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The traditional theories of internationalization, such as the Uppsala model and the eclectic paradigm, have been critiqued for their applicability to "born global" firms. Born global firms are those that internationalize rapidly from their inception, often bypassing the incremental internationalization process outlined in traditional theories. Here, I'll discuss the limitations of classic internationalization theories in explaining the internationalization patterns of born global firms and offer insights into why these firms deviate from the traditional trajectory.
Speed of Internationalization: Classic theories like the Uppsala model emphasize gradual internationalization through experiential learning and market knowledge accumulation. However, born global firms defy this by entering multiple foreign markets early in their lifecycle. Their rapid internationalization challenges the notion of sequential market entry and gradual resource commitment proposed by traditional theories.
Globalization and Technological Advances: Born global firms often leverage digital technologies and global communication networks to operate across borders from inception. Unlike traditional firms, born globals can leverage digital platforms, e-commerce, and social media to access global markets rapidly. These technological advancements enable them to internationalize without the need for significant physical presence or local market knowledge, which is central to the Uppsala model.
Networks and Relationships: Traditional theories highlight the importance of building relationships and networks in foreign markets before expanding further. However, born global firms often rely on networks of partners, suppliers, and customers to facilitate their international expansion. These networks enable them to access resources, market knowledge, and distribution channels quickly, reducing the need for gradual market exploration emphasized in traditional theories.
Industry Characteristics: Born global firms are often found in industries characterized by low entry barriers, such as technology, digital services, and creative industries. These industries allow firms to internationalize rapidly due to factors like low marginal costs of production, scalable business models, and the global reach of digital products and services. Traditional theories may not fully account for the unique dynamics of these industries and their impact on internationalization patterns.
Managerial Mindset and Vision: The founders and managers of born global firms often have a global mindset and vision from the outset, driving them to pursue international opportunities aggressively. Unlike traditional firms, where internationalization may be driven by reactive responses to domestic market saturation or competitive pressures, born globals are proactive in seeking global opportunities and expanding their market presence rapidly.
In conclusion, while classic internationalization theories provide valuable insights into the international expansion of traditional firms, they have limitations in explaining the unique internationalization patterns of born global firms. Born globals challenge the sequential and incremental approach proposed by traditional theories by leveraging technological advancements, global networks, and proactive managerial mindsets to internationalize rapidly from inception. Understanding the distinct characteristics and strategies of born global firms is essential for advancing our understanding of international business dynamics in an increasingly interconnected world.
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