Increasing complexity of organizational phenomena and contextual settings in management studies pushes scholars to focus more on the contextualization of research (Hitt et al. 2007). Advances in statistical methods and software provide the tools for greater consideration of the role of context (Bamberger 2008). Thus, contextualization results in the development of more robust theories, which are able to capture higher complexity of the interrelated elements, offer a greater predictive power and increase practical relevance (Hitt et al. 2007).
Contextualization is related to two interdependent processes of new knowledge creation departing from different points on the theoretical contribution continuum, namely contextualizing a theory and theorizing about the context.
(1) Contextualizing a theory refers to accounting for the “environmental forces or organizational characteristics at a higher level of analysis that affect a focal behavior in question” (George and Jones 1997 p.156);
(2) Theorizing about context refers to developing the context theories “that specify how surrounding phenomena or temporal conditions directly influence lower-level phenomena, condition relations between one or more variables at different levels of analysis, or are influenced by the phenomena nested within them” (Bamberger 2008 p.841).
To address the contextualization agenda in the field of management, a number of steps are suggested (Bamberger 2008). First, scholars should switch from contextualization of the research findings to generation and testing of the context-specific theories. Second, the range of applied context-specific theories should be expanded. Third, methodological, epistemological, and institutional obstacles to theory contextualization should be taken into account. Taking into account the theoretical and empirical setting of this dissertation, the author utilizes the contextualization approach in order to provide a theoretical and empirical contribution to the existing knowledge in the field of international business and international entrepreneurship.
4 Summary of the publications and review of the results
The following section summarizes the results of the five publications included in the dissertation.
The first paper introduces the institution-based view on the entrepreneurial internationalization of SMEs in emerging economies and presents an empirical exploration of the constraints and opportunities provided by the country-level institutional environment for entrepreneurship in Russia. The study also maps the strategic responses of the firms on the identified institutional environment challenges.
The second paper examines the applicability of a measurement instrument for capturing the influence of the institutional framework on the entrepreneurial internationalization in emerging economies. The study assesses the validity and reliability, as well as invariance of the “country-level institutional profile for entrepreneurship” measure (CIPE).
The third paper analyzes the relationship between the institutional influences, innovation capability, and proclivity to internationalization-based and innovation-based growth of SMEs in Russia. The study also includes an estimation of the institutional environment influence on the performance of the firms.
The fourth paper analyzes the relationship between the institutional influences, entrepreneurial growth strategy, and subsequent firm performance measured in terms of sales growth and profitability.
As a summarizing and concluding part of the dissertation, the fifth paper models the structural relationship between the different facets of the country-level institutional environment for entrepreneurship, domestic market size, local competition, and internationalization aspirations of entrepreneurs in emerging economies.
All the research papers that comprise this dissertation build on multiple theoretical perspectives such as institution-based view, resource-based view and dynamic capabilities, national culture dimensions theory, national competitive advantage theory, and new venture theory of internationalization. The papers together constitute a comprehensive analytical framework for addressing the influence that the institutional environment provides on the internationalization-based growth of entrepreneurial SMEs from emerging economies. The framework has the potential for further extension in order to address a broader spectrum of the institutional effects on firm resources, capabilities, strategy, and performance. The summary of the research objectives, theoretical perspectives, methods, data, research findings, and contributions of the research papers included in the dissertation is presented in Table 6.
60 Table 6. Summary of the objectives, methods of analysis, research findings, and implications of the publications Research QuestionResearch objective Theoretical perspective Method and dataMain results Main contribution Publication 1What are the contemporary institutional shortcomings for internationalization of Russian SMEs?
To explore the role of the country-level institutional environment for entrepreneurship for the internationalizing SMEs in Russia and to identify the firms’ responses to the identified institutional challenges Neo-institutional theory, RBVand KBV, cultural dimensions theory Qualitative interview-based study; 5SMEs from Saint Petersburgand Moscow The key contemporary institutional elements affecting SMEs’ entrepreneurial internationalization in Russia were identified and grouped under the five dimensions of the country-level institutional environment. The strategic responses of the firms are mapped based on the level of conformity with the institutional conditions.
Theoretical and empirical contribution: The exploratory study contributes to the development of the institution-based view in IE and provides empirical evidence of the institutional constraints and opportunities for entrepreneurial internationalization of Russian SMEs. Publication 2What measurement instrument can we use to assess an institutional environment for entrepreneurship in developed and emerging economies? Are the existing instruments universal?
