Espacios. Vol. 37 (Nº 23) Año 2016. Pág. 27

Influence of Institutional Factors on the Internationalization Process of the Brazilian Industry

Influencia de los factores institucionales en el proceso de internacionalización de la industria brasileña

Vanessa Almeida da SILVA 1; Flavia Luciane SCHERER; Natalia Pavanelo PIVETTA

Recibido: 12/04/16 • Aprobado: 28/04/2016


1. Introduction

2. Theoretical framework

3. Methodology

4. Analysis and discussion of the findings

5. Final considerations



This study examines the relation between the international operations and the institutional factors of the Brazilian machinery and equipment industry. The data was collected and analyzed using the descriptive statistical technique. The findings indicate that the analyzed companies entered the international market mostly via exports. With respect to the institutional factors, it was observed a tendency for a substantial similarity among the competitors that decided to operate in the international market, demonstrating mimetic isomorphism. It is notable the encouragement and contribution to innovation and adaptability to changes. This work attempted to expand the knowledge on the field of International Business.
Key words: Internationalization, Institucionalism, Isomorphism, Brazilian companies


Este estudio examina la relación entre las operaciones internacionales y los factores institucionales de la industria de la maquinaria y equipo de Brasil. Los datos fueron recogidos y analizados mediante la técnica estadística descriptiva. Los resultados indican que las empresas analizadas entraron en el mercado internacional, sobre todo a través de las exportaciones. Con respecto a los factores institucionales, se observó una tendencia a una similitud sustancial entre los competidores que decidieron operar en el mercado internacional, lo que demuestra isomorfismo mimético. Es notable el aliento y la contribución a la innovación y la adaptabilidad al trabajo changes. This intentaron ampliar los conocimientos en el campo de los negocios internacionales.
Palabras clave: la internacionalización, institucionalismo, el isomorfismo, las empresas brasileñas

1. Introduction

In the globalized environment, understanding the cultural and social aspects emerges as a key challenge in the companies' internationalization process, in pursuing global markets, winning and especially keeping new consumers (HONORATO, 2007). Thus, the organizations must be prepared to compete in the domestic and international markets.

The perspective of institutional studies has explored the organizations' relation with the socio-cultural environment. In this study, from the viewpoint of the institutional theory, emphasis is put on the organizations' orientation to the environment in the search of what is considered the mainstay of this approach, the legitimacy in relation to the other components of the organizational field (GOULART, VIEIRA & CARVALHO, 2005). The institutional approach not only contributes to improving the understanding of the components of the environment but also shifts the reference axis of the organizational analysis in terms of importance of the technical aspects – organizational efficiency and effectiveness – to those of symbolic nature, such as values, myths and symbols (CARVALHO & VIEIRA, 2002).

In Brazil, a major restructuring of the Brazilian industry, initiated in the 1990s, contributed to increase productivity, products quality and consumers' satisfaction, besides promoting a movement towards the internationalization of the Brazilian companies (ROCHA & MELLO, 2002). The growing internationalization process, marked by economic opening and privatization, associated with stability, provided great incentives to the national and foreign investments (HONORATO, 2007). In this context, it is understood that the internationalization process enables companies to become more competitive both within and outside the country.

The internationalization phenomenon should be viewed as an element that changes the internal and external structures of an organization, providing positive effects to the company itself and the entire production chain to which it is associated (HONORATO, 2007), and for this reason it has attracted the attention of many researchers from different fields of knowledge. In the field of international business studies, the main internationalization theories can be divided into two categories. The first is called Internationalization Theories with an economic approach, whereby it is understood that the internationalization process is driven by pseudo-rational decisions based on market surveys and the companies' operational context. The second is called Internationalization Theories with a behavioral approach, which states that the internationalization process depends on the attitudes, perceptions and behavior of the players  (companies and managers) involved (CARNEIRO, DIB & HEMAIS, 2005).

