Research on Innovation & Internationalization of Indian Retail SMEs

This study investigates the relationship between innovation management and internationalization activities among Indian Small and Medium Enterprises (SMEs) in the retail industry. It aims to evaluate how innovation influences internationalization, growth, and global expansion. The research identifies key factors like technological capabilities, strategic alliances, and decision structures that determine the link between internationalization and innovation strategy. It also analyzes barriers inhibiting international expansion of Indian SME retailers and proposes mitigation strategies. The study uses literature review and proposed research methodologies to explore these dynamics, aiming to provide insights into the international retail sector and offer recommendations for improved strategies to support SMEs.

Running head: RESEARCH ON INTERNATIONAL BUSINESS MANAGEMENT
Research Methods for International Business Management
Impact of Innovation Practices on Internationalization Activities of Indian Small and Medium
sized enterprises operating in retail industry
University Name
Student Name
Authors’ Note

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Executive Summary
The study aims to investigate in detail regarding the association between management of
innovations and internationalization among different small as well as medium sized
enterprises operating in the retail industry of the India. The study at hand evaluates the way
innovation influences internationalization, growth, worldwide growth, international
expansion along with performance of SMEs in the retail sector. Essentially, the study has the
intention to gain insight regarding different drivers along with barriers for particularly India
based SME retailers to mainly internationalize due to innovation actions undertaken, to
analyze in detail regarding associated infrastructures along with policy dimensions (with
respect to strengths as well as weaknesses) and to design specific recommendations for
attainment of improved strategies to support different small as well as medium sized
enterprises in this regard. Even though knowledge on internationalisation of SMEs in retail
industry, as it now stands, is at a nascent phase of development, the current study on Indian
SMEs in retail industry can provide significant insights into the neglected area of
international retail.

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Table of Contents
Introduction................................................................................................................................4
Research Objectives...................................................................................................................4
Purpose of the study...................................................................................................................5
Context of the Research.............................................................................................................5
Literature Review.......................................................................................................................7
Research Methodology.............................................................................................................13
Research Method:.....................................................................................................................13
Nature of research:...................................................................................................................14
Data Collection.........................................................................................................................15
Sampling:.................................................................................................................................16
Sources of Data:.......................................................................................................................16
Data Analysis Technique.........................................................................................................16
Ethical Consideration...............................................................................................................17
Limitations...............................................................................................................................17
Proposed Work Plan.................................................................................................................19
References................................................................................................................................20

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Introduction
The study at hand examines overall influence of innovation on strategic results related to
internationalisation activities among different small as well as medium sized enterprises in
the India. In particular, SMEs are the base of economic developments in particularly the India
and are identified to be significant contributors to process of recovery from recessionary
period. Essentially, the study helps in understanding the way growth as well as performance
of SME retailers are driven by the way business enterprises manage innovation as well as
internationalisation. In the beginning, combining both innovation and internationalization can
be reflected to generate the highest rate of growth potential for performance among small as
well as medium sized enterprises. Therefore, managing innovation as well as
internationalization might perhaps present theoretical and managerial threats since the two
subsists in an intertwined manner in SME retailers and might also have common antecedents.
Research Objectives
Research Objectives: The three primary objectives formulated for the study include the
following:-
- To evaluate important identified factors or variables (namely technological capabilities,
technology investment, strategic alliances as well as decision structure) that determines
relationship (ascertains causal associations) between internationalisation and innovation
strategy of firms
-- To critically evaluate the way innovation actions exerts impact on international
performance as well as worldwide expansion

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- To evaluate different barrier that inhibit international expansion of SME retailers in the
India
- To analyse the ways in which the identified barriers can be mitigated
Purpose of the study
The internationalisation of large transnational retailers is properly documented and numerous
researches have been conducted for understanding their motives as well as strategies for
expansion. However, no research in this particular area has identified internationalisation of
small- to medium-sized enterprises (SMEs) functioning in the retail sector and the way
innovation affects their internationalisation activities. Various theoretical insights derived
from the literature reflects gaps in existing research, that are related to the barriers, facilitators
and different processes of retail SME internationalisation (Chiva et al. 2014)
Context of the Research
Businesses enhance the degree and extent of internationalization by means of gaining more
information regarding the market and as the total amount of information enhances, so do the
possibilities for identifying diverse opportunities for innovative ideas, whether they stem
from different unmet requirements, rules and regulations or else imitation. This hereby
generates possibilities to augment performance in international context. Prior studies have
repeatedly instituted a positive association between innovation and performance.
Furthermore, association between innovation and performance has been observed in
internationalization context, since innovation in worldwide markets exert impact on
performance (Suarez-Perales et al. 2017). Therefore, whilst innovation has received only
limited research attention in the context of internationalization of small as well as medium
sized enterprises, there are two different reasons behind a positive association between

