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Governance Mechanisms of Small and Medium Enterprise International Partner Management
Author(s) -
Dimitratos Pavlos,
Lioukas Spyros,
Ibeh Kevin I. N.,
Wheeler Colin
Publication year - 2010
Publication title -
british journal of management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.407
H-Index - 108
eISSN - 1467-8551
pISSN - 1045-3172
DOI - 10.1111/j.1467-8551.2008.00620.x
Subject(s) - incentive , corporate governance , business , situational ethics , subsidiary , agency (philosophy) , industrial organization , international business , marketing , principal–agent problem , outcome (game theory) , knowledge sharing , knowledge management , multinational corporation , economics , microeconomics , finance , management , philosophy , epistemology , political science , computer science , law
We examine how small and medium enterprises manage their international partners across different market servicing modes, namely exporting, joint ventures and wholly owned subsidiaries. The international business literature has placed emphasis on soft issues of international partner management (such as trust, cultural sensitivity etc.) in each mode category independently. Since network arrangements and knowledge sharing are involved in all these modes, we contribute to the literature by providing evidence on the mechanisms of international partner management across market modes. Specifically, based on agency and knowledge‐based theories, we seek to understand the extent to which small and medium enterprises assign rights to make decisions to partners abroad, and the types of incentives and performance monitoring schemes they use. These mechanisms are drawn from agency theory. In‐depth case studies were carried out in 14 Greek small firms that employed different modes to collaborate with their partners abroad. Seven of these firms had high levels of international performance while the other seven had low levels. We identify two distinguishable combinations of governance mechanisms being implemented by these two sets of firms: high performers pursue situational decision‐making with outcome‐oriented incentives/performance monitoring schemes, whereas low performers pursue centralized decision‐making with behaviour‐oriented incentives/performance monitoring schemes.