This study addresses the theme of internationalization of small companies in the Brazilian machinery and equipment industry located in the state of Rio Grande do Sul and aims to examine the institutional factors that impact this process. So, it is important to identify the isomorphic mechanisms and strategic responses to the institutional pressures, besides the influence of the environment, to understand which is the relation with the adoption of internationalization as a management strategy. Thus, the study is intended to identify the limiting and driving factors of the actions and strategies developed in these organizations, so as to complement the researches in the field of International Business.

For the development of this article, the theoretical frameworks that constitute the required bases for the study are discussed. Thus, in the subsequent sections it will be discussed themes related to the firms' internationalization as well as how to enter foreign markets. Subsequently, the Institutional Approach is focused, depicting isomorphism.  Finally, the methodology and results of the survey is discussed, and final considerations are included.

2. Theoretical framework

2.1. Internationalization: theoretical approaches and entry modes

Internationalization as a strategic process can be understood as a result of strategic decisions that move a company through different and successive stages to its internationalization process. At each stage, new strategic challenges and decision priorities are encountered (DOUGLAS & CRAIG, 1989). As a result, time and resources are committed in the hope of obtaining satisfactory results. The strategic choices of the senior management, in terms of their competitive environment, shape the structure and the organizational processes (MILES & SNOW, 1978).

Considering the theories that supported the studies on internationalization, one can say that there are two fields of study dealing with the firms' internationalization, i.e., economics, and management and business (IGLESIAS & MOTTA VEIGA, 2002).

A similar classification is proposed by Carneiro and Dib (2007), to whom the traditional internationalization theories can be classified into two lines of research: internationalization approaches based on economic criteria, and internationalization approaches based on behavioral evolution.

Within the focus of internationalization approaches based on economic criteria, Carneiro and Dib (2007) argue that pseudo-rational decisions would prevail for issues arising from the internationalization process, which would be oriented to decisions that would bring maximization of economic returns, based on market surveys and the companies' operating context (CARNEIRO, DIB & HEMAIS, 2005). Thus, Cantwell (1991) grouped the main theories of international production in frameworks with similar theoretical foundations. Ietto-Gillies (1997) proposed a similar logic to that of Cantwell, with minor adjustments in the classification. By adopting the fundamentals of these two authors, three theories that are among the most cited and influential in the literature were selected: the Market Power Theory, the Internalization Theory and the Eclectic Paradigm (CARNEIRO & DIB, 2007).

According to the internationalization approaches based on behavioral evolution, the internationalization process would depend on the attitudes, perceptions and behavior of the decision-makers (firms and senior managers) involved in the decision, which would be oriented by the search of reduced risks on decisions on where and how to expand and which originated from the so-called stage models (CARNEIRO, DIB & HEMAIS, 2005).

Among these, the Uppsala Model was the first and most widely cited (OVIATT and MCDOUGALL, 1999) and empirically tested (BELL, 1995; PETERSEN & PEDERSEN, 1997) in the literature. Besides this, other two important theoretical developments are often mentioned (JOHANSON & VAHLNE, 1990 & 2003; KNIGHT, 2000), such as the international entrepreneurship and the networks prospect (CARNEIRO & DIB, 2007).

In Brazil, there are several empiric studies on firms' internationalization. Dal-Soto (2006) considers that the Uppsala theory offers a partial basic explanation about the internationalization process for recognizing that gradual actions towards the external market and exports are common characteristics of companies in this process. Rezende (2002) also considers the internationalization processes as gradual, but at the same time considers them as discontinuous.

The internationalization process consists of foreign trade strategic activities, capital flows, technology transfer, information and data flows, alliances, mergers, acquisitions, Direct Investment Abroad (DIA), among others. Most of the strategic decisions for entering a new market are related to the selection of the target country, and this kind of decision is affected by specific interactions between the decision-markers and the characteristics of the company (NICKELS & WOOD, 1999).

