Global Leadership, IQ and Global Quotient Geoffre.docx

Global Leadership, IQ and Global Quotient
Geoffrey VanderPal
The present paper aims to identify and explore the role of
cultural values and global mindset in successful
international leadership and the effects of global mindset
improvement on supporting leaders to provide
optimum solutions to challenging situations. The investigation
of extensive scholarly works highlighted
that the importance of global mindset to global leadership (GL)
has received only limited attention. This
article suggests that analytical intelligence (IQ), emotional
intelligence (EI) and leadership behavior are
complemented by cultural intelligence (CQ) in achieving a
highly performant global leadership.
INTRODUCTION
Under the empire of globalization, a world where any move
spreads in a domino game hard to image
a decade ago (Adler, 2006), successful leaders are regarded as
critical human assets for companies that
seek to gain or aim to expand their international reach (Conner,

2000). The past twenty years have been
marked by the efforts of the academic community and business
arena to decipher, understand and develop
the competencies required by the continuously changing
globalized environment (Caligiuri & Di Santo,
2001; Chin et al., 2001; Cseh, 2002; McCall & Hollenbeck,
2002; Bird & Osland, 2004; Jokinen, 2005;
Mendenhall, 2006; Bartlett & Ghoshal, 2008; Osland & Bird,
2008; Watkins & Cseh, 2009).
The new realities driven by globalization require that
international leaders develop their ability to
rapidly react to changes and manage the complex interpersonal
relationships in order to reach excellence
amid ambiguity driven by cultural differences in values,
patterns, attitudes and behaviours (Earley, 2002;
Earley & Ang, 2003; Ng et al., 2009a, 2009b).
Global operations are different from domestic activities; while
the “whats” maintain, the “hows” need
to be tailored to country specific factors (McCall and
Hollenbeck, 2002). The main driver of differences
in “hows” is related to cultural patterns. Extensive scholarly
works (inter alia, Deal et al., 2003; Javidan
et al., 2010) describe the ability to handle such cultural
differences as one of the essential skills needed for
a successful international leader.
The complex study of Beechler and Javidan (2007) emphasized
a practically endless list of global
leadership competencies, to the point they become useless. The
authors presented global intelligence as
the interplay between a manager’s knowledge, cognitive skills
and psychological traits that offer the
possibility to influence the various stakeholders. They analyzed
the global mindset from the perspective

of a multidimensional notion illustrating the mixture of “an
individual orientation towards the external
environment and the underlying openness to ideas and
experiences” (Beechler and Javidan, 2007, p.154).
Mendenhall et al. (2008) stressed that the critical differences
between global leaders and leaders refer
to the increased uncertainty and substantial contextual changes
the former experience. In order to achieve
excellence, all managers must be open to ongoing learning and
reshape their capacity to deal with
paradox, perplexity and ambiguity.
120 Journal of Management Policy and Practice vol. 15(5)
2014
The western Enlightenment tradition calibrated intelligence
with the help of IQ. It was, and still is, the
most notorious criteria of leadership and general abilities in
western scholarly works (Chen and Gaynier,
2005). In the 1990s, emotional quotient became increasingly
popular (Goleman, 1995). In addition to the
critical need for IQ and EI, global managers experience the
challenge of developing a new array of skills
that give content to cultural intelligence (Earley, 2002).
Despite rich evidences on the significant role of intelligence
quotient in the facilitation of successful
performing of tasks, an entire plethora of academic papers
highlighted the precedence of emotional
intelligence over IQ. As described by Lynn (2002), excellence
and intellectual brightness are highly

important components in human resource practices, but cannot
be treated separately and considered
sufficient to solve challenging managerial issues.
Considerable academic researches documented the relationship
between cultural characteristics and
leadership excellence in various countries. In addition, we note
the large array of studies that identified
and investigated the cultural values and traits in targeted
regions (Hofstede, 2001; House et al., 2004;
Hadgis, 2005). Extensive analyses by specialists (inter alia,
Thomas & Inkson, 2003; Walker et al., 2003;
Peterson, 2004) emphasize that cultural competencies and
cultural intelligence are the prerequisites for
reaching a successful leadership in a world with rules rewritten
by globalization. Despite all efforts of
organizations to improve their understanding of cross-cultural
leadership abilities, scientific papers on
cultural intelligence are surprisingly limited (Groves and
Feyerherm, 2011).
The literature and practical experiences have demonstrated that
a refined understanding of
international relationships is essential for companies to operate
effectively in today’s global business
environment. The parameters of this perception are closely
connected to the possession of international
abilities within an organization (Gupta and Govindarajan,
2002).
LITERATURE REVIEW
Scholars have suggested that the leadership paradigm that
governed the 20th century needs to be

refined to reflect an innovative way of thinking/behaving to
meet best the requirements of a highly
interconnected, competitive and dynamic global society (Jeanet,
2000; Werhane, 2007; Bartlett &
Ghoshal, 2008; Adler, 2009). Nowadays, the corporate
environment requires a superior quality of
interrelationships, collective understanding and improved
outcomes in the working arena (Ashraf et al.,
2014). After an extensive investigation of scholarly works
focused on leadership competencies, Jokinen
(2005) highlighted the lack of consensus regarding clear
definitions and classifications of fundamental
concepts such as “global”, “leadership”, or “competency”.
Although in the last decade the importance of having successful
global leaders has become more
obvious than ever (Adler and Bartholomew, 1992; Brake et al.,
1995; Brake, 1997; Bonnstetter, 1999;
Morrison, 2000; Suutari, 2002), researchers agree there is a
considerable gap between the transnational
human resource requirements of international strategies and
their achievement (Adler and Bartholomew,
1992; Morrison et al., 1999; Engle et al., 2001). In addition,
diversity and uncertainty increasingly mark
the domestic environment, as companies enjoy worldwide reach
(Jokinen, 2005).
According to McCall and Hollenbeck (2002), the development
of global capabilities should rely on
the foreign business strategy that establishes what kind of
global presence is optimal, the number and
grouping of international assignments, task forces, projects and
other kind of relationships that exist.
The study of relevant works in the literature showed an issue of
missing unanimity related to global

leadership capabilities. Some researchers (inter alia, Thaler-
Certer, 2000; Kets de Vries & Florent-
Treacy, 2002) stressed that successful domestic managers have
the same competencies as global ones, but
that highly performing international leaders are able to use and
retain these abilities to solve completely
unfamiliar issues. Although Kets de Vries and Florent-Treacy
(2002) argued that emotional intelligence is
a major attribute of a highly performing global leader, the
authors have provided no clear definition of
this characteristic.
The results of the literature review composition by Kokinen
(2005) indicate that the most important
leadership abilities include self-awareness, engagement in
professional improvement and inquisitiveness.
Journal of Management Policy and Practice vol. 15(5) 2014
121
These competencies are treated as essential prerequisites, and
driving factors for the development of a
broader array of other capabilities. Cognitive abilities influence
the way leaders experience and interpret
the business environment. They also calibrate the amount of
new knowledge and the effectiveness of
learning from those interpretations and practical contact with
challenging situations. Wills and Barham
(1994) described cognitive complexity as a fundamental
competence of successful global leadership. The
international business arena is usually marked by rising
uncertainty and ambiguity. Given that, routine

