Abstract: The objective of this research is to analyze which dimensions and attributes are discussed in born-global firms’ case studies presented by the literature and in practice. For these two specific objectives were proposed: i) identify the dimensions used to study the born-global firms; ii) identify the main concepts applied to such dimensions. Both analyses are based on cases studies addressed in the literature and practical case studies. This research is classified as exploratory and contains a content analysis. Furthermore, it was based on a selection of academic articles obtained on ISI Web of Knowledge database focusing on born-global firms’ case studies. The results demonstrate that the main issues regarding the born-global firms are found in an aligned perspective with the theory even when the article is focused on a particular industry. As a contribution, this study presented the list of dimensions and attributes that can be used as a reference for complementary discussions regarding the born-global case studies or even theoretical propositions. The composition of case studies, which provides a broad overview for the researchers, can be considered as an additional contribution of this article.
Keywords: Born-global Born-global,Case studyCase study,ConceptsConcepts.
Resumo: O objetivo desta pesquisa é analisar quais são as dimensões e atributos discutidos em estudos de caso de empresas born-globals, apresentados na literatura e na prática. Para estes dois objetivos específicos, foram propostos: i) identificar as dimensões utilizadas para estudar as empresas born-globals; ii) identificar os principais conceitos aplicados a essas dimensões. Ambas as análises são baseadas em estudos de caso abordados na literatura e em estudos de caso práticos. Esta pesquisa é classificada como exploratória e contém uma análise de conteúdo. Além disso, baseou-se em uma seleção de artigos acadêmicos obtidos no banco de dados ISI Web of Knowledge, com foco em estudos de caso de empresas born-globals. Os resultados demonstram que as principais questões relativas às empresas born-globals são encontradas em uma perspectiva alinhada com a teoria, mesmo quando o artigo é focado em uma determinada indústria. Como contribuição, este estudo apresentou a lista de dimensões e atributos que podem ser utilizados como referência para discussões complementares sobre os estudos de caso born-globals ou mesmo proposições teóricas. A composição dos estudos de caso, que fornece uma visão geral para os pesquisadores, pode ser considerada como uma contribuição adicional deste artigo.
Palavras-chave: Born-global, Estudo de caso, Conceitos.
Dimensions on Born-Global Firms´ Case Studies
Dimensões Dos Estudos de Caso dE Empresas Born-Globals
Escola Superior de Propaganda e Marketing
Received: 05 March 2016
Accepted: 14 March 2017
For management in general and strategy in specific, the internationalization theme has evolved prominently. Its conceptual evolution has been supported by the duality of theoretical and practical discussions. In this particular issue, it is understood that the economic-social insertion can be seen as leading in establishing new modus operandi and new perspectives for firms, or as stated by Johanson and Vahlne (1990 p. 22) that firm “internationalization is embedded in an ever-changing world”. Furthermore, the authors Jones and Coviello (2005, p.291) presented the following characteristics to distinguish internationalization patterns “(1) mode of transference (cross border business models); (2) place of transference (country); (3) time at which it occurs”. Thus, resulting in the research problem of this article: which key aspects are relevant when discussing the internationalization model of born-global firms?
Considering this context, this research’s overall objective is to analyze which dimensions and attributes are discussed in born-global firms case studies presented by the literature and in practice.
To achieve this objective, the following specific objectives are proposed: i) identify the dimensions used to study the born-global firms; ii) identify the main concepts applied to such dimensions; both analysis are based on cases studies addressed in the literature and practical case study.
Johanson and Vahle (1977) started an explicatory approach to the internationalization of companies by creating the so called Uppsala model. Due to the applicability and success of the model, it was constantly updated (JOHANSON; VAHLNE, 1990 and JOHANSON; VAHLNE 2009) and lays the foundation for this research.