The entry mode into an international market is an institutional arrangement that enables the entry of products, technology, human skills, management or other capabilities of a company into international markets, i.e., it is the effective internationalization of an organization (ROOT, 1994). Although the expressions "entry modes" or "entry strategies" erroneously appear to mean the strategy used to enter (for the first time) into a foreign market, they actually mean the institutional arrangement that the company uses to enter and remain operating and developing in an international market (ROOT, 1994).

The strategy of internationalization of Brazilian companies goes through various modalities, including the "association with foreign companies looking for new markets and access to cheaper capital" (SILVA, 2007, p. 152). A survey conducted by the Dom Cabral Foundation (2002) in 2001 aimed to investigate the internationalization process in Brazil, with the purpose of understanding clearly the context and strategies adopted by national companies that are internationalizing their operations. In addition, it also had the purpose of identifying the reasons why many Brazilian companies have not yet considered the possibility of internationalization. So, the main reasons and barriers encountered by the Brazilian companies for internationalization were revealed, as shown in Figure 1



Search for economies of scale – notably by intermediate producers and end goods producers -; varies according to the companies' size.


Development of capabilities to operate in international markets – the smaller the company the greater the need of skills.

Internal/organizational barriers with respect to the adequacy of the companies' capacity and resources to operate in international markets;


Barriers in the Brazilian competitive environment relating to the adequacy of economic and institutional infrastructure, to the offer of factors and attitudes and cultural characteristics;

Exploring the advantages of being located in Brazil;

Barriers in the target markets, also of economic, political-institutional and cultural nature.

Saturation of the Brazilian market.


Figure 1 – Reasons and barriers for the internationalization of Brazilian companies.
Source: Dom Cabral Foundation (2002) 

The results of the study conducted by the Dom Cabral Foundation (2002) show that the Brazilian companies have internationalized via exports. In this sense, many of them have advanced considerably to a greater insertion in international markets, and some of them have had expressive revenues from exports and have been adopting a gradualist approach.

In short, the longer a company operates in international markets, the greater its willingness to take risks and commit resources in its internationalization process. Finally, the conclusions of the study revealed that companies with greater experience in international markets face lower barriers and enjoy better results in their internationalization process. One can infer that the greater the experience and the greater the direct investments made, the better the returns attained by the companies (FUNDAÇÃO DOM CABRAL, 2002).

The resources and advantages of a company must not necessarily be powerful differentials for an organization to be successful in its internationalization.  Important is to have goals and strategies compatible with the organization's skills and objectives (FISCHER, 2006). Thus, internationalization is a process involving companies of all sizes and from virtually all sectors of the economy. Therefore, when studying the reasons and the means by which the behavior of the players of a given organizational field develops in a standardized manner, as well as the goals through which the players develop and share meanings, it is possible to emphasize the vision of the Institutional Theory by assessing the organization's orientation to its environment.

2.2. Institutional theory

The Institutional Theory had its origins in some theoretical formulations beginning in the late nineteenth century in the core of the debates in Germany on the scientific method (SCOTT, 1995), but its application to the study of organizations is relatively recent as well as the conceptual distinction given to the organizations. Thus, this approach is grounded on concepts such as institutionalization, norms, myths, and legitimacy, and develops under the perspective of the political, economic and social sciences (CARVALHO & VIEIRA, 2002).

The institutional theory became highly recognized from the period of the post-contingency theories, in which the environment became a significant variable in the organizational dynamics. Thus, the organizational analysis under the institutional standpoint is a new phenomenon in business administration and an alternative to the concept of social action (then dominant) in which every decision should be supported by rational selective criteria (CRUBELLATE, GRAVE & MENDES, 2004; QUINELLO, 2007).

One of the fundamental researches on the required organizational strategies to operate on a complex political and economic environment was Selznick's case study ((1949) on the Tennessee Valley Authority(TVA) in 1949 (PERROW, 1990 in CARVALHO, VIEIRA & LOPES, 1999).

