Autonomous University of Barcelona - idem@uab.es

Business Economics Department 

SMEs’ internationalization process in the context of 

Slovak Republic: Qualitative approach 

Supervisor: Dr. Alex Rialp i Criado 

PhD. Student: Martina Sojková 

Barcelona, 22 nd August 2007

Abstract 

This study contributes to area of the Slovak firms’ process of internationalization 

focusing especially on country where few studies about small and medium sized 

enterprises (SMEs) have been carried out. Using the qualitative methodology adapted 

from Yin (1989) and Eisenhardt (1989) provides a better understanding of SME’s 

internationalization process in the context of Slovakia. Based on six in-depths 

interviews, the study seeks to give answers to three simple questions: Why?, How?, 

and When? firms start their cross border business activities. Furthermore, a model of 

SMEs internationalization for further investigation is proposed. The discussion of the 

findings along with the recommendation to policy makers is included. 

Keywords: International Entrepreneurship, International Business, Process of 

Internationalization, Small and Medium Sized Enterprises, Slovakia 

2

ACKNOWLEDGEMENTS 

I have been very grateful to have the opportunity to write my research work in 

Business Economics Department in Autonomous University of Barcelona; the 

department with a nice, professional academics and administrative staff, who have 

offered me favourable conditions for my post-gradual study and research work. 

First, I would like to thank my supervisor Professor Dr. Alex Rialp for all his ideas, 

recommendations, and patience, which he shared with me during the process of 

conducting the paper’s writing. My thanks belong to: Dr. Joaquim Vergés, director of 

the doctoral programme, for his professional approach and understanding; Dr. Bengt 

Johanisson, for his enthusiastic and stimulating way of sharing his knowledge and 

experience. To Alicia Alesan and Ton Vendrell; thanks for their flexible and friendly 

solution to my technical doubts and questions. I believe that all what I have learned 

during my studies will be useful for my research work as well for professional carrier. 

I would like to thank also to the Ministry of Foreign Affairs of Spain; especially, the 

Agencia Española de Cooperación Internacional, for its financial support, without 

which the realization of my study would have not been possible. 

Also, I would like to mention the persons who helped me to find the basic information 

about SMEs in Slovakia, which was indispensable for my work. My gracious thanks go 

to Mgr. Mária Radvanská (Regional Advisory and Information Centre Prešov), Martin 

Zbur (National Agency for Development of Small and Medium Enterprises), Ľubomíra 

Slobodová (Slovak Chamber of Commerce and Industry Banská Bystrica regional 

chamber) and Vladimír Laššák (The Office of Banská Bystrica self–governing Region). 

Many thanks also to six entrepreneurs and managers who were willing and dedicate to 

me their time, answered all my questions and share with me their entrepreneurial 

experience. 

I would also like to thank my mother, sisters, boyfriend, colleagues and friends for their 

understanding of my dedication to finishing my studies. Special thank to my flatmates 

(Gladys, Ambra, Chen, and Laurent) for cheering me up in all situations. 

In progress, I would like to thank to my evaluators for their comments and observation 

that will help me improve the research work about the process of Slovak SMEs 

internationalization which I plan to continue in the future. 

3

Table of Contents 

Acknowledgements.......................................................................................................3 

1. PROBLEM STATEMENT......................................................................................9 

1.2. Structure of the work................................................................................................................11 

1.3. Objectives of research and research questions......................................................................12 

1.4. Contributions of the work.........................................................................................................14 

1.5. Delimitation of the study...........................................................................................................15 

2. A REVIEW OF RELATED LITERATURE............................................................17 

2.1. Firm’s internationalization models and theories.....................................................................19 

2.1.1. Uppsala Internationalization Model – U Model......................................................................20 

2.1.2. Innovation Models – I-Models...............................................................................................22 

2.1.3. The resource based-view and network theory on firm’s internationalization...........................25 

2.1.4. Factors of firm’s internationalization......................................................................................27 

2.1.4.1. Motivation to firm internationalization.............................................................................28 

2.1.4.2. Barriers to firm internationalization.................................................................................29 

2.1.5. Market selection and mode of entry......................................................................................32 

2.2. International entrepreneurship.................................................................................................35 

2.2.1. Development of International Entrepreneurship....................................................................37 

2.2.2. IE Research.........................................................................................................................38 

3. RESEARCH METHODOLOGY...............................................................................40 

3.1. The explanation and justification of qualitative research........................................................40 

3.2. Methods of data collection and sources of information..........................................................41 

3.3. Case selection...........................................................................................................................43 

4. THE STATE OF THE ART OF SLOVAK SMALL AND MEDIUM SIZED 

ENTERPRISES ..........................................................................................................45 

4.1. Slovak SMEs before 1989 .........................................................................................................53 

4.2. Slovak SMEs after 1989.............................................................................................................55 

4.3. The present state of Slovak SMEs............................................................................................56 

4.4. Slovak SMEs’ foregin trade during 2001 – 2005.......................................................................58 

5. CASE ANALYSIS ...................................................................................................61 

5.1. Individual case analysis............................................................................................................62 

5.1.1. CASE 1................................................................................................................................62 

5.1.2. CASE 2................................................................................................................................63 

5.1.3. CASE 3................................................................................................................................64 

5.1.4. CASE 4................................................................................................................................65 

4

5.1.5. CASE 5................................................................................................................................66 

5.1.6. CASE 6................................................................................................................................66 

5.1.7. Summary of individual case analysis....................................................................................67 

5.2. Comparative analysis................................................................................................................78 

5.2.1. Why do Slovak SMEs enter foreign market/s?......................................................................78 

5.2.2. How Slovak SMEs choose the foreign market?.....................................................................85 

5.2.3. When do Slovak SMEs start their cross boarder business activities?....................................92 

5.3. Discusion of findings................................................................................................................93 

5.4. The SMEs clasification..............................................................................................................95 

5.5. Model - the initiation of Slovak SMEs’ internationalization.....................................................96 

5.6. Some recommendation for policy makers...............................................................................98 

6. CONCLUSIONS, LIMITATIONS and FUTURE RESEARCH................................100 

Annex 1 Institutions contacted with the aim to obtain existing database, contacts or 

information related to Slovak SMEs..........................................................103 

Annex 2 Recommendation letter from Dr. Joaquim Vergés, director of doctoral 

programme...............................................................................................104 

Annex 3 The general guideline for face to face semi structured interview...............105 

Annex 4 The proposal of the questionnaire for further study of the comparison of 

factors (external, internal) between SMEs operating only into home market 

with those operating also in foreign market. .............................................106 

REFERENCES.........................................................................................................111 

Web-based sources..................................................................................................125 

List of Tables 

Table 1: The basis information about six cases..........................................................16 

Table 2: Innovation models of firm's internationalization.............................................23 

Table 3: The classification of the motives for firm export ............................................29 

Table 4: Characteristics of Export barriers according to Leonidou (1995a) ................30 

Table 5: Barriers to exporting in SMEs .......................................................................31 

Table 6: Comparison of Different Frameworks for studding Foreign Entry Mode .......34 

Table 7: Chronological development of IE definitions .................................................36 

Table 8: Regional differences in Slovakia ...................................................................43 

Table 9: Six selected firms..........................................................................................44 

Table 10: The review of the empirical studies about entrepreneurship and international 

business leaded in CEE countries with the focus on Slovakia....................46 

5

Table 11: Brief review of used theories in CEE studies ..............................................52 

Table 12: Industrial enterprises according to size structure in Czechoslovakia 1930 .54 

Table 13: Comparison of the structure of business entities and employment between 

Slovakia and Europe by size.......................................................................56 

Table 14: Destination of the sales in per cent (data collected in 1997).......................60 

Table 15: Firm’s basic information ..............................................................................71 

Table 16: Founder’s characteristics ............................................................................73 

Table 17: International activities .................................................................................74 

Table 18: Support program for SMEs .........................................................................77 

Table 19: The motivation for firm export .....................................................................78 

Table 20: The export barriers of six analysed Slovak SMEs.......................................81 

Table 21: Mode of entry into foreign markets..............................................................86 

Table 22: The firm’s presentation into fairs and conferences......................................89 

List of Figures 

Figure 1: The internationalization process of the firm .................................................21 

Figure 2: Map of the regions of Slovakia ....................................................................44 

Figure 2: Volume of export and import by size categories in period 2001-2005 (bn SK) 

......................................................................................................................59 

Figure 4: Proposal of Model SMEs’ internationalization in context of Slovakia based on 

case analysis.................................................................................................97 

Figure 5: Proposal of literature review for further investigation.................................102 

6

Preface 

I am conscious of uncommonness preface for such kind of the work, but I consider it 

very important to explain to the readers the present stage of this work and my 

personal reasons which had motivated this investigation. 

The present work has been proposed as a basis or we can say a pilot work for my 

dissertation about the determinants factors of SMEs internationalization process. The 

focus of the dissertation will be to investigate which are the factors (external and 

internal) positively related with firm’s international business and how these factors 

differ between firms operating only in the domestic versus foreign market(s). The 

principal research questions will be: “What factors lead firms to remain operating only 

in the home market?”, and “What factors stimulate SMEs internationalization?”. “How 

the internationalization affect on firm’s performance?”. Finally, the aim will be made a 

factors evaluation according to their positive and/or negative impact on SMEs’ 

internationalization process. 

Before the identification of the factors affecting firm internationalization, it is necessary 

to investigate: 1) Why do firms initiate foreign business activities?, 2) How firms 

become international? and 3) When, after the start-up, do firms enter foreign market?. 

These are three basic research questions, which will help to shed light on the process 

of Slovak SMEs internationalization. 

There is a never-ending discussion regarding advantages and disadvantages of 

qualitative and quantitative methods for social science investigations. More and more 

researchers propose to use the triangulation of these methods (Rialp, Rialp and 

Knight, 2005). In order to go deeper into the planned objective and enter in the real-life 

phenomenon of SMEs internationalization process, this research used a qualitative 

methodology. 

The engine of this research was my personal curiosity to do my own investigation and 

a desire to gain experience in the research process. Therefore, through the personal 

interviews involving the environment of Slovak SMEs, the aim was to became familiar 

with the object of the study and to answer proposed research questions: How?, Why?, 

and When? firms become international. 

A review 1 of the international journals regarding works related to Slovak SMES and 

1 This literature review can be found in chapter four. 

7

SMEs sector from post-communist countries has resulted in only a few articles that 

focussed on Slovak SMEs and this finding also motivated and strengthen my decision 

to make this investigation. 

Hence, I denominated this work as “a pilot” but, all of the effort was directed toward 

making it the integrated and worthwhile investigation even my first. 

8

1. PROBLEM STATEMENT 

International / Entrepreneurship is a 

contextual and active phenomenon. 

(Friederike Welter, 

The 3 rd EDP Conference 

6.-7. April 2006, UAB Barcelona) 

The transition process initiated in 1989 brought many radical changes to the Central 

and Eastern European (CEE) countries. The members of “Visegrad four” (known also 

as V4) Hungary, Poland, Czech Republic, and Slovak Republic were no exception, 

and realized a considerable amount of economic, social, and legislative adjustments 

with the aim to turn from planned into the market directed economy. The 15 years long 

process of transformation shows its outcomes as former communist countries of V4 

became members of the European Union in 2004. Nowadays, globalization trends and 

the liberalization of trade are two of the most determining factors; offering new 

possibilities for enterprise development. 

There is no doubt about the importance of SMEs for an economic and technological 

development, as well as for the creation of employment (Birch 1981; Storey 1982, 

1994; Birley, 1986; Sandberg and Hofer 1987; Katsikeas et al. 1998; Robbins et al. 

2000; Jovanovic 2001; GEM 2003) for both developed and developing countries. The 

SME’s sector is therefore a subject of study attracting great interest from academics, 

policy makers and practitioners. The new emerging CEE market represents an 

opportunity for academics to test theories developed in areas such as Northern 

America and Western Europe (Meyer and Peng, 2005). The economic development 

enhances not only the new firms’ creation, but also their survival, growth, and 

development. To expand the firm’s activity into new foreign markets is a promising 

way to grow, especially if the home market is small, as the Slovakian one is. 

Therefore, internationalization is not just an alternative that firms can choose to follow 

but an critical decision for firms’ survival and success. 

The year 1989 was the milestone for CEE countries but the actual economical and 

institutional situation of these countries have own specifics which differ from country to 

country. 

9

For example, while private enterprises were common in Hungary and Poland before 

1989, in former Czechoslovakia during the communist power they did not exist 2 . The 

emergence of private Polish small business took place during the 1970s, and in 1980 

almost 28% of production was associated with that sector (Marková, 2003). 

Meanwhile, Hungary started making changes within the communist system during the 

1950s 3 (Fogel and Zapalska, 2001), whereas in Slovakia the strong communist power 

has had a dominant position until 1989. Therefore, researchers have to consider the 

uniqueness of each country of the former Soviet Union bloc. 

There is general lack of the studies form CEE market. Peterson (2004) reviewed all 

empirical research focus on international management and published by the Journal of 

International Business Studies, Academy of Management Journal and Administrative 

Science Quarterly in period 1990 - 1990. Total 124 articles were analysed. Only eight 

studies used the sample from CEE, prevailing the Russia (4 studies), following by 

Hungary (three studies), Romania (two studies) and one study focuses on Croatia, 

Slovenia, Czech republic, and Poland. 

Only a few investigations4 have been focused on the internationalization process of 

the SMEs entering into the CEE markets (Nakos and Brouthers, 2002), and in the 

CEE firm’s internationalization process (Smallbone et al., 1999; Uhlenbruck and 

Castro 2000). The studies have been focused more on the foreign firms’ entrance into 

former communist markets through foreign direct investments (Rolfe and Doupnik 

1996), entry mode choice (Smallbone et al., 1999; Meyer, 2000, 2001; Meyer and 

Skak, 2002) and the privatization process (Ivy, 1996). 

Clearly, there is a lack of research focusing on SMEs’ cross-border activities from the 

CEE market side. McDougall and Oviatt (1997), Uhlenbruck and De Castro (2000), 

and Meyer and Peng, (2005) have identified the issues concerning the 

internationalization process of SMEs in the CEE countries, as opportunities for future 

research. 

2 

The Communist party prohibited private enterprises in 1948, and all private enterprises were gradually 

nationalized. 

3 

For more information about the Hungarian and Polish processes of transition, see for example Fogel 

and Zapalska, 2001:46-49. 

4 

See in table 10 the review of 19 articles related to entrepreneurship and/ or internationalization from 

CEE countries mainly Slovak and Czech Republic published in period 1998 - 2005. 

10

SME’s is not only of importance to academics but also to policy makers. National 

Agency for Development of Small and Medium Enterprises (NADSME) in Slovakia 

established SME’s acceleration of internationalization and its penetration to new 

foreign markets as one of six aims of the support policy until 2005 (NADSME 2002). 

The recent published results of NADSME survey (October 2005b) focusing on the 

Slovak SME’s advantages and disadvantages of EU membership shows that only 

13.7% of SMEs increased exports to EU member states. Only 17.2% of the SMEs 

found it easier to find foreign partner. Based these findings, several questions arise. 

What are reasons that Slovak SMEs remain in the increasingly competitive home 

market? What are the factors inhibiting the SMEs expansion to foreign market? Is the 

problem in shortage of managerial, financial and/or marketing capabilities? Do Slovak 

entrepreneurs consider the entry to foreign market too risky? If yes, why? All these 

questions are related to three simple questions of the firm’s internationalization 

process: Why?, How?, and When? do Slovak firms enter foreign market. 

The substantial SMEs growth and development are important for regional 

development and national competitiveness. Therefore, it is imperative to provide more 

meaningful understanding of SMEs’ internationalization process, as the possible way 

for firms’ development and/or growth, mostly in underinvestigated research context 

such as the Slovakian case. 

1.2. Structure of the work 

The research is divided into six principal sections. The, first section continues with 

the clarification of the main research’s objectives, the proposition of nine research 

questions. A discussion of the work’s contribution as delimitation ends the first section. 

The second section focuses on the literature review related to the studied problem. 

Following the three proposed questions; Why?, How? and When? the literature review 

is presented. The chronological review of theories explaining firm internationalization, 

the factors affecting firm foreign business activities are helping to clear up the question 

Why do Slovak SMEs enter into foreign market?. Interrelated but more focuses on the 

research question: How and which foreign market are chosen by Slovak SMEs? is the 

investigation area in entry mode selection, with resource-based view and network 

theory contribution. Finally the research question: When do Slovak SMEs start their 

cross border business activities? is related with emerging study filed about the firm’s 

early internationalization as a new stream of international entrepreneurship. 

11

The justification of the qualitative methodology selection for the research, validity and 

confidentiality of the research, sources of the primary and secondary data, as well 

methods of data collection are presented in the third section of the research. 

The fourth section is focused on the specific context of Slovakia with the emphasis 

on SMEs, entrepreneurship, SMEs’ international business activities. Based on the 

literature review and the officially available data about SMEs, the chapter presents the 

review of articles focused on CEE market and sheds light on the state of the Slovak 

small and medium sized enterprises. The chapter analyzes the development within the 

SME sector, its international activities, and shows the specific characteristics of the 

SMEs from the communist period to the present time. 

The empirical findings are presented in the fifth section. Case analysis is presented 

in two parts. First, Individual case analysis offers a brief description of the firms under 

study. Second, according to the planned research questions, a comparative case 

analysis is presented. Based on the research findings, classification of firms is 

defined. This classification defines three groups according to the process of firm’s 

internationalization. Based on the findings, a new model initiation of SMEs’ 

internationalization process with some propositions is developed and presented along 

with the recommendation for policy makers. 

The sixth section concludes the research study. The conclusions, limitations of the 

study and implications for further research are discussed. 

1.3. Objectives of research and research questions 

The main objective of this research is to describe and propose more meaningful 

understanding of the Slovak SMEs’ process and factors of internationalization. 

Regarding the internationalization process, this study’s aim, is to understand firms’ 

activities crossing the border of national market 5 . Therefore, the unit of analysis is the 

process of SME internationalization. The process of the firm’s internationalization is 

defined as the time period from the initial entrepreneur’s plan to start the firm’s 

internationalization, through the entrepreneur searching of the possibilities for firm’s 

expansion to one or more foreign markets until the firm actively operates in that 

market(s). In linking back to previous statements, the principal research questions are: 

5 The activity related to foreign market via exporting, importing, licensing, franchising, joint venture or 

wholly-owned subsidiary. 

12

Why do Slovak SMEs enter into foreign market?, How Slovak SMEs became 

international?, and When, after the start-up, does a firm enter into foreign market?. 

The second objective is to develop a model of Slovak SMEs internationalization 

based on the six investigated cases for further exploration. 

In unity with the preface words of the work, the third objective is to develop the 

questionnaire. The knowledge gained from the interviews, entrepreneurs’ reaction and 

comments, will be used to develop an considering the different kind of firms operating 

in different industries, with different organization structures, entrepreneurs’ 

preferences and business plans, and of different size. The clear and easy 

understandable questionnaire for Slovak entrepreneurs will allow for a future 

quantitative research on Slovak SMEs’ internationalization. 

The most important thing for research is to determine the research questions (Yin 

1989). In accordance with the planned objective of providing better understanding of 

SMEs’ internationalization process and, based on the literature review of international 

entrepreneurship 6 , the study proposes nine research questions covering three broad 

areas of interest. 

1. Why do Slovak SMEs enter foreign market/s? 

RQ1 What are the motivations factors leading Slovak SMEs to internationalize? 

RQ2: What are the barriers faced by Slovak SMEs in the internationalization 

process? 

RQ3: Do Slovak SMEs use governmental or regional support programs for their 

internationalization? 

2. How and which foreign market are chosen by Slovak SMEs? 

RQ4: What entry modes are used by Slovak SMEs to enter foreign market? 

RQ5: What foreign markets are attractive for Slovak SMEs, and why? 

RQ6: How do Slovak firms identify their foreign contacts? 

RQ7: How do Slovak firms promote itself and their products or services in abroad? 

RQ 8: Is the Internet an important factor for Slovak SMEs internationalization? 

6 As it will be explained in capitol 2.2., the international entrepreneurship for this study is understand as 

a field of study including research developed in both fields in entrepreneurship and international 

business. 

13

3. When do Slovak SMEs start their cross border business 

activities? 

RQ9: How soon, after the inception, Slovak SMEs begin their foreign business 


1.4. Contributions of the work 

The study plans to contribute to the academic literature, policy makers as well 

practitioners in the following five areas. 

1. As it was mentioned in the problem statement, there is a lack of studies 

investigating the SME’s internationalization in the developing economies. Most of 

this work has focused on the firms’ entrance from developed countries into 

emerging markets. As recently Cavusgil et al. (2005) highlights, more research is 

needed is the better understanding of unique workings of emerging markets. The 

study takes into account special geographical, economical and cultural context of 

Slovakia; a developing economy where a only few studies have been carried out. 

2. The study focuses on the internationalization of established firms. According to 

Zahra and George (2002), while the international entrepreneurship (IE) literature 

has been focusing on the international new venture and born-global phenomenon 

(Knight and Cavusgil, 1996; Oviatt, and McDougall, 1996, 1997, 1999; Rialp et al. 

2005b), limiting IE studies in such a way may not be desirable (Giamartino et al., 

1993; Zahra and Schulte, 1994). Therefore, the study does not exclude the 

established international firms from investigation. 

3. The findings of this study may be of value to practitioners and policy makers. The 

contribution for policy makers is related to the recommendations for SMEs’ support 

policy programme on a national and as well as regional level. On the one side, the 

identification of the barriers of firm’s internationalization helps identify tools on how 

the institutions can eliminate these barriers or help firms overcome them. On the 

other side, better understanding the factors and motivations that lead SMEs’ to 

successful entry foreign market can be use for firms contemplating 

internationalization. 

4. The investigation will serve as a basis for the further investigation work. Based on 

six interviews, a new model explaining the Slovak SMEs’ internationalization 

process and the questionnaire are developed. 

14

5. The contribution, which is not less important as those mentioned above, is that the 

investigation will serve as a basis for my dissertation work. Therefore, the process 

to obtain more detailed information about firms internationalization, will serve also 

for the quantitative research 

1.5. Delimitation of the study 

The study is focused on Slovak SMEs internationalization process. The SMEs are 

defined by EU agreement according to size criteria as follows: 

• Micro firm to 9 employees 

• Small firm from 10 to 49 employees 

• Medium firm from 50 to 249 employees 

However, SMEs represent 99.9% (NADSME 2006) of all Slovak’s firms but there is no 

available data about the proportion of total SMEs with foreign business activities. The 

publically available data offer the information only about total volume of export and 

imports activities. All SMEs size categories (NADSME, 2004a, 2005a, 2006) have 

increasing tendency of total volume of import activities in period from 1999 to 2005. In 

Export activities was the situation similar, only in 2002 there was a decrease of total 

export volume by mirco and medium firms (NADSME 2006). Hence, there is a lack of 

information about the amount of Slovak SMEs incorporated in international business 

activities according to their location, type of sector, firm’s size or foreign country of the 

collaboration. 

Only partial and fragmented information is offered by NADSME’s (2003, 2005c) 7 

surveys according to which, Slovak SMEs demonstrate low interest in export activities. 

Hence, about 44% of 1,025 randomly selected SMEs confirm their export activities in 

2002. During the period of 2001-2004, only 19% from 1,070 investigated SMEs were 

involved in export activities (NADSME 2005c). The highest proportion, about 63%; of 

exporting firms, belongs to industrial production. In other sectors, the international 

involvement is lower than 30% (NADSME, 2003). However, it is important to note that 

these surveys did not consider firms’ import activities and investigate only the export 

firms’ activities. 

7 NADSME’s study about competence ability of SMEs published in 2003 collected the data during 13. - 

28. November 2002. Study published in 2005 collected data during 22. October – 2. November 2005 

and investigate the SMEs export activities during the period of three years from 2001 till 2004. 

15

The problematical identification of the entire SMEs’ database and prevailing 

unwillingness of public officers 8 to facilitate the information about SMEs makes this a 

complex investigation. Interrelated difficulties are with the obtaining of initial 

information about firms with international activities. In dependence of the source of 

available firm’s information provoke that in our sample contains firms from only two of 

eight Slovak regions. However, NADSME’s (2003, 2005c) surveys do not confirm the 

significant difference in SME’s export activities according to their location. 

The case selection was conditioned by three restrictions: 

• Size of the firm - since 1 till 250 employees. 

