The globalization strategies of business-to-business born global firms in the wireless technology industry

This paper discusses the globalization process of business-to-business born globals in a rapidly growing industry, the wireless technology industry. Deviations in these patterns in regards to the mainstream pattern of internationalization and earlier born global literature are discussed. Furthermore, the roles of the founders and managers, the networks, the financial resources of the companies, and the innovations behind the companies under consideration are analyzed. A conceptual framework and propositions explaining the product, operation and market strategies of born globals are developed. The results suggest that born globals in the wireless sector do in fact deviate from the traditional internationalization process in many areas. Their expansion even to distant markets is rapid and they apply advanced product strategies at an early stage. However, their business operations are found to proceed at a more conventional pace and the notable difference from traditional firms is the rapid establishment of sales and marketing subsidiaries. Results emphasize the key role of the resources and capabilities of born globals in influencing the advancement of product categories, operation strategies, and global market presence. Born global firms were found to lack the resources and capabilities accumulated by traditionally internationalizing firms, and they therefore need to acquire them either through the earlier experience of the founding team, which should be complementary in nature, or from external domestic and international network actors.     

Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance

This paper draws on the social and behavioral sciences in an endeavor to specify the nature and microfoundations of the capabilities necessary to sustain superior enterprise performance in an open economy with rapid innovation and globally dispersed sources of invention, innovation, and manufacturing capability. Dynamic capabilities enable business enterprises to create, deploy, and protect the intangible assets that support superior long‐ run business performance. The microfoundations of dynamic capabilities—the distinct skills, processes, procedures, organizational structures, decision rules, and disciplines—which undergird enterprise‐level sensing, seizing, and reconfiguring capacities are difficult to develop and deploy. Enterprises with strong dynamic capabilities are intensely entrepreneurial. They not only adapt to business ecosystems, but also shape them through innovation and through collaboration with other enterprises, entities, and institutions. The framework advanced can help scholars understand the foundations of long‐run enterprise success while helping managers delineate relevant strategic considerations and the priorities they must adopt to enhance enterprise performance and escape the zero profit tendency associated with operating in markets open to global competition. Copyright © 2007 John Wiley & Sons, Ltd.     

Entrepreneurial orientation, exploitative and explorative capabilities, and performance outcomes in export markets: A resource-based approach

Innovation is critical to the growth and success of a firm. In an attempt to renew themselves and compete effectively in the global marketplace, firms must possess both technical and non-technical capabilities. Yet, the extant literature has mainly focused on technology and product development capabilities, disregarding other possible capability domains. This study investigates the role of market-related exploitative and explorative capabilities, together with product development ones, in the context of exporting. Drawing on the resource-based and organization learning theories, we examine the internal process through which entrepreneurial orientation influences performance in export markets and develop a model of entrepreneurial orientation-exploitative and explorative capabilities-advantage-performance relationships. The results indicate that entrepreneurial orientation is a precursor of exploitative and explorative product development and overseas market-related capabilities. The findings also suggest that product development explorative capabilities and overseas market-related exploitative capabilities have a positive effect on new product differentiation, which in turn enhances market effectiveness. Implications for scholars and practitioners are discussed along with suggestions for future research.     

The Significance of the New Venture's First Sale: The Impact of Founders' Capabilities and Proactive Sales Orientation

