Rapid Internationalization of Internet Companies - Jakob Hahn - ebook

Rapid Internationalization of Internet Companies ebook

Jakob Hahn

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Opis

Die folgende Thesis befasst sich mit Erfolgsfaktoren, die eine rapide Internationalisierung von sogenannten „Born Globals“ in den verschiedensten Industrien positiv beeinflussen und untersucht ob diese Faktoren auch für junge Internetunternehmen zutreffen. Somit enthält diese Thesis eine Auswahl an Erfolgsfaktoren, die jungen Unternehmen im Internetsektor bei einer rapiden und vor allem erfolgreichen Internationalisierungsstrategie von großer Hilfe sind. Als besonders signifikante Faktoren wurde befunden: ein starker Einsatz des Management Richtung Internationalisierung, Nutzung von privaten und geschäftlichen Netzwerken sowie detailliertes Wissen über internationale Märkte und ein hoher Einsatz von Ressourcen in den einzusteigenden Märkten. Nicht im Fokus der Untersuchung, jedoch auch als sehr relevant befundene Faktoren stellen eine signifikante Finanzierung durch Risikokapitalgeber dar und die Skalierbarkeit des Geschäftsmodelles. Die genaue Analyse und Definition der einzelnen Faktoren wird im Rahmen dieser Thesis detailliert besprochen.

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Abstract

This thesis examined some of the success factors which spur the fast internationalization of “Born Globals” in other industries and challenge the premise whether these are applicable for the internet sector. Ten success factors which have been identified by previous research were analyzed using a case study method. Success factors which have been found to be highly significant for the rapid internationalization process of internet companies are: a strong management commitment towards internationalization, a strong use of personal and business networks as well as market knowledge and market commitment. Whereas owning unique intangible assets based on knowledge management and a high value creation through product differentiation seem not to be as relevant for internet companies as they are for “Born Globals” in other industries. Yet, access to significant external financial resources and the scalability of a business, two success factors which were not identified as being critical in the initial research have been found to be highly significant in the process of international expansion of internet companies and therefore should be explicitly examined by future research.. This thesis builds on previous research done in the field of international entrepreneurship, extending the findings by examining success factors of “Born Globals” for internet companies. The implications of this thesis are relevant to researchers in the field of “Born Globals” as well as for entrepreneurs in the internet sector.

Table of content

List of Appendices

List of Figures

List of Tables

List of Abbreviations

Introduction

1.1 Problem

1.2 Relevance

1.3 Structure

Conceptual Foundation

2.1 Term “Born Global”

2.2 Definition “Born Global” phenomenon

2.3 Conclusion

Influential Factors

Research Method

4.1 Choice of Research Method

4.2 Data

4.3 Methodology

Case Studies

5.1 Company A: Airbnb

5.2 Company B: Groupon

5.3 Company C: Uber

5.4 Company D: Delivery Hero

5.5 Company E: The Kreditech Group

5.6 Company F: Helpling

Results

6.1 Management commitment

– highly relevant success factor

6.2 Strong use of personal and business networks

– highly relevant success factor

6.3 Market knowledge and market commitment

– highly relevant success factor

6.4 Unique intangible assets based on knowledge management

– less important success factor

6.5 High value creation through product differentiation, leading-edge technology products, technological innovativeness (usually associated with a greater use of IT), and quality leadership

– less important success factor

6.6 Further findings

6.7 Key Findings and Conclusion

Discussion

7.1 Theoretical Implications

7.2 Practical Implications

7.3 Limitations

7.4 Future Research

7.5 Conclusion

References

Appendices

I. List of Appendices

Appendix 1: List of studies selected by Rialp, Rialp & Knight (2005b)

Appendix 2: Taxonomy of studies examined by Rialp, Rialp & Knight (2005b)

Appendix 3: Coding Table

Appendix 4: Analysis results overview

Appendix 5: Analysis of: A global vision from inception

Appendix 6: Analysis of: Previous international experience on behalf of the management…

Appendix 7: Analysis of: Management commitment

Appendix 8: Analysis of: Strong use of personal and business networks

Appendix 9: Analysis of: Market knowledge and market commitment

Appendix 10: Analysis of: Unique intangible assets based on knowledge management

Appendix 11: Analysis of: High value creation through product differentiation

Appendix 12: Analysis of: A niche-focused, proactive international strategy in geographically spread lead markets around the world from the very beginning

Appendix 13: Analysis of: narrowly defined customer groups with strong customer orientation and close customer relationships

Appendix 14: Analysis of: Flexibility to adapt to rapidly changing external conditions and circumstances

II. List of Figures

Appendix 1: List of studies selected by Rialp, Rialp & Knight (2005b)

Appendix 2: Taxonomy of studies examined by Rialp, Rialp & Knight (2005b)

III. List of Tables

Appendix 3: Coding Table

Appendix 4: Analysis results overview

Appendix 5: Analysis of: A global vision from inception

Appendix 6: Analysis of: Previous international experience on behalf of the management

Appendix 7: Analysis of: Management commitment

Appendix 8: Analysis of: Strong use of personal and business networks

Appendix 9: Analysis of: Market knowledge and market commitment

Appendix 10: Analysis of: Unique intangible assets based on knowledge management

Appendix 11: Analysis of: High value creation through product differentiation

Appendix 12: Analysis of: A niche-focused, proactive international strategy in geographically spread lead markets around the world from the very beginning

