Oral Exam Preparation

Gupta et al. / #1: Rising up to the global challenge)

→ globalization is driven by free market ideology, international trade & investment, technology &
increasing importance of developing countries (moving to developed ones)

→ increasing importance of knowledge, skills & expertise → in order to exible and adaptive to
changing conditions

• de nition of global company: interdependence of globalization of the capital base, the supply
chain, the market presence — all based on the globalization of the corporate mindset

• today’s globalization is complex due to geographic dispersion of the value chains, cross-border
trade (also of intermediate goods and services)

• previous types of globalization was cross-border trade with either raw materials or nished
goods

• every industry is kind of a global industry & every business a knowledge business →
emphasises the importance of internationalisation & knowledge transfer

→ identifying market opportunities worldwide / turn global presence into global competitive
advantage / cultivate global mindset / take emerging economies into account

• de nition of globalization: „growing economic interdependence among countries as re ected in

increasing cross-border ows of three types of entities: goods and services, capital and know-
how“ → general economic interdependence among the various countries (at a worldwide level)

• di erent levels of aggregation: worldwide, speci c country, speci c industry, speci c

company

Gupta et al. / #2: Building presence

→ reasons for expansion in general: growth, knowledge, e ciency, globalization of customers or
competitors

1. choice of products that are launched: required degree of adaptation vs. expected payo from
globalization

• all products (more risk) or just with one good-selling product rst?

2. choice of strategic market: strategic importance of market vs. ability to exploit the market /
opportunities for learning

3. mode of entry: uniqueness of corporate culture vs. market growth rate

• 0% ownership (licensing, franchising) / partial ownership (joint ventures, a liates) / 100%

ownership (green eld operation or acquisitions)

• phased-in entry: create beachhead rst, enter country through another country

• rely on experts vs. ownership control in the desired market

• either export the nished product or export components only or 100% local production

4. transplanting DNA: being clear about core principles, these have to be embedded in routines
& mindsets

5. winning the local battle:

• adapt & respond to needs & actions of host customers, competitors & government

• host country competitors: acquire dominant local competitor, acquire a weak player,
enter a poorly defended niche, stage a frontal attack

6. speed of global expansion can be higher when: competitors can replicate success, scale
economies, capacity to manage global operations

Gupta et al. / #4: Exploiting global presence

1. responding to local market di erences

• to an extent, even standardised products have to be adapted to the local market

• by local adaption companies can have increased market share, improved price
realization and can neutralize local competitors

• challenges: right equilibrium has to be found, market has to be observed constantly,

recalibration

2. exploiting economies of global scale (= higher volume leads to lower cost price per unit)

• potential bene ts: spreading xed costs over higher volume, reducing capital & operating
costs per unit, higher purchasing power

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 • challenges: e ort for analysis, building competency, if economies of global scale is worth it

3. exploiting economies of global scope (= reusing resources from one country/product in

additional business/countries for synergy e ects)

• potential bene ts: coordinated service for global customers, market power on the same level
as competitors

• challenges: being responsive to central coordination vs. local adaptation, understanding

buying decisions of the customer network

4. using the most optimal location for activities & resources

• potential bene ts: performance enhancement, cost reduction, risk reduction

• challenges: shifting locations shouldn’t a ect the exibility negatively

5. maximise knowledge transfer across locations

• potential bene ts: faster product & process innovation, lower cost of innovation, reduced
risk of competitive preemption (Vorverkaufsrecht des Wettbewerbs)

• challenges: lack of mechanisms that enable routinised opportunities for knowledge transfer,
missing transfer to subsidiaries, lack of knowledge transfer bridges

• to manage an optimal network for each value-chain activity, 3 factors must be optimised:

• network architecture: either concentration in 1 location, di erentiated center of excellence or

distribution among local units

• competencies at the nodes of the network: depending on cultural assets (e.g. productivity),
cost for personnel

• coordination among the nodes: creating motivation to enhance knowledge transfer &
cooperation among managers, mechanisms that bring this cooperation into action

