INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-...

Page 1 of 15

INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED BORN-GLOBAL FIRMS: A

CONCEPTUAL MODEL

SELVI KANDASAAMI

Graduate School of Management

University of Western Australia

Australia

ABSTRACT

The increase of small and medium sized firms entering into the global business
environment is the impetus for this study. Some small businesses internationalise
almost from inception and the existing theories in international business do not
adequately explain this born-global phenomenon. The factors that may influence
the internationalisation process of born-global firms are categorised as firm
characteristics, environmental characteristics and global orientation of the key
decision maker(s). The internationalisation process is studied in four dimensions,
namely the speed of entry, pattern of entry, mode of entry and the market coverage
in terms of the number of countries covered. Global orientation of the key decision
maker is hypothesised to moderate the relationship between the firm
characteristics, the environmental characteristics and the internationalisation
process. This paper presents the conceptual model of the internationalisation
process of born global firms and relevant research propositions.

INTRODUCTION

Some small and medium sized businesses internationalise immediately and do not wait to
expand their horizons. Multinational from inception, these firms break the traditional
expectations (Knight, 1997; Oviatt and McDougall, 1994) that a business must enter the
international market in an incremental fashion, becoming global only as it grows wiser as
proposed by the conventional stage theory of internationalisation (e.g., Johanson and Vahlne,
1977; 1990). According to Hill (1995), about 1% of SMEs can be said to be truly global, in the
sense of being active in multiple countries, across several continents, and with the ability to
operate wherever they see fit. SMEs contribute between 25% to 30% of world manufactured
exports (Hill, 1995). UNCTAD (1993) research indicates that 2/3 of the number of mini
transnational corporations may be SMEs.

According to McKinsey & Co's Report (1993), four-fifths (80%) of the recent breed of emerging
exporters in Australia are small- and medium-sized firms and 20-25% of the total emerging
exporters in Australia are firms which internationalise at a very early age. Such firms are called
'born global' firms as 'these firms view the world as their marketplace from the outset and see
domestic market as a support for their international business' (McKinsey & Co., 1993, p.9).
Cavusgil (1994) says that this phenomenon is not unique to the Australian economy and that
they are visible in other economies and various industries as well. He mentioned that SMEs
develop their export business with a strong customer orientation and competing on value.
According to him, gradual, incremental internationalisation is almost obsolete in today's
business environment. There have been few reportings on small firms which

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 2 of 15

internationalise/globalise (depends on where the line is drawn between the two) and sample
cases are drawn from all around the world, mostly in developed countries such as theUSA,
Canada, Australia, New Zealand and Germany (Ray, 1989; McDougall et al, 1994, McMullan,
1994, Knight, 1997)

This paper will review the existing literature in this area and present a conceptual model linking
the factors that seemingly influence the internationalisation of the small and medium sized
born-global firms. This research focuses on considering the global orientation of the key
decision maker as the major explanatory variable and is hypothesised to moderate the
relationships of firm and environmental characteristics with the internationalisation process.

INTERNATIONALISATION

Theories in international business, product cycle theory of Vernon (1966), oligopolistic theory
of Knickerbrocker (1973), monopolistic advantage theory of Hymer (1976), internalisation
theory (Buckley and Casson, 1976), Uppsala school's stage theory (Johanson and Vahlne,
1977), eclectic paradigm (Dunning, 1988) and the network theory of Axelsson and Easton
(1992) proposed of course in different times, explain the process of internationalisation
differently. The existing theories seem to be based on the assumption that firms become
international long after they have been formed, and they therefore relate to large, mature firms.
These theories according to McDougall et al, (1994) look at international business with the
focus on firm-level analysis of large mature firms rather than the analysis of entrepreneurs and
small and medium sized enterprises.

Internationalisation is a learning process in which the management learns either through

personal experience or through formal learning. The term internationalisation tends to be
roughly used to describe the outward movement in an individual firm's or larger grouping's
international operations (Piercy, 1981; Johanson and Weidersheim-Paul, 1975). Welch and
Loustarinen (1988) define internationalisation as "the process of increasing involvement in
international operations”. According to Cunningham and Homse (1982), internationalisation is
`a continuous process of choice between policies which differ may be only marginally from the
status quo'. This view was endorsed by Bilkey (1978), Rothchild (1983) and Cavusgil (1984).

Lindquist (1991) has studied the process of internationalisation in three dimensions, i.e., speed
of foreign entry, pattern of foreign market selection and choice of foreign entry form. According
to her, the speed of entry concerns the time lag between the establishment of the firm and its
first international activities and between subsequent entries; the pattern of foreign market
selection refers to the sequence of markets entered and penetrated by the firm; and the choice
of entry refers to the organisation form used by the firm (pp. 6-7). The traditional focus of
inquiry on the internationalisation of small firms has been on their export intensity (Tyebjee,
1994). Boter and Holmquist (1996) conclude that the concept of industry, combined with
studies on company and individual levels, captures the essence of internationalisation
processes in small firms.