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innovation and performance of worldwide operation of SMEs (Hagen et al. 2014). This is the
first mover advantage and gap of performance. Again, first mover advantage are essentially
generated by means of innovation and this in turn have an influence on overall performance,
while gap in performance is generated by an alteration in the environment to which a
corporation is able to adapt to by means of innovating. Again, sustainable competitive
advantage can be reached by means of continuous innovation. Halilem et al. (2014) suggest
that product as well as process innovation might possibly inspire firms to internationalise,
while different knowledge intensive firms have the tendency to concentrate on generating
products that can necessarily be commercialised globally. In addition to this, entering
numerous foreign markets can be considered to be a way to overcome investments in mainly
research as well as development. Further, higher performance of export can be attained by
small corporations by means of an innovative differentiation stratagem. This in turn can help
in overcoming regional disadvantages for innovating firms that are expanding worldwide
(Kunttu and Torkkeli 2015). The association between innovation and financial performance
can be affected by the external business environment, as a competitive environment mixed
with incremental innovation augments financial performance in a dynamic business
environment. Again financial performance is said to enhance by means of radical innovation.
The current study intends to analytically evaluate the way continuous innovation can be
considered to be an important key to acquirement of competitive advantage and way
successful new global ventures to internationalize can be started. Therefore, the study at hand
intends to analyse the manner in which innovation in small as well as medium sized
enterprises in the India are positively associated to level of global performance. Also, the
study intends to delve deep into the matter to evaluate the extent to which innovation in
globally operating small as well as medium sized enterprises in the India positively contribute
to rate of growth. Essentially, new research studies also suggest that Indian SMEs are quite

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optimistic regarding the global economy and their role in the same. Results of the research
also present the fact that roughly 41% of SMEs in the India indicate that agility, strong and
enduring customer relationship and innovation are the most important strategies that they use
for accelerating rate of growth during the year 2018 (Prashantham and Dhanaraj 2015). Prior
studies have indicated towards the fact that respondents prioritise agility as the most
important capability for development over the upcoming three years. SMEs in the India have
extremely ambitious growth targets that are 23% of SMEs in the India as compared to the
figure of global average of around 19% (Ren et al. 2015). Further, past research reflects that
smaller enterprises in the India are primed for attaining success by concentrating on special
advantages, remaining close to customers, and enhancing efficacy by means of continuous
innovation.
Literature Review
Structure of the Literature Review
The learner intends to present an analytical overview of the important literature that is
published on the subject matter under consideration. Conducting an analytical and systematic
review of the literature helps in presenting an insight into subsisting knowledge as well as
themes related to the topic at hand. Firstly, the learner intends to explain in detail the
definition of SMEs, different proactive as well as reactive reasons for internationalisation,
main internalisation theories (including process of internationalisation, stage model of
internationalisation), internationalisation of Indian SMEs (strengths and weaknesses), barriers
of Indian SMEs in internalising activities. Moving further, the literature review section of the
study intends to throw light on the way innovation can help in internationalisation of SMEs
with empirical evidences and prior case studies. The key themes that emerge from different
cases shall be presented to provide theoretical insights. It can be hereby mentioned that the

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study at hand shall concentrate on case evidences of internationalisation of SMEs and
innovation of Indian retailers.

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Theoretical Insights
Definition of SMEs
The variance between large sized firms and SMEs can be recognized in terms of physical size
and at the same time presence. As suggested by Prange and Pinho (2017), classification and
categorisation of SME size can take account of total number of employees, total number of
outlets of retailers, yearly turnover, and a blend of employee and turnover dimensions.
Empirical evidences across different industries has observed turnover of sales as the key
indicator of differentiating between small and large sized firms (Wadhwa et al. 2017). The
current study at hand has followed guidelines specified by the Micro, Small & Medium
Enterprises Development Act of the year 2006.
Barriers encountered by SMEs in internalisation
Internationalisation entails high risk and SMEs possess more inadequate resources to cope up
with the consequences of foreign expansion (Zucchella and Siano 2014). Thus, the
complications impeding worldwide development for SMEs can be indicated as strategic,
functional, informational as well as process-based limitations (Halilem et al. 2014).
Accordingly, weak financing and the ensuing requirement for speedy return on investment
(ROI), SMEs normally have a narrow range of strategies for entry in foreign markets and
even a narrower functional ground from where international activities can be carried out (Sui
and Baum 2014). Again, intensified by restricted market knowledge and deficiency of
interaction with important parties, over and over again owners of small corporations have no
tendency, expertise or responsiveness to develop and grow and to pursue prospective actions
for overseas expansion. Nevertheless, the subsistence of export stimuli can permit SMEs to
triumph over this kind of barriers to worldwide expansion (Hagen et al. 2014). As suggested
by Zhang et al. (2016), international stimuli cab be considered as the motivating factors that

