Understanding the De-internationalization of Entrepreneurial SMEs in a Volatile Context: A Reconnoitre on the Unique Compositions of Internal and External Factors

Abstract

In recent years, the global business environment has witnessed a wave of de-internationalization not only among multinationals but also among small- and medium-sized enterprises (SMEs). This disengagement of cross-border activities is deemed to be driven by various firm-specific factors, as well as by external factors. Building on the premise of the non-linear internationalization debate and focusing on the dynamic capabilities view and institutional theory, this paper aims to disentangle the extent to which internal factors (IFs) and external factors (EFs) drive SMEs towards de-internationalization. To do this, we take advantage of a hybrid multilayer decision-making mathematical modelling approach to explore SME de-internationalization at two levels. Our findings at the exhaustive level contribute to the de-internationalization literature by proposing distinct frameworks that highlight the interrelationship amongst IFs and EFs. And our results at the subordinate level constitute the identification of four unique compositions leading to different de-internationalization modes. In this vein, we define two categories of factors, namely reducing and terminating factors, which drive SMEs into respectively partial and full de-internationalization.