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Internationalisation and Alliance Formation: Evidence from Turkish SMEs

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Author Info

  • Mehmet A. Ulubasoglu

    ()
    (Deakin University)

  • Muhammet Akdis

    ()
    (Pamukkale University)

  • Sabahat Bayrak

    ()
    (Pamukkale University)

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    Abstract

    This study explores the issue of internationalization through forming alliances with foreign capital in the small business sector in Turkey. Using a sample of 257 SMEs from this emerging market economy, collected via a field study, we investigate the impact of size (measured by investment levels and number of workers), sectoral preferences, factors causing low capacity utilization, management control, and the education level of CEOs on the alliance decisions of small firms. Multinomial logit estimations are employed to obtain a detailed and rich set of results. Overall, we find that Turkish SMEs would like foreign capital to help them expand their production capacity, while also serving as a conduit to convey their products to world markets. Size-specific, sectorspecific and management-specific factors are identified in the alliance behavior. We also investigate whether alliance motivation is a product of unidimensional or multidimensional decision-making process on the part of SMEs. Size, as shown by investment, and factors causing low capacity utilization are found to be the main contributors to the multidimensionality of the alliance motivation through influencing the alliance behavior predicted by other firm attributes.

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    File URL: http://www.deakin.edu.au/buslaw/aef/workingpapers/papers/2006-05eco.pdf
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    Bibliographic Info

    Paper provided by Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance in its series Economics Series with number 2006_05.

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    Length: 46 pages
    Date of creation: 13 Oct 2006
    Date of revision:
    Handle: RePEc:dkn:econwp:eco_2006_05

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    Web page: http://www.deakin.edu.au/buslaw/aef/index.php

    Related research

    Keywords: Internationalization; Alliances; Foreign Capital; SMEs; Turkey;

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    References

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    1. Peter J Buckley & Mark C Casson, 1998. "Analyzing Foreign Market Entry Strategies: Extending the Internalization Approach," Journal of International Business Studies, Palgrave Macmillan, vol. 29(3), pages 539-561, September.
    2. Otto Andersen, 1993. "On the Internationalization Process of Firms: A Critical Analysis," Journal of International Business Studies, Palgrave Macmillan, vol. 24(2), pages 209-231, June.
    3. Erzan, Refik & Filiztekin, Alpay, 1997. "Competitiveness of Turkish SMSEs in the Customs Union," European Economic Review, Elsevier, Elsevier, vol. 41(3-5), pages 881-892, April.
    4. Phillips McDougall, Patricia & Shane, Scott & Oviatt, Benjamin M., 1994. "Explaining the formation of international new ventures: The limits of theories from international business research," Journal of Business Venturing, Elsevier, vol. 9(6), pages 469-487, November.
    5. Lopez-Gracia, Jose & Aybar-Arias, Cristina, 2000. " An Empirical Approach to the Financial Behaviour of Small and Medium Sized Companies," Small Business Economics, Springer, Springer, vol. 14(1), pages 55-63, February.
    6. Madsen, Tage Koed & Servais, Per, 1997. "The internationalization of Born Globals: An evolutionary process?," International Business Review, Elsevier, Elsevier, vol. 6(6), pages 561-583, December.
    7. Etemad, Hamid & Wright, Richard W, 2003. " Internationalization of SMEs: Toward a New Paradigm," Small Business Economics, Springer, Springer, vol. 20(1), pages 1-4, February.
    8. Acs, Zoltan J & Preston, Lee, 1997. " Small and Medium-Sized Enterprises, Technology, and Globalization: Introduction to a Special Issue on Small and Medium-Sized Enterprises in the Global Economy," Small Business Economics, Springer, Springer, vol. 9(1), pages 1-6, February.
    9. Mateja Drnovsek, 2004. "Job Creation Process in a Transition Economy," Small Business Economics, Springer, Springer, vol. 23(3), pages 179-188, October.
    10. Minguzzi, Antonio & Passaro, Renato, 2001. "The network of relationships between the economic environment and the entrepreneurial culture in small firms," Journal of Business Venturing, Elsevier, vol. 16(2), pages 181-207, March.
    11. Heinz Hollenstein, 2005. "Determinants of International Activities: Are SMEs Different?," Small Business Economics, Springer, Springer, vol. 24(5), pages 431-450, 06.
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