Constraints facing small western firms in transitional markets

Abstract

Purpose

To provide an Asia‐Pacific viewpoint of the key constraints associated with large geographic distances for smaller westerns firms entering central and eastern Europe (CEE), described as a turbulent transitional environment.

Design/methodology/approach

An exploratory study was used within a qualitative methodology, using eight case studies across multiple industries. Semi‐structured interviews were the main method of data collection conducted in 2003/2004. Open, axial and selective coding was used for the analysis to identifying issues.

Findings

Key internal constraints for smaller western firms (mindset of western management and middle management in CEE; and lack of management in CEE with decision‐making authority) related to managements' inability to recognize geographic and psychic distance as major external constraints. Largely overcome by enhancing communication between various functional groups; adapting organizational structure; maintaining frequent communicational; developing partnerships in international joint ventures; finding reliable distributors and commitment from re‐sellers and working with government. While no single international business theory adequately explains this process, there is overwhelming support for the network perspective and international entrepreneurship.

Research limitations/implications

The study is limited by small sample size. The explanatory phase is proposed with further western companies, such as the UK, operating in CEE to identify geographic distance, and additional CEE markets to verify dimensions in this environment.

Practical implications

The paper provides a checklist of strategies for overcoming constraints facing managers of smaller firms, entering emerging markets with geographic distance.

Originality/value

Previous studies, using a European or Nordic viewpoint, fail to identify the constraints associated with large geographic distances. This paper provides practical assistance to managers starting out in CEE from the Asia‐Pacific.

Citation

Freeman, S. and Reid, I. (2006), "Constraints facing small western firms in transitional markets", European Business Review, Vol. 18 No. 3, pp. 187-213. https://doi.org/10.1108/09555340610663728