Academic journal article Global Journal of Business Research

A Quantitative Measure of the Gradualist Approach to Internationalization

Academic journal article Global Journal of Business Research

A Quantitative Measure of the Gradualist Approach to Internationalization

Article excerpt

ABSTRACT

The goal of this research is to create a holistic global model which integrates the main theories and approaches used in researching company internationalization. The resource-based view of export strategy has shown the greatest capability of explaining deciding exports. The gradualist model of the Scandinavian school of thought has been widely utilized as an explanation of the appropriate methods and momentum for gradual export abroad. The second goal of this research is to demonstrate implementation of the gradualist models. The way of entering each international market by the companies, though being an easily-understood intuitive concept, nevertheless generates confusion from an operating point of view. Currently, there is no quantitative variable that can tell if a specific company, or sector, adheres to the guidelines of the gradualist model. For this purpose, we generate an easily-measured quantitative, continuous variable, which indicates the extent that companies adapt the thesis proposed by the Scandinavian school of thought.

JEL: M16

KEYWORDS: International priority index, Internationalization models

(ProQuest: ... denotes formulae omitted.)

INTRODUCTION

Internationalization is an economic phenomenon that has awakened the interest of a great number of researchers. By internationalization we mean "a set of operations that facilitate the establishment of more stable relationships between a firm and the international markets, throughout a learning process of growing international involvement and patterns of development." Rialp et al. (2005).

The goal of this research is the creation of a holistic global model that integrates the main theories and approaches for researching company internationalization. The operations of companies abroad have been widely studied according to the strategy of entry into foreign markets. Regarding the export strategy, the resource-based view has demonstrated more ability to explain the determining factors of this strategy. On one hand, the gradualist model of the Scandinavian School has been widely used as an adequate measure of the appropriate ways and moments to perform a step-by-step entry into foreign markets.

The network model, which is of the no gradualist approaches, on the other hand, gives rise to the possibility of further studying and deepening our understanding of cooperative approaches to operating abroad. Without a doubt, other approaches such as the monopolistic advantage theory, the transaction cost approach, also contribute other points of view which help globally explain internationalization. However, given the literature examined here we consider the three approaches presented as the most relevant for discerning the decisive and determining factors of the internationalization strategy of companies. As a second research goal, we study the implementation of the gradualist models. The way companies enter each of the different international markets, while easily understood in an intuitive manner, still generates a great deal of confusion from the operating standpoint. There is no quantitative variable which discerns whether a company, or a sector, follows the guidelines of gradualist models or not. For this reason, based on the research developed by Davidson (1980, 1983) and Clark and Pugh (2001), we generate a variable that is continuous, quantitative and easily-measured in order to indicate to what extent companies follow the theses proposed by the Scandinavian School.

The paper is structured as follows, in the second section a review and analysis of the literature of the subject matter and the théorie model proposed is presented, and in the third section the methodology for the creation a quantitative measure of the gradualist versus non-gradualist.

LITERATURE REVIEW

Throughout history, there have been numerous conceptual frameworks classified under the phenomenon of entry into foreign markets. Table 1 presents a summary. …

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