Internationalization Theory

International business studies and theories have offered businesses with many important theories that have shaped and changed the way companies understand and approach the market such as product life cycle and factor proportion. According to classical trade theory, a country exports products and services having economic advantages whereas it imports products and services in which they don’t have economic advantages over (Smith, 1776). Since then and the study of international business and trade have offered a lot if insight and understanding on how companies do business locally and internationally.

In the last 50 years, various studies explained internationalization in the sense of how do companies internationalize and why. Researchers debated

In order to understand how SMEs internationalizes, the research must explore the different internationalization theories and which of them can be applied by SMEs and those that are more suitable or designed for MNCs. Also explore the concept and theories of internationalization, exploring the barriers that SMEs face in internationalization, understanding how governments support SMEs to expand internationally and then apply this knowledge through an exploratory case study with a focus on U.S. support schemes to SMEs and how it’s compared to MNCs. The order of the literature review is based on a funnel concept where the researcher start exploring broad issues and then zoom in the issues which are related to our topic until discussing specific background that supports our analysis of the conducted

OLI stands for Ownership, Location and Internalization which are three factors that influence a company’s decision for internationalization according to Dunning. The framework was mainly based on the transaction cost theory, but later the researcher added three significant factors to the process of internationalization which are ownership advantages, location advantages and internalization advantages. In order to compete with the host country’s firms in their markets, a company should demonstrate its superior assets that will help the company gain more