This study brought significant contributions to the knowledge on organizations in general and firms in particular. Selznick's line of thought  (1957) explored the influence of the environment on the organizations. When addressing the organizational structure, the purpose is to discuss the goals and explicit policies and the firm's internal relationships that form a rational theory, explaining how and why the activities are connected with each other (MEYER & ROWAN, 1977).

The elements determining such rational structure make up the firms' organizational environment, defined by various modern organizational theories as an external entity to the organization, but with impact on the organizational result, imposing restrictions and requiring the companies' adaptation (NUNES, 2000).

In contrast to the rationalist concept of action, the cognitive theory emerges demonstrating that human beings cannot process all sensorial data in a rational calculation, but make use and form concepts that, based on their previous experience, help them make decisions and act (CARVALHO, VIEIRA & LOPES, 1999). So, the cognitive theory gives way to the subjective elements of human knowledge and for this reason constitutes an ontological antecedent of the institutional theory. It suggests the unlikelihood of totally conscious rational deliberation on all behavioral aspects due to the huge amount of information and computational capacity that it would require (CARVALHO, VIEIRA & LOPES, 1999).

Considering this context, in 1977 Meyer and Rowan reintroduced the institutional theory with the purpose of encompassing normative and cognitive elements to explain the nature of the organization structure. Meyer and Rowan (1977) argue that formal organizations are often structures designed to coordinate and control complex activities belonging to the technical networks, with the purpose of exchange with its context. But in modern societies such structures take place in highly institutionalized environments, serving as powerful myths that are adopted by organizations in a ceremonial context. Unfortunately, the adoption of such myths in some cases directly conflicts with the efficiency criterion.  Thus, the authors' core argument is that the formal structure of many organizations in our society reflects dramatically the myths of their institutional environments rather than meeting the demands of the work or production activities (MEYER & ROWAN, 1977).

Rationalized myths create the need, opportunity and drive for formal structures to organize rationally in accordance with the institutions.  By following the institutional prescription, an organization shows that it is acting in its own way and appropriately, according to the collective values (MEYER and ROWAN, 1977). Thus, the organizations that incorporate socially legitimized rationalized elements into their formal structures maximize their legitimacy and increase their resources and survival ability (MEYER & ROWAN, 1977).

The studies on Institutional Theory have contributed to the organizational arrangements by following a sociological emphasis, introducing variables such as shared values, search for legitimacy and isomorphism, the analysis of relationships between organizations and the environment (MÓSCA, 2006).

The institutional approach, therefore, is pointed in the specialized literature as an attempt to challenge the rationalist model and its focus on the technical demands of management and production processes, by shifting its attention to the examination of the elements of relational networks and cultural systems that shape and sustain the organization' structure and actions (MÓSCA, 2006).

Thus, institutionalization may be represented by a process conditioned by the logic of compliance to the socially accepted norms, so that legitimacy becomes imperative to the entities in order to increase their chances of survival.  The institutional isomorphism, being a phenomenon inherent to institutionalism, allows organizations to assimilate institutional rules, making them more homogeneous within their organizational field (DIMAGGIO & POWELL, 1983). For being a central concept in the Institutional Theory, the next section addresses its main aspects.

2.2.1. Isomorphism

Legitimacy is a core issue to the organization' survival, and isomorphism represents a key concept in the institutional theory, having legitimacy as the main consequence. Legitimation is defined by Berger & Luckmann (2004) as a process that produces new meanings, used to integrate the meanings already associated with disparate institutional processes. Building legitimacy depends predominantly on elements of a symbolic nature, which define a behavior pattern rather than the parameters for the organization's technical efficiency (GOULART, VIEIRA & CARVALHO, 2005). The symbolic legitimacy thus assures the status of institution to an organization.

