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PALGRAVE STUDIES OF
INTERNATIONALIZATION
IN EMERGING MARKETS
International Business and

Emerging Economy Firms
Volume II:
European and African Perspectives
Edited by
Jorma A. Larimo · Marin A. Marinov
Svetla T. Marinova · Tiina Leposky
Palgrave Studies of Internationalization
in Emerging Markets
Series Editors
Marin Marinov
Aalborg University
Aalborg, Denmark
Svetla Marinova
Aalborg University
Aalborg, Denmark
Emerging market nations such as Russia, Brazil, China, South Africa
and India as well as Eastern European territories, are in the process of
changes and growth that require specific study and attention. The inter-
national business strategies employed in these territories target new
opportunities, the study of which provides scholars the opportunity to
evolve international business theory.
Covering three main themes—international business, management
and marketing—Palgrave Studies of Internationalization in Emerging
Markets will encompass a multiplicity of topics. Examining the new
ways in which firms from emerging economies develop and implement
their internationalization strategy, as well as their management and mar-
keting strategies, the series will encompass specific issues such as social
entrepreneurship, operations and regional specifics of international-
ization. Looking closer at the specifics underlying the development of
emerging market nations and their firms, this series aims to shed light
on the current and future issues associated with the challenges and
opportunities offered by the varying contexts of emerging markets.
More information about this series at

http://www.palgrave.com/gp/series/15456
Jorma A. Larimo · Marin A. Marinov ·
Svetla T. Marinova · Tiina Leposky
Editors
International
Business
and Emerging
Economy Firms
Volume II: European and African
Perspectives
Editors
Jorma A. Larimo Marin A. Marinov
Faculty of Business Studies Aalborg Business School
University of Vaasa Aalborg University
Vaasa, Finland Aalborg, Denmark
Svetla T. Marinova Tiina Leposky

Department of Business and Management School of Marketing and Communication
Aalborg University University of Vaasa
Aalborg, Denmark Vaasa, Finland
ISSN 2662-1185 ISSN 2662-1193 (electronic)

Palgrave Studies of Internationalization in Emerging Markets
ISBN 978-3-030-27284-5 ISBN 978-3-030-27285-2 (eBook)
https://doi.org/10.1007/978-3-030-27285-2
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature
Switzerland AG 2020
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Cover illustration: Maria Kazanova/Alamy Stock Vector
This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Contents
1 International Business and Emerging Economy Firms:

The Contexts of Central and Eastern Europe and Africa 1
Svetla T. Marinova, Jorma A. Larimo, Tiina Leposky
and Marin A. Marinov
Part I European Perspectives on the Internationalization

of Emerging Economy Firms
2 The Role of Responsible Business Practices

in International Business Relationships Between
SMEs from Developed and Emerging Economies 17
Maria Uzhegova, Lasse Torkkeli and Maria Ivanova-Gongne
3 West Meets East: Lessons Learned from

Misunderstandings During Market Expansion in Russia 61
Vincent Montenero
v
vi Contents
4 Job Creation of Exporters and Non-exporters:

Evidence from Estonia 103
Tiia Vissak and Jaan Masso
5 Determinants of Foreign Direct Investment in Serbia:

Is the Concept of Distance Relevant? 129
Natasa Grujic and Dimitrios Kyrkilis
6 An Acceptance Model for the Adoption of Smart

Glasses Technology by Healthcare Professionals 163
Dilek Özdemir-Güngör, Müge Göken, Nuri Basoglu,
Amir Shaygan, Marina Dabić and Tugrul U. Daim
Part II African Perspectives on the Internationalization

7 Empirical Evidence of an Inclusive Business Model:

Lessons Learned from Aquaculture in Tanzania 197
Anders Anker-Ladefoged, Thomas Varberg
and Daojuan Wang
8 Internationalising SMEs and Social Networks

in the Global South 231
Jackson Musona, Agnes Asemokha, Lasse Torkkeli
and Pasi Syrjä
9 The Nexus of Knowledge Sharing and Innovations

in the Informal Sector: The Case of Otigba Hardware
Cluster in Nigeria 275
Emmanuel M. Ogunjemilua, Billy A. Oluwale,
Oluseye O. Jegede and Blessing F. Ajao
Index 301
Notes on Contributors
Blessing F. Ajao is a Ph.D. degree holder and Researcher at the

National Centre for Technology Management, an agency at the Federal
Ministry of Science and Technology, Nigeria. In 2015, she was the
African winner of the Emerging Economies Doctoral Student Award
at the 26th Annual Conference of the Production and Operations
Management Society, Washington, DC, the USA. She has published
in journals. Her research interests are strategic alliances in the Nigerian
telecommunications industry, entrepreneurship and innovation in the
informal sector.
Anders Anker-Ladefoged holds an M.Sc. degree in International
Business Economics from Aalborg University, Denmark. He has inter-
national business experience from Kenya, Tanzania and Uganda.
Currently he works on value chain analysis, market analysis and strate-
gic planning, primarily in agribusiness. Research interests include topic
associated with bottom of the pyramid and global value chains.
Agnes Asemokha is a Ph.D. student at Lappeenranta University of
Technology, Finland. Her main research interests include business
models, internationalisation of small and medium-sized enterprises

vii
viii Notes on Contributors
(SMEs), and international entrepreneurship. Her research on business

models and internationalisation of SMEs was presented at international
business conferences.
Nuri Basoglu is Professor at Izmir Institute of Technology, Turkey.
He has many years of experience as Professor at Bogazici University,
Turkey and Visiting Scholar positions at Portland State University, the
USA and Copenhagen Business School, Denmark. He received his
B.Sc. degree in Industrial Engineering from Bogazici University, and
his M.Sc. and Ph.D. degrees in Production Management from Istanbul
University, Turkey. His research interests include technology adoption,
applications of wearable technologies in healthcare and technological
innovation.
Marina Dabić is Professor at the University of Zagreb, Croatia and
Nottingham Trent University, the UK, author of more than 200 arti-
cles and case studies, and has edited five books; the latest of which is
a co-authored book entitled Entrepreneurial Universities in Innovation-
Seeking Countries: Challenges and Opportunities, published by Palgrave
Macmillan. She has published over 150 papers in journals and confer-
ence proceedings. Her papers appear in a wide variety of international
journals, including the Journal of International Business Studies, Journal
of World Business, Journal of Business Ethics, International Marketing
Review, European Management Journal, Thunderbird International
Business Review, International Journal of Physical Distribution Logistic
Management and Management International Review among many
others.
Tugrul U. Daim is Professor and Director of the Technology
Management Doctoral Programme at the Maseeh College of
Engineering and Computer Science of Portland State University, the
USA. He is also Director of the Research Group on Infrastructure
and Technology Management and Faculty Fellow at the Institute for
Sustainable Solutions. US Department of Energy, National Science
Foundation, National Cooperative Highway Research Program, and
many other regional, national and international organisations have
Notes on Contributors ix
funded his research. He has published over 200 papers in journals and
conference proceedings. He edited more than numerous special issues in
journals and more than 20 books and conference proceedings. He is the
Editor-in-Chief of IEEE Transactions on Engineering Management.
Müge Göken is Research Assistant at Istanbul Technical University,
Turkey with interest in industrial and product design. She received
her B.Sc. and M.Sc. degrees in Industrial Design from Middle East
Technical University, Ankara, and Izmir Institute of Technology respec-
tively, both in Turkey. Her research interest is adoption of smart glasses
in medical industry.
Natasa Grujic graduated with a B.Sc. degree from the Faculty of
Economics at the University of Belgrade, Serbia. Her M.A. degree in
Politics and Economics was awarded by the University of Macedonia,
Greece. She has a Ph.D. degree in Economics. Her research is on transi-
tion countries from South-East Europe.
Maria Ivanova-Gongne teaches International Marketing. Her research
interests include business-to-business marketing management, particu-
larly the aspects of business interaction, managerial sensemaking, and
culture in international business-to-business relationships and net-
works. Her work has appeared in academic journals such as Industrial
Marketing Management, Scandinavian Journal of Management, Journal of
Business and Industrial Marketing and European Management Journal.
Dr. Oluseye O. Jegede is the African Research Fellow at the Centre
for Science, Technology and Innovation Indicators (CeSTII), Human
Science Research Council (HSRC), Cape Town, South Africa. He works
also as a Research Fellow at African Institute for Science Policy and
Innovation, Obafemi Awolowo University, in Nigeria.
His main areas of research are science, technology and innova-
tion policy, inclusive industrialization and Economic Development.
Dr. Jegede has published numerous articles on STI policy, innovation
management and innovation systems. He is reviewer to several interna-
tional journals and was guest editor of the Innovation and Development
x Notes on Contributors
Journal’s special issue and book on Firm-Level Innovation in Africa:

Overcoming Limits and Constraints and he is currently associate editor
with African Journal of Science, Technology, Innovation and Development
published by Routledge, Taylor and Francis Group, UK.
Currently, Dr. Jegede is a member of the Scientific Board of the
Global Network for the Economics of Learning, Innovation and
Competence Building Systems (Globelics) and an active member of
Africalics. He is a member of the Technical Advisory Committee of the
National Board for Technology Incubation in Nigeria as well as a mem-
ber of the Scientific Council of African Innovation Summit II.
Dr. Jegede was a Principal Investigator on Open Africa Innovation
Research (Open AIR) Grant on “Understanding the Nexus Between
Knowledge Dynamics and Innovation in the Informal Economy” and
the Nigerian Partner on the African Network for the Economics of
Learning, Innovation and Competence Building Systems (Africalics)
Seed Funding Research Grant on “Work Organisation, Competence
Building and Innovation in Formal and Informal Micro-enterprises in
Africa.”
Dimitrios Kyrkilis is Professor of International Business and
Economic Development at the Department of Balkan, Slavic and
Oriental Studies of the University of Macedonia, Greece. He is Dean
of the School of Economics and Regional Studies, University of
Macedonia and has served as Head of the Department of Balkan, Slavic
and Oriental Studies of the postgraduate program M.A. in Politics and
Economics of Eastern and Southeastern Europe, and Senior Economist
of the Black Sea Trade and Development Bank.
Jorma A. Larimo is Professor of International Marketing at the
University of Vaasa, Finland. He is Vice Dean of the School of
Marketing and Communication and Head of the Doctoral Programme
of Business Studies at the University of Vaasa. He is also the leader of
the FIGSIB, the joint doctoral programme of the Finnish Universities
in the International Business field. His research interests include the
internationalisation of small and medium-sized enterprises as well as
foreign entry strategies of multinational enterprises, especially, via for-
eign direct investments, mergers and acquisitions and formation of
Notes on Contributors xi
international joint ventures. He has edited six books in the field of

