The dynamics of relational competencies in the development of born global firms: A multilevel approach

From a multilevel approach, this paper focuses on the born global firms and the relational competencies that they use to initiate, maintain, and expand their international social networks. To do so, we detail the three levels of relational competencies (individual, collective, and organizational) and undertake an exploratory qualitative research based on interviews with French entrepreneurs of born global firms and experts who support their development. This study allows us to reach two sets of findings: firstly, a repository of thirteen relational competencies mobilized in born global firms as well as their development mechanisms; secondly, a dynamic view of these competencies, based on initiation, consolidation and expansion situations in which relational competencies and their development mechanisms are activated. Our study may lead entrepreneurs to identify competencies they hold at all levels (individual, collective, and organizational) but without necessarily implementing, as well as provide keys to develop any that are lacking in order to improve their internationalization strategy.     

Are born globals really born globals? The case of academic spin-offs with long development periods

Most research on the born global phenomenon investigates firms from the point of their legal founding. Studies in the field of entrepreneurship show nonetheless that international firms undergo long pre-founding periods, which are likely to affect growth and internationalization in newly founded firms. In this study, we investigate three academic spin-offs with advanced technologies that are attractive in a global market. These firms had experienced extended time in developing their technologies, two of them in pre-founding periods. We examine here the networks of academic spin-offs in three stages: idea conception, technology development, and growth and internationalization. The research builds on diverse theories: born global theory, research on academic spin-offs, entrepreneurial firms, and network theory. We use a multiple case study to investigate the three spin-offs and a process approach in interviewing that includes the biographic histories of the focal firms. In analysis, we identify networks that provide financial resources, knowledge, innovation and technology resources, marketing, and reputational resources. Networks acquired at different stages and network changes greatly affected growth and internationalization in the focal firms. We also find that networks and resources acquired in pre-founding periods had great implications for growth and internationalization in the young firms. Our research therefore highlights the problem of age in the born global literature and we argue for the need to include pre-founding periods to better understand the born global phenomenon.     

Internationalization: From incremental to born global

In this paper, we summarize how internationalization research has evolved over time, where it stands today, and how it might evolve going forward. Specifically, we examine internationalization research from earlier times to the present day. We contrast the incremental internationalization characteristic of older multinational enterprises with the early, rapid internationalization of born global firms. The paper summarizes the evolution of research on early internationalization and born global firms, and provides evidence to suggest why this area now has attained legitimacy in scholarly research. We then examine important theoretical issues in born global research and suggest avenues for future research.     

The internationalization of African firms: Opportunities,challenges, and risks

There has been a marked increase in the internationalization activities of African firms over the last two decades or so, resulting in the emergence of regional challenger firms that are aggressively competing with foreign multinationals in terrains historically dominated by the latter. However, our understanding of this phenomenon is limited, as empirical research examining the nature of internationalization of African firms is scarce, and research directly investigating drivers, outcomes, and boundary conditions of the internationalization of African firms is lacking. The goal of this special issue, therefore, is to contribute to the scholarly understanding of the increasingly prevalent internationalization of African firms. This guest editorial provides a summary of the six articles in this special issue, and highlights three broad thematic issues: internationalization opportunities for African firms (accelerated private‐sector development and regional integration, and ability to overcome institutional voids); internationalization challenges (global competitiveness challenges, limited management and cross‐cultural capabilities, and overcoming the liability of Africanness); and internationalization risks (losing focus on home markets and over‐internationalization).     

Turning point: when born globals enter post-entry stage

The literature on firms’ early internationalization includes a huge number of studies investigating the entry stage of companies, while works on the post-entry growth and survival have recently been increasing. In this context, this study aims to better explain which factors determine the evolution of born globals (BGs) during their lifecycles. The authors analyze the growth processes of six Italian manufacturing BGs at different stages of their development, with a particular focus on the transition of the venture from entry to the post-entry stage. The findings show that the entrepreneurial capabilities of the founders have a crucial role during the first international expansion of the companies. As BGs enter the post-entry phase, a trade-off emerges between entrepreneurial capabilities and some specific firm resources aimed at achieving the sustainable growth of the company. Moreover, the authors identify the existence of a turning point when companies switch from the entry to the post-entry stage. During this phase, entrepreneurs manage a process to transform their individual capabilities into an organizational knowledge base. Future research areas and managerial implications are discussed.     

