INTERNALIZATION OR EXTERNALIZATION: WHAT DETERMINES THE MODE OF GOVERNANCE FOR SMALL- AND MEDIUM-SIZED TECHNOLOGY ENTERPRISES?

Small and medium-sized firms interested in entering international markets face a difficult decision with regard to the choice of governance modes. The options available to a firm include internalization and externalization. Existing theories contradict each other as to the strategic benefits of these options. This study compares these theories in the context of small and medium-sized technology-based enterprises. Findings from this study suggest that merits of internalization and externalization vary with market contexts and the resources under the firm’s control. Under certain conditions, one theory can be more powerful than the other