The Born Global firm – a challenge for theory and policy

Svante Andersson

Halmstad university

NUI Galway 2 March 2016

Disposition

•  Background, Traditional theories •  The rise and development of Born Global

and International Entreprenurship research •  Factors influencing the Born Global •  Example from Swedish study •  Implications for policy •  Future research with examples from

creative industries

Stage models/ Uppsala model

•  Differences between countries •  Hard to understand differences •  Learning by experience •  Slow incremental internationalization

Johanson, J. and Vahlne, J-E. (1977) ‘The internationalization process of the firm – a model of knowledge development and increasing foreign market commitments’, Journal of International Business Studies, Vol. 8, pp. 23–32.

Increasing export involvment on single markets

•  No regular export •  export via independent representatives or

agents •  sales subsidiaries •  production/manufucturing plants

Managing Internationalization Processes 5

Psychic Distance

1 Denmark 2 Norway3 Finland4 West Germany5 Great Britain6 Netherlands7 Belgium8 USA9 Switzerland10 Canada11 Austria12 France13 Italy14 Spain15 Portugal

Factors preventing or disturbing the flows of information between firm and market.Examples of such factors are differences in language, culture, political systems,level of education, level of industrial development, etc.(Johanson & Wiedersheim-Paul, 1975, p. 308).

New situation

•  Trade barriers are lower •  Information and communication technology

has made internationalization easier •  People are more global/international

Some firms internationalize fast to many countries •  Mckinsey study 1993 coined the term Born

Global •  The “born global” firms – began exporting,

on average, only two years after their foundation an achieved 76 percent of their total sales through exports…their average age is only 14 years

International new ventures •  We define an international new venture as a

business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries. (p 49)

•  Oviatt, B. M., McDougall, P. P., (1994). Toward a theory of international new ventures. Journal of International Business Studies 24, 45-64.

Born Global •  The Born Global (BG) is defined as a company

which, from or near its founding seeks to derive a substantial proportion of its revenue from the sale of its products in international markets (Knight, 1997, sid 1)

•  Knight, G.A . (1997). Emerging paradigm for international marketing: The born global firm, Ph D Dissertation, Michigan State University. Dept. of Marketing and Supply Chain Management.

Different definition and operationalizations •  We define born globals as business

organizations that have a global mindset from inception and aim to derive significant competitive advantages from the use of resources and the sale of outputs in multiple countries spanning the three economic trading blocs of NAFTA, EU and Asia-Pacific. (Andersson, Evers & Griot, 2013, p 869)

Disposition

•  Background, Traditional theories •  The rise and development of Born Global

and International Entreprenurship research •  Factors influencing the Born Global •  Example from Swedish study •  Implications for policy •  Future research with examples from creative

industries

Definition of international entrepreneurship •  International entrepreneurship is the

discovery, enactment, evaluation and exploitation of opportunities – across national borders – to create goods and services (Oviatt and McDougall, 2005, p. 540).

Development of a new field of research •  McGill International Entrepreneurship

Conference started 1998 – Hamid Etemad •  2017 NUI Galway •  2018 Halmstad University •  In 2003, the Journal of International

Entrepreneurship was launched to provide a forum for research specific to IE

Entrepreneurial Internationalization: A bibliometric analysis (1989-2012)

•  Vinciane Servantie, Universidad de Los Andes, Colombia •  Mathieu Cabrol, Université de Savoie, France •  Gilles Guieu, Aix-Marseille Université , France •  Jean-Pierre Boissin, Université Pierre-Mendès-France , France

Santiago de Chile, Sept 2-5

Main Journals

Chronological evolution of the publications

0

10

20

30

40

50

60

70

1989 1990 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Internationalisation entrepreneuriale Comparaison internationale de l’internationalisation entrepreneuriale Revues de Littérature et conceptuels

Nature of the paper 1989-1999

2000-2006

2007-2012

Total

Papers with empirical data

Entrepreneurial internationalisation 32 109 236 377 Comparative entrepreneurial internationalisation 13 21 34

