Internal Internationalization

In the ongoing struggle to maintain and leverage competitive advantage, SMEs are in a constant state of change. A highly visible and researched change is concerning the process by which firms shift business activities across national borders. While the process theory of internationalization helps carve the path of a firm’s international expansion, the point of departure of the theory is the boundary of the firm. Thus it fails to capture the depth of the internal turmoil SMEs experience. This boundary creates a virtual black box that encapsulates the entities and activities, the very essence of the firm. To date, the black box of the firm is an enigma that research finds difficult to penetrate. The concept of dynamic capability provides a framework for capturing what happens internally when firms experience change. Through use of this perspective, the purpose of this theoretical thesis is to elucidate the internal transitions SMEs endure as they go through the process of internationalization. In order to describe this process conceptual models have been constructed which can be applied throughout the value chain of any SME during any stage of international expansion.