Gradual Internationalization Vs Born-Global/International New Venture Models
Gradual Internationalization Vs Born-Global/International New Venture Models
Gradual Internationalization Vs Born-Global/International New Venture Models
www.emeraldinsight.com/0265-1335.htm
IMR
36,6 Gradual Internationalization
vs Born-Global/International
new venture models
830 A review and research agenda
Received 7 October 2018
Revised 26 November 2018
Justin Paul
Accepted 23 December 2018 Rollins College, Winter Park, Florida, USA and
Graduate School of Business Administration,
University of Puerto Rico, San Juan, Puerto Rico, USA, and
Alexander Rosado-Serrano
University of Seville, Seville, Spain and
Interamerican University of Puerto Rico, Arecibo, Puerto Rico, USA
Abstract
Purpose – During the last two decades, studies on the theoretical models in the area of international business
(IB), such as gradual internationalization and the born-global firms, have gained the attention of researchers.
The purpose of this paper is to critically review the studies on the process of internationalization (Gradual
Internationalization vs Born-Global/International new venture models) to identify the research gaps in this
area and to prepare a future research agenda.
Design/methodology/approach – Systematic literature review method was employed for this review.
The authors highlight the findings from prior studies, compare and contrast salient characteristics and
features, based on the articles published in journals with an impact factor score of at least 1.0, and provide
directions for research.
Findings – The authors find that there are several areas that were under-explored in prior research. There is
a great potential for theoretical extension and theory development in this field as it covers the tenets of four
subjects: IB, marketing, strategic management and entrepreneurship.
Originality/value – There is no comprehensive/integrated review exploring the methods/variables and
constructs used in prior studies integrating gradual internationalization/born-global models based on all the
articles published in well-regarded academic journals. This review seeks to provide deeper insights, which
help us to contribute toward the development of this research field.
Keywords International business, Born global, Uppsala model, Gradual internationalization
Paper type Literature review
1. Introduction
Globalization can trace its beginnings from the early 1980s. The field of international
business (IB) studies got prominence in the academic world in the 1980s and 1990s with the
growth of multinational enterprises (MNEs). In the mid-1970s, researchers at Uppsala
University discovered that Swedish firms enter into the foreign markets initially through
foreign agents, and as their sales grew, they replaced their agents with their own
organization’s branch or sales office. The firms, which follow the Uppsala model, tend to
follow a gradual internationalization process ( Johanson and Vahlne, 1977). As per this
model, the cumulative processes play a central role in the subsequent internationalization of
the firm. Also, the same applies on how the underlying opportunity recognition of process
functions, and how managers search, recognize and act upon opportunities. The traditional
process of internationalization is often referred as the internationalization process theory or
International Marketing Review
Vol. 36 No. 6, 2019
pp. 830-858 The authors thank Professors Masaki Kotabe (Temple University), and Visiting Professor – University
© Emerald Publishing Limited of Puerto Rico), Gary Knight (Williamaite University, USA), Peter Liesh (University of Queensland) and
0265-1335
DOI 10.1108/IMR-10-2018-0280 Alex Rialp (Barcelona) for their comments on this paper.
the Uppsala model of gradual internationalization (Paul and Gupta, 2014). The Uppsala Gradual
model is also based on the assumption that internationalization is often began in foreign Internationalization
markets that were in closer proximity to the domestic market in terms of physical distance
( Johanson and Vahlne, 1977).
Rennie (1993), in McKinsey Quarterly, stated that some firms were created to do global
business rather than internationalizing gradually and called them as “born-global firms.”
This phenomenological approach triggered empirical and conceptual studies that make up 831
the overwhelming majority of extant born-global literature (Knight and Cavusgil, 1996;
Madsen and Servais, 1997; Bell et al., 2001; Moen and Servais, 2002; Knight et al., 2004;
Knight and Cavusgil, 2004; Gabrielsson, 2005; Rialp, Rialp and Knight, 2005; Rialp, Rialp,
Urbano and Vallant, 2005; Freeman et al., 2006; Freeman et al., 2010; Lopez et al., 2009;
Madsen, 2013; Paul and Gupta, 2014; Cavusgil and Knight, 2015; Falahat et al., 2018). The
born-global firm, according to Knight et al. (2004), is a firm that internationalizes, on an
average, within three years of founding and generates at least 25 percent of total sales from
foreign countries. There have been many studies on born-global firms operating in
technology-intensive industries (Andersson and Wictor, 2003; Crick and Spence, 2005;
Lopez et al., 2009). Likewise, there are examples of born-global firms in other industries
such as metal fabrication, furniture, processed food and consumer products
(Madsen and Servais, 1997).
Throughout the years, internationalization has been an ideal strategy for many firms
via different entry modes such as exporting, strategic alliances and joint ventures
(Leonidou et al., 1998; Piercy et al., 1998; Theodosiou and Katsikeas, 2001; Leonidou et al.,
2002; Cavusgil and Knight, 2015). Some firms enter foreign markets to gain access to
primary resources. While other firms prefer to go global either to follow their customers and
tap potential market, or to have access to knowledge in order to improve their competitive
advantage (Zhou and Wu, 2014). Thus, two pertinent questions arise while firms decide to
internationalize: do they follow gradual internationalization or a quick internationalization
pattern? and why do some firms follow gradual process while others follow an early and
accelerated process of internationalization?
