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The influence of networks in the Internationalisation process of Finnish SMEs to South Korea : A multiple-case study

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The influence of networks in the Internationalisation process of Finnish SMEs to South Korea : A multiple-case study

Nätverkens inflytande i internationaliseringen av finska små och medelstora företag till Sydkorea : en flerfallsstudie

The purpose of this thesis is to study the internationalization process of Finnish SMEs, i.e., small to medium-sized enterprises to Korea, and the influence of networks in the internationalization process. Previous literature indicates that networks have a significant role in overcoming many of the challenges SMEs are facing when expanding to foreign markets. Korea is an important trading partner for Finland and makes an interesting subject of study for this thesis because of the psychic and geographic distances from the perspective of Finland. Thus, this thesis aims to conceptualize the challenges Finnish SMEs are facing when internationalizing to Korea and what is the influence of networks in overcoming these challenges. Furthermore, informal networks are perceived as important for a company’s success in the foreign market. Therefore, this thesis aims to study how the Finnish SMEs perceive the informal network of Korea, which is called Yongo and how a Finnish SME could become a member of such a network. In addition, networks are important when it comes to learning and sharing the knowledge which is important for SMEs internationalization. Thus, the purpose of this is also to understand what kind of knowledge is essential when internationalizing to Korea. This thesis is qualitative by nature and uses a case study as a research approach in which four Finnish SMEs that are conducting business in Korea are studied. Moreover, the semi-structured interview is used as a data-gathering method. Based on the results, the internationalization process of SMEs to Korea is subjective and the psychic and geographic distance does not influence on the entry motives of Finnish SMEs. Instead, growth opportunities and existing connections in Korea are the main motives for Finnish SME's internationalization to Korea. In addition, networks have a significant impact on overcoming the challenges that Finnish SMEs are facing when internationalizing to Korea, since different network participants provide knowledge and assistance in finding representatives, customers, and distributors. Furthermore, language is the biggest barrier for Finnish SMEs. However, the best way to overcome the language barrier is to hire a local representative who speaks Korean and is familiar with the Korean market. Regarding knowledge, a conclusion can be made that prior international experience and knowledge about other markets seem to be important when developing business relationships and entering Korea. Furthermore, market-related knowledge about the Korean market is perceived as important. The findings of this thesis also show that attending meetings with Koreans is one possible way for Finnish companies to enter a Yongo network. However, the best way for a Finnish company to become a member of a Yongo network is to hire a local representative who is familiar with the Korean market and who can speak Korean.

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