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can over-ride these kinds of obstacles identified. Different important themes that have
emerged as significant stimuli, drivers as well as facilitators of overseas expansion include
innovative international strategy, experience of entrepreneurs, networks of firms plus external
support.
Resource Based Opinion
This literature assessment starts by studying in detail about the Resources Based View
(abbreviated as RBV), as both strategies are included in this corpus. Essentially, in one hand,
firm internationalization has necessarily been saturated by the RBV indicating that firms
attaining success have the need to acquire, build up important and not alternative resources
(Fernández-Mesa and Alegre 2015). Fundamentally, these resources have the need to be
configured in a way that is not imitable (Boermans and Roelfsema 2016). As such, business
concerns aiming to attain success in worldwide markets must get or design significant
resources and put them together to build up an internationalization scheme. Again, on the
other hand, existing literature on different innovation actions is said to be closely associated
to RBV (Caiazza 2016). Therefore, firms intending to innovate need to acquire and at the
same time develop significant intangible resources, in addition to knowledge as well as
technology. Therefore, for businesses to attain success there is need to develop products as
well as services presented to altering market conditions (Zucchella and Hagen 2015). To put
it briefly, RBV is a theoretical body that illustrates development of innovations and
internationalization, by way of significant resources as well as capabilities designed to
formulate a firm stratagem. Bello et al. (2016) suggest that at the time when a business
concern enters novel worldwide markets it acquires new knowledge to expand or else
redevelop products and/or services. In essence, this procedure directly influences innovation
system of firms. Then again, development of different products and/or services exerts
influence directly on different opportunities to enter in new foreign markets with a specific

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competitive gain and lead through resources development. However, the lack of proper
evidence on causal association between internationalization and innovation is a matter under
consideration.
Four different variables identified that directly exerts impact on innovation and
internationalisations of the firm include Technological development, Technology
Investment, Alliances as well as Decision Structure.
Innovation, Internationalization and Technological Capabilities
One ordinary approach to internationalization of firms and innovation is by means of
technological potential and capabilities. In essence, technological capabilities are observed
as technological knowledge that is derived from varied sources (Prashantham and Dhanaraj
2015). As such, this knowledge is utilized to develop novel product and/or services to enter
novel markets. Particularly, this knowledge also helps in path-dependent technology and
development of potential in firm innovation.
Internationalization can be considered to be a specific way to expose the enterprise to
knowledge as well as advanced technologies of different foreign markets, in that way
delivering opportunities for development of new skills as well as capabilities, and showing
the way to path-dependent technology along with innovation (Radulovich et al. 2018).
However, it is also said that technological potential exert influence directly on the innovation
system of the firm by means of internationalization.
Semrau et al. (2016) assert that innovation assists in the process of translating tangible as
well as intangible resources into different innovative product and/or services. Essentially, this
subsequently directs the way towards sustainable competitive advantage. There are studies
that propose the fact that technological capabilities helps in attainment of internationalization

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and expansion of firms and put forward the fact that technological capabilities directly
influence internationalization by means of innovation.
Innovation, Internationalization and Investment in Technology
Subrahmanya (2018) presents the fact that firm investment is an important variable.
Subrahmanya (2018) suggests that investment permits businesses to acquire and at the same
time develop novel technology or else technological resources. Again, this also permits the
corporation to develop novel products and/or services. Essentially, technology investment
also becomes an aspect for internationalization, provided that firms are competent of
developing novel product and/or services and entering into new and foreign markets
(Abubakar et al. 2018). Particularly, technology investment also is a factor that is an
important for innovation. Business concerns can attain or develop advanced technology that
reflect both tangible as well as intangible resources, and add to path-dependent technology as
well as innovation. However, this reflects a double impact of technology investment,
influencing directly on internationalization along with innovation.
Innovation, Internationalization and Strategic Alliances
Resource Dependence Theory (RDT) has necessarily roots in resource based view and is
attaining added awareness. In essence, this theme illustrates the relation between business
concerns, institutions and business concerns and other firms (Gupta et al. 2018). Also, it also
illustrates instituting alliances all the way through necessity of resources as well as
capabilities. This indicates towards the fact that business concerns are acquiring, imitating
otherwise gaining access to different strategic resources that are essential for the corporation.
However, they do not alter the value proposition of the business concern owing to erosion of
different resource value, or due to the fact that both firms are in varied phases of development