The geographic expansion of Dutch startups to East Asia

The rising trend in internationalization among small and medium-sized enterprises in the last 20 years is an entrepreneurial response of this category of firms to the opportunities and threats presented by an increasingly global economy (Nkongolo-Bakenda, Anderson, Ito, & Garven, 2010). Firms that could previously be content within national boundaries are now facing growing international competition and at the same time market opportunities (Kirby & Kaiser, 2003). Where traditional startups generally start as domestic firms and gradually evolve into multinational firms, contemporary startups are distinctly international in nature at or near inception (Johnson, 2004). Considering the increasing necessity for firms to expand abroad and the relatively unexplored, yet clearly present market potential that the East Asian region offers, this research aims to explore the geographic expansion of Dutch startups to East Asia. The objective is to gain some insight into the motivations for firms to move into this region specifically and the challenges that they face when doing so. All of which leads us to the following research question: “What are the motivations and challenges of Dutch startups expanding their business internationally, with special reference to East Asia? Using only qualitative research methods, a multiple case design is applied to study and compare 10 different cases. All cases concern young and small companies in The Netherlands that have expanded internationally to East Asia. Samples were selected through non-random sampling, using mostly the self-selection and snowball method. For the data collection in-depth, semi-structured interviews were held which were subsequently transcribed, coded and arranged in a data matrix for analysis. Applying the within and cross case analysis method the following section will highlight the results of this research. The results from the analysis show that regarding the motivations for Dutch young and small companies the most important takeaways are that the size of the domestic market was definitely an influencing factor to do business abroad. While some companies simply needed to obtain a critical sales volume, others expanded in order to reach the full potential of their business. Competition was never an influencing factor on the internationalization of the case firms and investors did not seem to influence the daily business operations either. While the knowledge and expertise of investors was sometimes used, clearly the money was the most important contributor for companies. While all entrepreneurs had previous international experience, for most this has helped, but did not seem to be a major contributor to the current internationalization efforts. For the challenges that Dutch young and small companies face, the analysis concluded that money was the resources that firms needed the most, followed by people. Knowledge seemed to be less Master Thesis | The geographic expansion of Dutch Startups to East Asia 4 needed. Regarding partnerships, the most striking conclusion was the importance of international conventions for meeting new customers, distributors or business partners. Furthermore, all firms were either international from the start or expanded abroad within a few years of inception. Strategy was used loosely and no firm seemed to have an extensive internationalization strategy. The thesis is structured as follows. After the introduction, the next section examines the relevant literature concerning on the internationalization, several constructs associated with it, followed by an exposition of frequently mentioned motivations and challenges for internationalization which will be researched. The next chapter provides context about the East Asian region after which the methodology and data collection are detailed. In the final section, the results and conclusion are presented.