TRIGGERS OF INTERNATIONALISATION

Most literature in international marketing covers exporting as the major international business
activity (e.g., Cavusgil & Nevin, 1981; Ganitsky, 1989). Literature on exporting can be grouped
into two categories; pre-export behaviour and the actual export process itself. Quite a lot of
studies in export marketing literature have focused on the investigation of factorsmotivating a

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 3 of 15

firm to become involved in export activities. Many authors have distinguished between internal
and external stimuli in order to examine whether the management decision making in initiating
exports is affected by the internal qualities of the firm plus the environmental factors (Simpson
and Kujawa, 1974; Olson and Weidersheim-Paul, 1978; Weidersheim-Paul et al., 1978;
Cavusgil and Nevin, 1981; Cavusgil, 1982; Brooks and Rossen, 1982; Garnier, 1982; Joynt,
1982). Some other authors, focusing on the firm's activity in identifying and exploiting export
market opportunities, have classified export stimuli as proactive, i.e., those connected to the
firm's aggressive behaviour and deliberate search to perform export activities (pull factors),
and reactive, i.e., those associated with the firm's reaction to changing conditions and passive
attitude in looking for export opportunities (push factors) (Piercy, 1981; Johnston and Czinkota,
1982; Cavusgil, 1982). Different proactive and reactive motives are grouped in Table 1.

Table 1 Triggers of Internationalisation

In export marketing literature, there is a consensus on the principal kinds of export motives
(Dicht et al, 1984; Sullivan and Bauerschmidt, 1990), in spite of the substantially different
approaches developed to analyse a firm's export growth and development, such as strategy of
innovation (Simmonds and Smith, 1968; Lee and Brasch, 1978), a process of knowledge
development and increasing foreign commitment (Johanson and Vahlne, 1977; 1990). A stage
hierarchy analysis (Bilkey and Tesar, 1977; Cavusgil, 1980; Czinkota and Johnston, 1981;
Reid, 1981) and a behavioural outcome of pre-export activities (Weidersheim-Paul et al., 1978;
Welch and Weidersheim-Paul, 1979; Olson and Weidersheim-Paul, 1978). From the review of
literature, it appears that export stimuli emerge primarily from three streams pertaining to
decision-maker's traits, firm characteristics and the factors of external environment. Pak (1991)
investigated how small- and medium-sized firms that are currently involved in exporting decide
to continue or expand exporting activities. As international factors, top management
international orientation (i.e., age, level of education, frequency of foreign travel, and foreign
language competence) and differential firm advantages (i.e., technology intensiveness, product
uniqueness, and management expertise) were included.External factors were represented by
domestic market environment (i.e., domestic market conditions and government export
assistance) and foreign market environment (i.e., foreign market conditions and market
barriers). It can be noted from the summary of the review of literature that the triggers can be
grouped into decision maker characteristics, firm characteristics and the environmental
characteristics.

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 4 of 15

Ever since researchers produced evidence to suggest that firm's internationalisation constitute
process of incremental and evolutionary build up of foreign commitment over time, there has
been extensive research to support, and more recently to dispute the proposed approaches to
internationalisation (Farhung, 1993, p. 177).

In the Behavioural / Incremental Model, psychic distance is important (Cyert and March, 1963;
Johanson and Vahlne, 1977; Bilkey and Tesar, 1986; Cavusgil and Nevin, 1981). The
behavioural model which addresses internationalisation in broad terms attempts to answer
which markets firms enter first (based on psychic distance) and how they organise at each
stage of development within the new market. According to the Economic Model, a firm's
decision in a foreign market involves a rational trade-off, whereby the firm trades various levels
of control for reductions in resource commitment, with the hope of increasing returns while
reducing risks (Jeannette and Hennessey, 1988; Anderson and Gatignon, 1986). The
economic model, on the other hand, addresses the questions related to the more efficient
between two alternative modes. Based on the assumption of Strategic Model that when firms
go international they pursue multiple objectives, their choice of market entry and development
is influenced by a set of internal and external factors (Dunning, 1980; Reid and Rosson, 1987;
Root, 1987; Tyebjee, 1994; Knight, 1997). The strategic model is based on what is most
feasible, given the circumstances both at entry point and in expanding within the market. This
is probably the best model within which the current research can be discussed.

CONCEPTUAL FRAMEWORK

Traditionally, small firms are known for lack of both financial and people resources. As
discussed earlier, the existing theories could not give adequate explanation for the
internationalisation process of born-global firms. Born-global firms view world as their
marketplace and internationalise almost from inception. The aim of this research is to identify
the factors that facilitate the early internationalisation of these firms. The organisational value
of a small firm is often the value of the owner-manager or the key decision maker. Even though
small firms have some inherent weaknesses such as lack of resources, this situation is often
overcome by having some unique firm characteristics. As Turnbull (1987) said, the
environmental aspects are very important for the internationalisation process.

Farhung (1993, p. 178) state that all research that deals with the firm's decision to go abroad,
its choice of country / product markets, selection of entry modes and finally substitution of
methods of operation within the markets would be of relevance to the topic of
internationalisation. Lindquist (1991) studied internationalisation process by speed of entry,
pattern of entry, and mode of entry. According to her, the speed of entry concerns the time lag
between the establishment of the firm and its first international activities and between
subsequent entries; the pattern of foreign market selection refers to the sequence of markets
entered and penetrated by the firm; and, the choice of entry refers to the organisation form
used by the firm. For the purpose of this study, it is proposed to add one more aspect of
internationalisation in terms of the market coverage. From the pilot interviews, it was notedthat
born-global SMEs have business activities in many, sometimes more than 10 culturally
divergent markets.