In this sense, the institutional environment is constituted of two sets of main elements: technical elements and symbolic-normative elements. The institutional environment explains the more complex nature of an organization's relationship with the environment, including normative, coercive and mimetic aspects. Organizations operating in institutional environments are better assessed for the adequacy of their form rather than for the results (POWELL, 1990).

In this sense, organizations depend on both environments concurrently, and Scott (1995) is perceptive when he claims that the organizations' survival depends either on the adaptive ability to environmental, technical and economic specifications or to the normative factors of support and legitimacy. Corporations, therefore, aiming to adapt to the environment that surrounds them, tend to internalize such interdependences by processes named in the institutional theory as isomorphism.

According to DiMaggio and Powell (2005), there are three mechanisms through which institutional isomorphic changes take place: (1) coercive isomorphism; (2) mimetic isomorphism; and (3) normative isomorphism. But these are types, and such types are not always empirically distinct, and more than one mechanism can occur simultaneously.   Important is to emphasize that each mechanism produces distinct results, even when they are mixed.

In the first case, coercive isomorphism derives from formal and informal pressures put on the organization and by the cultural expectations of the society in which it exists (DIMAGGIO & POWELL, 2005). Such pressures of political influence can be felt by force, persuasion, or calls for schemes of collusion (with the purpose of breaching the law). The second case, mimetic isomorphism, occurs when organizations tend to model themselves on other similar organizations having more legitimacy and success in their field of activities (DIMAGGIO & POWELL, 2005). Uncertainty is a powerful force that encourages imitation because when organizational technologies are not clearly understood, goals are ambiguous, or when the environment creates a symbolic uncertainty, organizations may model themselves on other organizations. Even the innovation process can derive from organizational modeling (DIMAGGIO & POWELL, 1991). It is a practice known in the market as benchmarking, widely used by consulting firms (DIMAGGIO & POWELL, 2005).

A third mechanism of organizational change comes basically from professional pressures and is known as normative isomorphism. It is associated with professionalization, which DiMaggio and Powell (2005) construe as a collective search by the members of an occupation to determine the work conditions and its methods, control the production procedures and set a basis and cognitive legitimacy for their occupational autonomy.

The contribution of the studies on institutional theory was the introduction of variables such as: shared values, search for legitimacy and isomorphism, analysis of the relationships between organizations and between organizations and the environment (MÓSCA, 2006). The isomorphic process is therefore an attempt of the company to be rewarded for its compliance with the technical and institutional characteristics of the environment (NUNES, 2000). For this reason, firms should adopt a strategy of fast followers, which is meant to be directly related to the survival in the long term (LEWIN & VOLVERDA, 1999).

In short, from sharing a common basis of knowledge and ideas by the players, strengthened by the association with the adoption of processes in other organizations, DiMaggio and Powell's isomorphism  (1991) is easily understood. Thus, when a firm adopts solutions developed by other firms, as a result of one of these three factors or a combination of them, 1) political influence and the need of legitimation (coercive); (2) standardized responses to uncertainty (mimetic); and 3) professionalization (normative), one can see that the firm is seeking success and survival in order to be legitimized by society. Finally, in environments where organizations are submitted to the same pressures and regulations, and where legitimacy is pursued, one can usually see some characteristics of the organizations or the inter-organizational relationships that are established and become common to the players in this environment.

3. Methodology

Methodology is a particular form to conduct a study. Accordingly, this study has a descriptive nature in which a survey with small companies in the machinery and equipment industry in Rio Grande do Sul was conducted, which developed operations in international markets in the past five years, according to the database of ABIMAQ - Associação Brasileira da Indústria de Máquinas e Equipamentos (Brazilian Association of Machinery and Equipment), regional office of Rio Grande do Sul.

Chart 1 summarizes the explanatory variables selected to compose the theoretical model, based on criteria such as easy data collection and operationalization.