Initial sale success in the market with a new product is a critical milestone for a new venture. Failure at the introduction stage of a new product could have lethal consequences for the venture. In the present study, the authors investigate the role of a new venture company's first successful sale in the venture's future commercial success. The authors develop and test a model of the impact of the founders' entrepreneurial and commercial capabilities and proactive sales orientation on the significance of the first sale and sales growth of a new venture. Using survey data and partial least squares estimation, the results reveal that the founders' commercial capabilities have a positive effect on proactive sales orientation, while their entrepreneurial capabilities positively moderate the effect of commercial capabilities. Further, the results reveal that a proactive sales orientation positively affects the significance of the first sale and that value‐based selling approach positively moderates the effect of proactive sales orientation. Finally, the results reveal that the significance of the first sale is positively related to sales growth. Thus, the authors conclude that combining the founders' commercial and entrepreneurial capabilities strengthens proactive sales orientation and that, in turn, a proactive sales orientation particularly increases the significance of the first sale when new venture companies practice value‐based selling. Research has convincingly demonstrated proactive selling behavior to be one of the most powerful predictors of sales performance. Value‐based selling is a sales approach to identify, quantify, communicate, and verify value of a new product to the customer. Our findings suggest that founders who possess both strong commercial and entrepreneurial capabilities engage considerably more in proactive sales practice as compared with founders that only possess strong commercial capabilities. Hence, rather than hiring specific sales expertise, founders should develop their proactive, value‐selling capabilities.     

The learning subsystem interplay in service innovation in born global service firm internationalization

We examine the role of learning firm-specific advantages of small and medium size (SME) service firms in their internationalization. We focus on technical services that have received limited scholarly attention. We theorize that innovative born global firms build a set of capabilities in market, internal and relational learning that will provide new knowledge configurations to undertake technical and administrative innovations. Adopting an organizational sub-system view, we posit that market learning drives other learning capabilities in the firm to contribute collectively to innovation, and in turn, international market outcomes. The findings of our study of US born global SMEs support this theorization. Market-learning capability operates in a complex set of relationships with other learning capabilities in its contribution to innovation. Interestingly, relative to technical innovation, administrative innovation makes a prominent contribution to international market outcomes. We discuss implications of our findings for theory and practice and provide future research directions.     

Users' contributions to radical innovation: evidence from four cases in the field of medical equipment technology

This paper focuses on contributions of users in early phases of radical innovation projects. In a multiple case study analysis in the field of medical equipment technology, we identify characteristics of users who contribute substantially to the development of radical innovations by being their inventors and (co)-developers. These innovative users have high motivation to seek new solutions, possess a diverse set of competencies, and are embedded in a supportive environment. We furthermore observe that they play an entrepreneurial role as they establish and organize the required innovation networks. These innovation networks are needed to transform the users' radically new concepts into first physical prototypes and marketable products. The study highlights how manufacturing firms can benefit from innovative and entrepreneurial users in the early phases of radical innovation projects.     

Supporting product innovativeness and customer value at the bottom of the pyramid through context-specific capabilities and social ties

Local firms operating in bottom of the pyramid (BoP) markets face significant challenges in managing their innovation practices and creating value for customers. Operating in resource-constrained environments, local BoP firms need to behave as bricoleurs, deploy capabilities that help creatively combine and leverage their limited available resources to innovate and create value for customers. Employing the capability-based view (CBV) of the firm and social capital theory (SCT), we develop a research model to explain the extent that local BoP manufacturers use bricolage to develop innovative products that create value for BoP customers. Analysis of data obtained from 150 local BoP manufacturing firms (three managers in each firm) and two of their major customer firms shows that the relationship between bricolage and product innovativeness is more complex than previously understood. Results show that the curvilinear relationship is attenuated differently by social ties with government versus ties with civil society organizations. Furthermore, findings also support the contingency role of BoP firms' marketing capabilities in translating product innovativeness into customer value in BoP markets. These findings present specific implications for scholars and practitioners interested in BoP markets.     

The Importance of Social Capital to the Management of Multinational Enterprises: Relational Networks Among Asian and Western Firms

Social capital is an important concept for multinational firms. Firms operating in global markets rarely have adequate resources to compete effectively in global markets; they access the needed resources through formal and informal relationships with other firms. The cultures in Asian countries have emphasized relationships much more strongly than Western firms. Thus, relational capital, based on guanxi (China), kankei (Japan) and inmak (Korea), provides the framework for business dealings in many Asian countries. As a result, the social capital of many Asian firms gives them a potential competitive advantage in global markets. Western firms must develop social capital and learn to manage relational networks to gain and sustain a competitive advantage in global markets. Western firms can learn how to develop and manage social capital from Asian firms. Alternatively, social capital has some disadvantages. Firms are limited by their networks and thus experience opportunity costs and path dependence. Additionally, while Asian firms often have strong network ties in their domestic markets, they have to develop many more ties globally to operate effectively in global markets. As a result, the development and management of social capital has become of critical importance for competitive advantage in global markets.     