The model’s first step describes the company’s decision in which way they should enter a new market. The entry mode choice should be done by analyzing the costs and risks based on the characteristics of the specific new target market versus its own resources. This process has to be reviewed again after each step of the internationalizing process. With more knowledge of a foreign markets its risks are lowering which again leads to a stronger commitment to the market. This ‘Process Theory of Internationalization’ describes the company’s gradual approaches of entering international markets, which can take up to decades of constantly further involvement
Another influence on the risks related to internationalization is the so called “psychic distance”. This attribute is related to the social environment and the gap between the company’s experience and knowledge and the market itself. Over time, it was found that it the proximity can, amongst others, be increased by the raise of modern communication technology. According to the researchers, the company’s acting in a foreign market allows the firm to increase the knowledge of the market by its gathered experience. This then leads to a greater “commitment” to the market, which can be understood as more investments. With more investment, the learning curve gets steeper which can, in a next step, lead to more investments. The company is step-by-step increasing its foreign activity. However, the exact pathway of each company is very individual and always depends on human decisions. In the review of the model by Johanson and Vahlne in 1990, the authors focus more on the network concept. A company can build its new international relationships by the following three approaches: “(1) Through the establishment of relationships in country networks that are new to the firm, i.e. international extension; (2) through the development of relationships in those networks, i.e. penetration; and (3) through connecting networks in different countries, i.e. international integration.” (JOHANSON; VAHLNE, 1990 p. 20)
It is relevant to indicate that the network referred to by the researches is related to the suppliers, customers (e.g. final or sales-channels) and commercial partners. “A firm’s success requires that those dimensions are well established” (JOHANSON; VAHLNE, 2009, p.1415). Also, according to Johanson and Vahlne (2009, p.1416), “network knowledge development is more than learning from the agents, but also involves the interaction between a buyer’s user knowledge and a seller’s producer knowledge which generates new knowledge” for the firm. This widely appreciated Uppsala model describes the process of internationalization itself. However, it does not explain the characteristics that are required or beneficial for the process. These influences can be separated into internal and external attributes.
Internal characteristics that have influence on the company’s performance can be summarized under the Resource Based View (RBV), which describes the company as a bundle of “tangible and intangible” (WERNEFELD, 1984, p.172) resources, which are responsible for the “competitive advantage” of a company (TEECE; PISANO; SHUEN, 1997, p.509). Fletcher (2001, p.26) summarizes the most important internal factors found in internationalizing theory as being “(1) management characteristics and (2) organizational characteristics”.
Management characteristics include, among others, the international experience accumulated in their life, like time spend overseas or the country of birth. Other characteristics are related to the managers’ knowledge like familiarity with the culture and international business practices. Furthermore, planning orientation and having a strategic or proactive approach were considered to be important for successful internationalization.
Organizational characteristics that were considered to be important were the willingness to develop products for oversea markets, to research oversea markets and to fund the international activities. Furthermore, the technological advantage, which is related to the nature of the product was mentioned in the literature.
External incentives can be understood under the industrial organizational theory, which argues that a firm’s success depends on its strategy, which is determined by external factors (SCHERER; ROSS, 1990). The external environment is responsible for the pressures that let a company adapt to the threats and opportunities (COLLIS, 1991). External factors mentioned in the “traditional” internationalization approaches were on one hand related to the aids and incentives of the governments. On the other hand, also domestic as well as oversea demand and competitiveness play an important role in the decision making of the company.
According to the researchers, Oviatt and McDougall (1994b) defined four types of international new ventures, which have an adapted early internationalization strategy. The first dimension is related to the scope of activities of the value chain, distinguishing between few and many internationally coordinated activities of the value chain. The second aspect is the market diversity, which differs between few, and many entered markets. As a result, The framework proposes the following types i) import/export start-ups, ii) multinational traders, iii) geographically focused start-ups and iv) global start-ups. Global start-ups are here defined as companies, which enter various markets and feature an internationalized value chain. In order to address the question when a company is considered to internationalize early, the authors Jones e Coviello (2005) examines further the importance of time to this research stream. They argue that “incorporating time as a primary conceptual dimension is essential to understand entrepreneurial internationalization”, due to the fact that “the firm itself and internationalization behavior are also functions of time” (p.290). A company is subject to its passing and it influences the environment. In a way “that the internationalization process is related, directly and cyclically, to numerous performance aspects of the firm performance” (p.299).
To summarize the traditional explanation of internationalization, a traditional firms’ internationalization process can be considered as a “stage” model, where firms evolve from sequential stages from selling in the “psychically and geographically close markets” to an ad hoc production site that attends the demand abroad. (KONTINEN; OJALA, 2012 p. 6).
