THEORIES OF INTERNATIONALIZATION

THEORIES OF INTERNATIONALIZATION

1. INTERNATIONALIZATION FROM THEECONOMIC PERSPECTIVE

2. INTERNATIONALIZATION FROM THEPROCESS PERSPECTIVE

4. PROPOSAL FOR THE CLASSIFICATION OF MODELS AND THEORIES OF INTERNATIONALIZATION FOR TECHNOLOGY-BASED SMEs

3. THEORIES ORIENTED TO THE INTERNATIONALIZATION OF SMEs

Types of theory

1.1. Theory of Monopolistic Advantage

1.2. Internationalization Theory

1.3. Dunning's Eclectic Paradigm

1.4. Macroeconomic approach

1.5. Competitive advantage model of nations

Types of theory

2.1. The Uppsala model ‒ Nordic School

2.2. The innovation model

2.3. Systemic planning model

2.4. Vernon's Product Life Cycle Model

types of theory

3.1. network theory

3.2. global born theory

3.3. Phases, processes and life cycle approach

3.4. Strategic approach

types of theory

4.1. pioneering theories

4.2. second generation theories

4.3. Contemporary models ‒ New perspectives

1.1. Theory of Monopolistic Advantage

According to:

Hymel (1976)

examine:

at the business level the types of Exclusive competitive advantage

Differential mark:

Value added to the market

may be of origin:

Search:

Productive

Commercial

Product diversification

Technological

Settle abroad

business example

For: Compete with local businesses

Starbucks: Starbucks is an example of the theory of monopolistic advantage through product differentiation. The company has created a unique experience for consumers with its coffee shops and has developed a very strong brand that allows it to charge higher prices for its products.

1.2. Internationalization Theory

Raises:

Focused on:

It is based on:

(Buckley y Casson, 1976)

1. Existence of advantages when locating activitiesabroad.

2. Organizing such activities may be more efficient than selling or assigning them to companies in the foreign country in question.

It is directed to:

Based on:

Unit costs

Comparing:

Productivity at the national level

Export of products abroad

Transaction costs:

Classified in:

Difficulty assigning a value

Delays

Specific aspects

Conflicts

Internal processes for the transfer of business information.

Preventing costs in the future

Associated with:

Guarantees:

The imperfections of foreign markets.

International benefits

business example

Two conditions for direct investment abroad.

Considering: Duty, productive factors and transport

IKEA: IKEA is another example of internationalization theory. The Swedish company has expanded its operations globally and has adapted its marketing strategy and product offering to different countries and cultures.

1.3. Dunning's Eclectic Paradigm

Linked to the ideals of:

Dunnig

Quarter

Third

Second

First

You must have affinity with the long-term strategy

Agreed for:

The organization

Profitability of production plants abroad.

Is generated:

Specific factor endowmenttransferable across its borders

Agreed for:

Factor productivity

Ideological difference

Quality

Price

Costs

Export them by themselves

Wanted:

Internationalize the advantages

Through:

Reduction of transaction costs

The implementation of new activities

Your value chain

Some are:

Prioritize product quality

Avoid risks and breach of contract

They are divided to:

If desired:

Possess own advantages

Specific advantages

Advantages of established companies over new ones

Through:

Outreach Economic Benefits

Ease of access to resources

Size

Experience

Of:

The characteristicsidiosyncrasy of being multinational

As:

Operational flexibility

Changes in production

Global sourcing

Participate in foreign markets, compared tolocal businesses.

For example:

Organizational capacity

Structural character

business example

Establishes: Four conditions for direct investment abroad

Compared to: Sell or rent them to other companies in other countries

It is more convenient to export by themselves.

Establishes: Four conditions for direct investment abroad

Nestlé: Nestlé is one company that has used Dunning's eclectic paradigm to invest abroad. The company has established operations in different countries to take advantage of the resources and technology available in those places, as well as to adapt its product offering to the tastes and needs of local consumers.

1.4. Macroeconomic approach

Focuses on:

Kojima (1973)

Study:

Say what:

The trajectory of Japanese companies

It is characterized by:

The intention is:

Produce at lower costs than local companies

It is possible by:

Implementing good capital and resource strategies

Improve the productivity of recipient countries

Given to:

The inflow of resources from Japanese companies

Especially:

Managerial skills

Have access to Japanese distribution networks

Ability to organize mass production systems

His theory has a macroeconomic focus on FDI

It intends to explain:

The reasons that companies have to carry out the IDE

Based on:

Neoclassical models

Japanese vs American Investment Theory

Competitive advantage

Direct investment theory

Trading theories

Japanese

American

business example

In search of: Docile staff

It is oriented towards: Trade and principles of comparative advantage

It is governed by: Oligopolistic markets demotivating to international trade.

GDP: GDP (Gross Domestic Product) is a key indicator used in the macroeconomic approach to measure economic output at the national level. GDP represents the total value of all goods and services produced in a country during a given period, and is used by governments and economic analysts to measure economic growth and the health of the economy.