solutions provided by old knowledge are not the best option to
consider (Gregersen et al., 1998). Instead,
relevant intelligence and findings offered by past experiences
need to be redesigned to create innovative
solutions.
Additionally, in a dynamic global context, leaders must possess
divergent thinking abilities and skills
to switch rapidly concentration focus from one issue to another
(Mintzberg, 1975), quickly recognize
patterns and identify critical facts and atypical behaviors, enjoy
high speed of closure and multiple
intelligences. Despite the importance of traditional IQ as the
academic community and practitioners have
come to know, it does not take outstanding capabilities to have
high intellect in other areas. The literature
offers multiple evidences that promote IQ, emotional
intelligence or both as predictors of global
leadership performance. The most relevant leadership theories-
behavioral, trait, situational, contextual, or
contingent constructs, do not yield a clearly articulated answer
to the requirements of contextual
intelligence as a component of crossing cultures that can be
defined, learned, calibrated and improved
(Service and Loudon, 2012).
Academic studies and practical experiences pinpoint the need
for an extensive understanding of IQ in
order to achieve superior leadership performances across
cultures at an ever-increasing pace. Many
authors (inter alia, Sternberg, 1996, 2003; Brooks, 2011; Hall,
2011) attached only a limited importance
to the traditional IQ and replace it with a concept known as
“successful intelligence”.
Service and Loudon (2012) extended the notion to a contextual

intelligence (GLO) that can guarantee
cross-cultural and different contextual fit effectiveness. The
authors have built a global leadership
quotient (GLQ) describing a type of intelligence similar to IQ,
emotional intelligence and leadership
quotient that can be used as a benchmark for assessment,
strategic development and ongoing training. Lee
(2005) research showed that many companies that seek
international expansion face difficulties when
selecting and managing the most appropriate individuals. In
addition, Yukl (2013) noted that as
globalization is changing demographic patterns, it becomes
increasingly important for leaders to
understand how to manage employees with different values,
beliefs and expectations.
The notion of cultural intelligence that emerged into the
business literature (Earley, 2002; Earley
&Ang, 2003) may provide indications of whose time has come.
The construct essentially refers to the
capacity to manage effectively relationships within various
cultures (Earley& Ang, 2003; Ang et al.,
2007; Thomas et al., 2008). Concepts that illustrate this
approach such as global mindset or cross-cultural
abilities have existed for some time (Thomas, 2006). However,
the efforts to shed light on this
multifaceted notion are still in infancy (Ang et al., 2007).
Earley and Mosakowski (2004) described two
types of cultural intelligence: organizational CQ and CQ related
to geographic/ethnic culture. Zecca et al.
(2013) analyzed the characteristics of critical variables a leader
must understand before performing any
operation in a culture with new and different patterns and
habits. Essentially, successful global leaders
should tailor and align their activities with cultural demands
(Muczyk and Holt, 2008). And although

cultural preferences are relative, a complementary approach
illumine an underlying cultural intelligence
(Hampden and Trompenaars, 2006).‖
Extensive academic analyses pinpoint the strategic importance
of investments in improving CQ
among organizations leaders, as a source of competitive
advantages in a global business arena (Earley &
Petersen, 2004; Ang & Inkpen, 2008; Rose et al., 2010).
Previous investigations examined the impact of
personality features (Ang et al., 2006) and international
experience (Crowne, 2008) on cultural
intelligence. Although some leaders learn from the valuable
insight provided by scholarly efforts, other
fail at a high cost (Hill, 2001). However, much less is known
about the connection between learning
capacity and international experience (Spreitzer et al., 1997).
This topic requires more in-depth
2014
exploration so that organizations can make use of their costly
international endeavor to improve global
leadership abilities (Kohonen, 2005).
There is a common belief in the literature that international
experience is essential for leaders that
seek success in a highly interconnected business world (Bisoux,
2011; Phan, 2011). The integration of
technologies, industries, markets, states, relationship and
interests is a main characteristic of the XXI

century workplace (Potoker, 2011). In line with Shinn (2011)
description of a successful global leader, the
manager of tomorrow is an individual who can go beyond
boundaries and disciplines and explore cultural
and international patterns. Based on previous theoretical
constructs on intelligence indicators such as
cognitive intelligence (IQ), social intelligence (SQ) and
emotional intelligence, Early (2002) described
that a leader’s ability to adapt to unfamiliar cultural
environments depends on three dominant factors:
cognitive, motivational and behavioral (Figure 1).
FIGURE 1
CULTURAL INTELLIGENCE
Source: adaptation after Earley, P.C. (2002) Redefining
interactions across cultures and
organizations: Moving forward with cultural intelligence. In
B.M. Staw & R.M. Kramer (Eds.),
Research In Organizational Behavior Vol. 24 (pp. 271-299).
New York: JAI
The CQ model and its extensions build by Thomas (2006),
Thomas et al. (2008) and Thomas and
Inkson (2009) highlighted that the mixture of knowledge,
mindfulness and competencies help global
leaders improve their CQ level. Culturally intelligent managers
have the ability to use their knowledge to
face the multiple dimensions of cultural habits that interfere
with their activities. They apply cognitive
strategies to identify and solve any issue and build an array of
skills that can be tailored and translated

into appropriate behaviors to face a wide range of situations
(Thomas & Inkson, 2009; Tuleja, 2014).
These are the most relevant abilities of a successful global
leader.
Chin and Gaynier (2005) stressed that in addition to significant
levels of IQ and emotional
intelligence, XXI century global leaders abilities have to be
complemented by CQ to navigate the
uniqueness of the international environment. The authors
improved the global competency model (GLC)
designed to support managers’ efforts in achieving global
leadership excellence.
The GLC model provides guidelines that conceptualize the steps
of cultural intelligence development
(Figure 2). First introduced by Chin et al. (2001), the model
reflects the ranking of competency elements.
Chin et al. (2001) suggested an evolutional path of global
leadership from a low hierarchic stage of
ignorance to an ideal superior degree of competence:
adaptability.
Cultural
intelligence
(CQ)
Cognitive:
-knowledge and skills
-meta strategies

Motivational:
-self-efficacy
-goals and conciousness
Behavioral:
-repertoire
-mimicry
-routines and rituals
123
FIGURE 2
GLOBAL LEADERSHIP COMPETENCY (GLC) MODEL
Source: Chin, C., Gaynier, L. (2006) Global Leadership
Competence: A Cultural Intelligence Perspective.
Presented at the 2006 MBAA Conference. Available from
https://www.csuohio.edu/sciences/dept/psychology/graduate/div
ersity/GlobalLeadership%2011206.pdf
The abilities investigated for each stage are in line with the EQ
research of Goleman (1995) and with

