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How do global born companies ignite their internationalization and succeed in international markets?

Posted by admin on 8 May, 2017 4:30 pm

Over the last decades, a new type of firm has assumed a growing role in international business.

Muriel Faden

These new firms, usually called “born global firms” or “international new ventures”, challenge the traditional firms’ internationalization model as they are able to become global shortly after their creation and without building previously a solid position in their internal markets. Thus how are these firms able to internationalise so early and to succeed in international markets?

To answer these questions, a comparative case research of four technological international new ventures based in Portugal was carried out. The firms included in this work were able to successfully internationalize their activity within a short period of time after their inception. Differently from traditional firms, these firms started their internationalization without a strong position in the domestic market and were able to rapidly enter several foreign markets using diverse entry modes.

an international entrepreneurial culture with a strong market focus, learning and innovation orientation as well as an international risk attitude which together with the existence of a clear vision and strategy seems to have focused the firms’ resources and capabilities in their internationalization.”

Through such study, the relevance of an entrepreneurial culture together with the existence of a clear vision and adjustable strategy to these firms’ early internationalization has become clear. The leaders of these firms were able to leverage the firms’ initial successes to develop an international entrepreneurial culture with a strong market focus, learning and innovation orientation as well as an international risk attitude which together with the existence of a clear vision and strategy seems to have focused the firms’ resources and capabilities in their internationalization. Indeed, these factors were crucial to guarantee an organizational flexibility that enabled such firms to answer rapidly to new challenges and to adapt their resources and dynamic capabilities to a changing environment and thus to ignite their internationalization shortly after their inception.

After the initial successful internationalization of their activities, these firms have continued to enhance their resources and dynamic capabilities. To improve their knowledge, such companies have, for instance, invested in R&D and developed different networks that included clients, suppliers, partners, shareholders and investors and research groups. The continuous expansion of these firms has further increased the potential value of these networks. Indeed, through the opening of local subsidiaries and the creation of local networks, these firms were able to develop exclusive networks that have turned into an extremely relevant resource both by themselves and by the resources and capabilities that these firms accessed through them.

“through the opening of local subsidiaries and the creation of local networks, these firms were able to develop exclusive networks that have turned into an extremely relevant resource”

In short, these firms’ success resulted from a singular combination of resources and dynamic capabilities that evolved over time. The leadership, vision and strategy as well as culture were essential to create innovative and flexible organizations able to answer rapidly to new challenges. These firms’ foreign subsidiaries and local networks also played a relevant role, enhancing these firms competitive position through the provision of distinctive knowledge and capabilities. As a consequence, the effective integration of such resources and capabilities in these firms’ will certainly continue to play a crucial role in their lasting success.

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