Department of Civil and Environmental Engineering   
Division of Construction Management 
CHALMERS UNIVERSITY OF TECHNOLOGY 
Gothenburg, Sweden 2015 
Master’s Thesis 2015:72	
  
 

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  

Internationalization a competitive 
advantage for SMEs? 
Review of the internationalization process set-
up, and what are the motives for small to 
medium sized enterprises 
Master’s Thesis in the Master’s Programme International project management 
 	
  
Ellen Jacobsson 
 



 
 
 
 
 
 
 
 



	
   	
  
	
  

MASTER’S THESIS 2015:72 

Internationalization a competitive advantage for SMEs? 
Review of the internationalization process set-up, and what are the motives for small to medium 

sized enterprises 

Master’s Thesis in the Master’s Programme  International project management 
Ellen Jacobsson 

	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  
	
  

Department of Civil and Environmental Engineering 
Division Construction Management 

CHALMERS UNIVERSITY OF TECHNOLOGY 

Göteborg, Sweden 2015 





	
  
	
  
	
  

	
  
	
  

I	
  

Internationalization a competetive advantage for SMEs? 
Review of the internationalization process set-up, and what are the motives for small 
to medium sized enterprises 

Master’s Thesis in the Master’s Programme International project management 
Ellen Jacobsson 

 
 

© Ellen Jacobsson 2015 

 
	
  
Examensarbete 2015:72/ Institutionen för bygg- och miljöteknik,  
Chalmers tekniska högskola 2015	
  
 
 
Department of Civil and Environmental Engineering 
Division of Construction Management 
Chalmers University of Technology 
SE-412 96 Göteborg 
Sweden  
Telephone: + 46 (0)31-772 1000 
 
 
 
 
 
 
 
 
 
 
 
Cover: 
Chalmers Reproservice’ Göteborg, Sweden, 2015





	
  
	
  
	
  

	
  
	
  

I	
  

Internationalization a competitive advantage for SMEs? 
Review of the internationalization process set-up, and what are the motives for small 
to medium sized enterprises 
Master’s thesis in the Master’s Programme  International project management 

Ellen Jacobsson 
Department of Civil and Environmental Engineering 
Division of Construction Management 
Chalmers University of Technology 

 
ABSTRACT 

Internationalization or offshoring is becoming a more commonly used strategy within 
the business environment today, but does this adapt to the construction industry. 
There are a number of larger construction companies that already are active on the 
international market, but how is it for small to medium sized enterprises, SMEs. The 
purpose of this thesis is to investigate whether or not internationalization for SMEs 
can be a competitive advantage, as well as illustrate different ways to set up an 
internationalization process.  
The thesis is based on a qualitative research approach where a number of semi-
structure interviews have been conducted as the main data collection source. The 
interviews were conducted with three different companies, where two of them are 
SMEs and are working with innovative internationalization and the third one is a 
larger international company that perform strategic offshoring processes. The 
theoretical framework highlights that a clear strategy is needed to successfully 
perform an internationalization process.  

The empirical findings identify that the SMEs did not have any clear goal or strategy 
before approaching the Chinese market and therefore a lot of unnecessary risks were 
faced in the processes. This is the main reason why they still have not met a return on 
investment. For the larger firm the managers have a clear strategy for how the projects 
should be performed and therefore the company has met its expected goal. As the 
business environment looks like today within Gothenburg, the need to search for new 
market shares are minor and consequently the incentives for internationalization are 
small. An internationalization processes is relatively costly, hence it is of most 
importance to put up a clear strategy before entering a new market to be aware of the 
cost as a whole and the potential risks.  

Key words: Offshoring, Internationalization 
SMEs 
	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

II 

Contents 
ABSTRACT I	
  
CONTENTS II	
  
ACKNOWLEDGEMENTS IV	
  

1	
   INTRODUCTION 1	
  
1.1	
   Research question 2	
  
1.2	
   Research aim and objectives 3	
  
1.3	
   Research method 3	
  
1.4	
   Scope and limitations 3	
  
1.5	
   Dissertation structure 3	
  

2	
   THEORETICAL FRAMEWORK 5	
  
2.1	
   Internationalization process 5	
  

2.1.1	
   Internationalization strategies 6	
  
2.2	
   Offshoring engineering 7	
  
2.3	
   Drivers and motivations in the internationalization process and offshoring 
strategy 8	
  

2.3.1	
   Cost reduction 9	
  
2.3.2	
   Resource seeking 10	
  

2.4	
   Barriers and obstacles in the internationalization process and offshoring 
strategy 10	
  

2.4.1	
   Internal barriers 11	
  
2.4.2	
   External barriers 12	
  

2.5	
   Decision processes in the internationalization and offshoring processes for 
SMEs 13	
  

2.5.1	
   Decision processes 13	
  
2.6	
   Summary of theoretical framework 14	
  

3	
   METHODOLOGY 16	
  
3.1	
   Research approach 16	
  

3.1.1	
   Quantitative or Qualitative research 16	
  
3.1.2	
   Trustworthiness 17	
  

3.2	
   Development of theoretical framework 17	
  
3.3	
   Data collection 18	
  
3.4	
   Respondents 18	
  
3.5	
   Interview 18	
  
3.6	
   Data analysis 19	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 III 
	
  

4	
   EMPIRICAL DATA 21	
  
4.1	
   Company A 21	
  

4.1.1	
   How do they work international? 21	
  
4.1.2	
   Obstacles and Barriers 22	
  
4.1.3	
   Opportunities 23	
  
4.1.4	
   Financial 24	
  

4.2	
   Company B 24	
  
4.2.1	
   How do they work international? 25	
  
4.2.2	
   Obstacles and Barriers 25	
  
4.2.3	
   Opportunities 26	
  
4.2.4	
   Financial 27	
  

4.3	
   Company C 27	
  
4.3.1	
   How do they work international? 27	
  
4.3.2	
   Obstacles 28	
  
4.3.3	
   Opportunities 29	
  
4.3.4	
   Financial 29	
  

5	
   ANALYSIS 30	
  
5.1	
   Competitive advantage for SMEs 30	
  
5.2	
   Strategies of internationalization process 32	
  

6	
   DISCUSSION 35	
  

7	
   CONCLUSION 37	
  

8	
   FUTURE RESEARCH 39	
  

9	
   REFERENCES 41	
  
	
  
	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

IV 

Acknowledgements 
This	
  thesis	
  has	
  been	
  carried	
  out	
  from	
  October	
  of	
  2014	
  to	
  April	
  of	
  2015	
  under	
  the	
  
programme	
  of	
  international	
  project	
  management	
  at	
  Chalmers	
  University	
  of	
  
Technology.	
  	
  
	
  
I	
  would	
  like	
  to	
  thank	
  my	
  supervisor	
  Martine	
  Buser	
  at	
  Chalmers	
  University	
  of	
  
Technology	
  for	
  the	
  supervision	
  through	
  out	
  the	
  process	
  and	
  the	
  help	
  in	
  
conducting	
  the	
  interviews.	
  	
  
	
  
I	
  also	
  thank	
  all	
  of	
  the	
  interviewees,	
  thanks	
  for	
  the	
  contribution	
  with	
  time	
  and	
  
competences	
  that	
  made	
  this	
  thesis	
  possible	
  to	
  conduct.	
  	
  
	
  
Göteborg	
  April	
  2015	
  
	
  
Ellen	
  Jacobsson	
  
 



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 V 
	
  

	
  





	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 1 
	
  

1 Introduction 
It	
   is	
  becoming	
  more	
  and	
  more	
  common	
  to	
   internationalize	
  business	
  or	
  parts	
  of	
  
business.	
   The	
   internationalization	
   process	
   affects	
   various	
   types	
   of	
   industries,	
  
which	
   in	
   this	
   case	
   have	
   been	
   narrowed	
   down	
   into	
   two	
   main	
   categories:	
  
manufacturing	
   and	
   service	
   (Örberg	
   Jensen,	
   A	
   learning	
   perspective	
   on	
   the	
  
offshoring	
  of	
   advanced	
   services,	
   2009).	
   In	
   this	
   case	
   focus	
   is	
   going	
   to	
  be	
  on	
   the	
  
construction	
  industry,	
  especially	
  the	
  category	
  service	
  industry.	
  For	
  this	
  industry	
  
the	
   demand	
   for	
   interaction	
   between	
   the	
   partners	
   is	
   high	
   and	
   each	
   and	
   every	
  
project	
   is	
   unique	
   and	
   requires	
   different	
   types	
   of	
   competences	
   (Stringfellow,	
  
Teagarden,	
  &	
  Winter,	
  2008).	
  There	
  is	
  a	
  current	
  lack	
  of	
  research	
  within	
  the	
  field	
  
of	
   internationalization	
  of	
   the	
  construction	
   industry;	
   thus	
  researches	
  from	
  other	
  
similar	
   industries	
   have	
  been	
  used	
   as	
   background	
   in	
   the	
   theoretical	
   framework	
  
(Westhead,	
  Wright,	
  Ucbasaran,	
  &	
  Martin,	
  2010).	
  	
  
The	
  opportunities	
   to	
   expand	
   the	
  business	
  within	
  an	
   international	
   environment	
  
have	
   been	
   improved	
   during	
   the	
   last	
   decades,	
   supported	
   by	
   improved	
   trading	
  
laws	
   and	
   regulations.	
   The	
   technological	
   development	
   has	
   also	
   been	
   an	
   adding	
  
factor	
  that	
  has	
  enabled	
  virtual	
  collaboration	
  all	
  over	
  the	
  world.	
  	
  Even	
  if	
  the	
  tools	
  
to	
   work	
   in	
   an	
   international	
   environment	
   are	
   provided,	
   the	
   growth	
   of	
   service	
  
firms’	
  internationalization	
  has	
  been	
  slow	
  compared	
  to	
  manufacturing	
  (Grönroos,	
  
1999).	
  	
  
Offshoring	
   is	
   one	
   strategy	
   used	
   within	
   the	
   internationalization	
   process.	
  
Offshoring	
  means	
   that	
   a	
   service	
   or	
   a	
   product	
   is	
   sourced	
   from	
   a	
   foreign-­‐based	
  
country	
  (Koch	
  &	
  Bennett,	
  2013).	
  Bunyaratavej	
  et	
  al.,	
  (2010,	
  pp.	
  71)	
  defines	
  it	
  as	
  
“the	
   transnational	
   relocation	
   or	
   dispersion	
   of	
   services	
   related	
   activities	
   that	
   had	
  
previously	
  been	
  performed	
  in	
  the	
  home	
  country”.	
  
The	
   drivers	
   and	
   motivations	
   for	
   companies	
   to	
   internationalize	
   its	
   business	
  
process	
   varies	
   depending	
   on	
   the	
   type	
   of	
   strategy	
   being	
   used.	
   Cost	
   cutting	
   and	
  
resource	
  seeking	
  have	
  been	
   identified	
  to	
  be	
  the	
  main	
  drivers	
   for	
   the	
  offshoring	
  
strategy.	
  It	
  can	
  also	
  be	
  adopted	
  for	
  other	
  types	
  of	
  internationalization	
  processes	
  
(Cerruti,	
  2008).	
  The	
   internationalization	
  process	
  motives	
  can	
  also	
  be	
   to	
   try	
  out	
  
new	
  markets	
  out	
  of	
  curiosity	
  or	
  that	
  an	
  opportunity	
  has	
  raised	
  with	
  a	
  too	
  good	
  to	
  
miss	
   offer,	
   without	
   any	
   clear	
   motives	
   to	
   gain	
   new	
   knowledge	
   or	
   to	
   cut	
   costs	
  
(Abdul-­‐Aziz,	
  Nor	
  Azmi,	
  Law,	
  &	
  Pengiran,	
  2013).	
  	
  
To	
  initiate	
  an	
  internationalization	
  process,	
  there	
  are	
  some	
  obstacles	
  and	
  barriers	
  
that	
  must	
  be	
  faced.	
   It	
   is	
   important	
  to	
   identify	
  potential	
  barriers	
   in	
  advance	
  and	
  
set	
  up	
  a	
  strategy	
   for	
  how	
  to	
  handle	
   them.	
  By	
  performing	
  a	
  risk	
  assessment	
   the	
  
risks	
   identified	
   can	
   be	
   evaluated	
   and	
   be	
   included	
   in	
   the	
   strategy	
   and	
   be	
  
monitored	
  throughout	
  the	
  process.	
  
The	
  main	
  obstacles	
  identified,	
  have	
  been	
  divided	
  into	
  two	
  subcategories;	
  internal	
  
and	
  external	
  (European	
  Commision	
  Enterprise	
  and	
  Industry,	
  2010).	
  
The	
   top	
   management	
   often	
   drives	
   the	
   internationalization	
   processes.	
  
Consequently	
   it	
   is	
   his	
   or	
  hers	
  personal	
  preferences	
   that	
   are	
   going	
   to	
   affect	
   the	
  
outcome	
   of	
   the	
   process	
   (Cicic,	
   Patterson,	
   &	
   Shoham,	
   2002).	
   While	
   using	
  
offshoring	
   as	
   a	
   strategy,	
   it	
   is	
   mostly	
   the	
   management	
   structure	
   within	
   the	
  
company	
  that	
  affect	
  the	
  control	
  and	
  monitoring	
  of	
  the	
  processes.	
  	
  (Farrell,	
  2004).	
  	
  
The	
  external	
  factors	
  are	
  barriers	
  outside	
  the	
  firm,	
  such	
  as	
  environmental	
  factors.	
  
Most	
  of	
  the	
  factors	
  are	
  connected	
  with	
  the	
  lack	
  of	
  knowledge	
  of	
  the	
  new	
  market	
  
(Westhead,	
  Wright,	
  Ucbasaran,	
  &	
  Martin,	
  2010).	
  The	
  main	
  external	
  barriers	
  faced	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

2 

for	
   both	
   internationalization	
   processes	
   and	
   offshoring	
   strategies	
   are	
  
communication	
  and	
   culture.	
   Since	
   the	
  host	
   country	
  most	
  probably	
  has	
  another	
  
native	
   language,	
   it	
   is	
   of	
   out	
  most	
   importance	
   to	
   create	
   a	
   strategy	
   that	
   sets	
   the	
  
communication	
   rules	
   within	
   the	
   project,	
   this	
   is	
   an	
   aspect	
   in	
   minimizing	
   the	
  
misunderstandings	
  between	
  the	
  partners.	
  It	
  is	
  also	
  important	
  to	
  be	
  fully	
  aware	
  of	
  
that	
  the	
  working	
  environment	
  and	
  culture	
  are	
  different	
  within	
  all	
  the	
  countries	
  
around	
   the	
   world.	
   This	
   is	
   also	
   one	
   of	
   the	
   contributing	
   factors	
   for	
  
misunderstandings	
   and	
   why	
   problems	
   occur	
   through	
   the	
   internationalization	
  
process.	
  	
