1 
 
Munkhjargal Badamgarav 
The Role of Networks in Overcoming SME 
Internationalization Challenges: 
A Comparative Case Study of Pharmaceutical Companies from Developed 
and Emerging Economies 
 
 
 
 
 
 
School of Marketing and Communication 
Master’s Thesis  
International Business 
 
 
Vaasa 2025 
2 
UNIVERSITY OF VAASA 
School of Marketing and Communication 
Author: Munkhjargal Badamgarav 
Title of the thesis:  The Role of Networks in Overcoming SME Internationalization 
Challenges: A Comparative Case Study of Pharmaceutical 
Companies from Developed and Emerging Economies  
Degree: Master of Science in Economics and Business Administration 
Degree Programme: International Business 
Supervisor: Minnie Kontkanen 
Year: 2025 Pages: 98 
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. 
 
 
 
 
 
 
 
 
 
KEYWORDS: (internationalization challenge, SMEs, network, pharmaceutical, Mongolia, 
social network, business network, institutional network, digital network) 
 
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Contents 
1 Introduction                 6 
1.1 Research background, significance of SMEs, and their internationalization 6 
1.2 Research gap 9 
1.3 Research objectives of the study 11 
1.4 The structure of the study 12 
2 Literature review              14 
2.1 Internationalization theories 14 
2.2 SMEs' internationalization and its challenges 18 
2.2.1 The Social Network 28 
2.2.2 The Business Network 29 
2.2.3 Institutional Network 30 
2.3 The role of digital platform networking in firms' internationalization 31 
2.4 The summary of theoretical background 33 
3 Research methodology             35 
3.1 Qualitative case study 35 
3.2 Case selection criteria and data collection methods 38 
3.2.1 Semi-Structured Interviews 39 
3.2.2 Secondary Data 41 
3.3 Data Analysis 42 
3.4 Reliability and Validity 43 
4 Findings               45 
4.1 The internationalization challenges of the firms in pharmaceutical sector 45 
4.2 Case company A 46 
4.2.1 Background of Company A and its internationalization activities 47 
4.2.2 The networking process for Company A's internationalization. 50 
4.2.3 The types of networks 51 
4.2.4 Company A’s internationalization challenges 56 
4.3 Case company B 59 
4.3.1 Background of Company B and its internationalization activities 59 
4 
4.3.2 The networking process for Company B’s internationalization 62 
4.3.3 The types of networks 63 
4.3.4 Company B’s internationalization challenges 64 
4.4 Comparison of case companies 68 
5 Conclusions               79 
5.1 Summary of findings and theoretical contributions 79 
5.2 Managerial implications 82 
5.3 Limitations and directions for future research 84 
References                88 
Appendices                98 
Appendix 1: Statement on the Use of AI Tools 98 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5 
Tables 
 
Table 1. Review articles for SMEs' internationalization challenges.  
Table 2. Interviewees' background of the case companies.      
Table 3. Secondary sources of the two case companies.  
Table 4. Company A’s internationalization activities. 
Table 5. Company A’s key people's experience and international networking. 
Table 6. Company B’s key people's experience and international networking. 
Table 7. Two case companies' background comparison. 
Table 8. Case companies' types of network and utilization in their internationalization. 
Table 9. Comparison of Internationalization Challenges Faced by Case Companies. 
Table 10. The importance of different types of network utilization for 
internationalization challenges. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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1 Introduction 
This chapter outlines the rationale for the study, starting with the background and 
significance of small and medium-sized enterprises (SME) internationalization, the 
challenges faced by SMEs' internationalization, and the role of networks in 
internationalization. It then identifies existing research gaps and key problems 
addressed in this study. Finally, the research objectives are presented, followed by an 
overview of the thesis structure. 
 
 
1.1 Research background, significance of SMEs, and their 
internationalization 
Firms' internationalization has been a focus of research for many decades, and scholars 
have examined firms' internationalization from various perspectives (Cavusgil & Knight, 
2015). In particular, the internationalization of SMEs has garnered attention over the 
past few decades due to their substantial economic contributions to countries' 
economic development (Gamage et al., 2020; Alsuwaidi et al., 2024). SMEs comprise 
more than three-quarters of all business entities worldwide. That represents 
approximately 90% of businesses and employs around 60% of the global workforce, 
which reveals the crucial role in global economic development (Gamage et al., 2020; 
Doojav et al., 2020). Given that SMEs are essential to a country's economic development, 
their successful internationalization in the global market is crucial (Chaldun et al., 2024). 
To better understand the internationalization of SMEs, firstly, this research examines 
how internationalization has been conceptualized in the literature over time by various 
scholars. 
 
Johanson and Vahlne (1977) provided the most cited definition of internationalization, 
describing it as a firm's gradual process of increasing its commitment to foreign markets 
by acquiring experiential knowledge and reducing uncertainty. Johanson and Mattsson 
(1988) defined internationalization from a network perspective, which is a process that 
7 
occurs through the development and management of relationships and networks, 
where firms depend on partnerships and interactions to enter and operate in foreign 
markets. Knight and Cavusgil (1996) explained internationalization as a process of firms 
achieving significant international reach by leveraging innovative capabilities and global 
market opportunities. According to Chandra et al. (2021), internationalization refers to 
a strategic process of firms expanding their operations beyond national borders by 
leveraging innovation, networks, and market opportunities while contributing to 
economic growth. Additionally, “SME internationalization brings numerous growth 
prospects by facilitating access to foreign markets and expanding operational scale” (Acs 
et al., 1997). The following part explains why the SMEs' internationalization is important 
and what the triggers are for SMEs to enter foreign markets.  
 
According to Paul et al. (2017), SMEs contribute to global economic growth by 
introducing new and innovative products and services. It improves market competition 
across industries. Moreover, SMEs' flexibility, agility, and ability to adapt to new markets 
enable them to enter foreign markets rapidly. SMEs’ internationalization fosters the 
knowledge transfers, global technology development, and innovative practices 
(Steinhäuser et al., 2020). According to Stuart (2011), SMEs play a positive role in 
decreasing poverty and income inequality, providing employment opportunities, 
developing innovation and technological advancements, and addressing various social 
challenges. SMEs utilize local resources in their manufacturing processes, which 
contributes to local economic growth by generating financial turnover, establishing 
supply chain networks, and creating employment opportunities (Asare et al., 2015). 
Therefore, SMEs success brings opportunities to increase revenue, enhance innovation, 
build global brand recognition, and access valuable networks and resources (Knight & 
Cavusgil, 2004; Paul et al., 2017; Johanson & Vahlne, 2009), while also allowing countries 
to benefit economically through job creation, export income, and increased tax 
revenues (Gamage et al., 2020). 
 
8 
However, while globalization and internationalization opportunities provide significant 
advantages to the firms, they also pose the risk of market saturation because of 
international competitors, such as multinational enterprises (MNEs). This trend can 
bring disadvantages to domestic SMEs without specific support to protect them against 
MNEs (Lis et al., 2012). Specifically, when the domestic market is small and unrestricted, 
allowing free entry to foreign MNEs without protective policies, internationalization 
becomes a survival strategy for SMEs.  
 
SMEs' internationalization journey is a complex process due to the numerous challenges 
they face, which can hinder their chances of successfully expanding internationally (Paul 
et al., 2017; Johanson & Vahlne, 2009). Not all SMEs succeed in the global market or 
benefit from global scalability. The critical challenges that hinder SMEs' 
internationalization success include resource constraints (Bellone et al., 2010, as cited 
in Paul et al., 2017), market knowledge gaps (Freeman et al., 2012, as cited in Paul et al., 
2017), operational challenges (OECD, 2009, as cited in Paul et al., 2017), institutional 
barriers (Majocchi & Zucchella, 2003, as cited in Paul et al., 2017), competitive pressures 
(Coviello & Munro, 1997, as cited in Paul et al., 2017), and cultural and social differences 
(Hofstede, 1984, as cited in Paul et al., 2017). According to Chandra et al. (2021), 
internationalization challenges are contextual and vary across firms.  Depending on their 
size, industry, and the institutional and economic conditions of their country of origin, 
firms encounter different challenges. 
 
For example, SMEs from emerging economies face greater challenges compared to 
those from developed economies due to factors such as institutional infrastructure 
development, access to financing, government support, and networking opportunities 
(Ahimbisibwe et al., 2020; Cardoza et al., 2016; Chandra et al., 2021; Ciravegna et al., 
2014; Kiss et al., 2012; Narooz & Child, 2017). Moreover, SMEs from emerging 
economies often face more significant challenges. The reason is mostly countries' 
underdeveloped infrastructure, lower living standards, slower economic growth, a 
9 
weaker legal business environment, and reduced government support (Gamage et al., 
2020).  
   
Networks are important for a SME's successful internationalization, and building a 
network is a critical strategy for addressing internationalization challenges (Chetty & 
Holm, 2000). Additionally, in resource-constrained and uncertain environments, 
network utilization can significantly decrease market entry challenges and increase the 
chance of success (Johanson & Mattsson, 1988; Musteen et al., 2014). The 
internationalization success of SMEs largely relies on their networks (Steinhäuser et al., 
2020). Therefore, firms are increasingly prioritizing the development of various types of 
networks to access essential resources and market knowledge. It provides an 
opportunity to reduce uncertainties in foreign markets and seize international 
opportunities effectively (Han et al., 2024).  
 
 
1.2 Research gap 
Many studies have examined the internationalization of SMEs from a network 
perspective in both developed and emerging economies, often separately. Most 
research studies have focused on the internationalization of SMEs and their challenges 
and opportunities in developed economies (Gamage et al., 2020). However, studies on 
emerging economies are increasing. Because such studies represent diverse contexts 
with unique challenges, this attracts researchers to investigate (Child et al., 2022). For 
example, Sanyal et al. (2019) explored the internationalization challenges of SMEs in 
emerging economies from a firm’s network perspective. Johanson et al. (2024) and 
Goncalves et al. (2024) examined how SMEs in developed economies strategically utilize 
knowledge and networks for effective internationalization.  Ciravegna et al. (2014) 
examined the differences in network utilization during internationalization between a 
developed economy and an emerging economy, one of the few studies that compares 
networking strategies across different economies. However, their study focused on the 
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high-tech industry, which differs from the industry type of the case firms examined in 
this research. 
 
Despite previously published extensive research on SMEs' internationalization and the 
role of networks, significant gaps remain. Particularly in the comparative analysis of 
SMEs in developed versus emerging economies across a broader range of industries 
(Child et al., 2022; Dekel-Dachs et al., 2021; Narooz & Child, 2017). As stated previously, 
most existing studies have examined SMEs' internationalization in a network 
perspective separately, focusing solely on developed or emerging economies. Such 
studies did not address the primary differences between different economic contexts of 
firms. This lack of comparative analysis, especially in the networking context, highlights 
a crucial gap in the research. Therefore, there is a need to enhance understanding by 
examining and comparing the SMEs internationalization and its challenges for SMEs 
from both developed and emerging economies within the framework of networking. 
 
Additionally, research on SMEs' internationalization often focuses on broad industries, 
overlooking challenges within the specific sector, such as the pharmaceutical sector. 
SMEs in the pharmaceutical sector face unique challenges, such as strict international 
regulatory compliance and extended product approval timelines, that require strong 
networking capabilities from the firms in the global market (Grant, 2024). Compared to 
other sectors, SMEs in the pharmaceutical sector encounter greater challenges in 
internationalization due to institutional voids, regulatory complexities, liability of 
foreignness, limited resources, and geopolitical constraints (Dekel‑Dachs et al., 2021). 
This industry is unique due to its importance in public health, contribution to innovation, 
and complex global regulatory process (Grant, 2024; Healthtech Finland, 2023; Takawira 
& Pooe, 2024; Waktole & Negera, 2024).  Therefore, it is crucial to focus on the 
internationalization challenges faced by SMEs in the pharmaceutical sector; moreover, 
the absence of comparative studies across different economies in this sector highlights 
the most critical research gap. 
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Lastly, while many findings focus on the importance of networks in facilitating firms' 
successful internationalization, most studies generalize the concept of networking 
without distinguishing among different types of networks (Han et al., 2024; Magni et al., 
2021). For instance, Han et al. (2024) systematically review literature on networks and 
identify a crucial oversight. Studies often treat networks as identical and neglect the 
types, functions, or actor roles. This gap limits theoretical clarity and practical guidance, 
as decision-makers and managers cannot determine which network types are most 
effective for addressing specific internationalization challenges. Due to these research 
gaps and the need for such studies, the following section explains the objectives of this 
research.  
 
 
1.3 Research objectives of the study 
Based on the previous discussion and the existing research gaps, the main objective of 
this research is outlined, along with three additional sub-objectives. 
 
Main objective 
To explore and compare how pharmaceutical SMEs from emerging and developed 
economies utilize networks to overcome the internationalization challenges of entering 
foreign countries. 
 
Sub objectives 
(1) To identify and compare the types of internationalization challenges the SMEs 
from different economies encounter. 
(2) To identify the different types of networks utilized by these SMEs. 
(3) To empirically explore how Finnish and Mongolian pharmaceutical SMEs utilize 
different types of networks to overcome internationalization challenges.  
12 
This research will focus on the internationalization challenges SMEs face at the market 
entry stage, as this is the most difficult period for establishing a foundation for successful 
business abroad. The networking plays a vital role in the early stages of 
internationalization for  SMEs, by providing essential resources, market knowledge, and 
connections that effectively facilitate entry into new markets (Musteen et al., 2014; 
Ojala, 2009; Steinhäuser et al., 2020; Galkina & Chetty, 2015).  
The case firms examined in this research are pharmaceutical SMEs in Finland and 
Mongolia offering research and development (R&D) based healthcare products that aim 
to expand their operations into foreign countries. The justification for selecting Finland 
and Mongolia as the focus countries in this study is based on their contrasting economic 
contexts. Finland represents a developed, innovation-driven economy with well-
established institutional support for firms’ internationalization, whereas Mongolia 
represents an emerging economy with a less developed international business 
infrastructure. Additionally, both countries have relatively small populations and limited 
local market sizes, with fewer pharmaceutical firms operating, making them suitable for 
a comparative analysis of SMEs in this sector. Additionally, the unique nature of the 
highly regulated pharmaceutical sector, which faces many international challenges 
compared to common industrial sectors, makes this research particularly noteworthy.   
  
 
1.4 The structure of the study 
This thesis is divided into five key chapters: introduction, literature review, research 
methodology, findings, and conclusions.  
The first chapter presents the main research topic and the importance of SMEs and their 
internationalization strategies. It describes the background of this research and the 
growing role of networks in firms' internationalization. The chapter also identifies a 
research gap and then outlines the research goals and objectives. 
13 
The second chapter offers a comprehensive overview of the literature. It starts with key 
theories on internationalization, such as the Uppsala model, network theory, and the 
"born globals," which serve as the theoretical foundation for this research. The chapter 
then discusses the challenges SMEs face in internationalization and different types of 
networks, such as social, business, and institutional networks. Additionally, it highlights 
the growing importance of digital platforms for firms' internationalization.  
The third chapter covers research methodology. The study used a qualitative, 
comparative case study approach to examine two pharmaceutical SMEs. The chapter 
details the selection of these two cases, data collection via semi-structured interviews 
and secondary sources, and how the data were analyzed with thematic and cross-case 
analysis.  
 
The fourth chapter presents the research findings. It begins by discussing common 
challenges faced by SMEs during their internationalization and provides detailed 
descriptions of each company's case. The chapter covers Company A (Finland) and 
Company B (Mongolia)'s internationalization backgrounds, the types of networks they 
used, and their internationalization challenges. It concludes with a comparative analysis 
highlighting key similarities and differences in network utilization and 
internationalization challenges. 
 
The final chapter concludes the main findings. It emphasizes this research’s contribution 
to existing theories. The chapter also includes managerial implications. Finally, it 
acknowledges the research limitations and proposes directions for future research. 
 
 
 
 
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2 Literature review 
This chapter provides a comprehensive review of the key theoretical and empirical 
studies related to the internationalization of SMEs. The primary objective is to establish 
a foundation for understanding the challenges that SMEs face during the initial stage of 
internationalization, as well as the crucial role of networks and relationships in 
addressing these challenges. 
 
The review starts with an overview of established internationalization theories, 
including the network perspective. It then focuses on the primary internationalization 
challenges and the role of networks in overcoming these challenges. The chapter also 
investigates various types of networks, such as social, business, institutional, and digital, 
and evaluates each type of network's advantages and disadvantages in facilitating firms' 
internationalization. 
 