• e.g. benchmarking, create incentives, formal rules about communication

Gupta et al. / #5: Cultivating a Global Mindset

• organizational mindset: aggregated mindset of company’s members adjusted for the
distribution of power & mutual in uence among the group

• can change when the relative power of individuals changes, social processes change, when
di erent mindsets (of new employees e.g.) are confronted with the one of the company

• de nition of global mindset: open to diversity, identify the di erences, being able to integrate
di erent cultures

• mindsets can be changing, can be ambiguous and are dependent on many factors → but it’s
not the same as behaviour because behaviour is the outcome of a mindset

• a mindset is intertwined with our knowledge since it is a knowledge structure

• the global mindset is further specialised by the degree of how much the company is open to
diversity (D) and how it is able to integrate (I):

• if D & I is high, they have a global mindset

• if I is high but D low, it’s a parochial mindset

• if D is high but I low, it’s a di used mindset

→ be fast in adaptation to new markets & consider cultural di erences & be accurate at the same
time

→ better decisions in terms of local adaptation vs. global standardization

→ smoother coordination → less failure → easier introduction of new products

• establishing & cultivating a global mindset:

• articulation of current mindset

• exposure to diversity & novelty: e.g. cross-border projects, formal education, diversity in the
team

• integration of new knowledge & development of new mindset: core values have to be clear &
communicated accordingly, interpersonal & social ties also play a role

• curiosity about how the world works

Gupta et al. / #6: Building a Global Knowledge Machine

• typically, knowledge of subsidiaries isn’t used to its full potential / although diversity means =
diverse knowledge as well

• the social ecology (picture) refers to the ecosystem in which employees are embedded / can be
seen as the basis for how easily knowledge can be shared

• IT for instance can be used to collect & share knowledge e ently

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• collective knowledge of a company consists of knowledge accumulation & mobilization of

knowledge

• knowledge accumulation:

• knowledge creation: internal experience

• problems: complacence, no market for ideas

• knowledge acquisition: from outside the company

• problems: not be an early mover, not being able to integrate & apply knowledge

• knowledge retention: minimising the loss of knowledge

• problems: employee turnover, passing on knowledge to competitors

→ to maximise: stretch goals, high-powered incentives, empowerment & slack, every unit
has a sandbox to play, market for ideas within the company

• mobilization of knowledge by individuals & units:

• willingness to share knowledge (out ow)

• problems: why should I do it, knowledge is power, only relative performance matters

• e ective & e cient knowledge transmission

• problem: channel doesn’t match type of information

• willingness to receive and apply knowledge (in ow)

• problems: not invented here-syndrome, not wanting to accept better peers

→ to maximise: praise knowledge givers, group-based incentives, invest in codi cation of

tacit knowledge, transmission mechanisms should match knowledge type

Gupta et al. / #8: Globalizing the young venture

• young ventures (born globals) can internationalize even faster due to:

• growth in emerging markets → customers are now literally global

• cheaper facilities: Internet, communication, trading platforms, global online payment

services, shipping & travel costs

• better communication: uency in English in many countries, globalised media

• bene ts of early internationalization: rapid growth, rapid competitive advantage (especially when
customers are multinational themselves), access to lower-cost human/capital/physical
resources without loosing quality, learning opportunity

• challenges: only small margin in managerial/organizational/ nancial resources, lack of

knowledge & relationships, lack of needed local capabilities, less experiences in cross-cultural
con icts, direct & indirect costs of cross-border coordination might be seen unsustainable

→ depends on industry, use

existing ties, not too much at a
time, overinvest in integration
capabilities

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 Ghoshal, 1987 / Global strategy: An Organizing Framework

• achieving e ciency: ratio of value of all outputs to costs of all inputs

• managing risks: macroeconomic (outside of control), policy risks (governmental regulations

etc.), competitive (uncertainty of competitors) and resource risks / all risks change over time

• innovation, learning & adaptation: diversity of rm’s capabilities regarding these 3 aspects
increases their likeliness of being successful / refers to importance of knowledge & learning

• national di erences: can be a chance & di culty at the same time / refers to cheaper labour or
production cost

