Sequential internationalization,heterogeneous process and subsidiary roles: the case of Hyundai Motor Company*

This paper proposes a new conceptual model to better understand the internationalization process of firms, especially those from rapidly developing East Asian economies. The model is illustrated through a comprehensive analysis of the internationalization process of Hyundai Motor Company (HMC). A comparative case analysis of the development of HMC's five major foreign subsidiaries shows both capability building through sequential investment from the headquarters' perspective and heterogeneous development of operational knowledge at the subsidiary level. The research emphasizes the importance of the post-FDI phase of subsidiary development to the study of firm internationalization, and highlights the process of decision-making and learning as the key to understanding the sequence of investments in subsidiaries.     

A case study on the internationalization process of a ‘born-global’ fashion retailer

This case study on Zara elucidates the expansion strategies used by both born-global and gradual global fast-fashion retailers based on theories of internationalization. Aspects related to knowledge sharing, resource-based theory, and psychic distance are overlaid with Zara's internationalization strategies to advance understanding of the role fashion plays in dynamic internationalization. Zara employs a high-risk, high-reward model of internationalization to defend its unique merchandise and retail position by remaining completely vertical. Zara's born-global expansion strategy engendered a psychic distance paradox in that it was very successful in distant markets early on. It is proposed that fashion retailers may take note of Zara's success through the proposed ‘dynamic strategic planning process’ for expansion in international markets. Researchers can test the proposed framework empirically to investigate the theoretical constructs for both gradual- and born-global firms.     

Small- and medium-sized enterprise internationalization: Towards the knowledge-based model

Firm internationalization research has grown throughout the last 50 years resulting in a number of theories and models. Although each theory and model enables us to see some parts of the picture, a holistic approach is needed to provide us a full picture. The so-called knowledge-based models proposed so far drew upon the transaction cost theory, the social capital theory, and the knowledge management models. This paper reviews previous research and builds a more comprehensive knowledge-based model of small- and medium-sized enterprises internationalization. The model includes “knowledge factors”, which we identified from internationalization literature. These include the market knowledge and the experiential knowledge composed of network knowledge, cultural knowledge, and entrepreneurial knowledge. Acquisition as well as utilization of each kind of knowledge during the different phases of internationalization is presented. The model is a step towards deeper understanding of the role of knowledge in SME internationalization.     

Exploring the relationships between innovation and internationalization of small and medium‐sized enterprises: A nonrecursive structural equation model

This article seeks to provide more insights on the two‐way link between internationalization and innovation by considering total, direct, and reciprocal effects using a nonrecursive structural model. Innovation is defined through product and process development, while internationalization is defined through inward and outward internationalization in both closer and farther markets. The results suggest that these two major sources of growth are linked by different sets of relations, from the investment in product and process innovation to outward internationalization in a closer market, or from inward and outward internationalization in farther markets to the investment in product innovation. Copyright © 2013 ASAC. Published by John Wiley & Sons, Ltd.     

Internationalization as an entrepreneurial process

When firms cross-borders it is, by definition, internationalization. We believe that often internationalization should be seen as either a by-product of a firm’s efforts to improve its position within its network or networks, or as the result of an entrepreneurial action. We consider three theoretical approaches as a starting point and breathe life into them with a rich case study. We suggest adjustments to Johanson and Vahlne’s business network internationalization process model, an update of the Uppsala internationalization process model, to emphasize the entrepreneurial aspects of the process.     

Knowledge and knowledge sharing in retail internationalization: IKEA's entry into Russia

Abstract

Research on retail internationalization and internationalization in general acknowledges the relevance of knowledge management and organizational learning, even though there is a lack of discussion about the specific constructs and approaches that would be most fruitful. The central role of knowledge sharing in the internationalization process is rarely stressed. Furthermore, the specificities of retailing are likely to require special considerations if we are to be able to develop a theoretical as well as a practical understanding of knowledge and knowledge sharing in the internationalization process. The aim of this paper, therefore, is to develop a tentative approach to knowledge and knowledge sharing in international retailing based upon previous literature about knowledge sharing and the internationalization process and a case study of IKEA's entry into the Russian market.     

The concept of learning in the Uppsala internationalization process model: a critical review

In behavioral models dealing with the internationalization process, such as the Uppsala Internationalization Process Model, knowledge and learning have a profound impact on how the firm is seen to approach foreign markets. In the light of recent work on learning in organizations, this paper addresses some issues related to how the process of learning is conceptualized in the Uppsala Model. It is argued that the model builders apply a more narrow interpretation of learning than that allowed by the literature, which limits the ability of the model to explain certain forms of internationalization behavior. It is also claimed that perceiving a firm to be a loosely coupled organization causes some problems in relation to the model’s possibility to predict the internationalization behavior. The consequences of the strong emphasis on individuals as the holders of market-specific knowledge are also discussed. The paper concludes with some remarks on the emergence of interesting research issues about the internationalization behavior if a broader concept of organizational learning is applied.     

