1. bookVolume 25 (2017): Issue 4 (December 2017)
Journal Details
First Published
30 Mar 2015
Publication timeframe
4 times per year
access type Open Access

How to Successfully Internationalize SMEs from the CEE Region: The Role of Strategies of Differentiation and Education

Published Online: 15 Mar 2018
Volume & Issue: Volume 25 (2017) - Issue 4 (December 2017)
Page range: 2 - 27
Received: 23 Mar 2017
Accepted: 06 Aug 2017
Journal Details
First Published
30 Mar 2015
Publication timeframe
4 times per year

Purpose: The purpose of the paper is to better understand why some SMEs who pursue a niche strategy on the international scale are more effective with a differentiation via innovation while others with marketing differentiation. Methodology: Therefore, the paper studies the effectiveness of different points of differentiation (innovation, marketing) of hidden champion type of companies: (1) from the perspective of the unknowns of the key success factors in the specific market segment, and (2) from the perspective of the professional mindset/education of the strategist. Findings: The results show that differentiation via innovation positively impacts firm performance when there are many market unknowns over key success factors, whereas marketing differentiation positively impacts firm performance when there are few market unknowns over key success factors. On the other hand, when top management earns a business education, the impact of marketing differentiation on firm performance is significant, positive, and strong. The effectiveness of differentiation via innovation does not depend on education. Research limitations/implications: These results mostly consider the hidden champion type of companies, which prefer not to reveal themselves or their data to the public. The transferability of this research is thus limited. Originality/value: This paper studies the hidden champion type of companies, which usually receive little attention from researchers, through the lens of differentiation via innovation and marketing differentiation as two distinct ways of competing as their effectiveness is contingent on the market unknowns.


Adner, R. and Zemsky, P. (2012). Competitive Positioning and Generic Strategies: Revisiting the ‘Stuck in the Middle’ proposition. Working Paper. Tuck Business School.Search in Google Scholar

Adner, R., Csaszar, F.A. et al. (2014). Positioning on a multiattribute landscape. Management Science, 60(11): 2794-2815, https://doi.org/10.1287/mnsc.2014.197810.1287/mnsc.2014.1978Open DOISearch in Google Scholar

Al-alak, B.A. and Tarabieh, S. (2011). Gaining competitive advantage and organizational performance through customer orientation, innovation differentiation and market differentiation. International Journal of Economics and Management Sciences, 1(5): 80-91.Search in Google Scholar

Azimont, F. and Araujo, L. (2007). Category reviews as market-shaping events. Industrial Marketing Management, 36(7): 849-860, https://doi.org/10.1016/j.indmarman.2007.05.01210.1016/j.indmarman.2007.05.012Open DOISearch in Google Scholar

Bantel, K.A. and Jackson, S.E. (1989). Top management and innovations in banking: does the composition of the top team make a difference? Strategic Management Journal, 10: 107, https://doi.org/10.1002/smj.425010070910.1002/smj.4250100709Search in Google Scholar

Barrett, R. (2016). A New Psychology of Human Well-Being: An Exploration of the Influence of Ego-Soul Dynamics on Mental and Physical Health. Lulu. com.Search in Google Scholar

Bartelsman, E., Scarpetta, S. et al. (2005). Comparative analysis of firm demographics and survival: evidence from micro-level sources in OECD countries. Industrial and Corporate Change, 14(3): 365-391, https://doi.org/10.1093/icc/dth05710.1093/icc/dth057Open DOISearch in Google Scholar

Bartlett, W. and Bukvič, V. (2001). Barriers to SME growth in Slovenia. MOST: Economic Policy in Transitional Economies, 11(2): 177-195, https://doi.org/10.1023/A:101220641478510.1023/A:1012206414785Open DOISearch in Google Scholar

Baum, J.A. (1999). Organizational ecology. In: S.R. Clegg and C. Hardy (eds.), Studying Organization: Theory and Method. Sage. Baum, J.A. and Singh, J.V. (1994). Organization-environment coevolution. In: Evolutionary dynamics of organizations. Oxford University Press.Search in Google Scholar