Kegan (1982) adult development model. The elements of
competence described from low to high include
ignorance, awareness, understanding, appreciation, acceptance,
internalization, transformation. Chin
(2005) refined the model and replaced transformation with
adaptation, in accordance to the construct of
Silverthorne (2000) that reveals a powerful connection between
adaptability and effective global
leadership. The author also delineated acceptance and
internalization and stressed the latter is a distinct
evolutional step.
The GLC model highlights the that a superior level of
international management function is not only
desirable, but in fact required for achieving excellence in a
globalized business environment. It has to be
noted that the GLC model is not merely a leadership model;
rather, it is centered on the nature of cultural
abilities or literacy needed to be a successful global leader.
Although the concept of CQ and its measuring instruments have
been heavily researched through
substantial theoretical and empirical analyses (Early & Ang,
2003; Ang & Van Dyne, 2008; Ng et al.,
2009; Moon, 2010), the investigation of CQ as a global
leadership ability is still at an early stage.
Moreover, scholarly works that explored the unique impact of
managers CQ on the performance
outcomes beyond other contemporary leadership competencies,
for instance emotional intelligence, are
very scarce (inter alia, Ward et al., 2009; Chun et al., 2010).
Despite extensive examination of CQ as a
key indicator of global assignment effectiveness (Kim et al.,
2008), integration in cross-border teams
(Flaherty, 2008), and expatriate adjustment and outcomes
(Shaffer & Miller, 2008), the CQ arena largely

lacks empirical investigations.
Hofstede (2001) was the first to strongly highlight the need to
research the cultural characteristics of
nationalities. The analysis of cultural differences was neglected
in the evolution of trading between
countries. The context complicates when multinational
companies decide to participate to joint ventures
and engage in mergers, acquisitions and strategic alliances at a
global level (Hofstede et al., 2002). The
findings of Hofstede (2002) revealed the significant failure rate
of international ventures between firms
from different parts of the world with various cultural habits. In
addition, Hitt et al. (2007) emphasized
the importance of a global mindset for the successful
management and competition in worldwide markets.
2014
Given the current business realities, global markets require
leaders of excellence with the ability to handle
substantial uncertainty, complexity and diversity and proper
knowledge of complex social, cultural and
institutional constructs.
Extensive academic studies have proposed the global mindset as
a vital construct for a global leader
to achieve mastery and increase performance (Kedia &
Mukherji, 1999; Black & Gregersen, 2000; Oddou
et al., 2000; Pucik, 2006).

Global mindset is a notion that refers to holistic abilities and is
usually associated with the
prerequisites of successful leaders. Although the literature has
created several frameworks of global
mindset, we note the absence of a consensus. Despite the
significant amount of analyses that claimed the
role of a global mindset in leadership performance, when it
comes to empirical research, only a limited
number of authors focused on this subject. While the vast
majority of scholarly works has explored the
antecedents and evolution of global mindset, the importance of
the concept has generated only narrow
interest to the academic community and it has not been
empirically established yet (Vakilbashi et al.,
2014).
Many authors stress the importance of local culture as a
determinant of leadership performance and
styles (Den et al., 1999; Koopman et al., 1999; Hofstede et al.,
2002; House et al., 2004; Scandura and
Dorfman, 2004). From the cultural intelligence perspective,
global managers increasingly face the need to
dominate local mindset, go beyond cultural restrictions,
cooperate with counterparties from different
nations and manage socially diverse relationships. Levy et al.
(2007) argued that the best solution to deal
with these issues is to escape from an ethnocentric mindset and
build a global mindset embedding CQ,
understanding of other cultures and international business
vision.
Rhinesmith (1996) illustrated 24 competencies that a global
leader should have and classified them by
scope as they connect to the company strategy, structure,
corporate culture and staff. Kottolli (2007) study
linked the global mindset with both people and organizations.

From the perspective of individuals, Levy
et al (2007) described global mindset as a multi-faceted notion
that encompasses “a highly complex
cognitive structure characterized by an openness to and
articulation of multiple cultural and strategic
realities on both the global and local levels” (p. 244).
Transnational competitors recognize the importance of having
powerful leaders with a global mindset
(Yan et al., 2002; Earley and Peterson, 2004; Crowne, 2008).
Businesses are in search of highly trained
individuals whose abilities would allow them to successfully
work across multiple cultures and achieve
substantial performances. Given the critical role of a global
mindset for both the academic community
and the business environment, the methods of acquiring and
further improving it has been extensively
investigated (Somerville, 1998; Gupta & Govindarajan, 2002;
Thomas & Inkson, 2004; Earley &
Peterson, 2004; Ang & Inkpen, 2008; Shapiro et al., 2008).
Although the techniques for designing a global mindset are
various, researchers reveal that
international assignments are one of the most powerful methods
to develop the competencies and
knowledge required by a successful leadership (Gregersen et al.,
1998; Crowne, 2008). According to
Sambharya (1998), foreign assignments are usually treated as
surrogates for a global mindset. However,
not every foreign assignment ends with the accomplishment by
the manager of the company-established
goals.
Gupta and Govindarajan (2002) described the global mindset as
a mixture of awareness and openness
to cultural diversity and markets of leaders with a high capacity

to integrate within different
environments. As presented by Lovvorn and Chen (2011), a
global mindset is an ongoing and
continuously evolving process supported by cognitive feedback
structures encouraging the search for
experiences that enlarge and improve a manager’s mental
constructions.
Danuser (2009) described the critical role of developing global
attitudes and training international
leaders. From an economic standpoint, it is more expensive for
companies to send an employee to a
foreign assignment as a leader. Hence, ineffective leadership
performed by new staff in international
markets could endanger the opportunity to compete, hamper the
return on investments, increase the risk
of losing precious business alternatives and decrease customer
loyalty and market share (Vakilbashi et al.,
2014).
125
An international transaction failure facilitates the grounds for
managers’ loss of self-esteem, self-
confidence and status among staff and engagement with the
organization. However, from a social
responsibility perspective, companies need powerful leaders
with a global mindset that would follow the
international ethics and rules related to climate change
mitigation and strategies for sustainability and
environmental protection.

