1. Turun kauppakorkeakoulu • Turku School of Economics
HOW CLOUD SERVICES MAY ENABLE
SMES TO OVERCOME INTERNATIONAL
GROWTH CHALLENGES
Finnish SMEs in the IT industry
Master´s Thesis
in International Business
Author:
Kaarlo Matero Párraga
Supervisors:
D.Sc. Elina Pelto
M.Sc. Riikka Harikkala
21.9.2015
Turku

3. Table of contents
1 INTRODUCTION...................................................................................................5
1.1 The importance of SMEs................................................................................5
1.2 Digitalization era and technology megatrends...............................................7
1.3 Purpose, limitations, and structure of the study ...........................................11
2 CLOUD SERVICES..............................................................................................14
2.1 Defining and describing Cloud services.......................................................14
2.2 The service models of Cloud services..........................................................17
2.3 The deployment models of Cloud services ..................................................19
3 INTERNATIONALIZATION AND INTERNATIONAL GROWTH
CHALLENGES OF SMES....................................................................................22
3.1 Describing Finnish SMEs ............................................................................22
3.2 Market expansion and international growth of SMEs..................................25
3.3 Limiting factors and challenges in international growth of SMEs...............28
3.4 Synthesis: framework on how Cloud services may enable SMEs to
overcome international growth challenges...................................................32
4 RESEARCH DESIGN...........................................................................................35
4.1 Research approach........................................................................................35
4.2 Data collection..............................................................................................39
4.3 Data analysis ................................................................................................45
4.4 Trustworthiness of the research....................................................................48
5 RESEARCH FINDINGS AND DISCUSSION ....................................................51
5.1 Major international growth challenges of Finnish SMEs.............................51
5.2 Benefits and advantages of utilizing Cloud services....................................57
5.3 Challenges and disadvantages of Cloud services.........................................64
6 CONCLUSIONS ...................................................................................................66
6.1 Theoretical implications...............................................................................66
6.2 Managerial implications...............................................................................70
6.3 Suggestions for further research...................................................................73
7 SUMMARY...........................................................................................................75

4. REFERENCES................................................................................................................ 78
APPENDICES ................................................................................................................ 88
List of figures
Figure 1 Changes in volume of gross domestic product by quarter
1991–2014............................................................................................ 6
Figure 2 Results digital evolution index............................................................. 9
Figure 3 The NIST definition of Cloud services .............................................. 15
Figure 4 Companies providing Cloud services and ordinary examples
of them................................................................................................ 17
Figure 5 The choice of entry modes: a decision model .................................... 25
Figure 6 Framework on how Cloud services may enable SMEs to overcome
international growth challenges.......................................................... 33
Figure 7 Research process ................................................................................ 36
Figure 8 The new complementary framework on how Cloud services may
enable SMEs to overcome international growth challenges .............. 67
List of tables
Table 1 Number of companies, personnel, and turnover in Finland between
2007–2012.......................................................................................... 23
Table 2 Number of companies, personnel, and turnover categorized by
company size in Finland in 2012........................................................ 23
Table 3 Limiting factors and challenges in international growth of SMEs..... 31
Table 4 Interview details ................................................................................. 42

5. 5
1 INTRODUCTION
We define Cloud as any IT or business process delivered as a service.
Cloud’s promise is as a growth engine for business. While it can drive
performance efficiencies and service optimization, it also supports rapid
innovation for growth — for us and for our clients. It is clear that Cloud
is going to change the way IT operates, and our strategic imperative is
absolutely that we will remake enterprise IT for the era of Cloud. (Vir-
ginia Rometty, 2014. Chairwoman, President, and Chief Executive Of-
ficer of IBM)
This introduction chapter will start by providing a general overview on the global
economy, the Finnish economy in particular. The underlying reasons why SME are so
important for the economy will be introduced and discussed as well. After this, a solid
background will be given regarding the digitalization era and technology megatrends
companies and individuals are experiencing in one way or another at the moment. The
purpose of this is to make a connection between the reader and the topic in order to
make the reading experience more meaningful for the audience of this study. This intro-
duction will also explain how digitalization and technology have created a suitable at-
mosphere for SMEs to utilize Cloud services, and what is the connection between them.
Finally, the purpose, limitations, and structure of the study will be presented.
1.1 The importance of SMEs
It has already been a few years since the Great Recession which led most developed and
developing economies into depression. At the present time, it seems some economies
such as the U.S. economy are experiencing real growth in their gross domestic product
(GDP) figures compared to previous years, but the situation is not that bright in Europe.
In this context, GDP signifies the market price of the entire production activity and ser-
vices delivered in a certain region including both public and private sector (Statistics
Finland, Tilastokeskus 2015). Most European economies are still battling depression-era
levels of unemployment and the threat of deflation is real. Deflation would be poison
for the European economy and slow down the global economic growth (Matthews
2014).
Net sales figures are decreasing significantly in the case of most European compa-
nies including small, medium-sized, and large companies and corporations. Businesses
lay off personnel as part of cost savings and restructuring programs in an attempt to
remain profitable in this harsh and challenging business environment. The GDP growth

6. 6
rates of BRIC countries (Brazil, Russia, India, and China) are decreasing significantly,
for instance, the annual GDP growth rate in China has reduced from 10 percent to 7.5
percent, and in Russia it is estimated to have a negative growth rate of -5 percent in
2015 being a dramatic GDP contraction. (Barone 2014, 1–2; Matthews 2014.) This is
poison for peripheral economies such as Finland which is a country dependent on ex-
ports (The Confederation of Finnish Industries, EK 2013).
Finland is in an economic recession at the moment. The characteristics of recession
are fulfilled in Finland: exports are declining; investments have shrunk for the third
year; and private consumption declined for the second year consecutively. (Christensen
2014; Kangasharju 2014; Pohjanpalo 2014.) All these factor have had a significant in-
fluence on the Finnish GDP declining and contraction as illustrated in figure 1. Finland
has not completely recovered from the Great Recession and financial crises in 2009.
After a substantial recovery till the end of 2010, the Finnish economic growth has
ceased, reaching negative growth figures meaning GDP contraction. The Finnish GDP
was contracted by 0.2 percent in 2013 and the production volumes fell by 0.1 percent
last year. (Statistics Finland, Tilastokeskus 2015.)
Figure 1 Changes in volume of gross domestic product by quarter 1991–2014
(Changes in volume compared to previous years, Statistics Finland, Ti-
lastokeskus 2015)
The Ministry of Finance (2015, 13–25) states in its financial report that Finland
needs sustainable economic growth to overcome the economic downturn which has per-

7. 7
sisted for a long time. Growth is needed in the domestic market and export-driven in-
dustries. According to the Confederation of Finnish Industries, EK (2014, 3), “entrepre-
neurship and small and medium-sized enterprises (SMEs) are the growth engines for
the Finnish economy.” Finland needs SMEs to enable long-term economic growth, es-
pecially during periods of economic recession.
Although the importance of SMEs in promoting employment and economic growth
is indisputable currently, consensus on defining the term SME globally has not yet been
achieved as different things are meant by it depending on the context (Julien 1993, 157;
European Commission 2005; OECD 2005, 16). SMEs are important and essential
around the world, even though frequently ignored by the business press. Globally,
SMEs account for more than 95 percent of the number of companies, make around 50
percent of the total value added, and generate approximately 60 – 90 percent of em-
ployment depending on the country and geographical location. In addition to these re-
markable figures and rates, they are essential as SMEs today may become multinational
enterprises (MNEs) of tomorrow by increasing turnover, or the number of employees,
or both simultaneously. (Peng 2006, 128–131.)
During the past years SMEs have increasingly internationalized their operations at a
faster pace and have been open to change (Slevin & Covin 1997, 53–68; Knight 2000,
12–32). According to Hall and Khan (2002, 2) and Steinbock (2003, 31–40), technology
development and innovations, for instance in information and communication technolo-
gies, are pivotal to build sustainable economic growth by increasing business of both
domestic and already internationalized companies. Recent digitalization and technologi-
cal development have enabled Finnish SMEs to increase the amount of international
operations significantly and to accelerate the internationalization process as well (The
Confederation of Finnish Industries, EK 2014, 6–7; The Federation of Finnish Technol-
ogy Industries, Teknologiateollisuus 2014, 2–19).
1.2 Digitalization era and technology megatrends
Since the late 90s it has rather often been heard we are living in the digital or digitaliza-
tion era. According to Gartner (2014, 1), digitalization is defined as a rising business
model including the extension and support of electronic channels, content, and transac-
tion. Almost everything people do, for instance, buying, communicating, social interac-
tion, consuming, and reading, it is possible to do in a digital way which is more conven-
ient, flexible, and cost-effective compared to traditional ways of acting and performing.
These are the reasons why traditional practices have decreased significantly and busi-
nesses need to be or become digital to attract and retain customers. (Gartner 2014, 1;
Rastas 2014; Partanen 2015.)

8. 8
In order to understand the impact of digitalization thoroughly, digital evolution in-
dex (DEI) was developed to identify how developing and developed countries compare
against each other in terms of readiness for a digital economy (Chakravorti, Tunnard &
Chaturvedi 2015, 2–3). This index was derived from four main drivers as follows (DEI
2015):
 Supply-side factors, including access, fulfillment, and transactions infrastruc-
ture.
 Demand-side factors, including consumer behaviors and trends and financial,
Internet, and social media savviness.
 Innovations, including the entrepreneurial, technological, and funding eco-
systems, presence and extent of disruptive forces, and the presence of startup
culture and mindset.
 Institutions, including government effectiveness and its role in business,
laws, regulations, and promoting the digital ecosystem.
The resulting digital evolution index (DEI) represents a ranking of 50 countries
which either are the current location of the existing 3 billion Internet users or they are
the location where the next billion users are probably to come from. (Chakravorti et al.
2015, 2–3.) In order to further understand the resulting DEI index (figure 2), countries
were classified to belong to one of four trajectory zones which are categorized as fol-
lows (DEI 2015):
 Stand out countries have demonstrated digital development has been high in
the past and continue to remain in an ascending trajectory.
 Stall out countries have gained a high level of digital evolution previously,
but are losing momentum and pace and they have the risk of falling behind.
 Break out countries have the readiness and potential to develop strong digital
economies.
 Watch out countries are encountering both opportunities and challenges scor-
ing low on both current level and upward movement of their DEI.

