FIRMS’ RESOURCE ALLOCATION BETWEEN R&D AND MARKETING IN THEIR INTERNATIONAL EXPANSION

For a small and medium size firm (SME), expansion into new foreign markets is a remarkable
milestone, requiring specific resources and capabilities. The purpose of this study is to explore
how management in internationalizing small and medium-size firms allocate their limited
resources between key functions, in particular, between marketing and R&D. This thesis builds on
a resource-based view of the firm, a dynamic capabilities perspective, and the SME
internationalization literature, and therefore assumes that a firm’s success in foreign markets is
closely related to its internal resource and capability configurations.
The findings of this study suggest that SMEs need a capability portfolio in which the relative
importance of key capabilities varies as international expansion proceeds. It appears that
throughout the international expansion process, investments in developing R&D capabilities do
not notably decrease, not even at the time when SMEs need to begin to develop other activities,
such as marketing. Closer examination reveals that investments in the capabilities’ underlying
microfoundations, rather than the resource allocation between the key functions per se, determine
the nature of the resulting competitive advantage.
Cross-border mergers are specific situations that reveal the strong influence of functionspecific
microfoundations on functional capabilities and thus, on an SME’s dynamic capabilities.
The results of this study show that in merger deals, each firm comes with distinctive crossfunctional
structures, processes, routines, and skills. Synergies might not be capitalized if
management is not able to effectively align merging firms’ underlying microfoundations.
The results in this thesis underline the invaluable role of SMEs’ management. The findings
show that even if the different phases of international expansion require diverse managerial
capabilities, unanimity among the top management team executives is needed (surprisingly) only
when these SMEs are making substantial resource commitments. Such adoption to changing
conditions is an illustration of dynamic managerial capabilities that partly determines success in
international markets.


ISBN-10:
9789526216980
Julkaisusarja:
ACTA UNIVERSITATIS OULUENSIS G Oeconomica
Kustantaja:
Oulun yliopisto
Painos:
Osajulkaisuväitöskirjan yhteenveto-osa
Painovuosi:
2017
Sivumäärä:
96
Tekijät:
HAAPANEN LAURI
Viivakoodi 9789526216980
Tuotekoodi 024637
Tekijä HAAPANEN LAURI
15,00 €