International Business. His has published in numerous journals, includ-
ing International Business Review, Journal of International Business
Studies, Journal of International Marketing, Management International
Review, Journal of World Business, Journal of Global Marketing, Journal of
East-West Business, and Journal for East European Management Studies as
well as chapters in several edited books. He is on the editorial board of
five international journals.
Tiina Leposky is Assistant Professor at the University of Vaasa,
Finland, in the School of Marketing and Communication within the
International Business and Marketing Strategies research group. Her
research areas include servitisation of international and global compa-
nies, customer value creation in sales relationships across borders, digi-
tal applications, Internet of Things or multi-actor platforms in customer
relationship management, and value co-creation and service provision
with impoverished people. Her research has been published in the
Journal of Strategic Marketing and Journal of Transnational Management.
Marin A. Marinov is Professor of International Business at Aalborg
University, Denmark. He has thought and conducted research in
many countries on the both sides of the Atlantic and in Asia including
Bulgaria, the United Kingdom, the United States of America, Denmark,
Finland, Sweden, France, Germany, Austria, Portugal, Spain, Italy and
China among others. His research interests include the internation-
alisation of businesses as well as management and marketing of mul-
tinational firms in general and in particular internationalising firms
originating from emerging economies, areas in which he has researched
and published at length over many years. He has consulted for numer-
ous multinational companies and national governments on country and
firm-specific strategies in the processes of internationalisation as well as
in the area of business education. He is Book Series Co-Editor of the
Palgrave Studies of Internationalization in Emerging Markets and Routledge
Frontiers in the Development of International Business, Management and
Marketing. He has published in more than thirty academic journals
including International Marketing Review, European Journal of Marketing,
Thunderbird International Business Review, and Journal of Marketing
xii Notes on Contributors
Management among many others. He is on the editorial boards of several

scholarly journals and periodicals, has published eighteen books, numer-
ous book chapters and more than 90 academic articles.
Svetla T. Marinova was awarded a Ph.D. degree in International
Business from Copenhagen Business School, Denmark. She is Professor
in International Business and International Marketing and Head of the
International Business Centre at Aalborg University, Denmark. Her
key research interests include the motives and strategies for firm inter-
nationalisation and the associated with them business models, institu-
tional and resource capital enabling international activities. Her research
has also explored multiple research areas including the internationalisa-
tion strategy of firms from emerging economies and their internation-
alisation motives, inducement and speed of internationalisation. She
has published more than eighty papers in scholarly journals, including
International Marketing Review, Management and Organization Review,
Journal of World Business, International Business Review, Research in
Marketing, European Journal of Marketing, and Thunderbird International
Business Review among numerous others. She is Book Series Co-Editor
of the Palgrave Studies of Internationalization in Emerging Markets
and Routledge Frontiers in the Development of International Business,
Management and Marketing and has published eleven books and many
book chapters exploring institutions and internationalisation, corpo-
rate strategy, and internationalisation of emerging economies and firms
among numerous other areas. She has been on international evaluation
and advisory boards on business education in numerous countries.
Jaan Masso is Senior Researcher of Applied Econometrics at the
University of Tartu, Estonia. He was awarded a Ph.D. degree in
Economics from the same university in 2005. His main research
areas are labour economics, foreign direct investments, innova-
tion, international trade and research policy. He has published in
the Journal of Comparative Economics, European Journal of Industrial
Relations, Economics of Transition, Scottish Journal of Political Economy,
International Business Review, Review of World Economics among
others. His empirical research makes use of a wide set of different
individual-level and firm-level datasets.
Notes on Contributors xiii
Vincent Montenero after holding several international commercial

and managerial functions, he obtained an M.Sc. degree in Intercultural
Management. In the past, he managed the negotiation of several co-op-
eration agreements in Central and Eastern Europe and led two projects
in Russia. In 2017, he was awarded a Ph.D. degree in Management
dedicated to Russia from Paris Dauphine University, France. He was
Adjunct Professor for the Master of Management of European Affairs
at Lille 1 University, France, in the period 2012–2016. He has taught
at Mendel University, Brno, Slovakia, since January 2018. His research
interests relate to Central and Eastern Europe, especially to the conse-
quences of the encounter of different national and corporate cultures.
Jackson Musona is Junior Researcher at the School of Business and
Management of Lappeenranta University of Technology, Finland, and
works in within the Safe Water for All research platform that researches
the provision of cost-efficient frugal innovations for new businesses in
emerging economies. Jackson’s research focus is on the internationalisa-
tion of small and medium-sized enterprises, sustainable business mod-
els, value co-creation and frugal innovation within bottom of pyramid
markets, specifically in Africa. He co-authored and presented two con-
ference papers at international business conferences.
Emmanuel M. Ogunjemilua was awarded Ph.D. degree from
Obafemi Awolowo University, Nigeria in 2019. He is Researcher at
The Open African Innovation (OPENAIR) and an African finalist of
the Emerging Economies Doctoral Student Award (EEDSA) at the 27th
Annual Conference of Production and Operations Management Society
(POMS), Florida, the USA. He has published in journals. His key
research areas are innovation, industrial technology management, inclu-
siveness and informal sector development.
Billy A. Oluwale is Research Fellow at the African Institute for
Science Policy and Innovation (AISPI), Obafemi Awolowo University,
in Ile-Ife, Nigeria. He is an active member of the African Network for
the Economics of Learning, Innovation, and Competence Building
Systems (AfricaLics) and the Global Network for the Economics of
Learning, Innovation, and Competence Building Systems (GlobeLics).
xiv Notes on Contributors
His research areas include technological capability building in the for-

mal and informal sectors, indigenous technological innovation, and
innovation management.
Dilek Özdemir-Güngör is Lecturer at Health Management
Department of İzmir Katip Çelebi University (İKCU), Turkey. She has
published papers on project management and management of tech-
nology. Before joining İKCU, she was Assistant Professor at Beykent
University, Turkey and performance metrics expert in the company Yapı
Kredi Bankası, Turkey. She received her B.Sc., M.Sc. and Ph.D. degrees
in Management Engineering from İstanbul Technical University,
Turkey.
Amir Shaygan is Ph.D. student at the Department of Engineering and
Technology Management at Portland State University, the USA. He
received his B.Sc. and M.Sc. degrees in Industrial Engineering focusing
on multi-criteria decision making in healthcare projects selection. His
research interests include technology management and quality improve-
ment in healthcare organisations.
Pasi Syrjä is Professor of Accounting at the School of Business and
Management, Lappeenranta University of Technology, Finland. His
research areas include financial and management accounting in small
and medium-sized enterprises and especially their digitalisation.
Additionally, his research also includes social value creation, social entre-
preneurship and sustainable business models. His work has been pub-
lished in twenty academic journals, including International Journal of
Entrepreneurial Venturing, International Journal of Entrepreneurship and
Small Business as well as International Journal of Law and Management.
Lasse Torkkeli is Associate Professor at the School of Business and
Management of Lappeenranta University of Technology, Finland. His
key areas of expertise are internationalisation of small and medium-sized
enterprises, their networks, and partnerships, as well as the role of
dynamic skills and culture in international business. He has published
research papers in conference proceedings and academic journals,
including Journal of International Entrepreneurship, European Journal of
Management and International Journal of Procurement Management.
Notes on Contributors xv
Maria Uzhegova is Junior Researcher at the School of Business and

Management of Lappeenranta University of Technology, Finland. Her
research interests focus on the firm’s international business relation-
ships with specific emphasis on the internationalisation of small and
medium-sized enterprises, business ethics and sustainability. She has
published in the Journal of East-West Business and International Journal
of Multinational Corporation Strategy.
Thomas Varberg earned his Master Degree in Economics and Business
Administration from Aalborg University, Denmark, in 2017. He works
for Uponor, a leading global provider of systems and solutions in the
fields of hygienic drinking water delivery, energy-efficient heating and
cooling, and reliable infrastructure. His research interests include
emerging economies from a regional perspective and topically mergers
and acquisions.
Tiia Vissak is Senior Researcher of International Business at the
School of Economics and Business Administration, University of Tartu,
Estonia. She defended her Ph.D. thesis at the University of Tartu in
2003. Her key research interest is internationalisation, especially non-
linear internationalisation (full and partial exits and re-entries, also
serial nonlinear internationalisation). Her work has been published in
International Business Review, Journal of International Entrepreneurship,
Review of International Business and Strategy, Journal of East-West
Business among other journals and as book chapters.
Daojuan Wang is Assistant Professor at Aalborg University, Denmark.
She defended her Ph.D. in 2016 at Aalborg University. Prior to pursu-
ing her academic career, she worked as investment analyst, and Assistant
Financial Manager at the Bank of China. Her current research interests
include mergers and acquisitions, investments, firm internationalisation,
and innovation from a financial perspective. She has published arti-
cles in the Journal of Business Ethics, Thunderbird International Business
Review, Sustainability, Chinese Business Review, as well as books chapters.
List of Figures
Fig. 3.1 Misunderstanding process—synopsis 71

Fig. 3.2 Causal diagram of the internationalization project 90
Fig. 3.3 Misunderstandings—general setting 91
Fig. 4.1 Estonian firms’ hiring rates in 2007–2015 117
Fig. 4.2 Estonian firms’ separation rates in 2007–2015 117
Fig. 4.3 Estonian firms’ job flow rates in 2007–2015 118
Fig. 4.4 Estonian firms’ annual wage costs per employee,
1996–2016 (in EUR) 118
Fig. 4.5 Estonian firms’ number of employees (years 1–21
after starting activities, period 1996–2016) 119
Fig. 4.6 Estonian firms’ export survival rates (years 1–20
after starting exporting, period 1996–2015) 120
Fig. 4.7 Estonian firms’ overall survival rates (years 1–20
after starting activities, period 1996–2015) 121
Fig. 5.1 FDI inflows to manufacturing and services sectors,
million € selected years, 2003–2015 (Source Authors’
calculation based on FDI Markets Official Webpage) 131
Fig. 5.2 FDI inflows to manufacturing subsectors, million €
selected years, 2003–2015 (Source Authors’ calculation
based on FDI Markets Official Webpage) 131
xvii
xviii List of Figures
Fig. 5.3 FDI inflows to services subsectors, million € selected years,

2003–2015 (Source Authors’ calculation based on FDI
Markets Official Webpage) 132
Fig. 6.1 Research model 172
Fig. 7.1 Data analysis process 208
Fig. 7.2 An example of themes formation 209
Fig. 7.3 Towards an inclusive business model of aquaculture
development: The hub model 219
List of Tables
Table 2.1 A comparison of Finland and Russia (The World Bank

2014; Transparency International 2016; Cleantech
Group 2017; SolAbility 2017; World Economic
Forum 2017) 26
Table 2.2 Description of the interviewed companies 30
Table 2.3 Quotes of Finnish SMEs regarding business ethics
in international business 44
Table 2.4 Summary of the RBPs in Finnish and Russian SMEs 45
Table 3.1 List of interviews 65
Table 3.2 Relations to first Russian partner (Case 1) 73
Table 3.3 Relations to second Russian partner (Case 2) 75
Table 3.4 Relation to the mother company (holding) (Case 3) 77
Table 3.5 Relations to the local representatives of the customer
(Case 4) 79
Table 3.6 Relations between supplier and customer (Case 5) 80
Table 3.7 Relations between customer and competitor (Case 6) 82
Table 3.8 Cultural behaviours 84
Table 3.9 Blocking behaviours 85
Table 3.10 Perception of the others 86
Table 4.1 An overview of studies on job creation 106
xix
xx List of Tables
Table 4.2 Estonian firms’ job creation, destruction

and reallocation rates in 2007–2015 113
Table 5.1 Scoring coefficients (method regression, based
on varimax rotated factors) 144
Table 5.2 World Bank governance data to measure ID
(Kaufmann et al. 1999) 144
Table 5.3 Linear regression at country level with Hofstede
type cultural index 147
Table 5.4 Linear regression for manufacturing sector
with Hofstede type cultural index 148
Table 5.5 Linear regression for services sector with Hofstede
type cultural index 149
Table 5.6 Linear regression for medium-high technology
industrial subsector with Hofstede type cultural index 150
Table 5.7 Linear regression for low technology industrial
subsector with Hofstede type cultural index 150
Table 5.8 Linear regression for low knowledge intensive
service sector with Hofstede type cultural index 151
Table 5.9 Linear regression for high knowledge intensive
service sector with Hofstede type cultural index 152
Table 6.1 Profile of participants 174
Table 6.2 Blocks’ unidimensionality 175
Table 6.3 Correlation values and square roots of AVE values 176
Table 6.4 Hypothesis testing 178
Table 6.5 Direct, indirect and total effects 179
Table 7.1 List of interviewees 207
Table 7.2 Farmer constraints identified in this study based
on London et al. (2010) 213
Table 8.1 SME comparison 258
Table 8.2 Data structure 261
Table 9.1 Socio-economic characteristics of the enterprises
in Otigba cluster 285
Table 9.2 Knowledge sharing processes in the Otigba cluster 286
Table 9.3 Knowledge acquisition process in the cluster 287
Table 9.4 Type and nature of innovations in the cluster 288
Table 9.5 Knowledge dynamics and innovativeness
in the cluster 289
Table 9.6 Knowledge acquisition and innovativeness
in the cluster 291
List of Appendices
Appendix 5.1 Factor analysis/correlations 155

