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 



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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 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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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 



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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). 

 



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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 



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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.  



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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. 



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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).  

 



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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). 

 



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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.  

 



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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. 



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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