On the internationalization of Turkish hospital chains: A dynamic capabilities perspective

How do professional service firms build the capabilities required for effective international operations? Although the internationalization of manufacturing firms is a widely studied topic, the literature on the internationalization of service firms remains scant. The problem is even more acute when it comes to studies of professional services such as healthcare organizations and hospitals. Yet, we encounter remarkable examples of international market expansion by professional service firms. In this paper, we report on a study of large privately-owned hospital operators from the emerging economy of Turkey, based on in-depth interviews with senior executives. Taking advantage of Turkey’s strategic location in the region, these firms have shown extraordinary entrepreneurial initiative expanding their operations beyond the home market over the past two decades. Even more impressive is the creative strategies these firms have been deploying in terms of market entry modes. These range from medical tourism to setting up diagnostic clinics abroad, operating full-service hospitals in key markets, management contracts, and attracting equity capital from international investment firms. We draw from the theory of dynamic capabilities in order to explain the success these firms have had in cultivating international market opportunities. We contend that it takes a variety of organizational capabilities for traditionally domestic-market focused firms to expand into international markets. We provide an integrative discussion and offer implications for advancing knowledge and managerial practice.     

Process and intensity of internationalization of IT firms – Evidence from India

This paper provides insights and evidence related to the process and intensity of internationalization of firms in the Information Technology (IT) sector, which is the driving force of high economic growth in the Indian sub-continent during the last two decades. Research objectives were set as (i) to examine the existence of born global firms in the IT sector, (ii) to identify the process of internationalization adopted by firms in the IT industry, (iii) to measure the intensity of internationalization of IT firms. The paper is based on data collected from annual financial reports of firms listed in the CNX IT Index of National Stock Exchange of India. Two clusters were extracted using hierarchical clustering method followed by k-means clustering to analyze the characteristics of the variables. We find that the firms in both clusters are true global firms with 66 and 85% of their income from foreign markets with a very high level of international intensity. Though the findings provide some evidence for the gradual internationalization of Indian IT firms; the empirical results indicate that firm age has no impact on internationalization. The results from our study also show that firms, especially in certain industries such as IT, do have access to information that reduces the risk aversion.     

‘Reverse internationalization’ in Chinese firms: a study of how global startup OEMs seek to compete domestically

This research investigates whether the global startup original equipment manufacturers (OEMs) in China could employ their knowledge-acquisition capability developed via internationalization to compete domestically (i.e. reverse internationalization), facing the recession in developed markets. Results examine that knowledge-acquisition capability can help these firms compete in ‘reverse internationalization’, while the conduct of own brand strategy partially mediates the positive relationship between their capability and domestic performance. We contribute to the literature by identifying the unique ‘Chinese global startup OEMs’, recognizing knowledge-acquisition capability as a high-order dynamic capability for such firms, and introducing a novel entrepreneurial phenomenon we call ‘reverse internationalization’.     

The online–offline balance: internationalization for Swedish online service providers

Online service providers (OSPs) are becoming increasingly important in the global economy and are undertaking internationalization at a remarkable speed. Since they depend on digital delivery over the internet, OSPs are portrayed as footloose in their geographical expansion and are often described as “born global.” However, on the basis of three case studies, the paper reveals the importance of the home market as a springboard, and of regional expansion in the early phase of internationalization. The paper emphasizes the balance in the internationalization process between an online and an offline presence in the new international market. The time gap between online and offline presence, the online-to-offline interval, seems to be a critical factor in the internationalization process. The speed of the internet industry and the technically complex nature of online services could explain why the case firms chose controlled modes of entry. The case firms thus skip sequential steps, following a pattern that is in contrast to the Uppsala model. Overall, the paper suggests that finding the right balance between the online and the offline presence is a challenge in the internationalization of these particular Swedish OSP firms.     