Appendix 5.2 Factor loadings (pattern matrix) and unique variance 155
Appendix 5.3 Factor analysis/correlations 156
Appendix 5.4 Rotated factor loadings (pattern matrix) and
unique variances 156
Appendix 5.5 Factor rotation matrix 156
Appendix 6.1 Variables used in the model testing 185
Appendix 9.1 Chi-square test for enterprise encourages knowledge
sharing and involvement in any kind of innovations 295
Appendix 9.2 Chi-square test for employees’ daily task involve
rotation of task/jobs and involvement in any
kind of innovations 295
Appendix 9.3 Chi-square test for enterprise internal training
programmes and involvement in any kind
of innovations 295
Appendix 9.4 Chi-square test for enterprise preference for employees
with relevant work experience during recruitment
and involvement in any kind of innovations 296
xxi
1
International Business and Emerging
Economy Firms: The Contexts of Central
and Eastern Europe and Africa
Svetla T. Marinova, Jorma A. Larimo, Tiina Leposky
and Marin A. Marinov
The internationalisation of firms from emerging and transition econo-

mies has become a rather debatable area of research in international
business (IB). The debates are often drawn to the issue whether well-
established theories in IB can offer plausible explanations of the motives
S. T. Marinova (*) · M. A. Marinov

Department of Business and Management, Aalborg University,
Aalborg, Denmark
e-mail: svetla@business.aau.dk
M. A. Marinov
e-mail: marinov@business.aau.dk
J. A. Larimo
Faculty of Business Studies, University of Vaasa, Vaasa, Finland
e-mail: jorma.larimo@uwasa.fi
T. Leposky
School of Marketing and Communication, University of Vaasa,
Vaasa, Finland
e-mail: tiina.leposky@uwasa.fi
© The Author(s) 2020 1
J. A. Larimo et al. (eds.), International Business and Emerging Economy
Firms, Palgrave Studies of Internationalization in Emerging Markets,
https://doi.org/10.1007/978-3-030-27285-2_1
2
S. T. Marinova et al.
and approaches used by firms from these economies when interna-

tionalising and serving foreign markets. While such firms are usually
lagging behind in the scope and scale of their international activities
when compared to their developed economy counterparts as they come
from economies that are arguably at the lower stages of the Investment
Development Path (Dunning and Narula 1995; Gorynia et al. 2007;
Bensebaa 2008; Kutzel 2017), many of these firms, especially when posi-
tioned in niche markets, engage in rapid early internationalisation show-
ing enviable agility and adaptability supported by innovative solutions
either targeting specific unmet customer needs or formulating offers that
can satisfy existing needs in new ways and at a lower price point.
Firms that succeed in their international markets are embedded in the
home market resource capital (Child and Marinova 2014) in the form of
natural endowments, knowledge base, technical expertise, and social spaces
(Marinova and Marinov 2017) and are fast learners in the internationali-
sation process. They compensate for resource deficiency through network
attachments in the form of knowledge-based network ties (Masango and
Marinova 2014), social ties in own, family or diaspora spaces, or through
being part of larger business groups or international value chains.
Many of these firms may seek internationalisation to spread risk that is
often higher in their domestic markets, trying to compensate for home mar-
ket or institutional inefficiencies, unpredictability and volatility. While access
to home country resource capital, in its various shapes and forms, is a basis
for the internationalisation of emerging and transition economy firms and a
key compensatory mechanism for limited financial resources, many of these
firms internationalise without having access to home country institutional
capital or even despite the limitations of not having access to such capital
in their home country environment and notwithstanding country-of-origin
liability, supplemented by liability of newness, smallness and outsidership to
Western host market networks. Arguably, they may use composition capabil-
ities that allow ordinary firms with limited ordinary own resources to crea-
tively integrate them with readily available open resources in order to achieve
fast speed of adaptation to international market requirements and favourable
price-value ratios for consumers (Luo and Child 2015).
Whether their success in internationalisation is associated with
specific local production expertise or application of home country
1 International Business and Emerging Economy Firms …
3
resources, or with knowledge, innovation and opportunity creation,

firms from emerging and transition economies demonstrate speed, agil-
ity, and aspiration to “make it happen” in markets and find clients wher-
ever they are and whatever their institutional or resource conditions.
Their internationalisation is not necessarily unidirectional, instead it is
multidirectional often combining market entry, expansion and with-
drawal at one and the same time in relation to a multitude of markets
in search for a portfolio of customers that can secure financial income in
the short, medium and long term.
While industry is indeed an important institutional setting for the
internationalisation of these firms, providing a possible shared learning
and capability development platform in the case of clusters (Lattemann
et al. 2017), more often transition and emerging market firms tend to
compete against those alike as co-operation and joint economic utility
is sometimes perceived as a remnant of the collective socialist past rather
than another way to learn in the market-led present. Nevertheless, there
have been some achievements in this regard in IT clusters, service provi-
sion and manufacturing clusters.
Central and Eastern European

Perspectives on Internationalisation
Central and Eastern European (CEE) companies offer a fascinating
platform for research on internationalisation in transition economies.
The analysis of the internationalisation process of CEE firms can pro-
vide better understanding of the similarities and differences in the path-
ways to foreign market expansion used by CEE firms compared to those
suggested by theories devised on the examples of developed market
firms (Jindra et al. 2015). CEE companies originate from countries on a
range of economic development levels although historically and cultur-
ally they form an area that shares similarities in their geographic posi-
tion and in their economic development post-WWII that allow scholars
to group them loosely together.
According to the statistics in the World Investment Report (WIR
2018), Russia holds a leading position among the transition economies
4
in foreign direct investment (FDI) outflows with US$36 billion

in 2017, an increase of 33% compared to that in 2016). Among the
transition economies second in FDI outflow is Azerbaijan with an
amount just a tenth of the Russian one and standing at US$2.6 bil-
lion. However, defining the exact area under study is challenging, as
the countries in scope are not strictly limited by specific geographic
boundaries or cultural determinants because the latter are often under-
pinned by ethnic similarities and belief systems, among others. For
example, the WIR does not include European Union (EU) countries at
an advanced level of development such as Estonia, Latvia or Lithuania
in transition economies, while in this book these three are consid-
ered as CEE countries and therefore included in the scope of the vol-
ume. Yet the small size and limited economic clout of these countries
hardly makes much of a difference when analysing FDI outflows, as
in 2017 only Poland (with US$3.6 billion) and the Czech Republic
(with US$1.6 billion) exceeded the billion-dollar mark (WIR 2018).
Therefore, with the clear exception of Russia, the CEE area is largely
made up of smaller economies at varying levels of development.
The heterogeneity of the area is also noted in a literature review of
42 studies on the internationalisation of CEE companies in the period
1989–2010 (Wilinski 2013). The review paper draws special attention
to the advantages of Russia and the EU countries in research focusing
on the drivers, processes and entry strategies of internationalising CEE
companies, yet it points to a continuing need to understand why most
CEE companies have not been internationally as successful as compara-
ble companies from the Asia-Pacific region. The underlying reasons for
the international obscurity of companies from the CEE region require
greater scrutiny, especially considering their close proximity to and cul-
tural familiarity with the developed EU markets, which are targets for
the internationalisation of CEE firms (WIR 2018).
Karasiewicz and Nowak (2014) found out that the internationalisa-
tion of Polish firms follows a U-shaped curve and reaping the greater
performance benefits requires time to build international experience and
ownership advantages, and thus most Polish companies are still at an
early stage of internationalisation. Some support, but from a different
perspective, for this is offered by Jankowska and Głowka (2016), who
5
argue that Polish clusters are at an early stage of internationalisation

and have a low level of interaction, therefore, providing fewer opportu-
nities for knowledge exchange, co-operation and experiential learning
than their Western counterparts have. Agreements such as the Visegrad
Group between the Czech Republic, Hungary, Poland and Slovakia have
been set up to bolster co-operation between countries that share histori-
cal and cultural ties but even with such linkages, internationalisation of
business ventures is at a low level. Consequently, a more consolidated
network approach might offer insights into the differences in the inter-
nationalisation of CEE and Asian firms, where business networks have a
well-documented prominent position in firm internationalisation.
The rapid transformation and reforms of transition economies have
forced companies to react differently to the dramatic changes in the
business and institutional environment. Internationalisation has driven
innovation and has forced companies to develop innovation capabilities
(Boermans and Roelfsema 2012). Conversely, the presence of foreign
firms in CEE has had a positive spillover effect and has become a source
of learning in transition economies, where inward FDI has been found
to enhance domestic firms’ internationalisation endeavours (Andreff
and Andreff 2017). Future research is therefore needed on learning—
either learning from more experienced partners, from experience, or
from internal networks. While CEE companies have in general taken
great strides toward internationalisation, a more profound explanation
for their internationalisation performance is still at an early stage of
development.
African Perspectives on Internationalisation

The internationalisation of African firms has generated interest among
scholars due to its paradoxical nature: while many African countries are
rich in resources, their participation in IB operations has been generally
low. The colonial history and its socio-political aftermath can be a viable
explanation of these economic consequences, but the ways in which dif-
ferent African countries have developed and the challenges and oppor-
tunities they face today vary wildly alongside the equally multifaceted
6
cultural and geographical diversity. As African firms have been recently

expanding their operations abroad, more research is needed to uncover
patterns and behaviours that explain both unique cases and the phe-
nomenon of African firm internationalisation as a whole.
WIR (2018) shows that FDI flows in and out of Africa have been
somewhat turbulent. According to the report, FDI inflows to Africa
decreased by 21.5% in 2017 compared with the levels in 2016 due to
weak oil prices and continued effects of the economic downturn, which
hit commodity-exporting economies the hardest. More diversified
exporters such as Morocco, however, were able to attract more FDI. On
the other hand, FDI outflows from Africa increased by 8%, although
this is largely explained by the significant growth of the top five econ-
omies, i.e., South Africa (64.5%), Angola (40.3%), Morocco (65.7%)
and Togo (22.9%) with only Nigeria keeping a flat volume at US$1.3
billion. The FDI outflows target both other African countries and other
countries across the globe.
Internationalisation within Africa remains at low levels in compari-
son to other regions, where intra-regional trade is much more com-
mon (Ngwu et al. 2015). South Africa is an exception, with its MNEs
largely focusing on other African countries. It is regional leader in terms
of FDI outflows—with US$7.4 billion in 2017, followed by Angola
with US$1.6 billion (WIR 2018). This low level of intra-African trade
is surprising as one of the competitive advantages African companies
can develop is operating under uncertainty and navigating institutional
voids and market imperfections (Boso et al. 2019). This is evident in the
case study of the South African Breweries (SAB), where the company
followed an internationalisation path from institutionally and geograph-
ically close African markets to transition economies sharing similar fea-
tures, before moving to developed markets to seek access to resource
capital and minimise its home-country institutional risk exposure (Luiz
et al. 2017). SAB moved its headquarters under a holding company to
the United Kingdom in 2002, where it operated as SABMiller until it
was acquired by Anheuser-Busch in 2016.
The low number of Africa-to-Africa investments is also evident in
mergers and acquisitions (M&A), where domestic M&As accounted for
about 40–50% of all M&As in the period 2009–2013 period, whereas
7
M&As by companies originating from outside Africa accounted for

