SMEs' international expansion and location strategies in gateway countries

Determining investors' perceptions remains a hard task due to the greater political risks relative to developed markets and to the way companies react to changes in FDI policies of host governments (Sirr et al., 2012). As shown in the latest A.T. Kearney's FDI Confidence Index (2012), the global equilibrium is changing. "Emerging markets have eclipsed developed countries in terms of FDI inflows, attracting more than the half of global FDI inflows for the first time of their history, and now comprise more than half of the FDI confidence Index's top 25 countries. This trend will accelerate over the next three years and perhaps beyond" (A.T. Kearney, 2012:9). Companies must adapt quickly to this new reality, using new types of strategies or strategic tools to determine the optimal location for their investment. Nowadays, a major part of overseas production is not only designed to serve local markets but also to be re-exported to the domestic or a third country. The host country acts as a gateway to other more complex or distant markets. Many empirical studies have focused on pinpointing the determinants of location strategies but in our state of knowledge, despite a growing interest for emerging countries in the literature, none of them have been dedicated to explain the use of gateway strategies by SMEs. "While the past literature has identified several key factors that influence entry mode decisions, the issue of investing in a country because it can serve as a gateway to other emerging economies has not been addressed" (Javalgi et al. 2010 : 210). Several specificities concerning the location choice merit further study. In this context, we propose the following research question: Why and how are gateway strategies implemented by SMEs to enter foreign markets? We aim to answer more precisely four corollary questions: -What are the endogenous and exogenous factors influencing the selection of gateway strategies? -What are the main characteristics of gateway strategies? -What is the impact of using gateway strategies on the management and organisation of SMEs? -To what extent do gateway strategies improve the success of SMEs expanding on foreign markets? Combining economic and management approaches, the objective of our project is to analyse the enforcement process of gateway strategies, highlighting key factors in the evaluation and comparison of locations for small firms. We will try to investigate how SMEs implement these strategies and observe the resulting effects.