The effect of social networks and dynamic internationalization capabilities on international performance

This article explores the relationship between social networks and dynamic internationalization capabilities (DICs), and their impact on the international performance of small and medium-sized firms (SMEs) in low-tech industries. We distinguish between exploitative DICs (threshold and consolidation capabilities) and explorative DICs (value-adding and disruption capabilities). Our results, which are based on a sample of small and medium-sized Portuguese exporters, indicate that social networks are a relevant antecedent of exploitative and explorative DICs, and that consolidation and disruption capabilities positively affect international performance. Multiple mediation analysis confirms these relationships. The article concludes with a discussion of implications for research and practice.     

Post-entry survival of developing economy international new ventures: A dynamic capability perspective

Recent research suggests that the capabilities needed for the survival of international new ventures (INVs) may be at odds with the original aims that had brought them into the international markets. INV mortality is exacerbated by uncertainty and lack of familiarity with the host market environment, which elevates the liabilities of newness, smallness, and foreignness in the initiating companies. We investigate the key factors that determine the post-entry survival of developing economy INVs by analyzing in-depth seven software INVs originating in the developing economy of Pakistan. These INVs survived the 2000 dotcom crisis and the 2008 global financial crisis, and continue to grow. Based on a dynamic capability view on the INVs’ internationalization and survival from sensing-seizing-reconfiguration angles, we find the founders’ entrepreneurial orientations and network development capabilities (sensing), specialized product focus and niche market development (seizing), and transformation and renewal capabilities (reconfiguration) are the key capabilities that enhance the post-entry survival of these INVs. Importantly, we find that a stable leadership and the post-entry international experience of the leadership team continuously feed into facilitating the creation and maintenance of dynamic capabilities. This paper identifies key strategic aspects that determine the post-entry survival of the developing economy INVs.     

Born global or local? Factors influencing the internationalization of university spin-offs—the case of Halmstad University

A wealth of research in the past decades has examined born globals or international new ventures, which are firms that from inception view the whole world as a market and as a source to access resources. Many of these firms build their competitive advantage on high-tech knowledge. However, although many studies have shown how born globals can achieve success if they access resources through their relationships from actors in their networks, few studies have explored the relationship between born globals and universities. Universities are important actors in creating new technology knowledge, and many studies have shown how new firms, or so-called university spin-offs (USOs), are formed around universities. The current study explores why some USOs are successful in their international growth strategy and discusses the factors that influence and facilitate the internationalization process. The study investigates 10 USOs around the newly established Halmstad University in Sweden and finds that universities have a positive effect on firm creation and initial international growth. The regional competence base increases from the establishment of a local university, primarily by strengthening the regional human capital and by increasing university research. This study shows that researcher entrepreneurs’ ventures start as born globals, but that these firms do not continue to grow. Born global business models, per se, do not lead to competitive advantage and successful internationalization. Instead, a strategy built on customer focus and an ability to adapt to different customer demands lead to growth, and the location of growth is dependent on the size of the home market. This study also shows that student entrepreneurship can be a successful growth strategy for USOs focusing on both international and local markets.     

Rapid multinationalization: Propositions for studying born micromultinationals

This study examines how so-called born micromultinationals multinationalize. Existing theoretical frameworks do not capture the multinationalization of young and small firms because of the literature gap separating studies on born globals and international new ventures from the research on multinational enterprises. However, firms go beyond accelerated internationalization and engage in accelerated multinationalization. Born micromultinationals invest and operate in multiple countries from, or soon after, their foundation. We argue that it is necessary to examine their smallness, newness and entrepreneurial nature, as suggested in the BG/INV literature, as well as to investigate why and how they invest abroad through the lenses of MNE theories. We discuss existing theories and examine them in the light of four case studies of Finnish born micromultinationals. Our results show that the organizational, locational and internalization approach and transaction costs economics for example, have explanatory power for the FDIs conducted by born micromultinationals. We suggest that the multinationalization process of born mMNEs consists of commitment decisions; reconfigurations of the value chain; and learning from, and creating and building trust with internal sources.     

