International Business Theories Term Paper

Topics: Knowledge, Knowledge management, Strategic management Pages: 19 (6628 words) Published: August 30, 2013
The internationalisation of internet-based companies:
a process perspective on managerial intentionality
This paper intends to outline a potential approach to investigating the path of internationalisation of firms whose business models are based on digital technology. It is believed that such firms, due to specific characteristics of their product offering and industry, exhibit an idiosyncratic internationalisation process overemphasising dynamism and managerial entrepreneurship. Hence, they seem a suitable context to apply a process lens through which the Uppsala model can be extended allowing for managerial intentionality. A process is conceptualised as a chain or cycle of related elements leading to an outcome, and as such it is a relevant perspective for understanding the evolution of MNCs and of their foreign operation modes. A process perspective can introduce dynamism in the existing views of internationalisation and help scholars look for new patterns running through different firms (Hutchenreuter et al, 2007). Moving away from comparing states towards comparing processes would allow for the discovery of such generalities if they exist. The Uppsala model develops a process concept of the internationalisation, allowing for cycles and interactions between phases. However, it advocates path-dependency and details little about the role management teams play in internationalisation. It is argued here that the Uppsala model can be enhanced through envisioning the internationalisation process as the joint outcome of managerial intentionality, path-dependency of knowledge, firm experience and the influence of the environment. As the role of managers has just recently started to be developed and considered in international business literature, this way of exploring the context of internet-based firms’ internationalisation may contribute to the growing body of literature on the matter. This paper will proceed as follows. First, the Uppsala model and the internalization perspectives of internationalisation will be examined in brief, centring on potential ways of seeing them through a process lens. Then, managerial intentionality views will be explored. Third, I will briefly outline the specificities of internet-based companies and what seem to be the major tensions they experience during their internationalisation. Finally, I will present the framework of my research and how it will be informed by the theoretical insights reviewed.

Theoretical approaches: introduction
After Hymer’s industrial organization conceptualisation of internationalisation and until the 1980s, scholars seemed to agree that market imperfection was crucial for the development of the process of foreign direct investment (FDI). However, the form of investment could not be explained: export, licensing or greenfield have different levels of commitment and risk, and from Hymer’s conception it was not clear why a firm would go for one or the other. The excessive reliance on market power has diminished as perfect competition has lost its appeal as an unrealistic, and therefore impractical, benchmark and henceforth interest has grown in how the firm advantages are generated. The move towards perceiving firm-specific advantages as inherently linked to the skill of an individual firm has opened the door to perspectives focusing on skill and knowledge as intangible assets. Since Penrose‘s (1959) seminal work, strategic management studies have been developing in the same direction, shifting the focus from industry to the firm. Looking inside the firm has resulted in several perspectives, of which the internalization theory and the internationalisation process theory will be examined in continuance. Both these theories set the grounds for exploration of the internationalisation paths of MNCs. Internalization theory

“Internalization theory” (IT) sees the firm as a governance form coordinating interdependent economic activities whose existence is to a great...

References: 1. Andersen, T. J. 2011(A). Multinational Risk and Performance Outcomes: Effects if Knowledge Intensity and Industry Context, International Business Review, 20(5).
2. Forsgren, M. 2002, The Concept of Learning in the Uppsala Internationalization Process Model: A Critical Review. International Business Review, 11.
3. Forsgren, M. 2008, Theories of the multinational firm, Edward Elgar Publishing Ltd,
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5. Jensen, P. D. Ø. (2012). A passage to India: A dual case study of activities, processes and resources in offshore outsourcing of advanced services. Journal of World Business.
6. Jensen, P. D. Ø. and T. Pedersen. (2011). The economic geography of offshoring: The fit between activities and local context. Journal of Management Studies.
7. Petersen, B., Welch, Lawrence S. and Benito, Gabriel R.G., "Managing the Internalisation Process", Management International Review, 50(2), 2010, 137-154.
8. Schweizer, R., J.-E. Vahlne and J. Johanson (2010), “Internationalization as an entrepreneurial process”, Journal of International Entrepreneurship, 8(4), 343-370.
9. Zaheer, S. (1995), “Overcoming the Liability of Foreignness”, Journal of International Business Studies, Vol. 38, No. 2, pp. 341-363.
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