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The world is ever-changing and is turning into a world with practically no borders due to globalization and the rapid advancement of technology, making international business easier for most people, especially for small and medium enterprises (SMEs). The role of SMEs has been growing over the years and is a very important part of the economy as enterprises who employ less than 250 people represent 99% of all enterprises in the EU. SMEs can benefit from the cheaper ways of doing business and be more competitive now than ever before. Lee et al. (2012) have also concluded that, rather than presenting a higher risk of failure for SMEs, internationalization actually provides opportunities that can increase survival. Internationalization can be defined as “the foreign market servicing strategy of a firm”.
Growth opportunity, new knowledge, access to new resources, larger market opportunities and long-term profitability are only a few of the various advantages that internationalization provides. There has been quite some research into what factors influence the success and survival of SMEs when they decide to internationalize. Studies have shown that not only e.g. firm’s characteristics and resources are substantial, but also the top management team’s characteristics, educational background and capabilities. However, less attention has been given to the psychology behind these top management teams, CEO’s or owners, even though that there were previous studies that did acknowledge how important personality can be in the process of internationalization. There has been no research into the role the Big Five personality traits have in the internationalization process of SMEs in either developed markets or emerging markets.
Previous research has shown that the Big Five personality traits, openness to experience, conscientiousness, extraversion, agreeableness and neuroticism (OCEAN), have a significant impact on firms’ performance, profitability and growth as well as a firm’s survival. Lai et al. (2016) have concluded that psychological factors like overconfidence have a significant influence on the choice of foreign market entry mode. Upper echelons theory states that firm performance is partially predicted by top management team’s characteristics, e.g. demographics factors. According to Lai et al. (2017), the external factors of foreign markets have less influence on the degree of internationalization than the top management team’s own psychological factors has. This is a valid incentive to look into how the Big Five personality traits affect the choice of internationalization by managers.
The goal is to examine how the different personality traits influence a manager’s commitment to the internationalization process directly by researching psychological studies as well as international entrepreneurship research. The link between the Big Five personality traits and internationalization will be linked by looking for aspects of each separate trait that has already been studied, to try and find a connection. As stated before, there have already been numerous studies analyzing how managers’ characteristics and capabilities affect their choice of foreign market entry mode, but only a select academics who have suggested that personality traits, in this case the Big Five, could have an impact on how firms tend to internationalize.
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