Theoretical framework for the main empirical study

The results of the data analysis from both companies revealed that knowledge of organizational processes that firms used to acquire, shed and release export ex-pansion related resources influenced the interaction between market knowledge and organizational processes. Therefore, market knowledge competence was not only just realizing what knowledge a firm lacked about a market, but also the lacking organizational knowledge that limited a firm to acquire market knowledge in that specific market and learning and development of the export expansion ca-pabilities specific to a foreign market. Nevertheless, the experiential knowledge and the knowledge of customers’ needs were found to be the key organizational and market knowledge constituting the intangible resources to market knowledge competence. The interaction between organizational processes and market edge resulted in the development and acquisition of both these kinds of knowl-edge.

Further, the market knowledge competence of the firms was found to be posi-tively related to export expansion capabilities. Due to the interaction between market knowledge and organizational processes, the firms went through a process of choice and change of the processes towards knowledge sharing and organiza-tional adaptation to create new knowledge. When the firms’ structures were modi-fied to acquire and accommodate new knowledge, a co-evolutionary process of foreign market knowledge evolution and capability development followed. Thus, as said earlier, foreign market knowledge competence comprised not only of the knowledge creation related to the knowledge of the needs of customers and expe-riential knowledge, but also included the knowledge of the capabilities and the limits of the firms in the context of foreign operations.

In the preliminary theoretical framework as presented in Chapter 2 the specific knowledge belonging to organizational and the market knowledge were not then identified. This was identified through cross case analysis as the experiential

knowledge and the knowledge of customers’ needs. Please see Chapter 3.6.1 page 75 for a discussion of what specific organizational and market knowledge level knowledge contributes to market knowledge competence of SMEs from software industry.

Although all the four kinds of export expansion capabilities rose from experiential knowledge of the firm, for analysis purposes, capabilities were categorized as arising from either experiential knowledge or knowledge of customers’ needs.

From the analysis of case studies it is evidently clear that alliance management and the marketing planning and implementation capability required input from the previous as well as existing experiential knowledge of the firm in these areas.

Therefore, these two capabilities were categorized as arising from the experiential knowledge (see Figure 10). The proposed relationship between foreign market knowledge competence and the speed and success of export expansion is shown in Figure 10.

Figure 10. Theoretical framework for the main empirical part of the study.

It is also acknowledged that the other two capabilities of alliance learning and new product development indeed were developed by initial input from the exist-ing experiential knowledge in these areas; however, these capabilities required a continuous renewal and integration of learning through alliances about the new customer specific knowledge and then customizing it in the form of products.

Therefore the nature of these capabilities turned out to be more dynamic, and as

Contextual

more of the input in development of these capabilities was required on continual basis in order to upgrade them, alliance learning and new product development capabilities were considered as arising from customer knowledge (see Figure 10).

Further, the contextual factors as in the context of software development firms, were not either identified as well until the review of theories. Therefore were not mentioned in the preliminary framework of the study. The contextual factors were later identified as entrepreneurial orientation, learning orientation and the knowl-edge transfer mechanisms through cross case analysis. The contextual factors of a firm played a critical role in the smooth interaction between organizational proc-esses and market knowledge. It was found that firm-level knowledge transfer mechanisms, the orientation of the firms towards learning and the managements’

commitment to exports influenced export expansion capabilities.

To generalize the preliminary findings, the typical knowledge which were belong-ing to the organizational and the market knowledge, then the specific capabilities belonging to experiential knowledge and the knowledge of customers’ needs and the contextual factors to export expansion capabilities were used to formulate a theoretical framework. Furthermore, the export expansion capabilities were linked with the speed and success of export expansion. The dotted lines represent the key issues addressed so far in the theory and preliminary case study analyses. Further, specific export expansion capabilities were not then identified.

Based on the theoretical review of theories in Chapter 2, contextual factors that appeared significant from the preliminary review of literature and the preliminary findings of the case studies as the learning orientation and the management’s ori-entation towards and the firm-level knowledge transfer mechanism will be em-phasized. Further, concrete hypotheses regarding the relationship between export expansion capabilities and the speed and success of export expansion will be de-veloped in the next chapter.

The findings of the two comparative case studies are substantial enough to gener-alize for a larger sample of firms in the software development industry. However, the main purpose of the case studies was to understand the phenomenon of market knowledge competence by exploring the interaction between organizational proc-esses and market knowledge. It was recognized by both case companies that inter- and intra- organizational factors and mechanisms acted together, and the ways this interaction took place was influenced by the organizational learning processes at the firm level. The interpretive or adaptive ability of the firm further deter-mined which of the knowledge needed to be changed and which retained. The interaction of organizational processes and the available market knowledge will not be further discussed in this study.

3.8 Summary

The main aim of this chapter was to employ a preliminary research methodology to understand how interaction between organizational processes and market knowledge could influence market knowledge competence. To investigate this, it was considered important to explore what intangible resource constituted market knowledge competence in software development firms and what factors facili-tated/hindered market knowledge acquisition. For this purpose, the chapter started with a discussion of the case study research methodology and continued with a consideration of the selection procedure of the case companies followed by an analysis of the data collection method and the validity and reliability of the study.

Next an overview of the export expansion behaviour of two of the case companies was given. The overview presented a general discussion of how the companies acquired and utilized market knowledge to expand exports. This was followed by a specific discussion pertaining to the two proposed propositions. Here, market knowledge competence and export capabilities were specifically emphasized.

In emphasizing market knowledge competence, attention was paid to the interac-tion between organizainterac-tional processes and market knowledge. The investigainterac-tion of the relationship between organizational processes and market knowledge inter-action revealed two important insights. First, export expansion appeared as an organizational adaptation process of the structures and processes within the firm, whereby the firm acquired knowledge needed for the expansion of exports. Sec-ond, the interaction directly traced to those factors which probably promoted knowledge acquisition and transfer from the market to the firm. Regarding the second insight, the learning orientation of the firm towards maximizing market knowledge internalization was one of the critical factors facilitating market know-ledge competence. The adaptation of the firm’s processes to accommodate market knowledge underlined the fact that foreign market knowledge competence was not only knowing what knowledge the firm lacked about a market, but also the learning of capabilities and limits of the firm with regards to market knowledge acquisition in that specific market. Two kinds of knowledge: experiential and customers needs were found to critically constitute market knowledge compe-tence for export expansion.

Supporting the theoretical ideas related to capability development, an analysis of the relationship between market knowledge competence and export expansion capabilities confirmed a positive relationship. New combinations of knowledge and the reconfiguration of firm-specific assets for marketing, selling and coordi-nating partnerships and international operations resulted in export expansion ca-pabilities of new product development, alliance learning and management as well

as market planning and implementation. These capabilities were useful not only for the existing market but also for creating opportunities in new markets. Due to the dynamism of the interaction process and the continuous learning approach, the firms were able to regenerate and reconfigure export expansion capabilities ac-cording to specific market situations.

In the end, the findings from the preliminary empirical part of the study were used to develop a comprehensive theoretical framework for the main empirical part. In this comprehensive framework, contextual factors, knowledge belonging to the organizational and the market knowledge and export expansion capabilities were included. Moreover, the relationship between export expansion capabilities was linked to the main dependent variable of the study. Further discussion of each of the export expansion capabilities and their link to the dependent variable of the study was left for the next chapter.

4 MARKET KNOWLEDGE COMPETENCE AND