• Founded in Slovakia 

• Business experience in foreign market 

The propose was as more different will be the firms according to type of industry, the 

kind of product or services, number of founder, source of initial capital and legal form 

of creation more information will be obtained. This will help in time to questionnaire 

construction, to include the questions taking in mind all these differences. 

The diversity of selected cases is presented in following table 1: 

Table 1: The basis information about six cases 

Year of firm’s 

creation 

Firm’s legal 

form# 

Number of 

founders 

Entrepreneurs’ 

gender 

Industry 

Main product 

CASE 1 CASE 2 CASE 3 CASE 4 CASE 5 CASE 6 

1996 1992 1998 2004 1998 2004 

s.r.o. s.r.o. s.r.o. a.s. s.r.o. s.r.o. 

3 1 3 4 2. 2 

Men Woman Men Men Men Men 

Textile 

industry 

Wide sort of 

socks 

products. 

Aromatherapy 

/cosmetic 

industry 

Bath salts and 

oils, fragrant 

lamps, and 

fragrant dried 

flowers. 

Electrotechnical 

Electric 

actuators, 

control valves 

and 

pneumatic 

elements. 

Metallurgy 

industry 

Mining 

equipment, 

locomotive, 

industrial 

vacuum 

cleaner, and 

agriculture 

machinery. 

Services Services 

Consultancy 

services in 

information 

systems, 

security, 

internal and 

external 

audit. 

Services in 

the 

geographical 

information 

systems. 

Foreign capital 

in time of firms’ 

creation 

#Abreviattions: 

No No No No Yes Yes 

s.r.o. – Limited Company, a.s. – Join Stock Company 

8 The list of appeal institutions is add in annex 2, in color are highlighted names of persons whose 

helpful advice leads to final identification of studied firms. 

16

2. A REVIEW OF RELATED LITERATURE 

The literature on firm internationalization is quite extensive. The SMEs 

internationalization is a complex process, which cannot ignore the findings from 

different research areas. Such it can be used the knowledge and findings from two 

complementing research streams: entrepreneurship and international business. These 

two researches create a base for a relative new research in the international 

entrepreneurship (IE) and thus also the base for this study. 

Steyaert and Hjorth (2003) postulate that “…entrepreneurship is no longer a beginning 

player in academics” (2003:3). However, many reviews of entrepreneurship 

emphasize the necessity of the unification of definition, frameworks, and approaches 

(Low and McMillan, 1988; Shane and Venkataraman, 2000). Steyaert and Hjorth 

(2003) suggest that: “…there is no need for homogeneity and argue: there is no “one” 

entrepreneurship but “many entrepreneurship” in focus, definitions, scope and 

paradigms” (2003:5). The different country contexts, educational background of 

investigators and their skill made this field of the study heterogeneous and creative. 

Veciana (1999) analyzes the investigation of entrepreneurship in 13 journals and 

based on three levels (micro, meso and macro) and four approaches: economic, 

psychological, socio-cultural and managerial and identifies twelve areas in 

entrepreneurship research. 

The Gartner’s (2001) metaphor of blind men touching different part of the elephant 

expressed aptly the entrepreneurship’s field of study 9 . 

Neither research in international business is new. Over the last thirty years, two main 

streams have predominated the internationalization field; the factors of 

internationalization (Cavusgil and Naor, 1987; Aaby and Slater, 1989; Zou and Stan, 

1998; and Fletcher, 2001) and the process of internationalization (Johanson and 

Wiedersheim, 1975; Johanson and Vahlne, 1997, 1990; Dunning, 1979, 1980, 1988; 

Bikley and Tesar, 1977; Cavusgil, 1980; Reid, 1981; and Czinkota, 1982). 

9 The story about blind men and the elephant express how six blind men are describing the elephant 

as: like a wall, a snake, a spear, a tree, a rope and a fun; depending on which part of the elephant 

they have touched. The story can be found in Gartner’s article: “Is there an elephant in 

entrepreneurship? Blind assumption is theory development, Entrepreneurship Theory and Practice, 

summer 2001. 

17

There have been several proposed models explaining the internationalization 

including the monopolistic (Caves, 1982), product life cycle (Vernon, 1966, 1979), 

Dunning’s eclectic framework, (Dunning, 1973, 1977, 1979, 1980, 1988), Uppsala 

model (Johanson and Wiedersheim, 1975; Johanson and Vahlne, 1977, 1990), 

Innovation model (Bikley and Tesar, 1977; Cavusgil, 1980; Reid, 1981; and Czinkota, 

1982), and the models focusing on firms’ early internationalization (Oviat and 

McDougall, 1994; 2005b; Zahra and George, 2002; Rialp et al. 2005a, Jones and 

Coviello, 2005). 

The investigation in the beginning does not separate the firms according to size, or the 

time when the firm start to internationalize. Currently this became a determined factors 

and the research is still in its developing stage. In spite of that the amount of 

knowledge and findings published in academic literature and journals help to build on 

IE base. 

IE emergence is related mainly to SMEs and especially small firms increasing level of 

international activities from the inception or in the early stage of their life (Oviatt and 

McDougall, 1999; McDougall and Oviatt, 2000). Fletcher (2004) founds that 86% of 

micro firms and 84% of small firms in UK were involved in international activities. 

Already in 1997, OECD’s observation confirms the increasing number of SMEs 

involved in international activities. 

To bring together shortly the important findings, knowledge, and models related to the 

process of firms internationalization is the aim of following second chapter. The 

proposition is to summarize the main themes related to studied object in such way to 

gain theoretical insights that would, along with this study, help build a framework. 

Therefore, the principal theoretical backgrounds are presented as follows. The first 

four subchapters dedicate to define the barrier and stimuli factors, entry mode 

selection, the models and supported theories. These topics are related with first two 

research questions: Why? and How? the firms start their cross boarder business 

activities. Other following four sections explore the state, definitions, development and 

research of IE, which enhance the importance of the time factor in internationalization 

process and support the third research question: When do Slovak SMEs start their 

cross border business activities? 

18

2.1. Firm’s internationalization models and theories 

We can observe the main impact on the changing models affected by the changing 

economical environment. The globalization, internet, fast development of technologies 

and subsequently more changing the customers’ needs are the principal factors of 

changing environment. 

A brief chronological review of the principal models explaining the process of 

internationalization are the monopolistic theory, life cycle theory, Dunning model, 

Uppsala model, and Innovation model. To two last models are receive more attention 

because of their important contributions and impact on the ensuing development of 

internationalization model. 

The monopolistic theory belongs to the first theory which attempted to explain the 

firms’ internationalization. This monopolistic theory has its origin in the work of Smith 

(1776) (absolute advantage) and Ricardo (1817) (comparative advantage), which 

discussed the monopolistic national advantage. According to monopolistic theory, 

firms engaged in international operations can use their factors based on the 

advantage of production that determined international trade and established 

advantages in foreign markets (Caves, 1982). The advantage could be related to 

production, technology, or structure of the firm’s organization. The firm thus disposes 

with such combination of factors which made it a very difficult to imitate for 

competency as in home, or in foreign market. Because of the monopolistic nature, 

even if the firm is in similar environment to develop and gain such advantages take 

some cost and so they cannot really compete with the foreign firm. 

The second theory explaining the firm’s internationalization is the product life cycle 

theory. Vernon (1966, 1979) explains the firm’s internationalization according to 

product life stages. In the introduction stage, the new product is produced mainly for 

home market. As the product reaches maturity, and the production process became 

stabilized, competition intensifies and the establishment of foreign manufacturing 

facilities becomes necessary in order for the firm to reduce its cost and compete 

effectively in foreign markets. 

While the first theories enhance the national advantage represent by environment. 

The theories’ evolution continues with the importance of the firm. 

19

Dunning’s eclectic framework, known also as OLI model, is proposed and developed 

by Dunning (1977, 1979, 1980, and 1988). Firms, have a rational vision of obtaining 

higher returns by considering the market potential and investment risk. Therefore, 

firms enter a new market because of rational reasons concerned with transaction 

costs (Williamson, 1975) and OLI advantages. 

OLI model explains that FDI and growth of multinational firms can by explained by 

three group of advantages. Therefore the choice of entry mode to foreign market up 

on Ownership advantages (related with control, the cost, risk and benefit of firm’s 

transaction), Location Advantages (recourse commitment, the cost and availability of 

recourse) and Internalization advantages (reducing transaction and coordination cost). 

Dunning’s model suggest when the OLI advantages are high, firm will prefer more 

integrated modes of entry as wholly owned. 

Posterior, Dunning (1995) reappraised the eclectic paradigm and highlights the 

importance of the innovation and cooperation or collective competition for firm’s 

growth and internationalization. Firms may engage in foreign alliances in order to 

acquire or learn about foreign technology. The cooperation of the firm in alliances 

gives the possibility to advance innovatory competitiveness. Thus, the membership in 

alliances can influence the firm’s strategic decision. 

Previous models have limited explication to SMEs and do not differentiate the different 

stage of the internationalization process (Rialp and Rialp, 2001). 

2.1.1. Uppsala Internationalization Model – U Model 

Uppsala Internationalization Model (known as U-model) emerged from the group of 

researchers Johanson, Wiedersheim-Paul, and Vahlne at the University of Uppsala in 

Sweden. The model explains the firm’s foreign activities as a gradual process based 

on the experimental incremental gained knowledge about foreign markets. 

Johanson and Wiedersheim-Paul (1975), based on the case study of four large 

Swedish firms, defined four different stages of gradually increasing foreign 

involvement, called as a chain of the establishment: 

1. No regular export activities 

2. Export via independent representatives (agents) 

3. Establishment of an overseas sales subsidiaries 

4. Overseas production/manufacturing unit 

20

Thus, the firm would gradually expand to others new markets, each time a little more 

distant, in psychological view, from the actual market. The basic assumption of this 

model is related to risk aversion. The high uncertainty of internationalization provokes 

that firms choose the “psychically” close countries for their business activities. 

Therefore, the firms select the foreign markets which are psychologically, and 

culturally nearest to the firm’s home market. The psychic distance is defined as factors 

preventing or disturbing the flow of information between firm and market. Such factors 

could be the language, culture, political system, level of education, or level of industrial 

development (Johanson and Vahlne 1977, 1990). The factor of psychic distance plays 

a similar role also in the I-models. 

Johanson and Vahlne (1977, 1990) continued on the model development and 

proposed the model based on the behavioural theory of the firm (Cyert and March, 

1963) and on the theory of the growth of the firm (Penrose, 1959). Therefore, model 

explains the internationalization as an incremental learning process conditioned by the 

experiential knowledge of foreign markets and the commitment to such markets 

(Figure 1). 

Figure 1: The internationalization process of the firm 

State aspects Change aspects 

Market 

knowledge 

Market 

commitment 

Source: Johanson and Vahlne, (1990:12). 

Commitment 

decision 

Current 

activities 

Johanson and Vahlne (1990) distinguished two aspects of the model: state and 

change aspect (Figure 1). While the state aspect is the market commitment and 

knowledge about foreign market and operations, the change aspects involves the 

decisions to commit resources and performance of current business activities. The 

basic assumption is that the lack of the experiential knowledge 10 about foreign market 

is an obstacle for trading activities on that market. The market knowledge could be 

10 Penrose (1959) distinguished two types of knowledge: experimental and objective. Experimental 

knowledge, which can only be acquired by personal experience, is viewed as the main method of 

reducing market uncertainty 

21

gained only with the experience in that foreign market. Therefore, with the increasing 

experimental knowledge, the firm increases its foreign activities in new and 

psychologically similar markets. The market knowledge and market commitment affect 

both commitment decision and the way in which current decisions are performed. 

In more recent work, Johanson and Vahlne (2003) persist that the learning about the 

foreign markets and operation is a critical in the internationalization of the firm. The 

authors recognize also the need to add another important factor to the 

internationalization model, the firm’s network. The firms are operating in set of close 

business relationships with the customers, suppliers, other business partners creating 

the network of interconnected business relationships. The authors describe the model 

as “…firms learning in relationships, which enables them to enter new country market 

in which they can develop new relationships which give them a platform for entering 

other country markets. (Johanson and Vahlne 2003:98)”. Thus, the firm’s network can 

offers the strong opportunities for internationalization expansion. 

2.1.2. Innovation Models – I-Models 

The basic assumption of the I-models is that the decision to enter into foreign market 

is considered to by an innovative act of the firm. The Roger’s (1962) stages of the 

adoption process and U-model in its initial stage (Johanson and Wiedersheim-Paul 

1975) serve as a basis for ensuing I-models development. There has been several 

proposed I- models including those of Bilkey and Tesar (1977), Lee and Brasch 

(1978), Cavusgil (1980), Reid (1981) and Czinkota, (1982). 

Just like the U-Model (Johanson and Wiedersheim-Paul, 1975), the I-model explains 

firm internationalization as a step-by-step learning process. The main differences 

among the various I-models lie in the number of stages and the initial impetus (pull 

and push) in starting foreign activities. According to Andersen (1993) the most well- 

know I-models are those proposed by Bilkey and Tesar (1977), Cavusgil (1980), Reid 

(1981) and Czinkota, (1982) presented in Table 2. 

There are observable similarities between the model of Bilkey and Tesar (1977) and 

Czinkota’s model, (1982);. and between Cavusgil’s model (1980) and Reid’s (1981) 

model. 

. 

22

Table 2: Innovation models of firm's internationalization 

Bilkey and Tesar (1977) Cavusgil (1980) Reid (1981) Czinkota (1982) 

Stage 1 

Management is not interested 

in exporting. 

Stage 2 

Management is willing to fill 

unsolicited orders, but makes 

no effort to explore the 

feasibility of active exporting. 

Stage 3 

Management actively explores 

the feasibility of active 

exporting 

Stage 4 

The firm exports on an 

experimental basis to some 

psychologically close country 

Stage 5 

The firm is an experienced 

exporter 

Stage 6 

Management explores the 

feasibility of exporting to other 

more psychologically distant 

countries 

Source: Andersen 1993: 213. 

Stage 1 

Domestic marketing: The firm 

sells only to the home market 

Stage 2 

Pre-export stage: the firm 

searches for information and 

evaluates the feasibility of 

undertaking exporting 

Stage 3 

Experimental involvement: The 

firm starts exporting on a 

limited basis to some 

psychologically close country. 

Stage 4 

Active involvement: Exporting 

to more new countries – direct 

exporting – increase in sales 

volume. 

Stage 5 

Committed involvement: 

Management constantly makes 

choices in allocating limited 

resources between domestic 

and foreign markets. 

Stage 1 

Export awareness: Problem of 

opportunity recognition, arousal 

of need 

Stage 2 

Export intention: Motivation, 

attitude, beliefs, and 

expectancy abut export 

Stage 3 

Export trial: Personal 

experience from limited 

exporting 

Stage 4 

Export evaluation: Results from 

engaging in exporting 

Stage 5 

Export acceptance: adoption of 

exporting/rejection of exporting 

Stage 1 

The completely uninterested 

firm 

Stage 2 

The partially interested firm 

Stage 3 

The exploring firm 

Stage 4 

The experimental firm 

Stage 5 

The experienced small exporter 

Stage 6 

The experienced large exporter 

23

In the Bilkey and Tesar, and Czinkota models, firms in the initial steps do not have 

interest in foreign market whereas in Cavusgil (1980) and Reid’s (1981) models, the 

firms have active intention to explore the possibilities of the international market. The 

firm in the first two models initiates the internationalization because of the exterior 

influence “push” mechanism meanwhile in the second two models is the internal “pull” 

mechanism which lead to the internationalization. 

The innovation models, compared to the U-model of the firm internationalization, have 

been developed in different geographical zone. Most of the I-models have their origin 

in United States (Bilkey and Tesar, 1977; Cavusgil, 1980; Czinkota, 1982). 

There are another three similarities between the U-model and I-models. First, both are 

based on behavioural theory. Second, both were developed in the same time period. 

Third, both explained the firm internationalization as a gradual process. Andersen 

(1993) explains the gradual process of both models because of two reasons: “1. The 

lack of knowledge by the firm, especially “experiential knowledge”, and 2. Uncertainty 

associated with the decision to internationalize” (1993:212). 

There is now doubt about the contribution to the understanding of firm’s 

internationalization of each above presented theory. The main contribution of the 

stage models is the importance of experiential knowledge and learning process. 

According to the Coviello and McAuley (1999) review of the articles about SMEs 

internationalization process published 11 during period from 1989 to 1998 inclusive, the 

stage models have an influence on SMEs’ internationalization research and offer 

mixed results. However, the stage models are the object of many critics (Andersen 

1993, Coviello and McAuley 1999, Rialp and Rialp 2001, Crick and Spence 2005) for 

their limited explanation of the SMEs’ internationalization process. 

As Knight and Cavusgil (1996) state, it is very difficult to build a general theory of firm 

internationalization because of the different parameters that characterize each firm. 

SMEs differ from the large firms; in managerial operation, firms’ structure, recourses, 

style of decision making. As a solution to this problem, academics (Andersen, 1997, 

Fletcher 2001, Rialp and Rialp 2001, Fletcher, 2004, Crick and Spence 2005) propose 

to bring together more theories, because no single theory could explain the 

entrepreneurial decision to start foreign business activities. 

11 The list of used journals, see on page 230 (Coviello and McAuley 1999). 

24

2.1.3. The resource based-view and network theory on firm’s internationalization 

The research in the firms’ internationalization investigation is based on several field of 

sociology, economic and strategic management, theoretical backgrounds and 

approaches such as behavioural theory, cost theory, institutional theory, 

organizational theories, network theory, and resource based view. There is now doubt 

about the contribution of each of these theories to the research of firms 

internationalization. However, the most researchers’ attention is dedicated to the 

resource based view and network theory as two influential theoretical perspectives in 

recent international research Peng, 2001, and Bell et al., 2004). Short presentation of 

basic assumption and findings related to these two research follows. 12 

Historically, the internationalization research tends to focuses on large firms. SMEs 

firm were consider as organization with limited capabilities, managerial and financial 

resources. Hence, when the reality shows (OECD, 1997) that the firm’s sized is not 

limited factor for internationalization, the research has to switched from MNCs 

(multinational corporations) to SMEs and to search what able to these firms expand to 

foreign market as well as to large firms. 

Resourse based view, based on Penrose (1959) work, states that firm’s resources 

and capabilities are critical for achieving success. Resources are important 

determinant of firm strategy and performance (Wernerfelt 1984). 

The firm’s ability to expand their business activities to foreign markets is permitted 

because of the unique, rare, valuable, and inimitable resources (Barney, 1991). These 

resources include financial, physical, technological and human resources. The firms’ 

resources are considered as crucial factors explaining the low international activity of 

SMEs in comparison to large firms. Peng (2001) highlights the importance of resource 

based view for studies in emerging markets. 

Westhead et al.’s study (2001) confirm the key importance of previous experience of 

selling goods or services abroad to encourage the firm’s further export activities. The 

importance of the firm’s actual experience is confirmed also by study of Meyer and 

Skak (2002). They found that experience is more important than formal knowledge. 

Several studies (Autio et al., 2000; McDougall et al., 1994) confirm that in dynamic 

environment, how quickly firms learn and are able to adapt is sometimes more 

12 For more about the resource theory see for example Peng (2001) review about network see Hoang 

and Antoncic, (2003) . 

25

important than prior acquired knowledge. Several studies highlight the importance of 

the information (Liesch and Knight, 1999, Hoang and Antoncic 2003) and the 

knowledge (Johanson and Vahlne, 1990, 2003) as most important resources for SMEs 

expansion into foreign markets. 

Kalantaridis (2004) highlights the importance of the financial recourses for developing 

an international orientation and explains two relating problems. First, the lack of 

finance may hinder the firm’s international operation and second, restriction of the 

exploitation of opportunities is already identified. 

Another importance for internationalization plays firm’s network of relationships. Firms 

operate in different relationships with their customers, suppliers, competitors, 

distributors, competitors, banks, support institutions, families, friends, .another private 

and state agents, Thus it is distinguished the business or formal and social or informal 

firm’s network. 

In 1986 Aldrich and Zimmer argued that the entrepreneur is socially embedded in a 

network structures what plays a critical role in the entrepreneurial process. According 

to the network theory firms are involved in the network of home and foreign 

partnerships (Johanson and Mattson, 1988; Johanson and Vahlne, 1990; Welch and 

Welch; 1996). The classical study in network internationalization research is presented 

by Johanson and Mattson (1988). The authors see the internationalisation as a 

dynamic and cumulative process in which firms’ continually established, developed, 

maintained, and dissolved its relationships in order to achieve the objectives. 

The network perspective is linked to strategic decision making. The operation of the 

firm in different networks helps to gain access to resources and new markets. Firms’ 

network can drive market expansion and development activities, including choice of 

market and entry mode. Beside, the networks can both facilitate and inhibit product 

and market diversification activities (Coviello and Munro 1997). 

Coviello and Munro (1995) state that the effective firm’s internationalization largely 

depends on the set of network relationship. Authors found that foreign market 

selection is the result of the opportunities created through formal and informal 

network. Their later study (1997) supports the importance of the network perspective 

in combination with model of incremental internationalization for better understanding 

of internationalization process. 

26

Hoang and Antoncic (2003) define the three key elements of network which help to 

explain the impact of the network on firms’ performance: the content of the 

relationships; the governance of these relationships; and the structure pattern that 

emerges from the crosscutting ties. 

The network helps firms overcome resource limitation (Oviatt and McDougall, 1995) 

and the size-related barrier (Coviello and McAuley 1999) to internationalization. 

Lindquist (1997) argue that SMEs rely upon the networks, which facilitate the 

acquisition of experiential knowledge about the foreign markets. 

The networks can help firms expose themselves to new opportunities, obtain 

knowledge, learn from experience and benefit from the synergistic effect of pooled 

resources (Merrilees et al., 1998; Chetty and Blankenburg, 2000). Also Bell et al., 

(2004) consider important the global business activities and the global network that 

allow firms to benefit from mutually beneficial relationship with international partners. 

2.1.4. Factors of firm’s internationalization 

Over 30 years of investigation in the factors affecting the firm’s internationalization 

brings overwhelming amount of identified factors. From the literature review (Bilkey, 

1978; Cavusgil and Naor, 1987; Miesenbock, 1988; Aaby and Slater, 1989; Ford and 

Leonidou, 1991; Leonidou, 1995a, 1995b; Morgan, 1997; Leonidou, 1998) there are 

two groups of factors attracting the researchers’ interest. On one side there are the 

factors which motivate or stimulate the firm’s internationalization and on the other side 

the obstacles or barriers faced by firms in that process. 

The motivation and barriers factors differ from one to another phase of the firms 

internationalization (Bilkey and Tesar, 1977; Wiedersheim-Paul et al., 1978; Ford and 

Leonidou, 1991; Leonidou 1998, Suárez, 2003). For example, Bilkey (1978) 

distinguishes between factors which initiate exporting (stimuli) and factors which 

sustain an ongoing export commitment at subsequent stages of involvement 

(motivators). 

Hence, not only the factors which stimulate or impede to the internationalization play 

an important role, but also many studies (Cavusgil, 1984; Ramaswami and Yang, 

1990; Manolová et al. 2002) confirm the significance of the firm manager’s perception 

of such factor. They perceive the factors differently, in dependence on whether they 

are or are not interested in internationalization. 

27

Hence, the firms’ internationalization is the result of multiple rather than single factors; 

according to Miesenbock (1989) and Leonidou (1998) only a few factors are critical for 

that process. 

2.1.4.1. Motivation to firm internationalization 

The export stimuli, called also incentives, motives, triggering cues or attention evokers 

(Leonidou 1998), are consider as the most dynamic and critical determinants of export 

behaviour. 

Morgan (1997) considers the study of Simmonds and Smith (1968), as the initial work 

about the factors stimulating the firm to export. In the initianal works predominant 

findings that external, environmental factors stimulate the firm’s internationalization. 

Further works also highlight the importance of internal or firm’s factors (Lee and 

Brasch 1978). 

Basically, the research continues investigating the external and internal factors 

motivating the firm internationalization and follow up with the differentiation on 

proactive and reactive factors (Johnston and Czinkota, 1982; Leonidou, 1988; Piercy, 

1981). 

Internal factors are related to the impact of the internal characteristics of the firm while 

external motivation came up from domestic and foreign external environment. 

Proactive factors or “pull-factors” (Leonidou 1995b) are forces compelling the firm to 

internationalize. Reactive stimuli or “push-factors” explain the firm export as a 

response to the environmental pressures. In words of Czinkota and Ronkainen (2001): 

“…proactive firms go international because they want to, while reactive ones go 

international because they have to.” (Czinkota and Ronkainen (2001:268). 

