Research method:

The “research paradigms” can be divided to three major ones which are qualitative, quantitative and mixed methods research. Qualitative research is most often described in contrast to quantitative research. It must be noted that quantitative research dominates the body of scientific work undertaken in social sciences, including business research (Eriksson & Kovalainen 2008). This master’s thesis represents the qualitative method research. Many qualitative approaches are concerned with interpretation and understanding, whereas many quantitative approaches deal with testing of hypothesis, statistical analysis and explanation (Eriksson & Kovalainen 2008). To justify the selection of a qualitative research it must be noted that the purpose of this study is to provide in-depth findings from cases that have numerous variables that differ from each other (e.g. size, age, business environment etc).

Focus of this thesis is on three separate cases thus it is a multiple-case study. Case studies are frequently used in industrial network research (Dubois & Gadde 2002) which makes it perfect for this thesis considering the bakery context and network approach. Another reason for the chosen method lies in the case studies strengths which are the learning possibilities. The interaction between a phenomenon and its context is best understood through in-depth case studies. (Dubois & Gadde 2002).

It must be noted that case study method is not suitable to investigate the phenomena prevalence and generalization (Yin 2003). The upcoming empirical part and its results are not aimed towards generalization and thus, the findings cannot be generalized to all firms with various conditions.

However, the chosen methodology provides the required tools for examining the prevalent research problem and questions that could not be examined with other methods.

Yin (2003) argues that multiple case studies are more preferable over single-case studies. It has been also noted that multiple-case studies might provide more conclusive evidence that will influence on the credibility of the research (Herriott & Firestone 1983). The disadvantage of the method is that it might require more resources such as time and expenses. This study has three case firms with different conditions and as connective factors consists from Finland, industry and the network impact to the internationalization process.

This research strives to provide a holistic understanding of the utilization of networks when Finnish family-owned bakeries choose their foreign entry modes. Purpose of this study is to find answers to the research problem: How do networks impact Finnish family-owned SME bakeries foreign entry mode choices? This research problem has resulted in the creation of two research questions that has guided the literature review as well as helped in choosing the right research methodology for this study. The research questions are:

(RQ1). How do networks affect to the selection of foreign entry mode?

(RQ2). What type of resources family-owned SME bakeries possess? How do these resources facilitate internationalization?

(RQ3). What role does the family ownership play in the internationalization process of a family-owned SME bakery?

It has been noted that the international business research is dominated with by quantitative research (Eriksson & Kovalainen 2008). This might be due to the fact that quantitative research provides more rigorous results whereas qualitative research can be seen as the, one that can be used as complimentary when studying something that is expressed in words and cannot be translated into numbers. (Eriksson

& Kovalainen 2008). Considering the theme and nature of this thesis: its topic and research problem it can be noted that they have influenced heavily on the chosen research methodology to be the qualitative.

3.3 Case firms

This part of this thesis begins with an in-depth description of the case firms that were interviewed. The interview data consist insightful data that might include delicate or confidential information and therefore permissions to publish were requested in advance. Permission to use the names was granted from all the interviewees but due to the mistake from the authors part these permissions were not recorded accordingly. In conclusion the names of the CEOs and the case firms are not revealed in this thesis.

The first interview was held in the middle of October 2019 with the CEO of firm X. The CEO´s background is purely commercial as she has a Bachelor of Business Administration degree majoring in international business and sales. Additionally, her working history includes few years at Loreal Finland as a product manager and a year as a product manager at the firm X before being promoted to the CEO position. Despite the degree and working for multinational corporation, the CEO has not gained much experience with international sales operations during her career.

Firm X is a family-owned bakery that is now in its third generation as the CEO and her two brothers run the company. The bakery is specialized in baking variety of frozen bakery goods. The product portfolio consists of such frozen products as rolls, sweet buns and breads. The firm has approximately 15 employees and makes turnover roughly 2,4 million euros per year.

