., their literature review. In order to capture the
1991), and between entrepreneurship and organizational processes and methods that
organizational performance (Snow and firms employ when acting entrepreneurially,
Hrebiniak, 1980; Miller & Friesen, 1984; authors use the labels of entrepreneurial
Covin & Slevin, 1991). Management at posture (Covin & Slevin, 1991),
substantially entrepreneurial firms may be entrepreneurial orientation (Lumpkin & Dess,
more inclined than others to create and activate 1996), entrepreneurial style (Naman & Slevin,
strategies and tactical manoeuvres with a view 1993), entrepreneurial management (Stevenson
to maintaining or improving performance. This & Jarillo, 1990), entrepreneurial strategy
notion appears to be true for companies making (Dess et al., 1997) or, most often,
operating in foreign markets as well as at Miller’s (1983) term of entrepreneurship (e.g.
home. Zahra et al., 1999).
It is generally asserted that entrepreneurship In relation to the other key notion of this
can have a positive influence on the present study, performance is a construct that
performance of the firm (Covin & Slevin, is difficult to operationalize holistically as it
1991). Yet, although entrepreneurship is may refer to different aspects of the
considered to be a driving factor for value organizational effectiveness of the firm (Dess
creation in both international and domestic & Robinson, 1984; Venkatraman &
markets, there seems to exist a paucity of Ramanujam, 1986). In their literature review
empirical studies on the of entrepreneurship studies, Murphy et al.
(1996) concur with this statement presenting Questionnaires were used as primary data
results of studies that employ a wide variety of sources and the fieldwork was carried out over
objective and subjective performance the period from January to March 2012. The
measures. identification of companies was done through
Consequently, we propose: the SABI1 database, which also allowed us to
Hypothesis 5: International Performance will control some of the questionnaire answers.
be positively associated with International Once the initial list of textile companies was
Entrepreneurship. obtained, we refined it by removing those
companies that showed excessive
3. Method heterogeneity, e.g. in their size (firms with less
The textile industry is one of the most complex than 5 employees) or in the production process
manufacturing industries, involving a great (dressmaking firms).
number of activities from yarn production to Prior to questionnaire distribution we ran a
fabric or knitwear for the final customer. The pilot questionnaire with five selected
textile industry in 2011 in Spain accounted for respondents that we considered representative
6% of industrial employment, 3% of GDP and of the whole sample. Finally, the questionnaire
5.9% of Spanish industrial exports. responses were obtained through personal
Globalization pressures, such as textile trade interviews. Respondents were required to have
liberalization, have considerably affected the a global knowledge of the company i.e. they
textile industry. Additionally, in the face of were either the General Manager or wer part of
increasing competition from countries with the Management Staff.
emerging economies, European firms have A total of 174 complete and corrected
reacted with a variety of strategies, including questionnaires accounting for 24% per cent of
productive delocalization aimed at reducing the population were obtained. Using the
production costs, policies of repositioning in Student’s t-test we checked possible biases
higher quality segments of the market, with between the sample and the population. To do
more added value products and services, and this, we carried out a test on the size of the
also intense international entrepreneurship. companies. We used the SABI database as a
source for this information. As Table 1
3.1 Sample collection and data sources demonstrates, there was no bias between the
The population of this empirical study has sample and the population.
been drawn from Valencian textile industry
firms in Spain. The Valencian textile industry
1
focuses on the so-called home textile sector SABI is a directory of Spanish and

and represents 17% of the Spanish textile Portuguese companies that collects general

industry, providing employment for over information and financial data. In the case of

24,000 people, with a turnover of €1,920 Spain, it has collected more than 95% of the

