The impact of internationalisation on small firms' choice of location and propensity for relocation

Abstract

Purpose

The primary focus of this paper is to examine the international (import and export) activities of the firm and the impact on the firms' criteria for choice of location and the propensity for relocation.

Design/methodology/approach

A web survey was carried out among small and medium‐sized Danish firms. Data used in the present study are based on responses from 622 firms. The analysis is conducted in two sub‐sections. The first section focuses on how export/import intensity is related to the location motives of the firm and the propensity to relocate the firm to another national location or abroad. Pearson's correlation with corresponding test of significance is used to explore the possible relationships between the international engagement and the firm's criteria for choice of location. In the second section the responding firms are classified into one of four categories, as suggested in a local/global typology. Analysis of variance (ANOVA) is conducted in order to assess whether there exist any significant differences between the four types of firms with regard to the location motives and relocation propensity for the firms.

Findings

The study shows that the international engagement of the firm influences the need for better location with regard to infrastructure (especially airport and highways) and to a lesser degree other types of infrastructure (railways and harbours). Interestingly, firms put less emphasis on the direct economic factors (infrastructure) compared with access to customers/suppliers, local network and, above all, access to research institutions. The study shows that international firms put significantly more emphasis on the relationship with research institutions than more local firms. The study also indicates that a higher international engagement increases the firm's intention to relocate abroad, which could be one of the unwanted sides of firms' internationalisation.

Originality/value

Guided by insights from location and relocation theory and international entrepreneurship theory, the connection between firms' export and import engagement and the reasons for location and propensity for relocation are explored. The paper also suggests an internationalisation typology of firms that can be used in future research on the internationalisation of the firm.

Citation

Rasmussen, E., Møller Jensen, J. and Servais, P. (2011), "The impact of internationalisation on small firms' choice of location and propensity for relocation", Journal of Small Business and Enterprise Development, Vol. 18 No. 3, pp. 457-474. https://doi.org/10.1108/14626001111155664