9. 9
Figure 2 Results digital evolution index (DEI 2015)
As illustrated in figure 2, Finland, as well as other Nordic countries such as Denmark
and Norway, is classified as a stall out country. This means Finland has developed a
proper and rather good digitalization infrastructure in the past few decades but the mo-
mentum and pace has stagnated. This momentum in digital development enabled Finn-
ish corporations such as Nokia to reach success during the 1990s and early 2000s, but it
did not last very long as Finland started to lose competitiveness in global markets result-
ing in the failure of Nokia´s mobile business (Beaulieu 2010, 1–3). As being a stall out
country, Finland has the potential risk of falling behind as it has already been happening
during the past decade. Finland needs continuous innovations and the ability to adopt
and make us of new technology to progress and keep up with the pace of stand out
countries such as Singapore, Switzerland, and the U.S. (Chakravorti et al. 2015, 3–4.)
Today´s global arena and marketplace are experiencing unprecedented rates of dy-
namism and revolutionary changes, especially in the technology sector. This rapid and
unprecedented change in the global economy is fueled by technology as it is considered
to be the enabler of building and running the systems that are the backbone of the
world´s economy. This affects both directly and indirectly many other industries around
as most businesses utilize technology as part of its value creation chain for consumers.

10. 10
(Jetter 2015.) Technology megatrends have been characterized for being rather fast and
extensive transformative changes concerning all people and businesses that are exposed
to technology. The primary goal and ideology of conducting business to make profits
has remained the same for centuries, but how this is performed and achieved has
changed significantly over time due to technology transformations and innovations.
(Partanen 2015.)
CAMSS is a representational acronym for the current technology megatrends en-
compassing Cloud, analytics, mobile, social, and security. Next, a brief definition and
description of each technology megatrend will be presented based on IBM´s standards
for defining these technology megatrends (IBM 2014).
As previously mentioned, Cloud can be defined as any information technology (IT)
or business process delivered as a digital service which usually requires Internet and
network connection to function (IBM 2014). Cloud services is one of the technology
megatrends shifting today´s way of doing business and the way people tend to interact
with each other. This transformational phenomenon emerged in the early 2000s and it is
gaining market share from traditional hardware IT. (Rometty 2014.) Deeper and more
thorough description of Cloud services encompassing types and characteristics will be
introduced and discussed in chapter 2.
The primary objective of analytics is to discover meaningful patterns in data which
intend to result in relevant information regarding a certain issue. Data and analytics rep-
resent a new era in data exploration and application that will change the way technology
companies and their clients operate, gain insight, and make decisions. By enabling cli-
ents to harness the power of data, service providers can help them grow and succeed.
(IBM 2014.)
Usually a mobile device is defined as a portable gadget usually having remote con-
nection to the Internet such as mobile phones and laptops. Mobile is becoming the pri-
mary mode of transaction and delivery for critical business insight. Mobile provides the
means to securely improve visibility and control, connect with customers in context,
and create new value at the moment of awareness. (IBM 2014.)
Social has transformed the world – evolving from a medium of personal interaction
to an indispensable tool of business and commercial engagement. It has created a fun-
damentally new source of human data enabling businesses and their clients to gain
greater insight into the sentiment, activities, performance, and behaviors of large num-
bers of people. Social is the future of how modern enterprises work. (IBM 2014.)
New innovations and technologies are pushing business transactions increasingly
more out from the company walls making enterprise security more complex. There are
many qualified vendors and service providers to help businesses understand that securi-
ty is not just a thing or a product that can be bought and installed – it is a continuous
process at the heart of the business itself. (IBM 2014.)

11. 11
These technology megatrends can be perceived and experienced in our daily lives at
the moment. According to Partanen (2015), social media, music, online movies, and
games are great examples of industries adopting current technology shifts and trends to
their core businesses, analytics and Cloud service technologies in particular. An average
citizen residing in a developed country may spend even hours during a day utilizing
Cloud services by chatting with friends on Facebook, watching online movies on Net-
flix, or playing Rovio´s or Supercell´s online games such as Angry Birds or Clash of
Clans. These industries can be classified as the early adopters of Cloud service technol-
ogies due to the fact their service and product offerings are delivered via the Internet
(Cloud) to end-users and consumers. It is clear that this prominent technological trans-
formation and breakthrough will happen in other industries as well, but when and how
are questions remaining unanswered at the moment. (Partanen 2015.)
Cloud services and SMEs have a very important connection since some SMEs have
been able to scale up their businesses and achieve international growth of business by
utilizing Cloud services. Furthermore, Cloud services is one of the current technology
megatrends shaping the way business is conducted nowadays. Finnish SMEs such as
Rovio and Supercell are the greatest examples of Finnish companies that used to be
SMEs, but not anymore thanks to the benefits and advantages of Cloud service technol-
ogies. After implementing and utilizing Cloud services to their core business, online
games, they managed to scale up their businesses so vastly that each of them has multi-
billion worth of market value nowadays. (Cutler 2013; Partanen 2015; Peltonen 2015.)
SMEs are expected to encounter growth challenges, especially when expanding to in-
ternational markets. An explanatory reason for this is that SMEs are usually character-
ized by a scarce resource base, meaning they lack of resources such as capital, labor,
and technology (Ahokangas 1998; Honig 2001, 21–35; Keizer, Dijkstra & Halman
2002, 1–13; Komulainen, Mainela & Tähtinen 2006, 526–541). Due to a number of
benefits and advantages of utilizing Cloud services, for instance, more efficient use of
resources and business growth opportunities, SMEs may be able to overcome the chal-
lenges impeding them to grow further (Partanen 2015).
1.3 Purpose, limitations, and structure of the study
The main research question of this study is how Cloud services may enable Finnish
SMEs to overcome international growth challenges. The research question is further
divided into three sub-questions as follows:
 What are the features and characteristics of Cloud services?
 What kind of limitations and challenges do Finnish SMEs experience when
pursuing international growth of business?

12. 12
 What kind of benefits and advantages does the utilization of Cloud services
provide for Finnish SMEs to mitigate and suppress international growth chal-
lenges?
Cloud services are a relatively new phenomenon (Rometty 2014), which explains to
some extent its little research attention in the academic and scientific world. Sriram and
Khajeh-Hosseine (2010) found in Cloud computing systematic literature review that
academia appeared to be lagging behind the rapid development of Cloud computing. It
should be noted that Cloud computing is a full equivalent for Cloud services in this
study.
Most studies related to Cloud services are from the technical point of view (Boss,
Mallidi, Quan, Legregni & Hall 2007), and there is just a limited amount of relevant
Cloud services researches considering this phenomenon from the business and man-
agement point of view (Creeger 2009, 50–56; Iyer & Henderson 2010, 117–131). This
was visible to the researcher when using databases, for instance the EBSCO database, to
gather information about this phenomenon. When searching and using key words and
terms such as international or global, growth or challenges, and Cloud services or Cloud
computing, the database showed only a small number of results and search hits of which
just a few were relevant in the context of this study.
Due to the information and knowledge shortage about Cloud services, significant
amount of data, information, and knowledge related to the Cloud service phenomenon
was reviewed and collected from IBM databases and expert interviews. This complies
with the confidentiality standards, in other words, no IBM or customer sensitive data is
exposed or compromised in this study. The researcher has worked at IBM over the past
18 months which has given him the opportunity to create an understanding about Cloud
services and to develop skills and competencies around them. In addition, IBM is con-
sidered to be the leading technology corporation offering Cloud services (University of
North Carolina 2010; Trent 2014, 1–2). These are the reasons why IBM experts and
databases were used as primary information sources for describing and understanding
Cloud services in this study.
As opposed to the Cloud service literature, the literature regarding SMEs has been
increasing as researchers have begun to realize their importance, and today, SME litera-
ture is more comprehensive than in the early 2000s. However, there is still a shortage
compared to the literature on larger firms and many research gaps still remain uncov-
ered. (Julien 1993, 157–166; Lindén 2012, 7–8.) One such research gap appears to be
the challenges and limitationsSMEs face when seeking for international growth of busi-
ness since most studies have concentrated on SME internationalization (Coviello &
Munro 1995, 49–61; Gankema, Snuif & Zwart 2000, 15–27; Fillis 2001, 767–783).
As discussed above, there is a limited amount of research on Cloud services from the
business perspective and the limitations and challenges SMEs encounter and experience

13. 13
when pursuing international business growth. This uncovers a research gap which
makes this study meaningful and increases the chances for scientific contribution. In
addition to creating value to the scientific world, this study also intends to create practi-
cal and managerial contribution for Finnish SME leaders who utilize or are considering
utilizing Cloud services in their businesses.
The SME perspective was selected for this study since SMEs are expected to encoun-
ter international growth challenges at some point due to resource scarcity (Ahokangas
1998; Honig 2001, 21–35; Keizer, Dijkstra & Halman 2002, 1–13; Komulainen, Maine-
la & Tähtinen 2006, 526–541; Partanen 2015). Furthermore, Finnish SMEs were select-
ed for the scope of this study due to their importance for the Finnish economy and since
the researcher is more familiar with them due to location factors and previous under-
standing of the Finnish market environment.
However, this study has its limitations. The industry focus is limited to include Finn-
ish SMEs in the IT industry since they are expected to utilize Cloud services more ex-
tensively than SMEs in other industries. Furthermore, industry distinction and limitation
seemed necessary as the benefits and advantages of using Cloud services are likely to
vary between industries. Since the study aims to create an understanding on how the
benefits and advantages of utilizing Cloud services may enable Finnish SMEs to over-
come international growth challenges, the examination of other technology megatrends
will be excluded from this study due to their amplitude.
The study is limited to examine the utility connection of Cloud services with Finnish
SMEs focusing on SMEs that are users of Cloud services. Moreover, the study approach
is from the international growth viewpoint, international growth challenge perspective
to be more specific. Since there are internal and external factors impeding SMEs to
grow internationally, this study is limited to focus on internal factors as SMEs can affect
them. External factors are given and independent, and SMEs cannot affect them, reason
why they are excluded from the examination.
The structure of this study will be the following. Firstly, a general introduction to the
topic was given focusing on explaining why SMEs focus was chosen for this study.
Then, technology megatrends and digitalization era topics were discussed to establish a
solid background for Cloud services and to understand their connection with SMEs.
After the topic introduction, the main purpose, limitations, and structure of the study
were introduced as well. Hereafter, a theoretical framework will be formed based on
theories and literature regarding Cloud services, SMEs, internationalization, and inter-
national growth challenges. Then, the research methodology of this study including re-
search approach, data collection, data analysis, and trustworthiness of the study will be
introduced. Later on the research findings of this study will be discussed. Finally, con-
clusions will be drawn in the form of theoretical and managerial implications followed
by the summary of this study.

