Born global or born to run? The long-term growth of born global firms.

VerfasserHagen, Birgit

Abstract Born global firms have stimulated substantial academic attention as regards their start up but research has neglected their subsequent, ongoing internationalisation. This contribution extends analysis from the inception and childhood to the growth and maturity of such firms. We investigate whether born global are also "born to run" companies; we also try to reconcile the analysis of international new ventures in international entrepreneurship studies with the approaches based on fast growing firms and gazelles. We initially present the latest advances in the modelling of accelerated internationalisation over time; we then discuss and develop a conceptual framework and a model that captures the variables that affect born global firms' evolution in an holistic perspective; finally, we match case study analysis with the framework and discuss our findings. The results show two groups of firms that differ significantly in long-term internationalisation paths and growth cycles. We highlight turning points in these paths and discuss the drivers which lead to sustained high growth. The characteristics of the entrepreneurial/management teams, strategic partnerships and the entry in complex markets are the main differentiators in growth patterns, irrespectively of the industry. The "openness" of the founders and the early preparation for growth determine both the extent of organizational learning and the speed at which it is developed and used. We see said learning and its speed in development and use as the underlying, necessary mechanism of sustained high growth.

Keywords Maturing born global firms * International entrepreneurship * International new ventures * Longitudinal research * Internationalisation patterns

1 Introduction

The emergence of Born Global firms (BG) or international new ventures (Rennie 1993; Knight and Cavusgil 1996; Oviatt and McDougall 1994)--firms that internationalise from the outset--has attracted considerable research interest in the last three decades. Their distinctive characteristics in terms of precocity (time to internationalisation), speed (time of internationalisation) and scope (international versus truly global firms) have been thoroughly debated. Research has targeted both the antecedents and the outcomes of the internationalisation of these businesses (Rialp et al. 2005). Less attention has been paid to the drivers and the dynamics of internationalisation after the initial stage (Liesch et al. 2007). In particular, there is a research gap in the understanding of the internationalisation process and the overall growth paths after the first years of existence (Efrat and Shoham 2012; Sui et al. 2012). Do born global firms maintain distinctive characteristics in terms of international expansion when they mature? Which drivers support ongoing entrepreneurial expansion abroad? Which of these drivers are continuous and which discontinuous? Which factors constrain expansion and thus progressively reduce born global firms to slower growth, stagnation, or even exit patterns? In other words, is born globalness a demographic feature that characterises such firms' nascent years, or is it a constitutive element of their DNA?

This contribution aims to extend the analysis from firms' inception and childhood to their growth and maturity, and to understand whether born global firms are also born to run" companies (Hagen et al. 2012a). We also attempt to contribute to international entrepreneurship studies by reconciling the respective analyses of fast-growing firms and gazelles (Autio et al. 2000; Acs and Mueller 2008; Storey 1994; Parker et al. 2010) and of international new ventures. To this end, the paper will identify the basic dimensions that are critical to BGs' long-term international expansion and internationalisation behaviour, and track them over time. In identifying said dimensions, the paper draws on the literature in international entrepreneurship and international business, and builds on recent efforts to conceptualize internationalisation processes as they manifest over time, namely, the Jones and Coviello (2005) model of entrepreneurial processes of behaviour in time, the Life Cycle Model developed by Gabrielsson et al. (2008), the dynamic capability view proposed by Weerawardena et al. (2007), the model proposed by Mathews and Zander (2007) and the most recent work by Efrat and Shoham (2012) on the differentiated drivers of short and long term growth in BGs.

The findings offered by the literature provide the framework for the analysis of six firms' internationalisation trajectories from birth to current state (timeframe c. 10 years). To qualify for selection, the case firms had to be accelerated internationalisers from their earliest years; they also had to meet the more general definition of Oviatt and McDougall (1994) regarding the coordination of value chain activities across markets. The selection criteria also included proximal foundation dates, differing industry/market characteristics (such as the degree of technology in the given industry) and variation in geographic (national) location. Cross-case analysis enabled the identification of patterns of similarities or differences (i.e., pattern matching) between our born globals. We then applied findings to previous internationalisation and BG models to explain and interpret the results (explanation building).

The paper is structured as follows: firstly, we briefly present the most recent advances in modelling accelerated internationalisation over time; secondly, we discuss and develop an appropriate conceptual framework for the analysis over time of the differing variables that characterise the evolution of born global firms in a holistic perspective; finally, we match case study analysis with the framework and discuss our findings.

2 Models of Internationalisation in International Entrepreneurship

Born global firms (BGs) or international new ventures are "small (usually) technology-oriented companies that operate in international markets from the earliest days of their establishment" (Knight and Cavusgil 1996, p. 1). They were first identified by Rennie (1993), and were subsequently described within a crossborder and cross-industry perspective (Rialp et al. 2005; Keupp and Gassmann 2009). These firms challenge conventional internationalisation theories and the long-held belief that the strategic options of small firms are prevented by resource poverty from entering international markets at, or near, their foundation (Oviatt and McDougall 1994). These businesses' fast and broad internationalisation, which lacks any apparent path-dependency, differs from the slow and incremental pattern described in traditional process models of internationalisation (Johanson and Vahlne 1977), and has raised substantial doubts as to the validity of such models. On the other hand, the few studies on the long-term growth of these companies question the path dependency issue (Hashai and Almor 2004; Moen and Servais 2002) and highlight growth paths that do not necessarily conflict with those of traditional process models. Moreover, Johanson and Vahlne's (2009) recent revision to their model identifies common ground between differing international growth models by assessing them from a "role of networks" perspective. The debate about international growth has extended from a bi-polar comparison between traditional intemationalisers and BGs towards a more nuanced understanding of differentiated growth patterns and trajectories (Bell et al. 2003). At the same time, attention to certain demographic traits of born global firms (age and time to internationalisation, speed of internationalisation in the first years) needs to be complemented by an understanding of what drives continuity (if there is any) in corporate growth (Gabrielsson et al. 2008; Gabrielsson and Kirpalani 2004).

In International Entrepreneurship (IE) studies, some authors depict internationalisation as a firm-level behaviour and as a process of development over time (Jones and Coviello 2005). The deriving models also accommodate the idea that certain conditions (e.g., firm and environmental factors) are both necessary and sufficient to explain internationalisation (ibid, p. 286).

The authors note that, although time is treated implicitly in behavioural research, it is seldom positioned as a primary dimension in understanding behaviour. However, time is fundamental not only to experiential learning, but also to explaining each firm's internationalisation in terms of order, timing and speed of the process (Hurmerinta-Peltomaeki 2003). In the BG context, time is one of the key elements in distinguishing BGs from traditional SMEs (Knight and Cavusgil 1996), since two key features of BGs are the time needed to start international activities (precocity) and the speed at which internationalisation develops. Time might also be expressed as the gap in time between the establishment of different forms of international activity, and thereby provide a measure of the rate of innovativeness of internationalisation (Jones and Coviello 2005). A second approach to model the phenomenon of early stage accelerated internationalisation is the international entrepreneurial dynamics framework offered by Mathews and Zander (2007). Their focus is on the entrepreneurial processes that embrace the discovery of new business opportunities in an international context, on aspects of exploitation, including the redeployment of resources, and on engagement with international competitors. Longitudinal INV research might also draw on organisational life cycle theories when trying to explain BG growth. Such research provides a framework for assessment of the options that SMEs face in their development at given times. In this vein, Gabrielsson et al. (2008) suggest a phase-model of BG development and the study of the different stages that these firms go through. On the basis of their multiple case...

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