Born Globals Concept

Paper proposed to be presented in the 28th EIBA Conference 2002, in the special session “SME internationalization and born globals - different European views and evidence”

The Born Global concept

Paper for the EIBA conference December 2002

Erik S. Rasmussen Tage Koed Madsen

University of Southern Denmark Department of Marketing Campusvej 55 DK 5230 Odense M Telephone: +45 6550 1000Email: era@sam.sdu.dk and tkm@sam.sdu.dk

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The Born Global concept

Paper for the EIBA conference December 2002

2 Abstract: The export behavior and internationalization processes of firms have been the topic of widespread research efforts during the past 30 years. New empirical studies of the export behavior of firms have challenged many findings of actual export behavior reported inthe traditional internationalization literature. It has been demonstrated that many firms now do not develop in incremental stages with respect to their international activities. Firms are often reported to start international activities right from their birth, to enter very distant markets right away, to enter multiple countries at once, etc. The purpose of this article is thus to discuss theusefulness of the Born Global concept from both a theoretical and an empirical point of view and from the viewpoint of two research questions: 1) Can we really talk about new forms of international firms? and 2) Why should we study these firms?

Keywords: Born Global, International New Ventures, Internationalization, Small and Medium Sized Firms, Globalization, New Organizational Forms,

3 I.Introduction The export behavior and internationalization processes of firms have been the topic of widespread research efforts during the past 30 years. The interest in the research area corresponds very well with the increasing importance of international trade which has fostered a rise in many forms of international business, exporting being one of them. So, for firms as well as governments theresearch topic has been highly relevant. Since the mid-70s two distinct streams of research have emerged in Europe, e.g. (Johanson & Vahlne, 1977); (Johanson & Vahlne, 1990) and in North America, e.g. (Bilkey, 1978);(Cavusgil, 1980). Both research traditions conceptualize export development as taking place in gradual and sequential stages (learning sequences involving feedback loops), based on aseries of incremental commitment decisions depending on perception, expectation, experience, managerial capacity, etc. The firm is assumed to build a stable domestic position before starting international activities. During the last 5-10 years new empirical studies of the export behavior of firms have challenged many findings of actual export behavior reported in the traditional internationalizationliterature. It has been demonstrated that many firms now do not develop in incremental stages with respect to their international activities. Firms are often reported to start international activities right from their birth, to enter very distant markets right away, to enter multiple countries at once, to form joint ventures without prior experience, etc. Such firms have been labeled InternationalNew Ventures (Oviatt & McDougall, 1994), High Technology Start-Ups (Jolly et al., 1992), and Born Globals (McKinsey & Co., 1993); (Knight & Cavusgil, 1996); (Madsen & Servais, 1997). The explanation for this new picture of internationalization of firms is claimed to be more global market conditions, new developments in transportation and communication technologies, and the rising number of peoplewith international experience. Some authors, e.g. (Knight & Cavusgil, 1996); (Oviatt & McDougall, 1994), have launched these empirical observations as a challenge calling for a new theory, whereas others, e.g. (Madsen & Servais, 1997); (Knudsen et al., 2002), argue that

4 e.g. (Madsen & Servais, 1997); (Knudsen et al., 2002), argue that even though such firms overtly behave differently they...