  	
  
This	
   dissertation	
   has	
   collected	
   data	
   from	
   six	
   interviews	
   with	
   three	
   different	
  
companies	
   where	
   two	
   of	
   them	
   are	
   SMEs	
   and	
   the	
   third	
   is	
   a	
   large	
   firm.	
   These	
  
companies	
   are	
   all	
   active	
   within	
   an	
   international	
   environment.	
   Since	
  
internationalization	
   and	
   offshoring	
   are	
   becoming	
   more	
   and	
   more	
   commonly	
  
used	
  within	
  all	
   industries	
  today,	
   it	
   is	
  most	
   likely	
  to	
  be	
  a	
   future	
  scenario	
   for	
  the	
  
construction	
  industry.	
  	
  
The	
  author	
  selected	
  this	
  subject,	
  by	
  identifying	
  a	
  current	
  lack	
  of	
  research	
  within	
  
the	
  area;	
  Most	
  of	
   the	
  articles	
   identified,	
  was	
  dated	
  back	
   to	
   the	
  1980´s	
  and	
  was	
  
adopted	
   on	
   other	
   industries	
   rather	
   than	
   the	
   construction	
   industry.	
   The	
  
construction	
  industry	
  is	
  known	
  for	
  being	
  conservative	
  and	
  a	
  slow	
  adopter,	
  where	
  
each	
  project	
  is	
  unique	
  (Balayse	
  &	
  Manley,	
  2004).	
  The	
  construction	
  industry	
  is	
  a	
  
type	
  of	
  service	
  industry,	
  where	
  the	
  interaction	
  between	
  the	
  partners	
  is	
  extensive	
  
and	
  the	
  possibility	
  to	
  interact	
  and	
  collaborate	
  is	
  a	
  critical	
  aspect	
  for	
  the	
  success	
  
of	
  a	
  project.	
  	
  
Reviewing	
   the	
   general	
   business	
   environment	
   today,	
   it	
   is	
   becoming	
   more	
   and	
  
more	
   common	
   to	
   internationalize	
  or	
  offshore	
  parts	
  of	
   the	
   in-­‐house	
  businesses.	
  
The	
  goal	
  or	
  motivation	
  is	
  to	
  access	
  skilled	
  working	
  labour,	
  cut	
  costs	
  or	
  to	
  create	
  
flexibility	
   within	
   the	
   company.	
   The	
   construction	
   industry	
   is	
   seen	
   as	
   slowly	
  
adopters	
  and	
  conservative	
  when	
  it	
  comes	
  to	
  changes	
  (Balayse	
  &	
  Manley,	
  2004).	
  
How	
   is	
   the	
   construction	
   industry	
  adopting	
   this	
  new	
  business	
  environment	
  and	
  
can	
   it	
   be	
   beneficial	
   for	
   the	
   companies?	
   The	
   focus	
   of	
   this	
   thesis	
   is	
   on	
   small	
   to	
  
medium	
  sized	
  enterprises,	
   SMEs,	
   since	
   they	
  do	
  not	
  have	
   the	
   same	
  structure	
  or	
  
network	
  as	
  larger	
  firms.	
  What	
  are	
  the	
  benefits	
  if	
  they	
  succeed	
  with	
  the	
  process?	
  
Would	
  it	
  be	
  beneficial	
  and	
  create	
  a	
  competitive	
  advantage	
  against	
  larger	
  or	
  other	
  
competitors?	
  	
  
The	
   focus	
   is	
   on	
   companies	
   with	
   their	
   main	
   base	
   in	
   the	
   region	
   of	
   Gothenburg.	
  
There	
  are	
  three	
  main	
  reasons	
  for	
  that	
  reasons	
  are	
  three	
  main	
  variables.	
  Firstly,	
  it	
  
is	
   most	
   rational	
   since	
   the	
   author	
   is	
   based	
   in	
   Gothenburg.	
   Secondly	
   a	
   local	
  
company,	
  Company	
  A,	
  was	
  identified	
  early	
  on	
  in	
  the	
  development	
  of	
  this	
  thesis.	
  
This	
  company	
  had	
  started	
  an	
  internationalization	
  process	
  on	
  the	
  Chinese	
  market.	
  
Third	
  and	
  final	
  is	
  the	
  aspect	
  that	
  the	
  construction	
  market	
  within	
  Gothenburg	
  is	
  a	
  
stable	
  market	
  with	
  a	
  lot	
  of	
  new	
  and	
  potential	
  upcoming	
  projects.	
  Gothenburg	
  is	
  
turning	
   400	
   years	
   in	
   2021	
   and	
   several	
   new	
   projects	
   and	
   buildings	
   as	
   well	
   as	
  
urbanisation	
   projects	
   are	
   planed.	
  With	
   a	
   stable	
   home	
  market,	
   the	
   incentive	
   to	
  
search	
  new	
  international	
  markets	
  decreases,	
  but	
  what	
  are	
  the	
  benefits	
  if	
  they	
  do?	
  	
  

1.1 Research question  
This	
   thesis	
   aims	
   at	
   answering	
   the	
   following	
   question	
   that	
   has	
   guided	
   the	
  
collection	
  of	
  data	
  and	
   the	
  work,	
   throughout	
   the	
   thesis;	
   can	
   internationalization	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 3 
	
  

processes	
  be	
  a	
  competitive	
  advantage	
  for	
  consulting	
  construction	
  SMEs	
  based	
  in	
  
the	
  region	
  of	
  Gothenburg?	
  

1.2 Research aim and objectives 
Since	
   the	
   competitive	
   business	
   climate	
   within	
   the	
   construction	
   industry	
   is	
  
constantly	
   getting	
   tougher,	
   new	
  ways	
   to	
   improve	
   competitiveness	
   needs	
   to	
   be	
  
found.	
   Expanding	
   within	
   the	
   international	
   market	
   is	
   one	
   way	
   to	
   investigate,	
  
would	
   it	
  be	
  an	
  alternative	
   to	
  create	
  a	
   competitive	
  advantage?	
  The	
   focus	
  of	
   this	
  
thesis	
   is	
   going	
   to	
   be	
   the	
   small	
   to	
   medium	
   sized	
   enterprises,	
   SMEs,	
   and	
   how	
  
internationalization	
  can	
  be	
  used	
  as	
  a	
  competitive	
  advantage.	
  Different	
  strategies	
  
to	
   set	
   up	
   an	
   internationalization	
   process	
   are	
   also	
   going	
   to	
   be	
   identified.	
  
Interviews	
  with	
   three	
   different	
   companies	
   have	
   been	
   performed,	
   examine	
   and	
  
identifying	
  different	
  opportunities	
  and	
  obstacles	
  involved	
  in	
  the	
  process.	
  
The	
   following	
   research	
   question	
   has	
   been	
   formulated	
   in	
   order	
   to	
   meet	
   the	
  
purpose	
  of	
  this	
  thesis:	
  

• Can offshoring engineering be used as competitive advantage for small to 
medium sized enterprises within the region of Gothenburg? 

• How does the internationalization process look like for the interviewed SMEs 
companies compared to the large company studied? Subsequently, what are 
the different strategies, pros and cons? 

1.3 Research method 
The	
  way	
  of	
  handling	
  international	
  business	
  varies	
  depending	
  on	
  type	
  of	
  company	
  
and	
   type	
   of	
   industry.	
   Since	
   internationalization	
   is	
   a	
   rather	
   new	
   phenomenon	
  
within	
   the	
   construction	
   industry,	
   especially	
   for	
   SMEs,	
   a	
   qualitative	
   research	
  
approach	
   has	
   been	
   used.	
   The	
   main	
   data	
   collection	
   source	
   has	
   been	
   semi-­‐
structured	
  interviews.	
  Data	
  has	
  also	
  been	
  collected	
  through	
  previous	
  thesis	
  and	
  
grey	
  literature	
  on	
  the	
  specific	
  projects	
  and	
  companies.	
  	
  

1.4 Scope and limitations 
Regarding	
   internationalization	
   and	
   offshoring	
  within	
   the	
   construction	
   industry	
  
for	
  SMEs	
  there	
  are	
  limited	
  research	
  identified,	
  therefore	
  theories	
  based	
  on	
  other	
  
industries	
  have	
  been	
  adopted	
  in	
  this	
  study.	
  
The	
  focus	
  on	
  this	
  study	
  is	
  going	
  to	
  be	
  the	
  internationalization	
  of	
  SMEs	
  within	
  the	
  
construction	
  industry.	
  As	
  the	
  main	
  data	
  collection	
  source,	
   interviews	
  have	
  been	
  
used.	
  The	
   interviews	
  have	
  been	
  performed	
  on	
   three	
  different	
   companies.	
  With	
  
respect	
  to	
  the	
  companies	
  involved	
  in	
  this	
  study,	
  the	
  identities	
  of	
  these	
  companies	
  
are	
  not	
  being	
  revealed	
  in	
  this	
  thesis.	
  The	
  study	
  is	
  conducted	
  with	
  companies	
  with	
  
its	
  base	
  in	
  Sweden.	
  Due	
  to	
  limitations	
  in	
  time	
  and	
  resources,	
  contact	
  has	
  not	
  been	
  
established	
  with	
  their	
  international	
  partners.	
  

1.5 Dissertation structure 
In	
   figure	
   1	
   a	
   guide	
   for	
   this	
   master	
   thesis	
   is	
   presented.	
   The	
   first	
   part	
   is	
   a	
  
presentation	
   of	
   the	
   theoretical	
   framework	
   presenting	
   previous	
   research	
   and	
  
important	
   aspects	
   to	
   consider	
   in	
   the	
   process	
   of	
   performing	
   a	
   successful	
  
internationalization	
   and	
   offshoring	
   business.	
   The	
   purpose	
   is	
   to	
   create	
  
background	
   knowledge	
   for	
   the	
   reader	
   to	
   understand	
   the	
   concept	
   of	
  
internationalization	
   and	
   offshoring	
   as	
   a	
   strategy.	
   This	
   is	
   followed	
   up	
  with	
   the	
  
methodology	
  chapter,	
  describing	
  the	
  methods	
  used	
  to	
  conduct	
  this	
  master	
  thesis.	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

4 

This	
   is	
   followed	
   up	
   by	
   the	
   findings	
   from	
   the	
   interviews.	
   The	
   findings	
   is	
   then	
  
analysed	
  and	
  discussed	
  with	
   the	
   theory	
  as	
  background.	
  The	
   thesis	
   ends	
  with	
  a	
  
conclusion	
  with	
  suggestions	
  of	
  further	
  studies	
  within	
  the	
  subject.	
  	
  

	
  
Figure 1 Dissertation structure. 

Theoretical	
  
framwork	
   Metodology	
   Analysis	
  and	
  

disscusion	
  
Conclution	
  and	
  
recomendation	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 5 
	
  

2 Theoretical framework  
The	
  way	
  to	
  internationalize	
  the	
  business	
  can	
  be	
  set	
  up	
  and	
  done	
  in	
  a	
  number	
  of	
  
different	
   ways.	
   The	
   theoretical	
   framework	
   begins	
   by	
   introducing	
   the	
  
internationalization	
  process	
  and	
  the	
  background	
  of	
  it.	
  This	
  is	
  followed	
  up	
  with	
  a	
  
description	
   of	
   different	
   strategies	
   on	
   how	
   to	
   internationalize	
   business	
   and	
   the	
  
concept	
   of	
   offshoring.	
   The	
   drivers	
   and	
   motivations,	
   and	
   the	
   barriers	
   and	
  
obstacles	
   for	
   the	
   different	
   concepts	
   are	
   similar.	
   Therefore	
   they	
   have	
   been	
  
presented	
   together	
   in	
   the	
   subcategories.	
   After	
   the	
   presentation	
   of	
   the	
  
internationalization	
  and	
  offshoring	
  strategies,	
   it	
  will	
  be	
  followed	
  up	
  by	
  decision	
  
process	
  and	
  a	
  summary	
  of	
  the	
  findings	
  from	
  the	
  theoretical	
  framework.	
  	
  

2.1 Internationalization process 
Most	
   industries	
   can	
   adapt	
   to	
   and	
   internationalize	
   its	
   whole	
   or	
   parts	
   of	
   its	
  
business	
   processes,	
   but	
   to	
   simplify	
   they	
   can	
   be	
   narrowed	
   down	
   in	
   to	
   two	
  
different	
  categories;	
  (1)	
  Manufacturing	
  and	
  (2)	
  Service.	
  Manufacturing	
  industry	
  
is	
   industries	
   that	
   physical	
   produce	
   products,	
   it	
   can	
   also	
   include	
   the	
   most	
  
standardized	
   processes,	
   such	
   as	
   phone	
   or	
   custom	
   services,	
   processes	
   or	
   tasks	
  
that	
  can	
  be	
  solved	
  without	
  having	
  a	
  specific	
  knowledge	
  or	
  a	
  engineering	
  degree	
  
(Örberg	
   Jensen,	
   2009).	
   Service	
   industries	
   are	
   processes	
   or	
   tasks	
   that	
   are	
  
advanced	
   and	
   usually	
   demand	
   an	
   engineering	
   degree,	
   i.e.	
   R&D,	
   IT	
   and	
   finance	
  
(Offshoring	
  Research	
  Network,	
  2007).	
  	
  
Most	
  of	
  the	
  research	
  within	
  the	
  field	
  of	
   internationalization	
  processes	
  has	
  been	
  
done	
  on	
  the	
  manufacturing	
  industry,	
  where	
  the	
  research	
  within	
  service	
  sector	
  in	
  
the	
   literature	
   is	
   fragment	
   (Westhead,	
  Wright,	
  Ucbasaran,	
  &	
  Martin,	
   2010).	
   The	
  
traditional	
  motive	
   for	
   firms	
  to	
   internationalize	
   is	
   to	
   identify	
  potentials	
   that	
  can	
  
generate	
  a	
  business	
  advantage.	
  The	
  most	
  commonly	
  known	
  process	
  is	
  within	
  the	
  
manufacturing	
   industry.	
   By	
   moving	
   production	
   to	
   countries,	
   where	
   the	
  
production	
   costs	
   usually	
   are	
   cheaper,	
   i.e.	
   to	
   reduce	
   costs,	
   (Westhead,	
   Wright,	
  
Ucbasaran,	
   &	
   Martin,	
   2010).	
   The	
   internationalization	
   of	
   service	
   firms	
   are	
  
becoming	
   a	
   considerable	
   part	
   of	
   the	
   internationalization	
   processes,	
   and	
   the	
  
academic	
   research	
   has	
   the	
   responsibility	
   to	
   fill	
   the	
   knowledge	
   gaps	
   that	
   exists	
  
today	
  (Grönroos,	
  1999).	
  