Appendix 13: Analysis of: narrowly defined customer groups with strong customer orientation and close customer relationships

Appendix 14: Analysis of: Flexibility to adapt to rapidly changing external conditions and circumstances

IV. List of Abbreviations

1. Introduction

Over the three decades fundamental technological, economic and social changes have been taking place (Rialp, Rialp, Urbano & Vaillant 2005a) influencing the international market place, allowing small companies to trade internationally and expand to foreign markets more effectively (Madsen & Servais 1997). The strong rapid development of communication and information technology (Oviatt & McDougall 1994), enabling small companies to share information around the globe, in turn analyzing markets more efficiently, and so reaching a faster decision on economically priced market entry (Rennie 1993). The transportation of both people and goods has reduced in price yet growing more reliable (Oviatt & McDougall 1994). Meanwhile, with the global development of emerging markets, like the BRIC-states, markets with similar customer needs evolve (Oviatt & McDougall 1994) providing the opportunity to focus on international niche markets and forming global distribution networks (Madsen & Servais 1997). Development of free trade areas, like the European Union and NAFTA, fewer import-restrictions and lower taxes enabling foreign companies easier access to new emerging markets (Knight & Cavusgil 1996). In the education field the growth of international exchange programs, with the closer collaboration between countries is fostering an internationally focused body and cohort of students providing companies with access to employees and managers who are multilingual, have international cultural and work experience and additional webs of networks (Madsen & Servais 1997). These changes mean small and medium sized companies are confidently stepping beyond their familiar home markets and exploring foreign markets shortly after inception, these are also known as “Born Global” (Rennie 1993). These so called “Born Global” companies no longer follow the established “Uppsala stage model”1 of internationalization by Johanson & Vahlne (1977), but skipping and ignoring some of the traditionally described internationalization stages (Hedlund & Kverneland 1985).

1.1. Problem

When the “Born Global” phenomenon was first described by Hedlund & Kverneland in 1985, it received considerable attention in the 90s and the subsequent decade. Many quantitative and qualitative studies about the “Born-Global” phenomenon were written, describing “Born Globals” from different industries and countries as can be seen in summaries by Wessely (2007) as well as Rialp, Rialp & Knight (2005b). This includes studies focusing on the spectrum of factors which foster the rapid internationalization process of “Born-Globals”. Studies cover high technology product industries (Lindqvist 1991) to pharmaceuticals (Stray, Bridgewater & Murray 2001) to the software industry (Coviello & Munro 1995) to even including the industry of handcrafted products (McAuley 1999). But there is limited research in the internet based business models field (cf. Schmidt-Buchholz 2001; Mahnke & Venzin 2003). The cause of this is most likely due to the fact that most research in the field of “Born Globals” was carried out in the 1990s and early part of this 21st century when the industry of internet companies was not so mature.

1.2. Relevance

As previously mentioned, early fundamental technological, economic and social changes have been taking place leading to the conclusion by Madsen & Servais (1997) that: “the rise of Born Globals may be attributed to at least three important factors: (1) new market conditions,

(2) technological developments in the area of production, transportation and communication and finally (3) more elaborate capabilities of people, including the influence of the founder/entrepreneur who starts the Born Global firm.” (Madsen & Sevais 1997, p.565).

Therefore, it can be assumed that these changes will continue to generate other positive effects with yet more growth of “Born Globals”, drawing further analysis and focus onto, “Born Globals” (Madsen & Sevais 1997).

But this phenomenon reaches beyond academic interest. Whilst an increasing number of “Born Globals” are being identified across industries and countries (Oviatt, McDougall & Loper 1995) this phenomenon attracts attention from investors, managers and politicians who want to understand this new growth venture of internationalization and development (Bell, McNaughton, Young & Crick 2003). The “Born Globals” innovation, provides new jobs in turn demanding greater understanding (Moen 2002).

Furthermore, the focus of research on “Born Globals” should be investigating the growth of internet companies, and their potential customers, as the number of internet users continues to grow rapidly worldwide (Statista 2015). Alongside comes growth of the global infrastructure and as a result new business models emerge and prosper, providing the opportunity for the new players to enter the fast expanding market.

This growth, in the internet field, cannot be ignored yet the level of accompanying research in “Born Globals” has not yet caught up. This thesis is going to examine and analyze some of the major factors which spur the fast internationalization of “Born Globals” in other industries and challenge the premise whether these are applicable for the internet sector. In addition, this thesis will investigate which other factors are crucial, or not, for a rapid internationalization of internet companies.

1.3.Structure

This thesis will begin with a conceptual foundation in chapter 2. by providing a definition of “Born Global” and the “Born-Global” phenomenon. To date there is no one single accurate definition. Chapter 3. will explore crucial factors common to “Born Globals” and explain each one of these in detail. Chapter 4. will contain a detailed description of the research method used and how the relevant data was gathered. Chapter 5. is case studies of six individual internet companies. By providing a clear definition of “Born Globals” these six internet companies will provide an initial step to understanding the key factors that “Born Globals” all contain. Chapter 6. will present the conclusions drawn from this examination. Closing the thesis with a discussion in chapter 7. focusing on the economy and the next steps required in deepening our understanding in the field of “Born Globals”.

1 Uppsala stage model is described as an internationalization process taking place in stages, preferably in countries with a low “psychic distance”, which implies in most cases neighboring countries (Johanson & Wiedersheim-Paul 1975).

2. Conceptual foundation