The firm was founded in 1958 and it started as a small home bakery that provided products for local grocery stores and marketplaces close to the city of Lahti. With time the company grew, and it delivered fresh products around the county of Päijät-Häme. As the business grew, the production facilities were moved in the late 1960´s to its current location.

In 2000 the bakery started baking frozen products to hotels, restaurants and cafés (also known as HoReCa -sector) alongside with the fresh deliveries to grocery stores. During the time period of 2000 and 2010, grocery stores started chaining which meant that bakeries had a tough time negotiating with local grocery store owners and thus the fresh deliveries margins started to plummet.

In 2011, when the CEO took the reins from her father (the former CEO and the second generation of the company), a strategic decision was made to focus only on frozen products. This meant that almost half of the turnover at that time was cut down. Additionally, the company decided to work as a sub-contractor for big market chains and foodservice sector (HoReCa) by manufacturing their customers own private label products.

The second interview was held at the beginning of November with the owner who is also the CEO of firm Y. The CEO has an extensive background in international business and in bakery business. He started his international business journey in 1996 in a family business called Vulganus where he was the co-owner and he´s area of responsibility was international sales. The firm makes bakery machinery, such as spiral coolers, provers and freezers. The company was sold in 2011 and after the transitional period he started his own consulting firm. The CEO also has a served as a member of board in a few family-owned businesses and one of them was in a small size bakery in southern Finland. The CEO describes baking and the world of baking as something that is not just a regular job for him, but more of a passion.

Firm Y is a consulting firm, that focuses on providing solutions for all types of bakeries all around the world. The firm has also a foodtec part that is focused on bakery innovations and new product development. The idea is to bring together the product or innovation, customer and the supplier, something that has not been done in the Finnish bakery field. The client base is mostly international and only a small percentage comes from domestic market. For this to happen, an extensive network is required, and it is something the firm´s CEO has acquired along the years he has traveled the world.

” The gluten free puff pastry dough case is very good example. In December we have a baker coming here from Israel and customers from Russia. This is the focal point or the melting pot where they have the chance to meet. Otherwise they might never meet “

- CEO of firm Y

The third interview was held at the middle of November 2019 with the CEO of Firm Z. Firm Z is a small Finnish bakery that has focused on frozen bakery products with the basis of operation being in serving the Finnish retail and foodservice sector with best possible service, products and by creating personalized relationships. The firm was established in 2011 and has grown its turnover from zero to

1,6 million euros since then. From year 2018 there has been approximately 30% growth. According to the CEO of firm Z, behind this success are quality hand made products which have to be simple enough to be replicable so that they can be produced in larger quantities. The most important factors behind a quality product for firm Z includes taste, idea, good ingredients and responsible manufacturing.

The CEOs background includes a bachelor’s degree in hospitality management and during the studies he spend a year as an exchange student in France. He was establishing the firm Z in 2011 and started working there a year after that, in his current position. He has a lot of experience in international sales and business as he worked for a company that had international sales and operations. During those years he has formed a formidable network with sales and marketing professionals who work all across Scandinavia, Northern Europe and the Baltic are. Those networks include old work colleagues, business partners, bosses and clients. In Finland he has worked with all the Finnish major retail chains excluding Tokmanni.

All three interviewees have some experiences from international business. Two of the CEOs have extensive experience from international business which has led them to have a very strong views on how internationalization in family-owned SME bakeries should be implemented. Firm X´s CEO has the least amount of experience from internationalization as she only has a degree on the subject and experience from working in a multinational enterprise. However, she has gained knowledge from internationalization in her current position as the firm X has started some foreign operations during her CEO period.

It can be noted, that the backgrounds of the CEOs have some affect to internationalization approach.

None of the CEOs discard the internationalization as a great possibility, but the CEOs of firms Y and Z, who have gained more first-hand experience from working on global markets and projects, possess a more clearly defined manner of approach to topic. This might have affected the strategical decisions and stances of these case firms.