The impact of industry 4.0 on the 2017 version of the Uppsala model

The emergence of Industry 4.0 offers firms internationalization opportunities employing digital platforms and emerging technologies. Relying upon the Uppsala model as applied in light of a firm case study, we contribute to the validity of the Uppsala model 2017. We respond to the counterpoint by Coviello, Kano, and Liesch (2017) to the Uppsala 2017 model, answering the question, What is the impact of Industry 4.0 on the validity of the 2017 version of the Uppsala model? This study builds on a qualitative research methodology through a single case study of Delivery Hero, a global service provider firm. We adopt an extensive longitudinal approach to understand a startup firm’s digital business concept and business evolution, including its internationalization paths. We conclude that the mechanisms of the Uppsala model are valid, but their characteristics have changed by digital and globalized value-adding processes. The dynamic capabilities possessed by the founding entrepreneur turn out to constitute a critical micro foundation for the firm’s international business success. Our findings explain these change mechanisms, illustrating the stepwise progression process led by entrepreneurial decision-making. Industry 4.0 technologies have changed the very manner by which ?rms arrange their value-adding activities with their business stakeholders in course of the firm’s internationalization. By relying on reasonable business targets, algorithms, and data management systems, real-time market monitoring enables international startup firms to learn and adopt local identities faster, thereby efficiently alleviating liabilities of foreignness.     

The internationalization process of Brazilian software firms and the born global phenomenon: Examining firm,network, and entrepreneur variables

This paper examines the born-global phenomenon in the context of an emerging country, Brazil. A literature review was conducted in order to develop an integrative model of the phenomenon under study. Three sets of internal variables were identified in the literature which seemed to explain why a firm would follow a born global, rather than a traditional, internationalization process: firm, network, and entrepreneur variables. The final conceptual model was tested in a Brazilian sample of 79 software firms, of which 35 followed the born-global process of internationalization and 44 followed the traditional process. Logistic regression was used to test the research hypotheses. Results showed that certain firm and entrepreneur variables seemed to be associated to the type of internationalization process chosen by these firms. Network variables did not significantly differentiate the two groups.     

A capabilities perspective on the joint effects of internationalization time,speed, geographic scope and managers’ competencies on SME survival

This study examines the effect of key internationalization contingencies on SME survival. We argue early internationalization increases the probability of firm failure, while international experience reduces it. However, the survival odds among international new ventures may be improved by their post-entry international expansion scope and speed, and by managers’ competencies. These internationalization facets provide firms with opportunities to develop and exploit their resources and capabilities, and thus enhance their survival chances. Drawing on a sample of 271 manufacturers followed between 2005 and 2014, we find results that provide support to most of our arguments, and hold theoretical and managerial relevance.     

The missing link between awareness and use in the uptake of pro-internationalization incentives

We investigate the process by which firms become participants in official programmes of public support designed to promote outward internationalization. This study builds on previous research that has established the distinct factors associated with firms’ awareness and use of public support measures. These earlier studies have also shown that deficiencies within programmes manifest in low participation rates. However, scholars have not extended this reasoning to focus on the underlying processes involved, and have paid little attention to the steps through which firms elect to use public support, and how support operates upon, and within, the firm. In particular, the link between awareness of public incentives towards internationalization and the use of these incentives has been overlooked. General failure to understand this link is a potential source of policy inefficiency, reducing the effectiveness of those public programmes that employ incentives. We pose three research questions to examine the concept of such a link: (1) Do firms select public incentives that compensate for a lack of resources or capabilities in their possession? (2) Do firms react primarily to internal or external exigencies, for example, internal financial constraints or, rather, are they responding to unfolding circumstances, such as the more demanding market conditions experienced on internationalization? And (3) do firms use public support to “externalize” the increased risk to which they are exposed as internationalization proceeds, and thereby protect their external activities and investments from loss?The process that firms go through to apply for any type of public support is normally two-staged. Firms first become aware of incentives and then decide whether or not to use them. This process can be handled empirically using a Heckman Selection Model, which we apply to explore our research questions using survey data collected from a sample of Portuguese firms. We find that the greater are the internal limitations of these firms with respect to resources and capabilities and the more demanding are the conditions in which internationalization takes place, then the greater is the use made of public support. We find that awareness of the availability of support is promoted by firms’ in-house resources and capabilities and, at the same time, is positively associated with more demanding conditions of internationalization. The use of public support appears to be associated with the opportunity cost to the firm of public incentives, and with the increased risk inherent with internationalization. These results point to the existence of important sources of inefficiency within the process of application for policy measures, particularly with respect to the link between awareness and use. The use of public support is inversely associated with the opportunity cost to the firm of the resources deployed to apply for public incentives and, for firms with greater resources and capabilities, associated positively with the increased inherent risk of internationalization. We find evidence that it is the firms with greater resources and capabilities that predominate in the application for public incentives, allowing us to infer from the data that the typical recipient pursues more risky modes of entry, or selects locations with higher levels of risk, because of the availability of public support. These results point to the possible existence of important sources of inefficiency within the process of application for policy measures, particularly with respect to the link between awareness and use. This behaviour is quite distinct from the search for return on commercial investments and, therefore, is indicative of the possibility of social loss within this public policy intervention.     