Given that international experience per se is not a driver of the
global mindset, Lovvorn and Chen
(2011) findings indicated cultural intelligence as a catalyst of
the international experience, turning the
information obtained from the foreign assignment into valuable
knowledge and ultimately into a global
mindset.
Kedia and Mukherji (1999) designed a two-tier construct to
describe the determinants of a global
mindset and by synthetizing the approach of Srinivas (1996),
emphasized that its foundation relies on
only two elements: knowledge and skills. According to the
authors’ vision, knowledge refers to the
appreciation of the existence of differences and skills relate to
the capacity to transform knowledge into
action.
FIGURE 3
DEVELOPMENT OF A GLOBAL PERSPECTIVE
Source: adaptation after Kedia, B.L. & Mukherji, A. (1999)
Global managers: Developing a mindset for
global competitiveness. Journal of World Business, 34(3).
While explaining the types of knowledge required to build a
solid global mindset, Kedia and
Mukherji (1999) explored three particular knowledge factors
successful leaders must possess:
1) a high understanding of technology, information systems and

telecommunications;
2) a fine perception of the social and political elements in
different countries - host of the
organization’s activities;
3) an evaluation of the role of culture and cross-cultural aspects
that influence leadership decisions.
The main underlying skills researched by Kedia and Mukherji
(1999) include acculturation and the
capacity to improve management to face cross-cultural
diversity. By combining knowledge with the
appropriate abilities, leaders build a global mindset that
enhances overall performance.
Global mindset
Knowledge
-mastery of technology
-International socio-politic and economic
perspective
-understanding of cultural issues
Skills
-acculturation
-leadership and managing diversity

2014
FIGURE 4
CULTURAL INTELLIGENCE AND GLOBAL MINDSET
Source: Lovvorn, A., Chen, J. (2011) Developing a Global
Mindset: The Relationship between an International
Assignment and Cultural Intelligence. International Journal of
Business and Social Science, 2(9)
The cognitive style of leaders with a global mindset is described
by three commonalities (Oddou et

al., 2000; Nummela et al., 2004; Osland & Osland, 2006):
1) managers enjoy a superior tolerance to ambiguity and are
able to perform well during times of
substantial uncertainty;
2) personal abilities array is broad with leaders capable to
function with the support of a large
number of available tools and underlying networks when faced
with the uncertainty of new
situations;
3) managers who possess global mindsets have the competencies
to handle cross-cultural issues
triggered by interactions with counterparties from foreign
countries based on a holistic versus an
analytic way of thinking;
In light of the relationship between CQ and the effectiveness of
global leadership, Manning (2003)
noted the vital role of cross-cultural effective leadership and
argued that international abilities,
particularly related to the capacity to handle rising cultural
diversity is a prerequisite of management
excellence. Rosen et al. (2000) study returned two important
findings. First, the authors revealed that
global literacies are the core of leadership universals; second,
Rosen et al. (2000) showed that with the
increase of the world economic integration, the more significant
cultural patterns become. Cultural
literacy-understand as the ability to value and turn cultural
differences into benefits- is critical among the
competencies required by a successful leadership.

The perception of cultural literacy of Rosen et al. (2000) shows
many similarities with Earley and
Ang (2003) construct of CQ and builds a relationship between
this type of intelligence and the leadership
of excellence in the global environment. Offermann & Phan
(2002) provided additional evidences of this
link and showed that cultural consistency between managers and
subordinates is related to the superior
hierarchy relationships within the company, satisfaction level of
the followers and work effectiveness.
Similar to the emotional intelligence concept, debates are
structured around assessment, training and
experience (Alon & Higgins, 2005).
International experience
-Accumulation of cultural
knowledge
-Experience in the
expanding global
marketplace
-Broadened perspective
-Enhanced knowledge
base
-Heightened interpersonal
and communication skills
Cultural intelligence
-Cognitive
-Motivational
-Behavioral

Global mindset
-Openness to diversity
-Awareness to diversity
-Integrating & Synthetizing across
diversity
Direct effects
Moderating
effects
127
The cognitive intelligence construct generated large debates as
a product of nature predominantly or
nurture predominantly (Lovvorn and Chen, 2011). According to
large academic evidences, a higher IQ is
postulated to improve the abilities of an individual related to
cultural patterns and differences. However, it
is the combination of leaders’ native intelligence, personal
motivation and behaviors that drives their
ability to possess CQ (Tan, 2004). The predisposition to
develop and improve cultural intelligence is
given by global leaders’ incentive to persevere when faced with
difficulties and failures and it underlies
the foundation of CQ.
A powerful international leader will never wait for guaranteed
outcomes; rather, he will return to his

own cultural intelligence, innovate, experience failure, learn
from mistakes and continue trying (Davies,
1996).
As described by Crowne (2013) cultural exposure and resulting
CQ is a source of competitive
advantages for any company. Sternberg (2003) argued that
success is generated by the interplay between
analytical, creative and practical capabilities. Groves and
Feyerherm (2011) analyzed a myriad of studies
and showed that CQ enhances leadership outcomes in the
increasingly globalized business environment.
To perform a leadership of excellence, global managers must be
able to understand and handle local
cultural patterns and develop superior IQ, EQ and CQ. The
graphical representation below illustrates a
conceptualization that connects all these three constructs.
FIGURE 5
ELEMENTS OF GLOBAL LEADERSHIP EXCELLENCE
Source: Alon, I., Higgins, J. (2005) Global leadership success

through emotional and cultural intelligences.
Business Horizons, 48, 501—512
Although the scientific investigations focused on global
leadership quotient have highlighted the role
and implications of various competencies, they have not always
been clear on how these abilities
influence the performance results. This topic may be intensively
explored and debated in other fields,
such as psychology.
CONCLUSION
The analysis of the relevant literature has highlighted that
successful global leadership depends not
only on leadership behavior, but also on the interplay of
intelligences: cognitive intelligence (IQ),
IQ
Verbal and mathematical
intelligence
EQ
Emotional intelligence
CQ
Organizational cultural
intelligence
Motivation
Elements and types of

motivation
Leadership
behaviors
Domestic
leadership success
CQ
Geographical/Ethnic
cultural intelligence
Global leadership
success
2014
emotional intelligence and cultural intelligence. Theoretical
studies and practical experiences have
revealed the critical role of cultural intelligence in achieving
global leadership excellence.
Given the highly interconnected business arena and the
determinants of successful global leadership,
companies need to include emotional and cultural intelligence
as a component of their GL programs.
Having a global mindset is essential for any leader activating
both in the global environment and in the
domestic arena.

Scholarly works on global quotient of international leaders have
provided dispersed outcomes and
thus, more synergistic scientific efforts are needed,
complemented by a more extensive theoretical
framework, to understand the phenomena and relationships
underlying the improvement of the global
leadership potential.
The academic interest in CQ has revealed an upward trend since
the seminal work of Earley and Ang
(2003), who described cultural intelligence as the ability to
operate in culturally diverse business
environments. The authors provided solid arguments that
general capabilities such as IQ, emotional
intelligence and social intelligence that involve a familiar
cultural context to guide leaders’ cognition and
social behaviors, do not hold when managers are engaged in
international assignments with different
background counterparties.
From a conceptual standpoint, the construct of cultural
intelligence needs to be further investigated
and operationalized so that it can bring maximum benefits to
academic community and business
environment. In the absence of multiple measurement
instruments to prove its reliability and validity, the
development of the concept will be substantially hampered.
Only in the last decade, researchers have
started to quantitatively develop the notion (Ang et al., 2007).
An operationalized framework should offer
the means for the scholars and practitioners to evaluate leaders
on their potential skills to activate
effectively during a foreign assignment. The international
assignment parameters could also be assessed.
Companies could make overseas assignments based on the level