Papers without empirical data

Literature review and conceptual papers on entrepreneurial internationalisation 2 16 22 40

Origin of contributions

Continent Number of contributions %

Europe 581 56,0% America 323 31,1% Oceania 73 7,0% Asia 56 5,4% Africa 5 0,5%

Total 1038

Origin of contributions by country 47 countries 1989-1999 2000-2006 2007-2012 Total contributions % Cumulative %

United States 30 90 146 266 25,6% 25,6% United Kingdom 8 60 86 154 14,8% 40,5% Finland 6 31 85 122 11,8% 52,2% Spain 10 46 56 5,4% 57,6% Sweden 3 23 28 54 5,2% 62,8% Australia 1 17 33 51 4,9% 67,7% Canada 9 13 26 48 4,6% 72,4% Denmark 2 5 20 27 2,6% 75,0% Germany 2 23 25 2,4% 77,4% Italy 24 24 2,3% 79,7% Norway 2 6 16 24 2,3% 82,0% New Zealand 1 12 9 22 2,1% 84,1% China

2 16 18 1,7% 85,8%

Netherlands 1 13 14 1,3% 87,2% Switzerland 3 3 7 13 1,3% 88,4% Ireland 2 10 12 1,2% 89,6% Greece 2 9 11 1,1% 90,7% Malaysia 1 8 9 0,9% 91,5% Belgium

3 6 9 0,9% 92,4%

France

8 8 0,8% 93,2% 27 pays Between 1 et 7

Most productive universities Universitiy 1989-

1999 2000-2006

2007-2012

Number of signature

Country Authors affiliated*

Lappeenranta University of Technology 15 34 49 Finland 17 authors, including Saarenketo (13) and Puumalainen (9)

Georgia State University 7 11 9 27 US 9 authors including McDougall (18), Zahra (14), Cavusgil (6)

University of Strathclyde 1 19 4 24 UK 11 authors, including Jones (9) and Dimitratos (9)

University of Texas 1 22 23 US 18 authors, including Khavul (6)

Helsinki School of Economics 3 9 9 21 Finland 11 authors, including M. Gabrielsson (9)

University of Ulster 1 10 10 21 UK 7 authors including Bell (9) and Loane (7)

University of Southern Denmark 3 16 19 Denmark 10 authors, including Servais (7) and Madsen (6)

Indiana University 5 13 18 US 7 authors, including McDougall (18)

Stockholm School of Economics 1 4 13 18 Sweden 13 authors University of Seville 1 17 18 Spain 6 authors, including Acedo (7)

Halmstad University 9 7 16 Sweden 4 authors, including Andersson (12)

Norwegian University of Science and Technology 6 7 13 Norway

4 authors, including Moen (7) and Aspelund (6)

University of Glasgow 4 9 13 UK 5 authors, including Jones (9) and Dimitratos (9)

Universitat Jaume I 12 12 Spain 5 authors, including Ripollés (5) University of Giessen 12 12 Germany 3 authors University of Pavia

12 12 Italia 6 authors, including Zucchella (5)

University of Minnesota 5 5 10 US 2 authors, including Zahra (14) and Sapienza (6)

Florida State University 1 6 2 9 US 2 authors, including Knight (8)

Athens University 1 7 8 Greece 4 authors, including Dimitratos (9)

Monash university 3 5 8 Australia 5 authors, including Freeman (5)

University of Queensland 2 6 8 Australia 5 authors, including Weerawardena (3)

University of South Carolina 3 3 2 8 US 7 authors, including Sapienza (6) University of Vaasa

8 8 Finland 4 authors, including Larimo (3)

Contributions per publication

Number of signatures per

publication

Number of publications % Number of de

collaboration

6 1 0,2% 6 5 4 0,9% 20 4 43 9,5% 172 3 128 28,4% 384 2 181 40,1% 362 1 94 20,8% 94 total 451 100,0% 1038