The proactive motivations are based on firm planned strategy meanwhile the reactive 

motivation is the firm’s response to the environmental changes. The profit advantage, 

unique products, technological advantage, exclusive information, managerial urge, tax 

benefit and economies of scale are defined as proactive motivations. The reactive 

motivations are defined as: the competitive pressures, overproduction, declining 

domestic sales, excess capacity, saturated domestic markets and proximity to 

customers (Czinkota and Ronkainen, 2001). 

The integrative model of the stimuli factors was proposed by Albaum et al. (1989). 

These authors bring together all investigated factors and divide them in classificatory 

28

matrix with four cells: internal/external and proactive/reactive variables. The factors of 

each of the four groups are presented in table 3. 

Table 3: The classification of the motives for firm export 

Proactive 

Reactive 

Internal External 

Managerial urge 

Growth and profit growth 

Marketing advantages 

Economies of scale 

Unique product/technology/competence 

Exclusive information 

Risk diversification 

Extend sales of a seasonal product 

Excess capacity of resources 

Overproduction 

Proximity to customers 

Source: Albaum et al. (1994: 31). 

2.1.4.2. Barriers to firm internationalization 

Foreign market 

opportunities 

Change agents 

Tax benefit 

Unsolicited orders 

Small home market 

Stagnant or declining home 

market 

The researches have focus also on factors which firms have to overcome to become 

international; in general call barriers. Barriers, impediments or obstacles faced by SMEs could 

be related to attitudinal, structural or operational constraints which firms have to overcome in 

the way to become international firm (Leonidou, 1995a). 

Leonidou, (1994a) considers, as one of the first study investigated the export barriers; 

empirically the research of Alexandrides (1971). As the main obstacles of the firm’s 

export in this study were identified: the existence of keen competition abroad, the lack 

of knowledge of exporting, insufficient understanding of export payment procedures, 

and difficulties in locating foreign market. 

The literature offers several classifications of the barriers. Ramaswami and Yang 

(1990) identify four sources of export barriers: export knowledge, internal resource 

constraints, procedural barriers and exogenous variables. Leonidou (1995a) classifies 

also four group of barriers based on two dichotomies external/internal and 

domestic/foreign. Bilkey (1978), distinguished between tariff and non-tariff barriers. 

Hence, the Leonidou (1995a) classification is spread used in literature (table 4). 

Another classification is proposed by Hamill (1997), who identifies other four main 

groups of the barriers to SME internationalization: psychological, operational, 

organizational and product/market (table 5). 

29

Table 4: Characteristics of Export barriers according to Leonidou (1995a) 

Home c 

Foreign d 

Internal a External b 

Inadequate/untrained export staff 

Insufficient production capacity 

Lack of managerial personal/time 

Shortage of working capital to finance exporters 

Limited info to locate/analysis foreign markets 

Different product standards/specs abroad 

Difficult/slow collection of payments from abroad 

Difficult to locate or obtain adequate representation 

High risk/costs involved in selling abroad 

Inability to offer competitive prices abroad 

Inability to offer technical/after-sales service 

Lack of/inadequate foreign distribution channels 

Problematic transport/high shipping cost 

Difficult handling of documentation/procedures 

Lack of governmental assistance/incentives 

Different foreign consumer habits/attitudes 

Difficult to understand foreign business practices 

Existence of language/communication problems 

Imposition of high tariff/non-tariff barriers 

Keen competition in foreign market 

a Barriers arising from within the organization, usually associated with organizational resources or export marketing strategy 

b Problems found in external environment where the firm operates (either domestically or in foreign markets) 

c Barriers identified in home country where manufacturing facilities of firm are located 

d Impediments found in foreign market(s) where firm intends to operate in future 

Source: Leonidou, 1995a:19. 

Unfavourable/fluctuating foreign exchange rate 

Restrictions imposed by foreign rules/regulations 

30

Table 5: Barriers to exporting in SMEs 

Psychological Operational 

Ethnocentric rather than geocentric 

orientation 

Short-term perspective 

Lack of commitment to exporting 

Exporting seen as “not for us” or “too much 

trouble” or “too risky” 

Fear 

Export documentation and management of 

export operations 

Language problems 

Organizational Product/market 

Limited resources (both financial and 

managerial) 

Lack of knowledge of foreign markets 

Lack of internationally experienced 

personnel 

Lack of formal education/training in export 

Sources of competitive advantage abroad 

Problems in finding suitable overseas 

representation (agents/distributors) 

Source: Hamill, 1997:311. 

Delays in receiving payment and financial 

risk 

Products may not be suitable for foreign 

markets 

Foreign market differences 

Need for costly product adaptation 

Problems in identifying and selecting the 

marketing most appropriate foreign 

markets(limited resources for country 

screening and export market research) 

Tariff and non-tariff barriers to trade 

Profitability of exporting 

Psychological barriers are closely related to the firm’s perceptions concerning the risks 

and profitability of exporting including an ethnocentric rather than geocentric 

orientation. Operational barriers refer to the problems encountered by firms in dealing 

with export paperwork, documentation, language problems, delays in payment etc. 

Organizational barriers are related with the limited resources available to devote to the 

export effort and the lack of international experience. Product/market barriers relate to 

the suitability (or lack of suitability) of the firm’s product or service for foreign markets 

and the country selection decision (Hamill, 1997). 

As it is mentioned above, the perception of the barriers plays an important role for 

firm’s internationalization. Companies which are not interested in exporting, perceived 

the barriers more important as firms interested in internationalization (Kedia and 

Chhokar, 1986; Burton and Schlegelmilch, 1987). Suárez (2003) identifies four 

categories of the firm: non-exporters, interested non-exporters, initial exporters, and 

experienced exporters. Her study confirms the significant differences in the barriers 

perception according to these four firms’ categories. 

31

Shaw and Darroch (2004) find that for exporters and likely exporters consider the main 

barriers to internationalization are the finance, cost-related factors and government 

incentives. By comparison, according to non-exporters perception, the firm size, lack 

of market knowledge and experience are the most important barrier to internationalize. 

The industry was not considered as an impact factor on the firm internationalization. 

2.1.5. Market selection and mode of entry 

The market selection, choice of entry mode (Bradley, 1995; Ellis, 2000) and timing of 

market foreign entry (Gaba et al., 2002) are also critical decisions for firm 


It has been argued that firm selects foreign markets according to geographical and 

psychical closeness (Johanson and Vahlne, 1992; Chetty, 1999).The basic 

assumption for such pattern is the reduction of uncertainty entering to psychically and 

culturally similar foreign market (Johanson and Vahlne, 1992) and therefore, firms can 

increase their chances of success in these markets. 

Many researches investigate the impact of the national culture on entry mode 

selection (Agarwal 1994, Erramilli and Rao, 1993, Erramilli, 1991). Brothers and 

Brothers (2001) find that selection of entry mode (cooperative and wholly owned 

mode) depends on the level of investment risk in foreign market. Thus “managers 

select more cooperative modes of entry in low investment risk markets and select 

wholly owned modes of entry in high investment risk” (Brothers and Brothers 

2001:178). 

However, O’Grady and Lane (1996) highlight, that beside the psychical and cultural 

differences, much more attention has to be devote to the manager’s perception of 

similarity and differences of selected market. Their study confirms the psychic 

distance paradox with 80% of investigated firms failed even with the 

internationalization in psychically close market. 

The important role for market and mode selection also plays into the organizational 

culture, which is embedded in the special context of each firm and affects the firm 

internationalization. Dimitratos and Plakoyiannaki. (2003) developed a conceptual 

framework of international entrepreneurial culture and identify its six interrelated 

dimensions; namely, international market orientation, international learning orientation, 

32

international innovation propensity, international risk attitude, international networking 

orientation, and international motivation. 

There is no general agreement on one conceptual framework which can explain the 

firm’s foreign entry mode choice (Andersen, 1997). Therefore many theoretical 

approaches can be discussed. Andersen (1997) and Brouthers (2002) observe that 

previous researches tend to rely mainly on the transaction cost theory to explain the 

firm’s entry mode selection. Anderson (1997) identifies two limits of transaction cost 

theory. First, the unit of analysis of transaction cost is in play, but many studies 

concerned about other issues affecting the mode of entry, used the firm as a unit of 

analysis. Second, too many transaction cost could be indirectly assessed by 

indicators. Hence, studies have had introduce some modifications of transaction cost 

theory and include non transaction costs (Rialp and Rialp 2001). 

Several studies extend the transaction cost theory by including organizational 

capability perspective (Madhok, 1997), cultural context (Brouthers and Brouthers, 

2001) and institutional context variables (Delios and Beamish, 1999, Brouthers, 2002). 

Madhok’s (1997) study contrasts the foreign market entry decision from the 

transaction cost and organizational capability perspective. He argue, that “the value- 

based logic of organizational capability perspective offers a more powerful, 

theoretically more robust and, generally more realistic explanation of firms market, 

entry decision than the Transaction cost/internationalization theory” (Madhok, 

1997:57). 

Brouthers’s (2002) 13 cost transaction model, improved by institutional and cultural 

context, predicted better the entry mode choice. His study confirms that, the significant 

predictors were confirmed with a legal restriction as institutional variable and 

investment risk as cultural variable. 

Agarwal and Ramaswami (1992) investigate firm’s choice of foreign market entry 

mode using the variables of Dunning model; the location advantages, ownership 

advantages, and international advantages. Andersen, (1997) summarizes and 

compares the four conceptual frameworks explaining the foreign entry mode choice, 

the transaction cost theory, the eclectic framework, entry mode as a chain of 

13 Brouthers (2002) follows the study of Kogut and Singh (1988), North (1990), Delios and Beamish 

(1999), and Brouthers and Brouthers (2000). 

33

establishment, and the organizational capability perspective for internationalization 

process. The basic differences between these theories are highlighted in table 6 14 . 

Table 6: Comparison of Different Frameworks for studding Foreign Entry Mode 

Entry mode as a 

chain of 

establishment 

Basic theory Resource-based 

view 

Unit of 

analysis 

Explanatory 

variables 

Behavioural 

assumption 

Decision 

criteria 

Transaction cost 

approach 


theory 

The eclectic 

framework 


theory, 

international trade 

theory, 

Resource-based 

view 

Firm Transaction Firm Firm 

Firm’s knowledge 

(i.e. experimental 

knowledge) 

Transaction 

characteristics 

(e.g. assets 

specificity 

uncertainty 

Bounded rationality Bounded 

rationality and 

Trade-offs between 

growth and risk 

Entry mode Entry mode 

according to an 

establishment 

chain: a) No 

exporter b) Export 

via independent 

representative, c) 

Sales subsidiary d) 

Manufacturing 

abroad 

Source: Andersen 1997:31 

opportunism 


minimization 

Several 

classifications: 

e.g. Contractual 

transfer, joint 

Venture, Wholly 

owned operation 

Ownership, 

locational, and 

internationalizatio 

n advantages 

Bounded 

rationality and 

opportunism 

Trade-off between 

return, risk, 

control, and 

resources. 

Several 

classifications: 

e.g. Independent 

mode, Cooperative 

mode, 

integrated mode 

The 

organizational 

capability 

perspective 

Resourcebased 

view 

Firm’s 

capabilities (in 

particular 

know-how) 

Bounded 

rationality 

Trade-off 

between value 

and cost 

Internalization 

vs. 

collaboration 

Rialp (2000) observes the amount of the typology or definition regarding the 

international channels of distribution. Entry modes can be divided in two groups: 

equity and non-equity modes. Non-equity modes do not entail equity investment by 

foreign entrant and are essentially contractual modes, such as leasing, licensing, 

franchising and management-service contracts (Dunning, 1988). 

Examines the internalizing decision of export operations inside the firm, with respect to 

their maintenance in the domain of the market through several mechanisms of 

14 For more detailed explication see Andersen1997:31-37. 

34

external distribution, from a sample of Catalan and Spanish (non-Catalan) exporters. 

Literature on the internationalization process; Typology of export modes; General 

framework on the selection of international channels of distribution; Methodology; 

Conclusions. 

Hence, the export as entry mode is due to the minimal business risks, low resource 

commitment and high flexibility of action in offers the most common foreign market 

entry among SMEs (Young et. al 1989). 

2.2. International entrepreneurship 

“International business researcher cannot afford to 

ignore growing power of entrepreneurial firms in 

international competition, nor can entrepreneurship 

researchers ignore the internationalization of the 

marketplace” 

McDougall and Oviatt, (2000:906). 

The strong influence of Oviatt and McDougall’s (1994) article provokes huge interest 

in research of business organization “… that from inception, seeks to derive significant 

competitive advantage from the use of resources and the sale of outputs in multiple 

countries.” (1994:49). The interest about this stream of research in the early 

internationalization is evidenced by the emergence of various new terms for such 

firms. Two of the first terms are the “Born Global” (Rennie, 1993) and “International 

New Venture” (Oviatt and McDougall 1994). Rialp et al. (2005b:135) identify seven 

other labels for this studied phenomenon: High Technology Start-ups, Global Start- 

ups, Instant Exporters, Instant Internationals, Born-Internationals, Micromultinationals 

and Early Internationalizing Firms. 

In spite of the early new firm’s internationalization predominance in research, Zahra 

and George (2002) highlight the importance of not excluding the established firms 

from international entrepreneurship research. Young et al. (2003) propose to broaden 

the scope of IE research. These authors postulate: “IE examination can potentially 

cover international activities or organizations regardless of age, size, (private/public) 

sector, or foreign market servicing mode” (2003:34). 

35

Table 7: Chronological development of IE definitions 

Year of 

publication: Author(s) Definition 

page 

1989:388 McDougall “…international entrepreneurship is defined …as the 

development of international new ventures or startups 

that, from inception, engage in international 

business, thus viewing their operation domain as 

international from the initial stages of the firm’s 

operation.” 

1993:9 Zahra "…the study of the nature and consequences of a 

firm's risk-taking behaviours as it ventures into 

international markets.” 

1994:47 Oviatt and 

McDougall 

1997:293 McDougall and 

Oviatt 

2000:903 McDougall and 

Oviatt 

2002: 261 Zahra and 

George 

2003:189 Dimitratos and 

Plakoyiannaki 

2004:296 

2004:302 

Fletcher 

2005b:540 Oviatt and 

McDougall 

Author’s elaboration. 

"…a business organization that, from inception, 

seeks to derive significant competitive advantage 

from the use of resources and sale of outputs in 

multiple countries." 

“… as a new and innovative activities that have the 

goal of value creation and growth in business 

organizations across national boarders. “ 

"…a combination of innovative, proactive, and riskseeking 

behaviour that crosses or is compared 

across national borders and is intended to create 

value in business organizations.” 

“the process of creatively discovering and exploiting 

opportunities that lie outside a firm’s domestic 

markets in the pursuit of competitive advantage,” 

“IE is an organization-wide process which is 

embedded in the organizational culture of the firm 

and which seeks thought the exploitation of 

opportunities in the international marketplace to 

generate value.” 

“…the creative enactment and envisioning of future 

scenarios and opportunities for 

service/product/organizational transformation those 

are socially constructed and realized through joint 

cross border co-ordinations.” 

“IE is a heavily contextualized and socially 

constructed activity that occurs thought joint crossboarder 

co-ordinations.” 

“IE is the discovery, enactment, evaluation and 

exploitation of opportunities – across national 

borders- to create future goods and services.” 

36

Table 7 summarizes the chronological development of IE definitions. According to 

Crick and Spence (2005) and Fletcher (2004); the most cited definition of the IE is the 

one proposed by McDougall and Oviatt (2000). The authors propose that IE is “… a 

combination of innovative, proactive and risk-seeking behaviour that crosses national 

boarders and is intended to create value in organizations.” (McDougall and Oviatt, 

2000:903). 

2.2.1. Development of International Entrepreneurship 

According to Veciana (1999:13) a new stream of study emerged when three 

conditions are met: 

1) The group of investigators starts to be interested in one new stream of study, 

2) The group starts to organize congresses and conferences related to the topic 

of interest, 

3) It launches special journal with the publication related to new topic of study. 

As can be observed from the following brief chronological development of IE, all above 

mentioned conditions are fulfilled and IE becomes the field in which scholars from 

around the world are interested in (Fletcher, 2004; guest editorial of IBR, 2005; Crick 

and Spence, 2005). 

1988 – According to Zahra and George (2002), the term International 

Entrepreneurship appeared the first time in Morrow’s article. Morrow 

discusses the age of the international entrepreneur and highlights the 

technological advances and cultural awareness to open the foreign market 

to new ventures or established firms. 

1994 – Oviatt and McDougall published the article “Toward a theory of international 

new ventures” which was awarded as 2004 decade award winning article of 

Journal of International Business Studies. 

1996 – Entrepreneurship Theory and Practice published special issue focuses on 

IE (Summer 1996). 

1998 – The first McGill conferences on international entrepreneurship held by 

Hamid Etemand and Richard Wright. In the conference related to 

Globalization and Emerging Business: Strategies for 21 st century where 30 

papers related with IE were presented. 

37

2000 – Academy of Management Journal (vol.43, 5) dedicates the special research 

forum on international entrepreneurship. 

2003 – In March, Publisher Kluwer launched a new journal: Journal of international 

entrepreneurship. 

2004 – The important handbook of IE field is edited by Léo-Paul Dana – Handbook 

of research on international entrepreneurship. 

2005 – Management International Review published special issue focused on the 

internationalization of entrepreneurship (vol.45, 3). The articles were 

selected from papers presented in third McGill Biennial International 

Entrepreneurship Conference. (www.mcgill.ca/mie/) 

2006- International Marketing Review the vol 23 issue 5 dedicate to the special issue 

to IE. 

Wright and Ricks (1994) consider IE as one of the three main emerging research lines 

in the field of international business. Also, Lu and Beamish (2001) and Zahra and 

George (2002) note the relevance of international phenomenon in strategic 

management, international business and entrepreneurship. The principal theoretical 

ground of research is presented in following chapter. 

2.2.2. IE Research 

Nevertheless, 18 years of scholars’ accelerated and intensive interest in IE research, 

IE is still in its infancy and the boundaries of IE field (McDougall and Oviatt, 2000; Acs, 

Dana and Jones, 2003) and a commonly understood IE vocabulary (Coviello and 

Jones 2004) are not clearly and defined 

Dimitratos and Plakoyiannaki (2003) develop a conceptual framework of international 

entrepreneurial culture and identified its six interrelated dimension namely 

international market orientation, international learning orientation, international 

innovation propensity, international risk attitude, international networking orientation, 

and international motivation. 

Some authors make the effort to define the field of IE research. For instance (Zahra 

and George, 2002) propose to answer the question: “What makes international 

entrepreneurship a distinct area of scholarly inquiry?”. Young et al. (2003) seek to 

contribute to the discussion of the features and boundaries of IE research and 

38

propose additions to the predominant resource based view and network perspective of 

four aspects from international studies: the critique of international business theories, 

the role of environment for international entrepreneurial firms, the importance of an 

institutional approach, and multinational and the role of subsidiaries. Also, Jones and 

Coviello (2005) in a similar vein discuss the core concepts common to 

internationalization and entrepreneurship research. 

The researchers’ effort leads to the development of some models of international 

entrepreneurship as: an integrative model of small firm internationalization by Bell et 

al. (2003:350), a general model of entrepreneurial internationalization process by 

Jones and Coviello (2005:293), a model of forces influencing internationalization 

speed by Oviatt and McDougall (2005b:541), and an exploratory resource-based 

model of early internationalizing firms by Rialp et al. (2005a:161). 

Related to further areas of IE study, two propositions have been made. First, 

McDougall and Oviatt (1997) defined the eight groups of interest within IE area. The 

present study will contribute to three of /in bold font/. 

• Cooperative alliances, 

• Corporate entrepreneurship 

• Economic development initiatives 

• Entrepreneur characteristics and motivations, 

• Exporting and other entry modes 

• New ventures and initial public offerings (IPOs) 

• Transitioning economies 

• Venture financing 

Second, Zahra and George (2002) stress the need to investigate the international 

entrepreneurship process. The fundamental question for this stream, authors define it 

as: “How, why, and when do entrepreneurial firms discover and exploit the 

opportunities outside their home country” (2002:278). Beside the international 

entrepreneurship, process authors propose two other areas for future exploration: the 

context of international entrepreneurship, and the post-internationalization agenda. 

In spite of relative newness of the research area several interesting reviews are published, for 

more see Rialp et al. (2005a) . 

39

3. RESEARCH METHODOLOGY 

The chapter is divided into four parts. The first explains the use of qualitative 

methodology for the research, justifies the validity and confidentiality of the research, 

second describes the methods of data collection and the sources of primary and 

secondary data, and third presents the case selection. 

3.1. The explanation and justification of qualitative research 

The study planned to gain insight into three research question “How”, “Why” and 

“When” the Slovak SMEs start their international business activities. According to Yin 

(1989) the case study is an appropriate tool for studying the “how” or ‘why’ question. 

Author also identifies three conditions when the case study is appropriate for research. 

First, existing theories for explaining current phenomena, seem to be inadequate or 

incomplete (Slovakia is a different geographical, historical, cultural and economical 

context 15 ). Second, multiple data collection and analytic methods should be applied 

(the secondary data about cases are included); and third, cross-industry biases, small 

size of samples, and resistance to survey methods could cause crucial empirical 

problems (Yin 1989:xi). 

The qualitative approach is appropriate for study which aim is to gain insights, provide 

a better understanding and describing of the phenomena, which would help to build a 

framework rather then to test one (Eisenhardt, 1989; Volery 2004). Meyer (2000) 

highlights the importance for studies leaded in transition countries the case-based 

research because can help to identify the relevance of variables and provide new 

insights into the causal relationship between them. 

The case study allows data analysis from multiple perspectives rather than the 

influence of a single variable (Chetty, 1996). Thus, the study investigates the process 

of firm internationalization considering the various theoretical perspective and findings 

from international business, entrepreneurship, IE, network and recourse based view. 

Considering the objectives of the study, study’s context, researcher’s knowledge about 

studied object and recommendations from small research in research literature 

review 16 about research methodology the multiple-case methods is applied. A multiple 

15 See the historical development of Slovakia capitol 4. 

16 The decision to apply the qualitative methodology was supported by: Eisenhardt 1989, Yin 1989, 

Morgan 1980, Carson and Coviello 1996, Chetty 1996, Gartner and Birley 2002, Perren and Ram 

2004, Peterson 2004, Volery 2004:788-791, Jennings, Perren and Carter 2005, Cavusgil, Deligonul 

and Yaprak 2005: 10-15. 

40

case design rather than single case is considered as more appropriate to help gain 

insight of internationalization process of SMEs in context of Slovakia. Multiple-case 

approach enables to identify the similarities and differences within cases as well as 

between groups of cases (Eisenhardt, 1989, Yin, 1989). 

In order, to ensure the credibility and the reliability of the research findings, all 

interviews were recorded and transcribed verbatim. The transcriptions from the face to 

face interviews were used for the narrative description to reconstruct the biographic 

history of each firm and analysis of the firms’ internationalization using the method of 

pattern-matching (Yin, 1989). 

The use of multiple source of evidence about studied objects as personal interviews, 

newspapers, firm’s web page, internet, and information from support policy institutions 

is used to enhanced the credibility and as well as construct validity (Yin, 1989). 

In cases analysis are used the citations of the interviewees, what is another method 

how to enhance the credibility proposed by Miles and Huberman (1994). 

Additionally following Eisenhardt (1989) suggestion, in time to data analysis, the effort 

was put to look at the collected data in many different ways and try to go beyond of 

the initial impression. 

3.2. Methods of data collection and sources of information 

The search for available information about SMEs for this study started in March 2005. 

The list of addressed organization is attached in the annex 1. Beside some exception, 

there were perceived prevailing unwillingness of public officers to offer the required 

information about SMEs. Hence, thanks to Mgr. Mária Radvanská (Regional Advisory 

and Information Centre Prešov), Ing. Ľubomíra Slobodová (Slovak Chamber of 

Commerce and Industry Banská Bystrica regional chamber), and Ing. Vladimír Laššák 

(The Office of Banská Bystrica self–governing Region), finally was obtained the 

information, which helped identify and contact suitable firms for this research. 

In November 2005, eleven SMEs with international business activities, were asked via 

e-mail to participate in the research study. To enhance the importance of the research 

and to encourage the entrepreneurs in the collaboration, the recommendation 

lettercard from Dr. Joaquim Vergés, director of the doctoral programme, (see annex 3) 

was attached. On the top of this, three of the firms were sent a letter with second 

request via mail. Finally, six of these firms confirm their assistance on this 

investigation. 