 
2.1 Internationalization theories 
Research articles related to international business and the internationalization process 
of firms have captured scholars' interest since the 1960s (Steinhäuser et al., 2020) and 
have served as a primary strategic guide for many companies. The Uppsala theory, the 
most cited internationalization theory, was proposed by Johanson and Vahlne in 1977. 
This model has undergone several revisions to adapt to the ever-changing global 
business landscape. The original theory was developed based on observations of 
traditional Swedish manufacturing firms expanding their operations into foreign 
markets. The main idea is that a company's internationalization is a gradual process and 
follows a general path. This is a complex process that requires significant costs, 
resources, knowledge, expertise, and time from the firms. Due to the high uncertainty 
in international markets, firms generally take many small steps to enter foreign markets. 
The model explains the internationalization process using change and state variables, 
reflecting four decades of shifts in global business (Cisneros-Reyes, 2021). 
15 
 
The original Uppsala theory emphasizes the concept of psychic distance between home 
and host countries (Johanson & Vahlne, 1977). The theory presents that a firm's 
internationalization is a gradual and incremental process driven by experiential learning 
and knowledge development. Firms enter foreign markets in stages. The process begins 
with low-commitment modes, such as exporting, and then increases commitment to 
higher modes, like foreign direct investment, as companies gain more experience in 
foreign markets. Firms are more likely to expand into countries with lower psychic 
distance, as these markets present less external uncertainty. Consequently, they prefer 
to enter markets that are similar to their home market. The perceived psychic distance 
decreases when a firm acquires experience and knowledge in a foreign market 
(Johanson & Vahlne, 2009). However, the Uppsala model has been criticized for not 
explaining the early and rapid internationalization steps of international new ventures 
(INVs) and born globals (BGs). It primarily focuses on the gradual steps taken by larger 
firms, although it remains relevant for explaining the internationalization challenges 
that SMEs face (Paul et al., 2017). Despite its limitations in explaining the 
internationalization processes of all business entities, including traditional 
manufacturing firms, INVs, and BGs, many new internationalization theories have been 
developed based on the Uppsala theory (Arvidsson & Arvidsson, 2019). 
 
Research on BGs has significantly grown due to the increasing involvement of these 
firms in international operations (Sharma & Blomstermo, 2003). Unlike the traditional 
model of gradual internationalization, the BG theory suggests that certain firms (digital 
or knowledge-based industries) can operate internationally from their inception. Driven 
by rapid technological advancements and globalization, many firms, particularly SMEs, 
skip the gradual internationalization process that typically involves starting in nearby 
markets. Instead, they entered the global market from the inception, and these firms 
are collectively known as INVs and BGs (Sharma & Blomstermo, 2003). INVs and BGs do 
not have to be large firms; for example, a BG can be an SME that operates in multiple 
countries shortly after establishment (Knight & Cavusgil, 1996). 
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There are several approaches to understanding firms' internationalization. However, 
this thesis focuses on the role of networks in addressing the challenges of 
internationalization. Therefore, the following sections will explore the concept of 
networks and their significance in overcoming these challenges. Another important 
internationalization theory is network theory, introduced by Johanson and Mattsson in 
1988. This theory suggests that firms utilize different types of networks to enter new 
markets abroad. In contrast to the Uppsala model, network theory emphasizes how 
networks enable rapid internationalization (Musteen et al., 2014; Steinhäuser et al., 
2020; Galkina & Chetty, 2015). This approach underscores how firms leverage 
relationships and connections to access market resources, knowledge, and 
opportunities that accelerate their entry into foreign markets (Ojala, 2009). 
 
According to network theory, markets are viewed as interconnected networks of 
relationships. A firm's success in internationalization is influenced by its ability to 
establish, develop, and maintain meaningful connections with other actors within the 
network (Johanson & Mattsson, 1988). These actors typically include key stakeholders 
such as suppliers, customers, and business partners, and relationships with them 
facilitate obtaining resources, knowledge, and opportunities (Chetty & Holm, 2000; 
Costa et al., 2016). Firms' internationalization involves leveraging their network 
advantages, with partner companies serving as bridges to other networks in the 
international market. Johanson and Vahlne (2009) noted that firms are typically situated 
within networks of other firms; their relationships enable them to obtain valuable 
market information and knowledge necessary for internationalization. Consequently, 
companies build and manage their positions within these networks to access resources 
controlled by firms in other markets. This network comprises firms that mutually benefit 
each other and provide access to shared resources (Johanson & Mattsson, 1988). The 
strength of these relationships relies on mutual trust, knowledge acquisition, and 
commitment (Paul et al., 2017).  
 
17 
According to Ojala (2009), networks are important in facilitating firms' successful 
internationalization. Firms may establish new connections proactively or leverage 
existing ties when opportunities arise. When the seller initiates and manages the 
networking, it is referred to as active networking; conversely, when the buyer starts the 
process, it is termed passive networking (Johanson & Mattsson, 1988). Both parties can 
benefit from active networking by learning from one another, acquiring new knowledge, 
and using this knowledge to enter foreign markets (Ojala, 2009). Due to limited 
resources and capabilities, SMEs' internationalization heavily depends on their network 
relationships with partners abroad (Paul et al., 2017). Therefore, networking is essential 
for the internationalization of SMEs. 
 
Johanson and Mattsson (1988) proposed three key propositions underpinning the 
network approach: 
 
(1) Companies rely on relationships to obtain resources and enter new markets. 
(2) Relationships function as external market assets that require time and effort to 
cultivate. 
(3) Connections among firms are dynamic and interdependent, fostering broader 
network effects. 
 
The network approach has proven particularly applicable to SMEs, whose 
internationalization often relies heavily on their connections, relationships, and 
networks. Building strong connections in both home and host countries is important, as 
these networks serve as bridges to foreign markets and help overcome the liabilities of 
outsiders, such as the inability to gain access to key networks in foreign markets 
(Johanson & Vahlne, 2009). For SMEs operating in culturally distant or highly 
competitive markets, local networks in host countries are especially critical for managing 
risks and obtaining operational support (Håkansson & Ford, 2002). 
 
18 
Despite its advantages, the network approach has limitations. Building and maintaining 
networks is a time-consuming process, and it does not always have positive outcomes. 
Trust, compatibility, and mutual benefit are essential for successful collaboration, and 
their absence can lead to conflict or inefficiencies (Carson, Gilmore, & Rocks, 2004). 
Furthermore, networks are dynamic, and they evolve with firms' growth or markets' 
change (Halinen & Törnroos, 1998). 
 
This subchapter on internationalization theories focuses on the conceptual foundation 
for addressing the main research objective of how SMEs from developed and emerging 
economies utilize different types of networks to overcome internationalization 
challenges. By reviewing past and current internationalization theories, such as the 
Uppsala model, traditional network theory, BG theory, and newer network perspectives, 
this section presents the mechanisms of SMEs’ internationalization and the role of 
networks in that process. Including these theories is important because it helps clarify 
how and why SMEs internationalize. It links this research to popular theories and ideas 
in the field of internationalization, demonstrating that the companies' 
internationalization is not random. The theories highlight the reasons and motives 
behind firms' internationalization and how they utilize different types of networks to 
overcome international challenges. These links are explored in more detail in the 
empirical part of the study. 
 
 
2.2 SMEs' internationalization and its challenges  
In today's globalized world, research on SMEs' internationalization is crucial due to their 
significant contributions to economic development (Knight & Liesch, 2016; OECD, 2019).  
Despite their smaller scale, SMEs offer several advantages. Those including their ability 
to contribute to economic development through job creation and innovation (Pavitt et 
al., 1987). Furthermore, SMEs play a crucial role in poverty reduction by generating new 
job opportunities, technological capabilities, innovative product development, and local 
revenue generation (Arudchelvan & Wignaraja, 2015). 
19 
 
The latest 12 review papers published from 2017 to 2025 summarize the possible 
challenges that SMEs encounter while internationalizing into different countries. The 
most common words to describe firms' challenges for internationalization are barriers, 
problems, difficulties, restrictions, uncertainties, risks, and constraints in these research 
articles. Therefore, based on the context and focus of the paper, each reviewed article 
refers to internationalization challenges using different terms. However, this review 
focuses more on the research articles that use the word “challenge” to describe the 
difficulties firms must overcome or adapt to during internationalization. The following 
table summarizes the main findings of all 12 review papers regarding internationalization 
challenges.  
 
20 
Table 1. Review articles for SMEs' internationalization challenges. 
Author and 
year 
Number 
of 
reviewed 
articles 
List of the challenges found from the reviewed articles Economic 
background for 
the reviewed 
firms 
Recommendations related to network how 
to mitigate the internationalization 
challenges 
Paul, J., 
Parthasarathy, 
S., & Gupta, P. 
(2017) 
211 
articles 
(1980 - 
2016) 
Macro problems (External institutional barriers, regulatory issues, economic environment, weak 
trade policies, unfavorable exchange rates). 
Micro problems (Resource constraints, lack of international experience, knowledge and 
experience barriers, financial limitations). 
Internal problems (Limited managerial capacity, lack of export experience, weak financial 
resources, knowledge gaps) and external problems (foreign market regulations, trade 
restrictions, lack of local market understanding). 
 
Other challenges 
Human resource management issues (difficulty in recruiting and retaining talent with 
international experience), export marketing challenges (adapting products to international 
markets, branding difficulties, weak distribution networks), and inadequate social capital 
resources (weak networks and alliances in foreign markets). 
SMEs from both 
developed and 
emerging 
economies 
were reviewed, 
but the exact 
number is not 
specified 
• Leveraging networks: Build relationships 
with international partners and leverage 
trade associations. 
• Utilizing government support: Take 
advantage of trade policies, export 
incentives, and institutional support 
programs. 
• Enhance market knowledge: Invest in 
market research, understand cultural 
differences, and comply with international 
regulations. 
Kahiya, E. T. 
(2018) 
100  
articles 
(1960-
2016) 
Knowledge and experience: Lack of international market knowledge, inadequate/untrained 
personnel for exporting,  difficulty in gathering foreign market data, Lack of export marketing 
research, lack of international business experience 
Procedural barriers: Difficulties in meeting product quality/packaging requirements, complex 
export procedures and documentation, challenges in locating foreign distributors/agents, 
communication problems with overseas customers, Shipping and logistics challenges, payment 
delays and collection difficulties 
Resource barriers: Limited working capital to finance exports, high market development costs, 
lack of financial assistance for exporters, high transportation/insurance costs, lack of production 
capacity to meet export demand, high costs of adapting products for foreign markets, Inability to 
offer after-sales services abroad 
Exogenous barriers (External to the firm): Strong competition in foreign markets, high tariff and 
non-tariff barriers, exchange rate risks and fluctuations, political and economic instability in target 
Developed 
economies – 60 
Emerging 
economies - 40 
• Building networks and partnerships  
• Engaging in strategic alliances with local 
firms  
• Enhancing export support programs 
through government agencies, embassies, 
and trade missions. 
• Using export intermediaries to navigate 
complex regulations. 
• Developing local presence through 
subsidiaries or partnerships to adapt 
products and marketing strategies. 
21 
markets, unfavorable home country regulations and policies, cultural differences and consumer 
preferences, Institutional and legal barriers in host markets 
Chandra, A. A., 
Paul, J., & 
Chavan, M. 
(2019) 
65 
articles 
(2000-
2019) 
Institutional challenges: Weak government support, inefficient legal and regulatory frameworks, 
rigid trade policies, bureaucratic red tape, and a lack of export promotion policies. 
Financial challenges: Limited access to financing, high transaction costs, and expensive export 
licensing and compliance fees. 
Knowledge and experience challenges: Lack of international market knowledge, poor managerial 
competence, and limited information on foreign trade opportunities. 
Geographical and Infrastructure Barriers: High transportation and logistics costs, poor 
infrastructure (ports, roads, and communication networks), and limited connectivity to global 
markets. 
Competitive challenges: Intense competition from foreign firms, Limited economies of scale for 
international competition. 
Cultural and psychic distance challenges: Language and cultural differences, difficulty in adapting 
products to different consumer preferences, limited networks and relationships in foreign 
markets 
Developed 
economies – 40 
Emerging 
economies - 25 
• Develop international partnerships and 
alliances to overcome resource 
constraints. 
• Encourage SMEs to participate in 
business networks and industry clusters to 
access resources and knowledge. 
• Strengthen ties with foreign distributors, 
customers, and suppliers. 
Sanyal, S., 
Hisam, M. W., 
& Baawain, A. 
M. S. (2019). 
30-40 
articles 
(1977-
2023) 
Resource constraints: Lack of financial resources, market knowledge, and skilled labor. 
Regulatory complexities: Bureaucratic hurdles, trade policies, and unpredictable policy changes 
in emerging markets. 
Cultural differences: Differences in business practices, language barriers, and consumer behavior. 
Market specific challenges: Lack of infrastructure, volatile economic conditions, and legal 
uncertainties. 
Competitive pressures: Difficulty in competing with established multinational corporations. 
Knowledge gaps: Limited understanding of foreign markets and lack of access to international 
networks. 
Entry barriers: Difficulty in forming local partnerships or gaining consumer trust. 
Technological limitations: Limited digital capabilities and difficulty in adapting to technological 
advancements. 
All emerging 
economies  
• Developing strategic partnership and 
alliance programs: Governments and 
industry associations should create 
initiatives to facilitate SME partnerships 
with local and global firms. 
• Proceeding knowledge transfer 
mechanisms: Encourage workshops, 
training, and mentorship programs to 
enhance knowledge-sharing between 
SMEs and established firms. 
Chandra, A. A., 
Paul, J., & 
65 
articles 
Internal Barriers:  
Human capital constraints (Lack of skilled workforce, Limited managerial competence, 
Inadequate international business knowledge), Resource Poverty (Limited access to financial 
All emerging 
economies  
• SMEs should leverage business networks 
to access foreign markets. 
• Engage in trade associations and 
international partnerships. 
22 
Chavan, M. 
(2020). 
(2007-
2017) 
resources, Poor technological capabilities, Limited innovation and R&D capacity), Product Quality 
Issues (Inability to meet foreign quality standards, Poor adaptation to foreign consumer 
preferences, Lack of branding and differentiation strategies), Managerial Capabilities (Lack of 
experience in global markets, Inadequate risk management strategies, Low levels of 
entrepreneurial orientation). 
 
External Barriers: 
Currency and transactional barriers (exchange rate risks, high transaction costs for cross-border 
payments, vomplex import/export procedures), government and institutional barriers 
(bureaucratic red tape in export processes, weak government support for SMEs, unfavorable 
trade policies and tariffs), socio cultural barriers (cultural differences in consumer behavior, 
language barriers affecting communication with foreign buyers, limited networking 
opportunities), market conditions and competition (high competition from established foreign 
firms, market fragmentation in developing economies, lack of access to global distribution 
networks). 
• Develop relationships with foreign 
distributors and suppliers. 
Naradda 
Gamage, S. K., 
Ekanayake, E. 
M. S., 
Abeyrathne, G. 
A. K. N. J., 
Prasanna, R. P. 
I. R., 
Jayasundara, J. 
M. S. B., & 
Rajapakshe, P. 
S. K. (2020).  
110 
articles 
(1990 - 
2020) 
Examined global challenges faced by SMEs in the context of economic globalization include: 
market competition, global capital and economic crises, information communication technology 
(ICT), the emergence of multinational corporations (MNCs), transnational corporations (TNCs), 
international terrorism and religious conflicts, international trade wars, and international 
dumping. 
SMEs from both 
developed and 
emerging 
economies 
were reviewed, 
but the exact 
number is not 
specified 
• Networking and collaboration: Building 
relationships with MNCs, universities, and 
industry partners to access resources. 
Alsuwaidi, F., 
Raziq, M., & 
Batool, U. 
(2024). 
19 
articles 
(2007-
2023) 
Internal barriers: 
Limited resources (financial constraints, high internationalization costs, lack of managerial skills), 
knowledge and information gaps (lack of awareness of foreign markets, limited experience in 
handling global operations, inability to identify market opportunities), credibility and reputation 
Developed 
economies – 11 
Emerging 
economies - 8 
• Engage with embassies, trade 
representatives, and foreign investment 
agencies for market intelligence. 
• Participate in trade fairs and networking 
events to build relationships. 
• Enhance digital presence to improve 
visibility in global markets. 
23 
challenges (difficulty in establishing trust with foreign buyers, weak brand presence in global 
markets, low recognition among international stakeholders). 
 