A born-international firm is defined as one which is involved in international activities (other

than imports and trading) with less than 5 countries; a born-global firm is defined as one which
has business activities in 5 or more countries and selling more than 40% of its produce. To
quality for a born-international or born-global, a firm must have commenced its international

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 5 of 15

sales within the first two years of the first commercial sales. The market coverage aspect will
help identifying whether a firm is born-global or born-international.

Firm Characteristics

Researchers have identified firm-specific factors such as differential firm advantages (Tookey,
1964; Simmonds and Smith, 1968; Pavord and Bogart, 1975; Weidersheim-Paul et al., 1978;
Cavusgil, Bilkey and Tesar, 1979; Cavusgil and Nevin, 1981; Cavusgil, 1984), resource
allocations (Cunningham and Spigel, 1971), management of export operations (Pavord and
Bogart,1975; Cavusgil and Nevin, 1981; Rabino, 1980; Ogram, 1982; Kaynak and Kothari,
1984), excess production capacity (Weidersheim-Paul et al., 1978; Johnston and Czinkota,
1982; Kaynak and Kothari, 1984; Diamanthopoulos et al., 1990), firm size (Tookey, 1969;
Reid, 1984; Gripsrud, 1990; Bonaccorsi, 1992), history and previous extra-regional expansion
(Garnier, 1982), multiculturality (McMullan, 1994); strategic alliances (Kanter, 1995);
technological sophistication/intensity (Tyebjee, 1995; Lindquist, 1991), customer orientation
(Cavusgil, 1994), market research information (Hart, Webb and Jones, 1994). Cavusgil (1994)
commented that small firms can cope with the fast track internationalisation with their unique
differential advantages. A major competitive advantage among small and medium successful
exporters, as identified in Mckinsey & Co's (1993) report, resulted from the possession of a
unique product developed through the application of technology and product design.

In the case of born-global SMEs, the firm characteristics that may have more influence on the
internationalisation process are their unique advantages (Cavusgil, 1994) in terms of their
product(s), technology used, composition of their management team (multiculturality,
knowledge base), customer orientation. During the pilot interview, one CEO of a born-global
SME stated that their product has a unique patent and no one else can make what they were
making. Another CEO said that their success in the international market was due to their
product, their multicultural work team and their global vision. Most companies came out
endorsing the nature of the product and the multicultural composition of the team. From the
literature review and the pilot interviews that the author had with the CEOs or the key decision
makers of the born-global SMEs, the following research hypotheses are developed.

Traditional international companies go though incremental internationalisation because of the

increased risk and capital involved. Particularly, a small firm which views the world as its
marketplace can enter into the foreign markets by virtue of the nature of its product by creating
a niche market all around the world. Also, having a unique technology or patent for its product
help fast track internationalisation process. Traditionally, most firms used to enter culturally
similar markets to avoid problems such as differences in language. In the case of a firm with a
multicultural management team, this perceived cultural barrier is alleviated straightaway. If a
firm has a unique product/technology/process and a management team tocope with the
cultural differences, then it is easier for the firm to internationalise quickly into any foreign
market using different modes of entry and have a broader market coverage.

P1 Firm characteristics are related to its internationalisation process.

H1 The unique advantages of the firm are related to its internationalisation process.

Environmental Characteristics

The importance of environmental characteristics that influence management decision making

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 6 of 15

process of initiating, developing and maintaining export activities also figure in the findings of
major studies on export marketing. According to Turnbull (1987), an understanding of how
companies internationalise can be achieved through a knowledge of the environment within
which they operate. It is this environment that determines the nature of their strategies.

Environmental characteristics refer to factors such as foreign government regulations (Pavord

and Bogart, 1975; Bilkey and Tesar, 1977; Kaynak and Kothari, 1984), availability of foreign
market information (Weidersheim-Paul et al. 1978; Kaynak and Kothari, 1984), increased
domestic competition (Joynt, 1982; Diamanthapoulos et al., 1990), export promotion
programmes (Bilkey, 1978; Rabino, 1980), profit and growth opportunities abroad (Rabino,
1980; Johnston and Czinkota, 1982; Kaynak and Kothari, 1984), declining domestic market
(Pavord and Bogart, 1975; Diamanthapoulos et al., 1990), unsolicited orders from abroad
(Piercy, 1981; Simpson and Kujawa, 1974; Bilkey and Tesar, 1977; Cavusgil and Nevin, 1981;
Cavusgil, 1984; Sullivan and Bauerschmidt, 1988; Diamanthapoulos et al., 1990), domestic
demand conditions (Tyebjee, 1994), industry environment factors such as scale economics,
technology dynamics, consumer switching and competitive lead (Tyebjee, 1994) and industry
structure (Boter and Holmquist, 1996).

Environmental characteristics were neglected in most early studies in international marketing.

