The internationalization process of a German SME into the Saudi Arabian market

Abstract

The introduction of Vision 2030´s economic diversification emphasized Germany´s significant role as trade partner for Saudi Arabia. This ongoing process underscores the importance of understanding how German SMEs can navigate the complexities of the Saudi Arabian market. Thus, this research aims to assess the alignment between strategies employed and identified barriers and challenges, alongside the role of networks and intercultural knowledge in facilitating market entry and benefiting operational success to illustrate the strategic decision making process of a German SME. By drawing from the literature on market entry barriers and strategies (Porter, 1998; Pehrsson, 2009; etc.) as well as networks and intercultural knowledge (Johanson and Vahlne, 1977; Hofstede et al., 2010; etc.), the study will explore factors influencing the strategic choices of a German SME. Employing a mixed-methods single-case study approach, including semi-structured interviews and existing data analysis, the research reveals that a flexible, low-risk entry strategy, such as indirect export, is particularly effective for SMEs with limited international experience. Furthermore, the thesis also underscores the importance of networks and cultural knowledge in facilitating market entry and shaping operational success in the Saudi Arabian landscape findings. While extensive literature on internationalization, networks and cultural knowledge exists, few studies have explored the interconnection of these factors and their influence on an SME in a complex, culturally divers market as Saudi Arabia. Therefore, this thesis significantly contributes to theory by adding empirical evidence to international business and network theory and offer practical insights for SMEs seeking to enter culturally complex markets like Saudi Arabia.