Internationalization of small, computer software firms : Entry forms and market selection

Internationalization has often been described as a gradual development, in terms of involvement and entry forms, in which firms are expected to target gradually more distant markets. This study focuses on the entry forms and market selection of five small Norwegian computer software firms. The findings suggest that the firm's network relationships are determinant with regard to which foreign entry forms they choose and to some extent, which markets they decide to enter. Whereas terms such as agent, distributor, licensee, and foreign subsidiary might have clear distinguishing power when physical products are concerned, the picture is far more complex when it comes to software. The firms in the study generally refer to their international partners as agents or distributors or both. When examined more closely a complex pattern of business solutions are encompassed by these terms. It seems also evident that the firms in the study are not concerned with such a distinction but look for competency, solidity and the ability to generate sales when searching for international partners. There seems to be a limited correlation between the firms’ international experience and their foreign entry form and market selection. The firm may choose one entry form in one market and a different one in another similar market, depending very much upon the options available in terms of their network relationships. Some key challenges for the managers of a software company will be to balance the allocation of resources between expanding the network through the current relationships and to focus on establishing new relationships and customers. This study's results illustrate the increasingly complex relationship between firms across national borders.