However, a few recent studies have included environmental characteristics as one of the
predictor variables. (Tyebjee, 1994; Cavusgil, 1994; Boter and Holmquist, 1996). While
accepting the importance of the environmental factors in the internationalisation process of the
firm, Lindquist (1991) considered environmental factors as a contextual variable. However, in
the present study, it is proposed to treat environmental characteristics as one of the predictor
variables.

P2 The environmental characteristics are related to the firm's internationalisation process.

H2 The domestic market attractiveness is related to the firm's internationalisation process.

H3 The foreign market attractiveness id related to the firm's internationalisation process.

Key Decision-Maker Characteristics

Researchers have recognised and emphasised the crucial role in a firm's export involvement
and commitment played by the specific managerial traits such as international orientation
(Simmonds and Smith, 1968; Bilkey and Tesar, 1977; Weidersheim-Paul et al., 1978;Cavusgil,
1980; Cavusgil and Nevin, 1981; Reid, 1981; Dicht et al., 198, 1990; Yaprak, 1985; Sullivan
and Bauerschmidt, 1988; Ellis, 1995), perception of profit, risks and costs in export markets
(Simpson and Kujawa, 1974; Brooks and Rosson, 1982; Joynt, 1982; Ogram, 1982; Kedia,
1985), quality and dynamism (Bilkey and Tesar, 1977; Reid, 1981; Ogram, 1982). Whether a
company is allied or merged with enterprises abroad, a critical element for success will rely on
the quality and flexibility of the management.

Perlmutter (1969) was probably the first researcher to discuss how various attitudes such as
ethnocentricity, regiocentricity, polycentricity and geocentricity of top management play a role
in determining the extent to which a firm is involved in international activity. This was supported
by the findings of Cunningham and Spigel (1971), etc.

Global Orientation

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 7 of 15

Globalisation is ultimately the business of mindset and behaviour change (Rhinesmith, 1992,
p. xi). Weidersheim-Paul et al. (1978) also found the international orientation of the decision
maker to be a significant factor in the firm's decision to export. Olson and Weidersheim-Paul
(1978), used the degree of international orientation as one of the major decision maker
characteristics which influences the perception of export stimuli. Simmonds and Smith (1968)
suggested that the differences in the degree of international orientation may explain the
differences between individuals in pre-export behaviour. Olson and Weidersheim-Paul (1978)
also stated that a high degree of international orientation on the decision maker's part probably
improves his/her ability both to recognise information about export and to act upon that
information. Findings regarding the international orientation of export decision makers suggest
that exposure to foreign environments and cultures (through for example education, foreign
travel, and the knowledge of foreign languages) was instrumental in shaping an international
orientation, particularly, if those experiences occurred early in life. Decision makers' age
appears to be relevant as well, younger executives tending to be more internationally minded
than other executives (Pinney, 1980). The more international outlook of the exporting firms, the
more it may contribute to their success. Cavusgil and Godiwalla (1982) argue that as firms
travel the internationalisation path, they become increasingly alert to environment,
opportunities and commit greater resources for searching new ventures. An important internal
characteristic of firms attempting to grow internationally, rather than through diversification,
was the international outlook of the high-ranking executives (Lindquist, 1991, p. 22). It should,
however, be borne in mind that international orientation has been identified in the past studies
as only one of other several factors influencing export initiation, others being the perceived
attractiveness of exporting and the firm's competitive advantages.

Dicht et al (1986, p. 124) mention that the foreign orientation of managers is, like all constructs,
not amenable to direct observation, and therefore should be determined through a series of
indicators which can be regarded as a reflection of foreign orientation. Their model of foreign
orientation is built-up on four levels; psychic distance, objective managerial characteristics,
subjective managerial characteristics (risk preference, rigidity, willingness to cperspective), and
attitude toward exports. Reid (1981) used foreign market hange and future orientation as a
measure of the perceived difference between the home market and foreign markets and
between foreign markets themselves, in terms of economic, cultural, political and market-
strategic dimensions (p. 107). However, no operational definition was used but only the
theoretical framework was provided. Holzmueller and Kasper (1990) used the foreignmarket
orientation and used the same definition as that if Dicht et al. (1984, 1986, 1990). Dicht et al.
(1984, 1990), in their work on foreign/international orientation, operationalised the international
orientation construct.

The international orientation of the decision-maker is perceived as being the most salient of the
personal characteristics for it suggests that the individual with a `high degree of international
orientation will have a higher probability of being exposed to attention evoking factors and of
perceiving them' (Weidersheim-Paul et al., 1978, p. 49). Ellis (1995, p. 78) has highlighted the
use of international orientation in different variations for the past two or three decades as a key
decision-maker variables influencing the export behaviour and the difficulty to measure the
concept.

For the purpose of this research, global orientation of the key decision maker as `viewing the
world as the marketplace'. From the foregoing discussions, it may be hypothesised that global
orientation of the key decision maker(s) will have a significant influence on the
internationalisation process of the firm.

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 8 of 15

P3 Key decision maker's global orientation is positively related to the firm's internationalisation
process.

