Academic journal article Multinational Business Review

Behavioral Patterns in Born-Again Global Firms: Towards a Conceptual Framework of the Internationalization Activities of Mature SMEs

Academic journal article Multinational Business Review

Behavioral Patterns in Born-Again Global Firms: Towards a Conceptual Framework of the Internationalization Activities of Mature SMEs

Article excerpt

Introduction

Since the late 1980s, an increasing number of new ventures have been international from their inception. The international activities of these "international new ventures" (Oviatt and McDougall, 1994) or "born globals" (Rennie, 1993) have not developed incrementally, nor do they have a large resource base. Instead, other factors - such as their unique intangible assets or specific knowledge - have prevailed. Internationalizing was the only opportunity they had to survive, rather than being viewed as a risky business. As a new and spreading phenomenon (Moen and Servais, 2002), these born globals have secured a niche in the academic world.

Nevertheless, an increasing number of researchers have started questioning the (over)emphasis on rapid internationalization early in such firms' life cycle. If this doubt can be substantiated, this will add a new dimension that international management's core research questions concerning the when, where and how of internationalizing, as well as the question regarding what internationalizing's performance outcomes, should strive to answer. Authors and institutions - including Dimitratos and Jones (2005), Young et al. (2003), Zahra and George (2002), Zahra et al. (2001) and the European Commission (2003) - have made us aware of another "species" in the wider corporate population, thus also creating the need for expansion of the international entrepreneurship (IE) field. Researchers should shed light on those mature, domestically focused corporations that, for a long time, apparently have little motivation to go international. They then suddenly decide to make a strategic shift and, consequently, "embrace [...] rapid and dedicated internationalization" (Bell et al. , 2001, p. 174). These firms are referred to as "reborn globals" (European Commission, 2003) or "born-again global firms" (Bell et al. , 2001).

This paper seeks to contribute to the theory-building process within the IE field. By examining mature small- and medium-sized enterprises' (SMEs') internationalization behavior, this study addresses a research gap in this area (Hitt et al. , 1995). Specifically, we explore the following questions:

Q1. Why do mature, domestically focused firms suddenly turn into born-again global firms?

Q2. How do they do so?

Q3. What primary and secondary elements are needed for born-again global firms to be sustainable?

We investigate relevant factors propelling a previously domestically focused firm into a rapid expansion trajectory.

The exploration of the questions of when, where, how and with what performance outcomes internationalization takes place, or ought to take place, has benefitted substantially from a country-specific perspective that allows a better understanding of the key and unique patterns (Ruigrok et al. , 2007). Our article continues this train of thought and, as outlined in the methodology section, is based on a sample of Swiss companies. The article proceeds with a literature review and an outline of the applied research model and method, followed by a case study results summary. We then present our conclusions and contributions, point out the limitations and offer future research directions.

Internationalization theories

Process theory of internationalization

The process model of internationalization (PMI) - also known as the stages model of internationalization, or the Uppsala model (U model) - is considered one of the most influential theories explaining firms' internationalization (Coviello and McAuley, 1999; Li et al. , 2004). Internationalization is perceived as a slow and incremental process with firms passing through four distinctive stages of greater involvement abroad (Johanson and Wiedersheim-Paul, 1975). These stages are:

no regular export activities;

exporting via independent representatives (agents);

establishing an overseas sales subsidiary; and

establishing overseas production or manufacturing units. …

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