The	
   internationalization	
   processes	
   for	
   service	
   firms	
   are	
   constantly	
   growing	
   in	
  
both	
  developed	
  and	
  developing	
  countries	
  (Freeman	
  &	
  Sandwell,	
  2008).	
  There	
  is	
  
around	
  85%	
  of	
  small	
  firms	
  that	
  to	
  some	
  degree	
  indirect	
  already	
  operating	
  on	
  the	
  
international	
   market,	
   by	
   buying	
   gods	
   or	
   services	
   from	
   foreign	
   countries	
  
(Westhead,	
   Wright,	
   Ucbasaran,	
   &	
   Martin,	
   2010).	
   During	
   the	
   last	
   decade	
   the	
  
trading	
   regulations	
   have	
   been	
   improved	
   with	
   free-­‐trade	
   conditions,	
   but	
   the	
  
internationalization	
  process	
  of	
   service	
   firms	
  have	
  had	
  a	
   slow	
  grow	
  so	
   far.	
  This	
  
might	
  depend	
  on	
  the	
  fact	
  that	
  the	
  service	
  industry	
  is	
  more	
  complex	
  and	
  the	
  firm	
  
lack	
   knowledge	
   how	
   to	
   promote	
   its	
   service	
   on	
   an	
   international	
   market	
  
(Grönroos,	
  1999).	
  
In	
   the	
   article	
   “Internationalization	
   of	
   construction-­‐	
   related	
   impact	
   of	
   age	
   and	
  
size”	
  Abdul-­‐Aziz	
  et	
  al.	
   (2013,	
  pp	
  149)	
  states	
  that	
  “there	
  is	
  a	
  correlation	
  between	
  
the	
   level	
   of	
   economic	
   development	
   and	
   outward	
   foreign	
   direct	
   investment”.	
   It	
   is	
  
therefore	
  important	
  to	
  be	
  aware	
  of	
  the	
  image	
  of	
  the	
  host	
  country	
  and	
  that	
  it	
  can	
  
influence	
  the	
  purchasing	
  pattern	
  (Abdul-­‐Aziz,	
  Nor	
  Azmi,	
  Law,	
  &	
  Pengiran,	
  2013).	
  	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

6 

2.1.1 Internationalization strategies 
There	
  are	
  a	
  number	
  of	
  different	
  strategies	
  or	
  opportunities	
  that	
  can	
  be	
  used	
  to	
  
internationalize	
   the	
  business.	
  Service	
   firms	
  are	
  more	
   likely	
   than	
  manufacturing	
  
firms	
   to	
   be	
   dragged	
   in	
   to	
   international	
   business.	
   The	
   service	
   firms	
   tend	
   to	
   be	
  
following	
  its	
  clients	
  abroad	
  in	
  their	
  internationalization	
  process	
  (Abdul-­‐Aziz,	
  Nor	
  
Azmi,	
  Law,	
  &	
  Pengiran,	
  2013).	
  	
  
Internationalization	
  may	
  also	
  arise	
  from	
  too-­‐good-­‐to-­‐miss	
  opportunities	
  (Abdul-­‐
Aziz,	
  Nor	
  Azmi,	
  Law,	
  &	
  Pengiran,	
  2013).	
  When	
  an	
  opportunity	
  arises,	
  for	
  example	
  
to	
  follow	
  a	
  client	
  abroad,	
  a	
  too-­‐good-­‐to-­‐miss	
  opportunity	
  has	
  occurred	
  and	
  lead	
  
the	
  company	
  on	
  to	
  an	
  internationalization	
  process.	
  	
  
The	
   different	
   strategies	
   and	
   opportunities	
   presented	
   above	
   can	
   be	
   narrowed	
  
down	
   in	
   five	
   stages	
   that	
   can	
  be	
  used	
   as	
   guidelines	
   for	
   companies	
   that	
  want	
   to	
  
internationalize	
  its	
  business.	
  The	
  stages	
  are	
  (1)	
  enter	
  new	
  markets,	
  (2)	
  product	
  
specialization,	
  (3)	
  value	
  chain	
  disaggregation,	
  (4)	
  value	
  chain	
  reengineering	
  and	
  
(5)	
  creation	
  of	
  new	
  markets.	
  The	
  stages	
  are	
  illustrated	
  in	
  figure	
  2,	
  below.	
  	
  

	
  
Figure 2 Internationalization processes (Farrell, 2004). 

(1)	
   Enter	
   new	
  markets	
   is	
   one	
   of	
   the	
   steps	
   in	
   the	
   internationalization	
   process,	
  
which	
  enables	
  access	
  to	
  new	
  customers.	
  It	
  might	
  become	
  necessary	
  to	
  start	
  up	
  an	
  
office	
  within	
   the	
   country	
   to	
   enable	
   the	
  business	
   concerning	
   import	
   and	
   export	
  
regulation.	
   (2)	
   Product	
   specialization	
   is	
   connected	
   to	
   the	
   location	
   of	
   the	
   host	
  
country.	
   There	
   are	
   different	
   regions	
   and	
   countries	
   that	
   are	
   specialists	
   (Farrell,	
  
2004)	
   on	
   different	
   technology	
   areas	
   such	
   as	
   Silicon	
   Valley,	
   known	
   for	
   their	
  
expertise	
  within	
  IT	
  (Business	
  Dictionary,	
  2014).	
  (3)	
  Value	
  chain	
  disaggregation	
  is	
  
about	
  maximizing	
  the	
  profit	
  and	
  quality,	
   to	
   locate	
   the	
  different	
  process	
   in	
   their	
  
“expertise”	
   location.	
  (4)	
  Value	
  chain	
  reengineering	
  is	
  to	
  move	
  processes	
  to	
  new	
  
location	
  where	
  there	
  is	
  a	
  new	
  market	
  to	
  consider,	
  which	
  means	
  that	
  the	
  product	
  
needs	
  to	
  be	
  improved	
  and	
  fitted	
  to	
  the	
  local	
  market.	
  (5)	
  Creation	
  of	
  new	
  markets	
  
is	
  about	
  the	
  expansion	
  and	
  penetrate	
  the	
  new	
  market	
  (Farrell,	
  2004).	
  
As	
   stated	
   by	
   Farrell	
   (2004,	
   pp.	
   87)	
   “The	
   five	
   stages	
   aren´t	
   necessarily	
   a	
   rigid	
  
sequence	
  that	
  all	
  industries	
  follow;	
  companies	
  can	
  skip	
  or	
  combine	
  steps”	
  
The	
   location	
   of	
   the	
   host	
   country	
   can	
   create	
   communication	
   issues	
   where	
  
language	
   can	
   be	
   considered	
   to	
   become	
   a	
   risk.	
   These	
   language	
   risks	
   can	
   be	
  
divided	
   in	
   to	
   three	
   different	
   sub	
   areas;	
   low-­‐,	
   medium-­‐,	
   and	
   high	
   interaction	
  
distance.	
   This	
   is	
   dependent	
  mainly	
   on	
   language	
   and	
   how	
   far	
   it	
   is	
   between	
   the	
  
different	
   countries.	
   As	
   an	
   example;	
   a	
   company	
   within	
   US	
   would	
   considerer	
  
Canada,	
   Australia	
   and	
   UK	
   as	
   low	
   interaction	
   distance	
   since	
   all	
   of	
   them	
   has	
  
English	
   as	
   their	
   first	
   language.	
   Medium	
   interaction	
   distance	
   would	
   be	
   other	
  
countries	
  that	
  have	
  a	
  lot	
  of	
  experience	
  with	
  English,	
  such	
  as	
  India	
  that	
  is	
  a	
  former	
  
UK	
  colony	
  and	
  most	
  European	
  countries.	
  Low	
  interaction	
  distances	
  are	
  countries	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 7 
	
  

that	
  have	
   low	
  knowledge	
   in	
  English,	
   such	
  as	
  China	
   (Stringfellow,	
  Teagarden,	
  &	
  
Winter,	
  2008).	
  

2.2 Offshoring engineering 
The	
   two	
  concepts	
  of	
  outsourcing	
  and	
  offshoring	
  often	
  gets	
  mixed	
  up	
  with	
  each	
  
other,	
   they	
  differ	
   from	
  each	
  other	
  but	
  at	
   the	
  same	
  time	
  overlap	
  each	
  other	
  and	
  
have	
  common	
  processes	
  (Koch	
  &	
  Bennett,	
  2013).	
  	
  Hätönen	
  &	
  Eriksson	
  (2009,	
  pp.	
  
142)	
   defines	
   outsourcing	
   as	
   “the	
   transfer	
   of	
   activities	
   and	
   processes	
   previously	
  
conducted	
   internally	
   to	
   an	
   external	
   party”	
   and	
   offshoring	
   is	
   according	
   to	
  
Bunyaratavej	
   et	
   al.,	
   (2010,	
   pp.	
   71)	
   defined	
   as	
   “the	
   transnational	
   relocation	
   or	
  
dispersion	
  of	
  services	
  related	
  activities	
  that	
  had	
  previously	
  been	
  performed	
  in	
  the	
  
home	
  country”.	
  	
  
Clarification	
  of	
  the	
  concepts,	
  offshoring	
  means	
  that	
  a	
  service	
  or	
  product	
  is	
  bought	
  
from	
  a	
   foreign-­‐based	
  country	
  and	
  bounded	
   to	
  a	
   location,	
  geographic	
  boundary,	
  
when	
   outsourcing	
   means	
   buying	
   from	
   another	
   company,	
   not	
   depending	
   on	
  
location,	
  firm	
  boundary	
  (Koch	
  &	
  Bennett,	
  2013).	
  A	
  combination	
  of	
  these	
  concepts	
  
creates	
   four	
  different	
   strategic	
   approaches	
   (Bunyaratavej,	
  Doh,	
  Hahn,	
  Lewin,	
  &	
  
Massini,	
  2010).	
  See	
  table	
  1.	
  
	
   Insourcing	
   Outsourcing	
  

Onshore	
   Internal	
  domestic	
  provision	
   Domestic	
  outsourcing	
  

Offshore	
   Captive/foreign	
   subsidiary	
  
offshoring	
  

Offshore	
  outsourcing	
  

Table 1 Combination of offshoring and outsourcing (Koch & Bennett, 2013). 

Captive	
  offshoring	
  means	
  that	
  a	
  company	
  both	
  owns	
  and	
  runs	
  the	
  offshored	
  unit	
  
in	
   another	
   country.	
   Offshore	
   outsourcing	
   is	
   when	
   a	
   company	
   simultaneously	
  
transfer	
  ownership	
  and	
  location	
  of	
  an	
  activity	
  (Koch	
  &	
  Bennett,	
  2013).	
  	
  
Offshoring	
   of	
   services	
   may	
   depend	
   on	
   the	
   lack	
   of	
   skilled	
   labour	
   within	
   the	
  
developed	
   countries	
   while	
   it	
   in	
   development	
   countries	
   there	
   are	
   excess	
   of	
  
engineers.	
  Therefore	
  they	
  do	
  not	
  have	
  any	
  other	
  alternative	
  than	
  to	
  start	
  looking	
  
abroad	
  (Örberg	
  Jensen,	
  2009).	
  
In	
  the	
  article	
  by	
  Hätönen	
  &	
  Eriksson,	
  (2009)	
  the	
  historical	
  aspects	
  of	
  outsourcing	
  
are	
  discussed,	
   since	
  offshoring	
  and	
  outsourcing	
   is	
   two	
  concepts	
   that	
   is	
  directly	
  
linked.	
  The	
  historical	
  aspects	
  for	
  outsourcing	
  are	
  also	
  relevant	
  in	
  understanding	
  
and	
  background	
  of	
  the	
  concept	
  of	
  offshoring	
  (Matwinska	
  &	
  Perbom,	
  2013).	
  	
  
The	
   phenomenon	
   of	
   outsourcing	
   can	
   be	
   dated	
   back	
   to	
   the	
   1950s,	
   but	
   it	
   was	
  
mainly	
   in	
   the	
   1980’s	
   that	
   it	
   became	
   more	
   common	
   used	
   and	
   adopted	
   by	
  
companies	
   (Hätönen	
  &	
  Eriksson,	
   2009)	
   In	
   the	
   beginning	
   it	
  was	
   predominantly	
  
manufacturing	
   companies	
   that	
   relocated	
   their	
   processes	
   abroad	
   as	
   a	
   way	
   to	
  
reduce	
  costs	
  through	
  lower	
  labour	
  costs	
  (Lewin	
  &	
  Volberda,	
  2011).	
  However	
  the	
  
expansion	
   in	
   the	
  recent	
  years	
  has	
  driven	
   it	
  more	
   towards	
  a	
  cooperative	
  nature	
  
and	
  access	
   to	
  skilled	
   labour	
  (Örberg	
   Jensen,	
  2009),	
  where	
   the	
  cost	
  reduction	
   is	
  
no	
  longer	
  the	
  main	
  reason.	
  (Hätönen	
  &	
  Eriksson,	
  2009).	
  	
  
Hätönen	
   &	
   Eriksson	
   (2009)	
   have	
   in	
   their	
   article	
   “30+	
   years	
   of	
   research	
   and	
  
practice	
  of	
  outsourcing-­‐	
  Exploring	
  the	
  past	
  and	
  anticipating	
  the	
   future”	
  divided	
  
the	
  history	
   of	
   outsourcing	
   in	
   to	
   three	
  different	
   eras;	
   big	
   bang,	
   bandwagon	
   and	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

8 

barrier	
   less	
  organizations.	
  The	
  big	
  bang	
  era	
  arose	
   from	
  when	
  companies	
   in	
   the	
  
1980s	
   first	
   started	
   to	
   move	
   processes	
   to	
   other	
   external,	
   domestic	
   companies	
  
with	
  the	
  aim	
  of	
  reducing	
  costs.	
  This	
  era	
  was	
  followed	
  up	
  by	
  the	
  bandwagon	
  era	
  
where	
  now	
  the	
   focus	
  was	
  moved	
  from	
  only	
  reduce	
  cost,	
   instead	
  the	
  companies	
  
now	
   are	
   searching	
   for	
   new	
   skills	
   and	
   knowledge.	
   The	
   last	
   era,	
   barrier	
   less	
  
organizations,	
  where	
  outsourcing	
  now	
  is	
  needed	
  and	
  companies	
  has	
  to	
  include	
  it	
  
in	
  their	
  strategies	
  to	
  survive	
  on	
  the	
  market.	
  The	
  eras	
  is	
  summarised	
  in	
  table	
  2.	
  	