Global Orientation as a Moderator

From the literature review, it is evident that the managerial decision making is vital for the firm's
internationalisation process. In particular, the entering of pre-export phase depends on
psychological variables rather than strictly economic considerations such as feasibility studies
(Bilkey and Tesar, 1977, p. 94). According to Dicht et al (1986), managerial characteristics
which moderate the strength of the impact of export stimuli are the cognitive style and the
degree of international orientation of the decision-maker (pp. 122-123). Even though it is
important for a firm to have desirable firm characteristics such as a unique product or service,
technological sophistication, resources, etc., without the international orientation of the
founder, the firm would not be able to enter into the foreign market. More so, in the case of
born-global firms, the international orientation of the owner-manager becomes contingent and
it will affect the relationship between the firm characteristics and the internationalisation
process. Global orientation may have several antecedents and some of the antecedents given
above in Figure 1 are directly taken from past research and from the pilot study.

Global orientation has been found as one of the characteristics of the management in most
literatures relating management characteristics with export behaviour. However, these studies
were all done on firms that go through the traditional stage theory of internationalisation. In the
case of born international or born global firms, global orientation may even precede the
product development stage. As this study focuses on the internationalisation process, it is
more appropriate that global orientation is considered as moderator that will have significant
effect on the relationship between the firm characteristics and the internationalisation process.

Most of the internationalisation models in international marketing literature is that the

researchers treated decision maker characteristics as an independent variable among the
internal export stimuli of their internationalisation model (eg., Reid, 1981). Most of the
researchers stated that the most intensive affect of the decision maker characteristics appear
at the beginning of the internationalisation process in which the evaluation of the feasibility
ofundertaking international marketing activity is done or in other words, in the pre-
internationalisation decision phase. The literature also comment that some exporters move
ahead with exporting without much rational analysis or deliberate planning (e.g., Cavusgil,
1980). If lack of experience and information at the beginning of internationalisation is
considered, the parallel results of these studies reveal that at the beginning of the
internationalisation, the characteristics of the decision maker becomes central construct of the
export feasibility evaluation process. In other words, `the systematic evaluation of the capacity
to export tends not to be due to economic considerations but to the stereotype built in the
managers value system' (Roux, 1987).

Dicht et al. (1984) surveyed risk preferences (both personal and marketing-related), rigidity,
willingness to change and attitude towards business stays abroad as indicators of the foreign
orientation. Factors such as frequency of stays abroad, foreign nationality, command of foreign
languages, etc, were used as objective manager characteristics (Holzmueller and Kasper,
1990). This model also attempts to consider international orientation as a moderator variable to
get better explanatory power.

The effect of the factors which influence internationalisation may vary from industry to industry

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BORN-... Page 9 of 15

and from a service firm to a manufacturing firm. Hence, the proposed conceptual model in
Figure 1 deals with firm characteristics. environmental characteristics as predictor variables,
global orientation as the moderating variable and the internationalisation process measured in
terms of the speed of entry, pattern of entry, mode of entry and the market coverage as the
criterion variables.

The following hypotheses are developed from the discussion above and from the pilot
interviews.

P4 Key decision maker's global orientation will moderate the relationship between firm
characteristics and the internationalisation process.

P5 Key decision maker's global orientation will moderate the relationship between the
environmental characteristics and the internationalisation process

Figure 1 Conceptual Model

DISCUSSION

This paper extends the knowledge in understanding the internationalisation process of firms, in
particular, small and medium sized firms. Entrepreneurs are often forgotten in the evolution of
multinational companies. This study attempts to link the hitherto neglected entrepreneurship to
the internationalisation aspects of the firm. Even though few studies have identified global
vision of the management as one of the essential skills required for internationalisation at an
early age. There is no formal proved scale to measure this. This research aims to develop a
global orientation scale by identifying the antecedents such as tolerance for ambiguity,
willingness to change, networking, international exposure, ethnocentricity and opportunity
seeking. Another important feature of this study is that the global orientation of the key
decision maker is said to moderate the relationship between the firm and environmental
characteristics with the internationalisation process. Even though this study includes firm
characteristics and environmental characteristics, the list included is not exhaustive. There are
so many firm characteristics which influence the internationalisation of SMEs. But it is
narrowed down to a distinct few in this research as indicated by the pilot interviews.

This research has several managerial implications. Firstly, academics in marketing,

management and entrepreneurship will have a clearer understanding of the internationalisation
process in born-global firms. Secondly, the scale on `global orientation' can be used to identify

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BOR... Page 10 of 15

in recruiting personnel for international businesses. Thirdly, for the developmental institutions
who design programmes for promoting exports can identify the factors that may influence the
internationalisation of SMEs. Lastly, this will enable SMEs to develop the necessary skill base
for internationalisation.

CONCLUSIONS

Global vision, the unique product, the multicultural management team combined with the
market attractiveness seem to influence the internationalisation of SMEs in terms of their
speed of entry, the mode of entry used, the pattern of entry and the number of countries
covered. This research attempts to offer a framework for incorporating global orientation of the
key decision maker as a moderating variable, measured by the new scale developed. Strategic
model of internationalisation is used to incorporate both the internal and external
characteristics. There may be more factors that are very important for SMEs and I do not claim
to be exhaustive. In order to generalise the findings, this study has to be duplicated in both
developed and developing countries of different sizes. This will eliminate all possible
arguments that size of the domestic market is a major decisive factor in a firm's
internationalisation.

