The internationalization of small and medium-sized enterprises (SMEs) has been of increas-ing interest to the research community. This is due to the important role of SMEs in national economies as well as in the global marketplace. SMEs are key players in creating jobs, boost-ing digital transformation, and helping societies to achieve Sustainable Development Goals. The SME internationalization research has two popular approaches: the traditional stages models and new phenomena, such as born globals and international new ventures. The stages models, most notably the Uppsala model, involve a pre-internationalization phase. Regardless of some models created to illustrate SMEs’ activities during this phase, it remains an understudied topic. Especially the decision-making during the pre-internationalization phase has not been researched enough. This thesis aims to study how SMEs are using the two decision-making logics – causation and effectuation - when they prepare to expand op-erations to foreign markets.

The theoretical framework of this thesis consists of three chapters on major theories of in-ternationalization, the pre-internationalization phase, and SME decision making. This frame-work provides the theoretical viewpoints for conducting the research and analyzing the find-ings. Specifically, the theoretical part of this thesis introduces three major theories of inter-nationalization concerning SMEs: the Uppsala model, the network theory, and the Interna-tional new ventures theory. Further, it examines the concept of pre-internationalization and what SMEs are experiencing before the expansion to foreign markets. Lastly, it discusses SME decision making concentrating on the two different but complementary logics: causation and effectuation. The research methodology selected for conducting this study is a qualita-tive, single-case study since it offers the best tool for identifying the logic behind the case firm’s decisions.

This study shows that SMEs use both logics – causation, and effectuation – during the pre-internationalization phase. However, the dominant logic behind the decisions related to the upcoming internationalization is effectuation. This study proposes which of the two logics SMEs tend to emphasize in their decisions depending on the field of operations. The author identifies four categories: target markets, product and competitors, networks, and re-sources. This study shows that decisions concerning product and competitors, networks, and resources follow effectual logic. Decisions concerning target markets follow causal logic. SMEs combine the two logics in such a way that they create synergy. The managerial implications of this study are aimed especially at the decision-makers in internationalizing SMEs who have no prior experience of international operations. Besides, the findings of this study are interest-ing for scholars studying internationalization or SME decision-making.