  
	
   Big	
  bang	
   Bandwagon	
   Barrier	
   less	
  

organizations	
  
Time	
   1980s	
   to	
   early	
  

1990s	
  
Early	
   1990s	
   to	
   early	
  
2000	
  

From	
   early	
   2000	
  
onwards	
  

Prime	
  motives	
   Cut	
  cost	
   Cut	
   costs,	
   capability	
  
enhancement,	
  process	
  
improvement	
  

Organizational	
  
transformation	
  

Buzzword	
   Outsourcing	
   Strategic	
  outsourcing	
  	
   Transformational	
  
outsourcing	
  

Outsource	
  
location	
  

Domestic	
   International	
   Global	
  

Strategic	
  
rationalization	
  

Profit	
  maximizing	
   Strategic	
   and	
  
competitive	
  edge	
  

Survival	
  

Outsourcing	
  
objects	
  

Structured	
   and	
  
well	
   defined	
  
turnkey	
  
manufacturing	
  
processes	
  

Strategically	
  
important	
  
organisational	
  
process	
  

Project	
   highly	
  
knowledge-­‐
incentive	
   and	
  
creative	
   in	
  
nature	
  

Main	
  theories	
   Transaction	
   cost	
  
theory	
  

Resource/competence	
  
based	
  view	
  

Organisational	
  
theories	
  

Table 2 Illustration of the characteristics and development of outsourcing (Hätönen & Eriksson, 2009). 

Offshoring	
  can	
  be	
  seen	
  as	
  a	
  strategy,	
  not	
  only	
  for	
  larger	
  firms	
  but	
  also	
  for	
  small	
  
and	
  start-­‐ups.	
  It	
  enables	
  for	
  the	
  companies	
  to	
  focus	
  on	
  their	
  core	
  competence,	
  or	
  
it	
  can	
  be	
  used	
  as	
  a	
  strategy	
  for	
  the	
  company	
  to	
  expand	
  their	
  business.	
  	
  For	
  small	
  
start-­‐ups	
   it	
   can	
   be	
   a	
   beneficial	
   method	
   used	
   for	
   speeding	
   up	
   the	
   process	
   of	
  
introducing	
  their	
  new	
  product	
  on	
  the	
  market	
  (Bunyaratavej,	
  Doh,	
  Hahn,	
  Lewin,	
  &	
  
Massini,	
  2010).	
  

2.3 Drivers and motivations in the internationalization 
process and offshoring strategy  

The	
   drives	
   for	
   service	
   firms	
   to	
   internationalize	
   their	
   business	
   are	
   different	
  
compared	
   with	
   manufacturing	
   companies	
   (Westhead,	
   Wright,	
   Ucbasaran,	
   &	
  
Martin,	
  2010).	
  Manufacturing	
  companies	
  tend	
  to	
  search	
  an	
  international	
  market	
  
to	
  gain	
  access	
  to	
  lower	
  labour	
  cost,	
  where	
  for	
  service	
  firms	
  the	
  prime	
  driver	
  is	
  to	
  
find	
  new	
  markets	
  and	
  gain	
  access	
  to	
  new	
  knowledge	
  (Bunyaratavej,	
  Doh,	
  Hahn,	
  
Lewin,	
   &	
   Massini,	
   2010).	
   There	
   are	
   no	
   significant	
   differences	
   in	
   the	
   drivers	
  
between	
  large	
  and	
  small	
  firms	
  to	
  internationalize	
  (Abdul-­‐Aziz,	
  Nor	
  Azmi,	
  Law,	
  &	
  
Pengiran,	
  2013).	
  	
  
The	
  driver	
  to	
  internationalize	
  is	
  often	
  due	
  to	
  the	
  market	
  share	
  is	
  decreasing,	
  lack	
  
of	
  knowledge	
  on	
  the	
  domestic	
  market	
  or	
  access	
  to	
  cheaper	
  working	
  labour.	
  If	
  the	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 9 
	
  

home	
  market	
  can	
  accommodate	
  these	
  needs,	
   it	
  becomes	
  less	
  attractive	
  to	
   leave	
  
the	
  domestic	
  market	
  (Sullivan	
  &	
  Bauerschmidt,	
  1990).	
  	
  
For	
  service	
  companies	
  there	
  might	
  be	
  additional	
  values	
  to	
  internationalize.	
  The	
  
time	
   difference	
   between	
   the	
   countries	
   around	
   the	
   world,	
   enables	
   service	
  
providers	
   to	
   provide	
   around	
   the	
   clock	
   service.	
   This	
   is	
   something	
   that	
   creates	
  
benefits	
  for	
  the	
  company	
  and	
  their	
  customers	
  and	
  can	
  be	
  used	
  as	
  a	
  competitive	
  
advantage.	
   Stringfellow,	
   Teagarden	
   &	
   Winter	
   (2008,	
   pp.165)	
   states	
   that	
   “This	
  
around-­‐the-­‐clock	
   operation	
   reduce	
   the	
   time	
   to	
   market	
   in	
   addition	
   to	
   its	
   cost	
  
advantage”.	
  
Within	
  the	
  internationalization	
  process	
  the	
  company	
  management	
  are	
  playing	
  an	
  
important	
  role.	
  It	
  is	
  their	
  personality	
  and	
  risk	
  taking	
  that	
  affects	
  their	
  decision	
  to	
  
either	
   internationalize	
   or	
   not	
   (Oviatt	
   &	
   McDougall,	
   2005).	
   They	
   tend	
   to	
   be	
  
somewhat	
   over-­‐enthusiastic	
   to	
   internationalize	
   their	
   company	
   and	
   therefore	
  
ignore	
   the	
   complexities	
   that	
   may	
   arise	
   in	
   the	
   process.	
   The	
   prim	
   motives	
   to	
  
internationalize	
  are	
  to	
  identified	
  and	
  sustain	
  the	
  firm	
  growth	
  and	
  increasing	
  the	
  
profitability	
  (Abdul-­‐Aziz,	
  Nor	
  Azmi,	
  Law,	
  &	
  Pengiran,	
  2013).	
  	
  

2.3.1 Cost reduction 
Cost	
  reduction	
   is	
   the	
  main	
  driver	
   for	
  companies	
  to	
  start	
   internationalization	
  or	
  
offshoring	
  activities	
  (Bunyaratavej,	
  Doh,	
  Hahn,	
  Lewin,	
  &	
  Massini,	
  2010).	
  The	
  two	
  
main	
  reasons	
  to	
  cost	
  reduction	
  are	
  (1)	
  processes	
  efficiency	
  and	
  (2)	
  lower	
  labour	
  
costs.	
   (1)	
   Process	
   efficiency	
   is	
   an	
   example	
   from	
   the	
   manufacturing	
   industry,	
  
which	
  means	
  that	
   it	
  will	
  generate	
  a	
  higher	
  productivity.	
  (2)	
  Lower	
  labour	
  costs	
  
refer	
   to	
   lower	
   wages	
   than	
   within	
   the	
   domestic	
   market	
   (Cerruti,	
   2008).	
   The	
  
calculation	
   needs	
   to	
   be	
   based	
   on	
  what	
   industry	
   and	
  within	
  which	
   country	
   the	
  
internationalization	
  or	
  offshoring	
  activity	
  is	
  taking	
  place.	
  	
  As	
  identified	
  in	
  table	
  3	
  
below	
   identification	
  of	
   the	
  perceived	
  effects	
  based	
  on	
   the	
   triple	
  constrain	
   time,	
  
cost	
  and	
  quality	
  (COE,	
  Committee	
  on	
  Offshoring	
  of	
  engineering,	
  2008).	
  

	
  
	
  

Table 3 Impact Matrix (European Commision Enterprise and Industry, 2010). 

Impact	
  Matrix	
  
Performance	
  
Metric	
  

More	
  
than	
  10%	
  
increase	
  

0-­‐10%	
  
increase	
  

Same	
   0-­‐10%	
  
reduction	
  

More	
   than	
  
10%reduction	
  

Engineering	
  
cost	
  	
  

4%	
   2%	
   7%	
   39%	
   48%	
  

Construction	
  
cost	
  

-­‐	
   4%	
   75%	
   17%	
   4%	
  

Engineering	
  
time	
  

2%	
   18%	
   48%	
   24%	
   8%	
  

Overall	
  
project	
   -­‐
delivery	
  time	
  

-­‐	
   9%	
   59%	
   30%	
   2%	
  

Engineering	
  
quality	
  

6%	
   11%	
   65%	
   18%	
   -­‐	
  

Construction	
  
quality	
  

2%	
   19%	
   72%	
   7%	
   -­‐	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

10 

It	
  is	
  important	
  to	
  be	
  aware	
  that	
  it	
  may	
  occur	
  hidden	
  costs	
  and	
  other	
  risks	
  in	
  an	
  
unknown	
   environment.	
   By	
   approaching	
   countries	
   that	
   has	
   a	
   similar	
   business	
  
environment	
  the	
  risks	
  can	
  be	
  minimized	
  (Bunyaratavej,	
  Hahn,	
  &	
  Doh,	
  2007),	
  but	
  
also	
   by	
   choosing	
   a	
   country	
   that	
   is	
   English-­‐speaking	
   or	
   at	
   least	
   has	
   a	
   basic,	
  
medium	
  interaction	
  distance	
  of	
  the	
  language	
  (Dossani	
  &	
  Kenney,	
  2003).	
  
The	
  cost	
  reduction	
  that	
  is	
  gained	
  by	
  moving	
  business	
  processes	
  to	
  other	
  parts	
  of	
  
the	
  world	
   is	
  often	
  costs	
  associated	
  with	
   labour	
  costs	
   (Bunyaratavej,	
  Doh,	
  Hahn,	
  
Lewin,	
   &	
   Massini,	
   2010).	
   The	
   scale	
   of	
   the	
   cost	
   reduction	
   differs	
   between	
   the	
  
industries,	
  Bunyaratavej	
   et	
   al.	
   (2010)	
   states	
   “offshoring	
  of	
  knowledge	
  work	
  may	
  
place	
   firms	
   at	
   a	
   long	
   term	
   disadvantage	
   despite	
   short-­‐term	
   cost	
   savings”.	
   The	
  
companies	
   that	
  work	
   in	
  development	
   countries	
   are	
  well	
   aware	
   of	
   the	
   fact	
   that	
  
their	
  services	
  is	
  needed	
  by	
  companies	
  in	
  the	
  developed	
  countries	
  and	
  therefore	
  
costs	
  for	
  skilled	
  labour	
  is	
  almost	
  as	
  high.	
  The	
  developed	
  countries	
  do	
  also	
  have	
  a	
  
lack	
  of	
  the	
  right	
  resources	
  to	
  perform	
  the	
  task	
  by	
  themselves	
  (Manning,	
  Massini,	
  
&	
  Lewin,	
  2008).	
  

2.3.2 Resource seeking 
Internationalization	
   and	
   offshoring	
   is	
   no	
   longer	
   just	
   about	
   moving	
  
manufacturing	
   and	
  back-­‐office	
   operation	
   to	
   India	
   or	
   China	
   to	
   reduce	
   cost.	
   It	
   is	
  
about	
   finding	
   the	
   right	
   talent	
   to	
   sustain	
   the	
   innovation	
   within	
   the	
   company	
  
(Offshoring	
  Research	
  Network,	
  2007).	
  Depending	
  on	
   this	
  aspect,	
   service	
  driven	
  
offshoring	
   main	
   driver	
   is	
   to	
   seek	
   new	
   knowledge	
   and	
   skilled	
   labour	
   (Örberg	
  
Jensen,	
  2012).	
   Internationalization	
  and	
  offshoring	
  of	
   services	
  are	
  done	
  because	
  
companies	
   cannot	
   find	
   enough	
   skilled	
   labour	
   to	
   bring	
   in-­‐house	
   (Offshoring	
  
Research	
  Network,	
  2007),	
  and	
   therefore	
  do	
  not	
  have	
  any	
  alternative	
   to	
  get	
   the	
  
needed	
  knowledge	
  than	
  to	
  move	
  abroad.	
  The	
  incentive	
  to	
  study	
  and	
  get	
  a	
  science	
  
and	
   engineering	
   degree	
   is	
   higher	
   in	
   development	
   countries	
   compared	
   to	
  
developed	
  countries	
  (Manning,	
  Massini,	
  &	
  Lewin,	
  2008).	
  
Since	
   internationalization	
   of	
   services	
   is	
   a	
   rather	
   new	
  phenomena	
   compared	
   to	
  
offshoring	
   of	
   manufacturing,	
   new	
   processes	
   needs	
   to	
   be	
   developed	
   and	
  
processed	
  (Offshoring	
  Research	
  Network,	
  2007).	
  
With	
   the	
   speed	
   on	
   the	
   global	
   market	
   today,	
   it	
   becomes	
   even	
   harder	
   to	
   find	
  
knowledge	
   and	
   skilled	
   labour	
   on	
   the	
   market.	
   It	
   may	
   therefore	
   become	
   more	
  
important	
   to	
  establish	
  business	
  with	
  several	
  providers	
  or	
   locations	
   (Offshoring	
  
Research	
  Network,	
  2007).	
  With	
  this	
  rapid	
  environment,	
  it	
  may	
  also	
  be	
  important	
  
that	
   the	
   authority	
   to	
   take	
   decisions	
   may	
   be	
   transferable	
   within	
   the	
   company,	
  
authorizing	
  the	
  person	
  with	
  the	
  best	
  background	
  information	
  and	
  knowledge,	
  to	
  
take	
  the	
  decision	
  (Offshoring	
  Research	
  Network,	
  2007).	
  	
  

2.4 Barriers and obstacles in the internationalization 
process and offshoring strategy 

Sometimes	
   companies	
   may	
   not	
   reach	
   the	
   expected	
   outcome	
   of	
   the	
  
internationalization	
   or	
   offshoring	
   process	
   because	
   they	
   cannot	
   overcome	
   the	
  
barriers	
   faced	
   in	
   the	
  processes	
   (European	
  Commision	
  Enterprise	
  and	
   Industry,	
  
2010).	
  	