14. 14
2 CLOUD SERVICES
The purpose of chapter 2 is to provide the reader with a brief introduction and descrip-
tion of Cloud services due to their importance and relevance for this study. To begin
with, Cloud services will be introduced and the main features and characteristics will be
presented to create a general understanding of this relatively new phenomenon. Moreo-
ver, a brief introduction to the Cloud services market including ordinary examples of
Cloud services will be provided. Hereafter, the service models of Cloud services will be
presented after which the deployment models will be addressed. Appendix 1 comple-
ments this chapter by providing the official definitions for Cloud services, service mod-
els, and deployment models defined by the National Institute of Standards and Technol-
ogy.
2.1 Defining and describing Cloud services
Due to its newness and extension, there is no unanimous and unambiguous definition
for Cloud services, also known as Cloud computing. The Cloud is a metaphor for the
Internet which is relatively easy to understand, but when combined with computing or
services, it is a more challenging definition to comprehend. Some vendors and analysts
define Cloud services very briefly as an updated version of utility computing, in other
words, virtual servers available over the Internet. Others prefer to define it from a
broader scope asserting that anything you consume outside the firewall is in the Cloud
including conventional outsourcing. (Knorr 2008, 1–2.)
Perhaps one of the most accepted definitions for Cloud services (Cloud computing)
within researchers, scientists, and vendors is the one provided by The National Institute
of Standards and Technology (NIST), U.S. Department of Commerce, which is as fol-
lows: “Cloud computing is a model for enabling ubiquitous, convenient, and on-
demand network access to a shared pool of configurable computing resources (e.g.,
networks, servers, storage, applications, and services) that can be rapidly provisioned
and released with minimal management effort or service provider interaction” (NIST
2011, 2).
Due to the broad acceptance of this definition for Cloud services, it will be the one
used in this study. Sosinsky (2011, 8), in turn, asserts Cloud services mean all the ser-
vices and application operating on a distributed network utilizing and applying re-
sources, mostly virtualized, and accessed by common Internet protocols and networking
standards. The main characteristics of Cloud services are as follows: virtual, limitless
and flexible usage of IT resources, and all the physical system and IT infrastructure are
abstracted from the user, in other words, there is no physical IT resources located in the

15. 15
consumer´s premises. Cloud services are consumed as a self-service utility since the
technology, services, and applications in scope are located on the Internet. There are
two terms which are often associated and interconnected with the word “Cloud”: ab-
straction and virtualization. (Sosinsky 2011, 8–9.)
The Cloud, or Cloud services, is composed by various service and deployment mod-
els not to mention diverse value propositions. This might be the underlying reason why
defining Cloud services is challenging and ambiguous. (Sosinsky 2011, 9–14; Kavis
2014, 13.) From a broad view, there are three service models which are software as a
service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS)
(Antonopoulos & Gillam 2010, 2; NIST 2011, 2; Sosinsky 2011, 10; Kavis 2014, 16).
In the deployment models context, there are three mostly accepted models being public
Cloud, private Cloud, and hybrid Cloud (NIST 2011, 3; Sosinsky 2011, 10; Bento &
Aggarwal 2013, 11; Kavis 2014, 19) as illustrated in figure 3. Each of these service and
deployment models will be defined and elaborated in subchapters 2.2 and 2.3.
Figure 3 The NIST definition of Cloud services (Kavis 2014, 19)
According to Sosinsky (2011, 10–11) and Kavis (2014, 19–20), there are many char-
acteristics and features associated with Cloud services, but just a few of them are con-
sidered to be essential characteristics as illustrated in figure 3. The first one is broad
network access meaning that Cloud service users, no matter location as long as having
access to the Internet, can access and utilize this services by using mobile phones, tab-

16. 16
lets, laptops, and workstations. Rapid elasticity signifies that capabilities and resources
can be elastically provisioned and released, in other words, provisioning can be either
scaled up or scaled down depending on demand and need. The third characteristic is
measured service, which enables Cloud services and systems automatically control and
optimize the usage of resources and capabilities, for instance, storage, processing,
bandwidth, and users. Resource consumption can be controlled, monitored, and reported
providing transparency for both the provider and consumer of Cloud services. (Mell &
Grance 2011, 2–3; NIST 2011, 2; Sosinsky 2011, 10–11; Kavis 2014, 19–20.)
On-demand self-service means that without requiring human interaction with the
service provider, Cloud service users can unilaterally provision computing capabilities,
for instance, server time and network storage automatically as much as needed. The last
essential characteristic is resource pooling. On the one hand, this is particularly benefi-
cial to the service providers as it allows them to pool their resources including storage,
processing, memory, and network bandwidth to serve multiple clients using a multi-
tenant model. This model has different physical and virtual resources dynamically as-
signed and reassigned according to consumer demand. On the other hand, Cloud service
users have no control or knowledge over the exact location of the provided resource.
(Mell & Grance 2011, 2–3; NIST 2011, 2; Sosinsky 2011, 10–11; Kavis 2014, 19–20.)
There are many reasons why companies, especially SMEs, are willing to utilize
Cloud services. Some companies and organizations seek for cost saving by using Cloud
services while others want have flexible ordering for virtual services. What almost all
companies and organizations do have in common is the fact they are looking for to deal
better with unpredictable demand for IT resources – Cloud services might be the key to
achieve this. (Kavis 2014, 20–21.) Benefits, advantages, and reasons for utilizing Cloud
services will be covered and discussed further in the empirical part of the study as these
issues form the essential foundations for answering the main research question.
There are approximately 150 players in the Cloud market currently. Figure 4 illus-
trates the Cloud service providers who possess the largest market shares. The Cloud
service market is dominated by the largest technology corporations in the world such as
IBM, Salesforce, Amazon, Microsoft, and Oracle. (Trent 2014, 1–2.)

17. 17
Figure 4 Companies providing Cloud services and ordinary examples of them
There are Cloud services most people use on a daily basis. Usually these are services
related to social networking, e-mails, and backup services. Common examples repre-
senting these type of services are Twitter, Gmail, LinkedIn, Facebook, Dropbox, and
Hotmail as illustrated in figure 4. (University of North Carolina 2010.)
2.2 The service models of Cloud services
The Cloud service models consist of the particular types of services consumers can ac-
cess on a Cloud computing platform. Before choosing the right type of Cloud services,
it is essential that the entity acquiring or adopting Cloud services, and the service pro-
vider as well, know and possess a deep understanding of the IT architecture and the
technical environment where Cloud services are intended to be implemented. This will
mitigate the risks of implementation failure which can be costly for all the parties in-
volved. (Antonopoulos & Gillam 2010, 2; Sosinsky 2011, 10.)
After ensuring that Cloud services can be implemented and they are compatible with
the current IT infrastructure, it is recommendable to budget time for discussion between
each party involved to choose the proper and right fit service model since being a criti-
cal success factor for delivering Cloud-based solutions. To be able to select the right fit
and compatible service model or combination of service models, it is essential to under-
stand thoroughly what each service model is, how they work, how they are used, and
what is really important, what responsibilities the Cloud service provider assumes com-
pared to the responsibilities the consumer presumes. (Kavis 2014, 15.)
As previously described, there are three universally accepted types of Cloud service
models: software as a service, platform as a service, and infrastructure as a service.
Each Cloud service model will be introduced and described next.
IBM
Salesforce
Amazon Microsoft
Oracle
Twitter
Gmail
LinkedIn
Facebook
Dropbox
Hotmail
Cloud service providers Examples of Cloud services

18. 18
Software as a service (SaaS) is a full operating environment consisting of applica-
tions, management, and the user interface. In the SaaS model, the application, including
management and maintenance, is delivered to the consumer by using a thin client inter-
face usually a browser. Everything from the application down to the infrastructure is
under the responsibility of the vendor while the user is only responsible for entering and
managing its data and user interaction. (Antonopoulos & Gillam 2010, 2; Sosinsky
2011, 10.)
In its purest and simplest form, SaaS is an automated complete application delivered
to the user as a service. The SaaS user has only to configure some application-specific
parameters and manage service users while the service provider takes care of everything
else including service infrastructure, application logic, and deployments which are relat-
ed to the service or product delivery. Common examples of SaaS applications are cus-
tomer relationship management (CRM) tools, enterprise resource planning (ERP), pay-
roll, accounting, and other common business software. One of the main features of SaaS
solutions is their remarkable usage for non-core competency functionality, for instance,
CRM and ERP as mentioned above. By doing this, users of SaaS solutions do not have
to support the application infrastructure, provide maintenance, and hire personnel to
manage it all. In the SaaS solution model as well as in other service models most ser-
vices are outsourced to vendors and a subscription fee is paid monthly based on the ser-
vice consumption levels. (NIST 2011, 2; Kavis 2014, 18.)
Platform as a service (PaaS) provides the actual operating system, virtual machines,
development frameworks, applications, services, transactions, and control structures.
The service provider is responsible for managing the Cloud infrastructure, the operating
systems, and the enabling software while the user or client has to install and manage the
applications it is deploying. The user can deploy its applications on the Cloud infra-
structure on its respective platform or make use of applications which were programmed
and configured using languages and tools supported by the PaaS environment of the
service provider. (Antonopoulos & Gillam 2010, 2; Sosinsky 2011, 10.)
Many PaaS solutions provide capabilities as a service in a way that software devel-
opers and other service users can focus on business logic and not reinvent the wheel by
coding for underlying IT infrastructure. PaaS vendors manage the application platform
and provide the developers with a suite of tools to accelerate the development process at
the expense of giving up software control to the PaaS service provider including
memory allocation and stack configurations. Although losing control, PaaS offers a sub-
stantial advantage as PaaS service platforms can be integrated with numerous third-
party software solutions often referred to as plug-ins, add-ons, or extensions. Examples
of these integrated activities and functions are database, logging, monitoring, security,
caching, search, e-mail, analytics, and payments. (NIST 2011, 2; Kavis 2014, 17.)

