The Uppsala Internationalization Model, developed in 1970s, is the earliest theory on the specific sequences that SMEs follow to access international markets. It describes a gradual process to internationalize – starting from intermittent exporting, and then exporting via agents, and then moving on to cooperation with foreign firms via sale subsidiaries, joint ventures, licensing and franchising, and eventually achieving FDI in the overseas markets18.Later on, complementary to the Uppsala Model, the Network Theory Model was developed at the time when global production networks and value chains became more prominent. The Model places all the firms into networks of suppliers, subcontractors, customers and other market actors19, and SMEs start to internationationalize from selling to or buying from multinational companies via global production networks or value chains.The internationalization process has implications on the grouping of SMEs.
Both the Uppsala Model and the Network Theory Model describe an incremental process for SMEs to internationalize, i.e. SMEs start as domestic firms, and gradually develop their international business capacity and become active in the international markets. Firms that fall under this group are classified as “incremental internationalization SMEs”.Other SMEs start with a global vision and devote resources towards international activities from the onset.
These are classified as “born-global SMEs”,