  
Companies	
   that	
   not	
   yet	
   have	
   taken	
   the	
   step	
   of	
   internationalization	
   may	
  
underestimate	
   some	
  of	
   the	
   barriers	
   but	
   also	
   overestimate	
   others.	
   The	
   barriers	
  
for	
   companies	
   can	
   be	
   divided	
   in	
   to	
   two	
   sub-­‐groups,	
   internal	
   and	
   external	
  
barriers	
  (European	
  Commision	
  Enterprise	
  and	
  Industry,	
  2010).	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 11 
	
  

The	
   international	
   attitude	
   that	
   the	
   top	
  management	
   and	
   chef	
   executive	
   officer	
  
has	
  in	
  relation	
  to	
  the	
  international	
  barriers	
  identified,	
  the	
  attitude	
  from	
  the	
  top	
  
managers	
   may	
   change	
   based	
   on	
   the	
   risks	
   or	
   benefits	
   identified	
   in	
   an	
  
internationalization	
  process	
  (Cicic,	
  Patterson,	
  &	
  Shoham,	
  2002).	
  
As	
  Cicic,	
  Patterson	
  &	
  Shoham	
  (2002,	
  pp.	
  1106)	
  writes	
  in	
  the	
  report	
  “Antecedents	
  
of	
   international	
   performance	
   A	
   service	
   firms´	
   perspective”	
   “The	
   higher	
   the	
  
perceived	
  internal	
  and	
  external	
  international	
  barriers,	
  the	
  lower	
  the	
  performance”.	
  
If	
  the	
  firm	
  identify	
  the	
  barriers	
  and	
  dedicate	
  resources	
  on	
  how	
  to	
  handle	
  them	
  in	
  
advance,	
  the	
  impact	
  of	
  them	
  can	
  be	
  reduced.	
  He	
  also	
  states	
  that	
  “The	
  higher	
  the	
  
perceived	
   importance	
   of	
   internal	
   and	
   external	
   international	
   barriers,	
   the	
   more	
  
negative	
  the	
  firm´s	
  international	
  attitude”	
  	
  

2.4.1 Internal barriers 
The	
   internal	
  barriers	
  are	
  barriers	
   that	
  are	
  directly	
   connected	
   to	
   the	
   firm	
   itself.	
  
The	
  decision	
  to	
  internationalize	
  the	
  business	
  is	
  usually	
  made	
  by	
  the	
  top	
  manager	
  
or	
   the	
  chief	
  executive	
  officer	
  of	
   the	
  company,	
  and	
   it	
   is	
   therefore	
  based	
  on	
  their	
  
personal	
   experiences	
   and	
   preferences.	
   These	
   preferences	
   and	
   experience	
   is	
  
something	
  that	
  also	
  going	
  to	
  be	
  affected	
  the	
  outcome	
  of	
  the	
  internationalization.	
  	
  
There	
   are	
   two	
   different	
   components	
   that	
   affect	
   the	
   internationalization	
  
processes	
   internally,	
   and	
   these	
   are	
   the	
   attitude	
   and	
   behaviour	
   that	
   the	
   top	
  
manager	
  has	
  towards	
  it.	
  Cicic,	
  Patterson	
  &	
  Shoham	
  (2002,	
  pp.	
  1107)	
  states	
  “The	
  
more	
  positive	
  the	
  international	
  attitudes	
  of	
  top	
  management,	
  the	
  stronger	
  the	
  level	
  
of	
  management	
  support	
  and	
  international	
  strategic	
  commitment	
  effort	
  used	
  by	
  the	
  
firm”.	
  	
  	
  
Internationalization	
  for	
  service	
  firms	
  are	
  considered	
  to	
  be	
  more	
  risky	
  compared	
  
to	
   the	
  manufacturing	
   industry.	
   This	
   is	
   argued	
   to	
   depend	
   on	
   that	
   service	
   firms	
  
need	
   to	
   have	
   more	
   control	
   over	
   the	
   processes	
   and	
   the	
   resources	
   put	
   in,	
  
compared	
  to	
  what	
  a	
  manufacturing	
  firm	
  would	
  have	
  (Grönroos,	
  1999).	
  
A	
   survey	
   presented	
   by	
   European	
   Commision	
   Enterprise	
   and	
   Industry	
   (2010)	
  
highlights	
   the	
   main	
   participation	
   barriers	
   that	
   SMEs	
   sees	
   with	
  
internationalization	
   and	
   offshoring;	
   the	
   high	
   cost	
   of	
   internationalization.	
   To	
  
address	
   this	
   concern	
   there	
  are	
  a	
  number	
  of	
   strategies	
   that	
   can	
  be	
  put	
   together	
  
which	
  makes	
  it	
  simpler	
  to	
  react	
  on.	
  The	
  survey	
  also	
  shows	
  that	
  companies	
  with	
  
an	
   internationalization	
  or	
  offshoring	
  strategy	
  are	
  more	
   likely	
   to	
  achieve	
  higher	
  
results	
   compared	
   to	
   companies	
   that	
   do	
   not	
   have	
   any	
   because	
   they	
   are	
   more	
  
aware	
  of	
   the	
   risks	
   and	
   location	
   factors	
   that	
   affects	
   the	
  outcome	
   (Bunyaratavej,	
  
Doh,	
  Hahn,	
  Lewin,	
  &	
  Massini,	
  2010).	
  
There	
   are	
   three	
   organisational	
   factors	
   that	
   affect	
   the	
   outcome	
   and	
   success	
   of	
  
internationalization	
  and	
  offshoring.	
  These	
  are	
   internal	
  management	
   structures,	
  
incentive	
  systems	
  and	
  unionization	
  (Farrell,	
  2004).	
  It	
  is	
  important	
  to	
  be	
  aware	
  of	
  
what	
  obstacles	
  that	
  may	
  be	
  faced	
  during	
  the	
  globalisation,	
  and	
  how	
  they	
  can	
  be	
  
turned	
   in	
   to	
   an	
   advantage	
   (Stringfellow,	
   Teagarden,	
   &	
   Winter,	
   2008).	
   The	
  
processes	
   also	
   affect	
   the	
   contact	
   and	
   interaction	
   that	
   is	
   needed	
   between	
   both	
  
parts.	
  
How	
  the	
  barriers	
  are	
  perceived	
  differs	
  a	
  lot	
  between	
  companies	
  that	
  already	
  are	
  
working	
   in	
   an	
   international	
   environment	
   and	
   those	
   who	
   only	
   have	
   plans	
   on	
  
doing	
  it.	
  Companies	
  that	
  are	
  not	
  yet	
  active	
  on	
  the	
  international	
  market	
  perceived	
  
the	
   barriers	
   20%	
   higher	
   than	
   companies	
   that	
   are	
   active	
   on	
   the	
   international	
  
market	
  (European	
  Commision	
  Enterprise	
  and	
  Industry,	
  2010).	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

12 

2.4.2 External barriers 
The	
  external	
  barriers	
  are	
  obstacles	
   that	
   the	
   firm	
  face	
   in	
  an	
   internationalization	
  
process.	
  It	
  is	
  factors	
  outside	
  of	
  the	
  company;	
  such	
  as	
  environmental	
  factors	
  with	
  
time	
   distance,	
   language	
   differences	
   etc.	
   The	
   external	
   barriers	
   are	
   different	
  
depending	
  on	
  what	
  market	
  being	
  approached,	
  if	
  it	
  is	
  the	
  EU-­‐EEA	
  market	
  or	
  third	
  
markets	
   (European	
   Commision	
   Enterprise	
   and	
   Industry,	
   2010).	
   Most	
   of	
   the	
  
barriers	
  and	
  risks	
  to	
   internationalize	
  are	
  connected	
  with	
  the	
   lack	
  of	
  knowledge	
  
of	
  the	
  new	
  market	
  (Westhead,	
  Wright,	
  Ucbasaran,	
  &	
  Martin,	
  2010).	
  	
  
It	
  is	
  important	
  to	
  be	
  aware	
  of	
  the	
  effect	
  the	
  host	
  market	
  has	
  on	
  the	
  business.	
  The	
  
host	
   countries	
   political	
   and	
   economic	
   situation	
   affects	
   the	
   outcome.	
   It	
   is	
   also	
  
important	
  to	
  be	
  aware	
  of	
  the	
  business	
  situation	
  within	
  the	
  host	
  market,	
  whether	
  
or	
   not	
   the	
   competition	
   is	
   based	
   on	
   lowest	
   cost	
   or	
   highest	
   quality	
   (Abdul-­‐Aziz,	
  
Nor	
  Azmi,	
  Law,	
  &	
  Pengiran,	
  2013).	
  Another	
   important	
  aspect	
   is	
   to	
  be	
  aware	
  of	
  
potential	
   trade	
   barriers	
   (Arnold,	
   2005)	
   and	
   absence	
   of	
   law	
   within	
   the	
   host	
  
country	
  (Delios	
  &	
  Beamish,	
  2010).	
  
The	
  distance	
  between	
  the	
  host	
  and	
  home	
  country	
  is	
  also	
  an	
  factor	
  that	
  affect	
  the	
  
outcome	
  of	
  the	
  internationalization.	
  With	
  the	
  distance	
  it	
   is	
  also	
  important	
  to	
  be	
  
aware	
   of	
   the	
   cultural	
   differences.	
   In	
   addition	
   there	
   are	
   also	
   the	
   differences	
   in	
  
language	
   and	
   way	
   of	
   communication	
   (Welch,	
   Lawrence,	
   &	
   Marschan-­‐Piekkari,	
  
2001).	
   These	
   aspects	
   of	
   cultural	
   and	
   language	
   are	
   becoming	
   even	
   more	
  
important	
   to	
   be	
   aware	
   of	
   working	
   within	
   the	
   services	
   industry,	
   since	
   the	
  
interaction	
   between	
   the	
   partners	
   are	
   more	
   extensive	
   comparing	
   to	
   a	
  
manufacturing	
  industry	
  (Castellacci,	
  2010).	
  
The	
   cultural	
   difference	
   is	
   an	
   important	
   aspect	
   to	
   be	
   aware	
   of,	
   to	
  minimize	
   the	
  
risks	
   involved	
   in	
   the	
   internationalization	
  process.	
  As	
  Gesterland	
  (2012)	
  writes:	
  
What	
   is	
   seen	
  as	
  polite	
   in	
  one	
   country	
   can	
  be	
   seen	
  as	
   rude	
   in	
  another	
  one.	
  The	
  
culture	
   within	
   the	
   different	
   countries	
   can	
   be	
   divided	
   in	
   to	
   different	
   types	
   of	
  
groups	
   such	
   as	
   deal	
   focused	
   (DF)	
   vs.	
   relationship	
   focused,	
   (RF),	
   or	
   direct	
   vs.	
  
indirect	
  communication.	
  DF	
  countries’	
  and	
  persons	
  tend	
  to	
  be	
  more	
  task	
  focused	
  
compared	
   with	
   RF	
   persons	
   and	
   countries	
   that	
   focus	
   more	
   on	
   the	
   person	
   and	
  
relationships.	
   Examples	
   on	
   DF	
   countries	
   are	
   America	
   and	
  most	
   of	
   Europe	
   and	
  
examples	
   on	
   RF	
   countries	
   are	
   most	
   of	
   Asia	
   and	
   mostly	
   mentioned	
   China.	
   If	
  
business	
   is	
   done	
  within	
   its	
   own	
   country,	
   cultural	
   problems	
   do	
   not	
   need	
   to	
   be	
  
taking	
   in	
   to	
   consideration.	
   Cultural	
   problems	
   occur	
   when	
   they	
   are	
   making	
  
business	
   across	
   the	
   borders.	
   If	
   the	
   DF	
   persons	
   are	
   not	
   aware	
   of	
   this	
   the	
   RF	
  
persons	
  often	
   finds	
   them	
  as	
   rude,	
  pushy	
  and	
  aggressive.	
  On	
   the	
  other	
  hand	
  DF	
  
finds	
   RF	
   to	
   be	
   vague,	
   dilatory	
   and	
   even	
   dishonest.	
   When	
   it	
   comes	
   to	
  
communication	
   DF	
   tend	
   to	
   use	
   a	
   more	
   direct	
   language	
   and	
   RF	
   use	
   indirect	
  
language.	
  This	
  difference	
  tends	
  to	
  create	
  misunderstandings.	
  The	
  structure	
  of	
  the	
  
organisation	
   is	
   also	
   an	
   aspect	
   that	
   affects	
   the	
   business	
   behaviour,	
   if	
   the	
  
organisation	
  is	
  strict	
  hierarchical	
  or	
  flat.	
  All	
  of	
  these	
  aspects	
  are	
  of	
  importance	
  to	
  
be	
  aware	
  of	
  to	
  minimize	
  the	
  risks	
  of	
  cultural	
  problems	
  (Gesterland,	
  2012).	
  
As	
  Welch,	
  Lawrence	
  &	
  Marschan-­‐Piekkari	
  (2001,	
  pp	
  193)	
  writes	
  in	
  their	
  report	
  
“The	
   persistent	
   Impact	
   of	
   Language	
   on	
   Global	
   Operations”	
   “Much	
   of	
   the	
  
international	
   management	
   and	
   strategy	
   literature	
   reflects	
   a	
   common	
   view	
   that	
  
language	
   is	
   the	
   embodiment	
   of	
   culture,	
  which	
   leads	
   to	
   the	
   bundling	
   of	
   language	
  
within	
  the	
  broad	
  term	
  ‘culture’.”	
  Language	
  becomes	
  more	
  important	
  in	
  the	
  initial	
  
stage	
  of	
  the	
   internationalization	
  process	
  when	
  the	
  first	
  connection	
  is	
  made	
  and	
  
the	
  first	
  deal	
  is	
  about	
  to	
  close.	
  If	
  problems	
  occur	
  in	
  this	
  situation	
  communication	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 13 
	
  

probably	
  would	
  be	
  problematic	
  throughout	
  the	
  process.	
  The	
  ability	
  to	
  handle	
  the	
  
communication	
   lies	
   on	
   the	
   individuals	
   involved	
   in	
   the	
   process	
   and	
   not	
   in	
   the	
  
organisation	
  (Welch,	
  Lawrence,	
  &	
  Marschan-­‐Piekkari,	
  2001).	
  