To provide an assessment of the validity, reliability, and invariance of the “country institutional profile for entrepreneurship” (CIPE) measurement construct; To test the potential of the construct application in studies across emerging and developed economies.
Neo-institutional theoryCB-SEMwith LISREL software; primarysurvey data from 193 Russian and 122 Finnish SMEs The adjusted CIPE construct was proved to be valid and reliable for application in the emerging economies context, though not invariant if applied in the studies across emerging and developed economies.
Methodological contribution: The study contributes to the methodological discussion on the application of the established measurement constructs in the emerging economies context. The instrument should not be applied in multiple-country studies that include both emerging and developed economies. Publication 3Howdoes the institutional environment affect internationalization- and innovation-based growth of Russian SMEs? How is this effect (if any) reflected in SMEs’ performance?
To identify the influence of the institutional environment for entrepreneurship on the internationalization and innovation proclivity and international and innovation performance of Russian SMEs Neo-institutional theory, KBV, new venturetheoryof internationalization OLS; primary surveydata from 188 RussianSMEs from the North- West region Firms with higher perception of the cognitive institutional environment and higher innovation capability are more likely to internationalize. The normative environment positively affects performance. The regulatory environmental effect was not significant.
Theoretical and empirical contribution: The study contributes to the development of an institution-based view of SME internationalization in emerging economies. The empirical study contextualizes the theory application in the Russian research setting. Policy implications are provided. Publication 4How does an SME’s growth strategy affect its realized growth and profitability in emerging economies (the case of Russia)?
To identify the influence that the institutional environment has on an SME’s choice of a growth strategy; To estimate the impact of the growth strategy choice on firm performance in terms of realized growth and profitability Neo-institutional theory, new venturetheoryof internationalization OLS, GLM; surveydata from 193 RussianSMEs from the North- West region The cognitive environment affects the proclivity to internationalization-based growth; the normative environment affects the proclivity to innovation-based growth. There is a disordinal interaction between firm growth cluster membership, knowledge-intensiveness, and regional location, which, together, affect firm performance.
Theoretical and empirical contribution: The study contributes to the development of a contextualized institution-based view of SME internationalization in emerging economies. The empirical study is conducted in the Russian context. Publication 5What are the multiple structural linkages underlying the relationships between the country’s institutional environment for entrepreneurship, domestic market size, local rivalry, and internationalization aspirations of SMEs in emerging economies?
To study the structural relationships between the institutional environment, domestic market size and competition, and international entrepreneurial opportunity recognition Neo-institutional theory, national culturedimensions theory, national competitive advantage,new venturetheoryof internationalization PLS-SEMwith Smart PLS software; secondarydata (GEMNES; GEMAPS; GCR);27 emerging economies Most important institutional factors influencing SMEs internationalization in emerging economies have a regulatory, normative, and cultural nature. SMEs from the countries with lower individualistic value orientation seem to internationalize more intensively. The large size of the domestic market hampers internationalization.
Theoretical and empirical contribution: The study contributes to the development of an extended framework for analysis of the institutional influence on entrepreneurial internationalization. It contextualizes the theory of the institution-based view of SME internationalization in emerging economies. The empirical study is conducted in a cross-country context. The structural model is built.
4.1
Publication 1: Exploring the role of a country’s institutional environment in internationalization: constraints, opportunities, and strategic responses of SMEs in RussiaOverall objective
Unlike the previous research applying the institutional perspective in the international entrepreneurship in emerging economies, the study focuses on the growth stage of the entrepreneurial process and provides insights about the influence of the institutional environment on the internationalization-based growth opportunities of SMEs in Russia.
Previous studies in the IEEE domain have mostly addressed the institutional influence on the earlier stages of the entrepreneurial process (Bygrave and Hofer 1991), that is, identification of an opportunity, the decision to proceed, assembling the required resources, and launching a new venture. This led to the fact that a majority of the knowledge on the institutional influence on entrepreneurship is focused on the perspective of domestic business creation (see e.g. reviews by Jones et al. 2011;
Szyliowicz and Galvin 2010).
This first study included in the structure of the dissertation aims to explore the role of the country-level institutional environment for entrepreneurship in the decisions of Russian SMEs to internationalize.
Main contribution
The exploratory study contributes to the development of the institution-based view in IEEE and provides empirical evidence of the institutional constraints and opportunities for entrepreneurial internationalization in emerging economies, particularly in Russia.