38–47%, and the remaining 10–15% were intra-African M&As
(Degbey and Ellis 2017). Interestingly, while service firms have received
less scholarly attention as African countries are typically dominated by
natural resource endowments, financial services with a special focus
on banking may provide a most fertile field to examine intra-African
internationalisation (Boojihawon and Acholonu 2013). South African
and Nigerian banks have shown persistent interest in regional expan-
sion with the former enjoying an early-mover advantage substantiated
by capital access, and the latter adopting a long-term orientation, rather
than going head to head with the big global banks (Ngwu et al. 2015).
Understanding the local needs and being able to spot opportunities to
create value for customers can therefore aid African firms to expand
successfully.
Understanding situational needs is especially important as the African
continent offers so much socio-political variety. South Africa stands
out with successful international businesses, such as the paper and
pulp company Sappi, yet, it exhibits unique characteristics due to the
disparities in infrastructure development and other post-apartheid fea-
tures such as healthcare and innovation potential, as well as the min-
eral reserves of gold and diamonds (Goldstein and Prichard 2009).
Culturally, there are big differences between areas with varying degrees
of colonial influence, reflected also in the religious make-up of the dif-
ferent countries. However, arguably more than cultural differences, the
situational variety and uncertainty prevalent in many of these countries
presents difficulties for businesses. Crises and increased investment risk
influence companies’ ability to operate, and this is particularly egre-
gious for micro-, small- and medium-sized companies, which are com-
mon in the African market, as their internationalisation is vulnerable to
currency fluctuations (Balakrishnan 2016). Uncertainty and a degree of
risk tolerance therefore underline African firms’ capability development.
African firms remain largely uncompetitive in global markets and
the reasons for this can be found both externally and internally. A study
on the African airline industry revealed that state protection blocking
market competition together with limited resources, skills and capital
have led to a situation where local airlines are losing competitiveness
8
and only 20% of inter-African air traffic is run by African carriers

(Amankwah-Amoah 2018). Truly understanding this low level implies
that the internationalisation of African firms requires more attention
from scholars and practitioners alike. A review of 54 studies of African
internationalisation (Ibeh et al. 2012) indicates that progress has been
made, although a critical mass of resources and capabilities from big
internationalisers are still needed to boost internationalisation, while
firm-level skill development is critical for African firms. Access to rela-
tional capital is also found to be important and some authors argue
that networks and co-operation with foreign partners could facilitate
internationalisation efforts. Moreover the rapid development of online
businesses can increasingly offer new ways to reach foreign markets that
allow even smaller African firms access to global markets.
The Book
The collection of studies in this book examines the role and influence of
emerging markets from the perspective of Central and East European as
well as African companies. The authors come from different universities,
countries and backgrounds, but they all represent scholarly interest on
how emerging markets are visible in the IB arena. Methodologically, the
approaches used in these studies vary and the book as a whole contains
conceptual and empirical papers, as well as quantitative analyses and
case studies. Understanding emerging markets as active participants,
partners and drivers of IB is still limited and thus the phenomenon rep-
resents a fruitful space for exploratory research using a wide range of
methodological and theoretical approaches.
Chapter 2 of the book discusses how different institutional environ-
ments of developed and emerging economies affect the business prac-
tices of small- and medium-sized enterprises (SMEs). With the current
focus of national institutions on better integrating SMEs into both
international trade and sustainability goals, the chapter investigates
the role played by socially and environmentally responsible business
practices (RBPs) in SMEs’ IB relationships. The qualitative approach
employed in this chapter reveals that environmental responsibility is not
9
prominent in cross-border business relationships between Finnish and

Russian SMEs, while social responsibility in terms of ethics, transpar-
ency and partner responsibility is crucial. The study thus contributes
to the literature on environmental and ethical responsibility in IB and
international entrepreneurship by (1) suggesting that IB relationships
can help raise the ethical behaviour of SMEs from emerging econo-
mies; (2) extending the research on sustainability-related issues in IB
and international entrepreneurship in the context of emerging econo-
mies; and (3) applying an institutional lens to explaining RBP in SME
IB relationships.
The third chapter considers how misunderstandings can be trig-
gered and amplified over time, and how they can influence the out-
come of a Western European corporation subsidiary establishment
in Russia. While conventional literature generally studies the nature
of misunderstandings occurring between two individuals at a given
moment in time, this chapter focuses on a longer chain of commu-
nications. Research demonstrates that difficulties can arise prior to
actual exchanges of information and that approaches promoted by
Intercultural Communications experts do not go far enough to guar-
antee successful intercultural communication between partners. Data
analysis identifies numerous malfunctions in relation to the “other”,
prompting the outbreak of misunderstandings. In addition, intercul-
tural aspects only broaden the recognition of the problem, while specific
partner behaviour can lead to a further blockage of the exchange pro-
cess. This chapter aims to create an overview of the process that might
help define and refine comprehensive management training on how to
deal with cross-cultural misunderstandings that can be resolved rather
than exacerbated.
Chapter 4 offers an interesting viewpoint on IB. The chapter aims to
find out how many and which types of jobs Estonian born global firms,
both exporters and non-exporters have created, and how many and
which types of jobs they have destroyed. Based on firm-level data from
the Estonian Commercial Registry, Statistics Estonia and the Estonian
Tax and Customs office, it shows that non-exporters had the highest job
creation and hiring rates, while the rates of job creation and hiring of
born globals were much lower. On the other hand, non-exporters also
10
had the highest job destruction and separation rates. While in absolute
terms, fast internationalisers (including born globals) were most active
in job creation and, in general, they were also larger than other firms,
the latter managed to grow much more in percentage terms as they were
very small in the beginning. The findings show that born globals had
the highest wage costs per employee and that fast internationalisers’
overall survival and export survival rates were higher than other firms’
rates. Consequently, although born globals’ net job reallocation and job
flow rates were not always positive, their contribution in terms of creat-
ing more highly paid jobs should not be underestimated.
The aim of the fifth chapter is to define the meaning and role of dis-
tance in determining cross border investment transactions. Using the
case of a transition economy, it demonstrates the implementation of a
modified Ghemawat’s culture, administrative, geographic and economic
distance framework for testing the relevance of distance in determin-
ing FDI inflows into a country. The chapter also illustrates how each
of the distance dimensions, i.e. cultural, institutional, geographic and
economic, correlates with FDI into diverse industries categorised by
their technological level into: manufacturing with high technology,
medium high technology, medium low technology, and low technology
sectors, and in services with low-knowledge intensive and high-knowl-
edge intensive sectors. With the exception of institutional distance, the
remaining distance dimensions, i.e. cultural, geographic and economic,
follow Ghemawat’s (2001) propositions. Therefore, the “CAGE distance
framework” in this chapter is being transformed into “CIGE distance
framework”.
Chapter 6 discusses how in recent years, there has been an increase in
the interest from different industries in the adoption of smart wearable
devices in light of their inevitable ubiquity. One type of these devices is
the Augmented Reality Smart Glasses (ARSGs), which can have a great
effect on different areas through providing timely information to users.
One of the industries that can significantly reap the benefits of this
technology is healthcare. However, as healthcare is a multi-dimensional
industry, there is a need for a multifaceted look into the adoption and
acceptance of smart glasses by health professionals. The chapter exam-
ines the acceptance of smart glasses by healthcare professionals based
11
on Technology Acceptance Model (TAM) as there is an imperative for

empirical studies on user perceptions, attitudes and intentions. For this
purpose, five external factors are extracted from the literature and the
field study, these being integration with information systems, external
effects, hands-free features, technological compatibility and documen-
tation. The model is examined by using PLS-SEM methodology and
suggests that documentation has the strongest impact on intention due
to the substitution of paperwork by mobile devices and facilitation of
continuous documentation.
Part II of the book presents African perspectives on internationalisation.
Chapter 7 investigates how foreign firms, local firms and small-
scale farmers can form inclusive business models for the development
of aquaculture in Tanzania. The chapter follows an embedded single
case study design using semi-structured interviews with key inform-
ants. Empirical evidence from the study challenges part of the bot-
tom-of-the-pyramid (BOP) literature, which emphasises co-creation
and bottom-up innovations with the BOP. The chapter suggests that
co-creation is very difficult to perform within aquaculture in Tanzania
due to significant lack of knowledge and severe constraints faced by
small-scale fish farmers. Consequently, the chapter presents a framework
for aquaculture development, referred to as the hub model, to demon-
strate how small-scale fish farmers can be integrated into the local value
chain through a hub firm integrating the resources and capabilities of
a foreign and a local firm. The chapter contributes to BOP literature
by discussing issues of legitimacy and the context-dependent nature of
co-creation. Moreover, it draws attention to constraints excluding many
farmers from the potential benefits of exporting. It shows how foreign
firms can contribute to eliminating those constraints by increasing pro-
ductivity through transferring resources and capabilities via local joint
ventures.
Chapter 8 applies a sociological view to economic activities within
BOP markets. It explores how social networks influence the business
models of internationalizing SMEs in BOP markets. Through analys-
ing the activities of one international SME in Zambia and compar-
ing them to another local SME in South Africa by means of inductive
grounded theory, the chapter presents seven processes that define social
12
embeddedness and five contextual conditions and mechanisms that lead

to embeddedness.
Chapter 9 determines the effect of knowledge sharing on innovations
in the Otigba cluster in Nigeria. The cluster was purposively selected
due to the high-tech business activities in it. The study reveals that the
Otigba cluster is dominated by micro-firms and encourages knowledge
sharing, internal training programmes, and does not give preference to
the experience of employees while hiring them. The employees in the
cluster are exposed to both formal and informal forms of learning and
tasks are allotted to them by close supervision. While adoptive inno-
vation is prominent, it is similar in the innovation types of firms that
share knowledge and those that do not share knowledge. Contrarily, the
innovation types of firms that encourage employee daily task rotation,
internal training programmes and preference for hiring employees with
relevant work experience is significantly different in the cluster. The
implication of the study is that firms should create knowledge sharing
platforms (daily task rotation, internal training and preference for hir-
ing employees with relevant experience) and use agglomeration benefits
such as knowledge spillovers based on their proximity, cost reduction
opportunities and similar innovation activities, among others. It is also
recommended that the government should enact, monitor and evaluate
policies that encourage clustering and encourage knowledge sharing and
openness of activities in Nigerian technology clusters.
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Part I
European Perspectives
on the Internationalization
2
The Role of Responsible Business Practices
in International Business Relationships
Between SMEs from Developed
and Emerging Economies
Maria Uzhegova, Lasse Torkkeli
and Maria Ivanova-Gongne
Introduction
One of the key recent phenomena in the international business domain
is the expectation of increasingly responsible business behaviour from
large multinational companies (MNCs) because of their high p ublic
visibility, generated from NGOs and the media (Campbell 2007).
However, it small- and medium-sized enterprises (SMEs) the pre-
dominant companies in the Organisation for Economic Co-operation
M. Uzhegova (*) · L. Torkkeli

School of Business and Management, LUT University,
Lappeenranta, Finland
e-mail: maria.uzhegova@lut.fi
L. Torkkeli
e-mail: lasse.torkkeli@lut.fi
M. Ivanova-Gongne
Åbo Akademi University, Turku, Finland
e-mail: maria.ivanova@abo.fi
© The Author(s) 2020 17
J. A. Larimo et al. (eds.), International Business and Emerging Economy
Firms, Palgrave Studies of Internationalization in Emerging Markets,
https://doi.org/10.1007/978-3-030-27285-2_2
18
M. Uzhegova et al.
and Development (OECD) and can be defined (using the European