Domestic Activity and Knowledge Development in the Internationalization Process of Firms

This paper is based on behavioral theory on internationalization, examining the effect of firms operations in the domestic market on experiential knowledge development in the internationalization of the firm. Five hypotheses are developed on the effects of business operations in the domestic market on: internationalization knowledge, business knowledge and institutional knowledge. The LISREL analysis of 206 firms shows that domestic operations effect the accumulation of experiential knowledge in internationalizing firms. We found that it is harder for a firm with long domestic experience to change their mental models and processes in the internationalization process.     

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ABSTRACT

The authors studied how knowledge derived from firms’ relationships—the so-called second-hand knowledge—is likely to influence their internationalization process. In this article, they examine how a European producer of textiles is able to sell worldwide, including to China, a highly competitive player in this industry. This article discusses models of firms’ networks and the extent to which such networks generate important knowledge that can explain internationalization behavior—how it is able to influence the selection of foreign markets and the entry mode used. The authors use the revised version of the Uppsala model of internationalization, which emphasizes the roles of trust-building, knowledge, and creation of opportunities within relationships.     

Business Relationship Learning and Commitment in the Internationalization Process

This paper is based on a case study of an international venture and on the observations reported by a number of researchers that the received models of the internationalization process of the firm do not capture some important phenomena in the modern international business world. As several researchers argue that networks play an important role in the early internationalization the paper outlines a network model of the internationalization process of the firm. It combines the experiential learning–commitment interplay as the driving mechanism from the old internationalization process model with a similar experiential learning–commitment mechanism focusing on business network relationships. In the resulting model we can see firms learning in relationships, which enables them to enter new country markets in which they can develop new relationships which give them a platform for entering other country markets.     

Knowledge acquisition for the internationalization of the smaller firm: Content and sources

Internationalization process research emphasizes accumulated experience and networks as sources of knowledge for internationalization. Our understanding, however, as to what this knowledge is in practice for smaller firms, the challenges they face in acquiring it, and how they address those challenges is limited. Integrating organizational learning concepts with our theoretical understanding of the small firm internationalization process, we develop a new framework for understanding knowledge acquisition processes, which are examined with a case study of 10 Scottish internationalizing firms. We find smaller firms may not have relevant experience or useful networks, and rely on sources rarely recognised before. Firms used recruitment, government advisors and consultants to acquire indirect experience. Recruitment is a source of market and technological knowledge and government advisors and consultants a source of internationalization knowledge. Accessing internal information is important for firms that have internationalized. Our integrated theoretical framework identifies knowledge content and sources that are critical for internationalization, but that may be absent.     

Firm Resources and Host‐Country Factors Impacting Internationalization of Knowledge‐Intensive Service Firms

In the era of the global economy, knowledge‐based services are becoming important sectors of the service industry. Services offered by a university are knowledge‐based services. Universities are in the service business, and they play a key role in creating and disseminating knowledge through teaching, research, and related services that cross domestic borders. The current research focuses on the internationalization of US MBA programs. The internationalization of US MBA programs refers to the delivery of knowledge‐based services beyond the domestic borders. The main objective of our research is to examine the effect of an organization's (e.g., a US business school) resources and a host country's attractiveness on the internationalization of knowledge‐based services offered by a firm (a US business school). Using data gathered from MBA programs of US colleges and universities, theÊstudy findings show that internationalization is influenced by human capital, prestige and reputation, management's willingness, and foreign market attractiveness. The results of this study offer practical insights for US business school leaders. © 2014 Wiley Periodicals, Inc.     

Small firm internationalization through experiential learning: The moderating role of socialization tactics

The importance of experiential knowledge for small firm internationalization has been emphasized in the process model of internationalization, the international new venture or born-global frameworks and the management characteristics perspective in the exporting literature. However, none examines in detail under what conditions experiential learning is more important for internationalization. We borrow insights from the socialization tactics literature to theorize how the context, content and social aspects of a foreign sojourn offer different opportunities for the acquisition of experiential knowledge to support the internationalization of small firms. We suggest that socialization tactics moderate the relationship between individual international experiential knowledge and small firm internationalization. We propose that the opportunities for international experiential learning are superior when the socialization context is individual and formal (rather than collective and non-formal), the socialization content is sequential and fixed (rather than random and variable) and when socialization involves serial and investiture (rather than disjunctive and divestiture) social aspects.     

Crowdsourced translation for rapid internationalization in cyberspace: A learning perspective

This paper explores how Facebook effectively used crowdsourced translation to accelerate its rapid internationalization. We apply the learning perspective of internationalization theory to unpack what the firm learned in order to mobilize crowd-based knowledge to facilitate internationalization in the virtual context, and how it did so. Increasingly, global activities are conducted in virtual space and virtual markets and thus the paper offers insights into successful expansion in this new terrain. The findings highlight two key points: (1) the firm used cognitive/explicit learning to acquire external and codified knowledge, rather than the experiential knowledge traditionally suggested in the literature on the process of internationalization, and (2) the firm's success rested on its ability to use virtual learning tools and incentive systems to acquire, articulate and integrate knowledge from communities of internationally dispersed users – the “crowd” – to accelerate its internationalization in cyberspace. This empirical study extends internationalization theory regarding knowledge and organizational learning.     