Bergh, D.D. (2001). Executive retention and acquisition outcomes: A test of opposing views on the influence of organizational tenure. Journal of Management, 27(5): 603-622, https://doi.org/10.1177/01492063010270050610.1177/014920630102700506Open DOISearch in Google Scholar

Berson, Y., Nemanich, L.A. et al. (2006). Leadership and organizational learning: A multiple levels perspective. The Leadership Quarterly, 17(6): 577-594, https://doi.org/10.1016/j.leaqua.2006.10.00310.1016/j.leaqua.2006.10.003Open DOISearch in Google Scholar

Bower, J.L. (1986). Managing the resource allocation process: A study of corporate planning and investment. Harvard Business Press.Search in Google Scholar

Burgelman, R.A. (1983). A process model of internal corporate venturing in the diversified major firm. Administrative Science Quarterly, 28: 223-244, https://doi.org/10.2307/239261910.2307/2392619Open DOISearch in Google Scholar

Burton, R.M. and Obel, B. (1998). Strategic organizational diagnosis and design: Developing theory for application. Springer, https://doi.org/10.1007/978-1-4684-0021-210.1007/978-1-4684-0021-2Open DOISearch in Google Scholar

Calof, J.L. (1993). The impact of size on internationalization. Journal of Small Business Management, 31(4).Search in Google Scholar

Carmin, J. and VanDeveer, S.D. (2005). EU enlargement and the environment: institutional change and environmental policy in Central and Eastern Europe. Psychology Press.Search in Google Scholar

Carpenter, M.A. and Fredrickson, J.W. (2001). Top management teams, global strategic posture, and the moderating role of uncertainty. Academy of Management Journal, 44(3): 533-545, https://doi.org/10.2307/306936810.2307/3069368Open DOISearch in Google Scholar

Carpenter, M.A., Geletkanycz, M.A. et al. (2004). Upper echelons research revisited: Antecedents, elements, and consequences of top management team composition. Journal of Management, 30(6): 749-778, https://doi.org/10.1016/j.jm.2004.06.00110.1016/j.jm.2004.06.001Open DOISearch in Google Scholar

Chandler, A.D. (1962). Strategy and structure: Chapters in the history of the American enterprise. Cambridge: Massachusetts Institute of Technology.Search in Google Scholar

Chen, X., Ender, P., Mitchell, M. and Wells, C. (2003). Regression with SPSS. Obtained from http://www.ats.ucla.edu/stat/spss/webbooks/reg/default.htm .Search in Google Scholar

Contractor, F.J., Kumar, V. et al. (2007). Nature of the relationship between international expansion and performance: The case of emerging market firms. Journal of World Business, 42(4): 401-417, https://doi.org/10.1016/j.jwb.2007.06.00310.1016/j.jwb.2007.06.003Open DOISearch in Google Scholar

Coviello, N.E. and McAuley, A. (1999). Internationalisation and the smaller firm: a review of contemporary empirical research. MIR: Management International Review, 39(3): 223-256.Search in Google Scholar

Cui, G. and Liu, Q. (2001). Emerging Market Segments in a Transitional Economy: A Study of Urban Consumers in China. Journal of International Marketing, 9(1): 84-106, https://doi.org/10.1509/jimk. DOISearch in Google Scholar

Datta, D.K. and Rajagopalan, N. (1998). Industry structure and CEO characteristics: An empirical study of succession events. Strategic Management Journal, 19(9): 833-852. https://doi.org/10.1002/(SICI)1097-0266(199809)19:9<833::AID-SMJ971>3.0.CO;2-V10.1002/(SICI)1097-0266(199809)19:9<833::AID-SMJ971>3.0.CO;2-VSearch in Google Scholar

Dawes, J. (1999). The relationship between subjective and objective company performance measures in market orientation research: further empirical evidence. Marketing Bulletin - Department of Marketing Massey University, 10: 65-75.Search in Google Scholar

Dickson, P.R. and Ginter, J.L. (1987). Market Segmentation, Product Differentiation, and Marketing Strategy. Journal of Marketing, 51(2): 1-10, https://doi.org/10.2307/125112510.2307/1251125Open DOISearch in Google Scholar

Dillon, W.R. and Goldstein, M. (1984). Multivariate Analysis. Methods and Applications. John Wiley & Sons, Inc.Search in Google Scholar