19. 19
Infrastructure as a service (IaaS) encompasses virtual machines, virtual storage,
virtual infrastructure, and other hardware assets as resources consumers can provision.
The IaaS service provider manages and is responsible for managing the entire infra-
structure while the client is responsible for all other aspects of the deployment. This
may include the operating system, application, and users interactions with the system as
opposed to SaaS and PaaS service models. In the IaaS model the client has more re-
sponsibility compared to the SaaS and PaaS service models. (Antonopoulos & Gillam
2010, 2–3; Sosinsky 2011, 10.)
The underlying idea of using IaaS service model is that many of the tasks related to
managing and maintaining a physical data center and physical infrastructure (servers,
disk storage, networking, and so forth) are abstracted and available as a collection of
services. These can be accessed and automated from code- and/or web-based manage-
ment consoles, in other words, accessed and automated form the Cloud. There are many
activities and functions IaaS service consumers need to perform such as coding, config-
urations, installations, management, and patching third-party solutions, but there is no
physical infrastructure to manage anymore, something considered to be a key advantage
of using IaaS. (NIST 2011, 2; Kavis 2014, 16.)
With IaaS, the virtual infrastructure is available on demand and can be up and run-
ning within minutes simple by asking to the IaaS service provider to do so. Like utilities
such as electricity or water, virtual infrastructure is a measured service that accumulates
costs when it is powered on and in use but stops it when it is turned off. This is what is
called consumption-based service model. In summary, IaaS provides virtual data center
capabilities so that service consumers can focus more on building and managing appli-
cations and less on managing data centers and infrastructure. (NIST 2011, 2; Kavis
2014, 16–17.)
2.3 The deployment models of Cloud services
The Cloud deployment models refer to the location and management of the Cloud´s
infrastructure. In addition, the Cloud deployment model defines the purpose of the
Cloud including its service types naturally and the nature of how and where the Cloud is
located. (Sosinsky 2011, 11.) There are three generally accepted forms of Cloud ser-
vices which will be described next.
Public Cloud means the Cloud infrastructure is available for general and public use.
It can be utilized and leveraged by all types of public and private entities including en-
terprises and organizations no matter their size or industry focus. The public Cloud is
usually owned by an organization providing and selling Cloud services. (NIST 2011, 3;
Sosinsky 2011, 11.)

20. 20
From a more practical perspective a public Cloud is a multitenant consumption-based
environment meaning end-users pay only for the actual usage of resources on a shared
grid of commodity resources alongside other clients. Service users are aware of where
their data center is located but they have no visibility into the physical location of where
their software is running. Technically an abstraction layer is built on top of the physical
hardware and presented as APIs (application programming interface) to the end user
who leverages these APIs to create virtual compute resources running in a large pool of
resources shared by many users. Public Cloud benefits may include, when applied and
leveraged properly, utility pricing, elasticity, and improved focus on core competency.
There are some drawbacks as well including less control, regulatory issues, and limited
configurations. (Bento & Aggarwal 2013, 11; Kavis 2014, 19.)
As opposed to public Cloud, private Cloud infrastructure is operated for the exclu-
sive use of a certain entity no matter whether it is public or private. Either a third party
or the service user itself can administrate and manage the Cloud. In addition, private
Clouds may be located either in- or off-premises. (NIST 2011, 3; Sosinsky 2011, 11.)
The main characteristic of utilizing a private Cloud is the fact it addresses the defi-
ciencies of the public Cloud including configurations, control, and regulatory issues. In
contrast to public Cloud, private Cloud can be located in on-premises or hosted in a
Cloud provider´s data center giving flexibility for the user to choose the most suitable
location for their technical environment. Regarding location, the service is deployed on
a single-tenant environment making it a private solution for the service user. This basi-
cally means technology resources are not shared with other customers resulting in a
more expensive solution. Private Cloud mitigates regulatory risks around data owner-
ship, privacy, and security to some extent due to the single-tenant nature of the deploy-
ment model. (Bento & Aggarwal 2013, 11; Kavis 2014, 19.)
Disadvantages of deploying a private Cloud may include reduction in elasticity, re-
source pooling, and pay-as-you-go pricing. Private Clouds do allow end users to scale
up and down over a shared pool of resources but those resources are limited to the
amount of infrastructure that is bought and managed internally. When using a private
Cloud, leveraging a seemingly endless grid of technology resources ready available is
not possible in contrast to public Cloud. This results in a cost increase and reduces agili-
ty as internal resources have to take control of the physical infrastructure, and excess
capacity should be controlled as well. Having excess capacity also destroys the pay-as-
you-go model because the end user has already paid for the infrastructure no matter
whether used or not. (Bento & Aggarwal 2013, 11–12; Kavis 2014, 19–20.)
The result of combining different forms of Cloud services or deployment models,
public and private Clouds, is the hybrid Cloud. Each Cloud retains its unique identity
but they are bound together as a unit. In addition to application portability, a hybrid

21. 21
Cloud may offer standardized or proprietary access to data and applications. (NIST
2011, 3; Sosinsky 2011, 11.)
Many private and public entities including small, medium, and large companies and
organizations leverage both public and private Clouds in order to get the best of both
forms of Cloud services, in other words, they are leveraging a hybrid Cloud deployment
model. This is achieved by using the public Cloud as much as possible in order to obtain
the benefits of Cloud services such as rapid elasticity and resource pooling, and at the
same time, leveraging the private Cloud in areas where the risks of data ownership and
privacy are too high to be exposed for the public Cloud. (Bento & Aggarwal 2013, 11–
12; Kavis 2014, 20–21.)

22. 22
3 INTERNATIONALIZATION AND INTERNATIONAL GROWTH
CHALLENGES OF SMES
Chapter 3 will begin by defining and describing Finnish SMEs due to their relevance in
this study. This description will include figures, facts, and characteristics of them. Then,
a reflection will be provided regarding what choice of entry modes SMEs have when
entering new markets or expanding operations abroad, focusing on non-equity entry
modes due to their relevance in SME internationalization and growth context. Theories
related to international growth will be addressed as well from the SME standpoint.
Hereafter, limiting factors and challenges in international growth of SMEs will be intro-
duced and discussed focusing on the resource scarcity point of view. Finally, a synthesis
of the theoretical framework of this study will be presented.
3.1 Describing Finnish SMEs
Finnish SMEs are usually defined as companies having less than 250 employees, their
annual turnover is EUR 50 million at the most, and the balance sheet total does not ex-
ceed EUR 43 million (European Commission 2003, 39; Statistics Finland, Tilastokeskus
2014). Since this definition is the most detailed, unambiguous, and widely accepted in
Finland, it will be the one used in this study. It should be noted that SMEs can be sub-
categorized into small and medium companies. By a small company is meant a business
entity employing fewer than 50 people and the annual turnover is EUR 10 million at the
most, whereas a medium company employs from 50 up to 250 people having the turno-
ver range between EUR 10–50 million (Statistics Finland, Tilastokeskus 2014).
As previously discussed, SMEs are central to the Finnish business environment as
they are considered to be the “growth engines” of the Finnish economy. As illustrated in
table 1, the number of Finnish companies has grown during the period 2007–2012 by 13
267 despite the small reduction in 2010 due to the Great Recession. In contrast, the
number of personnel has slightly decreased by 7 349 during the same period. Turnover
figures have grown by EUR 20.4 billion meaning an approximate increase of 5.5 per-
cent. This may indicate that Finnish companies have become more efficient over time
since the number of personnel has reduced and the overall turnover has grown moder-
ately.

23. 23
Table 1 Number of companies, personnel, and turnover in Finland between 2007–
2012 (Statistics Finland, Tilastokeskus 2013)
Year Number of Companies Number of Personnel Turnover (billion euro)
2007 308 917 1 481 870 374.6
2008 320 952 1 502 213 396.6
2009 320 682 1 447 403 336.2
2010 318 951 1 444 031 358.9
2011 322 232 1 486 136 385.2
2012 322 184 1 474 521 395.0
Table 2 provides a more accurate representation of the figures in 2012. Companies
are categorized by size: small, medium, and large companies. Company, personnel, and
turnover figures are described based on this categorization.
Table 2 Number of companies, personnel, and turnover categorized by company
size in Finland in 2012 (Statistics Finland, Tilastokeskus 2013)
Size
Number of
Companies
Number of
Personnel
Turnover
(billion euro)
SMEs 321 562 946 445 209.7
Small Companies 319 014 696 633 132.4
Medium Companies 2 548 249 812 77.3
Large Companies 622 528 076 185.3
Total 322 184 1 474 521 395.0
As illustrated in table 2, SMEs represented 99.8 percent approximately of all compa-
nies in Finland in 2012. In a closer examination, small companies accounted for 99.0
percent while medium-sized companies represented 0.8 percent. Based on these figures
it can be concluded that the vast majority of companies in Finland are SMEs. Although
large companies are characterized to have significantly more personnel than SMEs,
small and medium-sized companies employ more people compared to large companies.
Based on the figures in table 2, it can be calculated that SMEs employed 64.2 per-
cent while the figure for large companies is 35.8 percent. The difference in figures be-
tween SMEs and large companies is reduced when calculating their turnover. With an
accumulated turnover of EUR 209.7 billion, SME turnover represented a little more
than 50 percent (53.1) in 2012, which is very close to the figure of large companies hav-
ing 46.9 percent. Although the difference in the number of companies between SMEs
and large companies is immense, the accumulated turnover in 2012 was very similar to
each other reflecting the importance of both to the Finnish economy. These figures have