External barriers: 
Regulatory and Institutional Barriers (Complex trade policies, bureaucratic red tape in foreign 
markets, high tariff and non-tariff barriers) 
Market entry and competition challenges: Strong competition from established multinational 
corporations (MNCs); difficulty in forming partnerships with foreign distributors; barriers related 
to product adaptation and localization. Cultural and Communication Barriers: Language 
differences; cultural misalignment affecting business negotiations; difficulty in networking with 
key players in foreign markets. 
• Use online trade platforms, e-
commerce, and digital networking to 
reduce dependency on physical trade 
missions. 
Sreya, R. 
(2024). 
300 
articles 
(2010 - 
2023) 
Resource constraints: Limited financial, human, and technological resources. 
Regulatory challenges: Tariffs, trade restrictions, and legal compliance difficulties. 
Cultural differences: Language, communication, and business practice misalignments. 
Logistical complexities: Cross-border supply chain and distribution issues. 
Limited international orientation: Lack of a global mindset and experience. 
Lack of confidence: Fear of navigating complex international business environments. 
Political instability: Unstable government policies, corruption, and risks of business disruption. 
All emerging 
economies  
• Forming Strategic Partnerships – 
Collaborating with local distributors, 
multinational firms, and industry 
associations. 
• Seeking Government and Institutional 
Support – Accessing trade programs, 
funding, and export assistance initiatives. 
Nirmala, A. R., 
Sukoco, B. M., 
Ekowati, D., 
Nadia, F. N. D., 
Marjan, Y., & 
Hasanah, U. 
(2024).  
57 
articles 
(2000-
2021) 
Limited resources and financial constraints (Scarcity of financial, technological, and human 
resources; limited access to funding for international expansion; lack of export departments and 
physical resources).  
Inability to manage global networks and relationships (SMEs struggle to form international 
partnerships, weak business networks in foreign markets, difficulty in connecting with 
distributors, agents, and joint ventures). 
Limited information and knowledge for internationalization (Lack of understanding of 
international market conditions, weak legal and regulatory knowledge, insufficient 
entrepreneurial and managerial expertise). 
Limited internationalization of managerial capabilities (Owners and managers often lack 
international business experience, are unable to develop long-term global strategies, and have 
poor international risk management). 
Developed 
economies – 44 
Emerging 
economies - 17 
• Collaboration with larger companies: 
SMEs should partner with larger 
multinational corporations and 
collaborations provide access to 
international networks and expertise. 
• Leveraging founder/Leader experience: 
Prior international experience of leaders is 
crucial and utilizing personal networks and 
business relationships abroad. 
• Strengthening social and business 
networks 
• Engaging with local and international 
trade associations and forming strategic 
alliances and partnerships. 
• Government and institutional support: 
SMEs should leverage export incentives 
and funding schemes. 
• Seeking consulting services and advisory 
programs. 
24 
Koprivnjak 
Popović, T. 
(2024) 
60 
articles 
(1977-
2023) 
Environmental barriers (Government procedures and support, Political and legal restrictions, 
Socio-cultural differences, Lack of trade institutions, Unfavorable foreign market conditions). 
Company-level barriers (Resource constraints (financial, human, technical) 
Marketing challenges (advertising, distribution, product quality), Lack of internationalization 
knowledge. 
Owner/Manager barriers (Lack of international experience, Lack of language skills, Resistance to 
internationalization) 
SMEs from both 
developed and 
emerging 
economies 
were reviewed, 
but the exact 
number is not 
specified 
• Networking, strategic planning, and 
resource allocation as key ways to 
overcome barriers. 
• Building international partnerships, 
leveraging digital technologies, and 
government support programs as 
solutions. 
Andini, D., & 
Kusnandar, H. 
F. (2024) 
99 
articles 
(2020 - 
2024) 
Cognitive barriers: Limited awareness and understanding of international opportunities. 
Digital platform risks: Security, technological adaptation, and reliability concerns. 
Institutional constraints: Regulatory, legal, and bureaucratic barriers. 
Network coordination complexity: Difficulties in managing and leveraging international business 
networks. 
High financial requirements: The cost of expanding internationally and investing in digital 
transformation. 
Competitive disadvantages: Struggles against large multinational corporations (MNCs) with 
greater resources. 
Technological disparities: A gap in the adoption of digital tools compared to larger firms. 
Risk of innovation leakage: Fear of losing intellectual property when engaging in open innovation. 
Uncertainty in foreign markets: Risks related to fluctuating global economic conditions. 
SMEs from both 
developed and 
emerging 
economies 
were reviewed, 
but the exact 
number is not 
specified 
• Stronger network capabilities: Building 
international partnerships to access 
resources and markets. 
• Open innovation ecosystems:  
Collaborating with universities, startups, 
and multinational corporations. 
Kwartati, F., 
Maupa, H., & 
Cahyadi, H. 
(2024). 
5 articles 
(2020 - 
2024) 
Resource constraints: SMEs often lack the financial, technological, and human resources needed 
for expansion. 
Regulatory and compliance barriers: SMEs face challenges in navigating complex international 
regulations and diverse legal requirements. 
Risk management: SMEs face political, economic, and market risks when entering new 
international markets. 
SMEs from both 
developed and 
emerging 
economies 
were reviewed, 
but the exact 
number is not 
specified. 
• Strategic alliances: Partnering with 
foreign firms, distributors, and suppliers to 
gain market access and local knowledge. 
• Building diverse leadership teams: 
Including members with international 
experience to improve regulatory 
navigation and risk management. 
• Market knowledge and local networks: 
Investing in market research and local 
partnerships to enhance competitiveness. 
25 
 
Table 1 summarizes 12 review articles that collectively analyze 948 articles (including 
overlaps) on SME internationalization challenges across various economic backgrounds. 
The number of reviewed articles in each study is five minimum (in the 2024 Kwartati et 
al. study) and three hundred maximum (in the 2024 Sreya study). Some reviews focused 
on a long time duration, such as Paul et al. (2017), who reviewed 211 articles from 1980–
2016; Kahiya (2018), who reviewed 100 articles from 1960–2016; Naradda Gamage et 
al. (2020), who reviewed 110 articles from 1990–2020; and Popović (2024), who 
reviewed 60 articles from 1977–2023. However, more recent reviews focused on the 
latest research trends, including Alsuwaidi et al. (2024), who reviewed 19 articles 
covering 2007–2023; Andini and Kusnandar (2024), who reviewed 99 articles covering 
2020–2024; and Kwartati et al. (2024), who reviewed only five articles covering 2020–
2024. 
 
Earlier reviews (before 2019) examined broader information, which includes macro and 
micro challenges. Those are regulatory barriers, financial constraints, and resource 
limitations. Later reviews (2023–2024) focused on newer challenges such as digital 
networking, cognitive barriers, innovation risks, and technological disparities. Some 
studies divided the reviewed articles into developed versus emerging economies. 
However, a few reviews did not specify the exact number of SMEs from each economy. 
 
Regarding the internationalization challenges identified in the reviewed articles, these 
challenges are classified differently. Forty-three types of challenges are identified across 
the review articles. The most frequently cited internationalization challenges are as 
follows: 
 
(1) Regulatory and institutional challenges (Repeated in 11 out of 12 articles). 
(2) Financial and resource constraints (Repeated in 10 out of 12 articles). 
(3) Lack of network and relationship (Repeated in 9 out of 12 articles). 
(4) Lack of knowledge and experience (Repeated in 9 out of 12 articles). 
(5) Market-specific challenges (Repeated in 8 out of 12 articles). 
26 
(6) Cultural and communication differences (Repeated in 7 out of 12 articles). 
(7) Technological and digital challenges (Repeated in 6 out of 12 articles). 
 
The most frequently repeated challenges are regulatory challenges, financial constraints, 
knowledge gaps, and networking difficulties. Newer challenges (2023-2024 studies) 
emphasize digital risks, cybersecurity, and technological disparities. 
 
Each article provided managerial implications and recommendations for addressing 
these challenges. According to the findings of the review articles, networking has 
consistently been identified as one of the most significant strategies for SMEs to address 
internationalization challenges (Musteen et al., 2014; Paul et al., 2017; Chetty & Holm, 
2000). This includes strengthening business networks and partnerships (Paula et al., 
2017; Chandra et al., 2019; Kahiya, 2018; Sanyal et al., 2019; Gamage et al., 2020), 
utilizing government and institutional support (Alsuwaidi et al., 2024; Sreya, 2024; 
Nirmala et al., 2024; Popović, 2024; Andini & Kusnandar, 2024), and improving strategic 
alliances (Paula et al., 2017; Chandra et al., 2020; Sreya, 2024; Popović, 2024). 
 
Several articles highlight that SMEs with strong international business networks are 
better prepared to handle uncertainties in foreign markets. According to Paul et al. 
(2017) and Kahiya (2018), networking helps SMEs build relationships with local business 
partners, distributors, and industry associations; therefore, this improves their 
understanding of the foreign market, customer preferences, and regulations.  
 
Regulatory and institutional barriers are a major challenge to SME internationalization. 
Articles by Paul et al. (2017), Chandra et al. (2019), Sanyal et al. (2019), and Sreya (2024) 
highlight that networking with government agencies, trade associations, and export 
promotion organizations helps SMEs to comply with such foreign regulations.  
 
Financial limitations pose another common challenge for SMEs aiming to expand 
internationally. Articles such as Alsuwaidi et al. (2024) and Sreya (2024) emphasize that 
27 
networking is essential for securing financial resources through joint ventures, foreign 
investments, or funding from international development programs. Business networks 
offer SMEs opportunities to collaborate with larger firms, engage in cross-border trade 
initiatives, and access funding sources. 
 
Popović (2024) and Nirmala et al. (2024) argue that many SMEs struggle to build trust 
and reputation in foreign markets, making it difficult for them to establish partnerships 
with suppliers, distributors, or customers. However, by participating in trade fairs, 
business forums, and industry networks, SMEs can enhance their visibility, showcase 
their expertise, and earn credibility among international stakeholders. Developing 
relationships with trusted local business partners also aids SMEs in reducing risks 
associated with fraud, unreliable suppliers, and business misalignment. 
 
In addition to the review articles focused on this chapter, many other articles highlight 
the importance of networking in addressing the challenges of international markets. For 
example, SMEs enter international markets supported by their network relationships 
and continue to rely heavily on these connections (Musteen et al., 2014). Firms typically 
internationalize based on their strategies or through their networks. Ojala (2009) 
highlighted the importance of network relationships in the internationalization of SMEs, 
emphasizing their active utilization during the new market entry process. Costa et al. 
(2016) demonstrated the significance of foreign market information, knowledge, and 
collaboration with other actors in the decision-making process for SMEs' market entry. 
According to Altnaa et al. (2021), SMEs from emerging economies enhance their 
internationalization efforts by strengthening networks with foreign actors, finding 
strong correlations between network ties and the internationalization performance of 
these SMEs. The firm's network relationships are crucial for successful 
internationalization, providing SMEs with access to vital foreign market knowledge 
(Musteen et al., 2014).  
 
28 
Numerous authors have examined types of networks (business, personal, and 
institutional) and their specific importance in the internationalization of SMEs. All types 
of network relationships are important for a firm's market expansion. In the context of 
SME internationalization, networks are not a monolithic concept but encompass a 
variety of forms. Each form offers advantages in supporting firms' internationalization. 
The following section categorizes networks into three main types, social networks, 
business networks, and institutional networks, to highlight their roles and characteristics.  
 
2.2.1 The Social Network 
Social networks are crucial factors influencing SMEs' internationalization performance, 
as they facilitate the acquisition of information and knowledge while promoting rapid 
learning (Ahimbisibwe et al., 2020). According to Zhang et al. (2016), social network 
participants often emerge from personal relationships, such as friends, coworkers, and 
family members. These social connections are primarily established between business 
owners and managers, resulting in more reliable information due to the inherent trust 
shared among individuals. Consequently, the relationships of social networks are 
generally more dependable. 
 
Additionally, firms should cultivate personal networks with international partners, as 
these connections can provide a competitive edge by capitalizing on market 
opportunities and reducing risks and uncertainties related to foreign markets 
(Steinhäuser et al., 2020). SMEs can utilize the personal networks and previous 
internationalization experiences of their managers and owners to bolster their own 
internationalization efforts (Musteen et al., 2014). 
 
Han et al. (2024) systematically analyzed the role of social networks in firms' 
internationalization, categorizing these networks at individual, organizational, and 
national levels. Social networks serve as mechanisms for acquiring essential capabilities, 
enabling firms to overcome resource constraints and navigate uncertainties in global 
markets (Ahimbisibwe et al., 2020; Han et al., 2024). At the individual level, personal 
29 
connections establish the basis for building trust and facilitating informal knowledge 
sharing. These relationships often guide new opportunities, particularly when formal 
institutional support is lacking (Zhang et al., 2016; Chen & Chen, 2004). At the 
organizational level, social networks help firms develop alliances with other businesses. 
Such alliances frequently lead to value co-creation, access to new distribution channels, 
and improved innovation capabilities (Chetty & Holm, 2000). National-level social 
networks are affected by a country's broader cultural, societal, and economic 
frameworks. That highlights the informal connections among individuals, organizations, 
and stakeholders within the national context (Narooz & Child, 2017). Therefore, these 
networks give firms access to resources, legitimacy, and crucial support mechanisms for 
internationalization.  
 
However, social networking has its downsides, including overreliance, resource drain 
from unnecessary activities, breaches of trust, and misunderstandings or conflicts 
arising from cultural and institutional differences (Carson et al., 2004). Therefore, firms 
must actively manage their network relationships to ensure alignment with strategic 
objectives and mitigate potential conflicts (Han et al., 2024). 
 
2.2.2 The Business Network 
The most studied type of network is the business or formal network, which consists of 
two or more interconnected business relationships focused on resource exchange and 
aimed at achieving common goals (Jin & Jung, 2016). Business networks provide more 
reliable and formal market-specific knowledge. Ojala (2009) notes that formal 
relationships (business) are often associated with firms' financial aspects, while informal 
relationships (social) are more related to personal interactions. 
 
Relationships within formal business networks help SMEs determine their entry modes 
into foreign markets, as well as the timing of their entry and subsequent business 
activities, such as marketing efforts after entering a new market (Altnaa et al., 2021). Jin 
and Jung (2016) found that SMEs with extensive international business networks are 
30 
more likely to collaborate closely with their partners, gaining better insights and 
knowledge about international market environments. 
 
In terms of financial and strategic performance, business networks tend to support SMEs 
more effectively than other types of networks. To expand their business relationships 
with foreign actors, firms often seek to hire managers who have experience and 
established network ties in international markets and participate in international 
business exhibitions and conferences (Jeong, 2016). 
 
2.2.3 Institutional Network 
Institutional networks are formal organizations and public entities such as government 
agencies, financial institutions, and academic bodies.  They provide regulatory support, 
funding, and market access to firms during internationalization (Franco & Martins, 2023; 
Halinen & Törnroos, 1998). The increasing role of institutional networks has captured 
researchers' interest over the past decade, especially as countries aim to create these 
networks. According to Franco and Martins (2023), formal institutional network actors 
include countries' ministries of foreign affairs, export and import agencies, international 
business support organizations, and R&D institutions that facilitate the recognition of 
foreign market opportunities and internationalization. State support programs, policies, 
support from other organizations, activities, and the endeavors of professional and 
research support institutions are also classified as institutional networks. 
 
In highly developed countries such as those in the EU, Australia, the USA, and Japan, 
institutional network development organizations play a significant role in supporting 
local SMEs' internationalization, encouraging them to expand abroad without relying 
solely on the personal network connections of their managers and owners (Narooz & 
Child, 2017). The primary purpose of these organizations is to provide essential 
resources to local businesses, including market information, financial support (such as 
loans), and potential business partner contacts. This support reduces risks and 
31 
accelerates firms' internationalization, fostering a positive view toward international 
entrepreneurship (Costa et al., 2017). 
 
However, the role of institutional networks in emerging economies is often limited, and 
studies focusing on SME institutional networks in these regions are scarce (Altnaa et al., 
2021). Due to a lack of institutional networks, SMEs in emerging economies heavily rely 
on social networks to acquire market information, understand international regulations, 
and secure the resources for internationalization. 
 
All three social, business, and institutional networks are vital for obtaining international 
market information and knowledge and for successful internationalization. Therefore, 
developing and maintaining these networks is crucial (Altnaa et al., 2021). Besides the 
necessity of social, institutional, and business networks, digital platform networking has 
emerged as a powerful tool in the modern digital era. The following section explains the 
emerging trend of digital platform networking and its benefits for firms' 
internationalization.  
 
 
2.3 The role of digital platform networking in firms' internationalization 
The existing literature on utilizing digital platforms for firms' internationalization 
presents contradictory views. Some researchers demonstrate that firms should leverage 
digital networking to enhance their internationalization, while others argue that over-
reliance on digital networks may hinder firms' performance (Galkina et al., 2023). 
 
Digital platforms enable the creation of comprehensive digital networking systems for 
firms seeking opportunities abroad (Hu et al., 2024). For instance, these platforms equip 
firms with tools to develop partnerships with local institutions, distributors, mediators, 
and other stakeholders across diverse regions (Galkina et al., 2023; Magni et al., 2021). 
E-commerce platforms, for example, facilitate the global distribution of products, while 
social media and professional networks allow firms to connect with professionals and 
32 
end-users, enhancing brand visibility and trust (Nam & Kannan, 2020). The advantage of 
digital platforms is that they congregate consumers, suppliers, manufacturers, 
mediators, and other actors in the same space simultaneously, enabling them to build a 
digital ecosystem and network without geographical constraints (Nam & Kannan, 2020). 
“Digitalization changed the internationalization process, influencing the speed, timing, 
and rhythm” (Coviello et al., 2017). Many studies found that firms' digital tools support 
their knowledge acquisition in internationalization efforts.  
 
There are 3.8 billion active social media users worldwide, with an annual growth of 9.2% 
(Naslund et al., 2020). Digitalization, along with professional networking, enables these 
3.8 billion social media users to communicate, connect with like-minded groups, share 
their content, and interact with each other. Like individual users, businesses and 
organizations are increasingly prioritizing interaction through social media platforms 
(Almeida & Santos, 2020).  
 