Commission’s definition) as firms with fewer than 250 employees, a
turnover of less than EUR 50 million and an annual balance sheet of
less than EUR 43 million (European Commission 2003).
SMEs are still under-represented in international trade, although
their involvement in international business is believed to enhance
SMEs’ contributions to economic development and social well-
being (OECD 2017). As the World Trade Organization (2016: 150)
states, “SMEs are increasingly required to adhere to codes of conduct and
programmes for sustainable supply chain management, including best
practices on issues such as health and safety, labour rights, human rights,
anti-corruption practices and environmental impact ” to become the
suppliers of MNCs, thus joining larger global interfirm networks
(Buckley and Prashantham 2016) and “global factories” (Buckley
2009). Indeed, actions involving social and environmental responsibil-
ity are becoming more and more important for the SMEs operating in
global supply chains (Upstill-Goddard et al. 2016). However, SMEs’
willingness and capability to adopt responsibility practices often con-
front size-related resource constraints, skill deficits and knowledge
limitations (OECD 2017). Furthermore, SMEs aiming to internation-
alise rapidly are particularly susceptible to these constraints (Knight and
Cavusgil 2004).
Nevertheless, the research literature on responsible business practices
(RBPs) among SMEs has not yet considered such practices in interna-
tional business, especially between emerging and developed economies.
In turn, studies of SME internationalisation and international entre-
preneurship lack explanations for the possible interplay between adopt-
ing RBPs and their role in cross-border business (see Jones et al. 2011).
Hence, there is still limited understanding about the implications of
RBPs in SME internationalisation from both research streams, namely,
responsibility-related studies (often known as business ethics) and inter-
national business studies.
In this study, we aim to respond to these literature omissions by
illustrating the role of RBPs in international business relationships.
In particular, we focus on this question: What implications have the
2 The Role of Responsible Business Practices …
19
differences in RBPs’ manifestations for international business of SMEs

from emerging and developed economies? The empirical part of the study
consists of a qualitative investigation of RBPs in Russian and Finnish
SMEs that have international business relationships in the other coun-
try. We argue that international business relationships and expectations
of the partners from developed economies towards the SMEs from
emerging economies can contribute to greater partnership responsibil-
ity and business ethics, particularly in international relationships but
also in SME operations in general. Campbell (2007) proposes two
reasons why there are likely to be differences in the SME RBPs from
these two countries. The first reason is that companies operating in a
turbulent economic environment (such as Russia) and lacking finan-
cial resources will be less likely to behave responsibly. Another reason
is that a firm is more likely to behave responsibly in an environment
where a normative call for such behaviour is present (e.g., Finland).
Thus, we argue that the differences in formal and informal institu-
tional environments of two countries are reflected in RBPs of SMEs
from these countries and may in some particular way interfere with the
international business activities of these SMEs. Overall, we conclude
that ethics, transparency and a good reputation (partially related to
social responsibility) rather than particular RBPs are highly valued by
the managers of companies originating from the developed economy
when partnering with the emerging economies’ companies. Thus, the
main contribution of our study is to the literature on international
business and business ethics, which we extend by integrating findings
on SMEs, institutional context and comparison of emerging and devel-
oped economies.
In regard to structure, first we outline the literature about interna-
tional business and responsibility. We then describe the empirical
context of this study in terms of the business responsibility and institu-
tional factors in the countries of interest. This is followed by the qual-
itative study, where the actions and opinions of SME managers from
both countries are presented and analysed in detail. We conclude by
discussing the results and their implications for the theory and practice
of SME internationalisation and growth.
20
M. Uzhegova et al.
Theoretical Background
Business Responsibility in International Business
A firm’s business responsibility-related activities are often referred to

as corporate social responsibility (CSR) and include various actions.
Although there is no single widely accepted definition of CSR (either
in business practice or in the academic literature) (Crane et al. 2013),
its activities often include measures towards achieving sustainabil-
ity in economic, social and environmental terms, as presented in the
triple-bottom-line framework (e.g., Elkington 1998).
In the international business research literature, studies of CSR and
sustainable development constitute only ca. 3% of the whole field and
are centred on MNCs and a single-country context (Kolk and Van
Tulder 2010). Among these, several studies demonstrate CSR’s benefits
for MNCs. For instance, CSR commitment in MNCs has been found
to improve their capacity to compete in foreign markets (Bouquet and
Deutsch 2008), while CSR-based product differentiation may lead
to improved export performance for the medium and large compa-
nies from the emerging economies (Boehe and Cruz 2010). Moreover,
MNC’s responsibility may increase consumer and employee trust in the
organisation, which positively affects the firm’s activities in foreign mar-
kets. Supporting this, Hadjikhani et al. (2016) found that CSR used as
a Korean MNC’s marketing strategy, which facilitated the MNC’s entry
into the Chinese market through investments into the social and envi-
ronmental issues in the target country.
Nevertheless, the evidence of CSR implications for international
business is limited, with evidence for the role of responsible business
behaviour in SME’s international activities being even more scarce. A
rare exception is Costa et al.’s (2015) study, which suggests that CSR
principles affect the drivers of competitiveness in SMEs in international
markets, either facilitating or hindering innovation and internationali-
sation efforts depending on the type of innovation. Thus, responsibility
issues in the internationalisation of SMEs are an emerging topic.
21
Responsibility in SMEs
The term corporate in the CSR initialism may misleadingly imply that
the agenda is related to MNCs or human rights issues. However, SMEs
are not simply the smaller versions of their larger counterparts, and thus,
CSR as a term does not capture the approach required for such firms
(Moore and Spence 2006). Indeed, scholars have studied the differences
and features of CSR for SMEs in recent decades (e.g. see Spence 1999;
Jenkins 2004; Preuss and Perschke 2010), as well as drivers and barriers
(see Ellerup Nielsen and Thomsen 2009) and implications for SME per-
formance (e.g., Battisti and Perry 2011). To compare corporations and
small businesses (Jenkins 2004), corporate strategy, control measures,
formal standards, functional expertise and systems are all attributes of
corporations, while for small businesses, maintenance of tactical strat-
egies, individual ways of operating, personal monitoring and holistic
features are characteristic. Consequently, how small companies address
business responsibility issues differs from large corporations’ approaches
(Perrini 2006). This means that research conducted with MNCs is not
easily generalisable for SMEs and hence, in this study, we expect that the
implications for the international business of SMEs might differ from
those identified in the studies conducted in the MNC context.
While implementing standardised and formalised practices devel-
oped for MNCs is not applicable here, SMEs, instead, may address the
call for sustainability through responsible business practices (Ryan et al.
2010). RBP differs from the term CSR in that an SME’s owner/manager
is given the central role in decisions regarding such elements of RBP as
environmental and/or social responsibility. In this study, we adopt the
RBP concept, which better fits an SME context, as an overarching term
to study the social responsibility and environmental responsibility of
SMEs.
Social responsibility is defined broadly to capture the whole variety
of meanings and actions that SMEs possess. Specifically, it includes the
following groups of SME’s socially responsible practices (Larrán Jorge
et al. 2016): (i) philanthropic and voluntary work; (ii) internal activities
focused on improving working conditions; (iii) transparency of policies
22
M. Uzhegova et al.
undertaken by the company; (iv) communications practices aimed at

raising internal and external awareness; (v) activities with customers;
and (vi) activities within the supply chain. Thus, social responsibility
in this study is the activities of the company directed to internal and
external social actors and society as a whole. In turn, the environmen-
tal activities of an SME can be expressed in practices focused on waste
management, environment protection measures (including the recov-
ery/recycling of packaging and/or material), the reduction of water and
noise pollution, related business innovation and obtaining of environ-
mental certifications (i.e., ISO 14001 and EMAS) (ibid.).
Institutional Environment
Economic, political and social factors are shaping CSR activities around
the world (Baughn et al. 2007). Several studies analyse which nor-
mative, cultural-cognitive and regulative elements influence respon-
sibility applying the institutional lens. These include economic
conditions (Campbell 2007) and national, legal and cultural frameworks
(e.g. Matten and Moon 2008). The articulation of responsibility in dif-
ferent countries’ firms is often researched in the light of national differ-
ences both in international business literature (e.g. Demirbag et al. 2017;
Graafland and Noorderhaven 2018; Miska et al. 2018) and business
ethics literature (e.g. Ringov and Zollo 2007; Ho et al. 2012; Ioannou
and Serafeim 2012). The differences are often explained through nations’
levels of economic and social development, cultural profiles and institu-
tional environments. There are two prevailing hypotheses about the rela-
tion between responsibility and a country’s institutional environment.
The institutional substitute theory postulates that firms address a country’s
institutional voids through socially responsible business practices, while
the institutional mirror theory argues that firms’ responsibility actions
result from welfare states that have resources and a culture of care (Koos
2011). Keim (2003) has identified two main groups of institutions that
may influence companies’ responsibility: formal institutions, expressed
in laws, policies and formal agreements accepted by different countries;
and informal institutions, which form behavioural and mental models,
23
informal business practices and routines and are generated by individuals

through cultural heritage, religion or policies.
Differences in socio-political contexts and business environments not
only influence the international business of MNCs, which must adapt
their strategies (including product, capital, labour markets and regula-
tory systems) to fit the institutional contexts of different countries they
operate in (Khanna and Palepu 1997). They have also been found to
affect SME internationalisation (e.g. Manolopoulos et al. 2018). Pisani
et al.’s (2017) literature review into the state of corporate social respon-
sibility in international business pinpoints SMEs as the “new actors”
and calls for more research into institutional factors and underexplored
geographical contexts.
Emerging markets (EM) thus warrant special interest, as the econo-
mies of such markets may suffer from weak institutions and be charac-
terised by a higher level of risk and uncertainty, as opposed to developed
economies. EMs are further characterised by economic development,
liberalisation and the adoption of a free market system (Hoskisson
et al. 2000). In EMs, informal institutions, in particular, may be more
prominent, enabling and facilitating business transactions (Khanna
and Palepu 1997). However, what makes them so special, apart from
the specific economic environment, is the distinct institutional condi-
tions, as the EMs “have developed at least some of the institutions necessary
to encourage commerce. But institutional voids are still common enough to
cause market failures ” (ibid.: 4).
Study by Cheng and Yu (2008) emphasises that CEOs’ actions
towards internationalising SMEs from China are influenced by the
institutions and institutional pressure of both the home and host coun-
tries. Thus, countries with greater institutional pressure enable SMEs to
internationalise abroad more rapidly and aggressively abroad. Indeed,
a home country’s weak informal institutions are known to intensify
SMEs’ exporting, whereas inefficient formal institutions may hinder this
process (Manolopoulos et al. 2018).
Another example is Volchek et. al’s (2013) study, which applies the
Three Pillars of Institutions (Scott 2008) to study the international-
isation of Russian SMEs. In this framework, regulative pillar refers to
rules, laws and sanctions; normative pillar includes certification and
24
M. Uzhegova et al.
accreditation; and cultural-cognitive refers to common beliefs, shared

logics of action and isomorphism. The results reveal that a cognitive
institutional environment influences an SME’s decision to pursue an
internationalisation strategy, while further international growth depends
on the normative institutional environment, with favourable societal
attitudes as the decisive factor (Volchek et al. 2013).
Since it has been accepted in both research fields, we consider insti-
tutional theory and the institutions defined as the “rules of the game
in a society ” (North 1990: 3) as an applicable lens to use in this study.
Zucker (1987: 444) defines the institution as “a rule-like, social fact of
an organized pattern of actions ” and divides institutions into two catego-
ries, both affecting the company’s course of action. The first category is
a macro-social environment formed by regulatory pressure from agencies,
laws, courts, professional associations and interest groups. Another cat-
egory is the inter-organizational relationships with suppliers, customers
and competitors. North (1990) states that the institutional environment
is created with groups of organisations, namely, key suppliers, consum-
ers and regulatory agencies. Combining these two views, we see insti-
tutions affecting SMEs’ responsible business practices and international
business activities both on the macro (and supranational) level and on
the level of inter-organisational relationships.
In this study, we investigate the role of social and environmental
business responsibility in the international business relationships of
SMEs from two countries with distinct levels of economic development
and institutional environments: Finland as a developed economy and
Russia as an emerging one. Although an EM concept is still debated,
Russia is an example of a country with a transitional economy, chang-
ing from a closed to an open market economy in the 1990s, which is in
line with Peng’s EM definition (2003). We expect that the SMEs’ RBPs
in both countries are highly influenced by local social norms, cultural
expectations and the legal framework to which these RBPs are bound.
We thus propose that the differences in the RBPs possessed by the
SMEs in these countries may be reflected in the cross-border relation-
ships of these SMEs.
25
Empirical Context: Finland and Russia

