Country Effect on Internationalization

8/10/2019 Country Effect on Internationalization

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www.bournemouth.ac.uk

Country context and

Internationalization


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Research Overview

Examine the effect of contextual processes

on company internationalization


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Existing Perspectives

Internationalization as adaptation to external

markets (Calof 1994)

Direction and Modes of Internationalization (Hill

1999)

Outward Export

Foreign Direct Investment Licensing

Inward Import

FDI Licensing


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Existing Theoretical

Perspectives

MNE

Eclectic (including Alliance Capital)

Internalization

Resource/Knowledge Models

LLL (Dragon Multinationals)

Institutional International Models


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Existing Theoretical

Perspectives

SME

Stage Models

Network Born Global

Resource

International Entrepreneurship


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Internationalization as Patterns of

Adaptation

Life Cycle

Predefined path of development (Van de Ven & Poole

1995)

Stage Models Uppsala (Johanson &Valne 1977)

Innovation Models (Birkley & Tesar 1981)

Teleological

Goal driven development influenced by organizational

and environmental factors

Network models (IMP, etc)

Resource models ( Eclectic/LLL/SME)


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Existing Theory= Fixed Context



Are Country Environments fixed?

Resources Natural Resources

Human Resources

Historical/Cultural Institutions

Long term formal and informal social structures

that influence: Business formation and co-ordination

Intra-firm management and entrepreneurial processes

Work and employment relations



Country Environment support

organizations

MacroEnvironment

AggregationEnvironment

TaskEnvironment

SubEnvironment

ResourcePool



Industrial Policy

Factors and institutions change slowly

However, Countries attempt change

through policy Classified by intended effect (Bressers and

Jr 1998, Borras 2009).:

Regulatory ,

Economic

Financial

Human Development

Meta .



Industrial Policy and Country

Environments

MacroEnvironment

AggregationEnvironment

TaskEnvironment

SubEnvironment

ResourcePool

Regulatory

Finance

Human

Development



Country Environment is NOT

Fixed

Countries can and do change within the

lifespan of a company

Influences Firm resource availability andaccess

Can affect all organizational actions

including internationalization


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Small States

Subset of countries with distinct

characteristics (Easterly and Kraay 2000) :

Small economies Open Economies

Narrow Resource Base

Limited Institutional Capacity


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GDP: Small Economies

http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS/countries


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Open Economies

http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS/countries


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Narrow Resource Base/

Institutional Capacity

Dependent on Export of limited range of

products for foreign exchange

Small domestic markets do not have the

capacity to develop firms

Limited resources available to develop

institutional capacity

Taxation of imports form a large proportion of

domestic revenues

Difficult to access external capital for domestic

development for sectors other than main exports


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Outcome of Constraints

High Domestic Volatility

Firms Exposed to demands of international

markets without the capacity for firmdevelopment of larger countries (Pfeffer &

Salancik, 2003)


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Why study Small States?

Distinct Environment

Small states do not have subregions, easy to

observe the effect of policy on entire country Build or test new theories

Guidance for Policymakers

Guidance for Practice

Beyond countries, lessons can be applied to

other environments where market power is

limited


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Theoretical Framework

Macro

Environmental forces affecting all firms

Influence quantity, nature and value ofresources available to firms

Micro

Firms build and reconfigure resourcecombinations

Meso

Trajectory of internationalization, rate, mode,

direction


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Firm Level: Resource Based

View

Resources form basis of firms ability to

compete/provide value

Resource Characteristics Heterogeneity.

Ex ante limits to competition:(Barney 1986)

Ex post limits to competition Imperfect mobility(Mahoney and Pandian

1992).


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Property Based Resources

Require supporting legal framework

Discrete

Patents Trademarks

Leases

Systemic: Integrated Discrete resources Distribution Systems


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Knowledge Based Resources

Do not require supporting institutional

context

Discrete Individual skills

Eg. Design

Systemic: Combined skills Innovation

Production Management

Project Management


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Resource Adjustment Modes

Sources of Resources

Developmentof

Resources

Adjustment

ExternalInternal

Firm-Oriented

Network

Oriented


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Phase 1

Country Setting: Trinidad and Tobago

Wide variety of Data

Macro: Policy

Micro: Firms

Multiple Methods of Analysis: Narrative,

Visual mapping, Synthetic

Identify major policy periods of TT and its

influence on country resource environment


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Phase 2

Major Policy

Periods

Promoter Entrepreneur

Facilitator

Architect


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Phase 3: Micro

Case studies of 23 exporters

Interviews

Observations Archival Data


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Phase 3: Micro

9 firms selected

based on the

policy period in

which theyinitiated

operations and

continued to thepresent day


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Phase 3: Mapping firm

developments over time

Activities

SystemicKnowledge

Based Resource

ResourceDevelopment

DomesticSubcontractor

Assembly

ProductionManagement

DomesticProduction

Design

Marketing(Domestic)

Production

ProductDevelopment

FlexibleProduction

Customer

Relationship

Firm-External

Firm-Environment

RegionalExporter

Design

Marketing(Regional)

Production

ProductDevelopment

FlexibleProduction

Customer

Relationship

Firm- Internal


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Phase 4: Synthesis

Shift in Resource Composition

Shifts in Resource Development Modes

4 Meso Trajectories Identified

Incremental

Rapid Expansion within Caribbean Region

Rapid Expansion Outside Caribbean Region

De Internationalization


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Phase 4: Country effect on

Internationalization Model

Degree of

Openness

Organizational Geographic

Presence

Regional

Firm

Extra

Regional

Firm

Promoter/

Entrepreneur

Facilitator/Architect

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Market

Reforms

4


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Country Affect on

Internationalization

Overall path: Homogenous to

Heterogeneous

Specific Branches Rate

Slow to rapid

Direction From outward to outward/reverse

Mode

From export to export/JV/Fdi


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Conclusion

Country context can affect

internationalization

Need to identify: Specific drivers in domestic environment

(policy/resource/institution)

Effect of drivers over time

Documents

Country Effect on Internationalization