1.5. Competitive advantage model of nations

In accordance with:

Porter

Important elements to consider:

International markets depend on:

Domestic Demand Conditions

Related Industries

The degree of rivalry in the sector

The role of government in the international competitiveness of the company

It means that:

The greater the customer demand, the greater the company's effort to satisfy them.

Where:

The existence of multinational companies provides international competitiveness to the country

Drives:

Innovation or search for new markets

intend:

Increase business competitiveness

Costs of productive factors

Efficiency relative to cost

They are divided into:

Basics:

Advanced:

make reference to:

Are:

Naturally occurring factors

Those that are not found naturally

As:

Whether they are:

To a greater or lesser extent in the countries

Cheap labor

Natural resources

Capital

As:

Skilled labor

Comunication system

Scientific infrastructure

business example

To get to: Anticipate your needs

The Swiss watch industry: The Swiss watch industry has been a classic example of the application of the competitive advantage model of nations. The Swiss industry has been able to compete successfully in the global luxury watch market due to a combination of national factors, such as high-quality workmanship, a culture of innovation, and collaboration between business and government.

2.1. The Uppsala model ‒ Nordic School

Indicates that:

The psychological distance

There are 3 situations:

Resources increase by gaining more experience in activities

Tends to:

Incorporate through the psychologically closest country market.

Lots of resources available

Stable market conditions

Gain significant market experience

Sporadic or non-regular activities export

Its stages are:

Exports through independent representatives

Establishment of a branchbusiness abroad

Establishment of production units in the foreign country

business example

Tetra Pak: Tetra Pak is a Swedish company that manufactures carton packs for food and beverages. According to the Uppsala model, international companies develop in international markets as they increase their knowledge and experience in the local market. Tetra Pak began its international expansion in the 1950s, initially focusing on European markets and later expanding into other international markets as they gained more knowledge and experience.

2.2. The innovation model

Stands out:

Stages:

Internationalization is:

The cumulative nature of decisions

leading:

Innovation

internationalization

1. Domestic market

2. Pre-exporter

3. Experimental exporter

4. Active exporter

5. Committed exporter

A business innovation process

Is required:

Being within the limits imposed by the market

A broad commitment

Next to:

The internal capabilities of the company

business example

For small and medium businesses.

Google: Google is a company that has used the innovation model to develop new ideas and products in the field of technology. The company has developed a wide range of innovative products, including the Google search engine, Google Maps, Google Drive and Google Glass.

2.3. Systemic planning model

According to:

Root (1994)

1. Measurement of market opportunities

2. Statement of objectives

3. Input mode selection

4. Formulation of the marketing plan

5. Execution

business example

P&G: Procter & Gamble has used the systemic planning model to develop effective strategic plans in its consumer products industry. The company has analyzed the complex systems that make up its industry, such as consumer trends, competition, and the supply chain, to develop strategic plans that allow it to stay competitive and adapt to market changes.

2.4. Vernon's Product Life Cycle Model

replaced:

Stages:

The unrealism of the theory of comparative advantage

It is based on:

Vernon (1966)

Implementing:

Product innovation

Scale economics

Uncertainty

1. Introduction:

2. Growth:

3. Maturity:

4. Decline:

It is given by:

Added value based on company assets

In the country of origin

Achieve economies of scale

With the objective of:

Increase:

Investments in manufacturing plants

The export activity

Expanding demand

In countries with:

Manufacturing is diverted to countries with cheaper labor

it takes place when:

The country of origin

Abandonment of:

business example

For small and medium businesses:

McDonald's: McDonald's is another company that has used Vernon's product lifecycle model to expand internationally. The company began to expand internationally in the 1960s, establishing its first restaurants in Canada, Puerto Rico, and Latin America. In the 1970s, McDonald's expanded into Europe and Asia, and in the 1980s it became a truly global company.

3.1. network theory

extended network theory

network approach

It is based on:

internationalization process

function of interactions between local firms and their international networks

trips abroad and migratory movements stimulate the perception of foreign market opportunities

therefore:

indicates:

Opportunities in foreign markets

through:

members of the international contact network

social relations that the decision maker maintains

approach to committed members

give place to:

Creation of connections to other markets

more opportunities to exploit the benefits

Relationship with customers and providers

entry into foreign markets

dynamic element of network relations

arises from:

interaction between the company and the external network

limited by:

benefits of the information provided by each member of the network

staff experience

development of social networks

it's based on:

gives rise to:

relationships with partners in countries that are new

Increased engagement in already established networks

integration of the positions held in the networks between different countries

social network theory to explain how companies internationalize

business example

as a: logical development of the organizational and social networks of the companies.

business relationships are created and developed with their counterparts in foreign countries

Strategic alliances: Companies can form alliances with other companies to share resources and knowledge and thus reduce risks and costs in the internationalization process. For example, the alliance between Delta Airlines and Air France-KLM to share routes and resources in Europe and North America.

