Uppsala Model

Although in the literature, the traditional approach to the internationalization of SMEs is based on several theories and models, it is the step-by-step model, and in particular the Uppsala model, which is the most widespread reference. Despite their limitations, these models have the merit of being some of the first to have attracted the attention of the scientific community on the specificities of SMEs. Already these early developments have highlighted a great diversity of the world of SMEs and the difficulties related to over-simplification during conceptualization attempts. After presenting the different currents of the traditional approach as well as its criticisms, we will show the attempts to integrate different models.

1.1. The three theories of the economic approach

Three main theoretical currents are included in the economic approach of the internationalization of companies . In the context of transaction costsand especially the theory of direct investment abroad, the internationalization of companies is seen as a choice between internalization and outsourcing of activities. The company chooses the form of organization that minimizes transaction costs. Critics of this theory emphasize that it helps to understand investment behavior but does not include a vision of long-term international development . The explanation it offers is incomplete. The shortcomings of this theory have also been emphasized by Oviatt and McDougall(1994) with regard to the international development of International New Ventures. In the β€˜β€™Ownership Localization Internationalization Advantages- OLI’’ paradigm developed by Dunning (1988), the decision to enter and the mode of entry into a foreign market depend on three types of benefits. These are the benefits of ownership of the tangible and intangible resources accumulated by the enterprise, those of location related to the institutional and geographical context and those of internalization, ie the ability to a company to coordinate its activities internally. Companies are leading their internationalization process by arbitration between the benefits and risks associated with these different benefits.

Finally, internalization theory sees the internationalization process as a vertical integration upstream or downstream of a company's activities .

Studies undertaken to verify the adequacy of these theories with the process of internationalization of SMEs are not always conclusive . The economic approach only partially explains the process of international business development. The main criticisms concern the fact that this is the application of analytical tools of multinational companies.

They cannot account for the specificities of SMEs related to their structure and operation. The economic approach therefore seems of little use in understanding the internationalization of SMEs.

1- Step-by-step models and behaviorist theory

2.1 Behaviourist Corporate Vision and Organizational Learning - The two basic concepts underpinning Step-by-Step Models

The theoretical framework of the stepwise models is the behaviorist theory of the firm ((Cyert and March 1963). The firm acts on imperfect markets in a short-term perspective, is risk-averse and pursues the logic of survival rather than maximizing profits (Hsu and Pereira 2008). According to this theory, the knowledge of a company relative to the market grows gradually over time because of the high information costs and the limited rationality of the managers. Behaviorist theory studies business behavior as a process composed of well-defined sequences. These sequences are marked by decisions taken on the basis of cumulative knowledge.

The acquisition of knowledge in a company is done through organizational learning.

Most often, it is considered an intentional process undertaken with the aim of improving the performance of a firm. It is carried out by various means widely studied in the literature. In addition to the knowledge acquisition aspect, organizational learning also involves the distribution of information, its interpretation, and organizational memory (Huber 1991).

2.2- The Uppsala model as the essential reference for any internationalization study of SMEs.

The Uppsala model (U-model) developed by the Swedish school (Johanson and Wiedersheim-Paul 1975, Johanson and Vahlne 1977) in the seventies remains today the reference in the study of the internationalization of SMEs. Internationalization is thought of as a progressive process, which takes place through stages. The authors have distinguished four: the company does not have regular export activities (1), exports via an independent agent (2), the implementation of a sales subsidiary (3) and production in the foreign country (4).

Resource commitment is gradual and incremental based on the information and experience gained.

The U-model is based on two fundamental concepts which are psychological distance and gradual learning. Psychological distance is defined as "factors preventing or disturbing the flows of information between firm and market "(Johanson and Wiedersheim-Paul, 1975: 308). These include, for example, language, level of education, how to make business, culture or industrial development (Johanson and Vahlne 1977). Although it is often correlated with geographical distance, it can change with developments in the media and more generally with social changes.

Psychological distance influences the choice of the country of entry and the resources committed to international development. It can decrease as the company operates in the foreign market.

The second concept on which the U-model rests is that of the gradual learning which is at the source of the incremental character of internationalization. Indeed, the mechanism of internationalization is "the consequence of a process of incremental adjustments to changing conditions of the firm and its environment" (Johanson and Vahlne 1977: 26). A company entering a foreign market is faced with great uncertainty. Moreover, the risk associated with the commitment of resources, which is often irreversible, requires great caution. The mechanism of gradual learning provides an answer to these difficulties through two aspects. First, the opportunities and problems that arise for companies facing the international environment, it can find a response and adopt their routines based on events that occur. Second, it helps to overcome the problems of knowledge acquisition. Depending on how knowledge is acquired, it is possible to distinguish two kinds. The objective knowledge, which can be learned and the tacit knowledge (experiential knowledge) that can only be transmitted (Penrose 1959). The tacit knowledge about foreign markets is a critical factor in the process of internationalization. It is more difficult to acquire but at the same time it gives the framework to perceive and exploit opportunities in foreign markets. Gradual learning allows the acquisition of knowledge and especially tacit knowledge in a progressive way, adapted to the possibilities of the company.

The purpose of the U-model is to explain how an organization learns and how this learning influences its investment behavior . First, it describes the static aspect of an internationalized business. This aspect is composed of market knowledge and operations and market commitment. Market knowledge can be general (marketing methods, common characteristics of customers) or specific (market structure, business climate, characteristics of individual customers). This last type of knowledge can only be obtained by working on the given market, that is to say by experience. For its part, the commitment of a company in foreign markets is measured by the quantity and degree of resources committed. There is a direct link between the two aspects of the static view of an internationalized enterprise. Indeed, the higher the quality of knowledge, the greater the resources committed to the market.