2.5 Decision processes in the internationalization and 
offshoring processes for SMEs 

The	
  processes	
  for	
  the	
  decision	
  making	
  within	
  a	
  company,	
  differs	
  depending	
  on	
  a	
  
number	
  of	
  aspects	
  such	
  as	
   type	
  of	
   industry,	
  size	
  and	
  the	
   individuals	
  within	
   the	
  
company.	
  Example	
  of	
  the	
  theoretical	
  processes	
  and	
  decision	
  models	
  is	
  presented	
  
below,	
  both	
  small	
  to	
  medium	
  sized	
  enterprises,	
  SMEs,	
  and	
  large	
  firms.	
  

2.5.1 Decision processes 
It	
  needs	
   to	
  be	
  an	
  organisation	
  or	
   individual	
  behind	
   the	
  decision	
   taken	
  within	
  a	
  
company.	
   Internationalization	
   and	
   offshoring	
   has	
   become	
   more	
   than	
   cutting	
  
costs,	
  it	
  has	
  also	
  become	
  a	
  strategic	
  tool	
  for	
  companies	
  to	
  gain	
  flexibility,	
  access	
  
to	
  global	
  talents	
  and	
  increasing	
  competitiveness	
  within	
  the	
  company	
  (Offshoring	
  
Research	
  Network,	
  2007).	
  	
  
The	
   decision	
   process	
   is	
   shown	
   to	
   be	
   different	
   between	
   large	
   companies	
   and	
  
SMEs.	
   Large	
   firms’	
   decision	
   process	
   is	
   characterised	
   to	
   be	
   goal-­‐driven,	
   planed	
  
and	
   rational.	
   (Child	
   &	
   Hsieh,	
   2013).	
   While	
   SMEs	
   decision	
   tends	
   to	
   be	
   done	
  
through	
   individual	
   leadership.	
   This	
   means	
   that	
   their	
   personal	
   characteristic	
  
affects	
  the	
  strategic	
  decision.	
  They	
  also	
  tend	
  to	
  use	
  their	
  business	
  and	
  personal	
  
network	
  as	
   information	
   source	
   in	
   the	
  decision	
  process.	
  To	
  make	
  a	
  decision,	
   an	
  
input	
  of	
   information	
  to	
  trigger	
  the	
  process	
   is	
  needed.	
  Based	
  on	
  the	
  information	
  
given,	
   a	
   decision	
   is	
   taken	
   through	
   personal	
   or	
   impersonal	
   network	
   (Nielsen	
  &	
  
Nielsen,	
  2010).	
  
Child	
   &	
   Hsieh	
   (2013,	
   pp.	
   599)	
   States	
   that	
   “Previous	
   research	
   suggest	
   that	
   the	
  
approach	
  adopted	
  by	
  SMEs	
  leaders	
  toward	
  internationalization	
  and	
  their	
  network	
  
ties	
  may	
  depend	
  on	
  a	
  number	
  of	
  factors,	
  including	
  firm	
  characteristics,	
  such	
  as	
  size,	
  
age,	
  human	
  and	
  financial	
  resources,	
  their	
  link	
  with	
  sources	
  of	
  technology/scientific	
  
knowledge,	
   their	
  prior	
   international	
  experience	
  and	
  knowledge,	
  and	
  the	
  extent	
  of	
  
their	
   pre-­‐existing	
   contact	
   network”.	
   Four	
   decision	
   models	
   have	
   been	
   identified	
  
and	
   illustrated	
   in	
   table	
   4.	
   The	
   decision	
   models	
   reflect	
   if	
   the	
   decision	
   of	
  
internationalization	
  for	
  SMEs	
  is	
  planned	
  in	
  advance,	
  is	
  an	
  improvisation,	
  or	
  is	
  an	
  
unplanned	
  response	
  to	
  change	
  in	
  opportunities	
  (Spence	
  &	
  Crick,	
  2006).	
  
Decision	
  
model	
  

Feature	
   Planned?	
   Goal	
  driven?	
   Decision	
  
rules?	
  

Comparison	
   of	
  
alternatives?	
  

Reactivity	
   X	
   X	
   X	
   X	
  
Incrementalism	
   Limited	
   X	
   X	
   Limited	
  
Bounded	
  
rationality	
  

✓	
   ✓	
   ✓	
   Partial	
  	
  

Real	
   options	
  
reasoning	
  

✓	
   ✓	
   ✓	
   ✓	
  

Table 4 Decision models (Child & Hsieh, 2013). 

Reactivity	
   means	
   that	
   the	
   decision	
   is	
   made	
   as	
   a	
   response	
   to	
   an	
   immediate	
  
situation,	
   demand	
   or	
   environmental	
   change.	
   This	
   is	
   often	
   the	
   situation	
   within	
  
small	
   family-­‐owned	
   firms	
   (Child	
   &	
   Hsieh,	
   2013).	
   Internationalization	
   can	
   for	
  
example	
  be	
  done	
  when	
  a	
  domestic	
   customer	
   is	
   expanding	
   to	
  new	
  markets	
  and	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

14 

the	
  SME	
  decides	
  to	
   follow	
  them	
  into	
  the	
  new	
  market.	
  A	
  reactive	
  decision	
  mode	
  
“occasional	
  exporters”	
   respond	
   to	
  an	
  opportunity	
  when	
   it	
  occurs,	
  and	
  does	
  not	
  
perform	
  international	
  business	
  on	
  a	
  regular	
  basis	
  (Seifert,	
  2010).	
  
Incrementalism	
   is	
   characterised	
  by	
   vague	
   goals	
   that	
   is	
   often	
  defined	
   first	
   after	
  
the	
   action	
   has	
   taken	
   place.	
  Most	
   of	
   the	
   firms	
   enter	
   new	
  markets	
  without	
   pre-­‐
identification	
  of	
  risks,	
  goals	
  or	
  objectives;	
  they	
  are	
  often	
  defined	
  as	
  a	
  result	
  from	
  
the	
  action.	
  Mostly	
  the	
  decision	
  is	
  taking	
  in	
  a	
  same	
  type	
  of	
  way	
  as	
  in	
  the	
  familiar	
  
market,	
   but	
   also	
   what	
   they	
   have	
   learned	
   from	
   their	
   mistakes	
   and	
   more	
   of	
  
another	
  type	
  of	
  decision	
  mode	
  for	
  the	
  upcoming	
  situations	
  (Schweizer,	
  2012).	
  
Bounded	
   rationality	
   is	
   goal	
   direct	
   and	
   tends	
   to	
   be	
   more	
   rational.	
   It	
   is	
   more	
  
developed	
   with	
   criteria’s	
   and	
   rules	
   to	
   guide	
   the	
   decision	
   made	
   to	
   create	
   a	
  
successful	
  and	
  satisfying	
  result.	
  As	
  Child	
  &	
  Hsieh,	
  (2013,	
  pp.	
  601)	
  define	
  “While	
  
decision	
   makers	
   may	
   intend	
   to	
   be	
   rational,	
   their	
   cognitive	
   limits,	
   uncertainties,	
  
limitations	
  of	
  time,	
  and	
  the	
  cost	
  of	
  securing	
  further	
  information	
  can	
  prevent	
  them	
  
from	
  archiving	
  this”.	
  
Real	
   options	
   reasoning,	
   ROR,	
   are	
   a	
   highly	
   rational	
   decision-­‐making	
  model	
   that	
  
enables	
   to	
  minimize	
   the	
   risks	
   that	
   are	
   associated	
  with	
   globalization.	
   ROR	
   is	
   a	
  
model	
  that	
   is	
  trying	
  to	
  be	
  proactive.	
  Therefore,	
  analyses	
  of	
   information	
  and	
  the	
  
lack	
   of	
   it,	
   together	
   with	
   uncertainties	
   and	
   comparison	
   between	
   different	
  
alternatives,	
   are	
   made	
   to	
   identify	
   the	
   best	
   strategy	
   for	
   the	
   company	
   and	
   to	
  
maximize	
   the	
   value.	
   	
   This	
  model	
   is	
  more	
   likely	
   to	
   be	
   used	
  within	
   larger	
   firms	
  
than	
  SMEs	
  (Driouchi	
  &	
  Bennett,	
  2012). 	
  

2.6 Summary of theoretical framework 
The	
   internationalization	
   processes	
   can	
   be	
   set	
   up	
   and	
   done	
   in	
   a	
   number	
   of	
  
different	
  ways,	
  therefore	
  the	
  theoretical	
  framework	
  is	
  starting	
  with	
  introducing	
  
the	
  background	
  and	
  the	
  different	
  strategies	
  on	
  how	
  set	
  up	
  international	
  business.	
  
After	
  this,	
  the	
  concept	
  of	
  offshoring	
  is	
  presented	
  and	
  how	
  it	
  has	
  developed	
  over	
  
the	
   years,	
   followed	
  up	
  with	
   the	
   drivers	
   and	
  motivations	
   to	
   use	
   offshoring	
   as	
   a	
  
strategy.	
  Directly	
  linked	
  to	
  this	
  is	
  also	
  the	
  barriers	
  faced	
  in	
  the	
  process.	
  	
  
There	
   are	
   some	
   factors	
   that	
   affect	
   both	
   the	
   internationalization	
   processes	
   and	
  
the	
  offshoring	
  strategy.	
  It	
  is	
  the	
  basic	
  information	
  needed	
  to	
  understand	
  both	
  of	
  
these	
  concepts:	
  Type	
  of	
  industry,	
  and	
  the	
  affect	
  that	
  the	
  cultural	
  difference	
  might	
  
have	
  on	
  the	
  international	
  business	
  and	
  the	
  importance	
  of	
  communication.	
  	
  
	
  (1)	
   Enter	
   new	
  markets	
   is	
   one	
   of	
   the	
   steps	
   in	
   the	
   internationalization	
   process,	
  
which	
   means	
   that	
   it	
   might	
   become	
   necessary	
   to	
   create	
   an	
   office	
   within	
   the	
  
country	
   to	
  support	
   the	
  business	
  concerning	
   import	
  and	
  export	
  regulation.	
   	
   	
   (2)	
  
Product	
  specialization	
  is	
  connected	
  to	
  the	
  location	
  of	
  the	
  host	
  country,	
  there	
  are	
  
different	
   regions	
   and	
   countries	
   that	
   are	
   specialists	
   (Farrell	
   2004)	
   in	
   different	
  
areas,	
  such	
  as	
  silicon	
  valley	
  that	
  is	
  known	
  for	
  their	
  expertise	
  within	
  IT	
  (Business	
  
Dictionary,	
  2014).	
  (3)	
  Value	
  chain	
  disaggregation	
  is	
  about	
  maximizing	
  the	
  profit	
  
and	
  quality,	
   to	
   locate	
   the	
  different	
  processes	
   to	
   their	
   “expertise”	
   location.	
   	
   	
   (4)	
  
Value	
   chain	
   reengineering	
   to	
  move	
  processes	
   to	
  new	
   location	
  where	
   there	
   is	
   a	
  
new	
  market	
  to	
  consider,	
  which	
  means	
  that	
  the	
  product	
  needs	
  to	
  be	
  improved	
  and	
  
fitted	
  to	
  the	
   local	
  market.	
   	
   	
   (5)	
  Creation	
  of	
  new	
  markets	
   is	
  about	
  the	
  expansion	
  
and	
   penetrate	
   the	
   new	
   market	
   (Örberg	
   Jensen,	
   A	
   learning	
   perspective	
   on	
   the	
  
offshoring	
  of	
  advanced	
  services,	
  2009).	
  
(Abdul-­‐Aziz	
   et	
   al.	
   2013,	
   pp.	
   149)	
   writes	
   in	
   the	
   article	
   “Internationalization	
   of	
  
construction-­‐	
  related	
  impact	
  of	
  age	
  and	
  size”	
  that	
  “There	
  is	
  a	
  correlation	
  between	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 15 
	
  

the	
   level	
   of	
   economic	
   development	
   and	
   outward	
   foreign	
   direct	
   investment”.	
   It	
   is	
  
therefore	
  important	
  to	
  be	
  aware	
  of	
  the	
  image	
  of	
  the	
  host	
  country	
  and	
  that	
  it	
  can	
  
influence	
  the	
  purchasing	
  pattern.	
  	
  
In	
  the	
  internationalization	
  process,	
  there	
  are	
  a	
  number	
  of	
  obstacles	
  and	
  barriers	
  
faced	
  for	
  the	
  top	
  management	
  or	
  the	
  chef	
  executive	
  officer	
  of	
  the	
  company.	
  The	
  
barriers	
  faced	
  in	
  the	
  processes	
  are	
  both	
  external	
  and	
  internal	
  (Westhead,	
  Wright,	
  
Ucbasaran,	
  &	
  Martin,	
   2010).	
   The	
   international	
   attitude	
  of	
   the	
   top	
  management	
  
and	
   chef	
   executive	
   officer	
   in	
   relation	
   to	
   the	
   international	
   barriers,	
   the	
   attitude	
  
from	
   the	
   top	
   managers	
   may	
   change,	
   regarding	
   the	
   risks	
   or	
   benefits	
   in	
   an	
  
internationalization	
  process	
  (Cicic,	
  Patterson,	
  &	
  Shoham,	
  2002).	
  
Most	
  of	
  the	
  barriers	
  and	
  risks	
  to	
  internationalize	
  are	
  connected	
  with	
  the	
  lack	
  of	
  
knowledge	
  of	
  the	
  new	
  market	
  (Westhead,	
  Wright,	
  Ucbasaran,	
  &	
  Martin,	
  2010).	
  It	
  
also	
   highlights	
   the	
   importance	
   of	
   establishing	
   an	
   internationalization	
   or	
  
offshoring	
  strategy,	
  to	
  get	
  a	
  successful	
  outcome.	
  	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

16 

3 Methodology 
This	
  chapter	
   is	
  presenting	
  how	
  the	
  study	
  has	
  been	
  conducted	
  and	
  presents	
   the	
  
methods	
   used	
   throughout	
   the	
   thesis.	
   Firstly	
   the	
   research	
   approach	
   presented,	
  
this	
   is	
   followed	
   up	
   with	
   the	
   research	
   strategy	
   and	
   the	
   development	
   of	
   the	
  
theoretical	
  framework.	
  Secondly	
  a	
  deeper	
  discretion	
  description	
  of	
  how	
  the	
  data	
  
were	
  collected.	
  This	
  is	
  summed	
  up	
  with	
  an	
  analysis	
  of	
  the	
  result	
  identified.	
  	