24. 24
been fairly constant over the past few years, but the SME share of turnover has been
increasing by a few percentage points from the previous years. (Statistics Finland, Ti-
lastokeskus 2013.)
Finnish SMEs, as SMEs in general, have a number of common characteristics distin-
guishing them from large public and private organizations including both qualitative
and quantitative factors. These may include factors such as number of employees, capi-
talization, turnover, strategy, and innovativeness. (Julien 1993, 157–159; SME Defini-
tion and Statistical Issues 2003, 173–337; OECD 2005.) SMEs are usually smaller in
terms of revenue and employees and have less hierarchical and organizational structure.
This usually results in better adaptability to the changes of the external business envi-
ronment including the political, legal, economic, technological, and social environ-
ments. (Forsgren 2002, 273; Fernhaber & McDougall 2005, 111–136; Jones & Coviello
2005, 284–303.)
Furthermore, SMEs tend to be more risk-friendly than large companies (Hollensen
2007, 13). SMEs take risks intentionally and the tolerance attitude of entrepreneurs to-
wards risks itself is a key characteristic of these companies. In many cases SMEs led by
entrepreneurs tend to seek for short-term opportunities and seize them in an unstable
business environment (Julien 1993, 163) which is rather risky. Naturally there are SMEs
which are more reluctant to take risks as well, but usually SMEs are willing to take
more risks than large firms (Hollensen 2007, 13–15).
Since Finland is a small and open economy (SMOPEC), it can, depending on the cir-
cumstances, enable or hinder SME international growth (Björkman & Forsgren 1997,
11–29; Luostarinen & Gabrielsson 2004, 383–403). This openness allows foreign rivals
to access the Finnish market relatively easily, but it also creates the opportunity, and
also the necessity, for Finnish SMEs to expand and grow internationally (Young 1990,
5–10; Autio, Sapienza & Arenius 2005, 9–42). The smallness of the Finnish economy,
and the tough competition between local and foreign businesses, encourages and even
mandates SMEs to seek grow from abroad (Paavilainen-Mäntymäki 2009, 15).
Due to their importance for the Finnish economy, there is a need for current SMEs to
grow further domestically and internationally and to establish new SMEs continually.
The overall Finnish economic and GDP growth are significantly dependent on the per-
formance and success of SMEs as the business growth of them will be reflected on the
growth of the Finnish economy both directly and indirectly. SMEs have vital roles as
employers, investors, and tax payers – all these roles are needed to enable economic
growth in Finland. (The Confederation of Finnish Industries, EK 2014, 2–3; The Feder-
ation of Finnish Technology Industries, Teknologiateollisuus 2014, 2–19.)

25. 25
3.2 Market expansion and international growth of SMEs
According to the hierarchical model of market entry modes of Pan and Tse (2000, 535–
540), entry modes are divided into non-equity and equity modes as illustrated in figure
5. Exports and contractual agreements are the main non-equity modes while joint ven-
tures (JVs) and wholly owned subsidiaries (WOS) form the main equity modes. The
following decision model provides a better understanding regarding the categorization
of market entry modes.
Figure 5 The choice of entry modes: a decision model (Pan & Tse 2000, 538)
In general terms, SME market entry modes and foreign expansion are characterized
about the fact that non-equity modes are used more frequently compared to equity
modes as part of SME market expansion strategy. Both non-equity modes and equity
modes are used but non-equity modes tend to be used more as they usually require less
capital and involve less risk of failure compared to equity modes. SMEs tend to be more
resource scarce companies in terms of capital and other capabilities compared to large
players in the industry. This explains to some extent why SMEs tend to use more non-
equity modes of market expansion than equity modes. (Pan & Tse 2000, 535–554; Chet-
ty & Campbell-Hunt 2003, 796–822.)

26. 26
As illustrated in figure 5, exports can be divided into direct and indirect exports. The
main differentiator between direct and indirect exports is that in direct exports there are
no intermediaries while indirect exports do have, for instance, importers and wholesal-
ers. Contractual agreements can be classified further as follows (Pan & Tse 2000, 535–
540):
 Licensing/franchising
 Turnkey projects
 R&D contracts
 Co-marketing
In general terms licensing allows other companies to use proprietary technology and
knowledge to manufacture products for a fixed term in a specific market either exclu-
sively or non-exclusively. Franchising is a form of licensing and it is defined by Zim-
merer and Scarborough (2008) as a system in which semi-independent business owners
(franchisees) pay fees and royalties to a parent company (franchiser) in return for the
right to become identified with its trademark, to sell its products or services, and often,
to use its business format and system. Generally, research and development (R&D) con-
tracts are agreements intending to combine both basic and applied research aiming to
discover solutions to problems and needs, or even creating new goods, services, or
knowledge. The fourth form of contractual agreement is co-marketing meaning that at
least two parties engage on marketing activities in terms of allocating resources together
such as money and know-how. (Pan & Tse 2000, 535–540.)
Equity market expansion modes require more capital which favors large organiza-
tions and multinational conglomerates as they usually possess more capital than SMEs.
In turn, it is challenging to determine whether large public and private organization en-
gage more in non-equity modes or equity modes when aiming to foreign market expan-
sion. What can be said is both modes are used depending on many internal and external
factor affecting businesses such as resources, the entrepreneurial orientation of the com-
pany, industry competition, and the economic cycle. (Johanson & Vahlne 1990, 1–24;
Andersson 2000, 63–92; Pan & Tse 2000, 535–540; Komulainen, Mainela & Tähtinen
2006, 526–541.) Furthermore, SMEs are characterized to have unique paths to interna-
tionalize and achieve international business growth by utilizing entry modes for market
expansion (Hedlund & Kverneland 1984; Bonaccorsi & Dalli 1990; Gankema, Snuiff &
Zwart 2000, 15–27).
International growth has been described in the literature as the expansion of compa-
nies and their operations across their national boundaries (Penrose, 1959). This defini-
tion for international growth will be the one used in this study due to its simplicity to
understand and wide acceptance in the scientific community. Despite this, it has been
questioned to some extent in scientific debate since it fails to explain what international
growth actually is as a phenomenon. In order to understand international growth better,

27. 27
it is meaningful to examine it consisting of two intertwined processes: growth and inter-
nationalization. (Paavilainen-Mäntymäki 2009, 15–17.) In its simplest form, growth is
defined as a relative measure of size and dynamic measure of change over time
(Weinzimmer, Nystrom & Freeman 1998, 235–262). In the international business litera-
ture internationalization is defined as the process of increasing involvement in interna-
tional operations although there is no clear and unquestioned universal definition for it.
International operations are activities such as sales, marketing, and ramping up produc-
tion abroad companies engage in. (Welch & Luostarinen 1988, 36; Nummela 2004,
131–132.)
Many definitions of internationalization include some implicit reference to growth,
for instance foreign expansion, but still it remains unclear how growth and internation-
alization are connected and how the interaction between the two processes take place
(Paavilainen-Mäntymäki 2009, 15–17). Growth can be seen either as an outcome of
events or as a starting point for organizational change (Davidson & Wiklund 2000, 26–
43). Some researchers assert internationalization has been a by-product of organization-
al growth. Moreover, increasing organizational growth in terms of increasing sales fig-
ures can lead to and drive internationalization, or vice versa, making the conceptualiza-
tion and understanding of international growth ambiguous and difficult to define unan-
imously. (Paavilainen-Mäntymäki 2009, 19–20.)
From the SME international growth standpoint, there are several issues and factors
that make the studying and understanding of the international growth phenomenon both
interesting and challenging (Paavilainen-Mäntymäki 2009, 19–20). It becomes even
more difficult when international growth is contextualized in the international growth
challenge point of view, something that will be discussed in subchapter 3.3. A possible
explanation for the challenge of studying international growth of SMEs is that their in-
ternational growth processes including limitations and challenges are unique – tend to
differ from each other. Every SME, research context, and studied process has different,
unique characteristics, which make them all different in a way. (Hedlund & Kverneland
1983; Bonaccorsi & Dalli 1990; Gankema et al. 2000, 15–27.)
There is no doubt that SMEs pursuing international growth have some factors and
characteristics in common when aiming to grow their businesses internationally. Tradi-
tionally SMEs intend to grow and gain market share locally before expanding opera-
tions abroad. After gaining experience, knowledge, and market share on the domestic
market, they start the internationalization process, including international growth as-
pects as well, by exporting directly or indirectly to foreign customers. If successful, they
start to practice contractual agreements, for instance licensing and franchising, with
both foreign and local business partners usually meaning more business and revenue.
After a successful completion of this stage, they opt for equity market expansion modes
to grow business even further, but usually, at this time, the original SME is not an SME