Due to their limited resources and capabilities, utilizing digital technologies to engage 
with consumers, suppliers, and partners is the most cost-effective approach for SMEs 
(Hu et al., 2024). Finding business partners or consumers and accessing global markets 
and their information is the biggest example of how digitalization positively affects firms' 
internationalization (Massa et al., 2023). Information obtained from the network built 
on digital platforms can support SMEs in their efforts to internationalize to other 
markets (Hu et al., 2024). Digital platforms enable firms to quickly locate necessary 
actors globally and network effectively. Therefore, companies increasingly utilize 
various digital platforms for networking and internationalization. In particular, this is 
crucial for SMEs' internationalization due to the purpose of cost reduction. It is evident 
that digitalization positively influences firms' internationalization, and the traditional 
internationalization process has evolved since the intensification of digitalization (Bhatti 
et al., 2022). Additionally, digitalization allows firms to get closer to the parties they seek 
to engage with, decreasing the psychic distance between firms and international 
markets (Hu et al., 2024).  
33 
Naslund et al. (2020) emphasized that digital platforms are allowing firms to 
internationalize, network, and provide value to customers in innovative ways. Almeida 
and Santos (2020) conducted a survey of firms using LinkedIn as a social media platform 
for their internationalization and discovered that social networks facilitate firms' 
internationalization while reducing associated costs. Galkina et al. (2023) found that 
digital platforms empower firms to effectively expand their networks. Platforms like 
LinkedIn and other social media enable firms to transcend geographical boundaries and 
connect with new partners in international markets. Additionally, digital networks help 
lower entry barriers by offering cost-effective access to market information, allowing 
firms to connect with key industry representatives and establish valuable partnerships. 
However, instead of solely relying on digital networking, firms achieve the greatest 
benefits when they combine both physical and digital networking efforts (Galkina et al., 
2023). LinkedIn, with 663.3 million users (Naslund et al., 2020), is a prominent platform 
for professional networking, offering businesses valuable tools for sales, recruitment, 
and marketing. A firm's LinkedIn profile showcases its business description, operational 
functions, and key personnel in significant roles, making it easier for potential partners 
to find contacts, access essential information, and establish effective communication 
(Golbeck, 2015). Almeida and Santos (2020) found that LinkedIn enables firms to 
connect with key industry players and potential collaborators, thus supporting a more 
informed and network-driven approach to entering new markets. 
 
 
2.4 The summary of theoretical background 
This subchapter summarizes the theoretical framework developed from the literature 
review chapter to explore the main research objective of how SMEs utilize different 
types of networks to overcome internationalization challenges.  
 
Drawing from existing literature on internationalization, the internationalization 
literature framework focuses on the following key dimensions, which this research 
focuses on from the case companies in the empirical part. 
34 
 
The internationalization theories discussed in this chapter are earlier 
internationalization theories, such as the Uppsala model  (Johanson & Vahlne, 1977), 
which explains the internationalization process as incremental and knowledge-driven, 
where firms expand gradually based on experiential learning and reduced uncertainty. 
Additionally, the network approach (Johanson & Mattsson, 1988) presents that firms 
internationalize through relationships with external actors. However, the newer 
concepts, such as BGs (Knight & Cavusgil, 1996) and INVs, highlight firms that 
internationalize early and quickly by leveraging innovation and digital capabilities. 
 
The internationalization challenges identified from the articles reviewed in this chapter, 
which are used to explore the challenges faced by case companies, include regulatory 
and institutional issues, financial and resource limitations, knowledge and experiential 
gaps, market-specific challenges, cultural and communication differences, and 
technological and digitalization constraints. 
 
The main types of networks used by firms include social, business, and institutional 
networks. However, with the rise of digitalization, digital platforms now function as 
additional networking tools, allowing SMEs to make international connections with 
fewer physical limitations.  
 
 
 
 
35 
3 Research methodology 
This chapter outlines the research methodology employed in this study, detailing the 
rationale for adopting a multiple-case study approach and describing the data collection 
methods, data analysis techniques, initial assumptions, reliability, validity, and ethical 
considerations.  
 
 
3.1 Qualitative case study  
This study employs a qualitative research methodology, which enables the exploration 
of complex phenomena through in-depth investigation rather than numerical 
measurement. According to Saunders et al. (2019), qualitative research is a 
methodological approach that seeks to explore, interpret, and understand business-
related phenomena through non-numerical data such as interviews, observations, and 
textual analysis. Qualitative research is especially valuable when examining processes, 
behaviors, and experiences that cannot be easily quantified. It emphasizes depth over 
breadth, aiming to capture the richness and complexity of human behavior and decision-
making within business contexts. In this research, the qualitative approach enables a rich, 
detailed exploration of how SMEs from different economic backgrounds utilize 
networking to overcome internationalization challenges. Unlike quantitative methods, 
which focus on statistical generalization, qualitative research highlights contextual 
insights and deeper interpretations of SME networking strategies. 
 
Two case companies from emerging economies are central to this study. By focusing on 
the case studies of SMEs from Finland and Mongolia, this study illustrates how various 
types of networks support international market entry and tackle significant challenges. 
The comparative nature of the research promotes a deeper understanding of how firms 
from developed and emerging economies leverage their networks to improve 
internationalization success and maintain competitive advantages in foreign markets. 
36 
Given the nature of the exploratory study, the aim of this research is to determine what 
is occurring with SMEs from various economies during their internationalization. 
Understanding new insights and assessing phenomena are the outcomes of this research. 
Exploratory research provides an opportunity to comprehend the SMEs' actions utilizing 
the networking effect for their internationalization. According to Saunders (2019), an 
exploratory study involves examining what is happening regarding the study subject and 
evaluating specific phenomena in depth, assisting researchers in better understanding 
the problem to answer the research question precisely. Among the three main principles 
of conducting exploratory research—literature review, expert interviews, and focus 
group interviews—this study will utilize the first two methods. 
 
This research utilizes a case study strategy with multiple case study design, a widely 
recognized qualitative research method that enables an in-depth investigation of real-
world business scenarios. The form of research questions determines which type of 
research method researchers should select. For example, questions such as how and why 
utilize experimental and case study methods (Yin, 2014). However, researchers have 
some level of control over the experimental method, and in this research, the author has 
no control over the case firms' internationalization; therefore, a case study research 
methodology was adopted for this study.   Case studies are widely used across various 
fields of research, including political science, psychology, sociology, education, public 
administration, and business. International business is one area that extensively employs 
case studies (Yin, 2014, p. 6). The case study method is especially well-suited for 
exploring complex and dynamic business environments, such as SME 
internationalization.  
 
A case study strategy utilizes a wide variety of information sources and investigates a 
real-life empirical phenomenon. According to Yin (2014), case studies are especially 
valuable when the boundaries between a phenomenon and its context are unclear. This 
approach facilitates a comprehensive exploration of real-world situations, capturing the 
dynamic interactions among various influencing factors. Since SME internationalization 
37 
challenges are diverse and context-dependent, different firms face unique challenges 
stemming from their specific economic, institutional, and industry conditions. Given this 
complexity, a case study approach provides an in-depth investigation of how SMEs 
identify and navigate these challenges, offering insights into the strategies they employ. 
Therefore, this research will utilize case studies to explore SME internationalization in a 
manner that aligns with Yin’s focus on investigating complex, real-world phenomena 
within their contextual settings. 
 
The multiple-case study approach examines SMEs from two distinct economic contexts. 
The rationale for using multiple cases is to enhance the comparability and validity of 
findings by understanding whether results from one case also occur in the other. 
According to Yin (2014), a multiple-case study strengthens the reliability of research 
findings by allowing for stronger justification, as the findings from one case can be tested 
against another to assess their consistency. Additionally, multiple cases will help 
determine whether the networking tactics employed by an SME in Finland are similar to 
those used by an SME in Mongolia. If similarities exist, these findings could be 
recommended for SMEs operating in these two economic contexts in the future. If the 
findings are consistent across both cases, the generalizability of the results will increase 
within the context of SME internationalization. However, if differences are observed, this 
will highlight context-specific factors influencing networking strategies, further 
contributing to the understanding of how SMEs from different economic backgrounds 
navigate internationalization challenges.  
 
In terms of time horizon, the research is a cross-sectional study that examines a 
phenomenon at a single point in time, while a longitudinal study tracks changes over an 
extended period. Although internationalization is a long-term process involving finding 
foreign partners, conducting market research and selection, deciding on an entry mode, 
actual market entry, and expansion, conducting a longitudinal study is not feasible within 
the timeframe of this thesis. Since observing and tracking SMEs over multiple years is 
38 
impractical, this study will use a cross-sectional approach, gathering longitudinal data 
from managers regarding their past, current, and future internationalization tendencies. 
 
 
3.2 Case selection criteria and data collection methods 
The case companies were selected according to the following criteria: 
(1) They are both SMEs. 
(2) Their home countries represent different economic backgrounds, one from a 
developed economy and the other from an emerging economy. 
(3) They operate in the pharmaceutical industry. 
(4) They have engaged in and initiated internationalization activities. 
(5) They utilize networks for internationalization purposes. 
(6) They were accessible for research, with key informants available for interviews. 
 
This study employs a triangulation approach, integrating both primary and secondary 
data sources to ensure a comprehensive and well-rounded analysis of SME 
internationalization challenges and networking strategies. Triangulation is a research 
technique that involves using multiple data sources, methods, or theoretical 
perspectives to enhance the validity, reliability, and credibility of findings (Saunders et al, 
2019). It helps researchers verify results repetitively, reducing potential bias and 
strengthening the reliability of conclusions. Triangulation is especially useful in 
qualitative research, where findings may be subjective and require validation from 
multiple perspectives. By verifying data from various sources, triangulation enhances the 
credibility, validity, and reliability of the research findings (Saunders et al, 2019). 
 
The case company A, the representative of a developed economy, is contacted through 
their company's LinkedIn profile. Initially, six pharmaceutical SMEs operating in the 
pharmaceutical industry in Finland were selected, and messages were sent to their 
respective people in charge of international activities. However, three of them 
39 
responded, and one refused to participate in this research. The remaining two 
companies agreed to continue with the case study research, and Company A was chosen 
as the final participant due to its fit and willingness to cooperate in this research. 
Company B was chosen because it is the only pharmaceutical SME in Mongolia involved 
in international activities. An official request was emailed to the CEO, who agreed to 
participate in the research. Company B aims to derive valuable managerial implications 
from this research, thereby enhancing its internationalization process, and seeks 
practical guidance on how SMEs in developed economies establish networks and 
support their international growth.  
 
Primary data was collected through semi-structured interviews, while additional data 
was gathered from secondary sources. Interviews with key stakeholders from the case 
companies aim to collect detailed information on networking strategies, 
internationalization challenges, and market expansion efforts. Furthermore, secondary 
data will be sourced from various company documents, websites, social media platforms, 
industry reports, and tender materials to provide contextual insights into the firms’ 
internationalization strategies and networking activities.  
 
3.2.1 Semi-Structured Interviews 
This study's primary data collection method consists of semi-structured interviews with 
key stakeholders from the selected case companies. Semi-structured interviews strike a 
balance between structured and unstructured approaches, allowing for both guided 
discussions and flexibility in exploring emerging themes (Saunders et al., 2019). They are 
utilized when researchers seek in-depth insights and consistency across interviews. They 
offer flexibility to the interviewee and unexpected new insights to the researcher. 
Additionally, this type of interview is suitable for exploratory or explanatory research, 
aiming to understand how and why certain phenomena occur. Therefore, it will provide 
detailed answers to how SMEs from different economic backgrounds utilize networking 
to overcome their international market entry challenges.  
40 
Due to the geographical distance between the researcher and the case companies, 
primary data was collected through semi-structured interviews conducted via Zoom.  
 
Company A: Data was gathered through three separate Zoom interview sessions with a 
single key interviewee, the company’s Chief Development Officer, who was directly 
involved in the company's internationalization efforts. These interviews allowed for a 
deep and ongoing exploration of the company’s background, internationalization 
challenges, and network utilization across different phases of its international journey. 
 
Company B: Data collection involved two separate Zoom interviews with two different 
interviewees, each holding key roles related to the company’s international activities. 
One is the Chief Executive Officer, and the other interviewee is the Head of the Marketing 
Department, both directly involved in the company’s internationalization activities. This 
approach provided a broader perspective by capturing insights from multiple decision-
makers, contributing to a more comprehensive understanding of the company’s 
internationalization. 
 
The interviews covered key areas such as the companies' internationalization, challenges 
faced in foreign markets, and the role of various networks in supporting their 
internationalization. Any follow-up questions or clarifications were addressed via email 
correspondence after the Zoom sessions. 
 
According to Saunders et al. (2007, p. 312), a list of themes and questions to cover in a 
semi-structured interview is provided, but some questions can be altered based on the 
specifications of the organizational context. Additionally, in-depth interviews were 
conducted to explore areas that the researcher did not focus on or was unaware of, and 
interviewees will have the opportunity to discuss challenges not included in the list of 
interview questions (Eriksson & Kovalainen, 2016, p. 89).  
 
41 
Participants are intentionally selected based on their direct involvement in the case 
companies' internationalization from the beginning. Case company names and 
interviewee names have been anonymized at the companies' request. Data was 
collected from two case companies, along with interview details as follows: 
 
Table 2. Interview background of the case companies 
 Company A Company B 
Company main 
business 
Cancer drug development Biological active products, with natural 
ingredients and generic medicines 
Interviewee Chief Development Officer 
(Interviewee 1 from 
company A: IA)  
Head of the Marketing Department 
(Interviewee 1 from company B: IB1) 
Chief Executive Officer  
(Interviewee 2 from company B: IB2) 
Interview date and 
duration 
24.03.2025 – 33 min 
24.03.2025 – 36 min 
28.03.2025 – 51 min 
16.04.2025 – 46 min 
16.05.2025 – 43 min 
 
One person from company A, the Chief Development Officer, and two people from 
company B, the head of the marketing department and the chief executive officer, were 
interviewed. The following abbreviations IA (interviewee from company A), IB1 
(interviewee one from company B), and IB2 (interviewee two from company B) are used 
for each interviewee to clarify the direct quotes from the interview. 
 
3.2.2 Secondary Data  
Secondary data supplements primary findings and provides broader industry insights. 
This type of data refers to information that has already been collected, processed, and 
made available by another entity for purposes other than the current study. It includes 
data from sources such as government reports, academic publications, industry statistics, 
company records, and online databases (Saunders et al., 2019). Secondary sources of 
the two case companies in this research are as follows: 
 
 
 
 
42 
Table 3. Secondary sources of the two case companies. 
Category Company A Company B 
Types of 
secondary 
sources 
- Company website 
- Social media platform 
- Pharmaceutical 
regulations of Finland 
- Newspaper article 
 
- Company website 
- Pharmaceutical regulations 
of Mongolia 
- Company annual report 
- Company tender document 
- Written materials for 
international EXPOs 
 
Using both primary and secondary data enhances the credibility and depth of the study 
by allowing for data triangulation (Eisenhardt, 1989). Secondary sources listed in Table 3 
were primarily used to gather general information about the case companies, while 
more detailed information was obtained through primary data collection.   
 
 
3.3 Data Analysis  
This study uses a qualitative data analysis approach to examine the internationalization 
challenges and networking strategies of the two case companies. Considering the data 
collected from semi-structured interviews and secondary sources, the analysis focuses 
on identifying patterns, making comparisons, and validating findings through multiple 
data sources. The primary method for analyzing the data is thematic analysis, and cross-
case comparative analysis is employed to assess the similarities and differences between 
the two case companies. 
 
The thematic analysis facilitates the identification of recurring patterns, themes, and 
relationships within the qualitative data gathered from semi-structured interviews 
(Braun & Clarke, 2006). The analysis begins by transcribing the interviews to accurately 
represent the responses. After transcription, the data is systematically coded, focusing 
on key themes such as the internationalization challenges faced by the two case 
companies, their networking strategies, and market entry approaches. These themes are 
then organized into broader categories, which include a list of internationalization 
challenges, various types of networks, and future networking plans. This process allows 
43 
for a structured interpretation of the data, emphasizing critical insights into how SMEs 
from different economic backgrounds navigate their internationalization. 
 
A cross-case analysis was conducted to compare findings regarding the common and 
unique challenges faced by the two SMEs, the effectiveness of networking, and the 
differences in their market entry strategies. Cross-case comparative analysis is a research 
method for systematically comparing multiple cases to identify similarities, differences, 
and patterns (Ragin, 2014). This method enhances the generalizability of findings and 
allows researchers to develop theories or test existing ones through comparative 
reasoning. According to Yin (2018), cross-case analysis is an essential approach in case 
study research that aids in theory-building by identifying patterns across multiple cases. 
This comparative analysis facilitates the identification of best practices and offers 
recommendations for pharmaceutical SMEs operating in various economic contexts. 
 