These questions have been explored in prior research, but there are gaps in the literature.
Some researchers contextualize the early and accelerated process of internationalization with the
terms such as born global or international new venture (INV). Yet, the internationalization
models have neither gained the intensity nor gathered theoretical momentum (Knight and
Liesch, 2016). Knight and Liesch (2016) summarized the evolution of internationalization research
over time and contrasted incremental internationalization vs born global. Their effort provides
legitimacy to continue scholarly research into this topic. Other researchers indicate that there is a
need to integrate different theoretical frameworks for both streams (García-Lillo et al., 2017).
Nevertheless, our paper, to date, is the first, to consolidate, review and integrate 115 prior studies
that examine the gradual internationalization process model and born-global phenomenon.
Many researchers postulate that the Uppsala model does not explain the concept of
accelerated internationalization of small and medium enterprises (SMEs) (Lopez et al., 2009;
Freeman et al., 2010). Freeman et al. (2006) found that knowledge-intensive industries
tend to internationalize early and rapidly. it is important for us to understand the
particular characteristics of INV or the so-called born-global ventures/firms/businesses
(Bloodgood et al., 1996; Madsen and Servais, 1997). Cavusgil and Knight (2015) observed
that well-established firms that previously focused on their domestic markets suddenly
embraced rapid and dedicated internationalization, with the process of globalization
gathering momentum. Born-global firms are becoming predominant and this phenomenon
continues to evolve. Although born-global are rapidly expanding worldwide, their growth is
facilitated by advances in telecommunication, transportation and technology. These firms
are shrinking physical and cultural distances, and facilitating human capital mobility in
IMR order to extent their diffusion because it depends on the rights and certain conditions are in
36,6 place (Cannone and Ughetto, 2014). The choice of entry mode decision between traditional
exporters and born-global firms could be attributed on the experience and background
of the owners/founders (Madsen and Servais, 1997). The founder’s international experience
may impact on their perception and valuation on the opportunities in foreign markets,
creating a bias toward internationalization. Prior studies have found that some
832 entrepreneurs have developed a strong network of contacts as a result of their previous
international experience, which has allowed them to internationalize faster that others
(Contractor et al., 2005; Kundu and Katz, 2003). Another proposition that cannot be ignored
is the country-specific advantage. In the absence of country-specific advantages, one should
expect a strong firm-resource endowment in order for the firms to expand abroad
successfully (Rugman and Verbeke, 2005).
The main difference between gradual internationalization and born-global models is
related to the speed in which the firm internationalizes. The geographic pattern of entry, mode
of entry, and the pattern of their commitment have a lot to do with this. Managers could
choose their target foreign market based on this, and increase their commitment with those
markets. Managers’ commitment can make the difference in the internationalization process of
firms (Oviatt and McDougall, 1997). Taking into account all these aspects, there is a need to
advance our understanding of the crucial insights into born-global firms, especially to learn
how they grow and mature overtime, why some firms internationalize early than others,
among other questions. Therefore, we seek to provide a concrete review to highlight the
findings of important studies, compare and provide directions for future research.
Cavusgil and Knight (2015) provide useful perspectives on born-global firms, citing the
studies published during the preceding ten years. On the other hand, this review covers a
21-year period, and includes studies on both gradual internationalization process model and
the born-global phenomenon. We summarize the discussion and progress with reference to
the theory, content and methodology, and critically review the research on gradual
internationalization vs born-global models during the period 1995–2018. Through this
review, we identify commonalities; discuss the characteristics, present salient features and
the crossing points between the two models. We endeavor to provide insights on widely
used research methods, constructs/variables in this area of research and provide directions
for future research. Additionally, this review highlights the factors that help optimizing
managers’ efforts in their internationalization strategies. Thus, we follow a more robust
method of systematic literature review, focusing on sub-themes, methods employed and
theoretical underpinnings.as found in widely cited prior review articles on other topics
(Keupp and Gassmann, 2009; Paul et al., 2017), while some researchers have reviewed
literature on born globals (Dzikowski, 2018; García-Lillo et al., 2017) through a completely
different bibliometric approach (identifying the main authors, journals where articles are
published, affiliation of universities, etc.). Albeit their efforts provide information on
citations, journals and institutions, they only provide a general overview and do not delve
into identification of research gaps based on methods used and findings of the studies.
Our goal is to compare and contrast two theoretical models, highlight the findings of prior
studies and provide a better understanding of the phenomenon. In addition, our approach
provides a better understanding of the phenomenon as we provide a framework of salient
features and crossing points.
It is important to consider the uniqueness of internationalization as a theoretically
legitimate field of study beyond the conventional theories. The study of the process and pace
of internationalization would possibly be crossing certain common paths such as entry modes
(exporting, joint venture, etc.). However, contributions that adequately reflect theoretical
intersections of gradual internationalization process and born-global phenomenon are
few as most of the studies either address one of these models and related issues. Some studies
are grounded in developing scientific measures to examine and compare the pace of Gradual
internationalization of a firm. This situation could be traced in different stages of development Internationalization
of these two theoretical fields. Although the gradual internationalization process theory is an
established research area, the accelerated internationalization phenomenon and the associated
models, born-global/INVs is a relatively young field, despite widespread attention in
mainstream journals. These issues and problems have led to considerable knowledge gaps and
conflicts through literature. We provide some useful directions that we believe may provide 833
stimuli for improving theoretical and practical understanding of the path, process and pace of
internationalization phenomenon. Thus, we contribute to advancing the internationalization
theory by delving into the roots of respective models and by suggesting how future research
may help in advancing this field of research.