Institutional Environments
Despite Finland and Russia being geographically close and sharing a

mutual border, differences between the two business environments have
been noted in several international business studies, signalling it is a
fruitful research context. The issues studied include business relation-
ships with Russian authorities (Kosonen et al. 2008), corruption in the
Russian business environment (Karhunen and Kosonen 2013a), human
resource management (Minbaeva et al. 2003), intellectual capital man-
agement (Kianto et al. 2013), entrepreneurial orientation (Shirokova
et al. 2016; Bogatyreva et al. 2017) and corporate engagement with
NGOs (Kourula 2010) in the Finnish-Russian context. However, there
is a scarcity of responsibility-related studies which include both Finnish
and Russian firms. A rare exception is a study on the natural environ-
ment-related issues between these developed and emerging economies
in terms of NGO and governmental actor co-operation (Ritvala and
Salmi 2012). Other related evidence is Potepkin and Firsanova’s (2017)
recent investigation into consumer reaction in Finland and Russia to a
company’s CSR initiatives. Table 2.1 compares the institutional envi-
ronments of the two countries.
As indicated in Table 2.1, Finland and Russia differ drastically in
terms of geographical scale, economic indicators and positions in var-
ious rankings. This suggests that Russia as an EM is a more turbulent
and complex environment for business operations, with corruption, tax
rates and access to financing the most problematic factors. By contrast,
Finland, often described as a small and open economy, has ranked first
for several years in institutional development, with highly transparent
and well-functioning public institutions, while Russia is only ranked 83
(The World Bank 2014). Finland is also placed high in the sustainabil-
ity competitiveness ranking, which includes natural capital, social capi-
tal, resource management, intellectual capital and governance efficiency,
while also having a lower CO2 emission per capita. Orientation on clean
technologies and energy efficiency is still low in Russia (39 out of 40),
with Finland ranking among the top countries in this regard.
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which carry the war fever from one country to another. I regret that
Sir Charles should have so small an opinion of my intelligence as to
think that my country would make so trivial a use of me.”
“I can’t stand all this talk,” muttered the Rear-Admiral, and he went
away and all night long paced up and down the sands on the other
side of the island, imagining that he was once more serving his King
and country on his own quarter-deck.
VII: PLANS
In secret the indomitable servant of his country made himself a boat,
a coracle of palm branches and mud, and when, a week later, they
came in sight of land and Ultimus put in close to have a good look at
it and the little white city built by the mouth of a river, he put off in it
without so much as saying good-bye or thank you for the hospitality
he had received.
“He will come back,” said Siebenhaar; “he will come and try to annex
the island. No Fattish officer can resist an island and the Fattish
have been known to waste thousands of lives in order to add a bare
rock or a pestilential swamp to their Empire. It is an amiable lunacy
which my unhappy race, who cannot appreciate their geographical
disadvantage, are trying to emulate. What is the news of the war to-
day?”
“The official reports all agree in saying that there is no further
development. Every capable man in every country is now bearing
arms. All other activity is at a standstill. Stern measures have had to
be taken by the various governments to stop the emigration of
pregnant women to the peaceful countries on the other side of the
world.”
“Ah!” said Siebenhaar, “I thought that would happen, I thought the
women would revolt as soon as war ceased to be an excitement and
became a trade.”
“Some of the Governments,” added Ultimus, “are paying women
over forty-five years of age to go.”
Siebenhaar chuckled.
“It is time we interfered, Ultimus. When they lose their sense of
humour so far as that, it is time for action. We will go to Fatland.
Where are we now?”
“Off the coast of Africa.”
“We will lie out to sea until we have prepared the island against all
dangers. First of all we will blow up the harbour. Then we will mine
the shores all round. We will prepare the rocks on the tops of the
mountains for missiles and we will lay in a great stock of your new
transmissible explosive. We will then block the mouth of the great
Fattish river, and we shall see what we shall see. An intelligent use
of explosives should be able to counteract and if necessary to crush
the fatuous use of them that is now being made. We will try
persuasion, threats, and violence in that order to stop the war, and if
then we cannot succeed we will abandon the human race altogether
and return to our own Southern Seas.”
“You forget,” expostulated Ultimus, “that I was drawn here out of
curiosity as to something else besides the war, and that is, woman.”
“A man,” said Siebenhaar, “bears a grudge against woman for his
birth; he is a fool to burden himself with others against her.”
“As I imagine them,” replied the young man wistfully, “they are
beautiful.”
“Lord, Lord,” cried Siebenhaar, “if only a young man would be
content with his imaginings.”
VIII: IN FATTISH WATERS

The island moved proudly up the Fattish channel, until they came
within sight of the land on either side of it. Here was drawn up a
great array of ships like those which had been destroyed in the
Southern Seas. On the foremost of the ships were hoisted a number
of little flags which Siebenhaar interpreted as saying:
“Good morning. Welcome home.”
Now, the fragmentary message recorded by the wireless gave the
clue to the purport of this signal. There had been a great rally of the
Fattish Empire, one colony had sent sacks of flour, another black
currants, another black men, another brown sugar; all came to the
aid of the motherland in her need, all forgot their grievances and
vowed that they never would be slaves. In the face of such a
demonstration no doubt as to whether the Fattish empire really
existed could survive. Men who would not admit black, brown, or
yellow men to their clubs welcomed them to their trenches. Such
unity, such loyalty, such brotherhood, must lead to victory. But victory
was slow in coming and it was becoming difficult to maintain interest
in the war, when, suddenly, there burst upon the Fattish public the
news that the lost island was responding to the call and even now
coming to place its unique powers of motion at the service of the
Emperor-King. The miraculous had happened. Once more it was
obvious that the right was on the Fattish side. Once more the streets
of Bondon were thronged as on the eve of the declaration of war.
The map of the world with the red blot made by George Samways
was taken down and copies of it were sold for the Imperial relief
fund. It was supposed that George Samways, the only hero of the
last war, was on the island and had induced it to return to the fold.
His downfall was forgotten, his heroism remembered.
Ultimus stopped the island and entered into communication by
wireless with the Fattish fleet.
“Is that Samways Island?”
“Yes.”
“Is George Samways aboard?”
“No. His son and his friend, Siebenhaar.”
“What nationality is Siebenhaar?”
“Fatter.”
“He must be taken prisoner.”
“Nonsense. He is an ex-engineer, now a philosopher.”
“Fatter philosophers are writing the most scurrilous abuse of the
Fattish.”
“Siebenhaar has been for the last twenty years on the island.”
“Tell him to change his name before landing, or he will have to
register.”
“We have no intention of landing.”
“We did not get your last message correctly.”
“We have no intention of landing.”
“Don’t understand. May we send a deputation?”
Ultimus replied:
“I will receive one Cabinet Minister and the most beautiful woman in
Fatland. I shall be in the mouth of the river by two o’clock. You had
better move your ships and be very careful of the backwash. I
understand that the shores of the channel are strewn with wrecks.”
Frantic messages then passed between the ships and the Admiralty
in Bondon. It would be extremely awkward to have the island in the
river, blocking the channels to the port, but the public were thinking
of nothing but the island, and, in default of George Samways, were
quite prepared to take his son to be their darling. There must not be
a hint anywhere of the possibility of the island’s being, after all,
disloyal. The Fattish had been very reticent about their relations with
God, whereas the Fatters had claimed him as their ally. The Fattish
had been favored with miracles, even as the Children of Israel. It
was decided to retain the miracle in the face of all risks and Mr.
Samways was promised that a Cabinet Minister accompanied by the
most beautiful woman in Fatland should call at four o’clock on the
following day.
The fleet turned and steamed away out of sight.
IX: AN AFTERNOON CALL

The acknowledged most beautiful woman in Fatland was none other
than Arabella’s sister. She was fifty-three, but had managed to
preserve her reputation by the discreet publication of her connection
with illustrious men. She had one rival for the honour of the visit to
the island, a lovely creature, a brilliant singer of popular ballads,
who, during the crisis, had carried all before her and swept hundreds
of young men into the army with her famous ditty: “Won’t I kiss you
when you come back home?” However, her claims were disposed of
by Arabella’s sister astutely pointing out that she was the aunt of the
young man on the island, and therefore, if necessary, could be alone
with him in perfect propriety.
In a motor launch she came out with the Lord High Chief of the
Admiralty in full-dress uniform.
No sooner did she set eyes on Ultimus than she burst into tears and
cried that he was the living image of Arabella. She kissed him and he
drew back outraged and cried:
“Don’t do that again.”
Siebenhaar explained:
“Your nephew, madam, has never seen a woman before and is
naturally alarmed. Your voice must sound strangely to his ears and
your costume, if you will forgive me, leaves room for considerable
doubt as to the normality of your anatomy. I think it would be as well
if you made no attempt to reassure him, but allowed him to look at
you and to grow accustomed to you while I engage your companion
in conversation.”
With that he turned to the Lord High Chief and said:
“You can imagine that I am astounded to return after a long absence
to find civilisation plunged once more in the barbarism of war. Surely
no single one of the combatants has anything to gain by it.”
“The war, sir, was not of our seeking.”
“But you were prepared for it?”
“By God we were. I had seen to that.”
“Then you were prepared to join issue in any quarrel that might be
sought?”
“We pledged our word to the Grossians and the Bilgians. Besides,
sir, apart from all that, the Fatters are jealous of our Empire, and they
have deliberately plotted for years to oust us commercially and
politically. They want us wiped off the map. But when it comes to
wiping——”
“Does it ever come to that?” asked Siebenhaar. “Is Athens dead
while Plato lives? Is Rome forgotten while Virgil and Lucretius live in
the minds of men? Was there ever more in Spain than lives in
Cervantes?”
“I don’t know about that,” said the Lord High Chief; “but the Fatters
want to dominate the world.”
“So did Alexander: so did Napoleon: but they wrought their own
ruin.”
“This is too deep for me,” replied the politician. “I want something
that the newspapers can get hold of. I want to know what you are up
to, how you found the island, how it came to move again, and, if it
isn’t a miracle of loyalty, what is it? Also I want to know what your
intentions are, because if you are not here to support us we shall
have to place you both under arrest,—er—that is, after you have
moved the island out of harm’s way.”
Ultimus took Siebenhaar aside and said: “I want to go away. I have
been looking at the woman, and I think she is horrible.”
X: THE MOST BEAUTIFUL WOMAN