The primary assumption of this study is that SMEs from different economic backgrounds 
have different networking opportunities and use networks differently to overcome their 
challenges in the international market (Sanyal et al., 2019). 
 
 
3.4 Reliability and Validity 
The study aims to produce credible, reliable, and academically rigorous findings by 
applying these measures. Reliability refers to the consistency and stability of research 
findings over time and across different conditions (Yin, 2018). In this study, reliability 
was ensured through the following measures: 
- Systematic Documentation: The research process, including data collection and 
analysis methods, was thoroughly documented to allow for replication. 
- Structured Interviews: Semi-structured interviews with key decision-makers 
from both case companies were conducted, video and voice recorded, and 
followed a consistent protocol to ensure uniformity in data collection. 
- Participant Transparency: Interviewees were informed of the research 
objectives in advance to minimize bias, and anonymity was maintained to 
encourage candid responses. 
44 
- Triangulation: Primary data from interviews was supplemented with secondary 
sources (company documents, industry reports) to cross-verify findings and 
enhance consistency. 
 
Regarding this research validity, it aims to evaluate if the study accurately measures 
what it claims to measure (Eriksson & Kovalainen, 2016). The following strategies were 
employed to ensure validity in this research: 
 
- Construct Validity: Multiple data sources (interviews, secondary data) were used 
to triangulate findings. Key themes (e.g., network types, challenges) were 
derived from the literature and empirically validated through case analysis. 
- Internal Validity: Cross-case comparison highlighted patterns and discrepancies, 
strengthening causal inferences. 
- External Validity: Detailed case descriptions enable readers to assess 
transferability to other settings. 
 
Ethical standards are strictly followed as following: 
 
- Informed Consent: Interviewees will receive details about the research and sign 
consent forms. 
- Confidentiality: Company names will be anonymized where necessary. 
- Data Security: All interview recordings and transcripts will be securely stored. 
- Compliance with Research Ethics: The study follows institutional and GDPR 
(General Data Protection Regulation) guidelines. 
- Respect for Participants: Participants were treated professionally and 
respectfully throughout the research process. They were given the opportunity 
to review and clarify their responses if needed.  
 
 
 
 
 
 
45 
4 Findings  
This chapter presents the empirical analysis and key findings of the research. The 
chapter begins with an overview of the internationalization context within the 
pharmaceutical industry generally, how pharmaceutical firms internationalize globally, 
and what the specific challenges are in this sector, followed by an analysis of the two 
case companies that highlights their respective backgrounds, the challenges they 
encountered, and the different types of networking they utilized. The final section 
presents a comparative discussion, highlighting how networking has contributed to 
overcoming their internationalization challenges, and what type of networks are utilized 
to overcome which type of challenges, while examining the similarities and differences 
between the two cases.  
 
 
4.1 The internationalization challenges of the firms in the 
pharmaceutical sector 
Like firms operating in every other sector, firms in the pharmaceutical sector face many 
specific challenges. These include rapid innovation, pressures from globalization, 
difficulties in navigating diverse regulatory systems across markets, government 
restrictions, and compliance (Waktole & Negera, 2024). Navigating a complex 
environment while adhering to local and international regulatory requirements is 
already challenging for pharmaceutical manufacturers (Grant, 2024). Countries' 
stringent medicinal regulatory requirements are a major challenge in the 
internationalization of pharmaceutical SMEs in global supply chains (Takawira & Pooe, 
2024). That includes passing the local pharmaceutical product registration requirements 
in foreign markets, which demand significant time and effort from these firms (Waktole 
& Negera, 2024). Each country has specific regulations concerning pharmaceutical 
product registration, and in some cases, the standard registration process may take as 
long as five years. In some countries, the registration process for pharmaceutical 
46 
products can take even longer and incur higher costs, depending on the market's 
regulatory complexity. 
 
Regarding the legal and business environment, the two case pharmaceutical companies 
differ in terms of home country regulatory complexity, institutional support, and the 
overall maturity of the pharmaceutical sector in their respective countries. However, 
both companies agreed that foreign countries and strict global regulations on 
pharmaceutical products are among the most challenging aspects of internationalization. 
For example, Company A is established and operates in Finland, a country renowned for 
its highly advanced healthcare and research ecosystem, which provides significant 
opportunities for pharmaceutical businesses. However, despite the country-specific 
advantages, Finnish pharmaceutical SMEs encounter notable challenges in their 
internationalization efforts. These challenges include navigating complex regulatory 
requirements in foreign markets, facing competition from established MNCs, and 
dealing with limitations imposed by Finland’s relatively small domestic market, which 
restricts scale efficiencies (Ministry of Economic Affairs and Employment of Finland, 
2020).  
 
Mongolia’s pharmaceutical industry challenges include a lack of global networking, 
limited knowledge of foreign markets, and compliance with international 
pharmaceutical product regulations. Additionally, there is inadequate government or 
institutional support, along with limited access to foreign markets. The country is 
characterized by an unstable political and business environment, a high dependence on 
foreign markets and economies, a harsh climate, and an underdeveloped export 
industry (Enkhbayar et al., 2019).  
 
 
4.2 Case company A 
This section presents Company A, a Finnish pharmaceutical SME, as a representative 
firm from a developed economy by outlining its background, current 
47 
internationalization status, and networking activities. It highlights the firm’s global 
collaborations, the internationalization challenges it faces, and the types of networks it 
utilizes. The information presented in this section is drawn from both primary data 
obtained through a direct interview with the chief executive officer and secondary data, 
including the company’s website, emails from the chief executive officer, social media 
platforms, and other publicly available sources.  
 
4.2.1 Background of Company A and its internationalization activities 
Company A is a relatively new drug development company, originating from the 
research and development team at the University of Helsinki. This small yet highly 
professional team of scientists is dedicated to creating drugs for cancer. They discovered 
a treatment for a rare cancer that currently lacks a specific global treatment. Many 
cancers show overexpression of a specific cancer gene that triggers tumor development 
in patients' bodies. Company A developed a unique solution: a first-in-class precision 
therapy targeting these genes. Unlike existing treatments, which primarily alleviate 
symptoms or lead to drug resistance over time, their approach provides a precise 
mechanism to stop the growth of these tumor genes, with potential applications for 
other cancers that share this gene. Thus, Company A stands out by offering a tailored 
formula to address the unique problems of individual patients, a solution that no 
competitors worldwide can match.  
 
However, as a drug development is their main focus, they do not manufacture the actual 
product themselves locally. Instead, their main production, clinical trials, quality 
assurance, and other existing product development activities are all highly 
internationalized, which means that all their current activities are outsourced, except 
for the research and development of new products.  
 
The interviewee stated during the interview that “our international activities included 
formulation development activities in the research laboratory in the Netherlands, API 
manufacturing from a contract manufacturer from Germany, and quality management 
48 
operations from an expert company in the UK” (IA1., 2025). Table 4 outlines the details 
of Company A’s internationalization activities, including the countries involved and the 
main role of each activity.  
 
Table 4. Company A’s internationalization activities. 
Activities Country Role 
Drug development and research 
 
API direct manufacturing 
 
 
Formulation development 
 
Product manufacturing 
 
Clinical trials 
 
 
 
 
Quality management and 
regulatory consulting 
 
Marketing and sales 
Finland 
 
Germany 
 
 
Netherlands 
 
Netherlands 
 
Netherlands, 
Poland, UK, 
France, and 
Germany  
 
UK 
 
 
USA and EU 
countries 
Headquarters (R&D) 
 
Main material contract 
manufacturing. 
 
Specialized pharma services. 
 
Specialized pharma services. 
 
Specialized pharma services. 
 
 
 
 
Experts provide compliance and 
quality consultancy. 
 
Product registration, distributor 
partnership, and local regulatory 
support 
 
The company's headquarters in Finland oversee primary operations abroad. In the 
Netherlands, formulation development focuses on drug delivery technology for patients. 
Additionally, preclinical development is conducted in partnership with various service 
providers in the Netherlands. Product manufacturing and related analytics also occur in 
the Netherlands. The contract manufacturer handles main API manufacturing in 
Germany. A UK company provides quality control services, offering consulting that 
emphasizes product quality and efficiency.  
 
Regarding commercialization, Company A is currently securing marketing authorization 
in key markets, including the United States and European countries. This step follows 
the successful completion of clinical trials conducted internationally as part of the 
company’s global development strategy. They are preparing for market entry while 
49 
strategically assessing target markets (e.g., the US and EU) for international expansion. 
This process occurs after the ongoing clinical trials but before full commercialization, as 
they await decisions on marketing authorization. 
 
The company structure includes two additional key members besides the interviewee, 
A, the Chief Development Officer: the Chief Executive Officer, who holds a Ph.D. in 
immunology and has extensive experience in drug development; the Chief Development 
Officer, who also holds a Ph.D. in Chemistry and has expertise in drug development that 
encompasses laboratory work and medical product business activities; and the founders 
and board members, all of whom possess Ph.D.s in the biochemical and medical fields.  
 
Table 5. Company A’s key people's experience and international networking. 
Position Degree Experience International 
networking 
Chief executive 
officer 
Master’s Degree in 
Biotechnology and 
Ph.D. in 
Immunology 
More than 20 years of 
experience in the 
pharmaceutical 
market, working both 
as a researcher and in 
the business field 
Worked with both 
local and 
international entities, 
with diverse 
networking across 
Europe and the U.S 
Chief development 
officer 
Bachelor’s Degree 
in Industrial 
Engineering and 
Management and 
Ph.D. in Chemistry 
Both research and 
commercial positions 
in local and 
international 
pharmaceutical 
companies 
Strong professional 
network in the 
pharmaceutical 
industry, particularly 
in Europe and the U.S 
Chief Scientific 
Officer 
Doctor of 
Philosophy and 
MSc in 
Biochemistry 
Mainly worked on 
hard-to-treat cancers 
in research institutions 
Network with 
academic 
collaborators, biotech 
innovators, and 
pharmaceutical 
partners 
 
The Chief Development Officer of company A, who participated in this research, has 
extensive experience in her home country and internationally, spanning multiple 
countries and continents, along with a deep understanding of the global market 
landscape. She has held research positions in laboratories as well as commercial roles 
within business organizations, which has allowed her to comprehend the research 
50 
process involved in drug development, as well as business operations and strategies for 
bringing products to market.  
 
4.2.2 The networking process for Company A's internationalization. 
Building and leveraging networks is essential to Company A’s internationalization 
strategy. Given the company’s small size and specialized focus, identifying reliable, 
competent, and trustworthy partners for executing core business activities, such as 
manufacturing, clinical trials, and regulatory compliance, is crucial. The process of 
finding partners begins with compiling a pool of potential candidates, often numbering 
up to 20 options for a specific operational need. However, the final selection is not based 
solely on company qualifications or market reputation. Instead, the decision is 
significantly influenced by recommendations from trusted contacts within Company A’s 
professional network. For instance, input from a long-term quality consultant plays a 
central role in assessing the credibility and operational readiness of potential partners.  
 
The partner evaluation process entails audits, meetings, and relationship-building 
activities that allow Company A to understand not only the partner’s technical 
capabilities but also the individuals behind the operation. The interviewee emphasizes 
that “personal relationships and mutual trust are very important to us, especially given 
our small scale and limited internal resources. Even if a candidate meets all the technical 
requirements, a lack of personal engagement or cultural fit can result in elimination 
during the selection process” (IA1., 2025). For the company, choosing a partner goes 
beyond merely outsourcing tasks; it entails finding individuals who will grow with the 
company, fostering long-term collaboration through trust and shared commitment. 
 
In the case of manufacturing partnerships, the approach is strategic and often 
recommended by pre-existing networks. When a new contract manufacturer or service 
provider is required, the first step is typically to consult within their expert network for 
recommendations. This ensures that the selected partner is assessed through trusted 
networks, thereby reducing risk and shortening the due diligence process. 
51 
 
Regarding clinical study partners abroad, the process is developed within their 
professional medical and pharmaceutical communities, which operate as tightly 
interconnected networks. Most clinicians and researchers involved in clinical trials are 
already part of a large, semi-formal network characterized by both strong and weak ties. 
When Company A began developing its cancer treatment drug, the team started 
collaborating with leading experts in the field. Through academic publications and 
research partnerships, news of the product development spread throughout the 
community. Consequently, medical professionals with strong reputations in oncology 
and clinical research became aware of their work and expressed interest in collaboration. 
The specialized nature of the pharmaceutical sector, where a few major players 
dominate each specific product development, further enhances the effectiveness of 
networking by enabling companies to quickly identify reputable clinical partners and 
establish trust-based networks. 
 
Company A’s networking is highly relationship-driven, emphasizing trust, reputation, 
and prior connections over formal business partner selection procedures. This approach 
is effective not only for a small firm but also crucial for ensuring the quality and reliability 
of partners in the heavily regulated pharmaceutical industry. The interviewee said, “we 
are not looking for anyone just to provide services or the products, we are looking for the 
people who want to cooperate with us and be successful together. So it is so important 
to find those who trust each other and to be successful together globally.” (IA1., 2025). 
 
 
4.2.3 The types of networks  
The company actively utilizes various types of networks for its internationalization 
activities, and the following types are discussed in the interview.  
 
Social network. Trust between individuals is key in Nordic culture, and networking 
remains crucial for all activities (Halinen & Törnroos, 1998). In a small company like 
52 
Company A, networking is vital for every process, not just for partner selection or 
international expansion. For instance, the interviewee joined the company through 
networking after previously working with the CEO in another organization, and later 
came on board. In this context, hiring someone they know is essential. The company is 
heavily network-centered for all its activities.  
Interviewee mentioned that “in small companies, it is beneficial that we can support one 
another. Maintaining close friendships with former colleagues, friends, and people in the 
same sector can lead to successful collaboration, as this industry is unique in that 
everyone knows each other and values one another’s opinions, expertise, and 
companionship” (IA1, 2025). According to IA1, as in some other sectors or larger 
companies, social networking may not be as crucial as it is for Company A. In small 
businesses, trust-based collaboration and human interaction are essential for successful 
business partnerships. IA1 added that “Friendships made during postdoc years still drive 
most of my collaborations today” (2025). Most of the larger companies and MNEs have 
employees responsible for regulatory affairs in various countries and for preparing the 
necessary documentation to operate there. However, Company A utilizes its own 
network for this purpose, primarily a social network, to address the challenge of 
regulatory compliance in foreign countries.  
 
Regarding their current quality management system provider, the company selection 
and cooperation process began based on a social networking associate’s 
recommendation. This associate, who had worked on a different project with the 
company's Chief Development Officer a few years ago, recommended their quality 
management system provider company. The selection of such a provider company was 
solidly based on the personal network.  
 
In this industry, having a strong network and fostering relationships is crucial for success 
and staying updated with market trends. The interviewee mentioned that “whenever 
the company needed information or support for operations, there was always a phone 
53 
call to someone I knew, whether locally or abroad, and say hello, can you help me?” (IA1., 
2025).  
 
Business network. The raw material contract manufacturing companies in Germany, 
along with pre-clinical and clinical development and end-user product manufacturing 
companies in the Netherlands, as well as quality management and consulting support 
from the UK, are business partners of Company A. This trusted business network is 
essential for them as part of their key operations. Interviewee said that “we need the 
best suppliers and the best people to work with, people who also want to give their 
expertise in addition to their products or services. They are the partners who really want 
to help us, not just provide services” (IA1., 2025). 
 
In this industry, when a company needs a specific service or product, there are limited 
vendors, and Company A knows who the best candidates are, mainly through their 
network. Finding the best partners is crucial, as it determines who will successfully 
collaborate with them in the long term. The primary activities involve extensive 
discussions, background checks, inquiries about candidates from their previous 
networks, and a due diligence process. As the interviewee mentioned, their best 
candidates originated from recommendations within their prior business network, 
specifically a consulting company in the UK with which they have had a long-standing 
relationship. Therefore, they tend to accept business partner candidates recommended 
by networking partners. Additionally, a consulting firm in the Netherlands that has 
worked with Company A for many years recommended their top contract manufacturer 
in Germany. There were several options available, and this consulting firm made the 
final selection. Company A did not participate in the site-check selection process, 
auditing, or company visits, as they lack the necessary expertise in these areas. This 
demonstrates the level of trust Company A has in its business partner companies, such 
as their consulting companies, allowing them to make significant decisions on behalf of 
the company. Interviewee added that “if we want to bring the product to the market, 
we need industry. We connect with pharmaceutical companies and biotech start-ups 
54 
because they understand the pharmaceutical sector and countries' regulatory 
compliance” (IA1., 2025). 
 
Institutional network. Finnish institutional bodies play a significant role in Company A’s 
business development process. These bodies are formal organizations and institutions 
that operate in the public or governmental sector, influencing, governing, and 
supporting firms' business activities, such as their internationalization.  
 
