Institutional factors, opportunity triggers and critical incidents in international entrepreneurship

Damoah (2018) conducted a qualitative study on the internationalization process of SMEs from Africa perceived as entrepreneurs. This study is a recent example of critical incidents being taken as a useful approach to studying institutional factors and opportunity triggers in international entrepreneurship in an especially challenging institutional context. Interestingly, this study draws upon a range of international entrepreneurship theories (e.g. the resource-based view, the stage theory, the network theory and the contingency theory) to develop an international entrepreneurship model integrated under one label - the international entrepreixeurship theory. However, the study is not an analysis of international entrepreneurship in the true sense, as it focuses on exporting SMEs and not internationalizing young and new SMEs at inception or through their life-cycle. However, the context and methodology lend themselves well to questions on international entrepreneurship and international entrepreneurship in cross-cultural contexts. Importantly, while the study bases itself on an SME’s export propensity lens, it explores the critical incidents that trigger the behaviour, in this case, export initiation of SMEs perceived as entrepreneurial orientation.

Damoah (2018) not only links critical incidents, episodes and events that trigger export initiation to SME export propensity (i.e. the critical events and/or incidents that trigger the likelihood of whether a small firm will initiate export) but also to entrepreneurial orientation. Unsolicited orders, winning govermnent awards and having an international orientation are among the critical incidents that drove SMEs in the garment and textile sub-sector of Ghana to begin exporting. This particular case represents an important deviation from the predominant Internet and high-tech based industry analyses that dominate most of the international entrepreneurship studies on young and new internationalizing SMEs. Overall, six main critical incidents were identified by Damoah (2018): (1) contacts established through participation in trade fairs; (2) contacts established through international orientation (previous residency abroad); (3) contacts and recommendations established through friends and families abroad; (4) winning national government awards; (5) being in receipt of unsolicited orders; and (6) contacts and recommendations established through joint venture ownership. For example, from the perspective of SME firm owners, trade fairs were regarded as important opportunities that could trigger export business. The six critical incidents were categorized using dimensions offered by Leonidou et al.’s (2007) classification based on a firm’s proactive internal behaviour, proactive external behaviour, reactive internal behaviour and reactive external behaviour. Thus, international entrepreneurship literature was integrated with SME export propensity literature, and linked to critical incidents. The latter is an important methodological approach that links process to change triggers through this form of analysis.

While five theoretical frameworks were integrated to explore the critical incidents that trigger export initiation of SMEs from Ghana, contingency theory was the most dominant framework employed by Damoah, 2018). Again, drawing on earlier literature from international entrepreneurship, categorizations by Leonidou et al. (2007) were used to highlight the main triggers of export initiation among SMEs largely caused by external stimuli. An analysis of the critical incidents revealed that in most cases networking contacts established played an important role. For example, contacts gained through trade shows, previous foreign residency abroad, joint venture ownership and friends and families abroad are all network-related incidents. However, placed within a critical incident analysis, we can see more clearly, how most of the incidents seemed serendipitous and episodic (e.g. receipts of unsolicited orders), yet some entrepreneurs took full advantage of the incidents and exploited them

(Damoah, 2018). The act of maximizing and/or taking advantage of episodic events and being able to initiate export business supports the concept of entrepreneurial orientation, frameworks from international entrepreneurship literature and the contingency framework. The basic assumptions of international entrepreneurship (McDougall et al., 1994) are highlighted and supported in the study by Damoah (2018).

One contribution of the paper is that, unlike previous studies that use objective quantitative measures to examine the issue from other perspectives, Damoah (2018) uses the critical incident approach, which allows one to delve deeper into the phenomenon. Another contribution is that it sheds light on the internationalization process of manufacturing SMEs from an under-researched and a less-know geographical institutional context. The diverse context and use of new methodological approaches would be helpful in more studies in entrepreneurship, internationalization and cross-cultural studies in international entrepreneurship.

Finally, the study by Damoah (2018) extends the literature examining the propensity of SMEs to export into the international entrepreneurship field. While some work is prevalent in the area (Martineau & Pastoriza, 2016), most variables are researched as quantitative objective predictors. For example, organizational level predictors (e.g. firm size, firm age, firm network capacity and innovative products) (Dana et al., 2016; Wadhwa et al., 2017), individual level predictors (e.g. owner manager’s personality characteristics - age and education) (Adomako et al., 2017; Child et al., 2017), institutional level predictors (e.g. central govermnent’s export interventions) (Crick & Spence, 2005) and the structure of the domestic market (Maria-Perez & Garcia-Alvarez, 2009; Fakih & Ghazalian, 2013; BabaUinde, 2017).

Damoah (2018) also offers some novel ideas on internationalizing SMEs and entrepreneurial orientation. While Damoah’s study examines similar quantitative objective factors that facilitate and/or influence the likelihood of export, it also explores the critical incidents approach, which delves deeper into the subjective factors of the issue rather than merely the facilitating factors. It provides an approach for understanding the dynamic nature of entrepreneurial orientation for internationalizing SMEs. It has been argued that the internationalization of SMEs is a complex phenomenon that cannot be understood in detail using only quantitative objective determinants (Villena, 2019). Novel approaches such as the critical incidents approach are timely and useful for studying entrepreneurship, internationalization and cross-border entrepreneurial differences. The critical incident as a trigger for export propensity according to Bell et al. (2001, 2003), Nummela et al. (2006) and Zineldin (2007) refers to a significant episode, crisis time or crucial moment that leads to the opportunity for export.

Despite the ongoing advancement of studies in the SME internationalization field, rich and robust explanations and interpretations of the critical episodes, events and incidents that propel export initiation have not been offered. It is therefore an oppormne time for the research community in the international entrepreneurship field to extend studies such as those of Damoah (2018) to understand internationalizing SMEs’ entrepreneurial orientation and behaviour, integrated with external factors (institutional) using a critical incidents approach. The research gap is thus represented by the lack of adequate understanding regarding the critical incidents that trigger the export initiation of SMEs, such as in the example of Damoah (2018), as well as a lack of understanding of young and new internationalizing SMEs well into their life-cycle, enabling causal relationships to be more closely observed and clearly established. The approach in Damoah’s (2018) study, therefore, partially fills the gap by empirically exploring the critical incidents that trigger SME export initiation in manufacturing in lesser known regions (e.g. Ghana and South Africa). More studies are needed in the international entrepreneurship and international business field that draw from this approach to better elucidate the theoretical lens important to advancing the field conceptually (e.g. entrepreneurial orientation and opportunity triggers) at different levels of analysis (entrepreneur, firm and institutions), ecosystems in which global and internal firms operate (Teece, 2014) and in lesser known contexts (emerging and institutional country environments). Having focused thus far on SMEs, we now turn to theories in international entrepreneurship that address larger MNEs.