41

According to Yin (1989) suggestion, the study is based on the multiple source of 

information. The secondary and primary data are used. Before the personal 

interviews, the secondary data about the selected cases were obtained from RPIC 

Prešov, internet searching and propagation material relating with the studied SMEs. 

The www.google.sk, www.zoznam.sk, and www.atlas.sk were used to find initial 

information about these firms. The importance of the secondary data was to be 

prepared for interviews and to become a more familiar with the firms and with their 

business activities. 

Regarding to planned research questions and the primary data, the general guideline 

for interview was originally composed in Slovak. The proposal for interview was 

discussed first with Mária Radvanská who has a personal experience with SMEs and 

after final instrument was translated into English and discussed with Dr. Alex Rialp, 

the supervisor, The aim was to prepare easy understandable questions for the 

interview, which will help gain insights regarding the proposed objectives. The final 

general guideline for the interview is presented in annex 4. 

The most used methods of data collection for case analyses is interview confirm the 

recent published studies for example Peterson (2004), Rialp et al. (2005a), Coviello 

(2006). Peterson (2004) highlights the importance of personal interviews: “…I much 

prefer to meet my respondent face to face rather than rely on statistical analyses of a 

large number of surveys and questionnaires. The nature of the semi-structured 

interview allows the researchers to ask each interviewee essentially the same set of 

questions, but also allows the interviewee to share insights on topics or issues that 

would never come up using only surveys. (Peterson 2004:34).” 

During November 2005 and January 2006 six face to face interviews were leaded with 

the owners in the case 1, 2, 3, 6 and with commercial managers in the case 4 and 5. 

All interviewed persons were in the firm from its inception. 

Each personal interview was personally conducted by the author and took between 

two and two hour and half. All interviews were recorded with the aid of an MP3 and 

posterior transcript. The word-by-word transcription reached 124 of pages. Both, the 

interviews and transcription were realized in researcher’s native language (Slovak). 

42

3.3. Case selection 

In order to ensure sufficient cases for the replication, analyses and pattern matching 

the six firms were selected. There is no ideal number of cases for multiple-case 

research (Eisenhardt, 1989). The six cases are adequate according the Eisenhardt 

(1989) suggestion that the multiple case researches require between four and ten 

cases. According to Zahra and George (2002) definition IE research embraced also 

established firms. 

The main two criterions for case selection were the size and international business 

activities. The firm’s size must fulfil the definition for SMEs (between 1 and 250 

employees) and firm’s international business activities must be earlier or from 

inception. Other criterions were to have firms from different geographical zones, 

different type of industries, with different source of initial capital and different legal 

forms of firm’s creation. 

Just for general view, it is bring the comparison of Slovak regional differences in 

population, unemployment and SMEs divided to self-employment and Small trade 

license (Table 8). 

Table 8: Regional differences in Slovakia 

Region 

Population 

in % 

Unemployment 

2005 in % as Small 

Trade 

Licenses 

SMEs’ Business entities in 

% by region in 2005 

as a self 

employment 

SMEs per 1000 earning 

individuals in 2005 

as Small 

Trade 

Licenses 

as Legal 

Entities 

Bratislava 11.2 2.9 30.4 16.5 76.8 172.1 

Trnava 10.3 7.1 9.2 10.9 26.5 130.8 

Trenčín 11.2 7.0 10.1 11.2 28.6 131.8 

Nitra 13.1 13.3 8.9 12.3 21.4 122.7 

Žilina 12.9 10.2 10.1 14.5 25.3 151.6 

B. Bystrica 12.2 19.0 9.6 10.8 24.5 114.0 

Prešov 14.8 19.5 10.0 13.3 22.3 123.5 

Košice 14.3 21.0 11.8 10.4 27.8 101.9 

Total 

/average 

100 100 100 100 31.5 130.6 

Source: Statistics office Slovak Republic www.statistics.sk, www.upsvr.sk, and NADSME 2006. 

All selected firms are allocated in urban zone with the habitants between 3 000 and 

95 000. Both regions Banská Bystrica and Prešov have a high level of unemployment 

and the high level of population. The level of unemployment is about 19% and 19,5%. 

43

A year before in 2004 the percentage was a bit lower 17,8% and 18%. Where by 

comparison, the Bratislava region has only 1,9% and in 2004 it was about 3.7% less, 

5.6%. There is no considerable variance between the regions according the amount of 

SMEs including Small Trade Licenses and Legal Entities with the exception of leading 

position of Bratislava region (Table 8). 

According to region, four firms from Banská Bystrica and two from Prešov region. 

Four firms belong to the manufacture industry and two are the service promoters. 

Detailed information of six SMEs with international business activities is presented in 

table 9. 

Table 9: Six selected firms 

CASE 1 

CASE 2 

CASE 3 

CASE 4 

Type of business 

Textile, socks 

production 

Production of 

aromatherapy 

products 

Production of 

electro-technical 

products 

Products of 

metallurgy industry 

CASE 5 Consultancy 

services 

CASE 6 

Services in 

geographical 

systems 

Year of 

start-up 

Legal 

form٭ 


employees 

at start-up 

Foreign 

investment in 

the start-up 

1996 s.r.o. 2 No 

City# 

Banská 

Štiavnica 

1992 s.r.o. 3 No Prešov 

1998 s.r.o. 4 No Prešov 

2004 a.s. 180 No 

1998 s.r.o. 2 Yes 

Hliník nad 

Hronom 

Žiar nad 

Hronom 

2004 s.r.o. 6 Yes Zvolen 

Notes: ٭ s.r.o. – Limited Company, a.s. – Join Stock Company 

Selected firms are from the regions of Banská Bystrica and Prešov. Region Banská 

Bystrica is located in the centre of Slovakia and share the border with Hungary. 

Prešov region is located in the east of Slovakia and share the border with Ukraine and 

Poland (Figure 2). 

Figure 2: Map of the regions of Slovakia 

44

4. THE STATE OF THE ART OF SLOVAK SMALL AND MEDIUM SIZED 

ENTERPRISES 17 

The entrepreneurship is not a new research of study for specifics geographical context 

such as Northern America, Japan, or West and North Europe. The situation is different 

if we compare it with that in Slovakia, where not only the investigation in 

entrepreneurship but even the private enterprising is a recent phenomenon. The 

Velvet Revolution in 1989 meant the fall of the Communist Party after its 51 years long 

period of political power in Czechoslovakia and the rebirth for private firms. 

Therefore, the first step of this chapter is to bring a general view of the empirical 

studies leading into Central and Eastern Europe (CEE). The interest of this review was 

focused mainly on the studies related to Slovakia. To identify relevant studies 

published in journals of international level, a keywords search was conducted on 

ProQuest/Abi Inform, Elsevier, Blackwell and Ebsco-Host, encompassing 1988-2002. 

In the search, following words were used: “Slovakia”, “Slovak Republic”, “post- 

communist”, “transition”, in combination with “entrepreneurship”, “internationalization”, 

“international entrepreneurship”, “SMEs”, “small and medium-sized firms”. 

The result of this search is the review of 19 of the entrepreneurial and international 

business studies presented in Table 10 Selected articles were organized using the 

table. The table of the selected empirical studies describes the aim of the study, type 

of study, if the study is focused on SMEs, country of sample selection, the method of 

data collection and the research’s findings. 

Nine works from 19 are from Slovak context. Three works focus only on Slovakia, in 

another six studies the Slovakia, is one of two or more studied country. There is the 

predominance with seven works of descriptive studies based on interviews or 

questionnaire data collection. 

17 This chapter of the paper was selected for the presentation in the 2006 SVU conference on the 

special section about International trade and trading with the Czech and Slovak Republics. The 

chairman of this section was George Tesar, PhD. Professor of Marketing and International Business, 

University of Wisconsin –Whitewater. 

45

Table 10: The review of the empirical studies about entrepreneurship and international business leaded in CEE countries with the 

focus on Slovakia. 

Ivy, R. L. 

Ivy, R. L, 

Study Aim of the study Type of study SME Country Data Results - findings 

1996 

1997 

Grayson, L. E. 

Bodily, S.E. 

1998 

To analyze the relationship 

between new firm’s growth 

and regional economic 

differences measured by rate 

of unemployment. 

To identified profiles of both 

entrepreneur and their 

business. To define firm’s 

networking strategies and 

identify the problems faced by 

SMEs in Nitra (Slovak 

district). 

To analyze the behaviour of 

managers and firm’s 

integration in to the world 

economy in case of three 

post-communist countries. 

The special focus on the 

financial sector, managerial 

behaviour and marketing 

capabilities. 

Quantitative - 

descriptive study. 



Descriptive study 

based on cases. 

♣ SR Data from 

Statistical Office of 

the SR. 

Yes SR The questionnaire 

was sent to 225 

firms, from which 

97 responded. 

♣ SR 

CR 

H 

24 case studies 

conducted in new 

private firms, joint 

ventures, privatized 

firms and stateowned 

enterprises 

in 1995. 

Strong relation between regional unemployment 

and the proportion of the private sector 

enterprises as newly formed firms. 

Many firms were run by married couple, but 

since the entrepreneurial license was obtained 

by the male, he was considered as the 

entrepreneur. 

Only 4% of the respondents use market 

research. 

Almost half of respondents indicate the main 

problems related with finances. 

Other problems are government bureaucracy, 

perceived corruption, and slow economic 

reforms. 

Firm’s success depends to the flexible 

adaptation on the rapid and uncertain changes. 

In spite of good foreign languages skills, the 

entrepreneurs have problems to develop a 

medium-term business plan, a system for 

coordination and implementation in managing 

people, budgets and schedules. Managers have 

general aversion to risk-taking, to assuming 

responsibility, to making decisions. 

46

Table 10: (continued). 

Pavlínek, P. 

Smith, P. 


1998 

Smallbone, D. 

Piasecki, B. 

Venasaar, U. 

Todorov, K. 

Labrianidis, L. 

1999 

Bohatá, M. 

Mládek, J. 

1999 

To investigate the effect of 

inward investment on the 

regional transformation. 

To investigate the effects of 

internationalization on SMEs 

in post-communist countries. 

To compare the findings from 

Poland, Bulgaria and Baltic 

State with the similar survey 

in UK and Greece 

To examine the past and 

present stage of SMEs. 

Identify the main problems 

and barriers from the 

institutional and finances 

system faced by SMEs. 

Descriptive study 

bases on cases. 


comparative 

study. 


descriptive 

study. 

No SR 

Yes P 

CR 

B 

Firms with inward 

investment in three 

industrial sectors: 

automobile 

manufacturing, light 

engineering, 

tobacco and food 

processing. 

SMEs (100 or less 

employees) in food 

and clothing 

industry. 

377 face to face 

interviews. 

Yes CR 100 SMEs (64 in 

Prague and 36 

Prostejov and 

Olomouc district) 

conducted within 

the framework of 

PHARE. 

The authors identify two main forms of regional 

transformation. Key components of an offensive 

strategy for regional restructuring, such as, cooperation 

and partnership between economic 

and institutional actors are absent. 

The ability of SMEs in transition countries to 

compete in foreign and domestic market varies 

between sectors. The evidence shows that 

foreign market penetration by food processing 

SMEs in transition countries is often focused on 

CEE markets rather than in Western market. 

SMEs in transition courtiers with foreign 

business activities prefer to use external 

assistance to support their export effort, 

consultants of informally from other firms or 

business associates rather than from trade 

organizations or formal business support 

organization (missing trust, as remains from 

communist epoch). 

The improper functioning of legal system, weak 

protection of property rights, deficiencies in the 

state of law and shortage of qualified persons 

are the main obstacle for further growth of 

SMEs. 

47



Honeycutt, E.D. 

Ford, J.B., 

Lupton, R.A., 

Flaherty, T.B. 

1999 

Dana L. P. 

2000 

Uhlenbruck, K. 

Castro, J. O. 

2000 

Meyer, K. E. 

2000 

To compare the selection and 

training practices of 

salesperson by global and 

domestic company in 

Slovakia and China. 

Comparison of the state of 

small business in Czech 

Republic with that in Slovakia 

from macro economical and 

historical point of view. 

To analyze the entry into CEE 

market via acquisition of 

privatized firms according to 

country specific risk of FDI. 

To examine strategic and 

organization fit and firm 

transformation processes. 

To examine how the 

involvement of multinational 

enterprises affects enterprise 

restructuring in an interenterprise 

relationship. 

Quantitative – 

comparative 

study. 

Descriptive, 

comparative 

study. 

Quantitative – 

explanatory 

study. 

Theory of merger 

and acquisition. 

Qualitative, one 

case VW Skoda, 

Network theory. 

No SR 

China 

Yes SR 

CR 

No CR 

No 

EG 

H 

P 

Questionnaire: 51 

Chinese, and 74 

Slovakian. 

Focus group and 

interviews. 

CR One firm 

The questionnaire 

from 170 

privatization 

acquisitions by 

Western firms 

between 1989 and 

1993. 

VW Skoda 

Global and domestic firms in both countries use 

similar procedures for salesperson selection. 

The global firms devote more time to training 

practices and evaluate it at higher levels as 

domestic firms. 

Based on historical development and 

privatization process, study concludes that there 

is no ideal policy acceptable by all cultures. 

Study shows modest support for the applicability 

of merger theory developed in free market 

economies, mainly in the United States. While 

strategic fit between merging firms improves 

performance, the organizational fit were 

negatively related to performance. 

Merger theory should be adapted regarding the 

political, organizational and cultural differences 

for international acquisition. 

Global firms investing in CEE integrate their 

local operations into their global strategy and 

transfer their global networks to the new 

environment. 

48


Johnson, S. 

McMillan, J. 


Woodruff, Ch. 

2000 

Walsh, P.P. 

Whelan, C. 

2001 

Copp Ch, B 

Ivy, R. L. 

2001 

To investigate new firms 

(spin-off or creating from 

scratch) in five CEE countries 

by measures of job growth, 

security of property and 

market development. 

To examine the effects of 

inherited demand conditions 

on firm performance both 

directly and indirectly via their 

impact on corporate 

ownership during the first 7 

years of transition in CEE. 

To analyze the networking 

trends in small tourism 

business (However authors 

talk about firms with less than 

500 employees.) 


exploratory study. 

Quantitative 

study. 



Network theory 

No SR 

P 

R 

R 

U 

No SR 

B 

H 

SL 

No SR 

In 1997 were 

investigated 300 

private 

manufacturing firms 

(7 – 370 

employees) in each 

country. 

220 personal 

interviews in 

traditional 

manufacturing 

firms. Country’s 

detailed information 

on employment, 

ownership, regional 

and product 

classification. 

The questionnaire 

was send to 215 

tourism firms; 

response rate was 

37% (70 hotels 

and 10 travel 

agencies) 

Control of corruption is an essential institutional 

reform for entrepreneurship development. 

Dynamism of firms measured by employment 

growth was observed higher in Slovakia, Poland 

and Rumania than in Russia or Ukraine. 

Positive relationship between reinvestment and 

firm growth and no relationship between firms’ 

growth and external finance or property rights 

was found. 

The five countries according to firm’s growth, 

security of property and market development 

were grouped into two groups. An advanced 

group: Poland, Rumania, and Slovakia; and a 

lagging group Russia and Ukraine. 

Historical firm trade orientation has an impact 

on the firm performance. 

Firms that produce EU oriented products 

consistently outperform firms that inherited 

products historically produced for the artificially 

nurtured CMEA market. 

Firms use formal and social networks to 

coordinate business practices. 

39 % of investigated firms used international 

contact, 63 % participated in fairs. Firms do not 

use small business association (SBA) 

programs. Only 5 respondents had received 

SBA assistance. 

49


Fogel, G. 


Zapalska, A. 

2001 

Meyer, K. E. 

2001 

Nakos, G. 

Brouthers, K.D. 

2002 

Meyer, K. 

Skak, A. 

2002 

To examine differences and 

similarities in the environment 

of SMEs and to identify 

success factors and problems 

of SMEs in transition 

countries. 

To investigate the entry mode 

choice of German and British 

firms entering to CEE market. 

Using institutional framework 

and transaction cost theory. 

To examine the entry into 

CEE market from Greece 

market using the Dunning’s 

eclectic framework. 

To investigate the entry to 

east Europe market from 

Austrian and Denmark’s’ 

firms. 

Quantitative 

study. Data 

analysis is based 

on the model of 

Entrepreneurial 

environment 

proposed by 

Gnyawali and 

Fogel (1994). 

Quantitative 

study. 


theory. 

Quantitative 

study. Dunning’s 

model is 

contrasting on 

the entry mode 

selection in 

conditions of 

CEE countries. 

Triangulation of 

the methods. 

Network and 

resource based 

view. 

Yes H 

P 

♣ CR, H 

P, R 

RU 

Yes CEE, 

without 

specific 

ation. 

280 Hungarian 100 

polish SMEs by 

mail, telephone and 

one-site 

questionnaires with 

focus group. 

677 West German 

and British 

companies. 

From the mailing to 

418 firms were 118 

questionnaires 

used for analysis. 

Yes R The questionnaire 

was send to 50 

Danish and 144 

Austrian firms 

active in Russia. 62 

firms respond. 20 

Danish firms were 

use for case study. 

• 43 % Polish and 33 % Hungarian 

entrepreneurs recognize market opportunity 

as reason to start business 

• 17 % Hungarian and 20 % Polish 

entrepreneurs desire to be independent. 

• 99 % of Polish and 42 % of Hungarian 

entrepreneurs desire low cost and long –term 

loans. 

• Entrepreneurs have need for management 

training and communication network. 

Entrance firms adjust their mode choice to the 

specific transaction costs in different institutional 

frameworks. The type of knowledge transferred 

has major implications for its internalization. 

SMEs that have more differentiated products 

tended to use equity modes. 

SMEs perceiving high growth potential in a 

market tended to use equity modes. 

Variables as firms’ size, level of international 

experience and perception of investment risk do 

not have statistically significant impact to the 

entry mode choice. 

The evidence shows the importance of partnercountry-specific 

knowledge in the case of 

Russia. International entry is driven by a high 

degree of serendipity. 

50



Lituchy, T. R. 

Reavley, M. A. 

2004 

Smallbone, D. 

Rogut, A. 

2005 

Comparison of motivation and 

experiences of women as 

international business owners 

from CR and P with the 

literature about women 

entrepreneurs in North 

America. Study tests three 

models of entrepreneurship. 

To discuss threats and 

opportunities for SMEs of 

new EU members in case of 

Poland and Estonia and offer 

implications for SMEs at 

micro level. The main points 

of discussion are: the 

transition process, polices for 

entrepreneurship, adapting 

the institutional framework, 

regional policy and preparing 

or accession. 

Symbol and abbreviations used in table: 

♣ Study does not specify the firm’s size 

CEE Central and East Europe 

B Bulgaria 

CR Czech Republic 

E Estonia 

Exploratory study 

based on 14 

cases. 

Study tests three 

models of 

entrepreneurship: 

environmental, 

traits and 

behavioural 

approach. 

Descriptive study. 

♣ CR 

P 

Yes P 

E 

EG East Germany 

H Hungary 

P Poland 

R Russia 

6 Czech and 8 

Polish women 

entrepreneurs. 

Based on available 

information from 

National agency for 

enterprise 

development and 

previous research 

studies. 

The comparison confirms the adequate 

description used in North America for women 

entrepreneurs in countries in transition based on 

traits, environment and behavioural approaches. 

For instance, the interviewed women 

demonstrated high need for achievement, selfconfidence, 

pro-activity and commitment. 

Authors underline the need for further SME 

development as follows: 

• A need to strengthen the business support 

infrastructure. 

• A need to promote entrepreneurship at the 

regional and local levels. 

• A need to priority policies to support 

innovation. 

• A need to help SMEs adapt to a new 

regulatory regime. 

• A need to continue to improve the business 

environment. 

RU Rumania 

SL Slovenia 

SR Slovak Republic 

U Ukraine 

51

According to the used methodology, only 3 studies are supported by qualitative 

methodology (Grayson and Bodily, 1998; Pavlínek and Smith, 1998; and Dana, 

2000.), one used the triangulation of methods (Meyer and Skak 2002) and the rest are 

quantitative studies. 

Table 11 presents the overview of used theories, models and approaches, the rest of 

the studies are descriptive and comparative. 

Table 11: Brief review of used theories in CEE studies 

Theory, model or approach Study 

Network theory 

Meyer, 2000, 

Copp and Ivy, 2001, 

Meyer and Skak, 2002 

Transaction cost Meyer, 2001 

Resource based theory Meyer and Skak, 2002 

Merger and acquisition theory Uhlenbruck and Castro, 2000 

Model of entrepreneurial environment Fogel and Zapalska, 2001 

Dunning’s model Eclectic paradigm Nakos and Brouthers, 2002 

Environmental, traits and behavioural 

approach 

Lituchy and Reavley, 2004 

Three research areas can be identified according to the object of each study. First, 

studies related to entrepreneurship investigating the behaviour of managers and firm’s 

integration to the world (Grayson and Bodily, 1998), the profiles of the entrepreneur 

and their business (Ivy, 1997; Bohatá and Mládek, 1999). Other studies identify the 

success factors and problems of SMEs (Fogel and Zapalska, 2001), the networking 

trends of SMEs (Copp and Ivy, 2001), and test the entrepreneurship theory related to 

traits, environment and behavioural approaches in the market of CEE (Lituchy and 

Reavley, 2004). 

Second, the international business research, where Smallbone et al. (1999) 

investigate the effects of internationalization on SMEs in post-communist countries 

and Uhlenbruck and Castro (2000) analyze the entry into CEE market via acquisition 

of privatized firms according to country specific risk of FDI; other studies (Meyer, 

2001; Nakos and Brouthers, 2002; Meyer and Skak, 2002) investigate which entry 

mode are choose by firms entering into the CEE market. 

52

Third, from a macro economical view, Dana (2000) makes a comparison of the state 

of small business in Czech Republic and in Slovakia, whereas Pavlínek and Smith 

(1998) investigate the effect of inward investment on the regional transformation, and 

Ivy (1996) analyzes the relationship between new firm’s growth and regional 

economics. 

Keep in mind the high level of discrepancy of entrepreneurship research is Slovak 

context compare to west or north part of Europe. This chapter presents the review of 

the state of the art of Slovakian entrepreneurship 18 . The development of Slovak SMEs 

is presented in following three sections as: SMEs before 1989, after 1989, and SMEs’ 

foreign business activity during the period 2001-2004. 

Hence, there is a recently published Meyer and Peng’s review (2005) of articles 

relating to CEE. This research of works published in 13 top journals during the period 

of 1986 – 2004 analyzes how the transaction cost theory, agency theory, resource 

based view and institutional theories underpin CEE research. The study identifies and 

analyzes three different issues of CEE research. First, foreign entrants, the studies 

focused on motives, knowledge transfer, cross-cultural management, and entry 

strategies of foreign entrance. Second, local incumbents, related to restructuring, 

governance structure and business culture. Third, newly established local firms, 

entrepreneurship in CEE, and firm’s start-up and growth. 

4.1. Slovak SMEs before 1989 

Entrepreneurship in the Slovak land was common during Austro-Hungarian period. 

The first legislative norm defining the private enterprises was published in 1859 

(Marková, 2003). To understand the present stage of the industry’s sectors, it is 

necessary to look back upon its historical development. There were radical differences 

between the Czech and the Slovak economical developments. 

Czechoslovakian SMEs accounted for approximately 60% of the workforce in the early 

1930s (Horvath, 2004) and represented 97.4% of the manufacturing firms (Table 12). 

However, the Slovakian industry was characterized by large firms located in small 

cities, as compared to the rich industrial diversification in the Czech industry, with 

firms located in small and medium sized cities. 

18 Additional information about Slovakian economic development could be found in Capek and Gerald 

(1993), Pavlínek (1995), Grayson and Bodily (1998), Hilde (1999), Groshek (1999), and Bryson and 

Cornia (2000). 

53

Table 12: Industrial enterprises according to size structure in Czechoslovakia 1930 

Size of firm in number 

of employees 

Firms Employees 

Number % Number % 

6 – 50 35 632 86.0 485 864 29.0 

51 – 250 4 738 11.4 483 761 29.0 

251 and more 1 068 2.6 705 827 42.0 

Total 41 438 100.0 1 675 452 100.0 

Source: Adapted from Teichova, 1988:38. 