Entrepreneurial marketing of international high-tech business-to-business new ventures: A decision-making process perspective

Knowledge of how entrepreneurial marketing is conducted in industrial markets is currently rather weak. This study explores the marketing decision-making process of entrepreneurs undertaking entrepreneurial marketing in international new ventures (INVs) operating in high-tech business-to-business markets. A qualitative study conducted with entrepreneurs from four case firms reveals that due to the iterative, incremental, and co-creative nature of the process, marketing decision making in high-tech business-to-business INVs that is more effectual than causal results in more entrepreneurial marketing. A novel finding is that entrepreneurs alternate causal and effectual marketing forms as a result of their ambidextrous entrepreneurialism, and variations in the internal uncertainty, technological uncertainty, and any market turbulence faced by the firm. We develop a dynamic model presenting the alternation between effectual and causal processes, and the feedback loop of entrepreneurial marketing. The research offers implications for the management of organizations operating under conditions of uncertainty on how their decision-making processes can optimize entrepreneurial marketing, how to create new markets, and how to reduce the perceived uncertainty in industrial markets.     

From Corporate Crisis to Turnaround in East Asia: A Study of China Huajing Electronics Group Corporation

In this article, we investigated some of the pre-conditions of crisis faced by technology-focused firms, as a group, in the emerging markets facing globalization and looked at the modalities for turnaround. We applied the “entrepreneurial leadership” model recently proposed by Gupta, Macmillan and Surie (2004) for defining the processes needed for adapting to the globalization-induced crisis. Our context for the globalization-induced crisis was the 1997 East Asian crisis, and we studied how the crisis galvanized a leading Chinese electronics firm—Huajing—to develop and execute a turnaround strategy for recovering from a near bankruptcy state. We discussed how organizational and other factors conjoined to create crisis at Huajing in the midst of globalization and trace the process through which entrepreneurial leadership was implemented. We distil various insights into a prototypical, unified model that underscores the significance of entrepreneurial leadership in developing and applying the different strategic flexibility platforms embedded in the resources and capabilities of the firms and in generating a relationship-anchored market position. The findings suggest that in situations where the crisis occurs at the level of organizational field, firms need turnaround strategies that help strengthen not only their organizational field but also their own value generation capabilities.     

Corporate Culture and Commitment: Impact on Performance of International New Product Development Programs

To achieve success in today's competitive environment, firms increasingly must develop new products for international markets. To this end, they must leverage and must coordinate broad creative capabilities and resources, which often are diffused across geographical and cultural boundaries. Recent writings in the globalization and in the new product development (NPD) literatures suggest that certain “softer” dimensions that define the behavioral environment of the firm—that is, the firm's organizational culture and management commitment—can have an important impact on the outcome of these complex and risky endeavors. But what comprises these dimensions and what type of behavioral environment scenario is linked to high performance in the international NPD effort of firms has not been articulated clearly. This research focuses on these softer dimensions, with the objective of understanding and idengifying their specific makeup as well as their relationship to the outcome of international NPD programs. Based on an integration of three literatures—organizational, new product development, and globalization—the present study develops a research instrument, comprising 18 behavioral environment measurement items as well as several outcome measures, that is administered to a broad empirical sample of goods and services firms active in NPD for international markets. Using empirical results from 252 international NPD programs, three key dimensions are idengified: (1) the innovation/globalization culture of the firm; (2) the commitment of sufficient resources to the NPD program; and (3) top management involvement in the international NPD effort. These dimensions are used to derive four clusters of firms, where each grouping represents a distinctly different behavioral environment scenario. In a preliminary analysis, it is ascertained that other aspects of the firm such as “degree of internationalization,” location of the respondent to the NPD center, and other company parameters do not form the basis of cluster membership. By linking measures of performance to the four behavioral clusters, findings are developed that clearly support this study's hypothesis that international NPD outcomes are associated with the softer behavioral environment dimensions. Scenario performance ranges from “very high” to “very low” and appears to be linked clearly to the dimensions studied. The lower‐performing firms tended to emphasize positively only one, or sometimes two, of the three dimensions. The “best performers” were found to be firms with a “positive balanced” approach to international NPD, where all three behavioral environment dimensions are supported strongly. In other words, firms in this scenario have an open and innovative global NPD culture, they ensure that sufficient resources are committed to the NPD program, and their senior managers play an active and involved role in the international NPD effort. Given this evidence of a direct link between behavioral environment and international NPD performance, the present study's findings suggest some important messages for managers charged with the development of new products for international markets.     