Country of origin and network effects on internationalization: A comparative study of SMEs from an emerging and developed economy

This study examines the internationalization of high technology small and medium enterprises (HTSMEs). It explores how they develop and use networks to penetrate their first foreign market relying on information collected via direct interviews with the CEOs or founders of 58 high technology small firms that operate internationally. It uses mixed methods to discuss the network building mechanisms identified — client–supplier relationships, existing personal contacts, contacts acquired by chance, and contacts acquired through specific strategies. The findings provide the basis for developing propositions for further comparative analyses of the internationalization of HTSMEs based in emerging and developed markets. The study contributes to the literature on networks, internationalization and international entrepreneurship.     

International new venture performance: Role of international entrepreneurial culture,ambidextrous innovation,and dynamic marketing capabilities

International new ventures (INVs) contend with environmental dynamism in global markets, compelling firms to enhance their innovation and marketing capabilities. While the INV literature is growing, it is not informative as to how INVs develop and utilize dynamic capabilities to overcome resource-constraints to enhance performance. We utilize the concept of international entrepreneurship culture (IEC) to better understand how INVs advance innovation and dynamic marketing capabilities to succeed in their internationalization activities. Building on the dynamic capabilities view (DCV), we empirically examine the relationships among IEC, ambidextrous innovation, dynamic marketing capabilities, and INV performance under varying levels environmental dynamism. The findings highlight that IEC influences both ambidextrous innovation and dynamic marketing capabilities; and, together, these link to INV performance gains. Furthermore, this research finds support for the mediating effects of ambidextrous innovation and dynamic marketing capabilities in the IEC – INV performance relationship. Additionally, the results indicate an international entrepreneurial culture is of greater significance in developing ambidextrous innovation when environmental dynamism is present. The study context is a sample of 286 high-technology INVs from India, a large and dynamic emerging market.     

Upstream internationalization process: Roles of social capital in creating exploratory capability and market performance

This paper investigates to what extent resource governance of international ventures affects dynamic capability and market performance in the high-tech firms’ internationalization process. We examine the non-equity-based international network collaborations of high-tech firms as forms of strategic resource seeking within the internationalization process. Within the context of upstream technology collaborations by international software and hardware firms, this paper proposes and empirically examines the impact of resource governance mechanisms (i.e. trust-building and behavioral monitoring) on the exploratory capabilities of firms. The findings indicate that building trust in the internationalization process of network ventures contributes to the firm-level exploratory capabilities and, in turn, market performance. Furthermore, this paper tests the moderating effects of structural capital on the capability–performance relationship. The relationship is stronger when network relationships existed before the inception of the international technology alliance. We also find a negative moderating effect from the existence of an actual alliance and from network duration on the relationship between exploratory capability and market performance. To this end, the longevity of the alliance may not always be something firms should aim for. The paper highlights the criticality of relational and structural capital in the internationalization process and the importance of exploratory capability for creating radical innovation in high-tech industries.