The Role of Networks in Overcoming SME Internationalization Challenges : A Comparative Case Study of Pharmaceutical Companies from Developed and Emerging Economies

Abstract

This thesis examines the internationalization challenges faced by two pharmaceutical small and medium-sized enterprises (SMEs) from different economic backgrounds and their network utilization to overcome these challenges. Company A, from Finland, represents a developed economy, whereas Company B, from Mongolia, represents an emerging economy. This study employes a qualitative, comparative case study approach to explore how different types of networks (social, business, institutional, and digital networks) used to address internationalization challenges (regulatory and institutional challenges, financial and resource constraints, lack of foreign market knowledge and experience, market-specific challenges, cultural and communication differences, and technological and digitalization challenges). The primary data was collected through semi-structured interviews with two case companies' key managers, which provided a deep understanding of the pharmaceutical SMEs' internationalization challenges and the network utilization to overcome those challenges.

The findings show that SMEs from developed economies benefit from a diverse and integrated network ecosystem. This integrated network utilization helps them address internationalization challenges more effectively. In contrast, SMEs from emerging economies depend heavily on social networks and lack strong institutional and digital networks. This hinders their success in the international market. The study contributes to international business literature with findings of how SMEs' home-country economic backgrounds shape the challenges they face in internationalization. Additionally, this research found that networks play a vital role in overcoming these challenges. SMEs from developed economies encounter fewer internationalization challenges compared to SMEs from emerging economies. Companies aiming to enter new markets should strategically combine social, business, institutional, and digital networks to tackle these challenges. Furthermore, governments should improve institutional support systems for their SMEs for sustainable international growth.