Importer and exporter capabilities,governance mechanisms,and environmental factors determining customer-perceived relationship value

Although value creation is the overarching goal of interfirm exchange relationships, there is little research on relationship value in business markets in general and in global business markets in particular. The current research draws on the theoretical perspectives of dynamic capabilities, relational contracting, industry structure view, and Uppsala model of internationalization and synthesizes their insights to develop a model of customer-perceived relationship value in importer-exporter relationships. A mail survey was used to collect data from 211 import distributors of industrial products. The study results indicate that exporter core offering and customer responsiveness capabilities, importer market-sensing and customer relationship management capabilities, relational governance, psychic distance, and environmental munificence are important determinants of relationship value, while contractual governance has no detectable effect. Theoretical and managerial implications of the findings are discussed and future research directions are presented.     

Location choices under strategic interactions

We explore a fundamental aspect of firms' location choices largely overlooked in the literature: strategic interaction. We formalize the notion that strategic interaction renders collocation less appealing by fostering competition, which erodes firms' profits. Strategic interaction also impacts location choices across time. Specifically, because firms learn by doing in markets, location choices are shaped by two novel effects: entrenchment benefits from entering early in a market and improving capabilities relative to rivals, and opportunity costs from postponing entry to other markets where rivals enter and learn. When learning is local, firms collocate more: rivals are preempted from improving relative capabilities in higher‐value markets. However, when learning is global, firms collocate less: they can transfer capabilities from lower‐value to higher‐value markets, blocking rivals from achieving entrenchment benefits. Copyright © 2013 John Wiley & Sons, Ltd.     

A capabilities‐based perspective on target selection in acquisitions

We develop a capabilities‐based theory of acquirer target selection, arguing that acquirers will pursue both low capability targets in existing contexts to deploy existing capabilities, and high capability targets in new contexts to acquire new capabilities. These arguments are formalized in an analytical model that jointly considers the benefits and costs of acquisition as a function of target capability level and context. The predictions from this model are tested in the Chinese brewing industry (1998–2007), with results showing that acquirers strongly prefer inferior targets in existing geographic markets, but are relatively more likely to choose superior targets in new markets, especially if they have strong acquisition capabilities. Our study provides insight into the factors driving target selection, and contributes to a capabilities‐based understanding of acquisitions. Copyright © 2015 John Wiley & Sons, Ltd.     

Effective forms of market orientation across the business cycle: A longitudinal analysis of business-to-business firms

Macroeconomic developments, such as the business cycle, have a remarkable influence on firms and their performance. In business-to-business (B-to-B) markets characterized by a strong emphasis on long-term customer relationships, market orientation (MO) provides a particularly important safeguard for firms against fluctuating market forces. Using panel data from an economic upturn and downturn, we examine the effectiveness of different forms of MO (i.e., customer orientation, competitor orientation, interfunctional coordination, and their combinations) on firm performance in B-to-B firms. Our findings suggest that the impact of MO increases especially during a downturn, with interfunctional coordination clearly boosting firm performance and, conversely, competitor orientation becoming even detrimental. The findings further indicate that both the role of MO and its most effective forms vary across industry sectors, MO having a particularly strong impact on performance among B-to-B service firms. The findings of our study provide guidelines for executives to better manage performance across the business cycle and tailor their investments in MO more effectively, according to the firm's specific industry sector.     