Institutional Factors

Internationalization Processes

Companies that operate in the international market

Processes inherent to institutionalization

Entry modes (DIB, 2008)

Size of the company

Isomorphic mechanisms (DiMAGGIO & POWEL, 2005)

Markets (Reasons and Barriers) (DIB, DOM CABRAL FOUNDATION, 2002)

Time of activities in foreign markets






Sales volume of products and services

Chart 1 – Explanatory variables chosen to make up the theoretical model

This work consists of a quantitative survey divided into four modules and delivered to the entrepreneurs. The Lickert scale was used in the formulation of the most part of the questions. In this sense, the model of analysis shows that the institutional environment explains in terms of influence of the institutions in the activities of small Brazilian companies. Therefore, the internal managerial aspects that explain the trajectory of the internationalization process of the companies under study, from the initial decision to the current stage, were identified. 

4. Analysis and discussion of the findings

According to the objectives of this study, described in the first section hereof, the identification of the factors that influence the internationalization was done based on literature review and organization of the conceptual model. The findings of this survey are presented below, presenting both the analysis and the discussion. The sampling corresponds to 13.25% of the entrepreneurs contacted, who responded the survey. From the analysis of the survey performed, some observations can be made with respect to the general characteristics of the sample and the institutional variables, which are presented in the charts below.

Description of the companies' profile consists first of the characterization of the respondents. Then, the characteristics of the companies are presented by means of the definition of the size and some other aspects related to the international activities of the companies, as detailed in Table 1. 

Table 1 – Description of the companies studied

Description of the companies studied

Profile of the respondents

- Majority of females (63.64%);

- Regarding age, 54.55% are 30 years old or less;

- Regarding marital status, 81.82% are married and/or cohabiting;

- The most part of the respondents has college graduation and post-graduation (27.27% each);

- Most respondents are on the board of directors  (27.27% among founder/president and managing partner) or have a managerial position (27,27% in sales) – directly involved in international markets.

Characteristics of the companies

- Regarding the companies' size, the majority is classified as micro and medium size (36.36% each), and small companies represent 27.27%;

- 36.36% of the companies studied have as main activity the industrialization of machinery and equipment in general, and the manufacturing of agricultural machinery and implements represents 18.18% of the total.

One of the specific objectives of this study is to examine the context where the organizations operate, identifying the channels of the international activities of the gauchas companies in the sector of machinery and equipment (Table 2), describe the internationalization stage and identify the limiting factors of the strategies and actions to the internationalization process of the companies under analysis. For this purpose, the following aspects are presented: international operations and institutional factors.

 Table 2 – Description of the international involvement of the companies surveyed

Description of the international involvement of the companies surveyed

Time of involvement in international markets

- Heterogeneous samples;

- Most of the respondents (36.36%) are in international activities for up to15 years.

Countries or group of countries with which the companies have businesses

- Samples show reasonable diversity in terms of target countries or group of countries;

- South America (except Brazil) was the most representative, with 45.45%;

- Africa (36.36%) was the second country most cited by the respondents.

Number of countries with regular operations

- The majority operates in 1 to 05 countries (63.64%).

Information in terms of sales of the main product or group of products

- High level of non-responses;

- In terms of percentage, in 2009, it varied from 5% to 40%.

Activities performed internationally

- The majority (72.73%) of the respondents only commercializes their products and/or services in the international market

Entry modes in the foreign market

- The most part of the companies are in the initial stages (38.10%) of importing/exporting;

- Some decide for dealer or agent/representative (28.57%);

- Other partnership agreements (14.29%);

- Joint venture (9.52%).

Reasons that led the company to operate abroad

- Reasons given are very divergent;

- A little more than 27% of the companies had the intention of internationalizing since the beginning of its operations, so as to explore the location in Brazil.