The Lord High Chief towards the end of the interview adopted a
peremptory tone and ordered the island to be taken through the
enemy’s minefield and then to blockade the enemy’s fleet. The
island was to be called H.M.S. Samways, to be manned with the
crew of a first-class battleship and commanded by a senior admiral.
Ultimus refused point-blank. He owed nothing to Fatland, and was
not going to have his island or his inventions used in a cause which
he as yet did not understand. The Lord High Chief stormed and
blustered until Siebenhaar told him the truth about Bich’s battle and
the nature of the invention of which Ultimus had spoken. The Lord
High Chief went pale and muttered that he should have thought his
country’s cause good enough for any man. However, since they
were so obstinate, he invited the islanders ashore and undertook to
satisfy their curiosity with regard to the war, or the events which
immediately preceded it. Arabella’s sister proposed that they should
stay in her house, but her invitation was refused.
No sooner had the visitors put off in the launch than Ultimus moved
the island further up the river until all channels were blocked and no
ship could get either in or out.
“Now,” said Ultimus, “they will treat me with respect, and will not rest
content until they have satisfied me and persuaded me to move the
island once more.”
The effect he desired was produced. They were taken up to Bondon
in one of the Royal motor-cars, and a whole floor in one of the most
expensive hotels was placed at their disposal. For the first time in his
life Ultimus slept in a bed and was so hot that he could not bear it.
He rang the bell in the middle of the night and a little chambermaid
appeared.
“Take that thing away,” said Ultimus.
The little chambermaid stared at him.
“I don’t want it. I don’t like it,” he said, glowering at the girl’s face. It
was like a flower, like a star; it was beautiful. Ultimus could not take
his eyes off it. Her eyes smiled back at his amazed curiosity. He
stood and reeled and said:
“I love you.”
“Yes, sir,” replied the little chambermaid.
“My father said the Fattish were false. I asked them to send me the
most beautiful woman in the land and they sent me a hideous old
creature.”
“Yes, sir.”
“Ah! Why did they not send you? We could have gone away at once,
away, away, where there are no old women, no battleships, no
beds.”
The little chambermaid by this time was fascinated, and she stayed
with Ultimus all night, while he talked and told her how he had
desired to see a woman and was now satisfied and never wished to
see another, and how when he had seen the war he and she would
retire to the island.
“Oh, sir,” said the little chambermaid. “And shall I be a Queen? And
won’t the Fatters ever be able to get near the island? They all say
the Fatters do awful things to women.”
Ultimus took her to his breast and they were joined in the mystical
union of a kiss; and for many hours no word passed between them.
In the morning they were disturbed by Siebenhaar, who came in
unsuspectingly, saw what had happened and withdrew discreetly,
gave orders to the management that Mr. Samways was not to be
disturbed, and went out to see Bondon in war-time.
XI: HIGH POLITICS

The streets were full of young men in uniform. In the parks were
young men without uniform being drilled. Except for policemen, hall-
porters, street-scavengers, the town was empty, and when
Siebenhaar asked a policeman why it was so, he was informed that
everybody had gone to look at the island.
Said the constable: “There was nothing like it since I was a boy,
when the war began.”
Siebenhaar was taken aback.
“How long?” he said.
“Well! It’ll be a matter of fifteen years now, though it’s difficult to
remember. It goes on. Things get quiet in the winter. Then it begins
again with the fine weather, with a new list of Fatter atrocities. Then
there’s a new promise from the Emperor of Grossia; then we have
another rally of the Empire and things become livelier.”
“I am astonished,” said Siebenhaar, “that a great free nation like the
Fattish should tolerate such a state of affairs.”
“Bless you,” said the policeman, “I’ve forgotten what peace was like.
There’s a few old gentlemen hold meetings to talk about it, but we’re
used to it by now. I remember there used to be scares about our
being invaded, but they soon came to an end. We all take our spell
at the fighting, and, if we come home, settle down to work of one sort
or another. There’s no doubt about it, the Fatters would make a
nasty mess of things if we didn’t keep them bottled up.”
Siebenhaar protested: “Surely you yourselves are making a nasty
mess of things?”
“Oh!” replied the policeman. “That’s over the water. You soon forget
about it when you get back home. It would be funny, sir, if that there
island were to put a stop to the war. We’d hardly know what to do
with our young men.”
Siebenhaar’s blood boiled. A great nation, with a tradition of
freedom, could acquiesce in such arrest of its life, such wanton
sacrifice of its youth!
He visited the Lord High Chief and found him just out of his bed in a
suit of blue silk pajamas. Breakfast was laid before him and he
offered Siebenhaar coffee. It was refused.
“I am come, sir, to tell you that the island will not be used to assist
you. It will be used to stop the war.”
“Stop the——?”
“As I say.”
“Come, come, sir. The war cannot be stopped until all parties to it
agree to our terms of settlement. It is a matter of high politics, which
it takes an expert to understand. We have the matter well in hand.
The country was told at the beginning that it was to be a long war. It
will be finished when our terms are agreed upon and not before.”
“And those terms are——?”
“They are known to my colleagues and myself. When the settlement
is concluded they will be laid before the country.”
“And have you, sir, during the last fifteen years ever risked your life
on land or sea? Have you suffered in pocket or in health? Have you
been deprived of even a luxury?”
“For fifteen years I have been the hardest worked man in the
country. I have practically lived in this office. When things were going
badly with us I made speeches up and down the country.”
“Asking young men to give their lives and thank God for the privilege
of dying before they had tasted the full sweetness of life.”
“It is their country’s life against theirs.”
“You say so.”
“The Fatters will make an end of us if they don’t.”
“Have you made an end of the Fatters?”
“No. But we will before we have done.”
“Are the Fatter women all stricken with barrenness?”
“Not that I know of.”
“Then you cannot make an end of the race.”
“We can smash their Empire.”
“A word. Can you smash a word? You seem to me, sir, to talk and
act as though a nation were an abstraction instead of a collection of
human beings, bound together by language, manners, and religion.”
“It is a matter of high politics.”
“It seems to me, sir, that war is the logical outcome of your view of
national life, and that a nation without a war is not a nation. I should
imagine that a war greatly facilitates the task of government. The rich
can always be trusted to look after themselves, but the poor are
rendered impotent. I cannot raise a hand to support either such a
view or such a condition. You have attained the ideal of high politics,
the sacrifice of domestic affairs to international relations. I
congratulate you. I decline all further hospitality at your hands. My
young friend has already realized one of his ambitions. I shall
request the Emperor of Fatterland to satisfy the other. We shall go to
Fatterland to-morrow and see the war which you have been able to
confine to other countries.”
“Herr Siebenhaar,” shouted the Lord High Chief, “you shall do no
such thing. The public has taken the island to its heart. You will
consider yourself under arrest.”
Siebenhaar smiled sweetly:
“I have seen the Fattish public take Mr. George Samways to its heart
and I have seen it reject him. I do not think you will arrest me, for,
before leaving the island we arranged an explosion to take place two
days from now in case of our non-return. Such an explosion would
project thousands of tons of rock over your city.”
XII: THE PUBLIC

Ultimus refused to be separated from the lady of his choice, and
when Siebenhaar said he must return to the island the little
chambermaid declared her willingness to go if she could be married
first.
“You need not worry about that,” grumbled Siebenhaar. “There will
be no other women on the island, no one to care whether you are
married or no, no one to bully you if you have dispensed with the
ceremony, and Ultimus has no relations except his aunt, who will
never forgive him for his frankness. I warn you that on our island you
will find none of the excitements of the great hotel, neither the
advantages of society nor its disadvantages.”
“I will come,” said the little chambermaid, “if you will let me tell my
mother that I am married. It would kill her if she thought I was not.”
“A lie more or less in a community is no great matter, since its
existence depends upon lies,” said Siebenhaar.
So the chambermaid wrote to her mother, packed her belongings in
her tin box, and with Siebenhaar and Ultimus was driven in the royal
motor-car to the docks. The last few miles they drove through
enormous cheering crowds, men, women, and children, singing as
they went.
“Won’t I kiss you when you come back home,
My soldier boy!
For my heart is with you as you cross the foam,
My soldier boy!
You are big and you are brave,
From the Huns our homes to save,
Or to find a hero’s grave.
Won’t I kiss you when you come back home!”
A motor launch took them swiftly out to the island and there Ultimus
was proud to show the little house he had built and the gardens he
had made.
In the afternoon they went up to the top of the mountain, where an
amazing sight met their eyes. Through the smoke loomed the towers
and domes and chimneys of the great city, and on the banks of the
river for miles stretched the crowds of people, and others came
along the roads, pouring in on foot, in carts, and wagons. Ultimus
was seized with nausea, which soon gave place to rage and he
stamped his foot on the ground and cried:
“There are too many of them. Let me destroy them.”
But Siebenhaar wept and said:
“Rather destroy those heartless men who herd them like cattle and
rob them of the fruits of their labour and bid them believe in a God
whom they deny, a national idea which they can maintain only by the
destruction of life and the ruin of the nation. Destroy those who
sacrifice beauty to their pleasures, and love to their obstinate pride.
See, the city must be empty now, destroy it.”
Ultimus moved his hand and in one moment the domes, towers and
chimneys of the city disappeared. The island moved and the crowd,
seeing that which they had come to see, clapped their hands and
shouted until the island disappeared.
XIII: THE EMPEROR