28. 28
anymore as it has grown over time to become a multinational corporation (MNC). Usu-
ally there is a thin line determining when an internationalized SME becomes a MNC
due to the fact both types of companies are not defined unanimously. (Johansson &
Vahlne 1977, 23–31; Pan & Tse 2000, 535–554; Nummela 2004, 131–139.)
There are two traditional models explaining the internationalization process of SMEs
which are the Uppsala and Luostarinen´s models (Kamel 2003, 150–152). Due to their
similarity in explaining internationalization as an incremental process (Johansson &
Vahlne 1977, 24; Luostarinen & Welch 1990, 251), only the Uppsala internationaliza-
tion model will be presented briefly next. The Uppsala model describes the internation-
alization process as incremental meaning companies internationalize in stages. This
means companies including SMEs first gain experience from their domestic market af-
ter which they engage in foreign market operations, in other words, begin to interna-
tionalize. (Johansson & Vahlne 1977, 23–24; Nummela 2004, 133–135.)
Usually companies prefer to start from markets that are similar to their home market
in order to protect the company from too much risk and uncertainty. The Uppsala inter-
nationalization model has many similarities with the market entry modes of Pan and Tse
(2000, 535–540) since in both models SMEs are more likely to start their foreign market
activities by using non-equity entry modes. If resulting successful, they continue their
internationalization process and growth seeking with equity modes. (Johansson &
Vahlne 1977, 23–25; Olejnik & Swoboda 2012, 469.)
Furthermore, two distinct research streams have emerged in the existing literature on
the internationalization of SMEs. One stream focuses on international new ventures
(INVs) and born-globals such as startups. Born-globals are international right from the
commencement of doing their first business transactions. (Chetty & Campbell-Hunt
2004, 57–81; Knight & Cavusgil 2004, 124–141.) Based on this, it can be concluded
that the Uppsala model does not fully apply to all SMEs and other type of companies.
The other stream examines the internationalization of established yet small companies
also been called as traditional and ordinary SMEs. They usually start to grow interna-
tionally by engaging in export activities which may differ from the way of conducting
business of INVs and born-globals. (Miesenbock 1988, 42–61; Shoham 1998, 59–61.)
These growth streams might explain, at least to some extent, why the processes of inter-
nationalization and international growth among SMEs varies considerably (Paavilainen-
Mäntymäki 2009, 21–22).
3.3 Limiting factors and challenges in international growth of SMEs
When attempting to internationalize or being in the internationalization process already,
SMEs may encounter limiting factors and challenges impeding them to achieve interna-

29. 29
tional growth of business. These limiting factors and challenges can be divided into two
categories: internal and external factors. Internal factors are issues that are associated
with the company (SME) itself directly with no influence and impact from the outside.
A case in point is the lack of resources and capabilities an SME may experience in a
certain period. External factors, in turn, are issues affecting companies either directly
or indirectly and businesses cannot have an influence on them. Examples of these fac-
tors are the barriers to entry Finnish SMEs may confront when expanding operations
abroad such as monopoly, price wars, tariffs, and regulation. Thus, external factors are
closely related to the market environment businesses are operating in. (Miesenbock
1988, 42–50; Leonidou & Katsikeas 1996, 517–529.)
The most significant difference between internal and external factors is the fact that
companies can have a direct influence and modify internal factors such as resources and
capabilities whereas in the case of external factors this is not possible. Bain (1956) and
McAfee, Mialon, and Williams (2004, 461–465) defined a barrier to entry as an ad-
vantage that local competitors in a mature market have over potential market entrants as
they are well-established on the market, and they can, for instance, make mutual agree-
ment on decreasing prices in order to not attract competition. These above mentioned
factors are characterized by the fact they usually tend to have a negative impact rather
than positive in the pursuit of internationalization and international growth of business.
(Miesenbock 1988, 42–50; Leonidou & Katsikeas 1996, 517–529.)
Another important term in the context of limiting factors and challenges is the barrier
to exports. A barrier to exports can be any internal or external element or factor which
prevents companies, SMEs, from initiating, maintaining, or increasing export activities.
A barrier to exports differs from a barrier to entry in a way that the standpoint is the
opposite – instead of focusing on market entry issues, the company´s efforts and inten-
tions to expand abroad are considered and evaluated. The focus of the term is on export
activities but barriers can be applied and contextualized to other internationalization and
foreign market expansion modes such as licensing, JVs, M&A, and building a produc-
tion facility abroad. (Arteaga-Ortiz & Fernández-Ortiz 2010, 395–408.)
Despite its prevalence and common use, there is no clear and unanimous definition
for international growth challenges as a term, although it is usually associated with the
internal and external limiting factors and challenges discussed above (Arteaga-Ortiz &
Fernández-Ortiz 2010, 410–418). An explanatory reason for this is the fact that chal-
lenges are context-dependent and they are perceived and experienced in different ways.
What is an international growth challenge for an SME, for instance lack of capital, may
not be a challenge for a large corporation having a stable financial position. In addition
to the resource perspective, other issues and factors such as operating industry, product
and service offerings, employees, and company management have a significant effect

30. 30
on how SMEs perceive and experience international growth challenges in practice. (Ca-
vusgil 1984, 195–208; Yang, Leone & Alden 1992, 84–96; Morgan 1997, 68–79.)
Furthermore, Kaynak and Kothari (1984, 61–69) were among the first researchers
in affirming that the perception and experience of international growth challenges is
significantly dependent on cultural issues as well. Finnish SMEs perceive and experi-
ence international growth challenges on the Asian market differently compared to Asian
SMEs on the American market due to the dissimilarity of both corporate and business
cultures. Dissimilarities can be found in cultural aspects including power distance, indi-
vidualism, and time orientation (Kaynak & Kothari 1984, 61–69).
In this study, the international growth challenges term is defined as all the internal
and external factors impeding SMEs to achieve international growth of business. The
identification and understanding of these internal and external factors is crucial since
they determine the future engagement and performance of SMEs in international busi-
ness activities (Barker & Kaynak 1992, 27–36; Leoniduo 1995, 4–25). Since companies
cannot affect the external factors such as the political, legal, and economic environ-
ments in which they are operating in (Gillespie 2007), this study focuses on examining
and understanding the internal factors impeding SMEs to grow internationally.
SMEs are usually characterized by a scarce resource base meaning that, in the SME
context, resources are usually seen as scarce and limited (Ahokangas 1998; Honig 2001,
21–35; Keizer, Dijkstra & Halman 2002, 1–13; Komulainen, Mainela & Tähtinen 2006,
526–541). According to Bridgewater, Sullivan-Taylor, Johnston, Mattson, and Millett
(2004, 221) the resource scarcity of SMEs favors the usability of incremental interna-
tionalization models such as the Uppsala internationalization model. Moreover, Kirzner
(1973, 60–85) asserted resource scarcity is also a feature of opportunity-seeking entre-
preneurial behavior which explains to some extent why SMEs are usually led by entre-
preneurs.
Due to the resource scarcity of SMEs, it can be deduced that allocating resources to
one type of international business growth, for instance exports, reduces the possibility to
finance other types of growth, for instance JVs, with a foreign business partner. SMEs
need to put a considerable amount effort to find out how to better serve their customers
in a more efficient and lean way, in other words, not to misuse any of their scarce re-
sources. This might not be the case in all large organizations such as multinational cor-
porations and public organizations, especially when having many unused resources
available. (Paavilainen-Mäntymäki 2009, 255–257.)
In this study, resources are defined as the tangible and intangible assets and capabili-
ties a company uses to implement its strategy to achieve growth and business success
(table 3). Based on this definition, resource scarcity is defined as the lack of or shortage
in tangible or intangible resources. This definition for resource scarcity will be the one
applicable for this study as well. Tangible resources are the physical assets and capabil-

31. 31
ities that are observable and more easily quantified. On the contrary, intangible assets
are the nonphysical assets and capabilities that are harder to observe and more difficult,
or sometimes impossible, to quantify. (Peng 2006, 64–71.)
As illustrated in table 3, resources are generally classified into tangible and intangi-
ble resources. Financial, capital, physical, and organizational assets and capabilities are
well-accepted categories of tangible resources, examples of which are described in the
table below. Human, technological, and innovation assets and capabilities, in turn, are
classified as intangible resources. Examples of these intangible resources are outlined in
table 3 as well. (Barney 1991, 101; Grant 1991; Hall 1992, 135–144; Peng 2006, 64–
71.)
Table 3 Limiting factors and challenges in international growth of SMEs – the
resource scarcity perspective (Adapted from Barney 1991, 101; Grant
1991; Hall 1992, 135–144; Peng 2006, 64–71)
Tangible
Resources Examples
Financial Ability to generate internal funds
Capital Ability to raise external capital
Physical Location of plants, offices, and equipment
Access to raw materials and distribution channels
Organizational Formal planning, command, and control systems
Integrated management information systems
Intangible
Resources Examples
Human Knowledge
Trust
Managerial talents
Organizational culture
Technological Possession of patents, trademarks, and copyrights
Innovation A supportive atmosphere for new ideas
Research and development capabilities
Capacities for organizational innovation and change
Capital, finance, and skilled management are perhaps the most critical resources
SMEs usually experience shortages at some point in their life cycles. Other potential
scarce resources for SMEs are labor, technology, and know-how. SMEs generally rely
on finance that is generated internally from continuous operations or money invested in
the business by the owner. Normally this capital is not enough for the firm to operate
and internationalize by expanding business operations abroad. (Buckley 1989, 94; Hol-
lensen 2007, 9; Andersson & Lööf 2009, 5.)

32. 32
In addition to capital and financial resources, SMEs usually experience shortages in
other tangible and intangible resources such as labor, technology, and know-how. De-
spite this, they often have an abundant supply of intangible resources such as entrepre-
neurial drive and innovativeness. Lack of resources, both tangible and intangible, can be
considered one of the most significant factors challenging and limiting SMEs to interna-
tionalize and achieve international business growth. The underlying reasons for this is
that internationalization and international grow are processes that require capital and
financial resources to happen meaning growth needs to be financed either internally or
externally. For instance, SMEs need capital to build company awareness abroad by al-
locating financial resources in marketing and other promotional work in order to in-
crease awareness, acquire new customers, and grow their businesses. (Peng 2006, 64–
83; Paavilainen-Mäntymäki 2009, 255–257.)
One key driver to achieve the required efficiency and promote innovativeness to
compete with large firms is Cloud services. Cloud services can be used and applied by
any kind of enterprises or organizations no matter their size or industry. By utilizing
Cloud services, SMEs may achieve benefits including cost savings and performance
efficiencies. (Sosinsky 2011; Kavis 2014; Partanen 2015.) These assumptions regarding
benefits and advantages of Cloud services will be verified and elaborated further during
the empirical part of the study as being one of the three sub-question to answer the main
research question of this study.
3.4 Synthesis: framework on how Cloud services may enable SMEs to
overcome international growth challenges
The main idea of this synthesis is to wrap up all the relevant issues and topics covered
in the theoretical framework of this study and illustrate the connection between Cloud
services, SME internationalization, and international growth challenges. This synthesis
of the theoretical framework (figure 6) represent the current knowledge regarding these
issues which will be tested, verified, complemented, and even modified based on the
empirical findings and results of the upcoming research. On the one hand, it can be con-
cluded that the connection and relation between them is not that apparent and rather
complex to be perceived and understood at the moment. On the other hand, the cost
effectiveness achieved through the utilization of Cloud services may enable SMEs to
use their scarce resources more effectively leaving more resources, for instance capital
resources, to finance future growth of international business.