Following the widely cited review articles (Leonidou and Katsikeas, 1996; Rialp, Rialp and
Knight, 2005; Rialp, Rialp, Urbano and Vallant, 2005), we analyze 115 articles that have been
published in the top tier journals to provide directions for future research to avoid replete studies
as suggested by Kraus et al. (2015). Accordingly, our review is structured as follows. In Section 2,
we discuss review methodology. In Section 3, we present the literature on gradual
internationalization. We focus on the literature on born-global firms/INVs in Section 4.
In Section 5, we develop future research agenda in both areas providing the salient features and
crossing points between both models. Section 6 is devoted for providing insights on theoretical
underpinnings based on the findings from prior studies with propositions for future research and
managerial implications. Last, we provide the summary of findings in the Conclusion section.
2. Methodology
Marketing, entrepreneurship and IB are three disciplines that often cross path when we
analyze the internationalization process of a firm. For the purpose of this review, we selected
journals in all those specific areas because we found that researchers have published articles
in journals in all areas on this issue/topic due to its inherent tenets from those disciplines.
We conducted a search using the keywords, namely, gradual internationalization, born
global and INV, on the respective journal websites. We limited our search to the period
1995–2018. Then, we followed methods, such as online search using Google Scholar,
EBSCO, and journal websites and offline research using the reference list from different
articles. Following the criteria used in other widely cited articles (Keupp and Gassmann,
2009), article/journal selection criteria was decided based on the journal impact factor in
order to focus on the quality of the articles. We sourced and analyzed born-global and
gradual internationalization literature from Social Science Citation Index-listed journals
with an annual impact factor of at least 1.0 (2015 impact factor). Articles that are published
in journals with a lower impact factor or journals without an impact factor are not
included in this review. In addition, we double checked each article on their respective
journal websites.
Together, the articles included in this review can be considered as representative of the
knowledge accumulated about gradual internationalization and born-global models.
Table I presents the bibliographic sources on born-global and gradual internationalization
literature from the journals that we included for this review. Table II provides an overview
of widely used methods for data collection and analysis in prior research, and
Table III presents their distribution. Similarly, constructs and variables are a vital
component for gaining theoretical insights that facilitate theory development.
By synthesizing the variables used in empirical studies about born global/INV and
gradual internationalization, we gain an understanding about how the scholars have
measured and analyzed these models. Therefore, we synthesize the knowledge from the
articles reviewed and provide information about the commonly used constructs/variables
used in prior research in Table IV.
IMR Bibliographic source Articles in this review Total %
36,6
Academy of Management Journal 1 1
Entrepreneurship: Theory and Practice 7 6
Entrepreneurship and Regional Development 1 1
Family Business Review 2 2
Global Strategy Journal 4 4
834 International Business Review 21 17
International Marketing Review 4 4
Journal of Business Venturing 4 4
Journal of Business Research 1 1
Journal of International Business Studies 23 19
Journal of International Management 8 7
Journal of International Marketing 11 9
Table I. Journal of Management 3 3
Bibliographic sources Journal of World Business 14 12
on born-global and Long Range Planning 1 1
gradual Management International Review 9 8
internationalization Small Business Economics 2 2
models in our study Total 115 100
3. Gradual internationalization
Johanson and Vahlne (1977) developed a model that focused on the internationalization
process of an individual firm. They indicated that firms that they studied followed a pattern
of gradual internationalization in terms of acquisition, integration and the use of knowledge
about foreign markets. In this process, they increased their commitment to these foreign
markets gradually. For example, The Uppsala model, according to Johanson and Vahlne
(1977), deals with the gradual internationalization process of a firm. In early years, it was
thought that the lack of knowledge was an obstacle for the firms’ growth and that this
knowledge could be acquired by operating in a foreign country and by gaining experience
( Johanson and Vahlne, 1977). However, this perception has evolved, and the business
environment is viewed today as a complex web of relationships, a network, rather than as a
neoclassical market with many independent suppliers and customers ( Johanson and
Vahlne, 2009). In 2009, they added trust building, and new knowledge creation dimensions
to the model, which help to develop relationships. One important element that is different
from its original view is the perception of uncertainty. Initially, it was triggered by the
condition of being a foreign firm with the risk of not being accepted by the market; now it is
considered that the root of uncertainty is the condition of being an outsider where the firm
feels it is just passing through and not establishing a stable position.
Most firms would gradually enter foreign markets outside the primary market as they
overcome the psychic distance ( Johanson and Vahlne, 1977). Johanson and Vahlne (2009)
discuss the case of Sandvik, a Swedish firm to explain their model. Sandvik started steel
production with a sophisticated process and made a fast expansion with representatives in
Denmark, Norway, UK and France. Although this firm seems to have the characteristics of a
born-global, its history does fit with the establishment chain and it does correlate with the basic
assumptions about psychic distance in their model. In some cases, founders of these firms have
previous international experience and well-established networks. Therefore, the Uppsala model
could be useful explaining some cases in which firms present born-global characteristics.
