The global economy is continually evolving, with new market trends constantly emerging. There appears to be one exception, globalization remains a dominant and consistent trend, even among SMEs. Numerous SMEs enter international markets, encountering diverse business standards and cultures, and must align their local strategies with global responsibilities. They need to consider their position in the global economy and their impact on all stakeholders, from actors in the supply chain to citizens in the countries where they operate. Corporate Social Responsibility has become an increasingly important approach for businesses to understand and improve their global impact and competitiveness by adapting both internal and external strategies. Therefore, this thesis investigates how internationalization impacts CSR initiatives for SMEs when expanding across European borders and how these practices contribute to companies' long-term success. Moreover, the emphasis on culture is investigated through Hofstede's cultural dimensions and the CAGE distance framework, to understand the challenges and opportunities related to cultural differences, along with other distances between countries encountered while internationalizing. Furthermore, CSR is investigated based on popular cluster definitions and approaches suggested by the EU and the UN. For the simplicity of this thesis, SMEs originating from Sweden and Germany have been the focal point of this research.  For this thesis, primary and secondary data have been collected and will be analyzed using a qualitative research approach. Secondary data comprising theoretical literature was collected and analyzed from numerous databases. Primary data was gathered through Semi-structured interviews with four specialists employed at SMEs and one expert working with local and global SMEs regularly. This data collection will be analyzed to suggest successful CSR approaches related to the internationalization within Europe.  This research concludes that SMEs must understand their global responsibilities to stay competitive in the international market as CSR will become an inevitable part of a company's business strategy. Companies prioritize different aspects of CSR based on their size and industry and adjust these strategies in line with market trends and the conditions of their respective industries. The extent to which companies can integrate CSR into their core values and business plans depends on the resources available to them.

Syftet med denna studie är att skapa en ökad förståelse för hur svenska industriföretag kan arbeta på en utländsk marknad för att ta sig runt det psykiska avståndet. Detta har gjorts genom att titta på hur ABB, Sandvik, Scania och Volvo Cars arbetar i Malaysia med nätverk och olika åtgärder för att hantera skillnader mellan länderna. Den reviderade Uppsalamodellens definition av nätverk och CAGE-ramverkets definition av psykiska avstånd används för att studera företagensoch medias narrativ. En kvalitativ metod används där en innehållsanalys av sekundärkällor har kodats för att ta ut information som varit relevant för denna studie. De fyra företagen har använt sig av nätverk för att kunna bedriva en fungerande verksamhet och två av företagen har vidtagit åtgärder för att minska det psykiska avståndet. Erkännanden: Vi skulle vilja tacka vår handledare Lena Zander och seminariegruppen för diskussionerna och den konstruktiva feedback de bidragit med under uppsatsskrivandet. / The purpose of this study is to create a better understanding of how Swedish industrial companies can work in a foreign market to overcome the psychic distance. This has been done by looking at how ABB, Sandvik, Scania and Volvo Cars work in Malaysia with networks and different measures to manage differences between the countries. The definition of networks used in the revised Uppsala model and the definition used in the CAGE-distance framework of psychic distance are applied to study corporate and media narratives. A qualitative method is used where a content analysis of secondary sources has been coded to extract information relevant to this study. The four companies have used networks to operate and two of the companies have taken steps to reduce psychic distance. Acknowledgements: We would like to thank our supervisor Lena Zander and the seminar group for the discussions and constructive feedback they have provided during the essay process.