of CQ exhibited by the individual
leader and the degree of complexity and uncertainty that the
individual is forecasted to experience during
the foreign posting. International leaders face difficulties hard
to image a decade ago. Hence, their
competencies and those of subordinates needed to function
effectively in a highly interconnected business
environment characterized by different cultural patterns
requires a superior perception and understanding
of diversity in all its forms and an active integration of any new
incentive into exiting mental layouts.
Only by enhancing the level of cultural intelligence, a
successful leader can develop a broad global
mindset.
The estimation and investigation of the effectiveness of
international leaders faced with cross-cultural
interactions has never been so important. The construct of CQ,
as a mixture of capabilities that may
explain why some managers perform better than others, shows
substantial promise. The definition of
intelligence, in all its dimensions, has been a challenging
process, and CQ is similarly problematic.
However, analyses focused on the link between cultural
intelligence and successful leadership within
a globalized business world are rather limited. We also note the
lack of empirical papers and qualitative
works to enhance the viability of the theoretical models. In
addition, most researchers centered their
interest on offering normative recommendations to global
leaders and human resource professionals and
not on exploring the theoretical and empirical difficulties driven
by a rigorous investigation,
conceptualization and establishment of the role of a global
mindset in achieving leadership performance.

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Reproduced with permission of the copyright owner. Further
reproduction prohibited without
permission.
Internationalization of Small and Medium-sized Enterprises:
Barriers and Economic Incentives
Andrew Jonathan Beall, DBA
36 Carrier Bluff
Okatie, South Carolina 29909
[email protected]
Earned Doctor of Business Administration (DBA) and Master of
Business Administration
(MBA). Experienced executive who led international
enterprises from regional firms to a S&P
500-level global enterprise. A practitioner and leader of
complex organizations that served
heavy industry and global infrastructure. A strategic leader for
fully-integrated, globally-
distributed operations requiring the merger of knowledge

management, physical production, and
final delivery of complex assemblies. Through engagements
with public and private South
Carolina enterprises, well versed in the challenges faced by
leaders of small and medium-sized
business. Practiced and accomplished with solutions that
promote successful, serial international
expansions into new global markets.
Johnny L. Morris, PhD
University of Phoenix
209 South Riverwalk Drive
Palm Coast, Florida 32137
[email protected]
Earned Doctor of Philosophy (Ph.D.) and Master of Business
Administration (MBA). Associate
Professor involved with the development of curriculum and
teaching courses in the online
environment. Course delivery expertise includes accounting,
capstone, entrepreneurship, finance,
leadership, management, organizational behavior, strategic
management, and research. Teach
graduate and doctoral courses in classroom and online

environments at accredited universities.
Senior executive leader in for-profit public companies.
Experienced director of operations,
director of strategic planning, and director of community
reinvestment activities for federally
chartered bank organizations. Research interests include
integration of values-based leadership
skills, values, and concepts in global virtual environment.
Abstract
Enterprise leaders may improve outcomes and avoid costly
mistakes through
understanding of economic incentives and barriers to
international expansion.
Conclusions from a research study of small and medium-sized
South Carolina
enterprises were triangulated with prior research to highlight
leader
internationalization experiences. The globalization
phenomenon of world
markets is a persistent trend that is accelerating. Growing
global markets are
linked to increased opportunities for smaller enterprises to
participate in

international commerce. Limited understanding of incentives
that enable success
and techniques effective for overcoming barriers may restrict
smaller firms from
rewarding participation in international markets. Not all
commercial enterprises
are prepared organizationally nor properly resourced for
international success.
Those firms that may benefit by accessing larger customer pools
or expanded
December 19, 2015 TAF000008December 19, 2015 TAF000009
global supply networks may achieve higher levels of enterprise
success by
overcoming barriers to new international market commerce.
Keywords: Internationalization, Small and Medium-sized
Enterprises, International
Commerce, Business Networks, International Expansion
Leadership, International
Decision-making, Barriers to Commerce, Economic Incentives,
Global Supply

Chains
Introduction
Firms with fewer than 500 employees are the most frequent
form of enterprise defined by
number of employees, representing 97 to 99% of businesses in
market economies (Kumar, 2012;
K. London, 2010; Tesfayohannes & Habegger, 2011). These
small and medium-sized
enterprises (SMEs) provide the majority of employment
opportunities—from 51 to 86% of all
jobs in major market economies—yet only eight percent of
small enterprises report revenues
from exports (Tesfayohannes & Habegger, 2011; Vasquez &
Doloriert, 2011; Wright, Westhead,
& Ucbasaran, 2007).
Decision-makers for small business have limited resources when
contrasted to large
enterprises (İPlİK, 2010; Rodrigues & Child, 2012). Small
businesses are characterized as
founder-directed, entrepreneurial, nimble, flexible, niche
marketers, and learning organizations
(Kontinen & Ojala, 2011). Leaders of small firms also are less

able to guide the firm to
economies of scale, attend less effort at international market
scanning, and are less able to
address large or risky projects (Nkongolo-Bakenda et al., 2010;
Wright et al., 2007). Leaders of
SMEs make choices for the use of firm resources based on
subjective expected utility, evaluating
the relative expected benefit and likelihood of accomplishment
between alternatives (Fisher &
Lovell, 2009; Wright et al., 2007).
Expansion by SMEs into markets beyond home country borders
follows patterns
described as proactive market-seeking, reactive, and client-
following (K. London, 2010). SME
leaders may choose to engage in international business to
pursue opportunity, at the request of
historical customers who initiate operations in foreign markets,
and in response to competitive
market pressures (Hynes, 2010; Rodrigues & Child, 2012).
Decision-makers may also choose to
not pursue international markets due to sufficient domestic
market opportunities: “most stay at
home” (Wright et al., 2007, p. 1017). Leader prior experience
and foreign market relationships

are associated with enterprise movement into international
markets (Agndal & Chetty, 2006; K.
London, 2010).
Leader experience is a major factor in the ability of decision-
makers to identify
opportunities and to structure the firm for success in foreign
markets (Wright et al., 2007). The
SME decision-maker desire to internationalize is often
accomplished with assistance gained
through relationships; customer, supplier, or professional
contacts serve as a catalyst to launch
new international commerce (Agndal & Chetty, 2006). Leaders
determine specific markets for
expansion, basing their decisions on conditions that attract or
repel entrepreneurial interest
including business factors, chance opportunity, psychic
distance, politics, or structural conditions
(Agndal & Chetty, 2006; K. London, 2010; Sherriff, Brewer, &
Liesch, 2010).

