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Internationalization Theories - Coggle Diagram
Internationalization Theories
Historical development of internationalization
The Uppsala Internationalization model:
The main consequence of this Uppsala Internationalization model is that firms tend to intensify their commitment towards foreign markets as their experience grows.
The internationalization/transaction cost approach:
The internalization perspective is closely related to the transaction cost theory. The internalization and TC perspectives are both
concerned with the minimization of TC and the conditions underlying market failure.
The intention is to analyse the characteristics of a transaction in order to decide on
the most efficient, i.e. TC minimizing, governance mode.
The network approach:
The international firm cannot be analysed as an isolated actor but has to be viewed in relation to other actors in the international environment. The relationships of a firm within a domestic network can be used as
connections to other networks in other countries.
The Uppsala Internationalization Model
Unit of analysis:
The firm
Basic assumptions
about firms’
behaviour:
The model is based on
behavioural theories and an
incremental decision-making
process with little influence
from competitive market
factors. A gradual learningby-
doing process from
simple export to Foreign
Direct Investment (FDI)
Explanatory variables
affecting the
development process:
The firm’s knowledge/
market commitment.
Psychic distance between
home country and the firm’s
international markets
Normative
implications for
international
marketers:
Additional market
commitments should be
made in small incremental
steps:
– Choose new geographic
markets with small psychic
distances from existing
markets
– Choose an ‘entry mode’
with few marginal risks
The internationalization/transaction cost approach:
Unit of analysis:
The transaction or set of
transactions.
Basic assumptions
about firms’
behaviour:
In the real world there
is ‘friction’/transactional
difficulties between buyer
and seller. This friction
is mainly caused by
opportunistic behaviour.
Explanatory variables
affecting the
development process:
Transactional difficulties
and transaction costs
increase when transactions
are characterized by asset
specificity, uncertainty,
frequency of transaction.
Normative
implications for
international
marketers:
Under the above mentioned
conditions, firms
should seek internalization
of activities. Overall, the
firm should select the entry
mode for which transaction
costs are minimized.
Network Model
Unit of analysis: Relationships
Interorganizational between firms
Between groups of firms
Assumptions about firms' behaviour
Technical, economic, social, political, legal and personal ties
At first, managers' personal influence is determining for relationships' stablishment
Routines and systems become more important at a more mature stage
Actors are autonomous
They handle their interdependences bilaterally
Explanatory variables affecting the developing process
Individual firm is dependent on resources controlled by other firm
Get access through network positions
Scenarios with conditions that change rapidly are better for a business newtork to grow.
There must be coordination and sincrony between actors
Normative Implications for international marketers
Domestic/Local networks are key to expand and create foreign networks.
NAMES
: Jose Luis Briceño, Marcos Campos, Catalina Casas.
Born Globals
These are firms that go global rapidly from the begining
Capable of assuming a global geographic scope, by a time-space compression phenomenon.
SMEs with less than 500 employees and anual sales under $100 million
Innovators, technology-oriented, managed without barriers.
They develop unique products that can be quickly spread to new markets all over the world
Tend to choose a business are with homogenous and minimal adaptation of the marketing mix
Seek partners with supplementary skills and resources
Is the opposite of the "Uppsala-model"
They rather cooperate to facilitate internationalization