The most productive authors Auteur 1989-1999 2000-2006 2007-2012 Articles publiés McDougall 7 5 6 18 Oviatt 5 5 4 14 Zahra 1 8 5 14 Saarenketo 5 8 13 Andersson 7 5 12 Bell 1 6 2 9 Coviello 2 4 3 9 Dimitratos 5 4 9 GabrielssonM. 4 5 9 Jones 1 5 3 9 Puumalainen 4 5 9 Crick 6 2 8 Knight 1 6 1 8 Kuivalainen 2 6 8 Acedo 1 6 7 Loane 4 3 7 Moen 4 3 7 Servais 1 2 4 7 Young 6 1 7 Aspelund 2 4 6 Cavusgil 1 2 3 6 Evers 6 6 Khavul 6 6 Madsen 1 2 3 6 McNaughton 5 1 6 Prashantham 1 5 6 Sapienza 1 4 1 6 Zhou 6 6

10 auteurs 5 15 auteurs 4 42 auteurs 3 87 auteurs 2

390 auteurs 1 Total 58 authors 175 authors 444 authors 572 authors

More than 25% of producción

Disposition

•  Background, Traditional theories •  The rise and development of Born Global

and International Entreprenurship research •  Factors influencing the Born Global •  Example from Swedish study •  Implications for policy •  Future research with examples from

creative industries

Disposition

•  Background, Traditional theories •  The rise and development of Born Global

and International Entreprenurship research •  Factors influencing the Born Global •  Example from Swedish study •  Implications for policy •  Future research with examples from

creative industries

Swedish study on globals

•  Measuring performance five years after firm foundation, born global firms are found to have higher growth in employment and sales per employee but no such effect is found when performance is measured by profitability or labor productivity.

Born global firms – do they perform differently? Halldin (2012) •  The study investigates whether born global

firms perform differently compared to other newly founded manufacturing firms.

•  The dataset stretches from 1997-2008 •  All new started manufacturing firms in

Sweden •  Measuring performance five years after

firm foundation (Employment and sales growth, profatibiity, labor productivity)

Conclusions

•  Born global firms prioritize growth in employment and sales. Short-term profits seem to be secondary to these firms.

•  No significant differences in profitability and labor prouctivity

•  More born globals leads to economic and employment growths

•  Few born globals

Halldin’ definition

•  1. Stringent definition: New firms with at least 25 percent of sales in exports within two years from inception (abbreviation used below: BGF 2:25)

•  2. Modest definition: New firms with at least 10 percent of sales in exports within five years from inception (abbreviation used below: BGF 5:10)

•  3. Alternative definition: New firms with at least an average of 25 percent of sales in exports for three consecutive years no later than year two, three and four after firm foundation (abbreviation used below: BGF 3ma:25)

Statistics

Results

•  Manufacturing high-tech and low tech firms •  Still quite few born globals 1-6 % of

population •  The number of born globals are not

growing

IE research in different industries (Peiris et al, 2012.)

Industry factors influencing the INV internationationalization process (Andersson, Evers & Kuvalainen, 2014)

Disposition

•  Background, Traditional theories •  The rise and development of Born Global

and International Entreprenurship research •  Factors influencing the Born Global •  Example from Swedish study •  Implications for policy •  Future research with examples from

creative industries

Policy suggestions •  Business and entrepreneurship courses need

to include internationalizaton opportunities •  International experience can lead to Born

Globals – promote international exchange and studies abroad

•  Promote technology development connected with internationalization knowledge - Digitalization and automatization make it possible to insource activities to developed countries - technology development (Axelent)

Policy suggestion

•  Support systems need to be simplified an co-ordinated – Business Sweden, Swecare, regional support,

European Support

•  Support for companies need to be targeted toward different types of firms – New growing industries (e. g creative

industries computer games, music, fashion)

Disposition

•  Background, Traditional theories •  The rise and development of Born Global

and International Entreprenurship research •  Factors influencing the Born Global •  Example from Swedish study •  Implications for policy •  Future research with examples from

creative industries

Sweden’s Top 10 Exports (2014)