Company A received a business loan from a Finnish institutional body to start its 
internationalization, which has been the leverage that has enabled this business to this 
day. Such organizations support not only pharmaceutical firms but also other types of 
startups in developing their operations, and this opportunity extends even to risky or 
unstable businesses in Finland. Additionally, other financial support programs 
specifically target the drug development sector, which will be available to small startups 
like Company A. They noted that institutional networks may be crucial for their 
operations since these networks include connections with doctors and hospitals who 
can begin using their drug, facilitate permissions from various regions, and obtain 
financial support. In particular, institutional networks are vital for companies from 
countries like Finland, which has a small population and limited size. They require larger 
support to compete on an international scale. Interviewee agreed that “our 
collaboration with patient advocacy groups (PAGs), universities, and regulators like 
European Medicines Agency (EMA) is crucial. These institutional networks help us 
navigate approvals and connect with key stakeholders” (IA1., 2025). Their institutional 
networks included the following:  
 
A patient advocacy group (PAG): A non-profit or community organization that 
represents the interests, rights, and needs of patients, particularly those affected by 
specific diseases or health conditions (Themistocleous & Argyropoulos, 2024). In 
Company A’s case, the UK PAG consists of actual cancer patients, their friends, relatives, 
and professionals working in this field. This powerful group actively seeks opportunities 
55 
to treat or lessen the effects of such diseases, significantly impacting hospital operations 
in this regard. In this instance, PAG assisted Company A in engaging with UK hospitals 
and clinical stakeholders to gain access to major hospitals and collaborate with them to 
develop, distribute, and conduct clinical trials for their product.  
 
University group: Knowledge-based institutions that serve as a foundation for scientific 
legitimacy, significantly influencing Company A’s drug development from a scientific 
perspective. They collaborated with various university research teams to evolve the 
current product from its inception, which originated in the science laboratory at the 
University of Helsinki, as mentioned earlier. “Our university’s international consortium 
opened doors for joint research grants. It was a structured entry point into the European 
research community” (IA1., 2025). Additionally, large medical universities abroad have 
their own hospitals and conduct clinical trials on patients treated within these facilities, 
which provided Company A the opportunity to study the efficacy of its drug in global 
patients.   
 
Scientific conferences: A formal gathering of professionals within a specific academic 
field, such as drug development, to present and discuss their work, exchange ideas, form 
networks, and suggest future research directions (Rowe, 2018). It serves two primary 
purposes. First, they promote networking among industry professionals, enabling 
participants to introduce their work and products and connect with individuals, 
businesses, and institutions in the field. Second, these conferences attract investors and 
funding organizations, providing additional networking opportunities with these firms. 
Company A has participated in numerous scientific conferences throughout Europe, 
establishing important networks in the process. Events like BIO-Europe (BIO), a leading 
partnering conference in the life sciences, occur annually to foster collaboration among 
biotechnology innovation organizations.  Such events are significant in scale, attracting 
nearly everyone in the industry, which helps participants stay informed about emerging 
trends and developments. Consequently, when Company A presents its new drug 
development process, everyone in the European industry will have the chance to learn 
56 
about it. Interviewee stated that, “being invited to speak at the international stem cell 
conference gave us visibility to the professional audience. It is not just about the 
presentation, it is about being seen in the right place to the right people” (IA1., 2025). 
 
Digital network. Web of individuals, organizations, or systems interconnected through 
digital platforms, tools, or communication technologies that enable the exchange of 
information, services, and relationships beyond physical or geographic constraints 
(Galkina et al., 2023). The interviewee established a professional group on LinkedIn for 
various small pharmaceutical companies and individuals to come together and share 
ideas and information. The primary purpose of this LinkedIn group is to gather 
professionals in the industry to network, get to know one another, share experiences, 
exchange information and knowledge, and seek assistance from each other. “For small 
pharmaceutical companies, gaining knowledge and staying updated with the latest 
trends is crucial to being aware of this industry. If we experience something new, we 
share this on our social group page” (IA1., 2025). BIO-Europe is an annual life sciences 
partnering conference that combines both physical and digital networking opportunities. 
The physical participation fosters face-to-face human interactions, relationship-building, 
and trust development. However, such events organize virtual partnering days, enabling 
companies unable to participate physically to schedule and conduct meetings virtually. 
This presents a great networking opportunity, and Company A participates in the online 
event every year. Additionally, digital platforms for funding and investment provide 
opportunities for businesses and investors in this industry to connect with one another.  
 
 
4.2.4 Company A’s internationalization challenges 
As discussed in the literature review chapter, this research identified seven types of 
internationalization challenges, which formed the focus of the interview. The challenge 
of a lack of networking and relationships was not outlined or discussed as an 
internationalization challenge with the interviewees, since this study focused on how 
57 
networking is utilized to overcome the internationalization challenges faced by these 
case companies.  
 
Regulatory and institutional challenges: Confirmed that one of the biggest challenges 
to any pharmaceutical company in this sector, and the same as them, is that Company 
A’s biggest challenge is foreign countries. “Sometimes we get stuck for months waiting 
for approvals that are not transparent. Each country has a different process, and in some 
cases, the criteria are not even published. There is no global standard, and it negatively 
affects our budget” (IA1., 2025). Some countries require foreign companies to establish 
a local legal entity, which Company A does not intend to do in every country while 
managing its operations. For pharmaceutical companies in Europe, obtaining permission 
from the European Medicines Agency (EMA) or the Food and Drug Administration (FDA) 
in the USA is the most challenging and fundamental step to succeeding internationally. 
Once a product receives approval from these authorities, it is free to register elsewhere 
and operate in those areas. For Company A, this process involves leveraging its network, 
meaning someone knowledgeable about regulatory matters assists in preparing 
documentation and applying for permission.  
 
Finance and budget-related challenges: Company A’s product is expensive, and not 
every patient can afford it. As a result, countries' health systems reimburse patients for 
the treatment of such conditions. Company A has identified a lack of funding as one of 
the major issues. “Funding is always a challenge. Even when we have a good product, 
finding early-stage investment to internationalize is hard” (IA1., 2025). The company is 
in the early stages of its business, where income is insufficient, and it constantly requires 
funding for various processes, including product manufacturing, purchasing raw 
materials, laboratory tests, and clinical studies, all of which demand significant financial 
resources. Therefore, the financial and resource constraint is another major challenge 
they currently face.  
 
58 
Lack of market knowledge and experience: In new countries, there is unfamiliarity with 
the market, along with a lack of experience. A consulting company is currently 
addressing this for Company A. Gaining knowledge of the country and acquiring 
experience in this market requires substantial resources, time, and money. Currently, 
the company mainly operates in EU countries due to the similar legal systems, insurance, 
healthcare, and an overall easier understanding of these markets. On the other hand, 
some countries may be avoided in the future due to insufficient market knowledge, as 
they may be difficult to understand, hard to enter, and subject to strict regulations. 
Therefore, this type of challenge is considered medium for company A, as it can be easily 
solved with consulting firms, entering countries with similar environments, and can be 
avoided if necessary.  
 
Market-specific challenges: Company A highlighted several market-specific challenges, 
including the need to adapt to local consumer behavior, market readiness, intense 
competition from well-supported local firms, market entry costs, and difficulties in 
finding reliable partners due to unfamiliarity with the product or perceived risk. 
Regarding the different markets they entered, the interviewee said that “what works in 
Japan does not necessarily work in Germany. We had to adjust our messaging and 
sometimes the product itself” (IA1., 2025). 
 
Culture and language differences: According to Finnish culture, people’s 
communication style tends to be more straightforward and honest, with an open 
approach preferred in business settings. There are cultures where communication styles 
differ, which can lead to miscommunication. However, due to the nature of the medical 
industry, interactions generally follow a more formal approach, with written regulations, 
standards, and policies prevailing, regardless of country or culture. Therefore, adhering 
to these guidelines and communicating in accordance with established standards is 
considerably easier. As a result, in this context, cultural and language differences do not 
pose a significant challenge for Company A.  
 
59 
Technological and digital challenges: The interviewee did not highlight technological 
and digital challenges as major challenges. While digital platforms were used for 
communication and information, no significant difficulties related to technology 
adaptation, infrastructure, or digital regulation were reported for Company A. This can 
be linked to the fact that all members of the company are highly educated, proficient in 
English and other international languages, and skilled in using modern technological 
tools to interact with global partners effectively. 
 
 
4.3 Case company B 
Similar to the previous section, this part introduces Company B, a Mongolian 
pharmaceutical SME, as a representative firm from an emerging economy. It begins with 
Company A’s background, current internationalization status, networking activities for 
effective internationalization, the types of networks they utilize, and the 
internationalization challenges they encounter. All information was gathered from both 
primary and secondary data.  
 
4.3.1 Background of Company B and its internationalization activities 
Company B’s background information was obtained from secondary data, the 
company's annual report, and tender documents. Company B was established in 1990 
in Mongolia and manufactures eighty different types of pharmaceutical products, 
including generic medicines, herbal products, beauty items, and biologically active 
products made with natural ingredients. Approximately thirty of these products are 
their own brand items developed through original inventions. Their brand products 
primarily consist of biologically active ingredients sourced from rare natural sources. The 
company has operated in the local market for over thirty years, and its products are 
well-known and reputable in this region.  
 
However, the company aims to introduce its products, developed in its own laboratory, 
to the international market and expand its business abroad, focusing on 
60 
internationalization in countries that are geographically or culturally similar to Mongolia. 
Currently, there are one hundred fifty employees, but the company lacks a dedicated 
export department. Instead, the local marketing department oversees export activities 
and explores opportunities for internationalization overseas.  
 
Since 2020, the company has intensified its efforts in internationalization by sending 
teams to potential foreign markets for market research, networking with local 
distributors, and exploring opportunities in these countries. The targeted countries 
include those in the Eurasian Economic Union (EAEU), which comprises Russia, 
Kazakhstan, Uzbekistan, Kyrgyz Republic, and Azerbaijan. Recently, Company B has 
expanded its international operations to several countries, including the Kyrgyz Republic. 
Since 2022, the company has shifted its focus to other markets, including China and 
Korea, and has begun its export activities in these regions. Another food manufacturing 
subsidiary of Company B has started exporting twenty types of products to these 
countries, as the internationalization process for food-grade products is easier and faces 
fewer challenges compared to that of pharmaceutical products. 
 
Since the beginning of 2020, the company has been developing a new strategy for 
expanding into foreign markets, with a focus on various countries, primarily China, 
which appears to be a lucrative market due to its geographical proximity. However, both 
interviewees from company B stated that “we did not have any market knowledge about 
Chinese regions, thought that China is a big market with many potential customers” (IB1. 
& IB2., 2025). Additionally, Mongolia and China have a long history of business 
cooperation, and the company’s generic medicine raw materials suppliers are primarily 
based in China. Thus, the company believed it would be easier to enter the Chinese 
market. However, China and Mongolia have different cultures, languages, and 
pharmaceutical sector regulations that vary significantly. They initiated the registration 
of their branded products in the Chinese market, but even after three years, they have 
not achieved significant success with this first step.  
 
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Since then, the company has actively sought other opportunities to expand its market 
into other countries, beginning to meet people and sending teams to focus countries. 
Based on foreign market research, they have decided to focus on the Central Asian 
countries mentioned above. The reason is that these countries all speak Russian, making 
communication easier. Market size, the country's population, culture, customer 
behavior, and pharmaceutical market regulation, along with the supply chain system, 
seemed similar to those of Mongolia. Therefore, Company B initiated its 
internationalization in the Kyrgyz Republic and successfully registered a single product 
in this country, which renders this registration valid for the remaining five countries in 
the EAEU region. EAEU countries, including Russia, Kazakhstan, Uzbekistan, Kyrgyz 
Republic, and Azerbaijan, accept each other's pharmaceutical product registrations, and 
a product registered in one of these countries can be freely sold to other EAEU countries. 
However, they are currently only exporting their product to the Kyrgyz Republic while 
trying to stabilize product development in that country first.  
 
The key people in the company involved in the internationalization are the CEO and the 
Head of the Marketing Department, both of whom were interviewed for this research. 
Regarding their education, experience, and international networking, the following 
information was obtained:  
 
Table 6. Company B’s key people's experience and international networking. 
Position Degree Experience International 
networking 
Chief executive 
officer 
Bachelor’s Degree 
in Business 
Administration 
10 years of experience 
in the pharmaceutical 
field, working in 
various positions in 
company management  
For the last 5 years, 
focusing more on the 
company's 
internationalization, 
with little 
international 
networking 
experience  
Head of the 
Marketing 
Department 
Bachelor’s Degree 
in chemical 
science and 
business 
administration 
18 years of experience 
in the company for 
both drug research and 
commercial positions. 
Not much 
international 
networking 
experience 
62 
 
Both key individuals have over ten years of professional experience in the 
pharmaceutical industry, primarily within domestic companies. However, they have 
limited international experience and lack established professional networks abroad. 
 
4.3.2 The networking process for Company B’s internationalization 
The reason they initiated their internationalization efforts in the Kyrgyz Republic was 
“we found a person who could represent our company in this country and manage the 
registration work independently” (IB1., 2025). The initial internationalization was based 
on the social network of the company’s previous manager, who had a friend living in the 
Kyrgyz Republic. This friend introduced the representative to the company management, 
leading to discussions about future business opportunities. Consequently, the company 
established a subsidiary in the Kyrgyz Republic and appointed this individual as its 
director. However, the registration process was neither easy nor quick; it took more than 
two years to obtain approval for registration and permission in these countries. 
Company B’s single type of pharmaceutical product was registered as a medicine in this 
country with two different dosages. Since the company established its representative 
office there, it has registered the food-grade products of another subsidiary in the 
market through this established subsidiary with a local person as director. The 
interviewee mentioned that “the food grade products registration was quite fast and 
easy. Currently, the company has started exporting activities to this country, and new 
products were delivered to the Kyrgyz Republic in April 2025” (IB2., 2025). They plan to 
register and export more pharmaceutical products with natural ingredients to this 
country and expand the business to the rest of the EAEU countries in the near future.  
 
Company B’s next target for expanding its business abroad is Kazakhstan, where the 
ethnic group known as Kazakh resides. The reason for targeting this country is its 
language and cultural similarity. Mongolia has a small ethnic group of people of Kazakh 
origin who speak the Kazakh language and understand Kazakh culture. The company 
employs individuals from the Kazakh ethnic group, and by utilizing this human resource, 
63 
it aims to enter the Kazakhstan market. “Every Kazakh employee has relatives or friends 
in Kazakhstan, which presents a good opportunity for the company. When we give tasks 
to our Kazakh employees to expand the market to Kazakhstan, they will definitely seek 
to meet their network in Kazakhstan” (IB2., 2025).  
 
However, the company lacks significant networking in other markets and continents. 
The interviewee mentioned that “we do have products that are highly effective and safe, 
manufactured in a very sustainable manner, and made with many beneficial natural 
ingredients. These products could be appealing to customers in highly developed 
countries, such as European nations. However, there is no one we can contact to support 
us in these countries. We are very interested if someone could recommend companies 
for collaboration or introduce us to an experienced distributor” (IB2., 2025).  
 
4.3.3 The types of networks 
Social network: Company B emphasized the importance of personal networks in their 
business operations. Specifically, the interview highlighted that “personal relationships 
helped us get access to current foreign markets. Some of our contacts come from friends' 
circles or shared professional experiences” (IB1., 2015). The current foreign market, 
Kyrgyz Republic, was obtained through social networks, with a previous key manager’s 
friend acting as the bridge to this new country.  
Business network: When the neither interviewee clearly stated that the company has a 
business network that can be utilized for their internationalization. The only type of 
network that helped them enter the Kyrgyz Republic was a social network, specifically a 
friend of a previous employee. Through their established business entity in the country, 
they began contacting local businesses for cooperation in this market.  
 
Institutional network: The Mongolian National Chamber of Commerce and Industry 
(MNCCI) is the primary organization that supports local businesses in their development 
of internationalization in Mongolia. Their primary activities include advocating for 
private sector interests, promoting trade and investment in Mongolia, and fostering 
64 
international partnerships between foreign entities and local businesses. Additional 
functions include supporting the export development of local companies, facilitating 
access to foreign markets, ensuring regulatory compliance, and organizing international 
trade fairs, business networking events, and training programs to enhance companies' 
competitiveness. A few years ago, MNCCI organized a business networking event for 
managers in Central Asian countries, to which Company B sent its senior managers. They 
traveled to two Central Asian countries, Uzbekistan and Kazakhstan, to meet 
pharmaceutical companies. “We got the idea to expand our business into these countries 
from this event” (IB2., 2025).  
 
Additionally, the Company B stated that they never participated in pharmaceutical 
industry scientific conferences such as Bio Europe, and it has no connection or 
networking with medical professionals from abroad. Networking with industry experts 
at such scientific conferences is a new endeavor for the company, which has never 
previously attempted it.  
 
Digital network: “We mostly use digital tools for local communication rather than for 
building networks. Our company website and social platform profiles are active, but they 
have not led to business networking yet” (IB1., 2025). This suggests that while Company 
B maintains a basic digital presence, such as a company website and LinkedIn profile, 
they do not consider digital networking a primary channel for international business 
development.  
 