The phenomenon of the born-global was first discussed in the business literature over twenty years ago, when in 1993 McKinsey & Co. published a study where they identified a group of Australian manufacturers who were exporting just two years after being established. Since then it has gained practitioners and academic attention over the last decades. Its relevance can be recognized by the focus of the book “Globalization and Small and Medium Enterprises” released by OECD - Organization for Economic Co-operation and Development - in 1997 that presented chapters discussing born-global firms.
Born-global firms are in a way challenging the mainstream theories of incremental or gradual internationalization (OVIATT; MCDOUGAL, 1994). Different authors argue that the ‘born global’ firms’ phenomenon contradicts the Uppsala gradual process of internationalization (BELL, 1995) by pointing out that ‘born global’ firms internationalize rapidly and intensively, almost from their inception.
The born-global concept - according Knight and Cavusgil (2004) - is defined as business firms that, from their founding (or very near of that), seek superior international performance based on the sales originated from multiple countries. To those authors,
“The distinguishing feature of these firms is that their origins are international, as demonstrated by management’s global focus and the commitment of specific resources to international activities (…) these early adopters of internationalization begins with a global view of their markets, and develops the capabilities needed to achieve their international goals at or near the firm’s founding. (KNIGHT e CAVUSGIL, 2004 p 124, 125).
Looking at the born-global companies from the resource based view, Oviatt and McDougall (2005) summarize the difference between the traditional models and the born-global stream by a shift of the capability’s importance. Whereas organizational knowledge is considered crucial in the traditional approaches, born-global firms depend more on the individual managerial knowledge. Some researches indicate, “The internationalization of the born-global firms is driven by entrepreneurial owner managers with a global mindset which allows them to face the market adversities and to seek for opportunities” (WEERAWARDENA ET AL., 2007, p. 299). Especially the creation of networks is of importance for the newly founded companies (FREEMAN; EDWARDS; SCHRODER, 2006). According to Chetty and Campbell-Hunt (2004) the knowledge of the entrepreneur can substitute the company’s missing experience. The lack of organizational knowledge can even be seen as a facilitator of the rapid internationalization process (AUTIO et al. 2000).
Also, external factors need to be taken into account. Authors like Aspelund and Moen (2005) propose that born-global firms search for international markets as a forced movement to respond to an insufficient domestic market, which can be regarded as constraining the business. Furthermore, external developments are creating an environment that allows new ventures to internationalize rapidly. Examples are the globalization of markets, e.g. international value chains and the homogenization of buyer preferences and technological advances like the information & communication technologies, international logistics and modern production methods (KNIGHT; CAVUSGIL, 2004).
Although born-global firms have become a prominent area of research, there do not yet exist clear definitions when a start-up, or an early internationalizing company can be considered as born-global. The most prominent characteristics to classify a born global company is firstly the time when the company starts to go abroad and secondly the scale of the foreign operations. Kuvalainen et al. (2012) found in an evaluation of born global definitions that the maximum internationalization time is to be between two and three years. The scale of international activities is, depending on the author, between 25% and 75%.
One frequent criticism toward the born-global model is based on the fact that the percentage of sales that are supposed to be external might have no relevance depending on the country or even the continent that the company is based in (LUOSTARINEN AND GABRIELSSON, 2006, p.780). Some researches indicate that the internationalization of the “born-global firms is driven by entrepreneurial owner-managers with a global mindset which allows them to face the market adversities and to seek for opportunities” (WEERAWARDENA ET AL., 2007, p. 299). And it is considered that “the internationalization process of born-global firms is a matter of learning through networks” (…) “in a process that is neither planned nor linear”. (SHARMA; BLOSTERMO, 2003, p. 750).
According to Tuppura et al. (2008), “born-global firms are supposed to be highly proactive and able to enter new markets rapidly in terms of geographical areas and/or new products and services”. (2008 p. 485). Entrepreneurial owner-managers of born global firms assume the “development of innovative products” as a consequence of “close relationship and comprehension to their customer”. (MORT; WEERAWARDENA; LIESCH, 2012, p. 556-557).