The decision to launch an international initiative for a small or
medium-sized enterprise
represents both opportunity and risk for the firm (Lee, Kelley,
Lee, & Lee, 2012). The low
percentage of all SMEs involved in international commerce is
indicative of the choice by most
decision-makers to address only domestic markets.
Increasingly, however, globalization is
encouraged by the adoption of standard business languages,
ease of electronic communication,
and reduced trade barriers resulting in rising opportunities for
cross-border commerce (Khapne,
2012).
Internationalization
The decision to expand internationally is no guarantee for the
success of a new
international venture; however, successful expansion into
international markets may significantly
increase total opportunity available to a firm (Lee et al., 2012;
K. London, 2010). “Growth is a
multi-faceted phenomenon that is commonly associated with
firm survival, achievement of
business goals and success, or scaling of activities” (Hynes,

2010, p. 89). Foreign activities
necessitate the commitment of resources and may involve risk
to the firm, increasing the interest
and value of organizational knowledge for ventures active in
economies beyond the domestic
market.
Theories of internationalization began with the work of
Johanson and Wiedersheim-Paul
(1975) who first introduced research on the sequential,
international, expansion experience of
Swedish product-producing companies. The work by Johanson
and Wiedersheim-Paul, and
additional analysis by Johanson and Vahlne (1977), has been
generalized to describe the
internationalization experience of product-producing
enterprises. Subsequent scholarly work
explored additional aspects of internationalization, including
born-global and rapidly expanding
new firms aided by electronic communication.
Uppsala Stage Theory
Johanson and Vahlne (1977) published research on Swedish
firms that expanded from

historical service of the domestic Swedish market to
participation in international markets. The
theory known in scholarly literature as the Uppsala stage
theory, links to the association of the
authors with the Swedish University of Uppsala. The germinal
theory is a stage theory; the
authors showed the international expansion of the studied firms
to occur in stages defined by
time, commitment of resources, and the development of
international market knowledge
(Johanson & Vahlne, 1977). Firms researched by Johanson and
Vahlne included Sandvik, Atlas
Copco, Facit, and Volvo, and built on prior research on the
same companies by Johanson and
Wiedersheim-Paul (1975). Each of the firms included in the
study increased in international
exposure according to a particular pattern:
a) Initiating international activity through export sales,
followed by
b) The selection and development of a foreign representative,
c) The subsequent establishment of a sales subsidiary, and,
finally,
d) The commitment of a foreign direct investment of resources
to produce goods and
services in the foreign country.

Uppsala stage theory includes the researcher hypothesis that
psychic distance between
people groups impedes entry into a new foreign market.
Psychic distance is a construct used by
scholars to describe differences in the norms of two people
groups and is a factor that limits the
free flow of information between people in two economies
(Johanson & Vahlne, 1977; Johanson
& Wiedersheim-Paul, 1975). Language, custom, social norms,
education, business practices, and
political barriers are factors that require experiential learning
for people to master. Equally,
experiential learning is a necessary factor for the successful
transfer of the particulars of internal
knowledge within the internationalizing firm expanding into a
new market. The two-way
acquisition of knowledge of the foreign market and of the firm
that wishes to expand requires
time-based development. Personal contact by market
participants develops experiential learning

of foreign markets, which committed activity and direct
resources placed within the expansion
market reinforces.
Johanson and Vahlne (1993) theorized that the
internationalization of firms is a process,
which begins with the acquisition of market knowledge and
continues with incremental
commitment of resources, thereby providing a feedback loop of
additional knowledge to
reinforce further commitment. The authors concluded that the
process, one of double-loop
(Argyris, 2002) and triple-loop learning (Senge, 2006), might
not be abbreviated or accelerated.
The necessary form of market knowledge is experiential and a
tacit understanding that cannot be
transmitted otherwise.
The Uppsala stage theory continues as the prime theory of the
internationalization
process for enterprises that produce a physical product and
involve the commitment of capital
assets (Oviatt & McDougall, 1994; Oviatt & McDougall, 2005).
Subsequent research recording
the international expansion of service firms and those that
provide intangible products has

challenged the theory for exclusivity (Knight & Cavusgil, 2004;
Knight & Cavusgil, 2005;
Oviatt & McDougall, 1994).
The Internationalization Continuum
Cavusgil (1980) built on the work by Johanson and Vahlne to
introduce a continuum of
activity for the internationalizing firm. The process of
international growth is “…a gradual
process, taking place in incremental stages, and over a
relatively long period of time” (Cavusgil,
1980, p. 273). For manufacturing enterprises, the graduated
progress to foreign market
effectiveness is decades-long (Ohmae & Rall, 1987).
Beginning with a domestic focus, ventures first satisfy
opportunities in the home market,
and where the local market matches the ambition of the
entrepreneur, the firm may never choose
to venture beyond the local economy. Leader curiosity about
foreign opportunity may augment
focus on the domestic market. The second, pre-export
internationalization stage includes
knowledge and information gathering activity by the enterprise

leader. For example, a business
owner may pursue chance contacts with peers from international
markets through informal
encounters at trade shows or training symposia. Networking
with knowledgeable people and
their organizations is part of the first stage of developing
needed social capital to assist a new
international venture (Rodrigues & Child, 2012).
Pre-export activity may develop through leader predisposition
toward international
activity because of personal travel, a foreign living experience,
speaking a second language, or
ancestral heritage (Cavusgil, 1980). Experimental international
involvement in foreign markets
is a stage frequently initiated through an unsolicited order from
an international customer
(Johanson & Vahlne, 1977; K. London, 2010). An established
domestic customer of a domestic-
market supplier may launch international operations and invite
the trusted local supplier to
support the foreign location as well. Similarly, an import
company in a foreign nation may
acquire a good produced by a domestic-only firm resulting in an
initial unsolicited export order.

In each of the described examples, the enterprise leader may
fulfill the foreign order as an
experimental business activity to satisfy curiosity about foreign
markets, or may respond to the
simple profit incentive presented by an unanticipated order from
a foreign market (Cavusgil,
1980).
Knowledge gained by domestic-focused enterprise leaders in the
pre-export and
experimental stages of internationalization may stimulate
leaders to initiate purposeful programs
of export commerce. Leaders of companies who direct
expansion into foreign commerce choose
markets for initial activity that are regionally proximate and
culturally similar to the home
market of the new international entrepreneur (Aspelund &
Butsko, 2010; Cavusgil, 1980; Chetty
& Campbell-Hunt, 2003; Sherriff et al., 2010). A distinct
offering or particular competitive

advantage may be a basis for a firm to export, and accelerate the
acceptance of the product by
consumers in the import marketplace. Increased resource
commitment and leader involvement
in the development of a foreign market builds knowledge of the
expansion market (Cavusgil,
1980; Johanson & Vahlne, 1977). Successful experimental
efforts at international activity and
the accumulation of tacit knowledge prepare people in the
organization for the committed-
involvement stage of internationalization.
Organizations often must be redesigned to accommodate a
committed engagement in
international commerce; the risk and effort required to thrive in
foreign markets may exceed that
of the domestic market, requiring leaders to adjust product,
staffing, and business practices
(Cavusgil, 1980). Committed engagement in foreign markets is
a form of feedback loop of
knowledge acquisition leading to further resource commitment
described by Johanson and
Vahlne (1977). Continuous and expanding international market
involvement represents the final,
committed stage in Cavusgil’s continuum.