4.3.4 Company B’s internationalization challenges  
Similar to the interview with Company A, the interview with Company B focused on the 
six types of challenges mentioned in the previous part and discussed in the literature 
review chapter. Additionally, open-ended questions were also asked to reveal any 
further internationalization challenges not covered in the literature review. 
  
65 
Regulatory challenges: Foreign countries' regulations regarding pharmaceutical 
products present one of the biggest challenges to overcome for Company B. Each 
country has its own specific rules when it comes to permitting pharmaceutical products. 
“Some countries with strict regulations require clinical trials with large sample sizes 
conducted within their borders, while others permit products that have been used in their 
country of origin for more than five years” (IB2., 2025). These regulatory demands are 
the most challenging aspect, and due to these stringent requirements, Company B has 
cancelled its internationalization plan to China. The networking opportunities in China 
were insufficient for Company B, and the only business network, which consisted of 
previous raw material suppliers, supported their attempt to enter the Chinese market. 
However, strict country regulations and difficult approval processes, combined with 
unprofessional and inefficient network support, made it impossible for Company B to 
succeed in the Chinese market. Nevertheless, they mentioned that in the future, if they 
can find networking opportunities to support their entry into the Chinese market, they 
will be willing to try again.  
 
Financial and resource constraints: Company B has not indicated that financial 
difficulties are the primary obstacle preventing it from expanding its market 
internationally. Since the company was established over thirty years ago, it has 
maintained stable operations in the local market, where it manufactures and sells its 
core products.  
 
Additionally, there are no specific funding organizations or institutional networking 
groups that provide financial support to companies in Mongolia. The only way to assist 
these business entities is through government-specific policies that give low-interest 
rate loans with longer repayment. The company received this type of financial support, 
which is not specifically aimed at helping companies expand their operations abroad; its 
purpose is more focused on developing their business locally. The interviewee 
mentioned that “a few years ago, there was a government export promotion program 
that distributed business loans with a low interest rate. With the help of that loan, we 
66 
managed to make our first step to China, even though it ended up unsucceeded” (IB2., 
2025). Additionally, the marketing head noted that “when we attempted to hire 
professional from the foreign country, the salary was too high, that we could not afford” 
(IB1., 2025). This reveals that company B faces financial and resource constraints 
regarding its internationalization, and it could perform better if it had sufficient financial 
resources.  
 
A lack of knowledge and experience: For Company B, finding experienced individuals 
who understand foreign markets is another significant challenge the company faces, as 
it lacks experience in these new markets. The company’s primary strategy is to open a 
subsidiary office or collaborate with a trusted partner to gain knowledge in this market. 
This approach aims to reduce the risk associated with limited market knowledge by 
leveraging their network and acquiring insights through networking activities. 
Finding qualified human resources who can manage international business activities 
poses a challenge for the company. They attempted to find such personnel locally; 
however, they were unable to identify anyone with both the necessary experience, 
knowledge, and connections in foreign markets.  
 
Cultural differences: After starting work with the Kyrgyz Republic, the company began 
to understand the cultural differences and people’s attitudes toward business activities 
and communication styles. The variations in communication styles presented challenges, 
not only in face-to-face conversations and phone calls but also in email exchanges. The 
interviewee noted that “nationality and cultural differences significantly influence 
business cooperation, and we made our best efforts to adapt and understand these 
differences” (IB1, 2025). As they mentioned, social or personal networking is the top 
priority for conducting business in the Kyrgyz Republic. Business meetings between 
companies can be easily scheduled if both parties are interested in cooperating; they 
arrange a time and organize the meeting accordingly. However, in the Kyrgyz Republic 
or any other EAEU countries, even if both parties are eager for business, a meeting will 
never occur without a relative, close friend, or someone who can connect the two sides. 
67 
In Mongolia, knowing the person and establishing a personal relationship is not as 
crucial as it is elsewhere. Therefore, for company B’s market expansion in the Kyrgyz 
Republic, networking, especially social networking, is the most important tool to 
mitigate the challenge of cultural differences.  
 
Technological and digital challenge: Company B acknowledged that their limited 
technological and digital capabilities hinder their internationalization opportunities. 
Unlike firms in developed economies, Company B did not fully leverage digital platforms 
like LinkedIn or online B2B networks to build global relationships. Interviewees did not 
specifically mention that developing digital capabilities within the company is a 
significant challenge for them; rather, they are unaware of the importance of technology 
and digitalization. In today’s digital economy, under utilization of digital tools creates a 
major constraint, particularly for SMEs in regulated and knowledge-intensive sectors like 
pharmaceuticals, where digital engagement is a key enabler of global collaboration and 
market entry (Sinkovics et al., 2013). 
 
In addition to the overall challenges of internationalization, Company B added the 
“country of origin” effect as a significant challenge during its internationalization. While 
the company believes in the quality and efficacy of its natural pharmaceutical products, 
interviewees noted that “being a manufacturer from a developing country like Mongolia 
can negatively impact product success in the international market. Potential partners 
and regulators in more developed countries see Mongolian-made pharmaceutical 
products skeptically” (IB2., 2025), associating them with weaker regulatory standards or 
lower quality. According to Ciravegna et al., (2014), firms from emerging or less 
developed countries often face “liability of origin” which includes perceived lower 
product quality, weaker brand reputation, limited institutional trust which applied to 
Company B internationalization. Country of origin undermines Company B’s credibility 
and complicates its efforts to gain market entry or attract distributors abroad. Company 
B's case study found that country-of-origin and product-origin-based biases can 
influence internationalization, particularly for firms from less recognized 
68 
pharmaceutical-manufacturing nations. The liability of origin suggests that firms from 
emerging or developing economies face additional disadvantages in global markets due 
to negative stereotypes or unfamiliarity with their home country (Ciravegna et al., 2014).  
 
 
4.4 Comparison of case companies 
In this part, the main comparisons of the case studies will be discussed. The discussion 
is organized into a few different parts to address the research’s main research objectives.  
 
Both case companies are SMEs operating in the pharmaceutical sector, aiming to expand 
into international markets. However, they differ in terms of their country of origin, 
product type, challenges faced, and networking opportunities in foreign markets. 
Background information for the two case companies is summarized in the following 
Table 7. 
 
Table 7. Two case companies' background comparison. 
Categories Company A Company B 
Country of origin Finland (Developed economy) Mongolia (Emerging economy)
  
Company size Small-sized (less than 10 
employees) 
Medium-sized (More than 150 
employees) 
Type Born global Traditional 
Market experience Less than 10 years More than 30 years 
Product type Rare cancer medicine Natural ingredient biological 
active products 
International 
experience 
Actively engaged in global 
partnerships from inception 
Limited, early-stage 
internationalization 
Target countries to 
internationalize 
EU countries, the USA, and 
Japan (countries with a strict 
regulatory environment) 
Central Asian countries 
Key people’s education PhDs and MScs from top 
European universities 
Bachelor's in chemical science 
and business administration 
from local universities 
Key people’s 
international 
experience and 
networking 
Extensive, all key people have 
experience in international 
organizations and have direct 
network access to any foreign 
countries 
Limited, minimal interaction 
with foreigners and foreign 
institutions 
69 
Both companies are pharmaceutical SME, Company A is relatively small and also a new 
company, with only a few highly-skilled and experienced members who have rich 
networks all over Europe. They do not manufacture and commercialize the products by 
themselves; instead, they hire contract manufacturers and service providers from all 
over the world. Finland’s small domestic market, particularly for rare cancers, made 
Company A’s internationalization a necessity from the very beginning. The company’s 
niche product targeted a global patient population from the outset, aligning with the 
born-global definition of "early and rapid internationalization" (Knight & Cavusgil, 2004). 
The company’s human resources consist of highly qualified professionals with 
international experience who have networked across Europe and the U.S. The firm relies 
heavily on its networks, with decisions regarding suppliers, quality consultants, and 
market entry being network-driven, often based on trust and past relationships. 
According to Johanson & Vahlne’s (2009), the role of trust and relationships in 
internationalization helps firms reduce uncertainty in foreign markets. 
 
Company B is a medium-sized company with over 150 employees and has operated in 
its local market for more than thirty years. However, no key members of the company 
have significant international experience or network connections abroad. They 
manufacture their products in-house, which makes them a traditional manufacturing 
firm, following a simple internationalization path, starting with neighboring or 
geographically closer countries. It gradually expanded into culturally similar and 
geographically nearby markets (e.g., Central Asian countries like the Kyrgyz Republic and 
Kazakhstan) only after it had succeeded domestically. Unlike Company A, Company B’s 
internationalization was led by motivations rather than necessity (Doojav et al., 2020). 
The company does not have an export department, and its marketing team and personal 
networks manage its international operations. Furthermore, it does not have sufficient 
knowledge, regulatory experience, or international networks. Despite an interest in 
expanding to Western markets, the firm is limited by low absorptive capacity and a lack 
of reliable networks. 
 
70 
Networks play an important role in the internationalization strategies of both case 
companies. Both companies emphasize trust-based partner selection: Company A 
actively utilizes various types of networks and chooses its business partners through 
both formal and informal networks, as well as long-term relationships, while Company 
B relies more on personal trust and familiarity to identify foreign partners. Table 8 
compares the network types utilized by both companies for their internationalization.  
 
Table 8. Case companies' types of network and utilization in their internationalization. 
Aspects Company A Company B 
Main Networking Types  Actively utilize all different 
types of networks, including 
social, business, institutional, 
and digital networks, as well 
as connections with company 
and key managers. 
Social networks primarily 
involve the personal 
connections of key 
managers, while institutional 
networks are utilized to a 
lesser extent. 
Social network Friends in the 
pharmaceutical industry, 
academic peers, former 
classmates, and former 
colleagues from previous 
companies or research 
institutions 
Friends or relatives of key 
people.  
Business network Consulting firms, R&D 
partner companies, 
preclinical and clinical trial 
organizations, raw material 
and end-user product 
contract manufacturers, 
quality management service 
providers, hospitals, and 
laboratories 
Limited 
Hired a consulting firm in 
China.  
Institutional network Finnish institutional body, 
Universities and Research 
Groups, Bio-Europe, Financial 
support program, PAG UK, 
EMA, Scientific networking 
conferences 
MNCCI, Government 
program for financial support 
(business loan with low 
interest rate) 
Digital network B2B network virtual groups, 
LinkedIn, Virtual Bio-Europe 
Limited 
 
According to the literature background chapter, "SMEs rely on different types of 
networks for foreign market knowledge and rapid market entry" (Musteen et al., 2014), 
71 
and "SMEs use networks to pivot quickly in response to regulatory or market changes" 
(Paul et al., 2017). In line with this, both case companies prioritize the network for their 
internationalization. While both SMEs are aware of the importance of networks. 
However, their approaches differ significantly in terms of scope and intensity. 
 
Company A’s network utilization is a combination of social, business, institutional, and 
digital networks. In contrast, Company B mainly relies on social networks. They often 
leverage personal relationships, such as friends and relatives.  
 
Company A prioritizes building deep, trust-based relationships with its partners and 
views them as close, strong network ties who can grow together with them for the long 
term. Company A actively invests in partnerships with networks that share its values and 
goals, treating these partners as coworkers and friends in the complex international 
pharmaceutical environment. This is reflected in their internationalization approach, 
where partners are considered a crucial tool for global market access, and they work 
together as a team instead of Company A working alone.  
 
In contrast, Company B recognizes the importance of networking from a different 
perspective. For example, Company B hired a consulting firm in China to manage its 
regulatory registration documents. This represents a purely service-based interaction 
without any relationship development with this consulting firm. There is no active 
networking, personal communication, or long-term collaboration with these external 
parties. This highlights a fundamental difference in how each company utilizes its 
network. Company A builds strategic, close, and deep relationships, and Company B 
tends to engage in short-term, neutral connections without any close connections. 
 
Company A collaborates with consultants, experts, and regulatory advisors, and 
Company B lacks this support. This results in slower and more challenging international 
expansion. Company A’s expert network comprises consulting firms, R&D collaborators, 
preclinical and clinical trial organizations, contract manufacturers, and quality 
72 
management service providers. There is always someone they can contact when starting 
a project abroad, and through these networks, Company A leverages global market 
entry to co-create value. 
 
Additionally, Company A benefits from public and institutional funding in Finland, which 
enables it to sustain its operations and continue its outreach abroad. External financing 
allows for greater risk-taking in internationalization, a characteristic typical of developed 
market SMEs (Oviatt & McDougall, 2005). In contrast, Company B receives limited 
domestic financial support, primarily through general business loans that do not 
emphasize international growth. Besides institutional financial support, there are other 
organizations, such as PAG, university groups, and various scientific networking 
conferences, that allow Company A to build long-term collaborations that facilitate 
smoother international market entry. 
 
Regarding digital presence, Company A actively engages with global digital platforms, 
such as LinkedIn, professional digital networking platforms, and the BIO-Europe digital 
conference. In comparison, Company B does not have a global digital networking 
strategy, which leads them to stay out of international reach. 
 
Both Company A and Company B face several challenges in their internationalization. 
Although both companies operate in the highly regulated pharmaceutical industry. Their 
challenges are different in terms of market focus, resource availability, institutional 
environments, and networking strategies. Based on the findings from the literature 
review on recent challenges in SME internationalization, this research focuses on six key 
types of challenges. Table 9 outlines and compares the internationalization challenges 
faced by the two case companies, highlighting both their similarities and key differences. 
 
 
 
 
73 
Table 9. Comparison of internationalization challenges faced by case companies. 
Internationalization challenges Company A Company B 
Regulatory and institutional challenges High High 
Financial and resource constraints High Medium 
A lack of knowledge and experience Low High 
Market specific challenges Medium Unknown 
Cultural and communication differences Low Medium 
Technological and digital challenges Low High 
 
Table 9 compares six categories of challenges commonly encountered by SMEs during 
internationalization: regulatory and institutional barriers, financial and resource 
constraints, knowledge and experience gaps, market-specific issues, cultural and 
communication differences, and technological/digital difficulties. Each challenge is 
evaluated based on the degree of difficulty faced by the respective company: High, 
Medium, and Low. However, market specific challenge is unknown for case Company B, 
because the company did not encounter many foreign markets specific challenges that 
could be different, except for the Kyrgyz Republic and China currently. 
 
Both companies experience high regulatory and institutional challenges, reflecting the 
strict compliance requirements of the pharmaceutical sector, which aligns with highly 
regulated industries facing steep challenges when entering foreign markets (Grant, 
2024). This was the biggest challenge both companies agreed and repeated during the 
interview with both case companies.  
 
In terms of financial and resource constraints, both companies agreed that this is the 
challenge for them, though the importance is higher for Company A. This may reflect 
Company A's deeper investment in R&D, clinical trials, and contract manufacturing 
processes, which demand substantial funding. Company B reports only medium-level 
financial constraints, potentially because it adopts less resource-intensive strategies and 
no plan to invest much. Because they acknowledged that they do not see the financial 
constraint as the most significant challenge they encountered, they did not invest in a 
foreign expert who could help them develop their internationalization due to the high 
cost of the expert fee.  
74 
 
Lack of knowledge and experience: Company A reports low difficulty, suggesting a 
highly educated management team’s prior international experience and access to 
specialized networks. Additionally, Company A deliberately focuses on expanding within 
EU countries, where regulatory systems, institutional frameworks, and industry 
infrastructure are more familiar. This strategic preference for familiar markets enables 
Company A to reduce internationalization risk and avoid failures that may arise in 
unfamiliar or highly uncertain markets. Company B, however, faces a high challenge in 
this aspect, aligning with literature on SMEs from emerging economies that struggle 
with international business knowledge, weak managerial experience, and limited 
institutional learning (Sanyal et al., 2019). 
 
Market-specific challenges show a medium level for Company A, and it is marked as 
"unknown" for Company B. Because Company B is in the early stage of its 
internationalization and has not encountered many new foreign markets yet.  
 
Regarding cultural and communication differences, Company A faces a few challenges. 
The reason is that their foreign markets are located mainly in the EU region and they 
have internationally experienced staff who speak multiple languages. In contrast, 
Company B reported medium-level difficulties. This is a common challenge faced by 
SMEs from isolated and emerging markets like Mongolia. Initially, Company B tried to 
enter the Chinese market because of the size and geographic location. However, lack of 
market knowledge, cultural and language differences, and regulatory challenges led to 
the failure. Therefore, Company B shifted its focus to culturally and institutionally closer 
Central Asian markets. Such countries have lower risk and greater familiarity. 
 
Finally, regarding technological and digital challenges, the pharmaceutical industry is 
not as advanced in digitalization. It does not use modern IT systems, digital tools, and 
automation to the same degree as the high-tech industry. This challenge highlights the 
companies’ limited digital skills and capabilities, as well as the underuse of digital 
75 
platforms. Company A reports low difficulty. They actively use digital platforms, and key 
managers can use these digital tools effectively. Conversely, Company B faces significant 
technological and digital hurdles. This aligns with Hu et al., 2024; Andini & Kusnandar 
(2024)’s findings of digital underdevelopment in emerging economies. 
  
