Learning and Innovation of Chinese Firms by Jacky Hong Shenxue Li

Author:Jacky Hong, Shenxue Li
Language: eng
Format: epub
Publisher: De Gruyter
Published: 2023-01-30T12:16:52.080000+00:00

Born Globals and Born Digitals

In contrast to traditional MNCs, with the advancement of technology and diversification of information exchange channels, the rapid internationalization of companies has become an achievable option. This type of company operating international activities in a short period and whose goal is to become international at the beginning of its establishment are called born-global firms (Autio et al., 2000; McDougall & Oviatt, 2000; Knight & Cavusgil, 2004; 2005). Their appearance challenges traditional international business theories. For a born-global company, rapid internationalization means putting products in unfamiliar markets for a short period of time. Faced with relatively limited resources, firms proactively seek new opportunities in complex foreign markets that are often fraught with uncertainty and risk; thus, they may require an innovative, visionary, knowledge-gaining–oriented stance (Knight & Cavusgil, 2004).

Innovation plays an important role in global firms because the new knowledge brought about by innovation leads to the development of organizational structures, governance capabilities, and behavioral lines, which are the foundation for successful internationalization in foreign markets in the short term (Knight & Cavusgil, 2004). Innovation is the result of two pillars: knowledge within firms promoting R&D and the imitation of innovation by other firms (Lewin and Massini, 2004; Nelson and Winter, 1985). Therefore, to maintain a competitive advantage, companies must have unique, internalized knowledge to ensure that it is difficult to imitate and non-transferable. In essence, it is not the innovation itself but acting as a carrier of knowledge that brings special advantages to enterprises, which lays the foundation for rapid internationalization (Knight & Cavusgil, 2004; Kogut and Zander, 1993). New knowledge often leads to new paths that challenge current operating and management models, so the flexibility of young firms is stronger than that of older firms in terms of acquiring knowledge and innovation, and, ultimately, superior business performance is accomplished (Autio et al., 2000; Penrose, 1959). Specifically, knowledge about international markets and operations and the efficiency with which to acquire this knowledge are key determinants of successful international performance for born-global firms.

Given the accurate identification and utilization of knowledge, a global company’s innovation capability is global and can be applied to various foreign markets in a short period of time through information technology and e-commerce capabilities (Zhang, & Tansuhaj, 2007). Unique innovative product development generates a differentiated strategic advantage in niche markets, thus minimizing direct confrontation with strong competitors (Knight & Cavusgil, 2004), resulting in position holding (Porter, 1980) and internationalized performance benefits. A firm’s inimitable market-specific knowledge leads to high standard quality control, which increases customer loyalty and performance by promoting customer satisfaction. Finally, the market knowledge internalized by born-global firms is beneficial in finding skilled foreign intermediaries in host countries, building networks in a short period, and carrying out a range of local activities (e.g., Freeman, Edwards & Schroder, 2006; Thai & Chong, 2008).

Born-digital firms are the inheritance and further development of born-global firms, with reinforcement of information technology advantages. Lee et al. (2019) believe that digitalization has a positive moderating effect on a company’s development of international capabilities.

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