Talking business through the passport
Grab your passport? Let us take us take a trip around the globe of entrepreneurship. As you can see here: The world of business is changing drastically across the world and time. Information technology, communication trade have opened the slues gates of (Oviatt & McDougall, 1994)(Passaris, 2006). Large quantities of technologies and investments are flowing across the borders, a trickle is now a flood.
This brings many advantages such as increased economic efficiency and economic growth. It also results in new challenges about managing operations across borders, heightened competition and international competitiveness (Gilpin & Gilpin, 2002).
As we travel across global entrepreneurship, we that it requires a new type of entrepreneur in order to drive sustainable and successful businesses across borders. The international entrepreneur needs to have a global perspective. This is different from operating locally or across regions. The entrepreneur must be able to take into account global diversity, make technological innovation a priority and maintain a consistent vision of global reach etc. (Passaris, 2006).
When is a business considered “global”?
A global firm is able to operate and drive a competitive advantage in multiple state territories anywhere across the globe (Knight & Cavusgil, 2004). They are able to identify and develop opportunities in multiple countries and gain the majority of their income abroad. This is an important distinction between a global firm and a that happens to operate in another country but is still gaining the majority of its income locally.
Then there are “born global” enterprises that achieve the global status from the onset or short period after their founding (Knight & Cavusgil, 2004). The idea here is that their initial intention of founding was to go global.
In part one of this we will explore: The key components required in order to successfully? We will do this from the perspective of the entrepreneur. Then in part two of this we will need to sightsee the various strategies that are available for the entrepreneur or you to use in foreign markets.
Internationalisation antecedents (Professor talk Things you need to go global)
Going global is no longer about big companies with deep pockets taking advantage of economies of scale (Oviatt & McDougall, 1994) (Bloodgood, Sapienza & Almeida, 1997). Economies of scale are still considered a major competitive advantage on the international stage, however, technology has made things more interesting (Oviatt & McDougall, 1994).
You need knowledge about foreign countries. Knowledge of foreign markets and operating conditions is a resource (Knight & Cavusgil, 2004). The first requirement for firms to go international is that the entrepreneur has an international entrepreneurial orientation (IEO) or has the intention to go international (Hennart, 2013; Bloodgood, Sapienza & Almeida, 1997). Most firms may have a desire to however the risks and opportunities are often not clear to firms. This is why they may be slow in going (Hennart, 2013). There are high levels of uncertainty that are associated with foreign markets (Hennart, 2013). Knowledge is a way to overcome this however, limited knowledge still raises the risks. International knowledge is central to being an international orientated entrepreneur. Knowing about foreign markets is more than a conceptual understanding. It is more than what you read in a book or articles (this matters too , including the article you are reading now). However, it is about experienced knowledge. Getting feel on the ground. So grab your passport and go spend a week or two in Ghana, Nigeria, India, Indonesia or wherever your business sends you.
Research shows that the experience of entrepreneurs in international firms and the ability to speak a foreign language(s) increases the chances of international success (Hennart, 2013). Evidence also shows that the entrepreneurs with work experience abroad, increase the chances of a firm becoming a born global firm (Bloodgood, Sapienza & Almeida, 1997). This means that is driven by leadership in a similar way that culture is driven by leadership. Leadership represents the entrepreneur. The culture of leadership becomes another important factor.
One of the biggest common denominators that lead to initial and continuous success for enterprises is an innovation-focused culture (Bloodgood, Sapienza & Almeida, 1997; Knight & Cavusgil, 2004). The innovative culture can sometimes be termed as a management style (Oviatt & McDougall, 1994). Once again this speaks to the international entrepreneurial orientation of the firm. Case studies and research shows is a strong relationship between innovation and the implementation of early . (Knight & Cavusgil, 2004). A firm that places innovation and the application of technology at its is a firm that is often a born global (Knight & Cavusgil, 2004). R&D expenses as a percentage of total expenses have been investigated regarding this matter. This was shown to be a pre-condition for successful (Bloodgood, Sapienza & Almeida, 1997). Innovation is a key factor of IEO and it is a key factor in successfully crossing borders (Covin & Miller, 2013).
Internationalisation is an innovative act in itself. We should consider an innovative culture of a firm as specific traits of the business. These are traits that are dedicated towards the exploitation of markets either by new product introduction or new market entry (Knight & Cavusgil, 2004). Then we can see that is an innovative act altogether (Knight & Cavusgil, 2004). It is this culture or intangible resource that makes firms earlier and do so successfully (Knight & Cavusgil, 2004; Oviatt & McDougall, 1994). The operational strategies and knowledge that the firm gains in pursuing a foreign market become engraved into the culture (Knight & Cavusgil, 2004). This grows the company’s international entrepreneurial orientation (IEO) and hence innovative culture (Knight & Cavusgil, 2004).
Reflection and conclusion
The of the firm can be considered an entrepreneurial and innovative . Because It is about identifying opportunities in foreign markets and then taking the risk and proactive action to develop and exploit them. This does though require the initial awareness of the opportunity in the foreign market (Ellis, 2000). None the less this process and activity are determined by the international entrepreneurial orientation of the firm and its management. The requirements for the firm to go global or successfully expand internationally are very much the same antecedents of entrepreneurial action and much related to an innovative culture.
In part two we will discuss the different strategies and methods of crossing the border including the considerations related to them.