33. 33
Figure 6 Framework on how Cloud services may enable SMEs to overcome inter-
national growth challenges
As represented in figure 6, there are two types of market entry modes, equity modes
and non-equity modes, SMEs may use to internationalize. As previously mentioned and
explained, SMEs tend to use more non-equity market entry modes than equity modes
since they require less capital and involve less risk of failure compared to those entry
modes requiring equity. (Pan & Tse 2000, 535–554; Chetty & Campbell-Hunt 2003,
796-822.)
International growth challenges and digitalization and technology megatrends are is-
sues and phenomena affecting SME internationalization as illustrated in figure 6. Inter-
national growth challenges can be attributed to external factors such as the market envi-
ronment or internal factors such as resource scarcity. As previously discussed, SMEs
usually experience shortages in resources such as capital, finance, skilled management,
Equity modes (e.g. JVs)
Market entry modes
Non-equity modes (e.g. exports)
SME internationalization
International
growth challenges
Digitalization and
technology megatrends
External factors
(e.g. market envi-
ronment)
Cloud services
Cost effectiveness
Flexible usage of IT
resources
Performance
efficiencies
Capital
Finance
Skilled management
Labor
Technology
Know-how
Internal factors (e.g.
resource scarcity
Benefits and advantages

34. 34
labor, technology, and know-how. External factors are characterized by the fact that
they cannot be influenced whereas internal factors can be affected by SMEs and other
companies as well no matter size, type, or industry focus. (Miesenbock 1988, 42–50;
Leonidou & Katsikeas 1996, 517–529.)
As previously mentioned, digitalization and technology megatrends (CAMSS) have
enabled Finnish SMEs to increase the amount of international operations and activities
significantly and to accelerate the internationalization process as well (The Confedera-
tion of Finnish Industries, EK 2014, 6–7; The Federation of Finnish Technology Indus-
tries, Teknologiateollisuus 2014, 2–19). One of these technological enablers has been
Cloud services, which are characterized to provide a broad network access and rapid
service elasticity. Additionally, it is a measured service and on-demand self-service
meaning that the user pays only for the services which are actually consumed. (Mell &
Grance 2011, 2–3; Kavis 2014.)
There is a number of benefits and advantages SMEs can achieve by utilizing Cloud
services as illustrated in figure 6. These may include cost effectiveness, flexible usage
of IT resources, and performance efficiencies. (Mell & Grance 2011, 2–3; Sosinsky
2011; Kavis 2014; Rometty 2014; Partanen 2015.) Since SMEs are usually character-
ized by a scarce resource base (Ahokangas 1998; Honig 2001, 21–35; Keizer, Dijkstra
& Halman 2002, 1–13; Komulainen, Mainela & Tähtinen 2006, 526–541), it may limit
and challenge their pursuit for international growth of business. Hence, the empirical
part of this study aims to test, verify, complement, and even modify the current
knowledge regarding the benefits and advantages of Cloud services. Moreover, the in-
tention is also to know how SMEs can leverage and make use of these benefits and ad-
vantages in order to mitigate and suppress international growth challenges from the in-
ternal factor perspective as described in figure 6.

35. 35
4 RESEARCH DESIGN
The research design including the research approach, research process, and methodolo-
gy used in this study will constitute the introductory part of chapter 4. The reasons for
choosing qualitative research approach and method will be explained. Then, the method
used for data collection, which was semi-structured expert interviews precisely, will be
introduced and discussed focusing on all the issues that were taken into consideration
before, during, and after conducting the interview process. This section will also include
details of the conducted interviews and a brief description of the represented companies
will be introduced. Hereafter, the data analysis methodology will be introduced and ex-
plained, focusing on the thematic data analysis method since it was the one used in this
study. Finally, the trustworthiness aspects of this study will be discussed based on Lin-
coln and Guba´s (1985, 290–328) evaluative criteria for qualitative research.
4.1 Research approach
Generally research is conducted to gain a better understanding of the complexities of
human experience and to take action based on the results (Marshall & Rossman 2006,
23). As previously mentioned, the main purpose of this study is to create and under-
standing on how Cloud services may enable Finnish SMEs to overcome international
growth challenges. Thus, from the scientific contribution perspective, it aims at giving
further guidelines for research to understand the role of Cloud services in the SME con-
text, international growth challenges in particular. Also, from the practical and manage-
rial perspective, this study aims to increase awareness of all the benefits and advantages
Cloud services may provide to Finnish SME leadership to tackle international growth
challenges.
Before moving to the study itself, it is essential to define the research design and re-
search process of this study. According to Yin (1984, 28), research design is defined as
an action plan of getting from the research questions to the answers enabling to draw
conclusions from them. In addition, research design is usually addressed through the
methodology section of the research. Prior to carrying out the research, the research
process had to be planned carefully. The research process of this study is illustrated in
the figure below (figure 7).

36. 36
Figure 7 Research process
In order to create a pre-understanding of the theory and phenomenon, literature re-
view and practical general knowledge were needed. Due to the scarce amount of litera-
ture review about Cloud services topic and the complexity around it, previous general
knowledge about them was needed to understand the logic behind this type of services
and to build the theoretical framework around Cloud services, SME internationalization,
and international growth challenges theories. After creating the preliminary framework,
the research method was selected and data collection was designed for this study. Hav-
ing performed data analysis and evaluation of research results, preliminary framework
was modified and complemented based on the research findings (figure 7).
Creation of the
preliminary framework
Pre-understanding of the
theory and phenomenon
Data collection
Interviews
Providers
Users
Data analysis
Modifying the
framework
Secondary data sources
Selecting research
method and designing
data collection
Chapters
1, 2, and 3
Chapter 4.1
Chapter
4.2
Chapter 4.3
Chapter 6.1
Literature review and
practical general
knowledge

37. 37
In this study, existing theories related to Cloud services, SME internationalization,
and international growth challenges, as discussed in chapters 2 and 3, were presented
and used to create a theoretical framework around the main research question and to its
sub-questions as well. These theories were chosen to create an understanding about the
current knowledge related to the research topic and how this would enable to under-
stand, analyze, and create new knowledge on this rather unexplored phenomenon within
scientists and researchers both in academic and practical fields. For these reasons theory
is developed further by modifying and complementing the current theoretical frame-
work in the light of empirical findings in the later stage of this research.
Since the literature and previous studies regarding Cloud services in the context of
international growth challenges of Finnish SMEs is lacking, theory, Cloud services the-
ory particularly, was considered as a collection of ideas in flux and thoughts rather than
a stable widely known grand theory (Eriksson & Kovalainen 2008, 41; Yin 2009, 36).
As the researcher’s starting point in a study usually is the theoretical knowledge arising
from the literature and prior empirical findings (Flick 2002, 41; Ghauri & Gronhaug
2002, 29), relevant articles, reports, publications, and books were reviewed in order to
create and understanding of the topic. Although a largely accepted theory on the topic
was not found, it is still important for the researcher to have a firm idea of the issues
that are studied (Yin 2009, 37), and it is the present understanding that allows the re-
searcher to study relevant factors (Ghauri & Gronhaug 2002, 29). These are the reasons
why a preliminary framework was previously created and which will be modified and
complemented later on based on the research findings of this study.
Consensus has not yet been achieved within researchers and scientists to define
methodology, but Barbour´s definition has been widely accepted so far. According to
Barbour (2008, 15), methodology refers to the general assumptions and the philosophi-
cal underpinnings behind the methods, implications, challenges, and limitations for the
research including its derivatives. The used methodology determines how the topic can
be covered and studied and it guides the entire research design and process (Eriksson &
Kovalainen 2009, 16).
As Ghauri and Gronhaug (2002, 13) suggest, original contribution or originality is
usually seen as a precondition to perform good scientific research. Original contribution
may be seen in the form of fresh perspectives, new ideas, or dimensions to existing the-
oretical background. Based on the originality classification of Guetzkow, Lamont, and
Mallard (2004, 208), this study will represent new topic category and innovative ap-
proach to complement existing theories. This argument is based on the fact that Cloud
services is a relatively new topic, especially from the approach direction to discuss the
topic and phenomenon involved, which is related to the SME international growth chal-
lenges perspective.