The Slovakian land was underdeveloped, as compared to the Czech part before 1937, 

when Slovakia contributed only with 7.8 % of the industrial national output. However, 

the industrialization of Slovakia was fast and until 1943, it increases to about 63% with 

a 53% growth of the employment. 

In the 1960s, the Czech area was known as an intensive industrial society, while 

Slovakia as an agricultural one. The great impact upon the Slovakian industry was 

brought by the development of the military industry. During 1948-1988 more than two 

thirds of the Czechoslovakian armament industry was located in Slovakia, and at the 

same time, the Slovakian armament export was on the seventh position in the world 

ranking. Beside agriculture and armament industry, in Slovakia there also were 

developed chemical industry, mining, heavy industries such as the ones directed to 

steel and machinery. 

After 1948, when the Communist party gained the political power, the situation of 

private enterprising changed dramatically. Private properties and private enterprising 

were targets for the process of nationalization. The result of that process was a 

national economy based on state and cooperative owned firms (Marková, 2003). 

The five years planning was the principal tool for the national economy. To fulfil or 

overcome the planned production was the basic and unchallengeable firm objective. 

This confirms the observation made by Grayson and Bodily (1998): ”Czech shoes 

firms exported 600.000 pairs of shoes to the Soviet Union in 1989, and the following 

year not a single pair” (1998:133). The analysis of the customer preferences, looking 

for alternative distribution channels, the improvement of quality, and stress on the 

design were unimportant. Therefore, the marketing capabilities of the firm’s 

“directors” 19 were useless. The Czechoslovakian production was subordinated to the 

demand of members of the Council for Mutual Economic Assistance (CMEA). 

19 The notion of director is used to denominate the principal manager of the firm. The owner or 

entrepreneur seems inadequate for that time of period. 

54

4.2. Slovak SMEs after 1989 

Large firms (more than 500 employees) represent 90% of all firms, and 98.8% of the 

workforce in 1989 (Marková, 2003). The process of restitution and privatization 

initiated the rebirth of private enterprises in Czechoslovakia. Beside the fundamental 

institutional and economic change, which involved legislative reform and development 

related with the transition process, other radical changes appeared. On the 1 st of 

January 1993, the Slovak Republic starts an independent existence as an outcome of 

the break-up of Czech and Slovak Federal Republic (ČSFR). 

The transformation was needed not only in the enterprise’s area, but also in the 

institutional, banking and financial sector. The banks had little experience in lending to 

private firms, as they were used to give money to government and state owned 

enterprises (Grayson and Bodily, 1998). The transition process came along with an 

extended legislative reform. The natural consequence is an unstable, inconsistent and 

complex institutional environment (formal and informal), which makes unclear the 

rules of the economic game. The main function of institutions in a society is to reduce 

uncertainty by establishing a stable structure for human interaction (North, 1990). 

Empirical evidence from five CEE countries put forth insights related to the impact of 

the transaction cost relating unstable host institutional frameworks with foreign firm’s 

choice of entry mode (Meyer, 2001). 

The economic change, political and social transformation, economic reform, 

deregulation, privatization and foreign direct investments, are factors that dramatically 

alter the competitive environment in the CEE countries, as identified by Fahy et al. 

(2000). The problem of undefined ownership and property rights (Johnson et al., 

2000), the large process of privatization (Lieberman et al. 1995, Gerhard 1997, 

Fischer and Sahay 2000, Uhlenbruck and De Castro 2000), the restructuring of the 

banking sector, and the remaining problem of corruption 20 (Grodeland et al., 1998), 

interrelated with the low level of trust of public institutions, are other characteristics of 

the evolving transition process in Slovakia. High rents, low competition, higher prices, 

all indicate some kind of Slovakian markets failures (Horvath 2004). Johanson et al. 

(2000) observed that an inhibiting impact upon the SMEs growth is given more by 

20 Slovakia is ranked in the 57th place in the Transparency International Corruption Perceptions Index 

2004 (score 4.0) out of 146 countries, which relates to perceptions of the degree of corruption as 

perceived among politicians and public officials. 

http://globalcorruptionreport.org/gcr2005/download/english/country_reports_k_z.pdf 

55

insecure property rights, than inadequate finance. More precisely, the control of 

corruption is an essential institutional reform for development of entrepreneurship. 

4.3. The present state of Slovak SMEs 

Nowadays, SMEs in Slovakia represent approximately 99% of the business 

(NADSME, 2006). The percentage of the Slovakian SMEs in the national economy is 

comparable with the EU level, and the majority of 95.4% are micro firms (Table 13). 

The number of SMEs went up by 37% in the period of 1994 – 2004. Building industry, 

retail, commercial, and financial sectors are predominated by SMEs. More than 46% 

of the SMEs are located in the capital city. Bratislava‘s leading position is followed with 

less then 24% of the SMEs in Žilina, Prešov, Košice and Nitra. Coming in last with 

regard to number of SMEs are Banská Bystrica and Trnava with less than 20.5%. 

Table 13: Comparison of the structure of business entities and employment between 

Slovakia and Europe by size 

EU-19♣ 

2003 data 

Numbers of 

enterprise (in 000) 

Share on total 

number of 

enterprises 


employees (in 000) 

Share on 

employment 

Slovakia Numbers of 

enterprise 

Share on total 

number of 

enterprises Number of 


Share on 

employment 

Sources: NADSME, 2004a:30. 

Micro 

(0-9) 

Small 

(10-49) 

Company size 

Medium 

(50-249) 

Large 

(250+) 

SMEs 

Total 

17 820 1 260 180 40 19 260 19 300 

92.3% 6.5% 0.9% 0.2% 99.8% 100.0% 

55 040 24 280 18 100 42 300 97 420 139 720 

39.4% 17.4% 13.0% 30.3% 69.7% 100.0% 

353 597 13 722 2 871 586 370 190 370 776 

95.4% 3.7% 0.8% 0.2% 99.8% 100.0% 

628 125 323 833 383 059 689 975 1 335 017 2 024 992 

31.0% 16.0% 18.9% 34.1% 65.9% 100.0 

♣ EU-19 includes 15 Previous Members States and Iceland, Norway, Switzerland and Liechtenstein. 

The comparison was made using the method used by EU (which does not distinguish between the 

various legal forms, and both legal entities and natural person are considered to be enterprise). With 

respect to small trade licensees, employment has been bases on estimates. 

The SMEs’ employment has an increasing tendency from 1999, when they employed 

56% of the workforce. In 2005, the SMEs’ employment achieved a level of 70,7% of 

the total workforce (NADSME, 2006). Hence, large firms maintain their about 46,98% 

employment position only in the industry sector. On the other hand regarding 

geographical structure, there are not such noticeable differences; however Bratislava 

56

maintains its leading position with 17.9%, followed by Košice, Žilina, and Nitra which 

have less than 13.1%. 

The dynamics of the SMEs’ growth has a positive trend. In 2005, there were 

established 1,994 SMEs, while 990 finished their business activities. 

The main changes could be observed in the trade sector, building industry, 

manufacturing of goods, real estate, agriculture, and commercial services. 

The results from the survey made by NADSME (2004b) about the reasons to start own 

business, find that in 2003, more than 60% of the interviewed entrepreneurs indicated 

increases of income as the principal reason for establishing own firms. For 13%, it was 

only a possibility to find a job, for another 13% the reason was a need of 

independency, a factor confirmed in several investigations (Ettinger, 1983; Hisrich and 

Peters, 1998), and 8% saw business as the opportunity to pursue their ideas. Contrary 

to this, for 43% of the Polish and for 33% of the Hungarian entrepreneurs, we 

encounter the recognizing of market opportunity as the most important factor for firm’s 

creation (Fogel and Zapalska, 2001). 

The empirical evidence of NADSME (2004b) was confirmed more by the individual 

(or family based) entrepreneurship, than by collective entrepreneurs. Above four fifths 

(84%) of the respondents, who planned to establish a firm prefer small trade licence 

as legal form, 8% chose a limited liability company, and 2% a shareholding company. 

Lawrence’s study (2001) confirms the lack of managerial capabilities for entrepreneurs 

in CEE countries. The managers have a lack of skills, resources, and experience to 

manage firms in competitive market environments. Hungarian, Slovak, and Czech 

managers have a general aversion to risk, and problems to develop tools such as a 

medium-term business plan, a system for coordination and implementation, and 

managing people, budgets, or schedules (Grayson and Bodily, 1998). According to 

Swanson and Webster (1992), 30% of Czech and Slovak entrepreneurs need training 

in areas like business plan preparation, negotiation, pricing, market penetration, 

planning, decision making, and management of the work-force. Similarly, the findings 

provided by Fogel’s study (2001) with regard to the Hungarian SMEs, show that 52% 

of the entrepreneurs express a need for management training as the most desirable 

non-financial assistance to help them grow. 

57

Bohatá and Mládek (1999) found similar results in some other parts of former 

Czechoslovakia. They identified, beside the high burden of taxation and insufficient 

finance for expansion, the shortage of qualified workers and managers as important 

barriers for SMEs’ growth. 

The Slovak SMEs do not use marketing research, a technique widely used in the 

Western countries. NADSME’s (2004b) survey confirms that 83% of the SMEs, during 

2000-2002, did not apply any marketing research. The same result was confirmed by 

Ivy’s (1997) study in the Nitra district (located in the south-western part of Slovakia). 

Only 4% of the SME’s respondents used marketing tools. “Even international market 

ties are often formed by contacts from friends and relatives, directly or indirectly.” (Ivy, 

1997: 96). It seems that mainly informal networks are important instruments for the 

Slovak SMEs. 

4.4. Slovak SMEs’ foregin trade during 2001 – 2005 

Nowadays, the globalization trends opened new possibilities for Slovak SMEs to 

initiate cross-border business activities. Moreover, at the same time, firms face up 

higher levels of competency. This section analyzes SMEs’ export and import activities 

in the period between 2001 and 2005. 

During the studied period, it was observed a small, but increasing volume in both 

export and import activities (Figure 2). The export increased by 11.4% as compared to 

2003, and the import increased by 13.8%. Hence, from long-term horizon, import 

overtakes the SMEs’ export in the Slovak balance of trade. 

It is a bit surprising that during the studied period, the higher export and import 

activities were achieved by micro-firms when compared with small firms. The import 

activities performed by micro-firms, almost reached the level of medium firms. In 2004 

and 2005 micro-firms even exceed in volume of import and in 2005 also export of the 

medium sized firms. In addition in 2005, micro-firms also achieved the most dynamic 

growth in exports about 72.5%, and imports about 39.5%, as compared to 2004. 

Hence in 2005 NADSME includes in category of micro-firms also firms with not 

identified number of employees. One year before in 2004 the growth by micro-firms in 

exports was 35%, and imports 22.6% compared to 2003. 

58

Figure 3: Volume of export and import by size categories in period 2001-2005 (bn SK) 

Sources: NADSME, 2006:95 

Note: Hence, the most dynamic growth in export and import activity is observed by micro firms, in this 

sized category NADME includes also the firm with not identified number of employees. 

From the territorial point of view, in 2005, the export increased about 29.4% and 

19.4% to Spain, Poland, The Nederland, Hungary, and France. In the same year, the 

import increased about 83% and 21.4%. mainly from Taiwan, South Korea, China, 

Russia, and Hungary. The highest volumes of exports are related with the former EU 

15 members (NADSME 2006). 

The results of the NADSME (October 2005b) survey, focusing on the SMEs’ 

advantages and disadvantages of membership in EU, shows that only for 13.7% of the 

SMEs, the EU entrance brings an increase of exports to EU members. An easier 

possibility to find foreign partners was an advantage only for 17.2% of the SMEs. 

Beside the SMEs’ international activities for further economic development are direct 

foreign investments also important. Several studies (McMillan, 1993; Meyer, 2000; 

Mygind 2000) underline the importance of foreign direct investments through the 

capital and know-how transference for successful restructuring of the enterprises. 

Johnson et al. (2000) investigated 300 manufacturing firms with between 7 and 

370 employees in each of following countries: Poland, Slovakia, Romania, Russia, 

and Ukraine. They identified that “the ability to sell to customers in distant locations is 

a measure of market sophistication, for it requires functioning transportation 

infrastructure, sources of market information that can identify potential trading 

partners, and the means to assure bills are paid in arms-length transactions”(Johnson 

et al., 2000:12). The Slovak firms investigated achieved high level of sales related with 

foreign destinations (Table 14). 

59

Table 14: Destination of the sales in per cent (data collected in 1997) 

Destination of sales Poland Slovakia Romania Russia Ukraine 

Within home city 35.3 32.4 46.2 76.7 69.5 

Domestic, outside of 

home city 

55.7 50.7 49.2 21.3 26.7 

Foreign destination 9.0 16.9 4.6 2.0 3.8 

Source: Adapted from Johnson et al., 2000:29. 

Meyer (2000) observes that the supply of parts to foreign-owned first-tier suppliers 

permits the survival of many local manufactures in Czech Republic, Slovakia, and 

Hungary. The same author argues that “global firms investing in CEE integrate their 

local operations into their global strategy, and transfer their global networks to the new 

environment. Global strategies and global industry’s trends thus determines the 

strategies for CEE, and investors’ interaction with the local firms“(Meyer, 2000:143). 

60

5. CASE ANALYSIS 

The word-by-word transcript from recorded interviews, handwritten notes made by 

researcher during the interviews, information about the firms gained from firm’s web 

pages, institutions, internet and newspaper create the basis of data for three steps 

process analysis. Thus, case analysis follows the data reduction, data display, and 

conclusion drawing/verification, the steps proposed by Miles and Huberman (1994) for 

qualitative analysis. 

Before to first step of data reduction, data analysis involved reading the transcript 

several times obtaining a sense of the overall data, familiarising with the detail about 

each case individually and making the notes in the database itself about any ideas or 

concepts that occurred to the researcher. Simultaneously, to take advantage from the 

entrepreneurs’ reaction, their voice expression, the recorded interviews were listened 

several times. 

The data reduction process was focussed on the simplification, reduction and 

systemization of collected data. This helped to organize data in those related to firm’s 

creation and those to firm’s internationalization. Hence, such data separation, do not 

exclude the possibility of interrelation between these two processes and factors by 

which are influenced the creation with those related to the firm’s internationalization. 

The fundamental aim was just to simplify and organized data to gain easier 

possibilities for its analyses from different points of view. Based on organized data the 

individual case analysis using the narrative description for each case was made. 

Additionally, the data were organized also according to proposed research questions, 

which facilitated the cross cases analysis. 

The reduced data process used the tables as tool for displayed and organized data in 

compressed way to help more easily identify the relations and propose the research’s 

conclusions. 

The third and important step of data analysis, defined by Miles and Huberman (1994) 

is the conclusions, drawing/verification. As findings from the individual and cross case 

analysis, so the explanations, differences, similarities between cases, answers to 

proposed research questions and the propositions for further study are discussed in 

seventh chapter of the study. 

61

As indicated above, the analysis is divided in two parts: 

• Individual case analysis. The effort is put to offer brief but aptly description of 

each case. The aim is to present the basic information about firms and help with 

the initial sense making (Eisenhardt, 1989) of each case individually. 

• Comparative analysis goes deeper into the studied objectives the firms are 

analyzed according to planned research questions. In the analysis is made the 

comparison between cases with the help of findings presented in literature review 

(chapter two). The pattern matching (Yin 1989). is used to see the similarities and 

differences between studied SMEs’ process and factors of internationalization with 

the present stage of theory and its comparison with Slovak SMEs. The similarities, 

differences as the results of analysis helped proposed the model for firm’s 


In both, individual case description and comparative analysis the citations of 

entrepreneurs or managers are applied. 

5.1. Individual case analysis 

Easier analysis of individual cases facilitated the data organization according the 

several criteria. Thus, the description of each case is focus on the firm’s start-up, year 

of firm creation, type of industry, main product or services, number of founders, the 

presence of foreign partner or investment, firm’s size in number of employees. 

5.1.1. CASE 1 

The firm was established in 1996 in Banská Štiavnica. The family business was 

created by three persons, two brothers and their cousin, without any foreign 

investment. The firm’s industry is textile focused on the socks production. In the period 

of firm’s creation the environments in Banská Štiavnica region was competitive and 

there were created many similar firms. “In each third – fifth village there was someone, 

who has one or two machines and was producing socks in garage. In that period it 

emerged many similar firms”. 

Hence, the firm has officially three founders, only one of them makes the principal 

decisions and spends most of his time in the firm (almost twelve hours daily). The two 

other persons do not even live in Banská Štiavnica. Their main support was the 

financial help in the time of firm’s creation and after they participate in the firm’s 

marketing and some financial activities. 

62

The firm has grown from two to thirteen employees in nine years. The relationship 

between the employees and owner is very familiar. “I am not able to come to one of 

my employee and said to him/her I am sorry but you have finished in this work hence, 

I really do not need him/her.” 

From the inception, firm puts the stress on the product’s quality and design. One of the 

first machine which was bought was about five times more expensive then other 

similar knitting machines. In the beginning, firm faced the unwillingness of the banks to 

lend them the money. The entrepreneur interpret his experience with the banks with 

following comment: “The banks told us, so in what are you going to do your business? 

There are so many socks producers. You do not have any chance.” 

5.1.2. CASE 2 

The second family business was established in 1992 by the parents and continue on 

the experience from the previous own firm with esoteric products (the products of 

aromatherapy, literature about different religion). The family business is in its second 

generation; hence, leading position has the father and his son. First firm was created 

in 1990 with the help of Austrian firm. The relationship between Slovak and Austrian 

entrepreneurs was not only business but mainly a friendly one. However, during the 

communist period was very difficult to travel to abroad, but the entrepreneur, as a 

former a coach in handball had more possibilities for travelling to abroad. During his 

trips to Austria, he established good relationship, which afterward helped him 

established own business. 

In Slovakia, the sector of esotery products was unknown in time of early post- 

communist period. In spite of the fact, that the firm offers the literature and product 

from different religions, the people blame the company. The firm faces a problem of 

misunderstanding mainly from the sympathizants of evangelic and catholic religions. 

This was an impulsion which obliges the entrepreneur to change the main product. 

Therefore, the family decides to focus only on the one part of esoteric and become 

specialized on aromatherapy. The main product is the hand made bath salts poured 

by teaspoons. This decision was encouraged also by the historical tradition of the salt 

mines in Prešov, where the firm is located. 

The firm starts production of bath salts in the balcony and bathroom of the family flat 

and employed four family members (parents, son and daughter) and one financial 

manager. In 2001 the firm was transformed into Limited Company. In December 2005 

63

about 17 employees worked there. This number increases to 48 employees in the 

period of season (mainly Christmas time). 

The products are still hand made and each product has own story (based on its 

aroma, colour, or type as the salt is pour) created by the entrepreneurs. Some 

products are specially prepared for the representation of other firm (as propagation or 

memorial things), when the salt is poured in colour and logo according to clients’ 

request. Hence, the firm enters market with new products where there was a high 

interest about these products in the beginning: “Home market was in growth in 

aromatherapy compare to present period. Today we do not have boom as before. 

…One retail from Banská Bystrica bought from us 300 000 aroma-lamps. At the 

present time if the same retail bought from us 3 000 aroma-lamps, and we could be 

happy.” 

5.1.3. CASE 3 

The firm was created in Prešov city, without any foreign capital, by three partners in 

1998 with the pure commercial aims to sell the products in the home market. The 

trade company focuses on selling regulation and automatization elements such as the 

electric actuators, control valves and pneumatic elements. The application of these 

products is in several industries such as energetic industry, food industry, or for heat 

energy regulation. 

All four founders known very well the products because they worked in state company 

which produced them. “We created complete new independent firm. … We join 

together; we well known the problems, market, product, clients so we start to sell it.” 

Although, the trade company was established by three partners, the prevailing 

decision rights (with 70%) are in hand of one of them. This was the indispensable 

condition of this founder 21 (in continuing we focus on this entrepreneur) in the time of 

firm’s creation. The entrepreneur worked in state manufacturing company for 16 

years. He went through different positions in that firm from basic workers, to 

commercial assistant and commercial manager. After the firm privatization they 

decided to established own firm. 

The principal reason to start this business was the need of achievement, and desire to 

exploit the opportunities which he saw in the market for that product. The founders 

21 The face to face interview was realized with this founder who has 70% of firm’s share. 

64

planed to expand their activities and their strategy was growth oriented. In 2000, they 

bought the manufacturing unit of privatized firm and accepted a new business partner. 

“So we start these products also produce … and each year we are increasing our 

market share.” Since 2000, the firm also sell their products to foreign markets. 

This change means increased employment from four to 120 employees then 180 

employees in December 2005. 

5.1.4. CASE 4 

This firm has some similarities with previous case because of the historical 

manufacturing tradition in communist period. The firm was created in 1951 and 

passed trough several changes. The main change in firm’s management was because 

of non-transparent privatization in 1994 and 1995 and further, managers did not have 

an interest to continue in their business. Their aim was only to gain money and very 

fast 22 . 

The last change in property has been in December of 2004. To complicated process 

of property rights is common in post-communist country. The entrepreneur describes 

the process of firms’ acquire as: “The firm because of bankruptcy was offered for sell 

by tender. The old firm stopped to produce and our new firm rented all the area, 

buildings, and machinery. We also rented the employees …Hence, we rented the 

buildings and machinery but these things were the object of auction. In this action (two 

more firms were interested in objects) we bought the buildings. The machineries had 

another owner and we bought them also.” 

Four new managers have started to do business and continue on the lasting tradition 

of machinery and foundry products that find their implementation at the mining and 

exploitation industries, machinery, metallurgy, construction, power engineering, and 

agriculture. In spite of fact, that firm has four new managers; only two of them with the 

10% of the action work daily in the firm in Hliník nad Hronom. The decision control 

over the firm, with 40% of action has other two managers. These tow managers live 

far away from the firms’ location. The firm does not have any foreign capital. 

22 Through similar process initiated with firm’s privatization, followed by a progressive selling of the 

firms’s actives to bring firms to the bankruptcy passed many others Slovakian firms. 

65

The previous management has a financial problem. They were no able to pay a salary 

for more that 150 employees on time. “The previous management did not pay the 

salary for three months.” 

5.1.5. CASE 5 

In 1998; two founders, one German and one Slovak man established a consulting firm 

in Žiar nad Hronom. The firm starts with two employees. At the time of interview they 

employed 17 peoples. 

The initial impetus to establish that business emerged by serendipity. During the 

vacation time, the present Slovak entrepreneur was on hiking road trip across the 

Europe. During this trip, he knew the German man who was the founder of German 

service firm. After the conversation, German offered to him to create a new firm in 

Slovakia in similar type of services as had his firm in Germany. 

“It was very fast.” Slovak entrepreneur have no interest in such kind of business 

before. Consequently, they established new independent Slovak firm. Hence, because 

of different vision of the firm’s management and price policy, the German partner 

abandoned the firm one year after. 

Firm offers the services in the consultation and training for the development of 

management systems, services in information systems, IT security, internal; and 

external audit. The firm’s clients are SMEs and large firm from different industries, 

such as textile, automobile, chemistry, food, and construction. 

The firm’s home competency has to be evaluated according to firm size. “There are 

many small self-employed. Someone has a presentation on CD and offers such 

services, as his another job. Hence, the similar to our firm’s size in Slovakia are three 

more” The firm’s success in sectors of consultancy is confirmed by the national prize 

of Slovakia for quality, which firm gained in 2005. 

5.1.6. CASE 6 

The last firm is located in Zvolen and was established in 1998 with German foreign 

capital. The firm offers the services in the geographical information systems and main 

service is the data processing. The work on different projects is very exacting because 

many projects require learning of new software. At the same time, this kind of work 

requires employee’s patient and concentration for long hours of work. 

66

Hence the firm was established by two persons, araised as the result of self 

employment transformation. The collaboration between Slovak self employed and 

German company took about 3 years before. 

The Slovak man starts to work for the German company as self employed during the 

post-gradual study in the university. They know each other gracious to relations 

between German entrepreneur and father of Slovak man. Following, German 

entrepreneur offers to Slovak partner to continue in the collaboration and to establish 

new firm. “From their side arise the question if I want to start to do the business in 

Slovakia.” Finally, a new subsidiary firm was created with 80% of German capital. “In 

the begging I had worked in the home, than we rent the office and then after employed 

the first, second, third and fourth employer.” 

Slovak firm received most of the project from Parent Company. About the 98% of work 

are services for German clients. The entrepreneur has an interest to start looking for 

another market as well offers the services also in home Slovak market and such to 

ensure the firm growth and risk diversification. 