Reasons that led the company to begin operations

- Equally represented companies (27.27%) responded that the development of capabilities/skills to work in international markets was the reason to operate abroad;

- Nearly 18% of the companies received a request from a foreign client;

Barriers encountered by the companies for internationalization

- Responses are quite diversified;

- A little more than 36% of the companies reported to face economic, political-institutional and cultural barriers in the target markets;

- Nearly 28% of the respondents indicated internal/organizational barriers regarding the adequacy of capacity and resources.

In this section the institutional factors that led the organizations under study to adopt new organizational practices to internationalize are also identified. From the analysis of the institutional factors (Table 3), the key elements identified in the process of institutionalization of the companies analyzed were examined, observing the isomorphic mechanisms (coercive, mimetic, normative) to which institutional changes influencing the companies occur, according to DiMaggio and Powell (2005).

Table 3 – Institutional factors associated with the internationalization of the companies analyzed

Institutional factors associated with the internationalization of the companies analyzed

Status of the company regarding the international market

- Most of the sample companies has not placed themselves at the extremes of the scale;

- The market strengths factor, such as sales maximization and competitiveness, may influence the process of change in an intermediate level;

- The laws of the domestic market affect changes of the organizational practices also in an intermediate level;

- 36.4% of the respondents indicated that there was no need for hiring people to deal with the governmental policies of the international market, an aspect associated with the technological change;

- The respondents tended to a substantial similarity with the competitors who sought the international market, and 36.4% of them reported having substantial agreement to operate in the international market;

- Most of the managers did not hire any researcher/consultant to guide the company's process of change to operate in the international market and were based only on their own experiences;

- For 45.5% of the respondents, internationalization had positive impacts, considering partially substantial the addition of value in terms of performance and control of activities;

- Regarding the resistance of the group, the majority of the respondents were on the average concerning the reduced resistance of the agents directly or indirectly involved in the internationalization process;.

- Regarding the support of interest groups, the responses were on the average; there is a perceived acceptance as far as the change, on the one hand, is influenced by economic pressures; on the other hand, the change involves the adoption of a methodology whose acceptance, in the theoretical and practical level, is largely widespread.

Forms of acquisition of new managerial control techniques for internationalization

- The importance of normative mechanisms is demonstrated;

- Seminars, congresses, conferences  (19.05%);

- Consultancy (19.05%);

- Informal consults with peers, representing 19,05%;

- Business periodicals and journals  (16.67%);

- Meetings with professional entities (11.90%).

Factors of influence in the adoption (or abandonment) of new techniques for international operations

- Decision by the CEO or managers of the company (21.43%);

- Demand from clients/suppliers (17.86%);

- Economic-financial performance (17.86%).

Issues faced by the companies when deciding entering the international market

- Pressures to innovate appear to be an appropriate strategy for competitiveness, representing about 18%; 

- In equal proportion, meetings of the sector to discuss the use of new technologies;

- 46% represent a new way to reduce uncertainty, starting a political mobilization among interest groups with the purpose of building coalitions to demonstrate the merit and the acceptability of the organization to other external players from whom it is expected to obtain resources and approval.

When the characterization of the institutional factors relating to the international operation was completed, the efforts to obtain legitimacy and support from the environment in the most immediate level to the companies, where aspects such as dependence, power and policies of the surveyed sample, and as a consequence how the companies deal with these elements, were examined (Table 3). It was observed that some CEOs/managers who participated in this study have the ability to assimilate the changes and are willing to adapt to the situation. In addition, other CEOs/managers reported advantages in the circumstances that led the company to internationalization since the beginning of their operations.

In view of what has been investigated to the present moment, this work comes to the phase of final considerations, which allows to demonstrate a critical appraisal of the constructs of internationalization and institutional factors, subjects addressed in the theoretical model of this study.

5. Final considerations

This study aimed to analyze the relation between the institutional factors and the internationalization of small companies of the machinery and equipment industry in Rio Grande do Sul, as well as to develop a descriptive analysis of the analyzed companies, characterizing aspects of international operations and identifying the institutional factors that influence the companies' internationalization.

