Linking knowledge and internationalization in small and medium-sized enterprises in the ICT sector

This paper examines the internationalization of Finnish information and communication technology (ICT) firms from the knowledge-based perspective. Building on transaction cost economics and modern economics-based strategy research, this study presents a model that explores the influence of six important knowledge determinants on two key elements of the internationalization strategy, i.e. on the choice of entry mode and market concentration/diversification. We tested the model among 78 internationally operating Finnish ICT SMEs. The survey results indicate that the internationalization strategy is linked with uncertainty, asset specificity, appropriability of knowledge assets through tacitness and legal means, and economies of scale and scope. However, no link was found between opportunism and internationalization strategy of the firm. The paper concludes with implications to managers and future research.