In a few hours they were off the coast of Fatterland, and had blocked
up the harbour where the Fatter fleet lay in hiding from the
overwhelming superiority of the Fattish. The Emperor himself, who
had already heard of the destruction of Bondon, came out to greet
them. He had information as to Siebenhaar’s previous career and he
decorated him at sight with a Silver Eagle. To Ultimus he handed an
Iron Cross.
The Emperor was dressed in a large brass helmet, a white suit with
a steel cuirass, and enormous shining boots. He was a little man and
very pompous.
“God,” he said, “has blessed you.”
“How do you know?” asked Siebenhaar.
“God,” said the Emperor, “has preserved the Fatterland, through
me.”
“On this island,” retorted Siebenhaar, “we are accustomed to talk
sense. There would have been no need for God or anybody else to
defend Fatterland if you had not so wantonly destroyed peaceful
relations with other countries.”
The Emperor removed his helmet.
“What a relief!” he said. “No one has ever talked sensibly to me
before. You don’t know how sick I am of being an Emperor with
everybody assuming that I don’t wish to think of anything but my own
dignity. I am not allowed to think or talk of anything else.”
“Has it ever occurred to you,” asked Siebenhaar, “that a dignity
which requires over a million soldiers to maintain it is hardly worth it?
Have you ever thought that the million soldiers are maintained not for
your dignity, but because their housing, their feeding, their
equipment are all exceedingly profitable to a few men?”
“I have often thought that,” replied the Emperor, “but I have never
found a soul willing to discuss it with me. When I meet other
Emperors the same dreadful thought haunts all of us, but none of us
dare speak of it, for we are watched night and day, and what we are
to say to each other is written by young men in the Government
Offices.”
The Emperor began to cry.
“Four million men have been killed since the war began, and
everybody says it is my fault. I didn’t make the war, I didn’t, indeed I
didn’t. It was not in my power to make war, any more than it is in my
power to stop it. Horrible things have been done by the soldiers.”
“Poor wretches!” said Siebenhaar. “How can they be anything but
bestial, deprived as they are of all that makes life sweet?”
“How, indeed?” asked the Emperor. “Thousands have died of
dysentery, or cholera, and enteric and typhoid. Hundreds of
thousands more of starvation and exposure. It is impossible, I tell
you, impossible to prevent organisation breaking down. Contractors!”
He shook his fists. “Ah! There is nothing contractors will not do, from
sending bad food to insisting on being paid for food they have never
sent. Ah! the villains! the villains! And to think that my name is being
execrated throughout the world.”
The Emperor looked about him uneasily.
“And now, Herr Siebenhaar, what am I to tell them on my return?
That your marvellous island is the gift of God to the Fatter people?”
“Say nothing,” replied Siebenhaar, “except that Mr. Ultimus Samways
wishes to see the war. We are neutral territory. If we have damaged
Bondon we have in coming here cleared your minefields and we
propose to keep your fleet bottled up and shall destroy it unless Mr.
Samways returns in safety within a week.”
“We have had a delightful talk and it has been refreshing to me to
discover a philosopher who is greater than an Emperor.”
Siebenhaar laughed and said he looked forward to the day when
capitalists and contractors discovered that the world contained a
power greater than their own.
“I also,” said the Emperor, “possess an island. I shall be happy when
the war is over and I can retire to it and live in peace and devote
myself to the delightful and harmless pursuit of painting bad
pictures.”
He promised that an airship should be sent for Ultimus, and said
good-bye cordially and regretfully. As he put his helmet on he said:
“I have to wear this infernal thing, though it always gives me a
headache.”
“Now,” said Siebenhaar to Ultimus, “you have seen the unhappy
individual who is called the man-eater of Europe.”
“Was that the Emperor?” asked the chambermaid. “Why, they told
me he had a tail and always walked about with bleeding baby’s legs
in his hands!”
XIV: WAR
The airship was a great delight to the inventive genius of Ultimus. He
had it brought to earth on the shore and examined the engines and
propellers, and its ingenious steering apparatus. The officer in
charge of it was discreet and silent, a stiff martial gentleman whose
intelligence and humanity were completely hidden by his uniform. He
had brought a declaration to be signed by Ultimus, saying that he
was a non-belligerent and did not represent any newspaper. For
Siebenhaar he had brought a bundle of newspapers of every country
so that he might read what the nations were saying of each other.
At last Ultimus’ curiosity was satisfied, and he stepped into the
observation car, the engines started purring and the great fish-
shaped balloon rose into the air.
Ultimus was surprised to see how little his island was and when they
passed over into Fatterland he cried:
“Why, there is room for everybody! How wrong I was to hate the
Fattish for being so many! Why do not some of them come and live
here if there is no room for them on their island?”
“They’d have a warm time of it if they did,” said the officer.
“Why? Don’t you like the Fattish?”
“They are pirates and thieves. They are jealous of our honest
commercial success. They and they only are responsible for this war.
They have set half the nations of Europe to attack us, but they attack
in vain. We are glorious warriors, but they are only commercial
travellers.”
“In Fatland,” replied Ultimus, “they say that they are glorious
warriors, but you are only machines. And they say that you are
jealous of their Empire, and for years have been planning to destroy
their fleet.”
“What nonsense!” said the officer.
They had been thousands of feet in the air, often above the clouds.
“We are approaching the western frontier.”
They descended. A booming and roaring came up and a queer
crackling sound. There were flashes of light and puffs of smoke, but
nowhere were there signs of any men save far, far away on the
roads behind the lines of smoke and flashes of light.
“That,” said the officer, “is the war.”
“But where are the men who are doing it?”
The officer pointed to black zigzag parallel lines in the ground.
“They are there. Those are trenches. They are impregnable. Years
ago, at the beginning of the war there was some barbarous fighting
with bayonets, but since we took up those positions there is nothing
but what you see. Each year makes those positions stronger, nothing
can move the armies from them. While the war lasts, they will be
held. Is it not splendid? It is just the same on the eastern frontier,
though the line there is a hundred miles longer. Ah! It is the greatest
war the world has ever seen.”
They came lower until they could see into the trenches. There were
men playing cards, others sleeping; another was vomiting. Another
was buttoning up his trousers when his head was blown off. His body
stood for a moment with his hand fumbling at his buttons. Then it
collapsed ridiculously. One of the men who was playing wiped a card
on his breeches and then played it. Another man went mad, climbed
out of the trenches and rushed screeching in the direction whence
the missile had come.
“I have seen enough,” said Ultimus. “Why do they go there?”
“Because if they did not Fatterland would be overrun with the
savages hired by the Fattish.”
“Would that be worse?”
“It would not last so long,” replied the officer, “but we should have
lost our honour as a nation.”
“That,” said Ultimus, “is exactly how the most beautiful woman in
Fatland talks. What is this honour?”
“It is holy,” said the officer with so fatuously fervent an expression
that Ultimus laughed.
“Does your Highness wish to see the eastern frontier?”
“No, thank you. That is enough.”
The airship soared up. It was now night. The stars came out and
Ultimus mused:
“Out of all the planets why should this be tortured with the life of
men? Is it their vast numbers that drive them mad? Or are they so
vile that war is their normal condition and peace only a rest from it?”
For the first time Ultimus responded to the beauty of the world. They
flew low over mountains, and great rivers and wide valleys. The
variety of it all entranced him, accustomed as he was to the
monotony of the sea and the narrow limitations of the island. Apart
from the horror of war it was amazing to him that men should desert
such loveliness to spend their days in holes dug in the ground.
XV: SIEBENHAAR ON SOCIETY
Meanwhile on the island the philosopher and the chambermaid
lived through difficult hours. The girl wept without ceasing and said if
she had known how dull it was going to be she never would have
come. Remembering Arabella’s dissatisfaction, Siebenhaar said:
“Women have no resources within themselves. They take life too
seriously. It is never amusing to them. Society is organised for their
protection and amusement and they take no interest in it, and let
men, who are only worried or irritated by it, bring it to ruin without a
protest. Women are the criminals who are responsible for everything,
for they encourage men in their vanity and weaken them in their
power. They desire safety, and detest originality, intellect,
imagination.”
The chambermaid sobbed: “I thought it was going to be fun to be a
Queen, but there is no fun in reigning over sticks and stones.”
“Women,” said Siebenhaar, “want their lovers and their babies and
their fun. When they have to choose between the three, they choose
their fun. No. They are not the criminals; it is men who are that for
letting them have their fun to keep them quiet. Oh! Ultimus, that was
a true instinct of yours to destroy them in their thousands!”
XVI: PRACTICAL CONSIDERATIONS

Ultimus was gone exactly a week, during which time he saw all the
preparations for the war, the countless widows and orphans created
by it, the stoppage of other business, the immense activity at
arsenals, boot factories, and cloth mills, and chemical laboratories,
the soup kitchens for the starving, among whom he was horrified to
see thousands of men who had returned maimed from the trenches.
What perhaps appalled him most was the gaiety of the children.
He mentioned this to Siebenhaar on his return. The philosopher said:
“They have been born since the war began and do not conceive of
life being otherwise.”
“It must end,” said Ultimus, and he sank into a deep reverie. The
strangest result of his experience was that the sight of the little
chambermaid filled him with disgust. When he thought of the
peaceful and profoundly stirring existence out of which he and
Siebenhaar had come he could not but contrast it with the obscene
excitement in which he had found her. That she could accept and
welcome his embraces when she knew, as he did not, the bestiality
towards maintaining which the energies of Europe were devoted,
filled him with so bitter an anguish that he could hardly endure the
sight of her. When he thought that he and she might be bringing
another life into a world made so unworthy of human life, then he
thought that he could never forgive her. His impulse was to escape,
to leave the benighted nations to their fate, but, when he thought of
the suffering he had seen, he found that he was bound to them by
more than curiosity. He had seen war and could not rest until he had
done his utmost to expunge it from the minds of men. He had lived in
a pure happiness familiar with all the intellectual discoveries of the
human mind; now he had gained the love of beauty and a more
passionate incentive to live. What room was there now among all
those millions of men for intellect and beauty?
Siebenhaar had made good use of the newspapers.
“It is clear to me,” he said, “that this war happened through stupidity
and jealousy. They all invented excuses for it after the outbreak of
hostilities. There is no reason why it should not end as suddenly as it
began. It is too much to expect men debauched by fifteen years of
war to see reason, but they will understand force. We will use force.”
Together they drew up the following manifesto:
Samways Island,
Off Europe.
We, the undersigned, lately arrived in Europe, on
discovering its unanimous betrayal of civilisation, hereby
declare as follows:
(1) We have destroyed Bondon.
(2) The power which did that will be used against any of
the present belligerents not consenting to lay down their
arms.
(3) Upon the declaration of peace the fleets of the hostile
nations are to be collected and sunk, the guns and
ammunition of the various disbanded armies having first
been laded in them. Neutral nations will then be invited by
us to destroy their fleets and disband their armies.
(4) Nations in future will have no high political relations
with each other except through a central government.
(5) Recognising the natural pugnacity of the human race
and its love of spectacular effect, we suggest that in future
nations which arrive at a complete misunderstanding
should, with the consent of the central government,
declare war on each other for a period of not less than one
week and not more than one month, the nations to place
in the firing line only the incurably diseased, the
incorrigibly criminal, the lunatic and the imbecile, and all of
those convicted of exploitation and profit-sharing.
(6) Not more than two thousand men are to be employed
on either side, and the sphere of operations is to be
narrowly limited. If desired, and to encourage a knowledge
of the horror of war, we suggest that such wars be paid for
by admitting spectators at a price.
(7) Wars are only to take place in August.
(8) Naval war is to be prohibited altogether as too
barbarous. The central government will maintain an armed
fleet for the suppression of pirates.
(9) Weapons and machines designed for the destruction of
human life are only to be manufactured by the central
government.
(10) Acknowledging that follies do not die easily and that
nations at war will always desire territory as a trophy, we
are willing to place the island at the service of the central

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International Business and Emerging

Economy Firms: Volume II: European

International Business and Emerging Economy Firms:

Fashion Marketing in Emerging Economies Volume II:

Sustainable Consumption and Production, Volume II:

China's Expansion in International Business: The

Huawei Goes Global: Volume II: Regional, Geopolitical

China’s Belt and Road Initiative in a Global Context:

New Voices and New Perspectives in International

Facets of India's Economy and Her Society Volume II:

International Business and

More information about this series at

Svetla T. Marinova Tiina Leposky

ISSN 2662-1185 ISSN 2662-1193 (electronic)

Cover illustration: Maria Kazanova/Alamy Stock Vector

1 International Business and Emerging Economy Firms:

Part I European Perspectives on the Internationalization

2 The Role of Responsible Business Practices

3 West Meets East: Lessons Learned from

4 Job Creation of Exporters and Non-exporters:

5 Determinants of Foreign Direct Investment in Serbia:

6 An Acceptance Model for the Adoption of Smart

Part II African Perspectives on the Internationalization

7 Empirical Evidence of an Inclusive Business Model:

8 Internationalising SMEs and Social Networks

9 The Nexus of Knowledge Sharing and Innovations

Blessing F. Ajao is a Ph.D. degree holder and Researcher at the

(SMEs), and international entrepreneurship. Her research on business

Journal’s special issue and book on Firm-Level Innovation in Africa:

international joint ventures. He has edited six books in the field of

Management among many others. He is on the editorial boards of several

Vincent Montenero after holding several international commercial

His research areas include technological capability building in the for-

Maria Uzhegova is Junior Researcher at the School of Business and

Fig. 3.1 Misunderstanding process—synopsis 71

Fig. 5.3 FDI inflows to services subsectors, million € selected years,

Table 2.1 A comparison of Finland and Russia (The World Bank

Table 4.2 Estonian firms’ job creation, destruction

Appendix 5.1 Factor analysis/correlations 155

The internationalisation of firms from emerging and transition econo-

S. T. Marinova (*) · M. A. Marinov

and approaches used by firms from these economies when interna-

resources, or with knowledge, innovation and opportunity creation,

Central and Eastern European

in foreign direct investment (FDI) outflows with US$36 billion

argue that Polish clusters are at an early stage of internationalisation

African Perspectives on Internationalisation

cultural and geographical diversity. As African firms have been recently

M&As by companies originating from outside Africa accounted for

and only 20% of inter-African air traffic is run by African carriers

prominent in cross-border business relationships between Finnish and

on Technology Acceptance Model (TAM) as there is an imperative for

embeddedness and five contextual conditions and mechanisms that lead

(Ed.), Handbook of contemporary research on emerging markets (1st ed.,

M. Uzhegova (*) · L. Torkkeli

and Development (OECD) and can be defined (using the European

differences in RBPs’ manifestations for international business of SMEs

A firm’s business responsibility-related activities are often referred to

undertaken by the company; (iv) communications practices aimed at

informal business practices and routines and are generated by individuals

accreditation; and cultural-cognitive refers to common beliefs, shared

Empirical Context: Finland and Russia

Despite Finland and Russia being geographically close and sharing a

Part I European Perspectives on the Internationalization

Part II African Perspectives on the Internationalization