A hierarchical model of SME internationalization: Evidence from Spain

We empirically investigate the internationalization decision-making process of small-medium enterprises (SMEs). We argue that SME managers constrained by lack of resources and limited information simplify the internationalization decision by decomposing it into a hierarchy of two stages: First, they decide whether to expand abroad or not; then (if the case), they decide on the degree of control of the entry mode choice. Based on a sample of 436 Spanish SMEs, our paper contributes to the literature on SME internationalization in two ways: First, it shows the explanatory capacity of the hierarchical model to split SME internationalization into two different stages; and second, given a set of explanatory factors, it discriminates which factors impact each of the two stages respectively. In sum, our empirical findings indicate that a hierarchical decision-making model offers a realistic explanation of how SME managers approach the internationalization decision.