The firm starts with six employees and grown to nine employees in December 2005. 

The number of employees varies about two or four more according to requirements of 

the project in which the firm is actually working. 

The description of firm’s competency entrepreneur presents as: “The market in 

Slovakia is covered; the question is if these firms are able to compete with their price 

and quality of services. I do not have detailed information about their kind of services. 

The market in Germany is covered, in France also. The market is covered 

everywhere. The question is the relation between the price and quality of operating 

firms.” 

5.1.7. Summary of individual case analysis 

The tables 15, 16, 17 and 18 bring the summary about six cases according to four 

topics: firm basic information, founder’s characteristics and background, international 

activities and support program for SMEs. 

About firms (table 15): 

• One firm (case 4) has a long historical tradition from the communist period. Since 

1951 firm passed through several changes in management directors. The firm 3 

67

also sells the product with the long historical tradition but under new independent 

from the previous one brand. 

• The firms were established in period of years 1992 and 2004. The first created in 

1992 was case 2 and the last in 2004, cases 4 and 6. 

• The firms employ between 13 till 200 employees (December 2005). All firms are 

growing in number of employees. The most rapid growth about 176 employees 

during the 7 years has a case 3. This change is related with the transformation of 

the commercial into also manufacturing company. According to the size, there are 

one micro firm (case 6), three small firms (cases 1, 2, and 5) and two medium firms 

with about 180 employees (cases 3 and 4). 

• While for entrepreneurs from case 2 and 4 it is second created firm, for 

entrepreneurs from cases 1, 3, 5, and 6, it is the first established firm. 

• Two firms (cases 2 and 3) are allocated in region of Prešov and the rest in region 

of Banská Bystrica (cases 1, 4, 5 and 6). 

• Only one of the firms (case 2) was established by women, hence this firm is a 

family business in second generation. Another family business is case 1. Firm is in 

first generation, because children are too young to participate on business 

activities. 

• Two firms are from services sector of consultancy, data digitalization (cases 5 and 

6), three from manufactured production: in textile, metallurgic, and electro-technical 

industry (cases 1, 3 and 4) and one (case 2) produces hand made aromatherapy 

products. 

• The importance of innovation for business, with the exception of case 2 is 

confirmed by five firms. The case 2 stresses more creativity because offers the 

hand made products. 

• The four entrepreneurs started their business with previous knowledge about the 

type of product, the process of production, the market (case 1, 3 and 4), services 

(case 6) and two started in complete unknown area (case 2 and 5). 

68

• Three of the firms (case 1, 3, and 4), have started without any foreign investment, 

three of firms with foreign investment. Firms 2, 5, and 6 were established with the 

help of foreign partner. While in case 2 and 6 it was more informal – friendly 

contact, in the case 5 it was more formal relationship. 

About founders (table 16): 

• According to founders’ age when they constitute their firms, two categories can be 

observed. Between 21 and 29 years (cases 5 and 6) and between 36 and 45 years 

(cases 2, 3, 4, and 5). 

• Five entrepreneurs have a university degree, technical university (cases 3, 4 and 

6), economical university (cases 2 and 5). Only entrepreneur from case 1 has a 

college technical education. His study was specialized on the knitting machines for 

socks production. 

• Four entrepreneurs have previous labour (cases 2, 4, and 5) or study (cases 2 and 

6) experience in abroad, which took more than 2 month. Entrepreneurs from case 

1 and 3 do not have such experience. 

• All firms have in leading position someone who speaks one or more foreign 

languages. In cases 2, 3, 4, 5, and 6 the entrepreneurs speak English. In case 1 

the entrepreneur’s brother who participates in marketing activities speaks English. 

Beside that, entrepreneurs have knowledge of German (cases 2 and 6), Russian 

(case 3) and French language (case 4). 

About foreign business activities (table 17): 

• Two firms start to sell their product (cases 2 and 4) and offer services to abroad 

(case 6) from their inception. In two years after internationalize also cases 3 and 5, 

and in three years after the start up case 1. 

• The first mode of entry of all firms was exporting. The direct for cases 2, 3, 4, 5 and 

6 and indirect export for cases 1 and 2. 

• Five interviewed firms export to Slovak’s economically and culturally closeness 

country of Czech Republic. The exception was only case 6. 

69

• There is prevailing dominance of geographically close countries as Austria (case 

2), Poland, Hungary (cases 2 and 3), Germany (case 3, 4, and 6). However, the 

firms sell their product also to United Arab Emirates (case 2) or Iraq, India, China 

(case 3), and Virgin Island (case 5). 

• The most important advantage of internet using is the fast external (cases 3, 4, 5, 

and 6).and internal (cases 3 and 6) communication. 

• For cases 1, 2, and 5 is the internet source of possible new clients and other 

business contacts and new information (cases 2, 3, 4, and 6). 

• Except the case 6, five firms have web page. Four in Slovak and English language 

(cases 2, 3, 4 and 5). Case 1 only in Slovak language. 

• Except the case 6, five firms present their business, products and services in 

domestic and foreign fairs. 

About the entrepreneurs experience with the support programmes (table 18): 

• Half, three of the entrepreneurs have the experience with support programmes 

(cases 2, 3, and 5) and half not. 

• The reasons and problems why the entrepreneurs do not use the support help for 

their business are: untransparent process of solicitations (cases 2 and 3), 

interrelated lack of thrust between institutions offering such programmes and firms 

(cases 1, 2, and 3), and the lack of information about such programmes (case 1, 4 

and 6). 

• The low interest of support institution to help introduce Slovak firms into foreign 

market present cases 2 and 5. 

70

Table 15: Firm’s basic information 

Year of firm’s 

creation 

Organizational 

change after the 

start-up 

Actual legal 

form# 


founders 


1996 1992 1998 2004 1998 2004 

No 

2 brothers and 1 

cousin. 

Entrepreneurs’ 

gender Men 

The firm starts as selfemployer, 

in 2001 

was transformed into 

s.r.o. 

The firm starts as 

small trade company. 

In 2000 firm bought 

the production parts. 

The firm was 

establised has a 

tradition since 1951 

and passed through 

privatization and 

several managerial 

changes. 

No No 

s.r.o. s.r.o. s.r.o. a.s. s.r.o. s.r.o. 

1 person, after the 

transformation in 

2001 two more 

persons became the 

partners. 

Woman 

After 2001 two men 

enter 

3 persons with the 

share of 70 %, 15% 

and 15%. 

After 2000 one more, 

4 persons (70%, 10%, 

10% 10%). 

4 persons with the 

share of 10%, 10%, 

40% and 40%. 

2 persons – Slovak 

and German. 

2 persons – Slovak 

and German. 

Men Men Men Men 

Family business Yes Yes No No No No 

Industry 

Textile industry 

Aromatherapy 

/cosmetic industry 

Electro-technical Metallurgy industry Services Services 

Main product 


Wide sort of socks. 

Bath salts, bath oils, 

fragrant lamps, and 

fragrant dried flowers. 

Electric actuators, 

control valves and 

pneumatic elements. 

Consultancy and 

Mining equipment, 

education services in 

locomotive, industrial 

information systems, 

vacuum cleaner, and 

IT security, internal 

agriculture machinery. 

and external audit. 

Services in the 

geographical 

information systems. 


when the firm 

start / XII.2005 

2/13 

3/17 – 48 seasonal 

workers 

4 /180 180/186 2/17 

6/7+5 seasonal 

workers 

City of location Banská Štiavnica/ Prešov/ 

Prešov/ 

Hliník nad Hronom/ Žiar nad Hronom/ Zvolen/ 

/region 

Banská Bystrica Prešov 

Prešov 

Banská Bystrica Banská Bystrica Banská Bystrica 

71

Table 15: (Continued) 

Innovation 

Foreign 

investment 

The principal 

impetus which 

lead 

entrepreneur to 

start own 

business 

#Abreviattions: 

s.r.o. – Limited Company, 

a.s. – Join Stock Company 

Firm invests in new 

machines. Every year, 

firm buy one or two 

new machines and 

introduce about 

developing of 

completely new socks 

designs. 

Hand made 

production. The stress 

on the creativity. Each 

product has own 

story, which becomes 

part of the product. 

Firm invests into new 

technologies; they are 

important, for the 

cooperation projects 

and for further 

product’s 

development. 

The innovation is 

important but in same 

time exciting and 

financial strenuous. 

The firm has to pay 

the debt from the 

previous 

managements. 

No No No No 

Entrepreneur had a 

labour experience 

with socks’ 

production. He 

worked for firm owned 

by his relative and 

during the three 

years, obtained 

experience on how to 

start the business. 

The firms has some 

financial problems, 

therefore he decided 

to establish his own 

firm. 

After the velvet 

revolution and with 

the help of Austrian 

friends, the firm was 

established in 

Slovakia. The region 

has a long tradition in 

bath salts which 

enhance the decision 

to establish a firm. 

From the inception, 

the firm had export 

activities. 

New trade firm with 

the aim to sell the 

products, which the 

founders know very 

well; firstly, in home 

market. They know 

the product, clients, 

and problems related 

to that kind of 

business. The 

principal reason was 

the need of 

independence and the 

identification of 

market opportunities. 

To continue and to be 

competitive with a low 

labour cost, to invest 

into new machinery, 

and gain the 

advantages. 

To continue a tradition 

of our product and to 

earn more money. It 

is more beneficial to 

sell the product to 

foreign partners. 

The innovation is very 

important for the firm. 

The new services are 

still adapted 

according to new 

needs of clients. 

About 50 -60 % of 

new services are 

based on the client’s 

recommendation and 

comments. 

Hence, the firm was 

established with 

foreign capital; a 

German partner, after 

first year, left the 

company because he 

had a different vision 

of doing the business. 

During the vacation 

and travelling via 

hiking Slovak 

entrepreneur knew 

the German future 

partner. They decided 

to establish new 

company in Slovakia. 

The innovation is very 

important; there is 

need to buy and to 

learn new program in 

which the client needs 

the final digitalization 

of its data. 

Yes 80 % of financial 

capital. 

The entrepreneur, 

during his post 

gradual studies, 

worked for the foreign 

company, which after 

4 years of 

collaboration, made 

an offer to him to 

established new firm 

in Slovakia. 

72

Table 16: Founder’s characteristics 

Age when the 

entrepreneur established 

the firm 

Type of education 

Labour experience 

Previous foreign 

experience (study abroad, 

work stage for more than 

2 month) 

Knowledge of foreign 

languages 


36 43 40 45 21 29 

Secondary school – 

knitting technique. 

13 years, related to 

the socks 

production. 

3 years in small 

socks production at 

his relative’s firm. 

Education in 

humane science. 

The son has an 

economical 

education. 

Mother worked in 

library. Father used 

to work for retail 

shop with electro 

domestics. 

University technical 

education. - 

Electrical engineer 

He works in a large 

state firm, where he 

passed through 

different positions 

from a worker till 

manager of sales. 

Technical university Economic university Technical university 

In commercial 

department for 2 

years. Manager of 


in metallurgic 

company for 15 

years. 

Any. 

Self employed; in 

the same business 

for two years. 

No Yes No Yes Yes Yes 

He does not; but his 

relative, who helps 

with marketing 

activities, speaks 

English. 

Mother speaks 

German. 

Son speaks 

German and 

English. 

English 

Russian 

French 

English 

English 

German, 

English 

73

Table 17: International activities 

How many years 

after the start/up 

initiate international 



Three years after 

start/up, which is 

1999 

Mode of entry • 1999 Indirect 

Export 

Destiny of 

international 

activities # 

Internet importance 

and its use 

Own webpage 

From inception in 

1990. 

• 1992 direct and 

indirect Export, 

• 2001in CR branch 

office, 

• 2005 exclusive 

representation for 

Benelux and UAE. 

CR. CR, Austria, Poland, 

Ukraine, Hungary, 

Benelux, UAE. 

• for searching new 

business contacts 

• feedback about the 

products from the 

clients 

• plan to start with 

the internet shop, 

• important for the 

firms presentation, 

• 1998 virtual trade 

• many new client 

found the firm 

contact via internet 

• the inspiration for 

new product 

segment 

• www.alibaba.com 

for new contacts 

Two years after 


2000 

• 2000 direct export, 

• In 2001 branch, 

office in Poland, 

2004 in CR. 

Poland, CR, Ukraine, 

Estonia, Russia, 

Hungary, Latvia, 

Lithuania, 

Byelorussia. 

Germany, Iraq 

China, and India. 

Plan: Serbia, 

Bulgaria and Spain. 

• important for 

internal and 

external 

communication, 


cooperation 

relationships. 


2004 

• The firm continues 

with the export 

relationships 

established by 

previous 

managements. 

Germany, CR, 

France, Italy, VI. 

• the clients find the 

information about 

the firm and ask for 

price quotation 

• for fast internal and 

external 

communication 

• the source of useful 

information for our 



cooperation 

relationships 

Two years after 


2002 

• 2002 direct export 

into CR, 

• 2006 branch office 

in Serbia. 

CR, Serbia. 

Plan: Poland, 

Rumania, Bulgaria 

• for the firm 

presentation 

• the communication 

with the clients 

• to search new 

information and 

new possible clients 

1999-2000 1998 2002 2005 2000 


2004 

• Direct export into 

Germany via parent 

firm. 

Germany 

Plan: Slovak, 

Denmark and 

France. 

• important for 

internal and 

external 


• for transfer of data. 

• the employees 

work by sharing 

servers 

“if we do not have an 

internet connection, 

we do not have what 

it takes to do in 

work”. 

Working on the web 

page 

74


In which languages 

is the firm’s 

webpage 

Contacts abroad 

formal/informal 

Initial impetus to 

start foreign 

business activities 

Motivation with 


Presentation in 

fairs or conference 

Slovak 

Slovak 

English 

Slovak 

English 

Slovak 

English 

Slovak 

English 

No/No Yes/Yes Yes/No No/Yes No/Yes Yes/Yes 

His business partner 

offered to the 

entrepreneur the 

allocation of his 

socks product in the 

Czech market. 

The impetus for 

export comes from 

the outside, the 

unsolicited demand. 

• to know if the 

products are 

competitive in 

foreign market, or 

how it differs from 

foreign products 

• entry via export 

through 

commercial partner 

who had a long 

and trustful 

relationship with 

the entrepreneur. 

Italy, Czech 

Republic, Slovakia 

The foreign clients 

found the firm and 

offered a contract for 

its exclusive 

representation. 

The impetus for 

export comes from 

the outside; the 

unsolicited demand. 

• good feeling to see 

our product on 

foreign markets 

• to see that the 

consumers like and 

enjoy our products 

Slovakia, Czech 

Republic, 

Netherlands 

The firm was created 

with the aim to grow. 

It is the natural way 

for firm development 

because the home 

market is too small. 

The firm is actively 

entering new 

markets. 

• based on own 

commercial 

contacts from the 

previous 

employment 

position, continue 

in exporting 


• Slovak market is 

small; there is a 

natural need to go 

to foreign market 

and to grow. 

• only “to endure” 

Slovakia, Czech 

Republic, Spain, 

Croatia, Bulgaria, 

Germany, Rumania 

The principal aim is 

money and to earn 

more money. 

• the export to 

foreign countries 

base on our 

advantage of the 

low labour cost and 

skilled employees 

in metallurgic 

industry, 

• if you know that 

your product fulfils 

a level of quality 

and your delivery is 

on time; there is no 

problem to export 

The entrepreneur 

wants to build an 

international 

company. The home 

market is too small 

for the firm’s 

expansion. The 

entrepreneur decided 

enters developing 

markets as Bulgaria, 

Serbia, and 

Rumania. 

• the home market is 

to small and there 

is no more 


opportunities for 

further firm’s 

growth 

• the markets of new 

developing 

economies such as 

Bulgarian, 

Rumanian or 

Serbian are. 

France, Germany Slovakia, Turkey No 

- 

To find other market, 

there is the need for 

the risk 

diversification and for 

further business 

growth. 

• to obtain the 

references, 

• the employers gain 

a new experience 

in foreign market, 

• to get jobs for 

more people, 

• to growth 

• the risk 

diversification, do 

not depend on the 

one foreign market, 

75


Volume of export 

sales 

Problems with 


Czech Republic, 

2002 – less than 

10%, 

2003 and 2004 

between 10 – 24 % 

• the prejudice that 

Czech socks 

production is of 

higher 

technological, 

design and 

qualitative levelfinancial 

strenuous. 

• firms’ limited 

production capacity 

• the worry about the 

loss of control over 

the business 

because of fast 

growth 

• unwillingness of 

small foreign firms 

to incur initial 

increased costs 

because of higher 

fees related to 

payment into 

foreign banks and 

documental 

bureaucracy. 

Austria 

1992: 25-49% 

1995: 1998 and 

2005: less than 

10% 

Benelux 

2005: less than 10% 


1995: less than 10% 

2002, 2005: 10-24% 

• there is no national 

interests to help 

and promote the 

Slovak firms such 

as for SMEs export 


• the lack of financial 

support for SMEs 

presentation in the 

fairs 

• our national Slovak 

language can be 

used only in 

Slovakia, 

• lot of work with the 

preparation for the 

export activities, 

and maybe the 

same effort in 

home market could 

brings more benefit 

• entry into foreign 

market with 

someone whose 

knows that market; 

very difficult to find 

this help. 


2002-2003, 25-49% 

2004: 10-24% 

2005: 25-49% 

Russia 

2002-2003: 25-49% 

2004-2005: more 

than 50% 

• Other market do 

not know much 

about our country, 

• they know what is 

Czechoslovakia but 

Slovakia is less 

known 

• foreign clients do 

not know 

anything about our 

product, and this is 

the basic problem 

for building the 

firm’s brand. 

Russia 

2005: 10-24% 

Germany 

2005: 25-49% 

• the entrepreneur 

did not specify any 

problems or 

barriers related to 


#Abbreviation: CR: Czech Republic, UAE: United Arab Emirates, VI: Virgin Island, 


2002-2005 less than 

10% 

• the problem is to 

find a trustful 

person in foreign 

markets, 

• the different 

mentality, culture of 

Serbian clients 

Germany 

2004 and 2005 

More than 50 % of 

the sales 

• to convince that 

some Slovak firms 

are able to offer 

qualitative 

services. 

• foreign clients do 

not know our 

country. 

• the firm does not 

have a tradition 

and references. 

• the problem is to 

find a trustful 

person in foreign 

markets, 

76

Table 18: Support program for SMEs 

Have you ever used any 

support programme 

If yes, which problems 

were detected? 


No 

Missing 

information about 

support program 

Do not trust and 

do not believe 

that they can 

really help the 


Yes, through the 

Ministry of 

Construction, and 

Ministry of Labour 

Social Affairs and 

Family. 

Very low national 

interest to introduce 

Slovak firms into 

foreign markets. 

Hence, the firm 

applied for two 

programmes and did 

not receive the 

financial support. For 

one project, the 

finance help was 

obtained when the 

project was realized 

and second project 

fulfilled all the 

requirements, but 

there was a lack of 

financial resources. 

To obtain some 

financial support from 

EU funds is easier 

directly from Brussels 

than from Bratislava. 

Yes, through - 

NADSME 

Untransparent, 

inflexible process of 

solicitations. 

Without the lobbing, 

it is almost 

impossible to obtain 

the financial support 

even for very well 

prepared projects. 

No 

Because the firm 

operates in market 

for only one year 

and the firm could 

not identify any 

support programme 

for such firm. 

Yes, EU funds 

directly from 

Brussels. 

Entrepreneur 

enhances the 

importance not only 

for the financial 

support, but also 

the help to find and 

to identify the 

foreign clients and 

commercial 

partners. There is 

need of the 

introduction of 

Slovak business 

into foreign 

markets. 

No 

The firm does not 

know about any 

helps or support for 

its special kind of 


Because we offer 

very specifically 

services. 

77

5.2. Comparative analysis 

The comparative cross cases analyses used the pattern matching analysis together 

with three groups of proposed research questions. 

5.2.1. Why do Slovak SMEs enter foreign market/s? 

RQ1 What are the motivations factors leading Slovak SMEs to internationalize? 

The entrepreneur’s decision to expand the business activities into foreign market is 

never influenced by one isolated motivation (internal or external) but often is related to 

the initial entrepreneur’s vision about the firm in time of firm’s establishment. One 

important fact that has to be considered is that not all SMEs desire to grow. Some 

entrepreneurs do not want to lose the control and are not able to delegate some 

responsibilities to another manager (case 1). More proactive motivations are observed 

in firms 3, 4, 5, and 6, while more reactive motivations in cases 1, and 2. The 

summary of observed firms’ internal proactive, internal reactive, external proactive and 

internal reactive motivations for internationalization is presented in table 19. 

Table 19: The motivation for firm export 

Proactive • Growth and profit growth (case 

3, 4, 5, 6) 


• To test the competency of 

products into foreign market 

(case 1) 

• To gain a new references (case 

6) 

• To use the advantage of 

cheaper workforce (case 4, 6) 

• Foreign market opportunities (case 

3) 

• Foreign formal or informal contact 

(case 2, 6) 

Reactive • Risk diversification (case 6) • Competitive pressures (case 4) 

Internal proactive motivation 

• Unsolicited orders (case 1, 2) 

• Small home market (case 3, 4, 5, 

6) 

The most indicated factors for internationalization are internal proactive. The firm’s 

growth and profit growth motive cases 3, 4, 5, 6 to internationalize. “Money, earn 

much more money” highlights the commercial manager (case 4) as the principal 

reason for decision to internationalize. Entrepreneur from case 6 highlights also the 

importance to gain new references through the internationalization. 

78

The strong motivation to enter Czech market for entrepreneur from case 1 was to test 

the competency of products into foreign market. There was more emotional than 

economical motivation leading the entrepreneur’ curiosity to know if the products will 

be good also for foreign customers. 

The commercial manager of metallurgic firm (case 4) presents that compared to close 

foreign German market the Slovak firm can compete with the low price mainly 

because of cheaper workforce. The Slovakian tradition into metallurgic sector with the 

skilled employees enhances the firm’s competitive position into foreign market. 

Also the entrepreneur from case 6 sees the advantage for the competency the lower 

Slovak wages, hence this advantage he considers as temporal. 

Internal reactive motivation 

It is a bit surprising that only for one firm is the risk diversification is one of stimuli 

factor for internationalization. The case 6 offers the services for German market 

mainly because of 80% firm’s initial capital is in German hand. The entrepreneur plans 

to start operate in home market of Slovakia and expand into France and Denmark 

market. The reason for such decision is enhance risk diversification. “We have to 

stand on two legs. We have a strong dependence on our parent firm. Hence, I have to 

take care, that if the parent firm will have some problem I will have the work and also 

have to give the work to my employees. ... Risk diversification, more clients, and more 

possibilities. When we lost one, we need to have one remain.” (case 6). 

External proactive motivation 

The manager from case 3 identifies the search for new market opportunities is need 

for further firm’s growth We have to go into foreign market and there is interest in our 

products. Nothing more, we only have to satisfy the customers’ needs.” The firm (case 

3) is actively searching for new clients in new markets. 

The informal contact based on long relationship basically helps case 2 and 6 not only 

to operate in Austrian (case 2) and German market (case 6) but without these 

contacts the firms will not be created. 

“I have two possibilities; choose to stay in the university and continue in the post 

gradual study or to continue in self-employment activities. They ask me, if I would like 

to work for their new company. .…So we have start and employee our first employee.” 

79

Entrepreneur (case 2) explains “There were some friend relationships from previous 

period. When my father was a coach in handball, he had possibilities to travel abroad. 

In that time it was very difficult to travel. So does it start with the firm in 1990. In 1992 

we export about 10.000 of aroma lamps.” 

External reactive motivation 

The cases 1 and 2 helped enter foreign market/s the unsolicited orders. Both 

entrepreneurs (case 1 and 2) present that the firm has a still dominant position in 

home market and thus there was no need actively search for firm’s expansion into 

foreign market. The impetus for the further internationalization was conditioned by 

unsolicited order of foreign clients. “They found us, because they want the 

collaboration base on exclusivity contract. …They come and present their project for 

collaboration. We were very surprised how well they were prepared. They come and 

know everything in detail.” (case 2) 

The entrepreneur (case 1) has some intention to enter into Czech market but he faced 

many problems (will be discussed in barriers of entry in following page). The decisive 

impetus to enter into foreign market comes from outside. The commercial partner 

offers to the entrepreneur the opportunity to sell its product into foreign market. There 

was long term business collaboration between them. The decision to enter into Czech 

market was justify as: “We want to test our products into foreign market, without the 

investment into propagation, and the actively searching for clients into foreign market.” 