A new phenomenon has been occurring in developing countries where new
internationalizing firms leverage their late entry into markets by adopting partnership
strategies with top performing firms. This strategy permits them to rapidly catch-up with
other market contenders (Bonaglia et al., 2007). The presence of a small domestic market and
Regression analysis Survey method Case analysis Mixed method Cluster analysis
Gradual
Internationalization
Bloodgood et al. (1996), Jones (2001), Theodosiou Boter and Holmquist Coviello and Munro Lopez et al.
Elango (1998), Leonidou and Katsikeas (2001), (1996), Bell et al. (2001), (1997), Blomstermo et al. (2009), Paul and
et al. (1998), Autio et al. Moen and Servais Chetty and (2004), Knight et al. Gupta (2014)
(2000), Kotha et al. (2001), (2002), Kundu and Katz Campbell-Hunt (2004), (2004), Crick and Spense
Contractor et al. (2005), (2003), Acedo and Jones Coviello (2006), (2005), Jansson and
Gleason and (2007), Mudambi and Freeman et al. (2006), Sandberg (2008),
Wiggenhorn (2007), Zahra (2007), Zhou et al. Bonaglia et al. (2007), Crick (2009), 835
Fernhaber et al. (2008), (2007), Tuppura et al. Freeman and Almor et al. (2014), Martin
Banalieva and Dhanaraj (2008), Lopez et al. Cavusgil (2007), Gerschewski et al. (2015),
(2013), Fernhaber and (2009), Loane et al. (2007), Gerschewski and
Li (2013), Graves and Zhou et al. (2010), Gabrielsson et al. (2008), Xiao (2015)
Shan (2014), Glaister et al. Cannone and Hughes et al. (2010),
(2014), Glaister et al. Ughetto (2014), Pedersen and
(2014), Satta et al. (2014), Chetty et al. (2014), Shaver (2011),
Sleuwaegen and Musteen, Datta and Vasilchenko and
Onkelinx (2014), Sui and Butts (2014), Musteen, Morrish (2011),
Baum (2014), Choquette Datta and Francis Chandra et al. (2012),
et al. (2016), (2014), Zhou and Wu Evers et al. (2012),
Patel et al. (2018) (2014), Johanson and Ripollés et al. (2012),
Martín Martín (2015), Gabrielsson et al. (2014),
Li et al. (2015), Hadjikhani et al. (2014),
Efrat et al. (2016) Hagen and
Zucchella (2014),
Hallbäck and
Gabrielsson (2013),
Hennart (2014),
Kalinic et al. (2014), Table II.
Nummela et al. (2014), Widely used methods
Trudgen and Freeman in the research
(2014), Brouthers et al. on gradual
(2016), Tan and internationalization
Mathews (2014), and born-global/INV
Jiang et al. (2016) models
Method Total %
Case analysis 38
Regression analysis 23 Table III.
Survey 22 Distribution of widely
Mixed methods 14 used research
Cluster analysis 3 methods in
Total 100 our sample
the scalability of the product put on sale, have a positive effect on the probability of a
start-up internationalizing right from its inception (Cannone and Ughetto, 2014). The speed
with which firms can increase their international sales, and hence the probability that
they will be INVs/BGs, depends on the business model that they are implementing
(Hennart, 2014). The choice of the internationalization pathway for a firm is the result of a
complex mix of firms, environmental and individual factors (Cannone and Ughetto, 2014).
Risk perception is one element that may prevent a firm from internationalizing at all, in a
timely manner, or fast enough to capture available opportunities (Acedo and Jones, 2007).
Success is achieved as firms see competition as an opportunity to strengthen their core
competencies. Similarly, as borderless businesses increase, firms have greater pressure to
internationalize in order to maintain their competitiveness (Bonaglia et al., 2007).
IMR Dependent variable Independent variable Control variable
36,6
Ratio of Foreign Autio et al. (2000), Graves and Shan (2014)
Sales to Total Contractor et al. (2005),
sales Elango (1998),
Sleuwaegen and Onkelinx
(2014)
836 ROA Banalieva and Dhanaraj Banalieva and Dhanaraj (2013),
(2013), Graves and Gleason and Wiggenhorn
Shan (2014) (2007)
Firm Age Choquette et al. (2016), Graves and Shan (2014),
Contractor et al. (2005), Fernhaber and Li (2013),
Glaister et al. (2014), Patel et al. (2018)
Graves and Shan (2014),
Fernhaber et al. (2008),
Fernhaber and Li (2013),
Patel et al. (2018)
Firm Size Contractor et al. (2005), Banalieva and Dhanaraj
Glaister et al. (2014), (2013), Glaister et al. (2014),
Graves and Shan (2014), Graves and
Fernhaber et al. (2008), Shan (2014), Kotha et al.