Donaldson, L. (2001). The Contingency Theory of Organizations. Thousand Oaks, CA, Sage Publications, https://doi.org/10.4135/978145222924910.4135/9781452229249Open DOISearch in Google Scholar

Doyle, P. and Saunders, J. (1985). Market segmentation and positioning in specialized industrial markets. The Journal of Marketing, 49(2): 24-32, https://doi.org/10.2307/125156210.2307/1251562Open DOISearch in Google Scholar

Duncan, R.B. (1972). Characteristics of organizational environments and perceived environmental uncertainty. Administrative Science Quarterly: 313-327, https://doi.org/10.2307/239214510.2307/2392145Open DOISearch in Google Scholar

Field, A. (2000). Discovering Statistics using SPSS for Windows. Sage Publications. Search in Google Scholar

Fred van Raaij, W. and Verhallen, T.M. (1994). Domain-specific market segmentation. European Journal of Marketing, 28(10): 49-66, https://doi.org/10.1108/0309056941007578610.1108/03090569410075786Search in Google Scholar

Garbarski, L. (2014). Creating Value for the Organization through Marketing. Management and Business Administration. Central Europe, 4(127): 60-69, https://doi.org/10.7206/mba.ce.2084-3356.11910.7206/mba.ce.2084-3356.119Search in Google Scholar

Gavetti, G., Levinthal, D.A. et al. (2005). Strategy making in novel and complex worlds: the power of analogy. Strategic Management Journal, 26(8): 691-712, https://doi.org/10.1002/smj.47510.1002/smj.475Search in Google Scholar

Flynn, P.M., Tan, T.K. et al. (2017). Redefining Success: Integrating Sustainability into Management Education. Oxford: Taylor & Francis Group.10.9774/gleaf.9781351268806Search in Google Scholar

Hagedoorn, J. and Cloodt, M. (2003). Measuring innovative performance: is there an advantage in using multiple indicators? Research Policy, 32(8): 1365-1379, https://doi.org/10.1016/S0048-7333(02)00137-310.1016/S0048-7333(02)00137-3Search in Google Scholar

Hambrick, D.C. and Mason, P.A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2): 193-206.Search in Google Scholar

Hayes, A.F. (2013). Introduction to Mediation, Moderation, and Conditional Process Analysis. A Regression- Based Approach. New York: The Guilford Press.Search in Google Scholar

Herrmann, P. and Datta, D.K. (2002). CEO successor characteristics and the choice of foreign market entry mode: An empirical study. Journal of International Business Studies, 33(3): 551-569.10.1057/palgrave.jibs.8491031Open DOISearch in Google Scholar

Herrmann, P. and Datta, D.K. (2005). Relationships between Top Management Team Characteristics and International Diversification: an Empirical Investigation*. British Journal of Management, 16(1): 69-78, https://doi.org/10.1111/j.1467-8551.2005.00429.x10.1111/j.1467-8551.2005.00429.xOpen DOISearch in Google Scholar

Heshmati, A. (2001). On the growth of micro and small firms: evidence from Sweden. Small Business Economics, 17(3): 213-228, https://doi.org/10.1023/A:101188612891210.1023/A:1011886128912Open DOISearch in Google Scholar

Hill, C.W.L. (1988). Differentiation versus Low Cost or Differentiation and Low Cost: A Contingency Framework. The Academy of Management Review, 13(3): 401-412.Search in Google Scholar

Hitt, M.A., Tihanyi, L. et al. (2006). “International diversification: Antecedents, outcomes, and moderators. Journal of Management, 32(6): 831-867, https://doi.org/10.1177/014920630629357510.1177/0149206306293575Open DOISearch in Google Scholar

Huber, G.P. and Glick, W.H. (1993). Organizational change and redesign: Ideas and insights for improving performance. Oxford: Oxford University Press.Search in Google Scholar

Ingram, T., Kraśnicka, T., Wronka-Pośpiech, M., Głód, G. and Głód, W. (2016). Relationships Between Miles and Snow Strategic Types and Organizational Performance in Polish Production Companies. Journal of Management and Business Administration. Central Europe, 24(1): 17-45, https://doi.org/10.7206/jmba.ce.2450-7814.16210.7206/jmba.ce.2450-7814.162Open DOISearch in Google Scholar