  

3.1 Research approach 
There	
   are	
   different	
   ways	
   to	
   perform	
   and	
   carry	
   out	
   a	
   social	
   research.	
   A	
   social	
  
research	
   is	
   a	
   research	
   approach	
   that	
   is	
   used	
   for	
   questions	
   regarding	
   social	
  
scientific	
   grounds,	
   such	
   as	
   human	
   geography,	
   social	
   policy	
   and	
   politics.	
   The	
  
theory	
  is	
  an	
  important	
  aspect	
  of	
  social	
  research,	
  since	
  it	
  provides	
  a	
  background	
  
on	
  the	
  research	
  that	
  is	
  being	
  conducted.	
  It	
  is	
  therefore	
  important	
  to	
  be	
  aware	
  of	
  
if	
   the	
  data	
   is	
   collected	
   to	
   test	
   the	
   theory	
  or	
   to	
  build	
   the	
   theory.	
  There	
   are	
   two	
  
concepts	
   presented	
   about	
   this,	
   Deductive	
   theory,	
   where	
   theory	
   are	
   the	
  
background	
   to	
   the	
   research	
   and	
   Inductive	
   theory,	
  where	
   the	
   research	
   findings	
  
and	
  observations	
  guides	
  the	
  choice	
  of	
  theory	
  (Bryman,	
  2008).	
  
The	
  research	
  approach	
  conduced	
  throughout	
  this	
  thesis,	
  cannot	
  be	
  represented	
  
in	
  any	
  of	
  the	
  approaches	
  presented	
  above.	
  The	
  intention	
  was	
  to	
  use	
  a	
  deductive	
  
approach	
  where	
  the	
  literature	
  was	
  collected	
  and	
  was	
  guiding	
  the	
  outcomes	
  and	
  
findings	
   from	
   the	
   interviews	
   (Bryman,	
   2008).	
   Conducting	
   the	
   interviews	
   new	
  
strategies	
  was	
  presented	
  and	
  therefore	
  an	
  abductive	
  theory	
  needed	
  to	
  be	
  used.	
  
Dubois	
  &	
  Gradde	
  (2002,	
  pp.	
  555)	
  state	
   in	
  the	
  article	
  “Systematic	
  combining:	
  an	
  
abductive	
   approach	
   to	
   case	
   research”	
   “A	
   standardized	
   conceptualization	
   of	
   the	
  
research	
   process	
   as	
   consisting	
   of	
   a	
   number	
   of	
   planned	
   subsequent	
   “phases”	
   does	
  
not	
   reflect	
   the	
   potential	
   uses	
   and	
   advantages	
   of	
   case	
   research.	
   Instead,	
   we	
   have	
  
found	
   that	
   the	
   researcher,	
  by	
  constantly	
  going	
   “back	
  and	
   forth”	
   from	
  one	
   type	
  of	
  
research	
  activity	
  to	
  another	
  and	
  between	
  empirical	
  observations	
  and	
  theory,	
  is	
  able	
  
to	
  expand	
  his	
  understanding	
  of	
  both	
  theory	
  and	
  empirical	
  phenomena”.	
  

3.1.1 Quantitative or Qualitative research  
When	
  selecting	
  a	
  research	
  approach,	
  it	
  is	
  important	
  to	
  be	
  aware	
  whether	
  or	
  not	
  
the	
   thesis	
   does	
   have	
   a	
   quantitative	
   or	
   qualitative	
   research	
   approach.	
   A	
  
quantitative	
  approach	
  can	
  be	
  related	
  to	
  a	
  deductive	
  theory,	
  where	
  the	
  literature	
  
tests	
  the	
  findings.	
  It	
  is	
  also	
  an	
  approach	
  that	
  has	
  more	
  practices	
  and	
  norms	
  with	
  
natural	
  science,	
  and	
  usually	
  are	
  findings	
  and	
  observations	
  in	
  numbers	
  (Bryman,	
  
2008).	
  
The	
  qualitative	
  approach	
  is	
  more	
  about	
  words	
  and	
  is	
  usually	
  connected	
  with	
  an	
  
inductive	
  approach,	
  which	
  means	
  that	
  the	
  observations	
  and	
  findings	
  are	
  guiding	
  
the	
   theory.	
   Interpretivism	
   is	
   an	
   approach	
   used,	
   where	
   human	
   behaviours	
   and	
  
their	
  way	
  of	
  understanding	
  the	
  reality	
  is	
  studied.	
  It	
  is	
  also	
  commonly	
  used	
  where	
  
the	
   main	
   data	
   collection	
   is	
   through	
   observations	
   and	
   interviews	
   (Research	
  
Methodology,	
  2015).	
  	
  
Since	
   internationalization	
   with	
   SMEs,	
   active	
   on	
   the	
   construction	
   industry	
   is	
   a	
  
rather	
  new	
  phenomenon,	
  there	
  are	
  limited	
  previous	
  research	
  to	
  access	
  and	
  only	
  
a	
   few	
  companies	
  to	
  study.	
  The	
  qualitative	
  research	
  approach	
   is	
  connected	
  with	
  
creating	
   understanding	
   and	
   explores	
   new	
   phenomena,	
   which	
   has	
   been	
   done	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 17 
	
  

through	
   out	
   this	
   thesis.	
   Based	
   on	
   this	
   a	
   qualitative	
   research	
   method	
   with	
   an	
  
interpretivist	
  approach	
  has	
  been	
  used.	
  

3.1.2 Trustworthiness  
It	
  is	
  important	
  to	
  define	
  the	
  quality	
  of	
  the	
  conducted	
  qualitative	
  and	
  quantitative	
  
research.	
   They	
   define	
   trustworthiness	
   as	
   a	
   way	
   of	
   assessing	
   qualitative	
   data.	
  
Trustworthiness	
   is	
   built	
   up	
   by	
   four	
   criteria’s:	
   credibility,	
   transferability,	
  
dependability	
  and	
  conformability	
  (Bryman,	
  2008).	
  
Credibility	
   is	
   criteria	
   that	
   concern	
  how	
  believable	
   the	
   findings	
  are,	
  and	
  making	
  
sure	
   that	
   the	
   study	
   has	
   been	
   carried	
   out	
   according	
   to	
   good	
   practice.	
   Within	
  
credibility	
  there	
  are	
  another	
  aspect	
  that	
  can	
  be	
  carried	
  out	
  to	
  establish	
  that	
  good	
  
practice	
  has	
  been	
  followed	
  and	
  using	
  triangulation,	
  which	
  means	
  that	
  more	
  than	
  
one	
   source	
   for	
   the	
   data	
   collection	
   was	
   used	
   (Bryman,	
   2008).	
   To	
   secure	
   the	
  
credibility	
   within	
   the	
   six	
   interviews	
   conducted,	
   they	
   were	
   followed	
   up	
   with	
  
company	
   specific	
   information	
   gathered	
   online,	
   and	
   dissertations	
   already	
  
performed	
   on	
   the	
   companies.	
   This	
   was	
   used	
   as	
   a	
   complement	
   to	
   the	
   data	
  
collected	
  in	
  the	
  interviews.	
  	
  
Transferability	
  is	
  a	
  question	
  whether	
  or	
  not	
  the	
  findings	
  can	
  be	
  transferred	
  in	
  to	
  
other	
   areas	
  of	
   research?	
   Since	
   a	
   qualitative	
   research	
   approach	
  means	
   in-­‐depth	
  
study	
   of	
   individuals	
   and	
   smaller	
   groups	
   witch	
   is	
   usually	
   connected	
   with	
   an	
  
extent	
  of	
  uniqueness	
  within	
  the	
  social	
  world	
  (Bryman,	
  2008).	
  Since,	
  this	
  thesis	
  is	
  
keeping	
   it	
   open	
   for	
   other	
   companies	
   to	
   use,	
   other	
   industries	
   with	
   similar	
  
difficulties	
   identified	
   in	
   the	
   construction	
   industry	
   can	
   adapt	
   to	
   the	
   presented	
  
theories.	
  
Dependability	
  questioned	
  whether	
  or	
  not	
  the	
  findings	
  are	
  applicable	
  in	
  another	
  
times	
  period?	
   (Bryman,	
  2008)	
  Most	
  of	
   the	
   information	
   that	
   is	
  presented	
   in	
   the	
  
thesis	
  is	
  up	
  to	
  date	
  and	
  time	
  relevant	
  within	
  the	
  field.	
  Since	
  there	
  is	
  a	
  current	
  lack	
  
of	
   research	
   within	
   the	
   field,	
   research	
   based	
   on	
   other	
   industries	
   has	
   been	
  
necessary,	
  it	
  is	
  going	
  to	
  be	
  up	
  to	
  date	
  for	
  numbers	
  of	
  years	
  ahead.	
  	
  
Conformability,	
   has	
   the	
   authors	
   values	
   been	
   affecting	
   the	
   data?	
   In	
   qualitative	
  
research,	
  the	
  authors’	
  perspective	
  is	
  always	
  going	
  to	
  affect	
  to	
  some	
  extent,	
  but	
  it	
  
is	
   important	
   to	
   exclude	
  personal	
   values	
   out	
   of	
   the	
   study	
   and	
   act	
  with	
   an	
   open	
  
mind	
  and	
  with	
  good	
  faith	
  (Bryman,	
  2008).	
  The	
  research	
  is	
  based	
  on	
  a	
  theoretical	
  
framework	
   where	
   literature	
   studies	
   has	
   been	
   done	
   by	
   the	
   author	
   and	
   also	
   in	
  
collaboration	
   with	
   Martine	
   Buser	
   and	
   the	
   project	
   of	
   “strategic	
   innovative	
  
practices	
   global	
   alliances	
   in	
   the	
   Swedish	
   AEC	
   industry-­‐	
   preparing	
   for	
  
opportunities”.	
  	
  

3.2 Development of theoretical framework 
The	
  theoretical	
  framework	
  is	
  based	
  on	
  literature	
  and	
  theories	
  on	
  the	
  concepts	
  of	
  
internationalization	
   and	
   offshoring,	
   there	
   are	
   a	
   current	
   lack	
   of	
   result	
   from	
   the	
  
field	
   on	
   how	
   this	
   concepts	
   are	
   working	
   within	
   the	
   construction	
   industry,	
  
therefore	
   the	
   literature	
   has	
   been	
   gathered	
   from	
   other	
   industries	
   such	
   as	
   the	
  
manufacturing	
  and	
  IT	
  (Hätönen	
  &	
  Eriksson,	
  2009).	
  
The	
   aim	
   of	
   the	
   theoretical	
   framework	
   is	
   to	
   create	
   an	
   understanding	
   on	
   the	
  
subjects	
  of	
  internationalization	
  processes	
  and	
  offshoring	
  strategies.	
  The	
  purpose	
  
is	
   to	
   enable	
   a	
   deeper	
   analysis	
   of	
   the	
   findings	
   from	
   the	
   interviews.	
   Since	
   the	
  
author	
  has	
  went	
  back	
  and	
  forth	
  within	
  the	
  different	
  parts,	
  they	
  have	
  influenced	
  
each	
   other	
   and	
   the	
   theoretical	
   aspects	
   has	
   been	
   developed	
   after	
   the	
   interview	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

18 

had	
   been	
   conducted	
   since	
   new	
   information	
   was	
   presented	
   and	
   to	
   be	
   able	
   to	
  
conduct	
  an	
  analyse,	
  more	
  backgrounds	
  information	
  was	
  needed.	
  	
  
The	
   theoretical	
   background	
   is	
   based	
   on	
   search	
   throw	
   reliable	
   databases	
   using	
  
keyword	
  as	
  internationalization	
  process,	
  internationalization	
  process	
  within	
  the	
  
construction	
   industry,	
   offshoring,	
   business	
   culture,	
   international	
   environment	
  
and	
  communication.	
  The	
  snowball	
  effect	
  has	
  also	
  been	
  one	
  of	
  the	
  approaches,	
  by	
  
identifying	
   relevant	
   articles	
   or	
   reports	
   and	
   using	
   their	
   references	
   lists.	
   The	
  
supervisor,	
   at	
   Chalmers	
   University	
   of	
   Technology,	
   has	
   also	
   provided	
   relevant	
  
articles.	
  	
  

3.3 Data collection 
The	
   data	
   was	
   collected	
   throw	
   interviews	
   with	
   three	
   different	
   companies.	
   The	
  
interviews	
   was	
   semi-­‐structured,	
   which	
   creates	
   a	
   flexibility	
   in	
   the	
   interview	
  
where	
  only	
  guidelines	
  are	
  put	
  up	
  before	
  and	
  the	
  questions	
  does	
  not	
  have	
  to	
  be	
  
asked	
   in	
   a	
   specific	
   order.	
   The	
   interviewee	
  does	
   have	
   a	
   great	
   deal	
   of	
   leeway	
   to	
  
reply.	
   It	
   also	
   allows	
   asking	
  upcoming	
  questions	
  during	
   the	
   interview	
   (Bryman,	
  
2008).	
   Semi-­‐structured	
   interview	
   can	
   also	
   be	
   a	
   benefit	
   since	
   the	
   interviewer	
  
does	
  only	
  have	
  one	
  chance	
  to	
  conduct	
  the	
  interview	
  (Cohen	
  &	
  Crabtree,	
  2006).	
  
The	
   key	
   questions	
   to	
   the	
   interviews	
  were	
   prepared	
   before	
   the	
   interview.	
   The	
  
specific	
  questions	
  was	
  not	
  send	
  in	
  advance,	
  however	
  a	
  short	
  description	
  on	
  what	
  
subject	
   to	
   be	
   discussed	
   during	
   the	
   interview	
  was	
   seen	
   out.	
   The	
   questions	
  was	
  
designed	
   with	
   an	
   open	
   ending	
   where	
   the	
   interviewed	
   had	
   the	
   possibility	
   to	
  
discuss	
  the	
  response.	
  	
  

3.4 Respondents  
The	
   identification	
   of	
   the	
   right	
   persons	
   to	
   conduct	
   the	
   interviewees	
   with	
   was	
  
important	
   for	
   the	
   trustworthiness	
   of	
   this	
   thesis.	
   A	
   total	
   of	
   six	
   interviews	
  were	
  
performed,	
   three	
   of	
   the	
   interviews	
   were	
   conducted	
   with	
   company	
   A,	
   two	
  
interviews	
  with	
  company	
  B	
  and	
  one	
  interview	
  with	
  company	
  C.	
  The	
  position	
  of	
  
the	
   interviewees	
   is	
   illustrated	
   in	
   table	
   5,	
   in	
   chapter	
   4	
   Findings.	
   	
