Beyond Entry Mode - SME Escalation in Emerging Markets: A Conceptual Framework

Drawing on core theories of International Business research, this conceptual paper moves from a focus on the firms’ “entry mode” decisions towards an interesting aspect of small firms’ international behavior - namely their escalation of commitment to emerging markets. Escalation is the dynamic aspect of the entry strategy (and international form of presence) and refers to the change in the mode of presence that firms experience in a market over time. Several studies report that SMEs face difficulties in escalating in emerging markets. We investigate this issue by building a conceptual framework that links the escalation of a firm’s commitment in an emerging market to a firm’s endowment of resources and capabilities, as well as to the feedback it receives from the market and to the moderating impact of Institutional Voids – a key contextual aspect of emerging markets.