Kirzner, I.M. (1999). Creativity and/or alertness: A reconsideration of the Schumpeterian entrepreneur. The Review of Austrian Economics, 11(1): 5-17, https://doi.org/10.1023/A:100771990586810.1023/A:1007719905868Open DOISearch in Google Scholar

Klepper, S. (1996). Entry, exit, growth, and innovation over the product life cycle. The American Economic Review, 86(3): 562-583.Search in Google Scholar

Klepper, S. and Graddy, E. (1990). The evolution of new industries and the determinants of market structure. The RAND Journal of Economics, 21(1): 27-44, https://doi.org/10.2307/255549110.2307/2555491Open DOISearch in Google Scholar

Kor, Y.Y. (2003). Experience-based top management team competence and sustained growth. Organization Science, 14(6): 707-719, https://doi.org/10.1287/orsc.14.6.707.2486710.1287/orsc.14.6.707.24867Open DOISearch in Google Scholar

Koźmiński, A.K. (2015). Management in the Time of »Generalized Uncertainty« the Question of Revelvance. Management and Business Administration. Central Europe, 23(4): 2-10, https://doi.org/10.7206/mba.ce.2084-3356.15410.7206/mba.ce.2084-3356.154Open DOISearch in Google Scholar

Laloux, F. (2014). Reinventing Organizations: A Guide to Creating Organizations Inspired by the Next Stage in Human Consciousness. Brussels: Nelson Parker.Search in Google Scholar

Lattin, J., Carroll, J.D. and Green, P.E. (2003). Analyzing Multivariate Data. Brooks/Cole. Thomson Learning, Inc. Search in Google Scholar

Lee, J. and Miller, D. (1996). Strategy, Environment and Performance in Two Technological Contexts: Contingency Theory in Korea. Organization Studies, 17(5): 729-750, https://doi.org/10.1177/01708406960170050210.1177/017084069601700502Open DOISearch in Google Scholar

Lee, K.S., Lim, G.H. et al. (1999). Dealing with resource disadvantage: Generic strategies for SMEs. Small Business Economics, 12(4): 299-311, https://doi.org/10.1023/A:100808531024510.1023/A:1008085310245Open DOISearch in Google Scholar

Lee, K.S., Lim, G.H. et al. (2001). Generic marketing strategies for small and medium-sized enterprises- conceptual framework and examples from Asia. Journal of Strategic Marketing, 9(2): 145-162, https://doi.org/10.1080/0965254012217610.1080/09652540122176Open DOISearch in Google Scholar

Levinthal, D.A. and March, J.G. (1993). The myopia of learning. Strategic Management Journal, 14(S2): 95-112, https://doi.org/10.1002/smj.425014100910.1002/smj.4250141009Open DOISearch in Google Scholar

Lewis, M.W. and Grimes, A.I. (1999). Metatriangulation: Building theory from multiple paradigms. Academy of Management Review, 24(4): 672-690.Search in Google Scholar

Mallick, D.N. and Chaudhury, A. (2000). Technology management education in MBA programs: a comparative study of knowledge and skill requirements. Journal of Engineering and Technology Management, 17(2): 153-173, https://doi.org/10.1016/S0923-4748(00)00019-910.1016/S0923-4748(00)00019-9Open DOISearch in Google Scholar

Manolova, T.S., Eunni, R.V. et al. (2008). Institutional environments for entrepreneurship: Evidence from emerging economies in Eastern Europe. Entrepreneurship Theory and Practice, 32(1): 203-218, https://doi.org/10.1111/j.1540-6520.2007.00222.x10.1111/j.1540-6520.2007.00222.xOpen DOISearch in Google Scholar

March, J.G. (1991). “Exploration and exploitation in organizational learning. Organization Science, 2(1): 71-87, https://doi.org/10.1287/orsc.2.1.7110.1287/orsc.2.1.71Open DOISearch in Google Scholar

McKiernan, P. and Purg, D. (2013). Hidden Champions in CEE and Turkey. Springer. https://doi.org/10.1007/978-3-642-40504-410.1007/978-3-642-40504-4Open DOISearch in Google Scholar