• scope economies: arises from the fact that cost of join production can be cheaper than
separately → synergy e ects, also from shared knowledge & external relationships

• scale economies: increasing volume of output to achieve scale bene ts

→ successfully managing on a global scale means combining all 3 tools to increase the rm’s
competitive advantage and achieve the above-stated objectives / with considering trade-o s

Tallman & Fladmoe-Lindquist, 2002 / Internationalization, globalization, and capability-

based strategy
• capability-based strategies for internationalization: using capabilities to establish international
strategies

• competitive advantage is based on a rm’s unique internal resources & capabilities, they are
used to gain market power

• capabilities aren’t xed and possessed already, but also can be build → framework refers to
how they are build and leveraged

• corporate-level architectural capabilities: organization wide routines to integrate components

into purpose / ability to organize the rm in a way that allows new knowledge to be integrated
and works in di erent contexts

• business-level component capabilities: expertise speci cally in their industry, better products
than competitors / both tangible and intangible knowledge

→ both has to be developed further and leveraged at the same time in order to maximise the
rm’s competitive advantage

→ both capabilities lead to international expansion & global integration — while the process of
leveraging & creating capabilities occurs at the same time

• global integration: worldwide activities integrated in 1 strategy / by being part of a network →

increasing global exibility, cost optimisation etc.

• international expansion: important to keep crucial component capabilities internally

→ learnings from both can be helpful to create new capabilities

→ established capabilities can be used to engage in international activities in the rst place

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 (check table about strategies)

Johanson & Vahlne, 2013 / The Uppsala model on evolution of the multinational business
enterprise – from internalization to coordination of networks
• Uppsala model developed including now the importance of networks for MBEs:

• combining it with the eclectic paradigm (by Buckley & Casson) which emphasizes the
importance of ownership advantage & localization advantage

• in general, the model is based on the combination of state & change variables

• assumption: growing rms have competitive advantages due to their dynamic capabilities

• at the same time, the typical challenges are occurring: uncertainty about the future, bounded
rationality

• de nition of dynamic capabilities: the ability to create, extend & modify the resource base
according to the objectives / ability to adapt to the environment (also internationally)

• opportunity development capability

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 • internationalization capability

• networking capability

• these are in uenced by inter-organizational processes, such as learning, creating & trust-
building → transferred to other members of the rm’s network

• entrepreneurial capability: being able to act in situations with high degrees of uncertainty / at
the same time, seizing opportunities & using the advantages of networks

• market network view: di erent country markets are interconnected by network relationships

• they are dynamic & develop with increasing interaction among these network ties

• based on this, internationalization can be seen as developing opportunities resulting out of

these ongoing relationships & interactions

• → network position: determined by the power-dependences between the members of the

network /

• commitment decisions: in terms of how the rm can be developed further / also can be
intangible

• measured by volume & degree of the resources used for re-allocation

• then a ecting also other internal & external network systems because they have to adapt to
this re-allocation as well

Sharma & Blomstermo, 2003 / The internationalization process of born globals: a network
view
• de nition of born globals = global start-up, high technology start-up, international new ventures

• have an advantage in internationalization by having more knowledge, e.g. from their

employees & their weak ties → accelerated process due to high knowledge intensity

• networks = source of information, in uence timing of information & bene ts from referrals

• acquire market knowledge before entry with the help of a network (because other capabilities
are not built yet)

• by internationalising they acquire institutional knowledge, business knowledge and

internationalization knowledge then → gaining more experiences in these processes

• entry mode and choice of foreign market is dependent on knowledge from the born global’s
network ties → reduced risk if there already is some knowledge

• di erence between strong & weak ties

• more weak ties are better for internationalization due to more distant relations & novel
knowledge

• it’s also easier to have contact with more weaker ties due to less e ort for maintaining the
relationship

• partnerships substitute the lack of resources of born globals

• knowledge based behavioural internationalization process models can be applied for born
globals & their internationalization

Nonaka et al., 2000 / SECI, ba and Leadership: A Uni ed Model of Dynamic Knowledge
Creation
• knowledge creation process of the rm is a big part of daily business

