A Review of International Mode of Entry Strategies for SMEs in East Java

Abstract

The purpose of this research is to examine the internationalization of Small and Medium-sized Enterprises (SMEs) in East Java from both theoretical and practical perspectives. By analyzing existing literature and utilizing empirical data from earlier studies, this study seeks to deepen our understanding of the subject matter. The methodology of this study involves rigorous examination of the most recent theories and models, supplemented by empirical analysis of existing research on internationalization of SMEs. Various theories and models, ranging from classical to contemporary approaches, are explored in relation to the internationalization strategy of SMEs in East Java, and different entry modes for internationalization. The theoretical framework of this study is anchored on the resource-based view and network theory. This study uses content analysis of the latest theories and models coupled with empirical analysis of studies on the internationalization of SMEs that have been conducted. Several theories and models, both classical and new approaches, link the internationalization strategy of SMEs in East Java and several entry modes for internationalization. This theory is based on a resource-based view and network theory. The result of this study is East Java's SME internationalization strategy is hampered by various obstacles and issues, as per documented evidence. While the entry mode for internationalization hinges on networking, numerous SMEs in the region choose to network autonomously, as empirical data suggests. This study aims to provide policymakers, especially the government, with workable ideas for a long-term, proactive strategy to ensure the success of SMEs' internationalization in East Java. Empirical data proposes that limited knowledge about markets, trade regulations, communication barriers, financing, and transportation infrastructure supporting internationalization pose the most common challenges faced by SMEs in Indonesia. Consequently, the entry networking strategy mode is the key to independent internationalization for SMEs. This study contributes to a theoretical and practical review of SME internationalization mode entry strategies.