Miller, D. (1982). Evolution and revolution: A quantum view of structural change in organizations. Journal of Management Studies, 19(2): 131-151, https://doi.org/10.1111/j.1467-6486.1982.tb00064.x10.1111/j.1467-6486.1982.tb00064.xOpen DOISearch in Google Scholar

Miller, D. (1988). Relating Porter’s business strategies to environment and structure: Analysis and performance implications. Academy of Management Journal, 31(2): 280-308, https://doi.org/10.2307/25654910.2307/256549Open DOISearch in Google Scholar

Miller, D. (1991). Stale in the saddle: CEO tenure and the match between organization and environment. Management Science, 37(1): 34-52, https://doi.org/10.1287/mnsc.37.1.3410.1287/mnsc.37.1.34Open DOISearch in Google Scholar

Miller, D. and Shamsie, J. (1999). Learning across the life cycle: Experimentation and performance among Hollywood studio heads. Academy of Management Proceedings. Academy of Management, August (Meeting Abstract Supplement).10.5465/apbpp.1999.27594645Search in Google Scholar

Miller, D. and Toulouse, J.-M. (1986). Chief executive personality and corporate strategy and structure in small firms. Management Science, 32(11): 1389-1409, https://doi.org/10.1287/mnsc.32.11.138910.1287/mnsc.32.11.1389Open DOISearch in Google Scholar

Miller, D. and Friesen, P.H. (1983). Strategy-making and environment: the third link. Strategic Management Journal, 4(3): 221-235, https://doi.org/10.1002/smj.425004030410.1002/smj.4250040304Open DOISearch in Google Scholar

Parnell, J.A., Lester, D.L. et al. (2000). Strategy as a response to organizational uncertainty: an alternative perspective on the strategy-performance relationship. Management Decision, 38(8): 520-530, https://doi.org/10.1108/0025174001035281110.1108/00251740010352811Search in Google Scholar

Parnell, J.A., Lester, D.L. et al. (2012). How environmental uncertainty affects the link between business strategy and performance in SMEs: Evidence from China, Turkey, and the USA. Management Decision, 50(4): 546-568, https://doi.org/10.1108/0025174121122012910.1108/00251741211220129Open DOISearch in Google Scholar

Pissarides, F. (1999). Is lack of funds the main obstacle to growth? EBRD’s experience with smalland medium-sized businesses in Central and Eastern Europe. Journal of Business Venturing, 14(5): 519-539, https://doi.org/10.1016/S0883-9026(98)00027-510.1016/S0883-9026(98)00027-5Open DOISearch in Google Scholar

Porter, M.E. (1980). Competitive Strategy. New York: Free Press.Search in Google Scholar

Porter, M.E. (1985). Competitive Advantage. New York: Free Press.Search in Google Scholar

Randøy, T. and Goel, S. (2003). Ownership structure, founder leadership, and performance in Norwegian SMEs: implications for financing entrepreneurial opportunities. Journal of Business Venturing, 18(5): 619-637, https://doi.org/10.1016/S0883-9026(03)00013-210.1016/S0883-9026(03)00013-2Open DOISearch in Google Scholar

Ruef, M. and Scott, W.R. (1998). A multidimensional model of organizational legitimacy: Hospital survival in changing institutional environments. Administrative Science Quarterly, 43(4): 877-904, https://doi.org/10.2307/239361910.2307/2393619Open DOISearch in Google Scholar

Scharmer, O. (2009). Theory U: Leading form the Future as It Emerges. San Francisco: Berrett-Koehler Publishers.Search in Google Scholar

Schmidt-Wilk, J., Heaton, D.P. et al. (2000). Higher education for higher consciousness: Maharishi University of Management as a model for spirituality in management education. Journal of Management Education, 24(5): 580-611, https://doi.org/10.1177/10525629000240050510.1177/105256290002400505Open DOISearch in Google Scholar

Schumpeter, J.A. (1947). The creative response in economic history. The Journal of Economic History, 7(02): 149-159, https://doi.org/10.1017/S002205070005427910.1017/S0022050700054279Open DOISearch in Google Scholar