The main theoretical frameworks available in the literature on International Business were presented and discussed, demonstrating two categories, i.e., the economic approach and the behavioral approach of business' internationalization. The literature review revealed the reasons why the focus of this dissertation was more intense on the so-called Behavioral Approaches than on the Economic Approaches. The two key theoretical developments following the establishment of the Uppsala Model were reviewed: the perspective of networks and the international entrepreneurship, the latter being very useful to understand the entrepreneurs' behavior towards internationalization. It was also considered the adoption of the Innovation-related internalization model (I-Model), i.e., the model of stages through which exports is a route to innovation, and the main characteristics of this model were analyzed.

Accordingly, after review of the main studies that addressed the internationalization phenomenon, the factors impacting this process were examined, according to the existing literature, producing an integrative theoretical model with the institutional factors. From the descriptive analysis, developed with the purpose of accomplishing the specific objectives of this work, it was observed that the researched companies are for the most part micro and small companies. These findings demonstrate the strength of small companies, which even having a smaller organizational structure and fewer employees, are engaged in winning new markets beyond the national frontiers.

It is worth noting that most of the surveyed organizations entered the international market via exports, but data confirm that imports were an option for some companies. So, most of the respondents only commercialize their products and/or services in the international market, while others only acquire raw material from abroad.

In this particular, many companies advanced considerably in their trajectory, enlarging the international market share, and some of them have had expressive revenues from exports. It was observed that in their internationalization strategy, the respondent companies have been adopting a gradualist approach, investing initially in low-risk, low-investment solutions, and as they acquire knowledge on internationalization, they move forward to other stages requiring more commitment. In short, the longer a company operates in international businesses, the more willing or comfortable it is in taking risks and committing resources in the internationalization process.

When characterizing the international operations of the studied companies, the main reasons for the internationalization were quite divergent, such as the intention to internationalize since the beginning of their operations, the development of capabilities and skills to operate abroad or a request from the foreign client. With respect to the time of engagement in the international market, it was observed a heterogeneous sample, but the greater part of the respondents have been in international activities for up to 15 years, serving up to five countries.

As limiting factors to internationalization, the responses were quite diverse: some companies encounter barriers in the target market, such as of economic, political-institutional and cultural nature, while others indicate internal/organizational barriers relating to the adequacy of their capacity and resources.

Another important finding of the study is related to the institutional factors, about which it was identified that the market strengths, such as sales maximization and competitiveness, as well as the laws in the domestic market, influence the change process in an intermediate manner. Regarding the aspect of technological change, 36.4% of the respondents reported that there was no need of hiring people to deal with the governmental policies of the foreign market. The same percentage claims that the senior management tended to be substantially similar to the competitors that entered the international market, demonstrating a mimetic isomorphism. It is noteworthy that for half of the respondents, internationalization had positive impacts, considering value addition in terms of performance and control of activities.

Concerning the acquisition of new managerial tools or techniques to internationalize, it was emphasized the importance of mimetic mechanisms, represented by seminars, congresses and conferences, consultancies, business periodicals and journals and meetings with professional entities. Furthermore, the factors that influence the adoption or abandonment of new techniques are strongly influenced by the organizations' senior management, followed by demands from clients or suppliers (coercive isomorphism) and by the economic-financial performance.

Most of the respondents, in order to cope with the internationalization process, start political mobilizations among interest groups with the intention of building coalitions with other players to obtain resources and approvals/permits. It is worth noting that the organizations are guided by their reference context, from which the values and beliefs on the institutional environment are obtained.

Thus, in order to deepen the studies herein presented, it is suggested that further efforts are made to increase the number of participant companies, thus enabling a wider coverage of the vast field of Brazilian companies participating in the international market in this industry. And finally, this work attempted to expand the knowledge on a field of studies still relatively unexplored by empirical researches, the International Business.


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Revista Espacios. ISSN 0798 1015
Vol. 37 (Nº 23) Año 2016


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