Indian SMES and Internationalization - Role of Experiential Knowledge for the Firm’s Performance & Growth

Abstract

The purpose of this paper is to understand the importance of Internationalization of SMEs and the specific barriers which affects the Internationalization process in the light of Uppsala model of Internationalization. The paper will find ways for the positive and negative aspects of each theoretical approach to Internationalization process for the Indian SMEs. And also the study would try to reveal the advantages enjoyed by the Indian SMEs by slowly adopting themselves to the International markets through Experiential knowledge.
This study provides some implications and contributions to the International business literature by analyzing the impact of firms’ experiential knowledge and subsequent investment decisions on the profitability of the firm. According to the findings both the international and local experiential knowledge of firms are positively associated with profitability. This implies that when firms are investing in foreign markets, their experiential knowledge accumulated by managing international operations and the its network. Second, this study suggests that investing firms may need additional knowledge and experience to operate successfully in culturally dissimilar countries. The large geographical and cultural distance between countries. In this sense, the accumulation of firms' local experiential knowledge provides a context for interpreting the business market, increasing knowledge of clients, suppliers, competitors, government, institutional framework, rules, norms and values. This allows the firm to perceive business opportunities, increasing know-how of managing operations in the host country, reducing uncertainty and, consequently, enhancing subsidiary profitability. This implies that firms can learn from outside the local market and transform their experience into a competitive advantage.