Sidor, J. (2015). Debate Over Rigor and Relevance in Scientific Study of Management. Management and Business Administration. Central Europe, 23(3): 32-46, https://doi.org/10.7206/mba.ce.2084-3356.14910.7206/mba.ce.2084-3356.149Open DOISearch in Google Scholar

Simon, H. (1996a). Hidden champions : Lessons from 500 of the world’s best unknown companies. Boston (Mass.): Harvard Business School Press.Search in Google Scholar

Simon, H. (1996b). You don’t Have to be German to be a “Hidden Champion”. Business Strategy Review, 7(2): 1-13, https://doi.org/10.1111/j.1467-8616.1996.tb00118.x10.1111/j.1467-8616.1996.tb00118.xOpen DOISearch in Google Scholar

Simon, H. (2009). Hidden champions of the twenty-first century: The success strategies of unknown world market leaders. Springer Science & Business Media, https://doi.org/10.1007/978-0-387-98147-510.1007/978-0-387-98147-5Open DOISearch in Google Scholar

Smith, W.R. (1956). Product Differentiation and Market Segmentation as Alternative Marketing Strategies. Journal of Marketing, 21(1): 3-8, https://doi.org/10.2307/124769510.2307/1247695Open DOISearch in Google Scholar

Svetličič, M., Jaklič, A. et al. (2007). Internationalization of small and medium-size enterprises from selected central European economies. Eastern European Economics, 45(4): 36-65, https://doi.org/10.2753/EEE0012-877545040210.2753/EEE0012-8775450402Open DOISearch in Google Scholar

Thomas, A.S., Litschert, R.J. et al. (1991). The performance impact of strategy-manager coalignment: An empirical examination. Strategic Management Journal, 12(7): 509-522, https://doi.org/10.1002/smj.425012070410.1002/smj.4250120704Open DOISearch in Google Scholar

Tripsas, M. and Gavetti, G. (2000). Capabilities, cognition, and inertia: Evidence from digital imaging. Strategic Management Journal, 21(10-11): 1147-1161, https://doi.org/10.1002/1097-0266(200010/11)21:10/11<1147::AID-SMJ128>3.0.CO;2-R10.1002/1097-0266(200010/11)21:10/11<1147::AID-SMJ128>3.0.CO;2-RSearch in Google Scholar

Tushman, M.L., Newman, W.H. et al. (1986). Convergence and upheaval: Managing the unsteady pace of organizational evolution. California Management Review, 29(1): 29-44, https://doi.org/10.2307/4116522510.2307/41165225Open DOISearch in Google Scholar

Verhees, F.J. and Meulenberg, M.T. (2004). Market orientation, innovativeness, product innovation, and performance in small firms. Journal of Small Business Management, 42(2): 134-154, https://doi.org/10.1111/j.1540-627X.2004.00102.x10.1111/j.1540-627X.2004.00102.xOpen DOISearch in Google Scholar

Waldman, D.A., Ramirez, G.G. et al. (2001). Does leadership matter? CEO leadership attributes and profitability under conditions of perceived environmental uncertainty. Academy of Management Journal, 44(1): 134-143, https://doi.org/10.2307/306934110.2307/3069341Open DOISearch in Google Scholar

Wally, S. and Baum, J.R. (1994). Personal and structural determinants of the pace of strategic decision making. Academy of Management Journal, 37(4): 932-956, https://doi.org/10.2307/25660510.2307/256605Open DOISearch in Google Scholar

Weiner, N. and Mahoney, T.A. (1981). A model of corporate performance as a function of environmental, organizational, and leadership influences. Academy of Management Journal, 24(3): 453-470, https://doi.org/10.2307/25556810.2307/255568Open DOISearch in Google Scholar

Wiersema, M.F. and Bantel, K.A. (1992). Top management team demography and corporate strategic change. Academy of Management Journal, 35(1): 91-121, https://doi.org/10.2307/25647410.2307/256474Open DOISearch in Google Scholar

Xie, Y. H. and T. Suh (2014). Perceived resource deficiency and internationalization of small-and medium-sized firms. Journal of International Entrepreneurship, 12(3): 207-229, https://doi.org/10.1007/s10843-014-0121-910.1007/s10843-014-0121-9Open DOISearch in Google Scholar

Recommended articles from Trend MD

Plan your remote conference with Sciendo