For Andersson and Wictor (2003) the born-global firms’ establishment modes are a strategic choice, which can be the total opposite of traditional models (…) and usually consist of a planned rapid internalization through several modes of entry. In a way, that the strategy is built only based on firms’ resources. As stated by Mort, Weerawardena and Liesch (2012, p.551) “the ability to develop and configure innovativeness as marketable products provides a compelling source of competitive advantage and superior performance in born-global firms”.
Knight and Cavusgil (2004 p. 124) propose that “future researches should aim at deepening our understanding of early adopters of internationalization, which represent a widespread, ongoing trend.” that can be seen across industries and trading countries.
This research is classified as exploratory as it focuses on a better understanding of the born-global internationalization concepts, due to clarification of concepts and ideas (GIL, 2002; GIL, 2008). It takes the form of a literature review since its preparation is achieved using existing papers analysis, like in academic articles (GIL, 2002).
The main advantage of a literature review lies in the fact that, faced as a starting point, the researcher can cover a broad range of his object of study in a much wider way than direct search. This is particularly important when the research problem requires widely dispersed data (GIL, 2008).
The literature review is not limited to repeat or summarize what has already been said about the subject, but its purpose is to reach new approaches and innovative results (MARCONI; LAKATOS 2003). To address the phenomenon of born global companies, publications presenting case studies were taken into account.
Additionally, to the literature review, the authors conducted an interview with a consultant to capture the practical perspective regarding born-global companies, in order to assess the alignment between theory development and management practices.
A search was conducted on 06.15.2015 in the ISI Web of Knowledge database and the following filters were applied:
Title: born global
· Topic: case study
· Search domain (web of science categories): social sciences
· Area research focus (web of science categories): business economics
· Type of publication (document types): article
· Publication language: English
· The search results were applied to a critic review for the relevance of the articles presented based on the citation data presented by ISI.
Articles with no citation (zero) were disqualified from the selection due to the focus on presenting relevant academic discussions.
Chart 1.
Total articles per year
elaborated by the authors, based on the research
A content analysis was conducted with the selected articles, to identify the researchers’ and scholars’ focuses when conducting case studies regarding the born global firms – “considering that the content analysis focuses on identifying the indicators enabling one to deduce that the reality is different from the message” (BARDIN 2011, p. 384).
The content analysis was made considering all the relevant discussions in the following steps: the authors mapped the issues presented within the article, identified similarities in the content, defined the cluster for the similar issues and defined them as an attribute. The attributes were aligned considering the main topics embedded to finally define the dimensions used in the research.
This section aims to present the results obtained in the research. As described in the methodology, the qualitative analysis conducted in this research was to capture the key dimensions of born-global firms’ internationalization discussed in the case studies presented in the selection.
The ISI Web of Knowledge search resulted in 19 articles. These articles had citation numbers between none and over three hundred. After excluding articles with no citation, which guaranteed to present only the relevant discussions in the field, 16 academic articles were chosen for further analysis. After this qualification, the 16 articles were read in order to confirm that the selection was aligned with the purpose of this study (APPENDIX I) and to identify the main dimensions and attributes presented in the born-global firms’ case studies.
In a next step, the analysis was conducted on the selected sample to identify aspects of born-global firms’ academic research and the respective issues. Since the main objective of this study is to identify the dimensions presented by the born-global firms’ case studies, it can be seen in Chart 1 that oldest publication in the selection was made in 2004.
Even though the first discussion regarding the born-global firm phenomenon was conducted in 1993, the first case study regarding this topic was published eleven years later. Nevertheless, a positive trend of citation numbers can be identified which possibly indicates that the topic is gaining more attention from researches and scholars.
The Table 1 presents the article frequency by journal, in which can be seen that, within the 10 journals that covered the topic of born-global firms, the academic journals Management International Review (focus on research in the fields of international management) and International Marketing Review had the greatest number of relevant articles.