• knowledge is not only a justi ed belief - truthfulness & dynamic are important too

• a rm’s dynamic capability to constantly create new knowledge based on existing

knowledge is an important asset

• information → knowledge when put into context by individuals → tacit knowledge

• there are di erent kind of knowledge assets (the in- and output) a rm can obtain:

• experiential knowledge assets: tacit knowledge shared through common experiences

• routine knowledge assets: tacit knowledge routinised

• conceptual knowledge assets: explicit knowledge articulated through symbols & language

• systemic knowledge assets: systemised explicit knowledge

• based on the SECI process, tacit & explicit knowledge is made accessible (in order to transfer it
successfully)

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•socialisation: creating new tacit knowledge

through hands-on experiences, shared
experiences

•externalisation: e.g. quality control, actually

analysing things based on tacit knowledge

•combination: explicit knowledge → more

complex & systematic knowledge, e.g.
creative use of databases

•internalisation: sharing explicit knowledge

within the organisation → learning by doing

→ the SECI model is based on a spiral, not a

circle → emphasises the dynamic

→ both intra- and inter-organisational process

• ba: refers to the (non-physical) space where knowledge is converted and made understandable
to others

• „shared context in which knowledge is shared, created and utilised“

• changing & individually based on the respective individual’s worldview → interaction!

• originating ba: individual & face-to-face

• dialoguing ba: collective & face-to-face

• systemising ba: collective & virtual

• exercising ba: individual & virtual

• → di erences between ba among individuals and ba across an organisation

• autonomy, creative chaos, redundancy, requisite variety, love/care/trust & commitment

Kogut & Zander, 1992. Knowledge of the Firm, Combinative Capabilities, and the Replication
of Technology
• organizational knowledge is divided into information (data) & know-how (to integrate & put it into
context)

• based on the fact that this knowledge is only shared & used by social interaction within the
rm

• knowledge is measured by the codi ability & complexity: being able to structure it into rules
& easily communicated messages including breaking it down into di erent sets to make it
less complex (Simon’s near decomposability) → technology of course can support this
process

• this also makes knowledge transfer from personal to social/group knowledge possible,
otherwise this would be too much e ort & costly

• growth of knowledge of the rm:

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 • → combinative capabilities in rms are the ability to create new learnings & innovation from
making use of existing knowledge & exploit the potential of technology

• di cult due to being embedded in relationships & routines including employee turnover

• challenges of replication of knowledge:

• replication of a rm’s technology also makes it easier for competitors to imitate it

• deciding which capabilities are worth exploiting, depends on the rm’s current situation:

• how good a rm is doing something

• how good are the learning speci c capabilities

• the value of these capabilities as platforms for new markets

Ghemawat, 2007 / Managing Di erences: The Central Challenge of Global Strategy

• AAA triangle consisting of adaptation, aggregation & arbitrage

• arbitrage: exploitation of di erences between di erent markets / measured by the % spent

on labour compared to sales

• example: call centre in India, production in China, retail in Europe

• adaptation: increase revenue & maximise the company’s local importance / % spent on
advertising compared to sales

• aggregation: economies of scale → standardise the product/service / % spent on R&D

compared to sales

• → each has di erent outcomes, goals & strategies → companies put focus on di erent A’s
at di erent stages of their internationalisation strategy

• adaptation = localisation vs. aggregation = standardisation

• combining all 3 is rather di cult which is why companies usually aim for AA strategies

• new elements in a strategy have to be integrated accordingly

• aiming for more than one A requires good integration mechanisms & organizational structure

• joint ventures & partnerships can help achieving another A → externalisation

(check table about di erent strategies in the article)

Oviatt & McDougall, 2005 / Entrepreneurship and Modeling the Speed of Internationalization
• international entrepreneurship is the discovery, enactment, evaluation & exploitation of
opportunities - across national borders - to create future goods & services

• entrepreneurship consists of opportunities and individuals who aim to take advantage of

those

• 4 forces the speed of entrepreneurial internationalisation is a ected by:

