Nordic Industrial SMEs in Middle East-Factors Influencing Lack of FDI
Fattahi Moshtaghin, Mir Hamed (2015)
2015
Master's Degree Programme in Business and Technology
Talouden ja rakentamisen tiedekunta - Faculty of Business and Built Environment
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Hyväksymispäivämäärä
2015-05-06
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tty-201504221212
https://urn.fi/URN:NBN:fi:tty-201504221212
Tiivistelmä
Nowadays in the global business environment, globalization process is not limited to only large companies. One of the main goals of SMEs is also expanding their international businesses in order to increase sales and profits. The way a firm selects to go to international markets from its local market and choosing the appropriate entry modes are significant decision that demands a lot of resources and preparation. In the procedure of choosing entry modes different factors have to be surveyed before making the final decision. The results of the entry mode selection can have important influences on the success of the company. Selecting inappropriate entry mode can cause various problems such as financial losses and limited control on the foreign market.
This research study figured out that there are a number of Nordic SMEs exporting in the Middle East market. All of these SMEs are using only exporting as an entry mode and none of them have chosen FDI. Therefore, the main purpose of this study is to discuss and provide a deeper recognizing of factors that have caused Nordic SMEs in the Middle East market do not select FDI as their entry mode. The thesis surveyed internal factors that can influence on entry mode selection such as firm size, relevant international experience, business networks of Nordic SMEs and the capability of Nordic SMEs to produce differentiated products. The study also examined external factors that can influence on entry mode selection such as industry specific factors, cultural distance and environmental uncertainties.
The reasons for lack of FDI in the Middle East market among these Nordic SMEs were as follows: small firm size, lack of Nordic SMEs‘ relevant international experience, local networks of Nordic SMEs are not oriented toward the Middle East market, different environmental uncertainties in the Middle East market, perceived cultural distance and finally industry growth potential of the Middle East is not sufficient to attract FDI.
This research study figured out that there are a number of Nordic SMEs exporting in the Middle East market. All of these SMEs are using only exporting as an entry mode and none of them have chosen FDI. Therefore, the main purpose of this study is to discuss and provide a deeper recognizing of factors that have caused Nordic SMEs in the Middle East market do not select FDI as their entry mode. The thesis surveyed internal factors that can influence on entry mode selection such as firm size, relevant international experience, business networks of Nordic SMEs and the capability of Nordic SMEs to produce differentiated products. The study also examined external factors that can influence on entry mode selection such as industry specific factors, cultural distance and environmental uncertainties.
The reasons for lack of FDI in the Middle East market among these Nordic SMEs were as follows: small firm size, lack of Nordic SMEs‘ relevant international experience, local networks of Nordic SMEs are not oriented toward the Middle East market, different environmental uncertainties in the Middle East market, perceived cultural distance and finally industry growth potential of the Middle East is not sufficient to attract FDI.