The competitive pressure enhances the effort to internationalize in case 4. “There is 

home competition. Hence is not so strong as before. There are less employees. So 

they do not produce as before. Detva 23 has before 6.000 employees, but now do not 

reach 1.000 employees.” 

Basically small home market was identified by case 3, 4, 5, 6 as the reason supporting 

decision to expand into foreign markets. The manager (case 3) said: . “The Slovakia is 

too small for the perspective growth for this firm. It is small.” 

23 Detva is well known region because of the tradition in metallurgic industry. It has a strong position 

during communist period. After 1989 suffers a serious problems and many employees were fired. 

80

RQ2: What are the barriers faced by Slovak SMEs in the internationalization 

process? 

Five firms except the case 4 identify the barriers of the firm internationalization. 

Entrepreneur from case 4 do not perceived any impediments for firm’s 

internationalization. This could be explained with the fact that new management 

bought not only the production firm but also the foreign contacts, which were 

established by previous managements. Until December 2005 present management 

has not actively search for new foreign markets. The firm operates in the market with 

new management only one year (since 2004). 

The barriers are analyzed using the Leonidou’s (1995) classification. Therefore as is 

presented in table 20, the barriers are discussed separately into four groups: internal- 

home, internal-foreign, external-home and external-foreign barriers. 

Table 20: The export barriers of six analysed Slovak SMEs 

Home 

Foreign 


1. Insufficient production capacity 

(case 1) 

2. Recourse and time consuming 

the export preparation (case 2) 

3. Lack of managerial personal/time 

(case 1) 

4. Shortage of financial capital for 

export (case 1) 

5. The fear to lost the control over 

the firm because of rapid growth 

(case 1) 

6. The prejudice that foreign 

producers offer higher qualitative 

products. (case 1, 6) 

7. The strenuous preparation for 

export activities. The same effort 

into home market could brings 

higher benefit (case 2) 

1. Difficult/slow collection of 

payments from abroad (case 1) 

2. Difficult to find trustful partner who 

knows that foreign market (case 

1, 2, 5, 6 ) 

3. Difficult to find the adequate 

foreign distribution channels 

(case 1) 

1. The foreign countries do not 

know so much about former 

Czechoslovakia and even 

less about Slovakia (case 3, 

6 ) 

2. Difficult handling of 

documentation/procedures 

(case 1) 

3. Untransparent process to 

obtain the financial sources 

(case 2, 3) 

4. difficulty obtain the financial 

support from EU funds if the 

firm ask through Bratislava 

and no directly from 

Brussels (case 2, 3, 5 ) 

5. Lack of governmental 

assistance/incentives (case 

1, 2) 

1. Higher fees related to 

payment into foreign market 

(case 1) 

2. Different foreign business 

practices/law (case 2, 5) 

3. The limited used of Slovak 

language in abroad (case 

2). 

81

Internal-home barriers 

As it could be observed from table 20, the most of the organizational barriers 

associated with the firm’s resources and firm’s export strategy have been identified by 

firm 1. Hence the barriers as the lack of managerial personal, insufficient productive 

and financial capacity could be also interrelated with the low entrepreneur’s interest to 

enter into foreign markets. The entrepreneur does not want the firm’s rapid growth. He 

prefers to grow slower and gradually. He is concerned about the lost of total power 

control over all firms’ activities. The entrepreneur spends 12 hours in the firm and all 

responsibilities and decisions are made by him. “I have to be informed about the 

accountancy, machines’ revision, purchase of material… about everything.” His two 

business partners dedicate only 5% of their time to the firm. Hence this entreprenr 

behaviour is not so surprising, as emerge from the interview this firm have no problem 

to sell almost 95% of production into home market, and there is still increasing interest 

in its products into home market. 

The preparation of export is too costly (case2). Entrepreneur from firm 2 postulates: 

“The same effort which we used for export preparation could bring higher benefit if we 

used it for home market.” 

The second important internal home barrier is the entrepreneur prejudice about that 

foreign producers offer products and services in higher quality than Slovaks (case 1 

and 6). This psychological barrier is very interesting finding confirming the definition of 

Slovak stereotypes in Príhoda’s (1993) sociological investigation. One of author’s 

defined stereotypes for Slovaks is the stereotype of Slovak inferiority which is related 

with the lack of self confidence (lower education, lower experience, and lower 

knowledge). As Príhoda (1993) explains, the origin of this prejudice is in the period of 

Czechoslovakia where Slovakia was under developed compared to Czech lands. This 

confirms the entrepreneur of firm 1: “I was convinced that Czech market required a 

higher quality and different design. The Czech market is more developed; they have 

started to do business earlier than Slovak.” and the entrepreneur of case 6: “I can not 

image that we will enter into foreign market as Slovak firm.” 

Internal-foreign barriers 

Four entrepreneurs (cases 1, 2, 5, and 6) identify as the main barrier in foreign country 

where firms are located, the difficulty to find trustful, suitable partner who knows and 

has an experience in different foreign market(s). “The business today is mainly about 

82

the contacts.” (case 3). Related to that barrier, “There is a problem to find the 

adequate foreign distribution channels.” (case 1). 

The entrepreneurs faced the low recognition of Slovak products in abroad (cases 3 

and 6). “We have to convince foreign partner that some Slovak firm is able to offer a 

quality service” (case 6). 

The foreign entrepreneurs do not know so much about former Czechoslovakia and 

even less about Slovakia (cases 1, 3, and 6). “Therefore, it is more difficult to build our 

brand in foreign countries if you are from almost unknown country as Slovakia is.” 

(case 3). 

External-home barriers 

The barriers found in firms’ external environment of the home market are related with 

the never-ending personal changes in the national institutions. Therefore there it is not 

surprising that, entrepreneurs have a low level of trust into governmental institution 

(cases 1 and 6). According to entrepreneurs from firm 2 the main problem of SMEs 

internationalization is the very low governmental interest to help SMEs’ export. 

The solicitation process of financial support has been identified as untransparent and 

bureaucratic (cases 2 and 3). Even if the firm elaborate a very good project without the 

simultaneous lobbing, it is very difficult to obtain the financial recourses for the 

realization of planed project (case 3). Entrepreneurs (cases 2, 3 and 5) perceived that 

the solicitation for EU funds sources is more effective through the Brussels than 

through Bratislava. 

The entrepreneur from firm 1 faced the difficulty to handle the documentation related 

to export activities. The entrepreneurs’ experience with the national or regional 

support for international activities is negative (cases 2 and 5). In general there is lack 

of governmental assistance and incentives for SMEs internationalization, or at least it 

is perceived as so. 

External-foreign barriers 

Hence, Slovakia is the member of common EU market where there are still some 

administrative barriers. The higher fees related to payment between two countries 

(case 1). Entrepreneur face the unwillingness of its small clients from Czech Republic 

to buy the product from Slovakia because of high bank’s and transport’s fees. 

The different business practices complicated the exporting for case 2. Entrepreneur’s 

(case 2) experience from intention to enter into Dutch market confirms that, there is an 

83

indispensable needs to know the legal law and the condition of making a business in 

foreign market where the firm plan to enter. 

The Slovak language was identified as another barrier. This barrier is described by 

entrepreneur from firm 2 as: “All etiquettes of the products in Slovakia have to be in 

Slovak language but neither can they be used neither in Czech market. In comparison 

an Austrian firm can sell their product with the same language etiquette, except to 

home market, also in Germany, part of Switzerland, and part of Italy… There is a lot of 

work to prepare products for export.” (case 2). 

The cultural differences have been perceived by the entrepreneur entering into 

Serbian market (case 5). This factor have not been defined by another market hence 

the entry was culturally more different countries as China (case 3) or UAE (case 2). 

RQ3: Do Slovak SMEs use the support programs for their internationalization? 

No one firm used any support program for their internationalization. Half of the firms 

(cases 2, 3, and 5) used some support programme (for employees training, for 

investment construction) in the past. Hence even these firms were not satisfied with 

that help. Cases 1, 4, and 6 do not use any support programme. Cases 1 and 6 mainly 

because they do not have the information about national or regional programme which 

can help to their business. The entrepreneur from case 4 explains that he could not 

find the support programme for such a young firm as his company is (1 year old). 

There are some similarities how these firms perceived the support programme and 

three main problems can be defined. First, there is a lack of information about support 

programme. “I do not know what that institution can do for my business” (case 6). 

“There is low national interest to help SMEs in their export activities” (case 2). 

Entrepreneur’ experience (case 2) from the international fairs is that the representation 

of Spanish, Italian, even Kenyan business sector can not be compared how are 

represented the Slovak firms. “If there is some Slovak agency for firm’s development, 

the agency paid for some small stall where it puts firms which have to pay much more 

on how the agency paid. Such help and representation is useless” (case 2). 

Second, if the entrepreneur knows about some kind of supports, and is interested to 

gain them, it has to face lobbing, bureaucratically and untransparent procedure. The 

firms (cases 2, 3, 4, and 5) have a similar experience. The entrepreneur from case 3 

comment: “I asked for the financial support and until last year I had believe… but 

84

when I received the answer that our project is perfect, excellent and so on, but 

because of the lack of financial sources it can not be approved. I thing that this is 

mainly about the lobbing.” (case 3). Also the entrepreneur from case 2 has a similar 

experience. “We have tried twice for support from EU funds. Hence, for one project, it 

was approval, but the money comes too late, after the project was realized, so we 

could not use that money. For second project, we fulfilled all conditions but we do not 

receive the financial support. Until now we have asked for EU funds though Bratislava 

it does not work. I see that we have to connect to Brussels directly and we are working 

on that. (case 2)” The firms prefer to contact directly Brussels to obtain the support for 

EU funds that trough Bratislava (cases 2 and 5). 

Third problem is interrelated with the previous one. The entrepreneurs indicated the 

lack of trust. “I do not trust them (the national and regional institutions). Simply, I can 

not imagine that there is someone who knows the problem of mine firm better than I 

know. (Case 1)” They do not believe that national or regional institutions have real 

interest to help firm’s development. 

5.2.2. How Slovak SMEs choose the foreign market? 

Based on the interviewed six Slovak SMEs it is not definitely reject the 

internationalization according to psychical and geographical closeness. Therefore, it is 

not surprising that almost all firms (cases 1, 2, 3, 4, and 5) export into Czech Republic. 

The firms 1, 2, 3, and 5 have started its export activities to geographical closeness 

market. The psychically and geographically more different markets can be observed 

more as a result of unsolicited orders (case 2) and as a result of strong entrepreneur 

desire to build international and growing firm (cases 3 and 5). Therefore, firms have 

their foreign activities in countries such as China, Israel, Egypt, Kuwait, Oman, and 

Belgium. 

The most proactive firm from sample cases is the firm 3. This firm during the seven 

years of existence operates in twelve foreign markets and planes to open another 

three markets (table 21). 

RQ4: What entry modes are used by Slovak SMEs to enter foreign market? 

The six cases confirm that export is widely used mode of entry mode for SMEs. Hence 

the first entry mode was the direct (cases 3, 4, 5, 6) or indirect export (cases 1 and 2), 

85

afterward the firms 2, 3, and 5 decided to establish also the subsidiary firm in foreign 

market The review of mode of entry of six cases is presented in table 21. 

Table 21: Mode of entry into foreign markets 

Mode of entry 

Destiny of international 

Activities 

CASE 1 • 1999 indirect Export Czech Republic 

CASE 2 

CASE 3 

CASE 4 

CASE 5 

CASE 6 

• 1992 direct and indirect export, 

• 2001 in Czech Republic subsidiary 

firm, 

• 2005 exclusive representation for 

Benelux and Middle East. 

• 2000 direct export, 

• In 2001 commercial subsidiary 

firms in Poland, 2004 in Czech 

Republic. 

• The firm continues on the export 

relationships established by 

previous managements. 

• direct and indirect export 

• 2002 direct export into Czech 

Republic, 

• 2006 new firm in Serbia. 

• Since 2004 direct export into 

Germany via parent company 

Czech Republic, Austria, Poland, 

Ukraine, Hungary, Benelux, Middle 

east. 

Poland, Czech Republic, Ukraine, 

Estonia, Russia, Hungary, Latvia, 

Lithuania, Byelorussia. 

Contract abut the representation: 

Germany, Israel, China, India 

Plan: Spain, Bulgaria, Croatia. 

Virgin Island, Germany, Czech 

Republic, France, Italy 

Czech Republic, Serbia. 

Plan: Denmark and France. 

Case 2, in 2001; establish the subsidiary firm in Czech Republic, also case 3 in 2001 

Poland and in 3 years after in Czech Republic. The Case 5 in 2006 established the 

new company in Serbia. Hence, in cases 2 and 3 the creation of commercial 

subsidiary firm was related with existence exporting activities in these countries. In 

case 5; plan to established subsidiary firm in completely new market, when the firm 

only plan to present its activities and start to offer their services. 

Case 2 signs the exclusive contract for the representational with two firms. One for the 

countries of Benelux and second for Middle East (Oman, Qatar, Egypt, Kuwait, Saudi 

Arabia, Iraq, Jordan, UAE, and Bahrain). Also entrepreneur from case 3 signs the 

contract for firm’s representation in Germany and Israel. 

86

RQ5: What foreign markets are attractive for Slovak SMEs, and why? 

RQ6: How the firms identify their foreign contacts? 

Hence, these two questions are interrelated, in following the cases analysis do not 

separate each question, but are analyzed together. 

According to firms (cases 5 and 6) the main problem for firm’s internationalization is to 

identify the foreign contacts; the person or firm which can facilitate the entry of Slovak 

firm into foreign market. “The business is mainly about the contacts” (cases 1, 3, and 

6). 

The firm 6 does not operate into another foreign market except the German, 

entrepreneur is planning to expand into France and Denmark. These two markets 

were identify because the entrepreneur relationship. The France because his wife 

speaks French and she spent some time there. The Denmark was a suggestion from 

his friend who works in Denmark. Entrepreneur states: “I can not just to come into one 

firm in the Lion and said good morning, we are from Slovakia and we offer the 

digitalization of data.” 

Hence, firm 4, in 2004, was bought by new management, the foreign contacts were 

established by previous managers and firm‘s products with the tradition are known in 

foreign markets. The firm search for new foreign contacts, but in firm’s first year only 

continues on previous ones. The firm strategy is based on advantage of lower labour 

cost. “Our firm is oriented in German and France market, because there we can 

compete with our lower labour cost”. 

The similar situation is in firm 3. Hence, the four entrepreneurs create completely new 

firm where their products were before produced by state owned firm and known in 

former USSR, Poland and Czech Republic. The firm 3 starts to sell into Poland and 

Czech Republic. At the same time firm (case 3) continues in exporting into countries 

where the entrepreneurs had a commercial relationships from previous labour 

experience (mainly the former USSR) in Ukraine, Estonia, Lithuania, and Byelorussia. 

The foreign fairs served as initial medium for firm’s identification of new foreign 

contacts. The firm selects one internationally important foreign fair and presents the 

firm’s products. Afterward, the firm personally visits the potential clients, which have 

demonstrated the interest in the fairs. The firm in 2005 sings the contract for the 

87

commercial representation with firms in the German and Israeli market. In the same 

year firm starts to negotiate with the clients in China and India. 

The entrepreneur enhances the importance of personal contacts with clients and his 

personal motivation: “Our commercial sellers are actively working in the firm’s 

expansion in the foreign countries. The aim of each seller is to increase the sells and 

expands into new markets.” Using this method the firm plans to enter into new market 

of Spain, Bulgaria, and Serbia. 

The entrepreneur’s (case 3) decision to enter into market of China and India was 

conditioned by their rapid grown in production. “Because where there is the growth in 

production, there is the construction of new power plant, gas house, plant of water 

depuration, and there is need of our products. “The entrepreneur does not have any 

special criteria for selection of foreign market the important is goes into new market 

and to gain more clients. 

The firms 1, and 2, do not actively search for foreign clients; on the contrary foreign 

firms find them. In case 1 the long business partner offers the entry into Czech market. 

The internationalization of case 2 was in the inception based on the relationship with 

friends in Austria. The entry into countries of Benelux, UAE, Hungary or Poland was 

based on unsolicited orders. 

The expansion of firm 5 into Czech market was based on the firm’s good references. 

This firm offers the services to the firm in Slovakia and some of them have a parent or 

subsidiary firm in Czech Republic, therefore the firm offers the services also in Czech 

Republic. Hence the entry into Czech market was based on unsolicited order but the 

more active is the entrance into Serbia, where firm established new independent firm 

in February 2006. The problem with the identifying of trustful person for new company 

was solved using the informal network. The friends of entrepreneur’s friend help to find 

the new business partner. In comparison with the case 3 this firm has specially 

defined the market of future expansion: “If would we go in the west, there we can 

compete only with lower price, and the projects will be in very low quality. In the 

Rumania, Bulgaria and Serbia, there are the developing markets and therefore the 

entry is easier.” 

While the firms 3 and 5 actively search for new foreign market, more passive 

internationalization is present by cases 1 and 2. Firms 4 and 6 only start to work on 

88

the expansion into new foreign markets. As it can be observed the entrepreneurs 

based more on informal network than formal. 

RQ7: How do Slovak firms promote itself and their products or services in 

abroad? 

The firm used mainly the internet (cases 2, 3, and 5), firm’s webpage (cases 1, 2, 3, 4, 

and 5), fairs (cases 1, 2, 3, and 4), conferences (cases 3 and 5), national organization 

for SMEs support (case 4), and personal visit of possible clients for the firm’s 

presentation (cases 5 and 6). 

The entrepreneurs (cases 1 and 3) consider very important the presentation in 

international fairs. As can be observed from table 22 the most proactive presentation 

in fairs has firm 3, which has assisted in foreign fairs in seven countries. Firm 1 is 

more interested in home market and assisted in three Slovak (Nitra, Banská Bystrica, 

and Košice) fairs. Case 3 has own step-by-step method for firm internationalization, 

when the first step is the firm’s presentation in important foreign fairs in the country 

where firm wants to expand. The second step is the preparation of list of possible 

clients, whose demonstrate the interest in the presented products. Step number three 

is the organization of own conference in that foreign market, where they invite foreign 

firms but mainly those from the fair’s list. The presentation ends with the small 

refreshment. The aim is to establish more personal relationship with the possible 

clients. 

Table 22: The firm’s presentation into fairs and conferences 

Presentation in fairs or conference 

CASE 1 Italy, Czech Republic, Slovakia 

CASE 2 Slovakia, Czech Republic, Netherlands 

CASE 3 

Slovakia, Czech Republic, Spain, Croatia, 

Bulgaria, Germany, Rumania 

CASE 4 France, Germany 

CASE 5 Slovakia, Turkey 

CASE 6 Any 

89

The importance of more personal relationship with business clients is present also by 

case 1. “This year we have been twice in Czech fairs (Brno, Prague). There is an 

important to build trustful relationship. Therefore, is not enough to go once. In January 

2005 they went to exposition in Brno. In September we went again, we take it as our 

duty to go several times, ones is not enough. We have met there the same people, 

they know us. “ 

Only one firm (case 4) mentioned the national institutions as NADSME and trade 

organization for firm representation. “The NADSME offers to us the service to help 

with the identification the foreign clients.” 

The presentation of firm 2, have started also with the presentation in foreign fairs. But 

the final effect of that presentation was not satisfactory. “We do not have time, neither 

money, nor force to present the firm in the fairs, which become for us ineffective.” The 

firm focuses on the product’s presentation into trade networks (Tesco, Hypernova). 

Case 6 presents the plan to present the firm’s services via phone or personal contacts 

as most appropriate. “Before we do not feel the necessity to present the firm in 

conferences, now we are starting to search for new market”. 

Firm 5 once a year organizes own conference in which they present the new trends in 

their services. The conference is not only for their clients but also for public. 

It is not surprising that SMEs do not have particular department focuses only on firms 

and or product/services presentation. Hence all six cases have some person which is 

beside their duties, responsible also for some marketing activities. The case 6 states: 

“We do not have marketing department. We just sit all together and discuss together 

the questions related to marketing activities.” In similar way case 1 describes: “Me 

together with my cousin dedicate to the marketing activities. We are preparing the 

firm’s presentation in fairs, or the product’s package.” Different situation is in case 3 

which has a marketing department with two persons: “We have started to build 

marketing department last year (2004). The reason why we start with the marketing 

department was that we want to go to new markets and to search for new clients. The 

result of the SWOT analysis shows us that our weakness is low firm’s presentation. 

The possible clients do not know so much about us.” (case 3). 

RQ 8: Is the Internet an important factor for Slovak SMEs internationalization? 

All entrepreneurs identically affirm: “The internet is very important.” 

90

The five cases have own web page, the exception is only the case 6, which is also 

working on the web-page. The web page of cases 2, 3, 4, and 5 is not only Slovak, but 

also in the English language. 

The internet is important for firms mainly for communication (internal and external), 

searching for new contacts, sources of information. With internet is the communication 

interactive and fast. The technicians from firms 3 and 4 use the internet 

communication with foreign clients for a product development. The review of reasons 

for internet importance is presented in table 23. 

Table 23: The internet advantages and firm's web page 

CASE 1 

CASE 2 

CASE 3 

CASE 4 

CASE 5 

CASE 6 

Internet importance and its use 

• for searching new business contacts 

• feedback about the products from the clients 

• plan to start with the internet shop 

• important for the firms presentation, 

• 1998 virtual trade 

• many new client found the firm contact via 

internet 

• the inspiration for new product segment 

• the use of www.alibaba.com for new contacts 

• important for internal and external 


• important for the cooperation relationships. 

• the clients find the information about the firm 

and ask for price quotation 

• for fast internal and external communication 

• the source of useful information for our 


• important for the cooperation relationships 

• important for the firms presentation, 

• for the communication with the clients 

• to search new information and new possible 

clients 

• important for internal and external 


• for data transfer 

• the employees work in sharing servers 

• “if we do not have an internet connection, we 

do not have what it takes to do in work” 

Own 

webpage 

Languages 

of webpage 

1999-2000 Slovak 

1998 

2002 

2005 

2000 

Working on 

the web 

page 

Slovak 

English 

Slovak 

English 

Slovak 

English 

Slovak 

English 

- 

91

The entrepreneur from firm 1 highlights the importance of internet for searching of new 

contacts. Different opinion has the entrepreneur from firm 3: “We have tried to use the 

internet for searching new contacts but the final effect was too low. Only about 2% of 

all demand for potential clients responded to us. So it is possible, but I do not 

recommend it.” Firm 3 used the page www.alibaba.com for identification of new clients 

and also for own presentation. 

The internet for firm 6 is indispensable tool for every day work. The entrepreneur said: 

“If we do not have an internet connection, we do not have what it takes to do in work. 

The employees work on sharing server, the firm can not work without internet.” 

The firm 5 used the internet for marketing propagation. The firm has a prepaid 

advertisement which leads the clients in using the Slovak internet searcher 

(www.zoznam.sk) to firm’s web-page. 

Firms 3 and 4 used their web page for propagation of machinery for cooperation 

relationship. Both firm have a good experience with this presentation and established 

foreign contacts for cooperation. 

The firm 2 has the internet shop since 1998, also firm 1 plans to create the internet 

shop. 

5.2.3. When do Slovak SMEs start their cross boarder business activities? 

The cases 2 and 6 are according to McDougall’s (1989) definition born global, 

because both firms have international activities from their inception. Case 2 in its first 

year; exported more than 25% of the production to Austria. Hence in following years 

the export to Austria decreases, but sill total export maintains the 25% of production. 

The destiny of almost 99% of case 6’s production is for German market. The case 3 is 

also strongly exported oriented between 70 and 80% of production is for foreign 

markets. According to volume of export these two firms also confirm the definition of 

born global proposed by Knight and Cavusgil (1996). The authors define the born 

global as firms which reached a share of foreign sales at least 25% in three years after 

their birth. 

Hence case 4 has also initiated the exporting from the inception and in first year has 

exported about 36% of the production, but the firm continues on export relations 

tradition from previous years. There are no new market open with the present 

management. Therefore, for the definition of born global in Slovak context has to be 

92

considered fact of possible previous export contacts mainly in the firms created during 

communist period (as in case 4). The firm could be incorporated into business register 

as a new firm, created after the 1989, but there is a possibility that the firm existed 

before that period, although with different name and even with different management. 

Case 1 initiated some export activities in third year and the export represent about 

15% of the production. The cases 3 and 5 start in second year after the start-up. As it 

can be sees all six cases initiated the foreign business activities in three year of 

existence. 

