Presented by Karina Marie Ang Chua 31 March 2011

Benjamin M. Oviatt & Patricia Phillips McDougall

Journal of International Business Studies (1994) 25, 45-64

Presented by Karina Marie Ang Chua 31 March 2011

 Awarded 1st prize in the
1993 Competition for the
Best Paper on
Entrepreneurship &
Innovation (NYU’s
Center for
Entrepreneurial Studies
 2004 Decade Award
Winning Article

Presented by Karina Marie Ang Chua 31 March 2011

Benjamin M. Oviatt Patricia P. McDougall

• Professor of Managerial • currently Interim Associate

Sciences Dean of Academics

• William L Haeberle Professor of

• Director of the HJ Russell, Sr. Entrepreneurship at Indiana
International Center for University’s Kelley School of
Entrepreneurship in the Business
Robinson College of Business at
Georgia State • focuses on the
Internationalization
• focuses on the Of new ventures &
internationalization new venture
strategies
of new ventures

Presented by Karina Marie Ang Chua 31 March 2011

 Purpose of the study
 International New Ventures
 Problems
 Theoretical Framework
 4 Types of International New Ventures
 Conclusion

Presented by Karina Marie Ang Chua 31 March 2011

 To define & describe the phenomenon & to
present a framework explaining how
international new ventures fit within the theory
of the MNE
 Hope that a well-delineated, theoretical
framework will unify, stimulate, and guide
research in the area

Presented by Karina Marie Ang Chua 31 March 2011

 the success of international new
ventures seems to depend on
 having an international vision of the firm
from inception
 an innovative product or service marketed
through a strong network
 tightly managed organization focused on
international sales growth

Presented by Karina Marie Ang Chua 31 March 2011

Presented by Karina Marie Ang Chua 31 March 2011
 as a business organization that, from
inception, seeks to derive significant
competitive advantage from the use of
resources and the sale of outputs in
multiple countries

Presented by Karina Marie Ang Chua 31 March 2011

 The stage theory of MNE evolution
 after a period of domestic maturation and
home market saturation

Presented by Karina Marie Ang Chua 31 March 2011

 Scale and the MNE
 Requirement for multinationality: scale …
▪ ability to efficiently manage international
communication & transportation & exchange of
production & market information
▪ Some makes feasible a large scale R&D effort

Presented by Karina Marie Ang Chua 31 March 2011

 The Changing of International Environment
 Large Size economic, technological and social conditions …
 Markets link more efficiently

Presented by Karina Marie Ang Chua 31 March 2011

 Necessary & Sufficient elements for
sustainable international new ventures
 With many markets internationalizing,
fewer new ventures can escape
confrontations with foreign competition
 more entrepreneurs are adopting a
multinational viewpoint

 Thus, incongruent  new framework

Presented by Karina Marie Ang Chua 31 March 2011
Presented by Karina Marie Ang Chua 31 March 2011
 Internalization of some transactions
 most basic and is clearly part of traditional MNE theory
 Organizations form where economic transactions are
inefficiently governed by market prices
 defining element of all organizations

transaction costs of hierarchical

constructing and executing authority will transaction is said to
a contract & monitoring the be the have been internalized
performance of the governance within an organization
contracting parties mechanism
chosen

Presented by Karina Marie Ang Chua 31 March 2011

 Alternative governance structures
 Poverty of resources & power defining
characteristic of the new venture
▪ lack sufficient resources
▪ tend to internalize, or own, a smaller % of the resources
essential to their survival than do mature organizations
 Hybrid partners
 Network structure

Presented by Karina Marie Ang Chua 31 March 2011

 distinguishes new ventures &
established organizations:
 minimal use of internalization & >
use of alternative transaction
governance structures
 poverty of resources & power  new
ventures use such structures when
the risk of asset appropriation by
hybrid partners is high.
Presented by Karina Marie Ang Chua 31 March 2011
 Foreign location advantage
 The location advantage
▪ firms are international because they find
advantage in transferring some moveable
resources
 Disadvantages
 Barriers, laws, language & practices

Presented by Karina Marie Ang Chua 31 March 2011

 Unique resources
 3 elements - necessary conditions
 not sufficient conditions for sustainable competitive
advantage
 For Sustainable competitive advantage…
▪ knowledge-based INV - public good

Presented by Karina Marie Ang Chua 31 March 2011

 Kept proprietary by direct means
 Imperfect imitability
 Licensing
 The fact that new ventures frequently
use network governance structures
 The relationships inherent in a network can have
high personal and economic value because network
members share fees than…

Presented by Karina Marie Ang Chua 31 March 2011

Presented by Karina Marie Ang Chua 31 March 2011
Presented by Karina Marie Ang Chua 31 March 2011
Presented by Karina Marie Ang Chua 31 March 2011
 Framework
 explains the existence of international new
ventures, and appears useful in describing
their distinct types
 describes sustainable international new
ventures as controlling assets
 identifies ways of protecting rents derived
from such knowledge  empirical research
is needed

Presented by Karina Marie Ang Chua 31 March 2011

Presented by Karina Marie Ang Chua 31 March 2011