International New Ventures
Oviatt and McDougall (1994) concluded through their research
the necessary and
sufficient conditions for the success of an international new
venture:
a) Underserved market opportunities exist in accessible
international markets.
b) Because of limited resources, the new venture achieves
control of needed foreign assets
without direct ownership.
c) The international form of the organization is a competitive
advantage.
d) The expanding firm controls unique and inimitable resources.
The speed at which international new ventures (INVs) engage in
international commerce
when contrasted to the incremental and cautious
internationalization described by the Uppsala
theory defines INV as competing theory of international growth.
Hagen, Zucchella, and Larimo
(2010) conducted cluster analysis of internationalizing firms in
Italy, Finland, Greece, and
Switzerland; findings in the study supported opposing
developmental patterns, with one group

strongly internationally entrepreneurial and other groups
reactive and non-strategic. Spence,
Orser, and Riding (2011) found international new ventures to be
larger in terms of full-time
equivalent employees and financial parameters when compared
with domestic new ventures of
the same age. The identification of markets that did not
previously exist and the development of
a truly unique product or service are two compelling reasons for
entrepreneurial SME decision-
makers to enter international markets.
Due to resource constraints, leaders of international new
ventures develop network or
partner associations to gain access to needed resources a start-
up firm cannot provide. The
unique resources controlled by the new venture define the
attractiveness for pooling network
resources. The new firm quickly expands internationally
through use of distribution and license
agreements, contract manufacturing, and simple export. A
market-leader position for the unique

product or service to be introduced to global markets is
important for new international ventures.
Value chain activities are unbundled so that the firm may
penetrate new markets without the
time-consuming, incremental expansion defined by stage-theory
internationalization (Oviatt &
McDougall, 1994).
Scale and depth of resources are not attributes of small
businesses; rather, SMEs
commonly operate with poverty of resources and organizational
power (Knight & Cavusgil,
2005; Oviatt & McDougall, 1994). The successes of smaller
firms organized to succeed in
international commerce from inception were studied by Oviatt
and McDougall (2005); the
researchers discovered cases wherein the international
development of subject firms was shown
to skip steps or bypassed the sequence of stage-theory
internationalization altogether. A
resulting theory of international new ventures (INVs) provided
a second potential path to
international market entry. Developments in technology and
economical access to world

markets opened for SMEs the possibility to compete effectively
with larger enterprises in
multiple global markets (Rennie, 1993). “Internationally
experienced and alert entrepreneurs are
able to link resources from multiple countries to meet the
demands of markets that are inherently
international” (Oviatt & McDougall, 1994, p. 3).
Prior international experience by founders for new ventures and
the effective use of
technology together encourage decision-makers for small new
ventures to engage competitively
in international markets when combined with low cost
international transportation and
uniqueness of an offering to the marketplace (Oviatt &
McDougall, 1994). Consistent with the
tenets of internationalization included in stage theory, market
knowledge is a necessary element
for international expansion. Founders for new international
ventures may launch the venture
already equipped with necessary international market
knowledge, having acquired such
experiential knowledge of foreign markets through heritage,
travel opportunities, studying

abroad, or international exposure in prior work experience.
New international ventures may be examples of how market
knowledge may be added to
following the founding of the enterprise, rather than the
organization beginning from a deficit of
foreign market knowledge, as is normally observed in stage-
theory internationalization. New
venture entrepreneurs may have the needed market insight and
design the venture for
international engagement when founding the firm. The
international new venture avoids routines
of organizing a firm exclusively in a domestic economy and
developing foreign-market
knowledge following the launch (Oviatt & McDougall, 1994).
Born Global
New international firms designed by their founders to utilize
knowledge-based resources
to sell outputs in multiple countries are referred to as born
global (Knight & Cavusgil, 2004). A
global mindset held by the entrepreneurial leaders of the new
firm incorporates the idea of
serving international markets and is an important force for
internationalization of the firm

(Miocevic & Crnjak-Karanovic, 2010). “The distinguishing
feature of these firms is their origins
are international, as demonstrated by management’s global
focus and the commitment of specific
resources to international activities” (Knight & Cavusgil, 2004,
p. 124).
Rennie (1993) first introduced the notion to recognize the rising
importance of small
firms to total export sales. Rennie observed from collected data
the reversal in the declining
contribution to total exports produced by small enterprises. A
declining contribution by small
firms was the norm during decades of global expansion by large
multi-national enterprises
(Rennie, 1993). The scale and capital advantages of large
enterprises that produce standard
products at low cost are also impediments wherein speed,
nimbleness, and the ability to address
small markets are required; small firms operate with speed,
responding with quality products to

niche markets defined by consumer tastes for custom and
specialized goods (Jamali, Jawad,
Shaikh, Shaikh, & Afridi, 2011).
Electronic access to information and the low cost to transfer
both data and goods has
opened to enterprises of all sizes access to new markets, even
allowing smaller firms to compete
with large enterprises on equal footing (Kumar, 2012). The
lower cost of international business
opened the possibility for the formation of born-global
enterprises that begin small and grow
rapidly (Knight & Cavusgil, 2005). Nimble small enterprises
are effective competitors providing
quality and value that closely match the needs of a highly
differentiated customer. Interest in
highly specialized niche markets is a phenomenon that differs
from the past-dominant practice of
horizontal marketing (Rennie, 1993; Smith, 1956).
Members of born-global firms make generous use of electronic
communication
technology to gain knowledge about foreign markets, to
transmit information, and to conduct
commercial exchanges (Knight & Cavusgil, 2005). The

exploratory, sequential, mixed-methods
study conducted by Knight and Cavusgil (2005) discovered
organizational attributes that are
most associated with international performance: a) international
entrepreneurial orientation, b)
technological leadership, and c) enterprise differentiation. A
study comparing data from 400
Norwegian and French SMEs correlated further these
conclusions (Moen, 2002). Smaller firms
constrained by available resources and personnel limitations
performed best by adoption of an
international orientation early in the history of the firm, focus
on a narrow market segment, and
by providing a differentiated offering to the markets served
(Knight & Cavusgil, 2005).
Barriers and Economic Incentives that Influence Leader
Decisions
Conclusions drawn from the results of a mixed-methods study
of the internationalization
experiences of South Carolina leaders supported historical
findings reported in scholarly
literature (Beall, 2013). Specific and distinct economic
incentives motivated enterprise leaders

to expand international commerce. Similarly, leaders reported
distinct barriers that frustrate
successful internationalization of the firm.
Economic Incentives to Internationalize
Economic incentives to internationalize include foreign market
opportunity, access to
foreign suppliers, competitive threat, declining domestic
demand, exploiting a particular
uniqueness, and utilization of excess capacity (Bartlett &
Beamish, 2011; Bowonder, Dambal,
Kumar, & Shirodkar, 2010; Calof & Beamish, 1994; Cavusgil,
1984). South Carolina leaders of
small and medium-sized enterprises that view their firms to be
international strongly consider
foreign-market opportunity and expanded supply chain options
from foreign suppliers to be
incentives to internationalize (Beall, 2013). The data collected
in the study recorded a strongly
favorable view expressed by participant leaders that
international commerce influenced the
success of their firms (Beall, 2013).
Data collected in the study support the conclusion that the rate

of growth for South
Carolina enterprises that are international exceeds the rate of
growth for domestic-only firms
(Beall, 2013). The international South Carolina SMEs studied
had larger numbers of full-time
employees, a higher rate of revenue growth, serve a larger
number of customers each year, and
operate in a more intensely competitive environment (Beall,
2013). This outcome from the study
aligns with earlier recorded findings by Spence, Orser, and
Riding (2011) that show
organizational metrics for international enterprises are higher
than domestic peers.
Internationalization may be an inevitable step in the enduring
success of an enterprise
designed for competition in a global milieu (Antonie & Feder,
2009). Economic globalization is
an observed dynamic that results in increased competition from
domestic and international rivals
offering access to comparable quality goods (Sinha et al.,

