Internationalization Models Overview

A process where a business expands its operations beyond its domestic market, actively seeking opportunities in foreign countries.

Intentionally expanding a company's geographic reach to new international markets, often involving direct investments and operations.

Sourcing goods or services from foreign suppliers without directly investing in those markets.

A model explaining the gradual internationalization process of a firm, starting with low-risk activities in nearby markets and progressively expanding to more complex operations in distant markets.

The perceived differences between a company's home market and a foreign market, considering factors like language, culture, and business practices.

Internationalization activities that don't involve direct ownership or investment in foreign entities, such as exporting, licensing, and franchising.

Internationalization activities that involve direct ownership or investment in foreign entities, such as joint ventures, wholly owned subsidiaries, and foreign direct investment.

The gradual increase of a company's operations in international markets, starting with limited offerings and progressively adding products, services, and functions over time.

Small and medium-sized enterprises (SMEs) employ various internationalization models, but no single model universally outperforms others, suggesting a need for combined approaches.

Despite structural differences, both multinational enterprises (MNEs) and SMEs face similar internal and external barriers during internationalization, which can result in surprisingly similar internationalization processes.

Globalization influences both MNEs and SMEs, contributing to a convergence in their internationalization strategies and processes.

The Uppsala model, known for gradual internationalization, is widely applicable to SMEs as well, despite its focus on multinational enterprises (MNEs).

Networking allows SMEs to overcome size limitations, which can be a crucial strategy for successfully entering new foreign markets.

The Uppsala Model, a stage-based internationalization theory, was criticized for being overly deterministic and not acknowledging the strategic choices companies have. The model suggests a predictable, linear path to internationalization, which doesn't hold true for all businesses.

Born Globals are companies that from their inception, start their internationalization journey without following a gradual, stage-by-stage approach. They quickly expand into multiple international markets, challenging the Uppsala Model's assumptions.

The Business Network Model emphasizes the role of relationships and networks in driving internationalization. Companies don't simply expand into new markets; they build relationships and positions within existing business networks in those markets.

Internationalization is treated as a process of building a strong position within the market network, rather than solely a decision about entry modes. This involves establishing valuable relationships and understanding the dynamics of the network.

The entire network, not just a single company, can be driven to internationalize. This can be spurred by external pressures, such as increasing competition, or by seeking opportunities for greater growth and profitability.

This perspective emphasizes the role of a company's unique resources and capabilities in driving internationalization. Companies leverage their strengths, such as knowledge, technology, and branding, to compete effectively in international markets.

Intangible resources, such as knowledge, expertise, and brand reputation, play a crucial role in internationalization. These resources are often more valuable than tangible assets in terms of long-term competitive advantage.

While valuable for large companies, scholars argue that the resource-based view might not always be applicable to small and medium-sized enterprises (SMEs). SMEs often lack the resources and capabilities of larger companies, requiring a different approach to internationalization.

This approach emphasizes the importance of internal resources and capabilities for internationalization success, suggesting that firms leverage their knowledge, networks, and experience to expand abroad.

This approach highlights the crucial role of external networks and relationships in facilitating international expansion. Companies utilize network interactions and partnerships to gain access to resources and knowledge for international growth.

This approach focuses on the role of entrepreneurship and innovation in driving internationalization. It emphasizes the importance of timing, speed, and proactive action in seizing global opportunities.

A challenge faced by small businesses when expanding internationally. They often have fewer resources, lower brand recognition, and limited international experience compared to larger firms.

Challenges faced by companies when operating in a foreign market that is different from their home market, including cultural, regulatory, and linguistic barriers.

The difficulty that companies face when operating outside their established network and relationships. This can lead to limited access to information, resources, and support in a new market.

Models and frameworks specifically tailored to understand the internationalization process of small and medium-sized enterprises (SMEs), acknowledging their unique characteristics and challenges.