5.3. Discusion of findings 

The above presented individual and cross cases analysis confirm the complexity of 

research object. Thus, can be observed, that firm’s internationalization is process 

influenced by several set of external and internal factors, the firm’s home and foreign 

environment, formal and informal networks, entrepreneur’s perception of the reality 

and his/her plans and aims, the initial impetus which leads to firm creation. 

Consequently, it can be observed two main motivation determinants related to firm’s 

internationalization. Beside the entrepreneur’ vision of firm’s growth and it is the 

situation of the competition and possible development into home market for firm’s 

products or services. The strong entrepreneurs’ interest to go abroad defended by the 

smallness of home market is observed in cases 3, 5 and also case 6. The home 

market offers enough space for firm development was argument presented by 

entrepreneurs from cases 1 and 2. The entrepreneurs’ from cases 3 and 5 strong 

vision to grow and to become international firm and calculative position to increase the 

firm’s sells was observed in cases 3, 4 and 5. 

Hence, there is no doubt that Slovak entrepreneurs have some defect in areas such 

as marketing or management (Grayson and Bodily, 1998; Swanson and 

Webster,1992) but the findings confirm how important a role in the firms’ 

internationalization plays into an entrepreneur’s perception, mainly the perception of 

the foreign competency. For better illustration of this point follow statements of three 

interviewed entrepreneurs: 

• The entrepreneur’s perception from case 3 “We had an opinion that in Czech 

market, they have a more qualitative and different design of socks that we were 

producing.” (The entrepreneur describes his first perception which he had before 

93

entry into the Czech Market. Only his personal experience shows him that the 

reality is different, and there are no considerable differences between those two 

countries.) 

• In a similar way, the entrepreneurs from case 5 states: “We do not think that we 

can to compete in developed market of West Europe.” 

• The perception of entrepreneur from case 6: “I can not image that we will brake 

into foreign market as a Slovak firm. …I can not just to come into one firm in Lion, 

France? and said good morning, we are from Slovakia and we offer the 

digitalization of data.” 

Manolova et al., (2002) study also confirms the importance of perception in 

internationalization: “Perhaps the most important finding for managers is that 

internationalization is not a function of “demographics” but is a function of “perception” 

(2002:24). 

The scale of the internationalization barriers is richer than identified factors of 

motivation. As one of the main barriers was identified, the bureaucratic and 

untransparent process of the financial recourses solicitation (cases 2, 3 and 5) 

interrelated with the low level of trust to governmental institutions (case 1). Low 

interests to represent or help to represent the Slovak SMEs sector in foreign markets 

were identified by entrepreneurs from cases 2, 3 and 6. 

The financial, managerial, and human limited recourses also play its role for firm 

internationalization (cases 1, 2, and 6). Another important barriers identified by four 

cases 1, 2, 5 and 6 was a difficulty to identify trustful foreign business contact. 

Interesting finding is the entrepreneurs prejudice about Slovak inferiority observed in 

case 1, 5 and 6. The investigation about the stereotype of Slovak inferiority represents 

interesting area for further exploration not only in Slovak entrepreneurs but also the 

other from the post-communist bloc. 

Entrepreneurs (case 2, 3, and 5) state the need to develop a better support 

programme for SMEs with the transparent and equal condition for all firms. 

According to foreign market selection, six Slovak SMEs do not deny the 

internationalization according to psychical and geographical closeness. There is no 

surprising that the prevail firms entry mode is direct and indirect exporting. Hence the 

firms (four from six cases) follow the internationalization according to geographical 

94

closeness. The entry into more culturally and geographically different markets was 

result of unsolicited order (case 2) and the strong entrepreneur’s motivation to build 

international and growing firm (cases 3 and 5). 

Hence the SMEs identify the main problem the foreign contact identification, it is 

seems that entrepreneurs build their business relationship mainly on the informal 

network rather than formal one. This support Ivy’s (1997) findings 

The most used method of firms representation is the presentation with the firm’s web 

page (cases 1, 2, 3, 4, and 5), follows the presentation into foreign fairs (cases 1, 2, 3, 

and 4), and the organization of firm’s presentations (cases3 and 5). 

The firms use the internet services for: communication, searching of new business 

contacts, and virtual trade. The samples cases confirm the born-global phenomenon 

all firms have initiated their foreign business activities in three years after the start-up. 

5.4. The SMEs clasification 

Based on the previous analysis three groups of firms according their international 

intensity and impetus for internationalization are defined. 

1. Reactive Exporters or Exporters by “accident” 

Into this group belong the firms entering into foreign market because of external 

impetus such as unsolicited order, offering the collaboration in foreign market from 

foreign or home commercial contact. The home market situation does not pressure the 

firms search for clients behind the national border. The firm has a dominant position 

into home market and the demand for their products is still increasing. The firm does 

not have interest to internationalize but when the opportunity comes, they decide to 

use it. Such internationalization is saving the costs which are needed for the firm’s 

initiation of the expansion into foreign market. Such cost could be related with the 

searching of foreign clients, market analysis, firm’s representation, propagation into 

fairs and conferences. The decision to internationalize is more emotional than rational. 

Into this group belong cases 1 and 2. 

2. The planning exporters 

The firm does not actively search for new markets. Hence, the firm does not have a 

real problem with product or services in actual market but because of need of growth 

and the risk diversification (dependence on one market) start to think for 

95

internationalization. The searching for possibility of firm’s internationalization is more 

informative and entrepreneurs could be defined that are waiting when the opportunity 

comes to them. The entrepreneur used mainly the informal network of friends or 

relatives, rather than the formal – institutional network of organization supporting the 

firm’s internationalization. 

Into this group belongs the case 6. 

Hence this firms segmentation is based on the six cases can be contrast in further 

studies. There is no doubt of the existence of fourth group; the firms, which do not 

have an interest in internationalization. 

3. Proactive exporters or Intensive exporters 

The intensive exporters are firms which have defined a clear expansion strategy into 

foreign market. The entrepreneur has a vision of firm growth and/or the home market 

become to be too small for it. The firm actively represents its activities in foreign fairs 

and actively searches for new foreign clients. The firm presents their web page also in 

foreign language. The firm uses the market analysis for identification of new business 

opportunities. Comparing to previous group the decision to internationalize is more 

rational than emotional. It is based on entrepreneur’s intention to grow in sales, 

number of employees, and income. 

Into this group belong cases 3, 4, and 5. Hence, firm 4 does not open any new 

markets the firm actively continues into foreign contacts established by previous 

managements. The main aim of the firm is to grow and increase the benefit hence, the 

one year with new managers is too short to evaluate in detailed the firm’s 

internationalization activities. 

5.5. Model - the initiation of Slovak SMEs’ internationalization 

Based on the individual and comparative case cross analysis, with using the literature 

review presented in chapter two is proposed and developed the model of initiation 

Slovak SMEs’ internationalization (figure 4). The model and model’s factors are 

proposed for further contrasting in quantitative investigation. 

96

Figure 4: Proposal of Model for initiation of SMEs’ internationalization in context of 

Slovakia based on case analysis 

Local and 

international network 

(Formal, informal) 

Recourses (financial, 

productive, human) 

Internet, web page, 

promotion 

Size ♣ 

Education 

The firm’s 

competition 

The model explains the initiation of firm’s internationalization as well the mode of entry 

and market selection as result of planned firm’s strategy or as spontaneous reacting 

on internal and external stimuli. In both cases this process is influenced by set of 

factors which were investigated also in previous studies (see literature review in 

chapter 2.1.4.). The factors are divided in three groups: firm’s environment (as home 

so foreign), the firm, and the entrepreneur’s characteristics. 

1. The factors of environment: local and international network both formal and 

informal, the situation of firm’s competitors (strong, low, increasing, stable), 

institutional environment with the financial and consultancy support programme 

for SMEs, type of industry. 

Spontaneous 

reacting or planned 

decision 

Skills and experience 

(Labour and educational ) 

Institutional environment 

Support programme 

Firms ‘ 

Strategy 

Cultural diversity of 

the foreign country 

Reactive or Proactive 

Internationalization 

Perception 

♣ Control variable 

2. The firm’s factors are: firm’s recourses as financial, productive and human, 

firm’s size, the firm’s web page, using of the internet, firm’s promotion. 

Market selection 

Mode of entry 

3. The factors related to entrepreneur are identified following: education (as 

economical so the professional related with the firm’s product or services), skills 

(foreign languages) and experience in previous work, experience in abroad, the 

Type of 

industry♣ 

97

strategy. There is very important if the entrepreneur wants the firm’s growth or 

not. The last defined factor is the entrepreneurs’ perception of the reality about 

the firm position in the market, the competency of its product or services, the 

situation in foreign markets ect. 

The proposal of questionnaire for further testing and developing of proposed model is 

attached in annex 4. The finding from case analysis helps to defined propositions for 

testing model. 

• The entrepreneurs with higher education will initiate more proactive 


• The entrepreneurs with foreign labour or study experience will initiate more 

proactive internationalization. 

• The entrepreneurs not interested in firm growth will initiate reactive 

internationalization meanwhile entrepreneurs will clearly defined growth 

strategy, proactive internationalization. 

• The firms with more formal foreign relationships will initiate proactive 

internationalization, than the firms with more informal foreign relationships 

reactive internationalization. 

• The firm which actively work on its propagation and presentation into fairs will 

adapt the proactive internationalization. 

• Entrepreneurs more pessimistic perception of the firms product or services (not 

sure if firm offer competitive products and/or services, with good quality level 

and good price) will be related with reactive internationalization. 

5.6. Some recommendation for policy makers 

The policy makers have very important task, to develop and offer to SMEs sector, 

which is so important for national and regional development, programme supporting 

their development, growth and expansion into foreign market. 

In accordance with that the necessary precondition for such programme is on the one 

side the identification of barriers and problem faced by SMEs in process of 

internationalization. On the other side the identification of motivations, impetus leaded 

the entrepreneurs to firm’s internationalization. Hence there is no doubt that both 

factors barriers and motivation differ according to firms’ type of sector, the firms’ size, 

98

the firm’s age, entrepreneurs’ vision, and values. The studied six cases allow to 

propose some general policy makers recommendations important for SMEs sector. 

1. To promote and to inform SMEs’ entrepreneurs about the activities and 

programmes supporting SMEs. To demonstrate the real interest of these 

institution investigate the SMEs’ needs and to know problems faced by these 

firms in their way of internationalization. To offer more customized help. 

2. To make clear the rules of game in the solicitation process of financial 

incentives. To ensure transparent evaluation system and approval process for 

received solicitations. Thus, try to build the trustful relationship between SMEs 

and institutions. 

3. To help develop SMEs formal networks which will facilities the identification of 

foreign business contacts. 

4. To help overcome the prejudice about Slovak undeveloped country related to 

stereotype of Slovak inferiority inform the entrepreneurs about success stories 

of Slovak SMEs. 

99

6. CONCLUSIONS, LIMITATIONS AND FUTURE RESEARCH 

The research in economics area is complex and differs from the other fields of social 

science. Meanwhile the biologist or chemist can enter their laboratory and start doing 

experiments. They have unique control in establishing some conditions ceteris paribus 

and the changes to the others can be observed, analyzed, and explained. This unique 

control is missing for the researches in entrepreneurial area such as entrepreneurship, 

international business, and IE. It is impossible to establish, for instance the 

environment as a stable variable and observed the impact of the sector on the firm’s 

performance. Therefore the economist has to be also a little bit the politician, 

sociologist, psychologist, historian, and manager in order to be able see the reality of 

the firms from different perspectives. 

In spite of the fall of the Berlin Wall 16 years ago, the researches do not devote proper 

interest to the studies in former socialist countries. However, some analyses, which 

include the SMEs, have been done but mostly for policy makers needs rather than 

from the academicals’ point of view. 

The study contributes to the IE research in context of Slovakia where only a few 

studies have been carried out. In order to achieve the proposed aim and to describe 

the process of the Slovak SMEs’ internationalization and analyze Why? How? and 

When? do Slovak SMEs expand their business activities across the national boarder, 

the qualitative approach following to Yin (1989), Eisenhardt (1989), and Miles and 

Huberman (1994) was adopted. The in-depth interviews with six entrepreneurs 

provide the primary data for case analysis. The objective of the study was to gain 

insights that would help build a framework rather than to test one. 

The findings from the case individual and comparative analysis helped to describe the 

process of SMEs internationalization following the planned research objective and 

questions. As the result the model of SMEs initiation to internationalize and three 

groups of exporters are proposed. 

The limitation 

The case study does not allow for the statistical generalization. According to Yin 

(1989) “,...case studies, like experiments, are generalisable to theoretical propositions 

and not to populations or universe” (1989 21) However, the aim is not to obtain the 

100

generalization result but to provide more meaningful understanding of such complex 

SMEs internationalization processes. 

The limitation of case studies is the study that was carried out in only two regions 

(Banská Bystrica and Prešov) out of eight regions of Slovakia. 

The study does not consider the performance variables for evaluating the firm’s result 

of firms’ operating into foreign markets. Hence this limitation could be used as future 

research. There could be interest to investigate how the initiation of the SMEs 

internationalization process varies according to firm’s size and type of industry. 

Future research 

There are few studies leaded in CEE countries (Peterson, 2004). The studies have to 

consider the unique, similarities and differences of each studied market. “Moving away 

from understanding entry modes and firm’s market entry behaviour as expansions 

form one market to another, this new perspective requires greater appreciation for the 

roles played by cultural, administrative, geographic, and economic distance in 

international expansion and better framing of the marketer’s strategy as regional, 

global , or semiglobal.” (Ghemawat 2003a in Cavusgil, Deligonul and Yaprak, 

2005:15). 

The investigation about the stereotype of Slovak inferiority represents interesting area 

for further exploration not only in Slovak entrepreneurs but also the other from the 

post-communist bloc. 

I plan to continue in the investigation and therefore I propose some concrete steps for 

further investigation. 

1. Using the quantitative data to contrast the proposed model initiation of SMEs 


2. To investigate how the factors related to firm, entrepreneur and environment 

differ according to the three identified groups of SMEs (exporters by “accident”, 

the planning exporters, and intensive exporters) and non-exporters. 

At the same time, there is plan to expand the literature review of the findings from an 

entrepreneurship, more specifically the factors affecting on firm’s growth. Therefore 

the final literature revision will be as present in figure 5. 

101

Figure 5: Proposal of literature review for further investigation 

International Entrepreneurship 

Entrepreneurship International Business 

• Theories of firm’s 

growth 

• Factors affecting 

on firms growth 

• Models of firms’ 

growth 

The decision to use the entrepreneurship and international business as fields of 

theoretical background for this study was influenced by two facts. 

First, both streams used and contrast their researches in the same theories, 

mainly: network theory, resource based view, and transaction cost theory. 

Different stages of the firm’s life as creation, development, expansion and the 

break-up of firms are investigated mainly in entrepreneurship studies. 

Second, the firm’s internationalization represents a complex phenomenon of the 

study. Choice of foreign countries, entry modes selection, stimuli for 

internationalization, barriers of enter into foreign markets are influenced by 

characteristics of entrepreneur, firm, strategy, industry, environment, which are 

also the object of the study in entrepreneurship, international business, and more 

recently international entrepreneurship. 

• Theories and models of 

firm’s 

internationalization 

• Factors affecting of 

firms 

internationalization 

102

Annex 1 Institutions contacted with the aim to obtain existing database, contacts or 

information related to Slovak SMEs 

Name of institution Contact person 

NADSME – National Agency for 

Development of Small and 

Medium Enterprises 

Iveta Molnárová 

Martin Zbur 

EIC – Euro Info Centre Bratislava Michal Belan 

EIC Euro-info Centre Prešov – 

RAIC Prešov 

Statistical office Slovak Republic 

INFOSTAT –Institute of 

Informatics and Statistics 

SPOK – Slovak Chamber of 

Commerce and Industry Banská 

Bystrica regional chamber 


Commerce and Industry 

Bratislava regional chamber 


Commerce and Industry Lučenec 

regional chamber 


Commerce and Industry 

Prešov regional chamber 


Commerce and Industry Košice 

regional chamber 

The Office of Banská Bystrica 

Self – governing Region 

Mgr. Mária Radvanská 

Peter Heidinger 

Frantisek Szabo 

Ing. Katarína Šalgovicová 

Ing. Ľubomíra Slobodová 

Web page 

/email address 

www.nadsme.sk 

agency@nadsme.sk 

www.eic.sk 

eicsk672@nadsme.sk 

www.eic.sk 

eicsk673@rpicpo.sk 

www.statistics.sk 

KS.BA@statistics.sk 

frantisek.szabo@statistics.sk 

www.infostat.sk 

infostat@infostat.sk 

salgovicova@invostat.sk 

sopkrkbb@sopk.sk 

slobodova@sopk.sk 

Viliam Grznár sopkrbl@sopk.sk 

Ing. Vladimír Bystriansky sopkrklc@sopk.sk 

Without answer sopkrkpr@sopk.sk 

Without answer sopkrkke@sopk.sk 

Ing. Vladimír Laššák 

Ing. Marina Spirová, 

www.vucbb.sk 

vlassak@vucbb.sk 

mspirova@vucbb.sk 

The town Hall of Zvolen 

Juliana Ištóková 

www.zvolen.sk 

jistokova@zvolen.sk 

The names in green with black bold font have provided useful information. 

103

Annex 2 Recommendation letter from Dr. Joaquim Vergés, director of doctoral 

programme. 

104

Annex 3 The general guideline for face to face semi structured interview 

During the interview, focuses was put on three groups of questions with related sub 

questions: 

1. Questions related to firm about: 

• The firm’s creation (when, how and why the firm was established?), 

• The number of partners and their decision right in company, 

• The sector and main product of the firm, 

• The number of employees in the start-up and at the present time, 

• The use of foreign capital, 

• The firm’s marketing activities, 

• The importance of design and innovation for the firms’ activities, 

2. Questions related to entrepreneur about: 

• The age and sexuality, 

• The education, 

• The foreign language skills, 

• The study in foreign country, 

• The experience in foreign country, 

• The role of the entrepreneurs’ family for the business, 

3. Questions related to international activities 

• The initial impetus to start the international activities, 

• The firm’s entry into foreign market (how and when?), 

• The role of formal and informal contact for firm’s internationalization, 

• The firm’s searching of the foreign business contacts, 

• The presence on the national and international fairs, 

• The countries in which firm start its international activities and why in these 

countries?, 

• The barriers and problems which firm faced during the internationalization, 

• The expectation from the international business activities, 

• The help of national or regional institutions for the firm’s internationalization, 

• The share of the sales in foreign activities, 

• The firm’s web-page, 

• The importance of internet for the firm’s activities, 

105

Annex 4 The proposal of the questionnaire for further study of the comparison of 

factors (external, internal) between SMEs operating only into home market 

with those operating also in foreign market. 

The Questionnaire 

Dear entrepreneur, I am student at Universidad Autónoma de Barcelona and I would like to 

ask for our collaboration on present questionnaire. The data will be used for my final 

investigation work and the access for any other person is impossible. The filling of the 

formulary will no take you more than 15 or 20 minutes of your time. 

About entrepreneur 

1. How old were you, when do you start your actual business? __________ years 

2. Please indicate your sex. 

a) man b) woman 

3. Please indicate the high level of achieved education. 

primary school 

secondary school without the leaving examination 

secondary school with the leaving examination 

university degree 

master degree 

PhD. Degree 

4. Do you have some economical education (course in management, marketing, business 

administration, general economy )? 

a) Yes b) No 

4a) If your previous answer is Yes, please mark in the table below, how many years of 

experience do you have in the industry of present firm and in different industry. 

Entrepreneur experience In the industry 

Employee experience 

Management experience 

Entrepreneurial experience 

Different industry 

(specify which) 

5. Do you speak some foreign language? 

a) No b) Yes (Please indicate which one) 

English 

German 

Spanish 

French 

Italian 

Other, which: ___________ 

6. Is this your first established firm? 

a) Yes 

b) No. How many firms, except this one, have you established? 

1 firm 

2 firms 

more than 3 firms

About Firm 

7. Year when the company was founded___________ 

8. How many people founded the company? 

1 

2 

3 

More than 3 

9. Is the company family owned a) yes b) no 

/if the main decisions are made by the members of one family/ 

10. Sector of business 

Food and beverage 

Textile and clothing 

Mechanical (engineering) 

Wood 

Metal 

Service, Please specify the area _____________ 

Other, which?_____________ 

Main product or service of the company: ___________ 

11. Do you characterize your firm as growth oriented? 

a) yes b) no 

12. Number of the employees when: 

the firm was established 

1-10 

11-49 

50 - 250 

more than 250 

and in the present time 

1-10 

11-49 

50 - 250 

more than 250 

13. If you are willing please indicate firm’s sales in following years. 

2005 ______________ SKK 

2003 ______________ SKK 

2001 ______________ SKK 

1995 ______________ SKK 

1990 ______________ SKK 

14. Has your firm some foreign capital? 

a) Yes 

From which country? ________________________ (Please indicate all countries.) 

In which form? (Please in case of more countries indicate in each form country’s origin) 

Financial 

Tangible (for instance: machinery,) 

Intangible (for instance: know how) 

Personal 

Different, which one? _________________ 

b) No 

107

15. Do you think that the foreign firms in compare to Slovak firms: 

• offer more qualitative product or services a) Yes b) No 

• use a better technology a) Yes b) No 

• are more developed a) Yes b) No 

• have a more skilled employees a) Yes b) No 

16. Has your firm any foreign business activities? 

a) Yes b) No 

If your answer to previous question was NO, please answer the last two questions of the 

questionnaire: 

7a). Do you plan in near future initiate the cross boarder business activities? 

a) Yes probably when? _________________year and month 

b) No 

7b) What do you consider as the main obstacle to start foreign business 


If your answer to fourteenth question was YES, please continue with the questions about 

“Foreign business activities”. 

Foreign business activities 

17. Please can you describe the first impetus which leads to the initiation of the foreign 

business activities? 

18. Please can you evaluate the situation of your competition in home and foreign market 

when your firm was created: 

a) in the home market is strong, low, increasing, 

stable, there is no competition 

b) in the foreign market is strong, low, increasing, 


19. Please can you evaluated the situation of the your competition in home and foreign market 

in present time: 

a) in the home market is strong, low, increasing, 


b) in the foreign market is strong, low, increasing, 


108

20. Please estimate how the following statements were important for the firm’s 


extremely unimportant 

important 

a. Friends (Do they help to the decision of firm’s 

internationalization) 1 2 3 4 5 

b. Governmental institutions or programs 

(local, regional and state level included) 1 2 3 4 5 

c. Desire of entrepreneur to start 

foreign activities 1 2 3 4 5 

d. Family members 1 2 3 4 5 

e. Competitors (they serve as a model for firm’s 

internationalization) 1 2 3 4 5 

f. Needs for firms survival 1 2 3 4 5 

g. Firms allocated near to your firms 1 2 3 4 5 

h. Previous foreign business contact 1 2 3 4 5 

i. Desire for further growth of company 1 2 3 4 5 

21. Did you use some support from governmental institutions? Please choose the form and 

institutions. 

Consultancy NADSME 

Financial RPIC 

others, please specify ______________ BIC 

SARIO 

others, please specify ___________ 

If you not /use any from above mentioned support/ why? 

___________________________________________________________________________ 

_____________________________________________________________________ 

22. In which foreign countries have your firm business activities and when did you start them? 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

Country ____________Year _______ 

23. Please mark in the table below, which operation modes are used in which of the foreign 

market was your firm is present. 

Operation mode Country 

____________ 

Direct export to the end customer 

Foreign agent 

Domestic agent 

Importer / reseller (distributor) 

Sales office 

Joint venture 

Other, which 

Country 

____________ 

Country 

_____________ 

24. Your main product or service for the foreign activities is: ___________ 

________________________________________________________________________ 

109

25. Is your firm more oriented into: 

home market 

one foreign market 

two and more foreign markets 

both, into home and foreign markets 

26. Please indicate the share of foreign sales in the company’s turnover during the last three 

years for each foreign country. 

Country _________________ 

2005 less than 10% 10 – 24 % 25-49 % more than 50% 




Country _________________ 





Country _________________ 





Thank you very much for your time and collaboration on this project. 

All received data will not be misuse or abuse. 

Please, indicate your interest to obtain the result of work. 

Yes, I would like to obtain the result. My email is:______________________ 

No, I do not have interest to receive the work’s result. 

110

REFERENCES 

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