3.2. global born theory

activities with a global approach since its creation

International Start-up companies

influential factors:

Technological developments in production, transport and communication

The new market conditions

The most developed global capabilities of entrepreneurs

due to:

increase in market niches

production of specific parts of a product

It involves:

small scale operations are more attractive

The transport of people and goods is cheaper, more reliable and more frequent

as a consequence of:

increased gain of international experience12

more homogeneous markets

Few demand in domestic markets

Fast distribution of innovative products

greater viability in current markets

increased mobility and cross-cultural education

new way of seeing the world

business example

It is a new emerging perspective of the internationalization process

The competencies you must have are: having a global vision, a focused approach to developing businesses and the ability to recognize technological opportunities and capitalize on them.

The world is conceived as a single market without borders.

Skype: The popular internet communication platform was founded in Estonia in 2003 and started operating in several countries at the same time, harnessing the global potential of the internet to reach a global audience since its inception.

3.3. Phases, processes and life cycle approach

After-sale service alliances

Chen H. and E. Huang (2004)

growth patterns and speed varies according to initial conditions

large companies tend to grow faster than medium-sized companies

According to:

Ways to carry out an internationalization process:

Alliances for the distribution of your products

Alliances to develop products

Alliances to build retail distribution channels in global and local markets.

factors that influence:

business example

Coca-Cola: The Coca-Cola Company has used a phased approach to its international expansion. In the first phase, he focused on establishing agreements with local bottlers in different countries. In the second phase, it focused on establishing its own manufacturing operations in countries where it had a significant presence. In the third phase, he focused on product diversification and the acquisition of local companies.

3.4. Strategic approach

strategic options

exportation

Joint ventures and strategic alliances

IT IS:

entry strategy for small businesses with limited resources and market knowledge

due to:

small companies can take a more flexible approach than medium-sized companies

AN expansion strategy is safer when you decide to involve trusted people

it is noted:

microenterprises use a reactive export strategy

Based on:

use of competitive models different from those used by exporting companies

conditioned by the choice of the competitive model that they follow to internationalize

public business management policies are created for companies seeking to internationalize

business example

as in: family businesses by actively involving the family

Huawei: Huawei has used a global innovation strategy, focusing on research and development of new technologies to stay ahead in the global telecommunications market. It has also established strategic alliances with other companies to improve its position in international markets.

4.1. pioneering theories

the 70s with the name of models of knowledge and experiential learning

internationalization processes are determined by environmental conditions

arose in:

the most notable are:

Uppsala Model (U-Model)

systemic planning

The innovation model

establish that:

such as:

the operating environment

industry structure

given:

cost structure

models that seek to mix previous theories

networking perspectives

business example

SKF: The Swedish company SKF, world leader in the manufacture of bearings, began its internationalization process in the 1920s, exporting its products to countries such as Germany and the United States. From there, it has gradually expanded through the acquisition of local companies and the creation of subsidiaries in key markets.

4.2. second generation theories

Innovation models ‒ Adaptive choice

hybrid model

it is understood that:

systematic and planned sequence of activities facilitate the incursion into international markets

complement experiential learning models

phases

background

the internationalization process is generated when it tries to adapt to solve various types of dilemmas

strategic order (standardization vs adaptation)

does not apply:

companies with abundant resources will make great strides in their international expansion

Experiential learning is not necessary when foreign market conditions are stable and homogeneous

structural dilemmas (weak offices vs strong head office)

execution

considers that:

motivational aspects

consumer tracking

It is based on:

increasing internationalization gradually

consumer tracking

Experience is transferable in similar foreign markets

business example

involved with the passage of each stage, a higher level of evolution in administrative practices

with systematic planning models and contingency models

such as: the search for markets, consumer monitoring

The systematic planning phase is added, which includes a sequence of market research, market choice and entry mode selection.

This is how it evolves from a low level of commitment and risk to an intermediate level that finally gives way to a high level.

Includes feedback from different levels

Unilever: This company has applied a strategy of continuous innovation in its products and has managed to adapt its offer to the different international markets in which it operates. For example, it has launched specific products for consumers in emerging markets such as India and China, which have been tailored to the needs and preferences of local consumers.

4.3. Contemporary models ‒New perspectives

adjust to the current knowledge society

pretend

holistic model

network model

Marketing–entrepreneurship interface model

Explain:

relative performance of entrepreneurs

It is given in:

internationalization occurs by:

establishing and building new relationships in new markets

connection to existing networks in other countries

the most notable are:

interface:

innovation

risk taking

proactivity

The network approach derives from the relationship with industrial internationalization processes.

all parts of the value chain of a company

GIVE place to:

formation of transnational external links made by companies over time

characteristics:

Some firms have links that cover all aspects of the value chain

Links are made without a speed pattern

variation in the combination of steps to generate links

Some links are more common in certain periods

The oldest companies export and import with little expansion into new links.

business example

Understand marketing as the way to identify new opportunities, applying innovative techniques to be in tune with the needs of the chosen sector

Describe internationalization from a holistic point of view and some of them are still in conceptual development and empirical verification

from the conception and design of what is going to be produced, going through production and including the usual phases such as distribution and marketing.

IBM: leading technology and consulting services company, with a presence in more than 170 countries. IBM has adopted a holistic approach in its internationalization strategy, considering factors such as market regulation, local business culture and the technological infrastructure available in each country.