Article frequency by journal
elaborated by the authors, based on the research
The Table 2 presents the dimensions and attributes identified in on the selected articles - the complete list of attributes identified by the researches is presented at APPENDIX II. In this table, it can be seen that although the total number of internal and external factors are equal, the attributes do not replicate the proportionality (14 articles present the same number of citations for Internal and External factors). The most frequently mentioned attributes for internal factors are “entrepreneurs or manager knowledge” indicating the owners’ and managers’ relevance for the process of internationalization of a born-global firm. When considering the External Factors, both attributes “market development abroad” and “partnership and networking” present the same high frequency, what can possible indicate the foreign market perspectives are extremely correlated to the network and the partnership built in the new market.
Considering that the selection contains only empirical articles that aim to discuss and test hypothesis regarding one or more born-global firm concepts, it was observed that the perspectives captured by the case-studies, although plural, present concepts that are aligned with a global perspective of born-global firm model.
Attributes’ frequency
elaborated by the authors, based on the research
When considering the internal factors, the selected articles have the following propositions:Entrepreneurs or Manager Knowledge
The born-global theorists Chetty and Campbell-Hunt (2004) found that the “entrepreneurs are accustomed to operate in a global economy. This characteristic is strengthened by the advance of communication technologies. Those attributes are then used to develop strategies and maintain the relationships required by an accelerated process of internationalization”. (2004, p.62)
• Born-global firms usually are founded by entrepreneurs with a “strong international perspective”. They usually have a strong customer focus with high quality products. Furthermore, they heavily use the firm’s “marketing competence” in order to be successful outside of their home market. (KNIGHT; MADSEN; SERVAIS, 2004 p. 647)
• For Knight and Cavusgil (2004) “the international entrepreneurial orientation of born-global firms reflects a managerial mindset focused on innovation that leads the firm to pursue strategies aimed to maximize international performance”. (2004, p.136)
Firm strategic focus
• According to the authors Chetty and Campbell-Hunt (2004) due to the fact that “focus and pace of internationalization are established by competitive imperatives to seize a leading position in niche or emerging markets”, it’s necessary “to emphasize the role of strategy in the internationalization process” (2004, p.63).
• Kalinic and Forza (2012) indicated that born-global firms have “extreme flexibility” and are able to “adapt ever-changing external conditions”. (2012, p.697)
• “Born-global firms demonstrated a highly-developed ability to identify and mobilize resources from external sources, enrich and extend existing internal resources and to recombine these in novel and elaborated ways with a strategic purpose”. (MORT; WEERAWARDENA; LIESCH, 2012 p. 552)
Firms' innovative capacity
• “Knowledge that fosters unique products development also allows born-global firms to serve specific markets well, giving rise to increased market share and sales growth and supports superior international performance”. (KNIGHT; CAVUSGIL, 2004, p. 131)
• For the authors Knight, Madsen and Servais (2004) “the strategy elements of product quality, marketing competence and product differentiation are a direct influence to born-global organizational performance”. (2004, p. 654)
• Frequently, according to Trudgen and Freeman (2014), born-globals “operate in specialized markets in highly technical industries with their innovative products in a way that financial returns can be delayed as a scenario of the time and resources needed to educate the market about the value of their products”. (2014, p. 570)
Considering the external factors, the case studies mentioned the following characteristics to be beneficial for the creation of born-global firms:
Domestic market
• “Born-global founders perceive the world as one market and thus do not confine themselves to a single country”, this happens due to the fact that “they recognize the limited importance of the domestic market from the firms’ inception”, mainly because “they may have either a small domestic market or no domestic market”. (CHETTY; CAMPBELL-HUNT, 2004 p. 61)
• For Freeman; Hutchings; Chetty (2012) born-global firms potentially perceive the “downturns of the home market as a trigger to seek foreign locations that can be used to offset fluctuations in demand, as much as changes in the home market regulatory environment”. (2012, p.441)
• “The pace of born global firm internationalization occurred because of the entrepreneurial drive and interpretation of the founder(s) as well as the small size of the domestic market” (p.704) and its “maturity”. (p.706) (TAYLOR; JACK, 2013)
Market development (abroad)
• Born-global firms “followed international market changes and competitors’ actions and then developed their responses, acting like a market driven firm due to product characteristics in the industry”. (KOCAK; ABIMBOLA, 2009) p. 447)
• Born-global firms’ effective institutional bridging starts with “developing detailed social and cultural knowledge about the target markets, such as (1) knowledge about potential customers to customize products and services; (2) cultural knowledge about the norms and practices that underpin commercial transactions, and (3) knowledge of the legal and regulatory environment, both formal and informal”. (KARRA; PHILLIPS; TRACEY, 2008, p.448)
• The born-global firm's most developed resources are the “capability to create new markets, generate demand and position itself as a leader in those markets”. This ability is further strengthened by the “strong capacity to innovate and consequently be a first-mover in the markets”. (SEPULVEDA; GABRIELSSON, 2013, p. 799)
• For Trudgen; Freeman, (2014, p.571) the born-global firms are “aware (…) of the challenges of psychic distance”, which “reflects a longer-term business perspective, prolonging the amount of time born-global spent in the early international entry/ development phases”.
