Born Globals Rapid International Growth in New Ventures

Abstract: The traditional theories developed by Johanson and Vahlne (1977, 1990) and other researchers ofinternationalisation have long been questioned because of the fast-changing environment and deregulations. In particular, for Born Global firms, namely a company that has achieved a foreign sales volume of at least 25% within three years of its inception and that seeks to derive significant competitive advantage from the use of resources and the sales of outputs in multiple countries (Andersson and Wictor, 2003, p. 254), itis a question of surviving by establishing in many markets in a short period of time.This thesis summarises five papers. Paper 1 showed that the CEO´s perception and the fast changing environment push small firms to internationalise and that younger CEOs have an important role in expanding the firm. This is often because of their experiences accumulated inthe organisation over time or because the entrepreneur has been exposed to the international arena and information technologies, which can explain why some small firms continue to expandtheir international activities.The conceptual framework in paper 2 comprises four factors that influence Born Global firms:entrepreneurs, networks, industry and globalisation. To succeed in establishing a global firm it isimportant to have certain resources, such as an entrepreneur with international experience and strong networks. A Born Global entrepreneur is distinguished by his interest and motivation todo business abroad and his vision for the future.Paper 3 focuses on the importance of Born Globals’ foreign market channel strategies. The decision to establish a new market is of great importance for the long-term survival of the company. In this comparative case study, four companies that display different foreign entrymodes are compared. We found that these companies had very different market channel strategies even though they internationalised rapidly.Paper 4 is a study of four companies that indicates that their CEOs are active and involved in making strategic decisions in all parts of a Born Global firm’s value chain activities. Decisions on localisation and outsourcing are influenced by the entrepreneur’s definition of his firm’s core competencies. However, factors outside the firm are also an influence: potential suppliers,outsourcing of manufacturing and potential partners in distribution, especially relating to the riseof new emerging markets (e.g. China). The importance of coordinating value chain activities also influences the localisation of different activities. Entrepreneurs aim to arrange value-creating networks to secure their core manufacturing processes and close relations with local suppliers when they outsource products. In such a case, the entrepreneur can be seen as an orchestrator ina virtual organisation. The ‘global factory’ concept can be adjusted to fit locally for a Born Global company and its environment. Paper 5 focuses on a Born Global company’s way to grow and is a longitudinal study of acompany over 17 years (1990–2007) and its development in the different stages in the growth/life-cycle curve. From inception, the vision is already strong to go global. During thea bove period, the founder, external CEO I and CEO II were interviewed to assess whatcharacterises the different stages of growth over time compared with the growth/life-cycle model of Smallbone and Wyer (2006). The company is still growing and very entrepreneurial. The leadership has changed from a deciding style to a more coaching way of leading. Themanagement and organisation have changed to be more professionalised and team-oriented over8time. Entrepreneurial teams have also become more and more important for transferring knowledge to individuals in the organisation.The traditional models of Johanson and Vahlne (1977, 1990) point out that learning at an organisational level is a main factor in international development over time. However, a way to speed up the development of Born Global firms is entrepreneurial background with long experience and different knowledge serving his vision for the company. Nevertheless, theknowledge transfer from the entrepreneur and his team to the organisation is important. Knight and Cavusgil (2004, p. 137) find that “Born Globals pose an important new challenge to traditional views on the internationalization of the firm”.Johanson and Vahlne (2003) study what happens in companies because of rapid changes in the environment. They suggest that the Uppsala model is still valid, but that the early stage of a firm’sinternationalisation is important to study. Organisational learning is carried out at an individual and an entrepreneurial level. Johanson and Vahlne (1977) focus on the importance of the people working in a market and their learning. In their latest published article by Schweizer et al. (2010,pp. 368–369), they argue that “it is the liability of outsidership rather than the liability offoreignness that gives rise to internationalization difficulties. Outsidership implies that the firm isnot a member of relevant networks. Internationalization can be seen then as taking steps tobecome an insider in relevant networks in focal foreign markets … In their last study it emphasizes the entrepreneurial facets of a firm’s internationalization process”. The above defined background of the entrepreneur, his entrepreneurial way of working and his experience from former jobs also means that he already has the networks necessary for international expansion.The entrepreneur and his team in a Born Global company must from the beginning have the capability and knowledge of the environment and market in a country to establish in the new market as well as the understanding of how to manage the company and organisation. If they do not have this knowledge, they must have a network from which to extract this information. The entrepreneur has to be strongly involved in building and sustaining relationships with both customers and suppliers. In the organisation, he also has to build a powerful culture with decentralisation and empowered employees. The leadership in these companies is charismatic,employees are empowered in their jobs and the teams are entrepreneurial. Employees are therefore also allowed to make their own decisions within certain limits. Networks are important to overcome “perceived barriers on cultural and regulatory issues, those associated with locating partners, plus other matters deemed important to specific management teams” (Crick, 2009, p. 466). Coviello and Cox (2006) find that a company’s network is aresource when it is working with acquisitions and important recruitments. For companies growing over many years such as the Rubber Company studied herein, networks change and the chairman’s networks can be of great importance when core individuals should be recruited as an important part of the company’s strategies.