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Obadia and Vida (2006) bring up that companies more often choose to open foreign
subsidiaries to expand internationally. Additionally the authors state that the size of the
company is of great importance for the internationalization to be successful, as the SME’s
tend to be less prepared than larger firms to deal with issues such as geographic, cultural,
and institutional distance between the home country and the country in which the
investment was made. The authors pinpoint the lack of research made on the specific
reasons why SME’s performance when internationalizing and specifically regarding
issues that SME’s face with their foreign subsidiaries. 5 INTRODUCTION
Selecting the right entry mode is an important decision, which demands a lot of resources
and thorough planning. When selecting entry mode a wide range of factors must be taken
into consideration before making the final decision (Young, Hamill, Wheeler and Davies,
1989). Furthermore Koch (2001) states that all factors proposed to influence the market/
market entry mode selection process fall into three broad categories: external, internal,
and the mixed,...
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