BIBLIOGRAPHY

Anderson. E., & Gatignon, H. (1986) `Modes of Foreign Entry: A Transaction Cost Analysis
and Propositions', Journal of International Business Studies, 17(3), 1-26.

Axelsson, B., & Easton, G.(Eds.) (1992) Industrial Networks: A New View of Reality,
Routledge, London.

Bilkey, W. J. & G. Tesar (1977). ` The Export Behaviour of Smaller Wisconsin Manufacturing
Firms', Journal of International Business Studies, 8 (Spring/Summer): 93-98.

Bilkey, W. J. (1978). `An Attempted Integration of the Literature on the Export Behaviour of
Firms', Journal of International Business Studies, 9, (Spring/Summer): 33-46.

Bonaccorsi, A. (1992) `On the Relationship Between Firm Size and Export Intensity', Journal of
International Business Studies, 23(4), 605-635.

Boter, H., & Holquist, C. (1996) `Industry characteristics and Internationalization in Small
Firms', Journal of Business Venturing, 11, 471-487.

Brooks, M.R., & Rosson, P.J. (1982) `A study of export behaviour of small and medium-sized
manufacturing firms in three Canadian provinces', in Czinkota, M.R., & Tesar, G. (eds.) Export
Management: An International Context, Praeger, New York.

Buckley, P.J., & Casson, M. (1976) The future of the multinational enterprise, Holmes & Meter,
New York.

Casson, M. (1985) Entrepreneurship and the dynamics of foreign direct investment. In Peter,
J.B., & Casson, M. The economic theory of the multinational enterprise, St.Martin's press, New
York.

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BOR... Page 11 of 15

Cavusgil, S.T. (1980) `On the Internationalization Process of Firms', European Research, 8(6),
273-281.

Cavusgil, S.T. (1984) `Organizational characteristics associated with export activity', Journal of
Management Studies, 21, 1, 1-22.

Cavusgil, S.T. (1994) 'Born Globals: A Quiet Revolution Among Australian Exporters', Editorial,
Journal of International Marketing, 2(3).

Cavusgil, S.T., & Nevin, J.R. (1981) `Internal Determinants of Export Marketing Behavior: An
Empirical Investigation', Journal of Marketing Research, 15, 221-235.

Cavusgil, S.T., & Y.M. Godiwalla (1982) `Decision-making for International Marketing: A
Comparative Review', Management Decision, 20(4), 47-54.

Cavusgil, S.T., Bilkey, W.J., & Tesar, G. (1979) `A note on the Export Behavior of Firms:
Exporter Profiles', Journal of International Business Studies, 10, 91-97.

Cunningham, M. T. & E. Homse (1982). ` An interaction Approach to Marketing Strategy'. In H.

Hakkansson (ed.) International Marketing and Purchasing of Industrial Goods: An Interaction
Approach, Chichester: John Wiley, 328-345.

Cunningham, M.T., & Spigel, R.I. (1971) `A study in successful exporting', British Journal of
Marketing, Spring, 2-12.

Cyert, R.M., & March, J.G. (1963) A Behavioral Theory of the Firm', Prentice-Hall, New York.

Czinkota, M.R., & Johnston, W.J. (1981) `Segmenting U.S. Firms for Export Development',
Journal of Business Research, 18, 207-218.

Diamantopoulos, A., & Inglis, K. (1988) `Identifying differences between high- and low-
involvement exporters', International Marketing Review, 5 (Summer), 52-60.

Diamantopoulos, A., & Schlegelmilch, B. , & Allpress, C. (1989) Export Marketing Research:
An Empirical Investigation of Users and Non-users, Working Paper EBMS/1989/25, University
of Wales, Swansea.

Dicht, E., H.G. Koglmayr, & S. Muller (1990) `International orientation as a precondition for
export success, Journal of International Business, 21(1), 23-40.

Dicht, E., M. Liebold, H.G. Koglmayr, & S. Muller (1984) `The foreign orientation of
management as a central construct in export-oriented decision making process', in G.M.
Hampton and A.P. van Gent (eds.) Marketing Aspects of International Business, Boston:
Kluwer-Nijhoff, 119-141.

Dicht, E., M. Liebold, H.G. Koglmayr, & S. Muller (1986) `Identifying export potential: A
comparative analysis of German and Japanese firms', Advances in International Marketing, 1,
233-254.

Dichtl, E., Leibold, M., Koglmyer, H.-G., & Muller, S. (1983) `The Foreign Orientation of

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BOR... Page 12 of 15

Management as a Central Construct in Export Centred Decision-Making Processes', in

Research for Marketing, 10(1), p. 7-14.

Dunning, J.H. (1980) `Towards an Eclectic Theory of International Production: Empirical Tests',
Journal of International Business Studies, 11(1), 9-31.

Dunning, J.H. (1988) `The Eclectic paradigm of international production: A restatement and
some possible extensions', Journal of International Business Studies, 19, 1-31.

