Entering Emerging Markets: A Dynamic Framework

Entering emerging markets (EMs) is a huge opportunity and a risk for small and medium-sized enterprises (SMEs). This paper concentrates on the problems emerging from building a supply network in a target economic area. Cultural, legislative, and market factors make it a challenge, but SMEs also face diverse obstacles from side effects emerging from firm's internal decisions. Some of these obstacles are self-generated, and they arise from aggressive growth strategies in parallel with misunderstanding the dynamics of one's own firm-the unintended consequences of decisions. In this paper we will analyze the internal restrictions on Finnish SMEs or actions impeding or accelerating their growth in EMs. A conceptual system dynamics model is constructed so as to describe the challenges of entering EMs. The model is based on a literature review, VTT logistics experts, and interviews conducted with Finnish SMEs.