Challenges of the Internationalization Strategy of a Technology-Based International New Venture

Challenges of the Internationalization Strategy of a Technology-Based International New Venture

Luciana Costa Fernandes (University of Aveiro, Portugal), Cristiana Pereira (University of Aveiro, Portugal), Daniela Simões (University of Aveiro, Portugal) and António Carrizo Moreira (University of Aveiro, Portugal)
DOI: 10.4018/978-1-5225-8479-7.ch018

Abstract

The present study seeks to analyze the behavior of a technological start-up regarding its entry modes in foreign markets. It is based on the case study of a company in the field of 3D printing and takes into account the analysis of topics such as the internationalization of start-ups and modes of entry in foreign markets, considering several theories of internationalization. As the company analyzed is a start-up, the research is supported by the analysis of the characteristics present in the process of internationalization of small and medium-sized enterprises (SMEs). The study closes with the conclusion that this SME matches the profile of an International New Venture/Born Global (INV/BG), although the company takes advantage of the network-based theory and relationship orientation to enter international markets. The most used mode of entry by the company in international markets has been exporting activities.
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Introduction

Internationalization is very important for SMEs, especially for technology-based ones seeking new markets to exploit their competitive advantages (Stanisauskaite & Kock, 2016). Internationalization has been traditionally analyzed from an incremental perspective as SMEs tend to be gradually involved in international markets through a series of evolutionary stages (Bell, McNaughton, & Young, 2001; Ribau, Moreira, & Raposo, 2015).

In a new reality, marked by the globalization of markets and technological innovation, the emergence of internationalized, more agile and flexible companies, are based on behaviors that go beyond those analyzed in the traditional internationalization models. With the pervasive effect of the globalization process, the internationalization of stat-ups has increased steadily and research has stressed the importance of the concept of INVs, as well as the need to understand the factors that influence the success of such companies (Oviatt & McDougall, 1994; Tanev, 2012). INVs represent a growing and important type of start-up. They are defined as business organizations that, from inception, seek to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries (Oviatt & McDougall, 1994; McDougall, Shane, & Oviatt, 1994).

Research conducted regarding rapid internationalization and INVs highlight the way companies start and grow by meeting customers’ and international markets’ needs (Oviatt & McDougall, 1999; Cavusgil & Knight, 2009). The literature provides clear evidence of rapid and dedicated internationalization of INVs and BGs (Bell et al., 2001), by adopting a global approach since their inception or up to their first three years (Danik & Kowalik, 2015). However, the literature on INVs is still scant (Ribau, Moreira, & Raposo, 2018a).

Based on the case study of a singular company in the field of 3D printing – for confidentiality reasons hereafter known as OMEGA – this chapter seeks to analyze the behavior of a technological start-up in what concerns to its process and mode of internationalization. It considers the theories of internationalization, as is the case of the traditional Uppsala model, network-based theory, relationship orientation and INVs, in order to understand the characteristics that define the type of company under study. Although this technology-based company, focused on 3D printing, has a strong technology orientation, it can be seen that the modes of entry in international markets have limited its external growth.

The analysis of this case study aims at exploring the behavior of this technology-based start-up, namely of the following typologies / theories: INVs/BGs; Uppsala model; network theory and relationship orientation, in what concerns its internationalization process. For that purpose, a qualitative methodology shall be applied, based on structured interviews as the method of primary data collection. The main contribution of this chapter stems from dealing with a real case situation of a technology-based firm that has internal competencies and seeks to internationalize its activities. As such, several internationalization theories are discussed on how properly they fit the internationalization process of the firm.

The rest of the chapter is structured as follows: the first section covers the literature review of the main types of firms that fall in the internationalization theories and modes of entry. The second section addresses recent topics on 3D printing. The third section presents the research method. The fourth section presents the case study. The fifth section discusses the findings. Section sixth presents the conclusions of the chapter.

Key Terms in this Chapter

Globalization: It is a worldwide movement toward economic, financial, trade, and communications integration. It is normally envisaged as a lack of trade barriers between nations, which are removed through free trade agreements throughout the world and between nation states.

Contextual Conditions: They normally characterize a country, a region, or a market, based on a set of political, social, economic, and cultural dimensions, which are useful to depict how those contextual conditions differ across countries, regions, or markets.

Relationship Orientation: Is a concept much more specific than market orientation. It involves the commitment of one party that believes that a relationship is worth working on to ensure that is endures throughout time. The relationship orientation is built on the foundation of mutual trust and commitment.

Internationalization Process: It involves the emphasis of a trajectory of a company in its transition from a national market to a particular foreign market. It normally involves several entry modes (exports, FDI, franchising, etc.) that exert a critical influence on the subsequent trajectory, as well as on cost related to the internationalization process.

Born Global: It is a type of company that from the beginning of its activities pursues a vision of becoming global and globalizes rapidly without any preceding long term domestic or internationalization period.

Internationalization: It is the process of increasing involvement of enterprises in international markets. It involves a strategy carried out by firms that decide to compete in foreign markets. It involves cross-border transactions of goods, services, or resources between two or more firms or organizations that belong to two different countries.

International New Venture: it is a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries.

Uppsala Model: It has been one of the most discussed dynamic theories. It explains the process of internationalization of companies, namely how organizations learn and the impact of learning on the companies’ international expansion.

Small and Medium-sized Enterprises (SMEs): Although there are plenty of definitions across the world, the working definition used in this document is the one that was created by the European Commission, to permit a coherent and effective access of SMEs to European community funds.

Case Study: It is a qualitative research method normally used in social sciences. It seeks to interpret a reality through a particular perspective.

Network-Based Approach: It based on the industrial networks theory, which states that firms evolve on the basis of established relationships. It considers the companies’ internationalization process through their integration into networks and relationships.

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