The study addresses as yet scattered research on the institutional influence at the internationalization growth stage of the entrepreneurship process.
The analysis of conducted interviews resulted in grouping the institutional factors under five dimensions, constituting a country-level institutional framework for entrepreneurship. We extended a previously applied traditional three-dimensional institutional framework (Scott 2001) by incorporating conducive (Stenholm et al. 2013) and cultural (Hofstede 1980) views on the institutional dimensions.
Based on the results of the study, the identified institutional challenges for internationalization of the SMEs in Russia are related to the regulatory issues (contemporary political regime, regulatory instability, and WTO accession), normative issues (necessity of the promotion of entrepreneurial initiatives in society and reconfiguration of the state-business relationship model), cognitive issues (bounded cognition of Russian entrepreneurs, resistance to internationalize, underestimation of foreign partners’ capabilities), cultural issues (autocratic leadership style as a result of high power distance, communitarian nature of doing business through networks,
“over-62
patriotism”), and conducive issues (lack of resources and capabilities). At the same time, the identified opportunities that are related to the contemporary institutional environment include Russian accession to WTO, a gradual change in the entrepreneurs’
perception of the governmental role in innovation commercialization, and a growing demand for an increase in the firms’ international visibility and knowledge exchange with foreign partners.
The classified institutional challenges were mapped against the possible strategic responses of the SMEs, such as acquiescence, compromise, avoidance, defiance, and manipulation. The developed matrix suggests that Russian SMEs respond in a pro-active manner to the normative and cognitive pressures, which become the main drivers for gradual internationalization-based growth of the firms.
The study thus addresses the objective of the dissertation to contextualize the institution-based view on entrepreneurship in the empirical setting of emerging economies, particularly in Russia.
4.2
Publication 2: Measuring Institutional Profiles for EntrepreneurshipOverall objective
The adoption of the institution-based view in the field of international entrepreneurship requires not only theoretical, but also methodological advancements. It is important to ensure the applicability of the measurement instruments used by researchers in a new contextualized research setting such as emerging economies. As the theoretical knowledge advances, so should the measurement instruments (Churchill 1992).
Thus, the second article included in the dissertation has an objective to determine the convergent validity and reliability of the measurement instrument for institutional environment assessment (“country institutional profile for entrepreneurship” or CIPE) developed by Kostova (1997) and extended for the domain of entrepreneurship by Busenitz et al. (2000). In comparison with previous studies relying on economically homogeneous samples such as developed economies (Busenitz et al. 2000) or rapidly emerging major economies (REMEs) (Gupta et al. 2012a), this study adopts a comparative perspective that facilitates a pair-wise collation of the institutional facets across emerging and developed economies, namely Finland and Russia.
Although the reliability of the scale developed by Busenitz et al. (2000) has been tested based on a sample of 303 students from Latvia, Bulgaria, and Hungary (Manolova et al.
2008), there are still concerns about the applicability of the items to emerging economies, due to the limited statistical goodness-of-fit of the indicators and calls for adjustment of the measurement instrument (Gupta et al. 2012 a, b).
Main contribution
The study contributes to the methodological discussion on the development of the measurement instruments capturing the effect that the institutional environment has on business resources, capabilities, strategy, and performance in emerging economies.
First, by building on previous findings and conducting a validity and reliability check based on a sample of real-life entrepreneurs, as opposed to the business students surveyed in previous studies (Gray and Cuevas 2005; Manolova et al. 2008; Gupta et al.
2012 a, b), the study extends the quality assessment of the CIPE construct. Second, through application of structural equation modeling, the study provides a thorough assessment of the construct invariance and fit of the single-country models. Hereby, it also contributes to the lack of cross-country studies dealing with emerging economies in the field of international entrepreneurship.
Furthermore, to our knowledge, this is the first study to test the CIPE construct in a non-homogeneous research setting including both an emerging and a developed economy.
The only other study that assessed the measure’s validity for the Russian institutional environment was published by Eunni and Manolova (2012), though the study was based on a survey of business students and focused on the BRIC context. Replication of this type of measurement assessment study provides an important contribution to measurement development by increasing the reliability of the research findings.
Based on a sample of 193 Russian and 122 Finnish SMEs, the results of a LISREL confirmatory factor analysis and a comparative study of the measure’s application suggest that the instrument should be adjusted in order to be used in the Russian context.