2011). Economic incentives for
leaders to engage in international commerce have been
described as proactive or push drivers
and reactive or pull drivers (Vasquez & Doloriert, 2011).
Export activity may be grouped by
proactive, market-seeking or reactive, and client-following
motivated actions (K. London, 2010).
External incentives include perceived demand, declining
domestic demand, and potential for
reductions in supply chain costs. Internal incentives include
excess capacity, the need to protect
competitive advantages, and the desire to exploit a particular
uniqueness.
Developing global economies are neither behind those of
developed economies, nor
converging into a homogenous pattern; rather, marketplaces
throughout the world represent
potential opportunity for the international entrepreneur
(Bhattacharya & Michael, 2008).
International markets are sources of potential demand beyond
what is available in a domestic
marketplace. Potential new markets may provide the expanding
company opportunity for
leaders to improve the financial position of the firm, create

competitive advantage, more fully
utilize capacity, and build management skills (Arteaga-Ortiz &
Fernández-Ortiz, 2010).
Barriers to Internationalization
Barriers reported in scholarly literature include leader
inexperience, resource scarcity,
high costs to accumulate knowledge, expropriation risks,
domestic market opportunity, and
disadvantages of size, newness, and foreignness (Arteaga-Ortiz
& Fernández-Ortiz, 2010;
Chelliah, Sulaiman, & Munusamy, 2011; Hutchinson, Fleck, &
Lloyd-Reason, 2009; Hynes,
2010; Knight & Cavusgil, 2005; Lu & Beamish, 2006; Sommer,
2010).
Leaders of SMEs in particular face challenges to
internationalization due to the
disadvantages of smallness, inexperience, foreignness, and
newness (Korsakienė &
Tvaronavičienė, 2012). Domestic opportunity, leader
characteristics, and poverty of resources
are barriers to international entrepreneurship. Unique barriers
that present challenges not faced
by smaller enterprises in domestic markets offset potential

opportunities and incremental value
creation from international expansion (Miocevic & Crnjak-
Karanovic, 2010).
Data in the study of South Carolina firms supported the view of
participant leaders that
ample domestic opportunity is a barrier to internationalization
(Beall, 2013). South Carolina
leaders consider domestic opportunity in the local region and
across the United States is
sufficiently large. Consequently, domestically-focused firms do
not pursue foreign markets.
SMEs leaders in the study that viewed their firm to be domestic-
only did not consider lack of
knowledge of foreign markets or resource scarcity to be barriers
(Beall, 2013). The leaders of
domestic-focused South Carolina enterprises simply did not
consider foreign markets as
important to their success (Beall, 2013). The low level of
perceived importance of the
international markets may explain the leader perception that
resources and foreign-market
knowledge do not present internationalization barriers. A
potential explanation of this
inconsistency with the literature is that leaders of enterprises

with a domestic focus fail to
consider additional barriers because they have not investigated
requirements for foreign-market
entry.
Implications
Open international markets represent historically unprecedented
opportunity for small
and medium-sized businesses (Kamakura et al., 2012). Once
limited to large, resource rich
firms, international commerce is accessible to enterprises of all
sizes with the organizational will
to expand overseas (Oviatt & McDougall, 2005). Action by
decision-makers to reach the
benefits of internationalization is constrained by a poverty of
knowledge of economic incentives
and barriers. Only a single digit percentage of SMEs in the
United States are exporters, half the
internationally active level of SMEs in other developed world

economies and a potential cause
for economic underperformance by smaller American firms
(Tesfayohannes & Habegger, 2011).
The gap in what is known of internationalization by SME
leaders in general is significantly
limiting for leaders of smaller firms.
Such uncertainty reflects a challenge to the entrepreneurial
proclivity of the firm, affects
deployment of resources, impedes communication, discounts the
need to align the organizational
supply chain, and deters needed capital infusion (Zhou, Barnes,
& Lu, 2010). The globalization
phenomenon of world markets is a persistent trend that is
accelerating, and leaders perceive
growing global markets as increased opportunities for smaller
enterprises to participate in
international commerce (Ibeh, Carter, Poff, & Hamill, 2008).
Limited understanding by leaders
of the incentives linked to international success and techniques
effective for overcoming barriers
may restrict smaller firms from rewarding involvement in
international markets.
Economic incentives that are motivations for leader decisions to
expand company

involvement into international commerce include proactive
market-seeking opportunity and
reactive client-following or competitor-matching responses (K.
London, 2010). Barriers that
impede international expansion include poor organizational
readiness, limited enterprise
resources, leader inexperience, limited knowledge of foreign
markets, and competing domestic
opportunity (Hynes, 2010; Korsakienė & Tvaronavičienė, 2012;
Rodrigues & Child, 2012).
Decision-makers who contemplate international expansion may
do so in response to opportunity,
the urging of customers, as a reaction to competitor initiatives,
following market momentum, or
as a reply to numerous business threats (Hynes, 2010;
McMullen, Shepherd, & Patzelt, 2009;
Nkongolo-Bakenda et al., 2010). Entrepreneurial hubris is a
contributing factor in enterprise
failure due to an overestimation by leaders of the likelihood of
success; yet leaders naively
initiate new ventures with enthusiasm (Hayward, Shepherd, &
Griffin, 2006). Leaders of smaller
enterprises benefit from information useful to identify economic
incentives linked to a likelihood

of success. Leaders benefit as well from knowledge of barriers
that are disincentives to
international expansion.
Conclusion
The increasingly global nature of commerce is an important
business dynamic recognized
by enterprise leaders and scholars (Bartlett and Ghoshal, 2002;
Hames, 2007; Ibeh, Carter, Poff,
& Hamill, 2008). Leaders who may not embrace foreign
commerce may be less aware of the
potential threat or opportunity represented by cross-border
trade. The United States economy is
large, providing considerable opportunity that was shown to be
a barrier to internationalization
by some business leaders (Beall, 2013). Leader opinions
studied in a verity of research projects
support the conclusion that decision-makers in positions of
responsibility for enterprises that are
international feel international activity important to the success
of the enterprise. Leaders who

experience international business understand the importance of
foreign-market commerce, the
potential risks, and the international opportunity available to
businesses of all sizes.
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