Posts Tagged ‘internationalization’
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When I began on this project, I knew very little about internationalisation. It’s a huge and very daunting subject. This is because it can be different for every industry, market, product, founder, entry mode etc.
Any complex subject usually has a wealth of academic literature associated with it. And internationalisation is no exception.
From the beginning, we needed some form of robust model to understand the process that firms go through.
Early models of internationalisation, namely the Upsala model and Cavusgil’s I-model, suggested that firms gradually increase their involvement in overseas markets which they consider have some form of psychic proximity to their own domestic market. For example, many firms may consider the US to have a close proximity simply because we share the same language.
The following image conveys the I-model process of internationalisation (Cavusgil).
- Domestic marketing – Firm isn’t considering internationalisation and is carrying out marketing efforts solely in the domestic market
- Pre-export – Firm is researching and preparing for involvement in a new overseas market.
- Experimental involvement – Firm may be attending trade shows, missions, offering services in a new market in order to evaluate demand.
- Active involvement – Firm is trading directly in or with a new market. Typically less than 10% of revenue will come from this new market.
- Committed involvement – Firm has made a commitment to the new market and may be considering other new markets.
The crux of this model is the precis that firms experiment gradually into new markets, as opposed to jumping straight in head first.
However, this model has a number of problems.
The traditional staged models don’t account for the behaviour of some firms (e.g. ‘born globals’) who have the management expertise, a network of valuable contacts, a knowledge-based product (i.e. no physical shipping) and a desire to internationalise to many markets concurrently and rapidly to gain a first-mover advantage.
Born global firms becoming more and more common and is particularly important for UK Technology companies, where intellectual property and technology design form an integral aspect what the UK excels at.
The staged model is still very valid for some firms and we have witnessed a number of firms working in this manner in our own research. However, a more holistic model has been developed by Jim Bell, Ron McNaughton, Stephen Young and Dave Crick.
An integrative model of small firm internationalisation
The integrative model (Bell et al) takes into account not only the more proactive and competitive approach of born globals but includes the more traditional staged approach and even seeks to marry the two approaches with the concept of born-again global firms.
The model indicates the most stereotypical trajectories as opposed to rigid pathways and has served as inspiration for an approach to the design which prioritises versatility.
Most importantly, when incorporating the stages of internationalisation, the model tends to use them more as states, not stages. This thereby affords the potential for forward, backward or repetitive involvement in the ’stages’.
A flexible model, but does it suit you?
I would be interested to hear if you have internationalised your business and you feel you do not fit into the above model.
UK Technology Global Markets group