Partnership and networking
• For “born-global firms, the influence of networking capability is not restricted to impact on capital requirements and management skills but is instrumental in developing innovative products, in locating markets across national borders and in international market performance” (MORT; WEERAWARDENA, 2006, p.568)
• Born-global “strategies that utilize partners are favored because they enabled partnership advantages providing market access and end customer credibility”. (GABRIELSSON; GABRIELSSON, 2011, p.97)
• For Hagen and Zucchella (2014) “the born-global firms’ social networks work as an accelerator” (p.519) and “a significant proportion of the opportunity for exploration and exploitation is to be found by born-global firms in partnerships, which represent a key asset in this companies’ resource base”. (p. 523)
To strengthen the critical view regarding the born-global firms’ dimensions and attributes, the authors discussed the born-global firms’ model with a practitioner who supports firms in their early stages of the internationalization process. This should be regarded as a validation of the case studies (APPENDIX III). This additional case – considered exploratory by the authors, “offered the opportunity to explore the limits of the descriptions and explanations developed” in the article selection’s cases (SWANBORN, 2010, p. 105)
The main aspects brought by the consultant regarding the born-global firms were (i) the internationalization requires profound knowledge and preparation about the target market, (ii) the decision of becoming a born-global firm usually considers the external factors as much as the internal factors in a combined view, (iii) the entrepreneurs understand that it is crucial to establish a local infrastructure / relationship (clients, suppliers, distributors, investors), (iv) the internationalization adoption is aligned with the firm strategic focus, (v) the born-global firms’ entrepreneurs are relevant to the internationalization model and have some distinct characteristics (understanding the foreign market, for example) and (vi) born-global firms are resource-constrained firms in the beginning of the internationalization process.
This research’s overall objective was to analyze the dimensions and attributes discussed in born-global firms’ case studies, in order to extend the understanding of this phenomenon. To achieve this objective two questions were answered: i) identify the dimensions used to study the born-global firms; ii) identify the main concepts applied to such dimensions; both analyses are based on cases studies addressed in the literature and practical case studies.
To properly conduct this research, a categorization was proposed that allowed the authors to map the issues in a standard approach. As a result, the main issues presented in the sample were clustered in one of the six attributes that were consolidated into two dimensions.
The results demonstrated that the main issues regarding the born-global firms are developed in perspective that is aligned to the literature and to the management practice experienced by consulting firms. The authors considered the distinct relevance presented by the attributes used in the research that in a way captures the main perspectives/agents that support the born-global firm internationalization. Furthermore, the authors understood that this alignment occurs as a result of the following context: (i) the born-global firm model has not reached a mature phase; (ii) the plurality of the issues derive from the fact that the case studies are built to analyze different purposes in multiple industries.
As a contribution, this study presented a list of dimensions and attributes that can be used as a reference for further discussions regarding the born-global firms’ case studies or even theoretical propositions. The composition of case studies can be considered as an additional contribution developed by the authors by providing a broad overview for the researchers.
The study’s limitations can be considered to be the rather low number of selected articles that might have some influence on the dimensions and attributes proposed.
https://internext.espm.br/internext/article/view/356/299 (pdf)
Chart 1.
Total articles per year
elaborated by the authors, based on the research
Article frequency by journal
elaborated by the authors, based on the research
Attributes’ frequency
elaborated by the authors, based on the research
