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This study explores how small and medium-sized enterprises (SMEs) innovate their business models to achieve organizational resilience during international expansion. Through a multiple-case study of three Finnish SMEs, key sources of resilience such as digitalization, strategic collaboration, customer intimacy, agile resource utilization, and revenue model improvement were identified, highlighting the necessity for significant business model innovation for resilient international growth. This study proposes a new research concept: SME international resilience.
“People often say that ‘nothing is permanent but change’, highlighting the inevitability of adaptation in today’s rapidly evolving business landscape. This external dynamism necessitates internal organizational changes for companies to effectively navigate market turbulence, a concept referred to as organizational resilience. While smaller enterprises may lack the buffers of larger firms, they often exhibit greater flexibility and adaptability, potentially enhancing their resilience. Organizational resilience encompasses the ability of some firms to respond swiftly to crises and recover faster than others, often achieved through preparedness and the ability to bounce back. SME resilience is intricately linked with innovation, serving as a mechanism for renewal and adaptation amidst change. However, the interplay between internationalization, resilience, and innovation in SME business models remains underexplored. This study examines how SMEs with international growth strategies innovate their business models to enhance organizational resilience, focusing on international opportunity development processes. Through case studies of Finnish SMEs, it was found that significant business model innovation is crucial for resilient international expansion, with digitalization, strategic collaboration, and customer intimacy being key resilience sources. This research contributes to both international entrepreneurship and business model innovation literature, offering insights into the dynamics of international growth and resilience development in SMEs.”
For SMEs, internationalization serves as a strategy to bolster organizational resilience, a process outlined by scholars like Johanson & Vahlne (2009) and Jones & Coviello (2005). This involves iterative development of international opportunities, often necessitating changes in product, delivery, partners, and competencies (Dimov, 2007; Nummela et al., 2006). While significant changes may occur, sometimes leading to business reinvention (Rask, 2014), smaller adjustments are more common, such as in customer offerings and value propositions (Heikkilä et al., 2017). However, internationalization doesn’t always demand business model innovation (Hennart, 2014), though it’s crucial for SMEs to align with resilient organizational characteristics (Reinmoeller & Baardwijk, 2005). This resilience involves adaptability and robustness, enabling SMEs to navigate international markets effectively (Buliga et al., 2016). Through anticipation, coping, and adaptation, SMEs develop international resilience, essential for facing unforeseen challenges (Duchek, 2020).
The business model, a key concept in academia and industry, outlines how a company generates value for customers. It encompasses product/service offerings, target customers, production organization, partnerships, and revenue generation, with digital technology being integral. Business models are dynamic, requiring adaptation to environmental changes for viability. Such adaptations, termed business model innovation, are crucial for SMEs seeking resilience. Resilient SMEs can navigate disruptions by either strengthening their existing models or adapting to new ones. While there’s extensive research on business model innovation, the link to organizational resilience is less explored. Recent studies suggest that digital adoption, collaboration, and customer relationship management are vital strategies for SME resilience, particularly evident during the COVID-19 pandemic.
This study explores how small and medium-sized enterprises (SMEs) adapt their business models to achieve organizational resilience through international expansion, particularly focusing on integrating data-driven services. Unlike digitally native firms, the SMEs under study were in the process of digital transformation. Despite being in early stages, all case companies recognized the significance of data-driven services for resilient international growth and made considerable changes to their business models to enhance customer value through data utilization. Key factors contributing to organizational resilience in internationalizing SMEs include digitalization, strategic partnerships, customer focus, flexible resource management, and revenue model enhancements. The findings underscore the importance of understanding the relationship between international growth and business model innovation. However, SMEs may face challenges in identifying suitable partners for enhancing resilience, potentially leading to internal service provision that could impede adaptability. The study highlights the role of data in developing value-added services tailored to customer needs, while also noting the risks of customer lock-in associated with high intimacy and sunk costs. Driving resilience requires enhancing digital and analytical capabilities to serve international markets, although physical infrastructure and local context remain significant considerations. Transitioning to subscription-based revenue models enhances stability and predictability for SMEs expanding internationally. This transformation necessitates substantial and interconnected changes, often requiring parallel operation of old and new business models. The study proposes a novel framework, SME International Resilience, integrating organizational resilience, business model innovation, and international growth, which could guide future research in understanding and fostering resilience in SMEs. Managers can leverage these findings to strengthen their firm’s resilience and navigate business model innovations for international expansion effectively.
This study investigates how small and medium-sized enterprises (SMEs) adapt their business models for international growth to enhance organizational resilience. Through a multiple-case study of three Finnish SMEs, it was found that business model innovation was crucial for resilient international expansion. The study contributes to understanding how SMEs with global growth strategies innovate their business models to bolster resilience, proposing a new concept of SME international resilience. This resilience is cultivated through business model innovation, particularly emphasizing digitalization, strategic partnerships, customer engagement, resource flexibility, and revenue model enhancement. The study suggests that fostering digital capabilities and adopting strategic network thinking are vital for SMEs seeking international resilience. However, there are limitations, notably the small sample size and the potential influence of the domestic market context on findings. Future research avenues include exploring the link between organizational resilience and nonlinear internationalization, as well as examining the impact of resilience on internationalization outcomes. Interdisciplinary collaboration is advocated to equip SMEs to navigate market changes and crises effectively.
Source:
Taina Eriksson, Marikka Heikkilä & Niina Nummela (2022) Business model innovation for resilient international growth, Small Enterprise Research, 29:3, 205-226, DOI: 10.1080/13215906.2022.2092890