Japanese SME Internationalization in Halal Food Industry: A Preliminary Study

Abstract

Recently, Japanese small and medium-sized enterprises (SMEs) have faced a shrinking domestic market due to a declining population in Japan. In contrast, the global Muslim population has been drastically increasing, which is attractive to Japanese SMEs, especially food manufacturers. Despite the situation, there has been little empirical research on the internationalization of Japanese SMEs in the halal food industry. With this in mind, this study explores it by adopting an existing framework of SME internationalization. The main aims are to describe the process of how one Japanese small food manufacturer has entered a foreign Muslim market by starting and expanding its halal food business and to identify the role of international entrepreneurial orientation (IEO) in this specific field. By analyzing this case, the findings show the following things. First, IEO is considered an important factor to lead to the internationalization of Japanese SMEs in the halal food industry because the president of the manufacturer actively collected information on the halal food business and built an appropriate organizational structure. Second, since the halal industry in Japan has obstacles to SME internationalization, Original Equipment Manufacturing (OEM) is an effective form of entry into foreign Muslim markets, which gave the president opportunities to collect market information and build a network in the market. Third, procurement innovation is imperative to receive foreign halal certification and break down a cultural barrier based on food habits since ingredients Japanese manufacturers procure possibly contain non-halal materials at the level of not only first-tier suppliers but second and third-tier suppliers.