Domestic mindsets and early international performance: The moderating effect of global industry conditions

We develop and test a sensemaking model of early internationalization that ties domestic mindsets to international industry conditions and early international performance. Our central contention is that the fit between international industry conditions and domestic mindsets will lead to superior early international performance. We test this contention with a sample of 178 large and established domestic firms from 20 industries. Our results highlight the role of domestic mindsets in the early phases of internationalization and prescribe the types of domestic mindsets needed to maximize early international performance in global, multi‐domestic, and transnational industry conditions. Our results also provide valuable insights to top managers of large and established firms on how to reduce the risk of failure and how to successfully prepare for and cope with international environments by matching their domestic mindsets with international industry environments. Copyright © 2010 John Wiley & Sons, Ltd.     

Commercial exploitation of new technologies arising from university research: start-ups and markets for technology

The creation of start-up firms is an important method of commercializing new technologies arising from R&D at universities and other research institutions. Most research into start-ups presumes that these firms develop products or services. However, start-ups may operate through markets for technology by selling or licensing rights to use their technology to other firms – typically established firms – who develop and sell new products or services based on the technology. In this study of 57 public start-up firms created to commercialize the results of university research, we find evidence that (1) operating through markets for technology is a common approach to commercialization, (2) start-ups that operate in markets for technology can be effectively distinguished in practice from start-ups operating through product markets, and (3) there are substantive differences in the business activities of firms depending on whether they operate through product markets or markets for technology.     

An empirical analysis of organizational strategies by entrepreneurial high-technology firms

Many start-up, high-technology firms commercialize an emerging technology through cooperative arrangements. This paper empirically investigates the determinants of entrepreneurial high-technology firms to form cooperative relationships. The statistical results on data drawn from the commercialization of the new biotechnology show that the propensity to cooperate is positively correlated with the distance of firms' competitive position in relation to their rivals. The follower is more likely to seek cooperative relationships than the leader in commercializing new products. However, the competitive pressure impacts firms in different ways, depending on their internal capabilities to commercialize a new product. We found that firm size is negatively correlated with the use of cooperative arrangements. The study also found that the organizational mode of cooperative arrangements is predominantly selected by the high-tech. start-up firm in commercializing their new products in foreign markets.     

Portfolio of controls in outsourcing relationships for global new product development

Due to increasing globalization and technological discontinuities, firms strive to develop new product capabilities and flexibilities by engaging in outsourcing activities and adopting modular systems. However, these strategies contain risks of opportunistic expropriation of tacit knowledge and costs related to monitoring sourcing partners who are geographically and culturally distant. This study examines the antecedents of control mechanisms through which firms manage the risks and costs associated with outsourcing relationships in global technology-intensive markets. Modularity in design is hypothesized as a moderator of model relationships because it can serve as a substitute for formal or informal controls in a “controls portfolio”.     

The impact of entrepreneurial orientation on B2B branding and business growth in emerging markets

This study examines the relation between entrepreneurial orientation and brand orientation in industrial small and medium-sized enterprises (SMEs) and the extent to which the two contribute to business growth in emerging markets. The authors develop and empirically test a structural model using data collected from Hungary, a country that has undergone a political and economic transition during the past two decades since the fall of the iron curtain. The results show that entrepreneurial orientation has a positive effect on business growth in emerging markets, whereas brand orientation has an adverse effect. Furthermore, the study examines whether there are differences (1) between B2B firms and B2C firms operating in emerging markets and (2) between B2B firms operating in emerging markets (Hungary) and in developed markets (Finland). The results from comparative analyses suggest that while B2B firms and B2C firms do not differ significantly from each other, there are notable differences between emerging markets and developed markets. Specifically, the study finds that although brand orientation does not contribute to business growth in Hungarian B2B firms, it has a positive effect on growth in B2B firms operating in Finland.