38. 38
According to Ogden and Goldberg (2002, 101), research design describes what will
be done whereas research methods describe how it will be done. As Barbour (2008, 13,
15) affirms, methods are the particular ways of data collection and analysis used to ac-
cess or create data for the research. Research methods should be chosen on the basis of
selected research questions aiming to answer them in the most suitable manner (Eriks-
son & Kovalainen 2009, 27). Hirsjärvi, Remes, and Sajavaara (1997, 165) stated one of
the main criteria for qualitative research is that data is collected using qualitative meth-
ods.
For this study, qualitative research approach and method were selected based on the
objectives of the study. Ghauri and Gronhaug (2002, 86) describe qualitative research as
“a combination of rational, explorative, and intuitive where the skills and experience of
the researcher pay an important role in the analysis of the data”. As this study intends
to create an understanding about a relatively new phenomenon, Cloud services, in the
context of international growth challenges of Finnish SMEs, qualitative research meth-
od was considered the most appropriate. Little research attention has been given to this
phenomenon and topic due to its newness which makes its studying more interesting
and meaningful from both theoretical and managerial perspectives. Moreover, qualita-
tive research method enables to look deep into and gain a genuine understanding of a
still quite new field and area of interdisciplinary research with rather modest scientific
and practical research background.
Although qualitative methodology is often seen as opposite to quantitative research,
they mainly differ in the research procedure meaning these two methods have distinc-
tive perspectives on knowledge and research (Eskola and Suoranta 1998, 14). Quantita-
tive measures intend to produce more quantifiably results whereas qualitative methods
aim to produce more qualitative results. Thus, qualitative research method is an equal
option to quantitative method depending on the topic of the research and how the topic
is intended to be studied and explored. This does not necessarily mean qualitative and
quantitative methods are mutually exclusive as in some occasions it is possible, and
meaningful as well, to codify into a numerical form qualitative data in order to create
deeper insight when analyzing data and drawing conclusions from it. In general terms,
qualitative methods are commonly applied when explorative designs are needed in de-
scribing processes while quantitative measures intend to structure data. (Ghauri &
Gronhaug 2002, 86.) Based on this as well, it can be concluded that qualitative research
method and measures were seen more appropriate than quantitative approach in this
study.
There are researchers claiming that if the research studies a phenomenon or topic in
which people actively change the symbolic domes of discourse, social word, and
knowledge related to it, quantitative measures and methods become inadequate and
even inappropriate. Thus, qualitative methods are needed to explore and study this type

39. 39
of phenomenon with little prior knowledge. (Morgan & Smircich 1980, 498.) When
aiming to scientific knowledge creation in business, qualitative research setting is ade-
quate even without prior quantitative research on the topic. Methodology should always
be justified in relation to the research objectives considering the context around the top-
ic. (Eriksson & Kovalainen 2009, 5.)
As Ghauri and Gronhaug (2002, 87) asserted, qualitative research method is a typical
setting to understand and uncover knowledge about a topic with little prior knowledge
and research background, something supporting this methodological choice. Qualitative
approach aims to the interpretation and understanding of phenomena providing a holis-
tic insight of what is being studied (Malthora & Birks 2007, 153–154; Eriksson & Ko-
valainen 2008, 5). This approach has the ability to view things from new perspectives
(Koskinen, Alasuutari & Peltonen, 2005, 24) and it is especially relevant when the phe-
nomenon under scope is complex or previous insights about it are scarce (Ghauri &
Gronhaug, 2002; Malthora & Birks 2007, 154). All this is true and applicable for this
study.
According to Eriksson and Kovalainen (2008, 6), qualitative research approach re-
quires qualitative methods naturally. Also a decision between different qualitative
methods for data collection purposes had to be done before conducting the actual empir-
ical research. There are five distinct partly overlapping qualitative methods for collect-
ing data: experiment, interview, archival analysis, history, and case study (Yin 2009, 8–
10). Yin (2009, 8) has stated that when deciding which approach is the most appropriate
for the research, the purpose of the research has to be considered. Based on these con-
siderations, the expert interview approach was seen as the most appropriate for this
study due to the explorative nature of the research topic.
Using expert interviews for qualitative research purposes is a suitable approach for
studies that intend to create new knowledge about issues with little prior research atten-
tion (Ghauri & Gronhaug 2002, 90; Eriksson & Kovalainen 2008, 6–10; Yin 2009, 9).
Furthermore, for topics for which the existing knowledge base is scarce, any new empir-
ical study is likely to assume the characteristics of an exploratory study (Yin 2009, 37).
In addition, the expert interview approach is suitable in situations where the phenome-
non under review is rather complex to understand (Ghauri & Gronhaug 2002, 91–92;
Eriksson & Kovalainen 2008, 8–9; Yin 2009, 11–12) Based on previous discussion, all
this applies in this study.
4.2 Data collection
In this study, expert interviews were used as the method for collecting data. In its sim-
plest form, an interview can be defined as a direct researcher-to-respondent conversa-

40. 40
tion with the purpose of gathering information (Berg 2004, 75; Daniels & Cannice
2004, 185). Interviews were chosen as the means of data collection for this study for
various reasons. Firstly, interviews are efficient and practical for collecting such infor-
mation that cannot be found in a published form (Eriksson & Kovalainen 2008, 80).
This is applicable for this study due to its newness and minor research attention given to
study the Cloud service phenomenon.
Secondly, interview-based studies are regarded particularly well-suited for explorato-
ry studies being the case in this study as they are insightful and allow casual explana-
tions and discovery of new relationships and situations (Ghauri & Gronhaug 2002, 102;
Daniels & Cannice 2004, 186; Yin 2009, 102). Thirdly, interviews allow the researcher
to acquire a richness of information and understanding from each individual respondent
which is essential when the amount of possible respondents is small (Daniels & Cannice
2004, 186), also applicable in this study.
The collection of empirical data for this study was conducted through semi-
structured expert interviews to be exact. In semi-structured interviews some of the
questions and themes are prepared, but the wording and order may vary (Eriksson &
Kovalainen 2008, 82). The researcher is able to probe beyond the answers to the pre-
pared questions (Berg 2005, 81). Therefore, instead of getting only yes and no answers
(Stake 1995, 65), this method also allowed the respondents to lead the conversation
within the limits of themes thus resulting in more thorough interview data. This allowed
the interviewer to guide the conversation without completely controlling it. The purpose
of having semi-structured interviews in this study was to obtain rather systematic and
comprehensive data (Eriksson & Kovalainen 2008, 82) while still allowing space for
free conversation around the topic, deeper descriptions, and extensive explanations.
The disadvantages of semi-structured interviews as a research method were consid-
ered when the data collection phase was planned. This method requires from the re-
searcher more prior knowledge and understanding of the topic than some other methods
(Ghauri & Gronhaug 2002, 102). This disadvantage was mitigated by carrying out an
extensive literature review and spending considerable amount of time to build the theo-
retical framework for the study. In addition to this, the researcher has worked 18 months
for IBM. Based on these issues, it can be considered the researcher possessed deep prior
knowledge and understanding as needed. Semi-structured interviews can also lead to
incomparable empirical data and confusion due to poorly articulated questions (Eriks-
son & Kovalainen 2008, 82; Yin 2009, 102). This was not considered as a problem in
this study as efforts were made to articulate interview questions clearly and properly.
In this study, interviews were divided into two categories of expert interviews: Cloud
service provider and Cloud service user interviews. The company representing a Cloud
service provider was IBM while Exidio, Big Data Solutions, and Comptel represented
Cloud service users. Exidio, Big Data Solutions, and Comptel are considered as users of

41. 41
Cloud services since IBM has been providing them with Cloud service technologies. All
these companies will be presented briefly subsequently after introducing the interview
details of this study. The underlying reason for this interview categorization was to get a
broader and more reliable view on the topic since Cloud service users may experience
the utilization benefits and challenges distinctly compared to Cloud service providers.
This would allow the researcher to answer the main research question of this study in a
more reliable and insightful manner.
All the originally contacted representatives from IBM, Exidio, Big Data Solutions,
and Comptel agreed to meet with the researcher. The initial contact method varied be-
tween emails, phone calls, and face to face encounters. When being contacted, all the
interviewees were told that they and the represented companies could remain anony-
mous in the study if they wanted to (Daniels & Cannice 2004, 195). However, none of
them wished to stay anonymous permitting to reveal interview details as follows. Due to
the Finnish culture and since some of the interviewees were familiar to the interviewer
in advance, Mr. or Mrs. titles were not used during the contacting and interview pro-
cess.
The first three expert interviews in table 4 were conducted from the Cloud service
provider´s perspective. Although all of them work for the same company (IBM) and
hold high positions in this firm including leadership and executive positions, they have
different roles which allowed to approach the Cloud service topic from different angles
and obtain a wide range of thoughts, opinions, and perceptions about this phenomenon.
IBM was chosen to represent the Cloud service provider´s perspective as it is consider
to be the leading technology corporation offering these products and services and since
the researcher has been working for this company for 18 months. This exposure to
Cloud services allowed the researcher to learn and understand the phenomenon to some
extent and to be more critical to what the researcher is being told during the expert in-
terviews. As seen in table 4, the duration of the interview varied between 39 to 51
minutes and the average duration was 46 minutes approximately. Interviews were exe-
cuted between October 2014 and February 2015.

42. 42
Table 4 Interview details
Interviewee Company Position Date Duration
Heikki Rastas IBM Client Solution
Executive
October 28th
2014
51 minutes
Jarkko
Haapalainen
IBM Country Leader
in Strategic
Outsourcing
Business Unit
December 17th
2014
39 minutes
Antti Partanen IBM Cloud Services
Sales Leader
February 9th
2015
47 minutes
Sanna Outa-
Ollila
Exidio Chief Operat-
ing Officer
February 24th
2015
76 minutes
Eerik Puskala Big Data
Solutions
Head of Cloud
Based Analyt-
ics
March 9th
2015 42 minutes
Antti Koskela Comptel Executive Vice
President
March 20th
2015
62 minutes
The last three expert interviews in table 4 were conducted from the Cloud service us-
er´s perspective. These interviewees were selected to represent three different Finnish
SMEs in the IT industry, which are Exidio, Big Data Solutions, and Comptel. Even
though all interviewees have leadership positions, they have different roles in their
companies. This allowed to examine the topic regarding the usage of Cloud services
from different angles, in a versatile manner, and critically. As illustrated in table 4, the
duration of the interview varied between 42 to 76 minutes and the average duration was
60 minutes approximately. Based on these figures it can be concluded that the average
duration of the Cloud service user expert interviews was 14 minutes longer than the
Cloud service provider expert interviews. This permitted to examine and discuss the
Cloud service user perspective deeply and insightfully. Interviews were executed be-
tween February and March 2015.
As illustrated in table 4 and discussed above, there were four companies participating
and represented in the expert interviews of this study: IBM, Exidio, Big Data Solutions,
and Comptel. These companies will be introduced briefly next. IBM is a global tech-
nology corporation having more than USD 90 billion in annual turnover in 2014 and
over 400 000 employees worldwide. Before the 2000s, IBM was mainly known as a
manufacturer of big computers and heavy-duty servers but nowadays it is acknowledged
to be a leading provider of cutting edge technology solutions and services including
Cloud, analytics, social, mobile, and security. (IBM 2015.)