Finally, at the end of this subchapter, this section examines how two case companies 
utilize different types of networks to tackle their internationalization challenges. 
Networking is widely regarded as critical support for SMEs in overcoming 
internationalization challenges (Johanson & Vahlne, 2009; Musteen et al., 2014). 
However, in the context of the two case companies, networks play distinct roles and 
provide varying levels of support depending on the nature of the challenge and the 
firm's internationalization strategy.  
 
MNEs have the expertise and human resources for every aspect of the 
internationalization process. However, pharmaceutical SMEs cannot afford to hire 
experts for every operation. Additionally, this industry requires expertise at every single 
step. Therefore, networking and having reliable partners are essential for overcoming 
challenges, especially in the international market.  
 
Table 10 illustrates how networks addressed the internationalization challenges faced 
by the two case companies.  
76 
 
Table 10. The importance of different types of network utilization for internationalization challenges. 
 
Challenges Company A Company B 
Social 
network 
Business 
network 
Institutional 
network 
Digital 
network 
Social 
network 
Business 
network 
Institutional 
network 
Digital 
network 
Regulatory & 
Institutional Challenges 
Moderate High High Low High Moderate Low Not used 
Financial & Resource 
Constraints 
Low Moderate High Low Low Low Moderate Not used 
Knowledge & 
Experience Gaps 
Moderate High Moderate Moderate Moderate Low Low Not used 
Market-Specific 
Challenges 
Moderate High Moderate Moderate Not used Not used Not used Not used 
Cultural & 
Communication 
Differences 
Low Moderate Low Moderate Moderate Low Not used Not used 
Technological & Digital 
Challenges 
Not used Moderate Low High Not used Not used Not used Low 
77 
 
Based on the backgrounds of the two companies, their internationalization status, the 
internationalization challenges they encounter, and their level of network utilization, it 
can be concluded that Company A is effectively using different types of networks to 
address internationalization challenges. In contrast, Company B faces numerous 
challenges in its internationalization efforts. They are not employing specific tactics, 
such as many different types of networks, to overcome these challenges. Rather, it is 
more accurate to say that Company B continues to struggle with internationalization 
challenges and is not utilizing various networks to address them. It cannot be said that 
networks have no impact on internationalization challenges for pharmaceutical SMEs 
from emerging economies. Instead, pharmaceutical SMEs from emerging economies are 
not effectively utilizing networks to address their challenges.  
 
Company A, from a developed economy, effectively integrates all four network types to 
address a wide range of internationalization challenges, particularly by leveraging 
institutional and business networks to navigate regulatory and financial constraints. In 
contrast, Company B primarily relies on social networks, exhibiting limited or no 
strategic use of business or digital networks. This analysis points to the literature (e.g., 
Ciravegna et al., 2014; Narooz & Child, 2017) that indicates SMEs in emerging economies 
often lack access to formal business networks and institutional support, limiting their 
ability to establish strategic partnerships. Consequently, they tend to depend on 
informal or social networks, such as friends, family, or former colleagues.  
 
The biggest internationalization challenges for Company A were regulatory and 
institutional challenges, as well as resource and financial challenges. Market-specific 
challenges were moderate, while the remaining three types of challenges—lack of 
knowledge and experience, cultural and communication differences, and technological 
and digital challenges—were viewed as the least important. To overcome the most 
significant challenges (regulatory and institutional challenges, resource and financial 
challenges, and market-specific challenges), institutional and business networks had the 
strongest effect. The business network had the greatest impact on overcoming all six 
78 
types of challenges, followed by the institutional network, which had a moderate to 
significant effect on these key challenges. However, while Company A recognized the 
importance of social networks for their internationalization, their effect on overcoming 
challenges was not as pronounced as that of business and institutional networks. The 
digital network had a limited impact on addressing the most important challenges, 
though it was beneficial for tackling the least significant challenges, such as overcoming 
the lack of new market knowledge, market-specific challenges, and cultural and 
communication differences.   
79 
5 Conclusions  
This section will present the results of this research, as well as the theoretical 
contribution, limitations, and suggestions for further studies. 
 
 
5.1 Summary of findings and theoretical contributions 
This research aimed to explore how networking supports pharmaceutical SMEs in 
overcoming internationalization challenges during their new market entry and how the 
situation differs between SMEs from emerging and developed economies. If the country 
of origin affects the situation. To understand this, two case studies of pharmaceutical 
companies from each type of economy were analyzed based on the relevant literature. 
The main research objective was to explore and compare how pharmaceutical SMEs 
from emerging and developed economies utilize networks to overcome the 
internationalization challenges of entering foreign countries. 
 
Firstly, this paragraph addresses the sub-objective of identifying the types of 
internationalization challenges that SMEs from different economies encounter and 
comparing these challenges. This research focused on six specific challenges: regulatory 
compliance, financial and resource constraints, market uncertainty, cultural and 
communication differences in foreign countries, market-specific challenges, and the 
utilization of technological and digital tools. Market-specific challenges were moderate 
for Company A, while the lack of knowledge and experience, cultural and 
communication differences, and technological and digital challenges were identified as 
the least significant. For Company B, all types of internationalization challenges have a 
high to moderate effect, except for market-specific challenges, as Company B is in the 
early stages of its internationalization and has not yet encountered many new foreign 
markets. Therefore, it can be stated that pharmaceutical SMEs from emerging 
economies face more challenges compared to those from developed economies. This 
finding confirms that firms from emerging markets have a weaker competitive 
80 
advantage compared to those from developed economies, primarily due to their limited 
institutional development, which leads to facing greater challenges in international 
markets (Igwe et al., 2022, p. 2). Companies in emerging economies often have weaker 
technology, less brand reputation, and management abilities (Ramamurti, 2012). 
Conversely, firms in developed economies have better access to networks, technological 
advancements, adequate network infrastructures, clear guidelines and regulations from 
regulatory bodies, extensive market knowledge and experience (Narooz & Child, 2017; 
Altnaa et al., 2021). This enables them to compete better in international markets. 
Additionally, the country of origin presents a significant challenge for pharmaceutical 
SMEs from emerging economies. It influences their product image in foreign markets. 
Company B, which is from an unfamiliar and less industrialized country, faces 
underestimation regarding product quality, regulatory reliability, and brand credibility 
in the international market. This is called "liability of origin". It decreases trust from 
potential foreign partners and regulators and makes market entry more difficult and 
costly (Ciravegna et al, 2014). As discussed in previous sections, this disadvantage 
emphasizes the need for stronger institutional networks, reputation-building strategies, 
and trust-based social connections to address the negative bias toward the country of 
origin. 
 
The second and third sub-objectives of this research were regarding the different types 
of networks utilized by the two case SMEs and the role of these networks in addressing 
their internationalization challenges. Company A, from a developed economy, presents 
a strategic use of all social, business, institutional, and digital networks. This approach 
enables the company to mitigate its internationalization challenges systematically.  
Particularly, regulatory compliance, financial/resource constraints, knowledge and 
experience gaps, and market-specific challenges. The most significant networks for 
Company A are business and institutional networks. These two types of networks are 
crucial to overcome strict regulations in foreign countries, access financial resources, 
and build effective partnerships. Another finding of this study is the growing role of 
digital platform networking in facilitating successful internationalization. Digital and 
81 
social networks, while not central, still play a supporting role in enhancing access to 
market knowledge and facilitating communication. Company A has strategically 
developed digital platforms as part of its internationalization efforts, using them to 
strengthen its existing networks. Company A’s case of digital platforms utilization 
supports Neubert's (2018) finding that digital networks are becoming cost-effective 
tools that enhance firms' global visibility, gather market knowledge, and facilitate new 
partnerships without requiring a physical presence or incurring additional costs. In 
contrast, Company B has limited use of digital platforms. Therefore, they lost 
opportunities to expand their international network and reach new partners. Digital 
networking enables SMEs to overcome geographic and institutional limitations at 
relatively low costs (Jean et al., 2021). Digital platform networking represents an 
effective tool for SMEs to enhance their global connectivity.  
 
Company B relies on social networks, such as personal contacts. It shows minimal 
utilization of business and institutional networks and virtually no use of digital networks. 
Therefore, Company B struggles to address its internationalization challenges effectively. 
This aligns with the findings of Ciravegna et al. (2014) and Narooz & Child (2017), that 
SMEs in emerging economies often lack access to structured network ecosystems and 
rely on survival-oriented informal connections. Additionally, it confirms Altnaa et al 
(2021)’s findings that Mongolian SMEs often depend more on social networks than 
formal business or institutional networks for market-related connections. This reliance 
poses challenges for SMEs in emerging economies such as Mongolia. For example, it 
limits their ability to leverage more formal types of networks that could enhance their 
internationalization efforts.  Furthermore, support from third parties (government, 
funding programs, and NGOs) in emerging countries is low (Narooz & Child, 2017).  
Therefore, it forces SMEs to depend on social networks.  
 
Although Company B’s overall network utilization is limited, there are clear cases where 
networks have played a crucial role in their internationalization efforts. For example, 
social networks enabled their entry into the Kyrgyz Republic. The government-
82 
supported financing program helped them take their first steps toward the Chinese 
market. Additionally, participation in an institutional networking event gave them the 
idea to expand their business to Central Asian countries. It means that, whenever 
Company B had the opportunity to use a network, they always reached a positive 
outcome.  
 
There is another interesting finding that proves that the country-of-origin effect is 
crucial for R&D based innovative products such as pharmaceuticals. Product reputation 
significantly decreased due to its country of origin being less developed.  Despite 
Company B’s emphasis on product quality and scientific credibility, its reputation was 
significantly diminished because it is from a less developed country.  
 
Therefore, based on the findings, this research shows that SMEs from developed and 
emerging economies use networks differently to overcome internationalization 
challenges, depending on their own capabilities and third-party support. This supports 
the initial idea that SMEs from different economic backgrounds have unique networking 
opportunities and use networks in different ways to address specific challenges in the 
international market (Sanyal et al., 2019). SMEs from developed economies benefit from 
various types of networks and operate within an integrated network ecosystem, which 
helps them handle internationalization challenges more effectively. SMEs from 
emerging economies tend to have lower levels of network use. However, all levels of 
network utilization still help them overcome challenges to some extent. This means 
different types of networks assist firms, whether from developed or emerging 
economies.  
 
 
5.2 Managerial implications 
Regarding the implications for decision-makers in SMEs from developed and emerging 
economies, this study can provide several contributions.  
 
83 
First, the findings emphasize the strategic importance of various types of network 
utilization for SMEs' internationalization. Managers of both developed and emerging 
economy SMEs should understand that relying solely on informal social networks is 
insufficient for successful internationalization. Instead, developing a combination of 
social, business, institutional, and digital networks can enhance the chances of 
successful internationalization.  
 
Second, the study emphasizes the importance of proactive engagement with 
institutional support systems. SMEs in both developed and developing countries 
benefit from public innovation agencies, government funding programs, and 
international trade missions (Radulovich, 2008). Managers should actively seek out and 
engage with such institutions to reduce financial and regulatory burdens. The lack of 
networking opportunities and support services from external organizations remains a 
major challenge for SMEs in emerging economies. To support the internationalization of 
local SMEs, countries have established official institutional networks. For example, 
Business Finland in Finland, KOTRA in South Korea, and the China Council for the 
Promotion of International Trade (CCPIT) in China.  
 
Third, the research highlighted the importance of digital networking. Managers who 
operate in emerging economies should allocate resources to digital platforms, including 
LinkedIn, virtual events, B2B portals, and EXPOs. These platforms serve purposes such 
as marketing and international partner connections. SMEs need to use digital 
networking tools for their internationalization strategy to reach maximum foreign 
market potential and competitive advantage. This is referred to as one of the most cost-
effective approaches. 
 
Fourth, SMEs in emerging economies face the country-of-origin challenges. It requires a 
strategic plan and concrete market promotion activities such as branding, certification, 
and reputation building. Managers must recognize that how foreign countries view their 
country can influence their trust and their future intentions. Therefore, SMEs should 
84 
strategically leverage networks to mitigate these effects. The actions include third-party 
product validation and partnerships with internationally reputable brands. 
 
Fifth, the study suggests that internationalization is not a one-time, temporary act. It is 
an evolving systematic process, such as long-term relationship-building with 
international partners. Managers should treat their partners as future-oriented strategic 
networks that will expand together with their firm. After building a network, it becomes 
essential to maintain and nurture these relationships actively. 
 
Lastly, the findings reveal important implications for governments. Since SMEs are main 
contributors to a country's economic development and create most employment, 
governments should focus on building institutional infrastructure to support SME 
internationalization. This includes financial funding programs, trade facilitation services, 
and institutional networking platforms that can connect local SMEs with global markets. 
Such actions will significantly reduce the liability of origin and enable SMEs to compete 
more effectively in international markets. 
 
 
5.3 Limitations and directions for future research 
Despite its contribution to current literature, this study has several limitations. 
 
Since only one pharmaceutical SME from each economic background is studied, the 
findings may not be fully generalizable. The sample size is limited. The findings may not 
apply to the whole range of internationalization of all SMEs operating in this industry, in 
the exact locations, since they are based on particular firm-level experiences. 
 
The internationalization and network utilization of the two case companies differ 
significantly. Two case companies have different backgrounds. The Finnish company 
actively engages in utilizing various types of networks, while the Mongolian company is 
85 
less involved and is not even aware of the importance of networking. Therefore, in the 
future, the two companies should be compared on a similar level of network utilization 
 
Participants may provide subjective responses influenced by their interests. They may 
view their company’s internationalization efforts in an overly positive or overly negative 
way. This could lead to biased interpretations and affect the reliability of the findings. 
 
The results may not be directly applicable to SMEs in other industries. The 
pharmaceutical sector operates under unique regulatory frameworks that significantly 
shape internationalization processes. This may not be relevant or relatable to firms in 
different industries. 
 
The two case companies are from two distinct countries with different cultural and 
contextual differences. This may impact how networks function in these countries, and 
it may potentially limit direct comparability. 
 
Regarding the directions for future research, this study contributes to understanding 
how pharmaceutical SMEs from developed and emerging economies utilize different 
networks to address their internationalization challenges. However, the following 
directions remain open for further research exploration.  
 
Pharmaceutical companies are not a homogeneous group. Their regulatory, operational, 
and strategic environments differ significantly based on their specific products. For 
example, drug manufacturers, R&D oriented drug developers, and IV solution 
manufacturers operate under different regulatory environments. This study compares a 
supplement manufacturer to a drug development company. Future research should 
explore and compare the same groups, such as generic drug manufacturers, with other 
generic drug manufacturers. Each SME faces its unique internationalization challenges, 
which impact its networking needs and strategies.  
 
86 
This study examines firms from Mongolia and Finland as representatives of emerging 
and developed markets. However, generalizability can be improved. For example, 
compare SMEs from bigger and more professional emerging economies such as India, 
Pakistan, Brazil, Indonesia, or China, which are the largest pharmaceutical product 
manufacturing countries. Furthermore, developed economies with specialized 
pharmaceutical industries, such as Switzerland or Japan. Expanding the samples would 
improve understanding of how the country of origin shapes SME internationalization 
success in the pharmaceutical sector. 
 
While this thesis addressed digital networking to some extent, a more in-depth 
exploration of how digital platforms, particularly industry-specific ones, facilitate 
internationalization would be beneficial.  
 
This study focuses on successful networking strategies; however, failed 
internationalization attempts, especially those related to failed networks, can provide 
equally valuable lessons. Future studies should examine network-related failures to 
identify patterns of over-reliance on weak ties or ineffective institutional support 
mechanisms. 
 
This study focuses only on the challenges of internationalization. However, future 
research could explore the internationalization opportunities. Both perspectives can 
provide valuable insights to SMEs to succeed in international markets. 
 
Since this research demonstrated that networking is essential for SMEs' successful 
internationalization, future studies could explore it in greater depth. For instance, how 
the educational background of key managers, language proficiency, and previous 
international experience contribute to successful internationalization. 
 
As SMEs are the main contributors to countries' economic development, the 
government and state organizations should support their local SMEs' 
87 
internationalization. To improve the effectiveness of internationalization, they should 
prioritize the development of institutional support systems.  They should provide SMEs 
with opportunities to access formal business and international networks. Meanwhile, 
SMEs should adopt integrated networking. Integrate all digital, institutional, and 
interpersonal networks to improve their internationalization success. 
 
Lastly, the pharmaceutical firms' successful internationalization is vital for global health. 
It significantly affects the reduction in costs of essential life-saving products and their 
availability in the global market (Takawira & Pooe, 2024). Therefore, the successful 
internationalization of pharmaceutical SMEs is crucial for the firms, the countries, and 
the overall society well-being.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
88 
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Appendices 
Appendix 1: Statement on the use of AI tools 
OpenAI's ChatGPT and Grammarly are employed as language enhancement tools.  
In this research writing, ChatGPT AI was used exclusively for the following purposes: 
 
- Improving sentence clarity and grammar. 
- Finding better words and organizing sentence structure for improved readability. 
- Receiving suggestions on academic tone and structure. 
 
Grammarly Premium is utilized to improve grammar, punctuation, spelling, and enhance 
clarity and sentence structure.