Patel et al. (2018), (2001), Patel et al. (2018),
Sui and Baum (2014) Satta et al. (2014)
Home Region Banalieva and Banalieva and Dhanaraj (2013)
Orientation Dhanaraj (2013)
(HRO)
International Contractor et al. (2005), Satta et al. (2014),
Experience Glaister et al. (2014) Patel et al. (2018)
R & D Intensity Fernhaber et al. (2008) Fernhaber and Li (2013),
Graves and Shan (2014)
Total Employees Glaister et al. (2014) Gleason and Wiggenhorn
(2007)
Administrative Elango (1998)
Investments
Asset Elango (1998)
Productivity
Corporate Gleason and
Announcement Wiggenhorn (2007)
Returns
Country Specific Kotha et al. (2001)
Websites
Culture Gleason and
Wiggenhorn (2007)
Domestic Market Elango (1998)
Growth Rate
Employee Elango (1998)
Efficiency
Export Scope Choquette et al. (2016)
Failure Patel et al. (2018)
Foreign asset Elango (1998)
Ratio
Foreign Expertise Contractor et al. (2005)
of Employees
Geographic Patel et al. (2018),
Diversification Satta et al. (2014)
Table IV. Global Market Elango (1998)
Variables/constructs Growth Rate
widely used Globalization Gleason and
in the studies Strategy Wiggenhorn (2007)
According to Cannone and Ughetto (2014), a niche strategy with reference to the product as Gradual
well as market and the firm’s network relationships facilitate early internationalization. Internationalization
These relationships include the association between geographical movements of the
individual, the formation of social networks, their effects on opportunity recognition and entry
points into the global economy (Mathews and Zander, 2007). On the other hand, researchers
(Hennart, 2014) show that some firms can be fast developing foreign sales whether or not their
managers have international experience, international-level skills or knowledge of foreign 837
markets. It is unclear, for instance, whether the concept of psychic distance applies to markets
for niche products. Hence, there is little reason to expect INVs/BGs to gradually enter markets
at increasing psychic distance. Instead, all potential markets may be reached simultaneously,
or, if not, the sequence will be serendipitous (Hennart, 2014). Johanson and Vahlne (2009)
believe that the correlation between the order in which a company enters foreign markets and
psychic distance has weakened. The managers of born-global firms do not see foreign
markets as a mere addition to their domestic markets. They proactively and aggressively
compete in international markets; they take risks, and innovate. Managers elevate their
internationalization activities as an artistic composition. Li et al. (2015) indicate the
individual-level antecedents of entrepreneurs and the company-level antecedents explain the
different methods and realities the firm might follow. Firms that adopt a global strategy also
found success in the internationalization process (Kalinic and Forza, 2012). The skills of top
management teams have proved to be important for a dynamic form of internationalization,
particularly in the knowledge-based sectors (Loane et al., 2007).
The traditional SMEs may face tough consequences and challenges in the path of
internationalization when a firm establishes a production unit abroad. Kalinic and
Forza (2012) indicate that a gradualist approach by the SME without the learning process
can produce stress for the organization. Therefore, it is necessary to research the
organizational consequences of the specific internationalization process before entering a
foreign market. Musteen, Datta and Butts; Musteen, Datta and Francis (2014) concluded
from a survey of CEOs those firms with chief executive officers who had developed strong
and diverse international networks exhibited greater knowledge of foreign markets prior to
internationalization. Foreign market knowledge prior to the first international venture had a
positive impact on venture performance. The question here arises whether this previous
knowledge is gained from formal education or by other circumstances such as experiences
gathered through foreign stints? Cavusgil and Knight (2015) tell us that managers will need
to hone their capabilities in change management, to more effectively anticipate and control
continuous change. Entrepreneurs with aspirations of early internationalization should be
well aware of the importance of consolidated network relationships and of niche positioning,
if they want to achieve internationalization faster (Cannone and Ughetto, 2014).
The methods that the entrepreneurs use to connect with different types of networks
have significant influence on the dynamics of internationalization process of the firm
(Coviello and Munro, 1997; Coviello, 2006). Paul and Gupta (2014) provide evidence
for the gradual internationalization of large information technology firms from
India; however they found that firm age had no impact on internationalization.
High-tech regional clusters provide different internationalization patterns for local firms
regardless of their life cycles. Yamin and Sinkovics (2006) used the term active online
internationalization to define the strategic conduct of business transactions across
national boundaries in a virtual rather than a spatial domain. Firms can virtually and
instantaneously have access to multiple foreign markets by simply launching a website
(Kotha et al., 2001). This sheds light and helps in better understanding of such consumer
behavior (Yamin and Sinkovics, 2006). In an effort to highlight the most recent research on
gradual internationalization of firms, we summarize the purpose, methods used and the
findings of recent studies published in Table V.
