Dear friends and colleagues,
The second issue of Global Strategy Journal in 2020 is out! There you can find a set of articles on the internationalization process. An overview of the Uppsala model of internationalization (Vahlne) opens the issue. This is followed by two papers on the internationalization of small firms (McCormick & Somaya; Puthusserry, Child, & Khan). We then have two articles on market entry strategies (Dow, Baack, & Parente; Jiang, Holburn, & Beamish). Finally, two papers on the internationalization of state-owned firms (Nuruzzaman, Singh, & Gaur; Kalasin, Cuervo©\Cazurra, & Ramamurti) conclude the issue.
We hope that you find them useful for learning about the latest thinking on the topic.
Gabriel Benito, Alvaro Cuervo-Cazurra, and Ram Mudambi
Co-editors of Global Strategy Journal
I explain how the Uppsala model of the internationalization process progressed from explaining internationalization to explaining evolution. Initially, empirical findings led to the formulation of a model, later named the Uppsala model, driven by the interplay between experiential learning and commitments to expand the business into new foreign markets and deepen engagements in existing markets. Later, conceptions led to networks becoming a key ingredient in the model. As a result, globalization, geographical extensions and reconfigurations, and coordination changes were shown to follow the same pattern of learning and commitments as internationalization did. More recently, other dimensions in firms' evolution, such as R&D, and organizational and strategic change processes appear to follow similar processes of learning and commitments.
Marleen McCormick, Deepak Somaya
What explains born global firms who internationalize very early through exports, when theories of internationalization recommend they focus on domestic markets first? While prior research suggests a number of factors that enable exporting by new ventures, empirical tests of these theories have not evaluated if these factors uniquely explain new venture exporting. We propose and empirically test hypotheses that exporting by young (relative to established) emerging©\economy firms increases when they tap into the drivers of modern globalization (Internet technologies, global talent flows) and overcome home©\country institutional constraints (government inefficiencies, location), all of which have bigger impacts on exporting by young firms than established ones. Understanding these unique drivers of born global emerging©\economy firms is critical for reconciling this phenomenon with traditional theories of firm internationalization.
Pushyarag Puthusserry, John Child, Zaheer Khan
Relatively limited research has been conducted on the evolutionary development of social capital during the internationalization process of small and medium©\sized enterprises (SMEs). We address this issue through a qualitative study of 30 pairs of British and Indian SMEs that have developed international business relations with each other. We provide frameworks that illustrate how microfoundations create, modify, or dissolve network structures to achieve the desired outcomes at different stages of social capital development and internationalization. We identify that entrepreneurial characteristics and intentions influence the development of social capital and internationalization. We suggest that the stages of social capital evolution tend to accompany discrete stages of internationalization, albeit with some exceptions due to the nature of the industrial sectors and actors' dispositions towards business exchange.
Douglas Dow, Daniel Baack, Ronaldo Parente
With respect to entry mode decisions, psychic distance may play two contradictory roles. On one hand, the transaction cost perspective is concerned with opportunism. Psychic distance magnifies the threat of opportunism, which encourages higher levels of control by foreign firms. Conversely, the new internalization perspective emphasizes the role of complementary assets controlled by local entities. Distance increases the need to access local knowledge, which encourages firms to seek joint ventures. By adopting an experimental approach and measuring managers' a priori perceptions of distance, this article contributes to the literature by providing a more sophisticated approach for discriminating between these effects. The results indicate that distance magnifies the need for firms to access complementary assets; however, distance does not appear to magnify the threat of opportunism.
Guoliang Frank Jiang, Guy L. F. Holburn, Paul W. Beamish
This study examines strategic and resource contingencies that shape MNEs¡¯ country location choices. Our analysis of overseas production investments by Japanese firms (1971¨C2006) finds that differences in investment motives (i.e., horizontal and vertical investment) and corporate capabilities (i.e., marketing and production capabilities) moderate how prior entries into a host country affect subsequent entry decisions. In general, the positive impact of prior entries on investment in a country is weaker for horizontal investments and stronger for vertical investments. A more nuanced relationship emerges when entry decisions are analyzed in conjunction with heterogeneous corporate marketing and production capabilities. The study illustrates the novel insights to be gained from analyzing the joint impact of path dependence, managerial intentions, and corporate capabilities on country location decisions.
N. Nuruzzaman, Deeksha Singh, Ajai S. Gaur
We utilize the institution©\based view to study the effect of home institutions on the internationalization of emerging economy firms. We argue that institutional support and institutional hazards co©\exist and can influence firm internationalization simultaneously. However, institutional support has a stronger effect on internationalization than institutional hazards. Further, we argue that when the institutional environment is supportive of the internationalization effort, state ownership provides proximity to institutional resources and thus amplifies the relationship between institutional support and firm internationalization. However, when the institutional environment is perilous to business activities, state ownership increases dependency on the institutional environment and constrains the escape from the domestic market. Results based on the World Bank Enterprises Survey of 9,337 manufacturing firms from 81 emerging economies largely support our arguments.
Kiattichai Kalasin, Alvaro Cuervo©\Cazurra, Ravi Ramamurti
We study how state ownership affects the international expansion of emerging©\market firms. Building on agency theory and the resource©\based view, we propose an S©\curve relationship: Firms with a low level of state ownership have a limited level of international expansion, those with a medium level of state ownership have an increasing level, and those with a high level of state ownership have a decreasing level. This S©\curve is the outcome of the interaction between the ¡°hindering hand¡± of state ownership, arising from multilevel agency problems, and the ¡°helping hand,¡± arising from state©\ownership advantages. Analyses of 674 publicly traded firms from 16 emerging markets support these ideas and reveal that the inflection points in the S©\curve appear at state©\ownership levels of 19 and 43%.
Professor, International Business and Strategy, Northeastern University
Co-editor, Global Strategy Journal
D'Amore-McKim School of Business, 360 Huntington Avenue, Boston MA 02115, USA
[log in to unmask]. +1-617-373-6568. www.cuervo-cazurra.com.
Skepticism on globalization and global strategy: Increasing regulations and countervailing strategies. Global Strategy Journal
Pro-market institutions and global strategy: The pendulum of pro-market reforms and reversals, Journal of International Business Studies
Frugality based advantage, Long Range Planning
Mexican Multinationals: Building Multinationals in Emerging Markets. Cambridge University Press
State-Owned Multinationals: Governments in Global Business. Palgrave
Emerging Market Multinationals: Solving Operational Challenges in Internationalization. Cambridge, UK: Cambridge University Press.
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