•  Machines, engines, pumps: US$25.4 billion (15.5% of total exports)

•  Electronic equipment: $17.6 billion (10.7%) •  Vehicles: $16.1 billion (9.8%) •  Oil: $13.3 billion (8.1%) •  Paper: $10.2 billion (6.2%) •  Pharmaceuticals: $7.6 billion (4.6%) •  Iron and steel: $6.8 billion (4.1%) •  Plastics: $5.9 billion (3.6%) •  Wood: $4.7 billion (2.8%) •  Medical, technical equipment: $4.5 billion (2.7%)

Swedish largest exporters (2014) •  1 Ericsson , Telefon AB LM 113 734 000 SEK •  2 Volvo, AB 78 174 000 •  3 Preem AB 53 863 000

•  4 SSAB AB 39 568 000 •  5 AstraZeneca AB 39 130 000 •  6 Sandvik AB 26 000 000 •  7 BillerudKorsnäs AB 18 120 000 •  8 LKAB 15 900 000 •  9 Tetra Pak, AB 15 000 000 •  10 Saab (koncernen) 12 000 000 •  11 Södra Skogsägarna ek. för. 10 932 000 •  12 IKEA AB 9 500 000 •  13 Siemens Industrial Turbomachinery AB 9 218 958 •  14 Husqvarna AB 9 000 000 •  15 SCA, Svenska Cellulosa AB 8 500 000

•  First released in August 2003, Skype was created by Swedish Niklas Zennström and Danish Janus Friis, in cooperation with Ahti Heinla, Priit Kasesalu, and Jaan Tallinn, Estonians who developed the backend that was also used in the music-sharing application Kazaa. In September 2005, eBay acquired Skype for $2.6 billion. (Wikipedia)

Mojang •  Mojang AB (Swedish: [mʊˈjɛŋː] "gadget") is a

Swedish video game developer founded in May 2009 under the name Mojang Specifications by game programmer Markus Persson, best known for creating the popular independent game Minecraft, a sandbox game. It is currently updating two games frequently: The game Scrolls, and indie hit, Minecraft. Mojang's company headquarters is in Stockholm. Microsoft acquired Mojang in 2014 at valuation of $2.5 billion. (Wikipedia)

•  Spotify is a Swedish commercial music streaming, podcast and video service that provides digital rights management–protected content from record labels and media companies. It is available in most of the Americas, Western Europe and Oceania.[Music can be browsed or searched by artist, album, genre, playlist, or record label.

•  Spotify was launched in September 2008 by Swedish startup

Spotify AB. As of June 2015 Spotify had more than 75 million active users, including about 20 million paid users. Spotify Ltd. operates as the parent company, headquartered in London, while Spotify AB handles research and development in Stockholm. (Wikipedia)

Swedish Music Export •  ABBA to MAX MARTIN •  Martin Karl Sandberg (born February 26, 1971), known professionally

as Max Martin, is a Swedish music producer and songwriter. He rose to prominence in the mid-1990s after making a string of major hits for artists such as the Backstreet Boys, Britney Spears and NSYNC. Some of his earlier hits include "I Want It That Way" (1999), "...Baby One More Time" (1999) and "It's My Life" (2000).

•  Since 1999, Martin has written and co-written 21 Billboard Hot 100 number-one hits (most of which he has also produced or co-produced) in the United States, including Katy Perry's "I Kissed a Girl" (2008), Pink's "So What" (2008), Britney Spears's "Hold It Against Me" (2011), Maroon 5's "One More Night" (2012), Taylor Swift's "We Are Never Ever Getting Back Together" (2012), "Shake It Off" (2014), "Blank Space" (2014), "Bad Blood" (2015). Martin is the songwriter with the third-most number one singles on the chart, behind only Paul McCartney (32) and John Lennon (26).[2]

Future research •  New technology (Internet, automatization

etc) challenge theory, practice and policy for firms’ internationalization.

•  New knowledge and research are needed to facilitate decisions in different industry contexts.

Thank you very much! Questions and Comments?