IMR Author Purpose Method Findings
36,6
Baum et al. Derive 4 internationalization Latent class analysis Gradually internationalizing firms
(2015) patterns: born globals, of a sample of 1,944 account for roughly 50% of small
born-again globals, small German firms firms, and 15% of small firms pursue a
traditional internationalizers born-global pattern. Learning
and born-regionals and orientation and network contacts foster
838 examine the capabilities and traditional and born-global models of
resources on them internationalization, respectively
Chetty et al. Develop a new Survey Questionnaire Firms do not internationalize at a
(2014) multidimensional theory of 178 SME in constant speed. They suggest to step
of speed of Navarre, Spain away from the “Uppsala Model” and
internationalization test alternative conceptualization and
measurements of the dimensions of
distance and speed
Graves and Compare the performance Regression analysis Small medium family enterprises
Shan (2014) of unlisted family and of 4217 firms with (SMFEs) perform better in the
non-family SMES – and 11,821 observations international marketplace than the
the effect of over a three-year non-family business. They achieved a
internationalization on their period higher return on assets as a result of
relative performance having a superior return on sales
Kalinic et al. Theory building – discuss Case studies of 5 When firms switch from casual to
(2014) the implication of effectual manufacturing firms effectual logic it allows them to
decision-making on the from Eastern Europe rapidly increase the level of
internationalization process commitment in the foreign market
and overcoming liabilities of
outsidership
Hadjikhani et al. Propose a theoretical view Case Study of a The irregular behavior of MNCs can
(2014) by adding expectation and Swedish bank, be analyzed by merging concepts into
unknown uncertainty Swedbank from the IP-model, merging the two
to the internationalization 1995 to 2009 concepts of unrealized uncertainty
process model and expectation into the IP-model
provides tools for understanding
irregular behavior
Paul and Gupta To test the existence of Cluster analysis Most firms generate 66–85% of their
(2014) born-global firms in the of a panel data of income from foreign markets with a
information technology 19 leading IT firms very high level of international
(IT) sector in India from India intensity. Their empirical results
indicate that firm age has no impact
on internationalization
Pukall and Revise the Uppsala model Literature review Organize open issues in literature into
Table V. Calabro (2014) by integrating the concept of 72 articles from 4 distinct clusters: family firm
Recent articles on of socio-emotional wealth 1980 to 2012 on the heterogeneity, internationalization
gradual internationalization process, relational/network
internationalization of family firms perspectives and resources and
and their findings capabilities view
In Figure 1, we highlight the salient features of gradual vs born-global firms that we derived
from our literature review.
5. Research agenda
Prior research has examined the differences between gradually internationalizing firms and
born-global firms including the determinants of the pace of internationalization using
IMR GRADUAL DEFINITION BORN GLOBAL
INTERNATIONALIZATION
36,6
According to the Uppsala theory, firms will follow an The born-global firm is a firm that
internationalization process in which they would internationalizes, on an average, within three years
gradually enter foreign markets outside the primary of founding and generates at least 25% of total
market as it overcomes the distance (Johanson and sales from abroad (Knight et al., 2004). There are
Vahlne, 1977, 2009) elements such as the uniqueness of products or
services that influence the born global process
842
INDUSTRIES
FIRMS
Automobile firms such as Volvo and Toyota, family Firms that use new Generation Technologies and
firms such as Lego, the electro domestic’s platforms such as Amazon, e-Bay, Google,
manufacturer Haier, the Swedish bank Swedbank Facebook, LinkedIn
Figure 1.
Salient features
of gradual vs Firms with unique and innovative business models
born-global firms such as Apple
variables like Ratio of foreign sales to total sales as dependent variable (see Table IV ).
The substantial body of research on born-global firms has helped researchers to derive
insights about such firms. However, the literature lacks a clear and widely accepted
definition of born-global firms.
We assert that future research could be designed in such ways that highlight unique
features of born-global firms that have contributed to the pace and pattern for doing IB in the
industry/country context. We note that early work in this area focused more on firms from
developed countries in Europe and North America. Also, over the last decade, many researchers
made efforts to study different attributes of the path and process of internationalization of firms
from emerging economies (Lopez et al., 2009; Paul and Gupta, 2014).
Following the structure of four prior reviews (Keupp and Gassmann, 2009;
Nicholls-Nixon et al., 2011; Terjesen et al., 2013), we highlight the knowledge gaps and
suggest new directions for future research using a simple framework, TCCM, in which
T stands for theory, C for context, C for characteristics and M for methodology: accordingly,
the following section deals with the future research agenda for developing papers focusing
on: theory development, context, characteristics and methodology.
Entrepreneur characteristics Contractor et al. (2005), Crick (2009), Crick and Spence (2005), Evers et al.
influence the firm decision to (2012), Freeman et al. (2010), Johanson and Martín Martín (2015),
internationalize and its pace on Jones (2001), Jones et al. (2011), Knight and Cavusgil (1996), Madsen and
born-global/INV or accelerated Servais (1997), Mathews and Zander (2007), Zhou et al. (2010)
internationalization model
The adoption of niche Bell et al. (2001), Cannone and Ughetto (2014), Cavusgil and Knight (2015),
marketing strategy has a Chetty and Campbell-Hunt (2004), Coviello and Munro (1997), Evers et al.
positive influence in the firm (2012), Freeman et al. (2006), Freeman and Cavusgil (2007), Gabrielsson et al.
decision to internationalize on (2014), Gerschewski et al. (2015), Hagen and Zucchella (2014), Hennart (2014),
born-global/INV or accelerated Jiang et al. (2016), Johanson and Martín Martín (2015), Knight et al. (2004),
internationalization model Knight and Cavusgil (1996, 2004), Madsen and Servais (1997), Moen and
Servais (2002), Nummela et al. (2014), Oviatt and McDougall (1997),
Paul and Gupta (2014), Sui and Baum (2014), Trudgen and Freeman (2014)
Supply chains, networks, Coviello (2006), Coviello and Munro (1997),
stronger inter-firm relationships Freeman et al. (2006), Freeman et al. (2010), Mort and Weerawaedena (2006),
have a positive influence on Musteen, Datta and Butts; Musteen, Datta and Francis (2014), Vasilchenko
the internationalization of and Morrish (2011)
born-global/INV or firms
that follow an accelerated
internationalization model
Firms in technology-intensive Autio et al. (2000), Boter and Holmquist (1996), Cannone and Ughetto (2014),
industries tend to follow Cavusgil and Knight (2015), Table VII.
born-global model, compared to Chetty and Campbell-Hunt (2004), Coviello and Munro (1997), Crick and Summary of
labor-intensive and traditional Spence (2005), Efrat et al. (2016), Fan and Phan (2007), Fernhaber et al. generalizable/
manufacturing industries (2007), Freeman et al. (2006), Knight and Cavusgil (1996), Kumar et al. (2013), theoretical findings
Moen and Servais (2002), Paul and Gupta (2014) from the review
IMR few definitive conclusions can be drawn. The first and foremost challenge is that, despite the
36,6 increase in studies about the process of internationalization during the past two decades, there
is still a lack of agreement regarding which process is the best for new venture firms.