Internationalization of Small Family Firms: The Influence of Family from a Socioemotional Wealth Perspective

We explore the factors influencing the internationalization of small family firms. Based on interviews with six family firms in Singapore, we highlight the importance of (1) family harmony, (2) trust in external relationships, (3) social and business networks, and (4) organizational resources and capabilities in the internationalization process. We show how the socioemotional wealth factors of trust and harmony affect networking and resources, which in turn affect internationalization. We find that initial internationalization through exports is enabled through trust in family networks, but the typical family characteristics of a desire to maintain family harmony and distrust of outsiders have a negative impact on network creation and resource development, which constrains the extent to which the firm internationalizes beyond exporting. In order to move from the first stage (exports/similar markets) to the second stage (joint ventures/different markets) of internationalization, less emphasis on trust and family harmony accompanied by more emphasis on building external networks and resources may be necessary. We propose a new model of internationalization of family firms based on our findings. © 2015 Wiley Periodicals, Inc.     

The process of internationalization in the operating firm

Two factors have been emphasised as influencing the choice of, and subsequent shifts between, modes of foreign market servicing: (1) market-specific knowledge; and (2) the generalised knowledge from operating internationally. The process-oriented literature on internalisation has tended to emphasise the former over the latter. This article maintains that market-specific knowledge is not the only source of information available to a firm. As firms operate in foreign markets they develop, in addition to networks of institutional arrangements, a knowledge of the process of internationalization. Account therefore has to be taken of the general knowledge from operating internationally in understanding the development of institutional arrangements in foreign markets. Consequently, the appropriate unit of analysis is not the individual market but the operating firm as a whole. This argument is illustrated with reference to an empirical study of the internationalization of 25 UK-based organizations.     

Foreign market entries,exits and re-entries: The role of knowledge,network relationships and decision-making logic

We focus on the following question: how are knowledge, network relationships and decision-making logic interrelated throughout the internationalization process – foreign market entries, exits and re-entries? We contribute to the internationalization literature, network approach and effectuation theory that have not examined these interrelationships during internationalization – especially de- and re-internationalization – in detail yet. Thereby, we provide a more complete view of internationalization. Based on a single punctuated longitudinal case study, we show that lack of knowledge results in mostly effectual (opportunity-driven) decision-making: finding customers via weak ties, trade fairs and unsolicited export orders and experiencing numerous market exits and re-entries due to “experimenting”. Knowledge acquisition leads to more causal (systematic, plan-driven) decision-making and stronger ties, but serendipitous (“by chance”) entries can still occur, and exiting and re-entering foreign markets may continue. We suggest that managers should network and acquire knowledge actively, use both decision-making logics and accept uncertainty as normal during internationalization.     

The influence of experiential,inherited and external knowledge on the internationalization of venture capital firms

This paper examines the effect of different types of international knowledge accumulation on the internationalization of venture capital firms, as a particular type of professional service firms. We distinguish between experiential knowledge acquired through previous activities, inherited knowledge through the management team and external knowledge through network partners. Hypotheses are developed for both the likelihood and the number of cross-border investments. The hand collected dataset comprises a combination of survey and archival data on a unique sample of 110 venture capital firms from five different European countries. Analyses indicate a positive effect of experiential and inherited knowledge on internationalization, but external knowledge has limited impact. Intense international contacts even decrease international activities. Together, these results highlight the importance of experiential and inherited knowledge to overcome information asymmetries inherent in the internationalization of professional service firms, and of venture capital firms in particular.     

Exploring the Business Development Process of Swedish Firms in the Baltic States and Poland

On the basis of internationalization theory, a model is developed to study the business development process of Swedish firms in the Baltic States and Poland. The model focuses on two aspects of behavior: the pre-entry and positioning of the firms. The results, based on an investigation of 40 firms, indicate differences in the pre-entry behavior between large and small firms. Strategic considerations were the most important factors that influenced the large firms' decision process while personal motives were more often the main motive among small firms. The subsequent positioning behavior, in terms of knowledge development and commitments,was influenced by the network of large firms while small firms had to gain knowledge by utilizing external factors or finding information on their own.     

Modeling firm specific internationalization risk: An application to banks’ risk assessment in lending to firms that do international business

Drawing on internationalization process theory, we develop a new model for firm-specific internationalization risk assessment. The model shows that firm-specific internationalization risks can be determined from a firm's experiences and from current business activities in a firm's network. Experiential risks are categorized as international, country market, network, or relationship experience risks. Risk assessment in current network activities can be determined from a firm's dependency on a network and from the network's performance and evolution. We apply our model to credit risk assessment by banks and other credit institutions. This article adds to research on financial institutions’ credit risk assessment by focusing on firm-specific internationalization risk assessment, an area that has previously received little attention in the literature. In addition, this article provides a better understanding of risk assessment in the internationalization process, shedding light not only on the risks involved in firms’ commitment to internationalization but also on the risks that banks and other institutions take when they commit by lending to internationalizing firms.