million euros and exports worth €693 million. companies in the 17 Spanish regions with total
yearly revenues of over €360,000-€420,000.
(INSERT TABLE 1 ABOUT HERE) technology-based advantages to contribute to
the superior performance of born-global
3.2 Measures internationalization (Zhou, 2007). In this sense,
We carried out this study using some basic respondents were asked about participating in
variables. We reviewed previous research to nationals R&D programmes or in European
generate measuring procedures and adapted Competitiveness and Innovation Framework
them to the particular context of our empirical Programmes in the last five years.
setting. Creativity and Innovation. This variable has
3.2.1 Dependent variable long been a core focus for entrepreneurship
International Entrepreneurship. Following researchers (Styles & Seymour, 2006).
Styles & Seymour’s (2006) definition of IE we Creativity and Innovation facilitate the firm’s
assessed the degree of creation and exchange willingness and ability to engage in
of value through the identification and international markets. In fact, Kropp et al.
exploitation of opportunities that cross national (2006) state that creativity and innovation are
borders. We asked firms to evaluate critical to international entrepreneurial
internationalization projects over the last five business ventures. Other authors (Knight and
years, such as international promotion actions, Cavusgil, 2004) found that innovative products
new market prospection, new international and quality improved international orientation.
venture creation and international business. In consequence, we asked about their results in
3.2.2 Independent variables creation and innovation through new designs,
Skills/Competences. Human capital in new material and fibres used in production
international ventures is becoming increasingly processes, new applications and new products
important. Firms focusing on knowledge, skills in the last five years.
and competences are more likely to be Networking. Networking is a powerful tool for
successful in adapting to new environments, the entrepreneur (Dubini & Aldrich, 1991;
such as as international markets, than firms Oviatt & McDougall, 2005). The
which are more dependent on tangible internationalization processes of
resources. Thus, knowledge-intensive firms are entrepreneurial firms are enriched through
less constrained by distance or national network contacts, rather than solely from the
boundaries (Autio et al., 2000). Thus, we asked strategic managerial decisions. Thus, networks
how many graduates with technical can help entrepreneurs identify international
competences there were in the workforce. opportunities and cooperative strategies
Attitude/Proactiveness. International (Oviatt & McDougall, 2005). We asked firms
entrepreneurship involves risk-taking, to evaluate the perception obtained from the
proactiveness and innovative behaviours since cooperation agreements established with
it allows national boundaries to be crossed universities, technological centres, trade
(Coviello and Jones, 2004; Zhou, 2007). An associations and others firms in international
innovation culture can drive products and projects.
International Performance. International sales dependent on firm size. Additionally, the
as a percentage of total sales are the most dummy variable had no significant association
widely used measure to capture the with IE. After introducing Model 1, Table 2
effectiveness of international performance shows the results of the model regression
(Zhou, 2007; Yeoh, 2004). Respondents were contrasting the hypotheses we proposed. All
asked about the percentage of their foreign five hypotheses were supported. In all cases,
sales against their total sales on a seven-point the F-statistic result confirmed the significance
scale. of the variance of the dependent variable
Employees. Size is usually used as a control through the models. Finally we obtained an
variable in studies of IE (Peiris et al., 2012). Adjusted R2 of (.389), a value that we consider
The variable has been measured through the acceptable to complete an integrative view of
number of employees. IE that focuses on concepts related to
Activity. We identified the sample companies employee profile, innovation attitude and a
according to their activity (commercial or proactive context, cooperation and previous
manufacturing). To do this, we built a dummy experiences in the firm.
variable in order to show different behaviours (INSERT TABLE 2 ABOUT HERE)
depending on the main activity they carried
out. 5. Conclusions
The research stream on IE offers great
4. Results opportunities for scholars to employ and
To test the hypotheses we ran a stepwise integrate theories from multiple disciplines
hierarchical regression approach to assess the (Zahra & George, 2002). IE behaviour is a
explanatory power of each variable. To complex social phenomenon that requires
compute all models we used the statistics different types of resources to identify and
software SPSS version 20. exploit opportunities (Peiris et al., 2012).
We performed various regression equation Thus, this work was based on providing a
analyses, which are shown in Table 2. In each comprehensive picture of the resources that
regression model, variables were progressively influence IE. Specifically, we have
introduced in order to analyze the emphasized the importance of integrating
improvement in their fit and significance level. entrepreneurial competencies, social
We previously validated all multi-item scales networks and innovation factors. In our view,
with an exploratory factor analysis. this paper contributes to IE literature
Model 1 presents the base case controlling firm because it combines multiple factors and has
size (Employees) and Activity. Neither obtained the importance of each category in
Employees nor Activity was significantly IE. Additionally, the paper’s contribution is
associated with IE. These results were in line with authors who point out the need
expected since previous literature (Peiris et al., to use multi-theoretical perspectives (Zahra
2012) revealed that, for instance, IE was not & George, 2002; Jones & Coviello, 2005).
The results obtained show how important it from the early stages to the achievement of
is for international entrepreneurs to have a results in the company. Thirdly, it would be
team with the right skills to tackle new interesting to carry out a more detailed study
international ventures. Thus, having workers in entrepreneurial companies. This would
with adequate skills is necessary for the firm enable us to compare their role in local
to adapt to new scenarios in international markets, their customer or supplier profiles
markets. In addition, the findings highlight and their product portfolio to name but a few.
the importance of developing an innovative However, we must leave these limitations
attitude and innovative products, resulting in for future studies.
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Antecedents and performance implications
Table 1. t-student for mean comparison.
Value of Sig. Mean
Variables t
the test (bilateral) differences

Number of
32 -.835 .405 -2.144
employees

Table 2. Results of multiple hierarchical regression analysis

Dependent variable: International Entrepreneurship


Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Constant 1.285 (.161)* 1.028 (.170)* .932 (.166) .648 (.178) .578 (.172) .236 (.173)

Skills/Competences .810 (.220)** .695 (.215)** .614 (.208)** .610 (.200)** .563 (.186)**

Attitude/Proactiveness .273 (.073)** .196 (.074)* .071 (.100) .169 (.095)*

Creativity and .316 (.086)** .303 (.083)** .230 (.078)**


innovation

Networking .736 (.194)** .673 (.180)**

International .384 (.073)**


performance

Employees (control) .010 (.003) .007 (.003) .000 (.004) -.001 (.003) -.002 (.003) -.003 (.003)

Activity (control) -.156 (.204) -.170 (.197) -.153 (.190) -.065 (.185) -.072 (.178) .035 (.167)

Model F 5.637* 13.532** 13.851** 13.505** 14.427** 27.653**


2
R .062 .131 .197 .257 .316 .413
Adjusted R2 .051 .116 .178 .234 .291 .389
2
R Change - .069** .066** .060** .059** .098**

N = 174; p< .01 **; p< .05* Non standard coefficients (errors in brackets)

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