Moreover, it was noted that most of the research studies were conducted in the context of firms
from developed countries such as European Union nations and North America. Hence, there
are opportunities to carry out research in the context of firms from developing countries in this
844 area to fill the gap in the literature. Next, we highlight future research directions in terms of
characteristics, antecedents and outcomes of internationalization.
6. Discussion
6.1 Theoretical implications and propositions
Our review of the extant literature on the internationalization process research reveals
opportunities for theory development, extension and theory testing in the areas such as
IMR entrepreneurial characteristics of managers, the firms’ decision to enter niche markets,
36,6 inter-firm relationships, the link between innovation and the degree of born globalness.
We find that there are not many theoretical studies highlighting the real factors that
contribute to the born-global phenomenon focused on empirical evidence. According to the
insights and findings of prior studies discussed in this review, we suggest the following
theoretical propositions, which could be used as hypotheses for testing in future research.
846 Our findings reveal that the entrepreneurs’ artistic approach to trust building and
opportunism drive the internationalization effort. Several researchers have explored the
factors determining the process and pace of born global/INV type of firms focusing on
entrepreneurial characteristics (Contractor et al., 2005; Crick, 2009; Crick and Spence, 2005;
Evers et al., 2012; Freeman et al., 2010; Johanson and Martín Martín, 2015; Jones, 2001;
Jones et al., 2011; Knight and Cavusgil, 1996; Madsen and Servais, 1997; Mathews and
Zander, 2007; Zhou et al., 2010). We feel scholars should build upon the social exchange
theory to explore the relational exchange derived in the process of trust building and
opportunism. Hence, we posit the following proposition:
P1. Entrepreneur characteristics influence the firm’s decision to internationalize and the
pace of internationalization; especially for the firms that follow a born-global
approach/INV or an accelerated internationalization model.
An area where born-global firms might thrive is to target niche markets and emerging
markets. Entrepreneurs with aspirations of early internationalization should be well aware of
the importance of consolidated network relationships and of niche positioning strategy
(Cannone and Ughetto, 2014). Cavusgil and Knight (2004, 2015) identified that this international
marketing orientation leverages the foreign distributor competencies. Other researchers also
corroborated with the same or similar findings (Bell et al., 2001; Chetty and Campbell-Hunt,
2004; Coviello and Munro, 1997; Evers et al., 2012; Freeman et al., 2006; Freeman and Cavusgil,
2007; Gabrielsson et al., 2014; Gerschewski et al., 2015; Hagen and Zucchella, 2014;
Hennart, 2014; Jiang et al., 2016; Johanson and Martín Martín, 2015; Knight et al., 2004; Knight
and Cavusgil, 1996, 2004; Madsen and Servais, 1997; Moen and Servais, 2002; Nummela et al.,
2014; Oviatt and McDougall, 1997; Paul and Gupta, 2014; Sui and Baum, 2014;Trudgen and
Freeman, 2014). Based on these findings, we feel scholars should base a theoretical extension of
the network theory to explore how entrepreneurs increase the formation an adoption of niche
marketing strategy. Hence, the following proposition is proposed:
P2. The firm’s adoption of a niche marketing strategy has a positive influence in its
decision to internationalize and thereby the process and pace; especially for the firms
that follow a born-global approach/INV or an accelerated internationalization model.
Local and international networks can lead to local industry renewal, help the firms to be
born-global and help in sustained development (Freeman et al., 2006, 2010; Andersson et al.,
2013). Managers have an ability to locate new partners through their existing networks,
which shows an opportunistic behavior (Freeman et al., 2010). Future studies might examine
issues related to the use of international networks in the acquisition of other types of
knowledge (e.g. product and technological know-how) (Musteen, Datta and Butts; Musteen,
Datta and Francis, 2014). Relational trust and relational trust-like outcomes in early
internationalizing smaller born-global firms help them to strengthen the link between
customers and firms (Freeman et al., 2010). Based on these, we feel scholars could use the
tenets of relational contract theory to explore how managers select and govern their
relationships with their partners. Therefore, we posit the following proposition:
P3. Supply chains, networks and stronger inter-firm relationships have a positive
influence in the decision-making process to internationalize, particularly for
small firms.
Firms need to be more innovative along their value chains, in terms of both identifying Gradual
and exploiting opportunities. Similarly, technological developments herald an emergent Internationalization
business environment that will further enhance the ability of young firms to internationalize
and perform optimally in the global business environment (Cavusgil and Knight, 2015).