Ellis, P.D. (1995) Cosmopolitanism and the Marco Polo effect, Unpublished Doctoral
Dissertation, University of Western Australia.

Farhung, M. (1993) `Internationalization of the Firm: Conceptual overview and empirical

evidence', in Swanson, C.L., et al. (eds.) International Research in the Business Disciplines,
JAI Press Inc. Greenwich, Connecticut, Vol. 1, pp. 177-184.

Ganitsky, J. (1989) `Strategies for innate and adoptive exporters: Lessons from Israel's case',
International Marketing Review, 6(5): 50-65.

Garnier, G. (1982) `Comparative export behavior of small Canadian firms in the printing and
electrical industries', in Czinkota, M.R., & G.Tesar (eds.) Export Management: An International
Context, Praeger, New York.

Gripsrud, G. (1990) `The Determinants of Export Decisions and attitudes to a distant market:
Norwegian Fishery Exports to Japan', Journal of International Business Studies, 21(3), 469-
485.

Hart, S.J., Webb, J.R., & Jones, M.J. (1994) `Export Marketing Research and the Effect of
Experience on Industrial SMEs', International Marketing Review, 11(6), 4-22.

Hill, C. (1995) `Skilling for Internationalisation: Findings from OECD Research on the
Globalisation of SMEs'. In W. Dunlop & B. Gibson (Eds.) Skills for Success in Small and
Medium Enterprises, Proceedings of the 40 th International Council for Small Business
Conference, Sydney.

Holzmueller, H.H. & H. Kasper (1990) `The decision maker and export activity: A cross-
national comparison of the foreign orientation of Austrian Managers', Management
International Review, 30(3), 217-230.

Hymer, S. (1976) The International Operations of International Firms: A Study in Direct

Investment, MIT Press, Cambridge, MA.

Jeannette, J.P., & Hennessey, H.D. (1988) International Marketing Management: Strategies
and Cases, Houghton Muffin, Boston.

Johanson, J. & J. Vahlne (1977). `The Internationalization Process of the Firm- A Model of
Knowledge Development and Increasing Foreign Market Commitment, Journal of International
Business Studies, 8 ( Spring/Summer): 23-32.

Johanson, J., & J.E. Vahlne (1990) `The mechanism of internationalization', International

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BOR... Page 13 of 15

Marketing Review, 7, 4, 11-24.

Johanson, J. & F. Wiedersheim-Paul (1975). The Internationalisation Process of the Firm: Four
Swedish Case Studies'. Journal of Management Studies, October: 305-322.

Johnston, W., & M.R. Czinkota (1982) `Managerial motivation as determinants of industrial
export behaviour', in M.R. Czinkota and G.Tesar (eds.) Export Management: An International
Context, New York: Praeger, 3-17.

Joynt, P. (1982) `An Empirical Study of Norwegian Export Behaviour', In Czinkota, M.R., &
Tesar, G. (Eds.) Export Management: An International Context, Praeger, New York.

Joynt, P. (1982) `An Empirical Study of Norwegian Export Behaviour', in Czinkota, M.R., &
G.Tesar (eds.) Export Management: An International Context, Praeger, New York.

Kanter, R.M. (1995) `World Class', Academic press, New York.

Kaynak, E. (1985) `Correlates of Export Performance in Resource-based Industries', in

Kaynak, E. (ed.) Global Perspectives in Marketing, Praeger, New York. pp. 197-210.

Kaynak, E., & V. Kothari (1984) `Export behaviour of small and medium-sized manufacturers:
Some policy guidelines for international marketers', Management International Review, 24(2),
61-69.

Kedia, B.L., & Chhokar, J. (1985) `The impact of managerial attitudes on export behaviour',
American Journal of Small Business, Fall, 7-17.

Knickerbrocker, F.T. (1973) Oligopolistic Reaction and Multinational Enterprise, Harvard

Business School Press, Boston.

Knight, G.A. (1997) Emerging Organizational Paradigm for International Marketing: The Born
Global Firm, Unpublished Doctoral dissertation, Michigan State University.

Lee, W., & Brasch, J.J. (1978) `The adoption of export as an innovative strategy', Journal of
International Business Studies (Spring-Summer), 85-93.

Lindquist, M. (1991) Infant Multinationals, Institute of International Business, Stockholm School

of Economics, Sweden.

McDougall, P.P., & Oviatt, B.M. (1991) `Global start-ups: New ventures without geographic
limits', The Economic Forum, Winter: 1-5.

McDougall, P.P., Shane, S., & Oviatt, B.M. (1994) Explaining the formation of international new
ventures: The limits of theories from international business research', Journal of Business
Venturing, 9, 469-487.

McKinsey & Co. (1993) Emerging Exporters, Report submitted to Australian Manufacturing
Council.

McMullan, W.Ed. (1994) `Going global on start-up: a case study', Technovation, 14(3), 141-

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BOR... Page 14 of 15

143.

Ogram, E.W. (1982) `Exporters and Non-exporters: A Profile of Small Manufacturing Firms in
Georgia', in Czinkota, M.R., & Tesar, G. (Eds,) Export Management: An International Context,
Praeger, New York.