• enabling forces: makes seizing opportunities easier & faster

• motivating forces: encourage the entrepreneur to move forward with their idea and be faster/
better than competitors

• mediating forces: includes the personal characteristics, experiences & decision-making

ability of the entrepreneur himself

• moderating forces: knowledge-intensity & network of the entrepreneur

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 • knowledge: following the idea of the Uppsala model / the more knowledge, the faster the
speed of internationalization / also involves the ability to learn & acquire new knowledge
of foreign markets → which then positively a ects the speed of internationalization

• network: based on the network theory / strength of ties (strong or weak ties incl. the
advantages & disadvantages), size of network & overall network density a ects the
speed of internationalization

Knight & Cavusgil, 2004 / Innovation, organizational capabilities, and the born-global rm
• born globals: innovative mindset → knowledge is better developed → better capabilities =
superior performance in international markets

• capabilities have to be implemented into the company’s routines to make use of them

• due to their small size, born globals are more exible and can be more adaptive in international
markets → including born globals’ knowledge, this also positively a ects their organizational
capabilities

• routines are not as internalised which makes them more exible

• organizational capabilities → lead to a rm’s performance and therefore its success

• changing business environment

• strategically managing and adapting & integrating the knowledge-based capabilities into this
changing business environment

• at born globals, the organizational culture is already global from the beginning

• despite a lack of tangible resources (labour or money), they obtain more intangible knowledge-
based capabilities that are helpful for expansion

• because they are confronted with several changing business environments

• international entrepreneurial orientation: innovation-focused managerial mindset → leads to

identifying opportunities better and in the end, maximization of international success

• international marketing orientation: relevant to leverage & emphasize the opportunities identi ed
→ being adaptive to the respective international market

Monaghan et al., 2020 / Born digitals: Thoughts on their internationalization and a research
agenda
• born digitals focus on their digital infrastructure rst & then use it to strengthen communication,
capabilities & collaboration

• they are digital from day 1

• their technical advantages lead to:

• direct engagement with stakeholders

• direct-to-user approach due to digital products, no intermediary necessary

• network e ects without much e ort

• they also bene t from their network that typically consists of other founders or digital
start-ups

• direct network e ects: the more users, the higher the value of the service/product

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 • indirect network e ects: dependencies of di erent parts of the network, users use a
separate platform for instance

• automation in terms of digitising processes → saving cost & time

• exibility in their structure, lower investment in physical infrastructure

• scalability especially due to digital products

→ all this increases speed of born globals’ internationalisation process

Coviello et al., 2017 / Adapting the Uppsala model to a modern world: Macro- context and
microfoundations
•macro-level: digitization has an
impact on the internationalization
process & opens new
opportunities

•in uence on timing, speed, entry

mode choice etc. is a ected → in
general accelerated growth

•→ exchange-orientation rather
than production-orientation

• micro-level: the individual decision maker of a rm still makes a certain decision and with that
in uences the automation of processes & the digitalised acceleration

• individual behaviour is still an in uence

Shaheer & Li, 2019 / The CAGE around cyberspace? How digital innovations internationalize
in a virtual world
• CAGE distances can (but don’t have to) be user adoption barriers for online start-up rms:

• cultural, administrative, geographic & economic distances between markets

• → using 2 demand-side strategies can support those rms in their internationalisation speed &
create value based on their digital infrastructure

• social sharing strategy: acquire new customers by engaging customers to share on their
socials → when CAGE distance is high

• easy marketing for distant cultures

• already a rst contact to potential markets & users before actually starting the process of
internationalization

• virtual community strategy: engaging interaction among the community to go across borders
→ when CAGE distance is lower / more a supporting strategy, doesn’t make sense to focus
on this one when social sharing is not established yet

• helps the start-up to get a better understanding about the consumers’ needs

• can increase the community’s heterogeneity

→ building a big customer base is important for an online rm’s competitive advantage

→ nonetheless, the e ectiveness depends on degree & type of distance

e.g. language, social media

→ only having technical superiority doesn’t mean success, the distances in the cyberspace still
have to be considered

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