   They	
   were	
  
identified	
   to	
   be	
   exclusively	
   responsible	
   for	
   the	
   internationalization	
   and	
  
offshoring	
  strategies	
  within	
  the	
  different	
  companies.	
  	
  	
  
Company	
  A	
  was	
  identified	
  early	
  on	
  in	
  the	
  processes,	
  based	
  on	
  a	
  previous	
  master	
  
thesis	
   performed	
   at	
   the	
   division	
   of	
   construction	
   management	
   on	
   a	
   similar	
  
subject.	
   It	
   was	
   their	
   innovative	
   international	
   interaction	
   with	
   China	
   that	
   was	
  
interesting	
  for	
  this	
  thesis.	
  In	
  their	
  on-­‐going	
  project	
  with	
  China	
  Company	
  B	
  was	
  a	
  
part	
   of	
   company	
   A	
   network	
   in	
   the	
   Chinese	
   project	
   and	
   was	
   therefore	
   also	
   an	
  
interesting	
  company	
  to	
  examine.	
  Since	
  both	
  company	
  A	
  and	
  company	
  B	
  are	
  SMEs	
  
the	
  author	
   found	
   it	
   interesting	
   to	
   identify	
  a	
   larger	
   firm,	
  active	
  within	
   the	
   same	
  
industry	
   and	
   international	
   market,	
   enabling	
   comparisons.	
   Company	
   C	
   was	
  
identified	
  in	
  association	
  with	
  the	
  project	
  of	
  “strategic	
  innovative	
  practices	
  global	
  
alliances	
   in	
   the	
   Swedish	
   AEC	
   industry-­‐	
   preparing	
   for	
   opportunities”	
   performed	
  
within	
   the	
  same	
  division	
  and	
  Centre	
   for	
  management	
  of	
   the	
  build	
  environment	
  
(CMB).	
  	
  	
  

3.5 Interview 
The	
  structure	
  of	
  the	
  interview	
  is	
  depending	
  on	
  the	
  purpose	
  of	
  the	
  interview	
  and	
  
for	
   qualitative	
   research	
   the	
   interviews	
   are	
   normally	
   unstructured.	
   An	
  
unstructured	
  interview	
  means	
  that	
  interviewee	
  may	
  just	
  have	
  one	
  question	
  that	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 19 
	
  

the	
  respondent	
  need	
  to	
  respond	
  freely	
  on	
  and	
  the	
   interview	
  picks	
  up	
  on	
  things	
  
that	
  seems	
  worth	
  to	
  follow	
  up	
  on.	
  A	
  semi-­‐structured	
  interview	
  guideline	
  for	
  the	
  
interview	
  is	
  set	
  up,	
  does	
  not	
  necessarily	
  need	
  to	
  follow	
  the	
  same	
  structure	
  as	
  it	
  is	
  
written	
  down,	
  and	
  it	
   is	
  usually	
  allows	
  an	
  open	
  answer	
  question.	
  If	
  needed,	
  new	
  
questions	
   can	
   be	
   asked	
   during	
   the	
   interview	
   that	
   is	
   not	
   specified	
   in	
   advance.	
  	
  
Both	
  this	
  types	
  of	
  interviews	
  creates	
  flexibility.	
  They	
  are	
  also	
  considered	
  to	
  be	
  in-­‐
depth	
  interviews	
  (Bryman,	
  2008).	
  	
  
The	
   empirical	
   data	
   has	
   been	
   collected	
   through	
   six	
   interviews	
   with	
   project	
  
managers	
   or	
   chief	
   executive	
   officer	
   at	
   three	
   different	
   companies.	
   The	
  
interviewees	
   were	
   identified	
   through	
   contacts	
   with	
   CMB	
   and	
   the	
   on-­‐going	
  
research	
   “strategic	
   innovative	
   practices	
   global	
   alliances	
   in	
   the	
   Swedish	
   AEC	
  
industry-­‐	
   preparing	
   for	
   opportunities”	
   performed	
   by	
   Christian	
   Koch,	
   Martine	
  
Buser	
  and	
  Petra	
  Bosch.	
  The	
  interview	
  was	
  conducted	
  in	
  association	
  with	
  Martine	
  
Buser	
  and	
  was	
  mainly	
  held	
  in	
  English	
  language.	
  	
  
The	
   structure	
   of	
   the	
   interviews	
  was	
   as	
   previously	
  mentioned	
   semi-­‐structured.	
  
That	
  enabled	
  the	
  respondent	
  to	
  elaborate,	
  and	
  if	
  needed	
  the	
  question	
  order	
  could	
  
be	
   switched.	
   During	
   all	
   of	
   the	
   interviews,	
   notes	
   were	
   taken	
   and	
   it	
   was	
   also	
  
complemented	
  with	
  recordings.	
  This	
  allows	
  the	
  author	
  to	
  go	
  back	
  and	
  evaluate	
  
the	
   information	
   and	
   response	
   again,	
   making	
   sure	
   that	
   the	
   information	
   was	
  
understood	
  correctly.	
  The	
  interview	
  was	
  performed	
  in	
  face-­‐to-­‐face	
  meetings;	
  the	
  
interview	
   was	
   conducted	
   both	
   at	
   the	
   company	
   and	
   at	
   Chalmers	
   University	
   of	
  
Technology.	
  The	
   interview	
  was	
  performed	
   in	
   the	
  time	
  period	
  of	
  November	
  and	
  
December	
  of	
  2014	
  and	
  the	
  lasted	
  for	
  approximately	
  one	
  and	
  a	
  half	
  hour	
  each.	
  	
  

3.6 Data analysis 
As	
  Taylor-­‐Powell	
  &	
  Renner	
  (2003)	
  has identified in the report “analyzing qualitative 
data” an analys process for qualitative data this is done in five steps. Since the process 
is not fixed moving back and forwared between the steps can be made. The steps are 
(1) geting to knwo the data, (2) focusing the analysis, (3) categorize information, (4) 
identify patterns and connections wihthin and between categories and (5) 
interpretition. 
(1) Getting to know the data, this step means to go through the collected data over and 
over again to be able to provide a qualitative analysis, a deper understanding of the 
data enables a  better analys. If the data were collected by interviews and they where 
recorded, it enables to listen to them over and over again , go throw notes etc. It is 
also important to sort out the relevant and relable information that has been discused 
(Taylor-­‐Powell	
  &	
  Renner,	
  2003).  
The data for this thesis was collected through interviews that was recorded, 
complemented with notes and a short summery after each interview was made to 
conclude the data. To gain a deper understanding of the data these information 
sources was examined over and over.  
(2) Focusing on the analysis. This is how the structure of the analysis is going to be 
put up. As a starting point it is important to know what to search for. Identify 
questions as guidlines in the process. It can also be narrowed down in to two 
approaches on how to respond to the analysis, with focus on the topic, event or time 
period it can also be with a focus on case, individuals or groups (Taylor-­‐Powell	
  &	
  
Renner,	
  2003). 



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

20 

(3) Categorize infromation, identify patterns that may occur in the data collected such 
as ideas, concepts, behavior or incidents. Try to organize the patterns that has been 
identified in to coherent categories (Taylor-­‐Powell	
  &	
  Renner,	
  2003). 
(4) Identify patterns and connection within and between categories, based on the 
caterorize information that has been developed in the stage above, trying to identify 
connections between them and evaluate the relationship between them (Taylor-­‐
Powell	
  &	
  Renner,	
  2003). 
(5) Interpretation, is the stage where all the information is being brought together. 
And based on the previous stages explan the findings and connection that has been 
identified (Taylor-­‐Powell	
  &	
  Renner,	
  2003).	
  



	
  
	
  
	
  

CHALMERS	
  Civil and Environmental Engineering, Master’s Thesis 2015:72 21 
	
  

4 Empirical data 
Data	
  presented	
  in	
  this	
  chapter	
  are	
  based	
  on	
  the	
  interviews	
  carried	
  out	
  with	
  three	
  
different	
  companies,	
  where	
  a	
  total	
  of	
  six	
  interviews	
  were	
  made.	
  The	
  Interviews	
  
were	
  made	
   within	
   the	
   construction	
   sector,	
   where	
   two	
   of	
   the	
   companies	
   were	
  
small	
  to	
  medium	
  sized	
  enterprises	
  and	
  the	
  third	
  one,	
  a	
  large	
  company.	
  All	
  three	
  
of	
   the	
   companies	
   are	
   currently	
  working	
   in	
   an	
   international	
   environment.	
  They	
  
are	
   presented	
   with	
   letters	
   where	
   company	
   A	
   and	
   B	
   are	
   SMEs	
   and	
   the	
   third	
  
company	
  C	
   is	
   a	
   larger	
   company.	
  All	
   three	
   of	
   these	
   companies	
   are	
   based	
   in	
   the	
  
region	
   of	
   Gothenburg	
   and	
   perform	
   the	
   majority	
   of	
   their	
   projects	
   on	
   the	
   local	
  
market	
   of	
   Gothenburg.	
   The	
   subjects	
   discussed	
   during	
   the	
   interviews	
   are:	
   how	
  
their	
   international	
   contacts	
   are	
   set	
   up,	
   how	
   their	
   collaboration	
   look	
   like,	
  what	
  
opportunities	
  they	
  see	
  within	
  the	
  international	
  market	
  and	
  lessons	
  learned	
  from	
  
their	
  projects	
  abroad.	
  The	
  interviewees	
  are	
  presented	
  in	
  table	
  5,	
  below.	
  	
  
Interviewee	
   Company	
  A	
   Company	
  B	
   Company	
  C	
  
A1	
   Former	
  CEO	
   	
   	
  
A2	
   Project	
  Manager	
   	
   	
  
A3	
   Initiative	
  taker	
   	
   	
  
B1	
   	
   Project	
  Manager	
   	
  
B2	
   	
   CEO	
   	
  
C1	
   	
   	
   Project	
  

Manager	
  
Table 5 Formal positions and companies involved in this thesis 

4.1 Company A 
Company	
  A	
  is	
  a	
  relative	
  small	
  company	
  with	
  its	
  base	
  in	
  Gothenburg.	
  Their	
  main	
  
business	
   are	
   within	
   HVAC(explain)	
   and	
   they	
   are	
   a	
   traditional	
   company	
   that	
  
usually	
  do	
  not	
  perform	
  job	
  outside	
  of	
  their	
  comfort	
  zone.	
  They	
  have	
  a	
  subsidiary	
  
that	
   solely	
   are	
   focusing	
   on	
   new	
   inventions,	
   and	
   they	
   are	
   not	
   frightened	
   to	
   try	
  
new	
   technology	
   or	
   try	
   new	
   markets.	
   This	
   is	
   the	
   main	
   driver	
   behind	
   their	
  
international	
   process.	
   They	
   had	
   the	
   opportunity	
   to	
   get	
   in	
   contact	
   with	
   the	
  
Chinese	
  market	
  and	
  they	
  took	
  it.	
  They	
  are	
  currently	
  part	
  of	
  an	
  association	
  with	
  a	
  
few	
  other	
  companies	
  from	
  the	
  region	
  of	
  Gothenburg	
  that	
  performs	
  a	
  project	
  for	
  a	
  
Chinese	
  company.	
  	
  
As	
   illustrated	
   in	
   table	
  5	
  above,	
   three	
  different	
   interviews	
  were	
   conducted	
  with	
  
this	
   company;	
   all	
   of	
   them	
  were	
   somehow	
   involved	
   in	
   the	
  project	
   in	
  China.	
  The	
  
interview	
   was	
   done	
   with	
   the	
   initiator	
   of	
   the	
   project,	
   A3,	
   the	
   former	
   chief	
  
executive	
  officer,	
  A1,	
  and	
  the	
  project	
  manager,	
  A2,	
  that	
  currently	
  are	
  working	
  on	
  
the	
  project.	
  	
  

4.1.1 How do they work international? 
It	
  was	
  mainly	
  the	
  subsidiary	
  of	
  company	
  A	
  that	
  started	
  the	
  internationalization	
  
process,	
   prior	
   to	
   their	
   contact	
   with	
   China,	
   which	
   is	
   the	
   main	
   focus	
   of	
   the	
  
interviews.	
   They	
   have	
   performed	
  projects	
   all	
   over	
   Sweden	
  but	
   also	
   in	
  Norway	
  
and	
   Germany.	
   It	
   is	
   a	
   company	
   more	
   willing	
   to	
   take	
   risks,	
   but	
   they	
   also	
   have	
  
employees	
  that	
  are	
  driven	
  and	
  can	
  be	
  seen	
  as	
  entrepreneurs.	
  	
  
Their	
  internationalization	
  process	
  started	
  with	
  a	
  school	
  that	
  they	
  had	
  projected	
  
with	
  new	
  and	
  innovative	
  technology.	
  This	
   interested	
  an	
  architect	
   from	
  south	
  of	
  
Sweden,	
  also	
  about	
  to	
  design	
  a	
  school.	
  The	
  architect	
  contacted	
  company	
  A	
  to	
  get	
  



CHALMERS,	
  Civil	
  and	
  Environmental	
  Engineering,	
  Master’s	
  Thesis	
  2015:72 
	
  

22 

a	
  briefing	
  of	
  the	
  company	
  and	
  what	
  they	
  had	
  done	
  in	
  this	
  specific	
  school.	
  During	
  
the	
   company	
   briefing	
   done	
   by	
   A3,	
   a	
   misunderstanding	
   occurred	
   when	
   the	
  
locations	
   of	
   their	
   offices	
  were	
   presented.	
   One	
   of	
   the	
   offices	
   is	
   based	
   in	
   Kinna,	
  
which	
   is	
   a	
   community	
   one	
   hour	
   drive	
   outside	
   of	
   Gothenburg.	
   The	
   architect	
  
mistook	
  Kinna	
  for	
  China	
  (Kina,	
  in	
  Swedish)	
  and	
  asked	
  where	
  in	
  China	
  their	
  office	
  
were	
  located.	
  It	
  turned	
  out	
  that	
  they	
  were	
  working	
  together	
  on	
  the	
  school	
  in	
  the	
  
south	
   of	
   Sweden	
   and	
   they	
   got	
   to	
   know	
   each	
   other.	
   The	
   architect	
   had	
   business	
  
over	
   in	
   China	
   and	
  where	
   about	
   to	
   travel	
   there	
   to	
   participate	
   in	
   an	
   exhibition.	
  
Where	
   the	
   architect