The assessment of the adjusted construct confirmed the validity of the instrument for emerging economies, though leaving some concerns, firstly, about the item’s theoretical conceptualization (narrow theoretical definitions), and, secondly, about invariance of the scale in case of further possible comparative studies. The results suggest that, despite the configural invariance in both countries, entrepreneurs in Finland and Russia do not interpret the construct in the same way. Thus, there was no metric invariance.
This is not a problem for the research per se, although it must be kept in mind that the scale is not generalizable in these two countries.
The development of a more rigorous measure that will shed light on the specific institutional features of emerging economies is encouraged. In order to counteract the potential discontinuances of the measure, the CIPE construct dimensions are treated as separate variables in all further studies included in the dissertation.
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4.3
Publication 3: The Institutional Environment for International Entrepreneurship in Russia: Reflections on Growth Decisions and Performance in SMEsOverall objective
The study goes beyond the assessment of the institutional environment influence in the early stages of the entrepreneurship process, and focuses on the growth of the entrepreneurial SMEs from emerging economies, taking into account both internationalization- and innovation-based growth strategies. It adopts neo-institutional theory and a dynamic capabilities view of a firm, and applies them in addressing the SMEs’ behavior in the growth stage. The study focuses on the Russian context.
The objective of the study is to identify the influence of the institutional environment for entrepreneurship on the internationalization and innovation proclivity and international and innovation performance of the SMEs. Hypotheses for testing the strategic behavior and performance of the SMEs are developed in the study.
Main contribution
The research findings suggest that the firms that have a higher level of entrepreneurial knowledge and capabilities are more likely to internationalize, though not necessarily achieve higher international performance. In order to achieve a higher performance in terms of innovation output and success in foreign markets, the firm should overcome the existing normative constraints related to the social attitudes to entrepreneurship in the home country, as well as consider the potential normative distance between the domestic and foreign target markets. Surprisingly, the regulatory dimension of the institutional environment did not provide a significant effect, neither on internationalization nor on innovation proclivity.
This study encompasses a nuanced view of the relationship between the firms’ behavior and the country-level institutional environment, including its regulatory, normative, and cognitive dimensions (Scott 2001). Following the findings of Publication 2, we rely on the country institutional profile for entrepreneurship measure, although we use its adjusted construct and treat regulatory, normative, and cognitive dimensions separately.
In contrast with the earlier research applying institutional theory in the context of SME internationalization, the study goes beyond the application of a single dimension of the three-pillar institutional framework (Shirokova and Tsukanova 2012) or aggregated measure utilization (Tsukanova and Shirokova 2012).
The study contributes to the theoretical pool of knowledge related to the effect of the institutional environment on the growth strategies in emerging economies, and thus addresses one of the dissertation objectives of developing a contextualized institution-based view of SME internationalization in emerging economies.
4.4
Publication 4: To Grow or Not To Grow: International Growth and Performance of Russian SMEs in the Context of a Local Institutional Environment for EntrepreneurshipOverall objective
The study examines the influence of the domestic institutional environment on the growth strategy choices of Russian SMEs and their subsequent performance in terms of sales growth and return on sales and assets. Building on the theoretical foundations of the Product – Market Growth Matrix and the sociological branch of neo-institutional theory, we construct a model to test the institutional determinants of growth strategy choices and the impact of growth strategy on firm performance.
Main contribution
The study examines Russian SMEs’ growth strategies from the perspective of the domestic institutional environment influence on international growth, and the growth strategy choice impact on firm performance measured in terms of realized growth (sales growth) and profitability.
All sampled firms were clustered, based on their growth aspirations, into four groups:
(1) Domestic Innovators, (2) Domestic Replicators, (3) International Innovators, and (4) International Replicators.
The analysis indicated that the cognitive component of the institutional environment affects SMEs’ proclivity to international-based growth (groups 3 and 4), while the normative component affect SMEs’ proclivity to innovation-based growth (groups 1 and 3). The performance analysis resulted in finding a disordinal interaction between growth cluster membership, knowledge-intensiveness, and regional location of the firm.
On average, middle and high knowledge-intensive firms achieve bigger sales growth, as well as higher returns on sales and assets in comparison with low knowledge-intensive firms.
Sales growth outcome is, in addition, dependent on the pursued growth strategy, as well
Sales growth outcome is, in addition, dependent on the pursued growth strategy, as well