Firms in knowledge-intensive industries show tendency to internationalize early and
rapidly (Boter and Holmquist, 1996; Crick and Spence, 2005; Kumar et al., 2013; Autio et al.,
2000; Boter and Holmquist, 1996; Cannone and Ughetto, 2014; Cavusgil and Knight, 2015; 847
Chetty and Campbell-Hunt, 2004; Coviello and Munro, 1997; Crick and Spence, 2005;
Efrat et al., 2016; Fan and Phan, 2007; Fernhaber et al., 2007; Freeman et al., 2006; Knight and
Cavusgil, 1996) with the aid of local research institutions, following a niche strategy in high-
tech sectors (Cannone and Ughetto, 2014), being more innovative as a result of team
cohesion (Efrat et al., 2016) and exporting a large share of their total sales shortly after their
establishment (Moen and Servais, 2002; Paul and Gupta, 2014). Based on these findings,
we feel scholars should base a theoretical extension of the network theory to explore
how entrepreneurs adopt a niche strategy in high-tech. Hence, the following proposition
is proposed:
P4. Firms in technology-intensive industries tend to follow the born-global model,
compared to labor-intensive and traditional manufacturing industries.
Figure 2 presents the crossing points found in literature that are derived from our content
analysis and guide our future directions for research between the gradual and born-global
models. Figure 2 shows four distinct elements that coincide in both the literature (i.e. gradual
and born-global) with some different definitions and examples of their impact. These elements
are niche markets, entrepreneur characteristics, intra-firm relationships and supply chains.
Both models coincide at the same point, which explains how firms have specific products that
can be put to sale with little effort in an international context from its inception.
The formation of social networks and network Early internationalization of smaller born-global
relationships are key drivers for early and scope for firms build relational trust through long-standing,
firms during international expansion (Mathews and pre-existing connections accessed through
Zander, 2007; Cannone and Ughetto, 2014) established network partners (Freeman et al., 2010;
Hagen and Zucchella, 2014; Oviatt and
McDougall, 2005)
SUPPLY CHAINS
High-tech regional clusters provide different This new ventures provide a stream of innovation to
internationalization patterns for local firms the global economy (upstream activities) and large
regardless of their life cycles firms provide the efficiency by manufacturing and
marketing these products around the globe
(downstream activities) (Acs and Terjesen, 2013)
GRADUAL
BORN GLOBAL
INTERNATIONALIZATION
FUTURE DIRECTIONS
(1) Entrepreneur’s characteristic and opportunism influences on firm’s decision to internationalize
(2) Firm adoption of niche marketing strategy has a positive influence on firm’s decision to internationalize
(3) Supply chains and stronger inter-firm relationships have a positive influence on firm’s decision to
Figure 2.
internationalize
Crossing points
(4) Firms in technology-intensive industries tend to follow a born-global model compared with labor-intensive
between gradual and
and traditional manufacturing industries
born-global models
derived from
content analysis
7. Conclusion
This paper summarizes the discussion and progress between gradual internationalization
and born-global models. It provides a comprehensive and detailed review. Our analysis
points out the knowledge gaps that are impediments to understand the determinants of Gradual
gradual internationalization vs born-global models. Developments over the last two decades Internationalization
in the field of born-global and gradual internationalization models have added richness in
explaining the progress of research on both models, but yet have knowledge gaps in this
area. Based on the earlier review and analysis, we charted out promising opportunities for
future research, which may contribute substantially to the development of the field.
Specifically, we have identified theoretical inconsistencies and knowledge gaps that 849
future research should resolve regarding the following topics: entrepreneur characteristics
influence the firm’s decision to internationalize as a born-global firm or to follow an
accelerated internationalization model; the adoption of a niche marketing strategy
and the firm’s decision to internationalize as a born-global firm or as an accelerated
internationalization model; the link between supply chains and stronger inter-firm
relationships and their influence in the decision to internationalize; and firms in technology-
intensive industries tend to follow born-global model, compared to labor-intensive and
traditional manufacturing industries. For each of the topics, we provide arguments for why
are relevant to close the particular knowledge gap or to resolve the conflicting theoretical
predictions and inconsistencies encountered.
The opportunities for future research that we have identified should also spur the debate on
whether firms should follow born-global model or gradually internationalize in this era of
globalization. This will help deriving useful insights that can inform executives about which
entrepreneurial characteristics should be enhanced by senior executives to positively influence
the decision for the firm to internationalize. The firm with an entrepreneurial management
must be transformative and not passive. The ability of the entrepreneur to recognize and
exploit opportunities largely depends on the entrepreneurial intention, orientation, marketing
capabilities and experience. The question here arises whether these entrepreneurial traits
are learned through formal education, by their cultural background (inherit), by observation,
by other managers or by international experience and networks. In rapidly evolving
environments, successful firms are more likely characterized by agility and flexibility.
Some firms, in order to anticipate these rapid evolving environments, have established
networks and alliances to enter the new foreign markets. In uncertain markets, firms
should develop marketing strategies more carefully and scientifically and draw on
collaborative ventures and network relationships to identify and tap opportunities and avoid
costly missteps.
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Further reading
Baier-Fuentes, H., Merigó, J.M., Amorós, J.E. and Gaviria-Marin, M. (2018), “International
entrepreneurship: a bibliometric overview”, International Entrepreneurship Management
Journal, pp. 1-45.
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systematic review and paths for future research”, International Journal of Management Reviews,
Vol. 14 No. 4, pp. 367-390.
Appendix Gradual
Internationalization
Corresponding author
Justin Paul can be contacted at: profjust@gmail.com
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