Olson, H.C., & Weidersheim-Paul, F. (1978) `Factors Affecting the Pre-Export Behaviour of
Non-Exporting Firms', in Ghertman, M., & Leontiades, J. (Eds.): European Research in
International Business, New York, pp. 283-305.

Oviatt, B.M., & McDougall, P.P. (1994) `Toward a theory of international new ventures', Journal
of International Business Studies, First Quarter, 45-64.

Oviatt, B.M., McDougall, P.P., Simon, M., and Shrader, R. (1994) `Heartware International
Corporation: a medical equipment company “born international” (Part A)', Entrepreneurship
Theory and Practice, 18(2), 111-128.

Pak, J.M. (1991) `The Export Behavior of Firms: A Study of Determinants and Decision-Making
in Small and Medium-Sized Manufacturing Firms', Unpublished Doctoral Dissertation, The
University of Alabama.

Pavord, W.C., & Bogart, R.G. (1975) `The Dynamics of the Decision to export', Akron Business
and Economic Review, Spring, 6-11.

Perlmutter, H. (1969) `The tortuous evolution of the multinational corporation', Columbia

Journal of World Business, 4, 1, 9-18.

Pinney, J.K. (1970) Process of commitment to foreign trade. Indiana Department of

Commerce.

Rabino, S. (1980) `An examination of barriers to exporting encountered by small

manufacturing companies', Management International Review, 20, 67-73.

Ray, D.M. (1989) `Entrepreneurial companies “born” international” four case studies',
Presented at Babson Research Conference on Entrepreneurship, St. Louis, IL.

Reid, R.S. (1981) `The Decision-maker and Export Entry and Expansion', Journal of
International Business Studies, 12(2), 101-112.

Reid, S. (1984). ` Market Expansion and Firm Internationalisation'. In E. Kaynak (ed.)

International Marketing Management, New York: Praeger, 197-206.

Reid, S., & Rosson, P. (1987) `Managing Export Entry and expansion: An Overview' in Reid
and Rosson (eds.) Managing export entry and expansion, Praeger, NEW YORK.

Rhinesmith, S. H. (1992) `Global Mindsets for Global Managers', Training and Development,
October, 63-68.

Root, F.R. (1987) Entry Strategies for International Markets, Lexington Books.

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004
INTERNATIONALISATION OF SMALL- AND MEDIUM-SIZED</b> <b>BOR... Page 15 of 15

Rothchild, D. (1983). `Surprise and Competitive Advantage', Journal of Business Strategy, 4

(3): 10-18.

Roux, E. (!987) `Manager's Attitudes Toward Risk Among Determinants of Export Entry of
Small- and Medium- Sized Firms', in P. Rosson and S. Reid (eds.) Managing Export Entry and
Expansion: Concepts and Practice, Praeger Publishers, 95-110.

Roux, E. (1987) `Manager's attitudes toward risk among determinants of export entry of small-
and medium-sized firms', in P.Rosson and S. Reid (eds.) Managing Export Entry and
Expansion: Concepts and Practices, Praeger, New York. pp. 95-110.

Simmonds, K., & Smith, H. (1968) `The First export order: A marketing innovation', British
Journal of Marketing, Summer, 93-100.

Simpson, C.L., & Kujawa, D. (1974) `The Export Decision Process: An Empirical Inquiry',
Journal of International Business Studies, 5(1), 107-117.

Sullivan, D., & A. Bauerschmidt (1990) `Incremental Internationalization: A test of Johanson

and Vahlne's thesis', Management International Review, 30(1), 19-30.

Tookey, D. (1969). ` International Business and Political Geography', British Journal of

Marketing, 3(3): 18-29.

Turnbull, P.W. (1987) `A challenge to the Stages theory of the Internationalization Process' in
Buckley, P.J., & P.N. Ghauri (eds.) `The Internationalization of the Firm: A Reader, Academic
Press, London, 1990.

Tyebjee, T.T. (1994) `Internationalization of High-Tech Firms: Initial vs. Extended Involvement',
Journal of Global Marketing, 7(4), 59-81.

UNCTAD (1993), Small and Medium Sized Transnational Corporations, UN, New York.

Vernon, R. (1966) `International Investment and International Trade in the Product Life Cycle',
Quarterly Journal of economics, May, 190-207.

Weidersheim-Paul, F., Olson, H.C., & Welch, L.A. (1978) `Pre-Export Activity: The First Steps
in Internationalization', Journal of International Business Studies, 9(1), 47-58.

Welch, L.S., & Loustarinen, R. (1988) `Internationalization: Evolution of a concept', Journal of

General Management, 14(2): 34-55.

Welch, L.S., & Wiedersheim-Paul, F. (1979) `Export Promotion Policy: a new approach',
Australian Journal of Management, 4, 2.

Wiedersheim-Paul, F., H. C. Olson, and L. Welch (1978). `Pre-Export Activity: The First Step in
Internationalisation'. Journal of International Business Studies 9 (Spring/Summer): 93-98.

Yaprak, A. (1985) `Empirical Study of the Differences Between Small Exporting U.S. Firms',
International Marketing Review, 2(2), 72-83.

http://www.sbaer.uca.edu/research/1998/ICSB/j006.htm 5/5/2004