The Internationalization Process of German High-Tech SMEs: An Empirical Analysis

Much research has been done about the internationalization process of companies since the 1970s. However, only few studies applied the findings to high-tech SMEs and different researchers have pointed out this lack of research (see e.g. Rialp and Knight 2005 and Kriedrich and Kraus 2009). Our contribution attempts to fill in the previous research gap using a longitudinal study to analyze the internationalization process of German high-tech startups. Our data set consists of 120 venture-capital-financed German high-tech SMEs of which 41.6 per cent of them went international. The data was collected directly from the original transaction documents at the venture capital companies. This enabled us to collect reliable quantitative (e.g. the financial figures) and qualitative data (e.g. the market entry strategy). We showed that the companies followed a structured process for going international which mainly consists of the following four parts: Early Planning, Protecting IP, Raising Funds and Building Networks. The German high-tech SMEs plan for their internationalization within their business plan and then stick to the plan. They analyze the patent situation and file international patents if possible. In addition, they sometimes have to seek for a way to finance their internationalization. Furthermore, they actively work on expanding their international network, most using trade fairs as a first step. Comparing the national with the international group we were able to quantitatively verify this process. In addition, we enhanced our process model by findings derived from our qualitative data. We used investigator triangulation to ensure the reliability of our approach. Our findings are contrary to the international new venture theory currently discussed in literature and support the process theory of internationalization.