Strategic Consulting by Philippe Chereau & Pierre-Xavier Meschi

Author:Philippe Chereau & Pierre-Xavier Meschi
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

This double sequence of evolution in both psychic distance and establishment chain takes place over a long timeframe. Going from one step to another in this double sequence is triggered by what Johanson and Vahlne call the “basic mechanism of internationalization.” For each target country, this mechanism works in two steps: first, it is based on the starting situation of the internationalising company, as described by its level of resource commitment to the country (see establishment chain ) and its knowledge of the country (its markets, distribution networks, culture, regulatory framework, competition…). Next, by working and accumulating various experience in the target country, over time, the foreign entrant will gradually increase its knowledge of the target country and reduce its “liability of foreignness.” The accumulation of this “experiential knowledge” and the successful local implantation with a first entry mode will lead the foreign entrant to increase its resource commitment to the target country, shifting to an equity entry mode and advancing along the establishment chain. Finally, when the foreign entrant has developed a refined knowledge of the target country and reached the last steps of the establishment chain , it can decide whether to start again with this gradual mechanism of internationalisation, setting up in another foreign market whose psychic distance is somewhat greater.

Since its original version in 1977, the Uppsala model has been supplemented over time. An updated recent version contains the new component of “ guarded globalization ” with its fault lines and fragmentation. Here, Johanson and Vahlne defend the idea that foreignness is less of a liability than “outsidership,”9 i.e., a company entering a country where it has no access and links to local business networks (clients and distributors, suppliers , competitors, government and State institutions).

A second theoretical framework of the internationalisation process was proposed in 1994 by Benjamin M. Oviatt and Patricia Phillips McDougall , professors of management at Georgia State University and Georgia Institute of Technology, respectively. Before developing their own model of internationalisation, Oviatt and McDougall examined and put forward the shortcomings of the Uppsala model. They criticised it as having a deterministic, gradual, slow and relatively inflexible approach to company internationalisation. Nevertheless, they recognised that the Uppsala model at least protects internationalising companies from country risk and the high uncertainty inherent to internationalisation. However, in their view, its major disadvantage is to neglect market opportunities, the specific features of certain highly value-added businesses and the possession by the internationalising companies of VRIST resources (see Chap. 3 for the definition of resources that are valuable, rare, inimitable, non-substitutable, and non-transferable). On the basis of their criticism of the Uppsala model, Oviatt and McDougall elaborated an alternative internationalisation model: the “International New Venture” (or INV) model.10 This INV model is particularly suited to companies that from inception, may reach a wide clientele base on a global scale. These “ born global ” companies, to use the terms created by McKinsey in a study of Australian exporters,11 are largely made up of start-ups that have developed a new and unique technology, a digital platform or an e-business model.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.