International Entrepreneurship Course Notes PDF

International Entrepreneurship Course Notes: Prepared by K.S. Powell Do not distribute outside of the course without instructor’s permission (e.g., do not post on websites such as “Course Hero” or similar) Topic : Entrep...

International Entrepreneurship Course Notes: Prepared by K.S. Powell Do not distribute outside of the course without instructor’s permission (e.g., do not post on websites such as “Course Hero” or similar) Topic : Entrepreneurial orientation and typologies of international entrepreneurship Overview: In our previous topic, we discussed the “entrepreneurial process,” which views entrepreneurship as a general series of steps/stages used by various types of entrepreneurial actors to capture opportunities they identify. By defining entrepreneurship as a process, entrepreneurship can be pursued by many different individuals or firms in different contexts. In this topic, we note that all these actors have an “entrepreneurial orientation” (Miller, 2011) and then we identify key types of “international entrepreneurial organizations” (IOEs). While we identify numerous types of IOEs, this course is primarily structured to focus on “international new ventures” so more attention will be given to this “type.” 1. Defining “entrepreneurial orientation”. Entrepreneurial Orientation: The degree to which individuals or firms exhibit innovativeness, risk taking, proactiveness, competitive aggressiveness, and autonomy in pursuit of entrepreneurial opportunities. (Covin & Wales, 2012; Lumpkin & Dess, 2015) 2. Types of “International Entrepreneurial Organizations” (IOE’s): a. International New Ventures (INVs): A company that from its very inception tries to gain competitive advantage from the sourcing of inputs and/or sale of outputs in multiple countries (Oviatt & McDougal, 1994). These ventures DO NOT need to own foreign assets, and there are 4 sub-types of International New Ventures. i. INV sub-type 1 is “the export/import start-up”: These start-ups limit their focus to one or a few international markets that the entrepreneur is familiar with (Oviatt & McDougal, 1994). ii. INV sub-type 2 is “the multinational trader”: These INVs focus on an array of international markets and continuously scan for opportunities where their networks are already established, or where they could quickly set up (Oviatt & McDougal, 1994). iii. INV sub-type 3 is “the geographically focused start-up”: These INV base their advantage on the ability to specialize in serving the needs of a specific region in the world through the use of foreign resources (Oviatt & McDougal, 1994). iv. INV sub-type 4 is “the global start-up”: These INVs derive their competitive advantages from coordinating numerous activities across different international markets. These start-ups are proactive in looking for  opportunities to BOTH sell and source in international markets (Oviatt & McDougal, 1994). Coordination of Value Chain Activities Across Countries Geographically Global Many activities Focused Start-up Start-up coordinated Few activities Import/Export Multinational coordinated Start-up Trader (mostly logistics) Few Many Number of Countries Involved Source: Adapted from Oviatt & McDougal (1994). b. Born Global b. “Born FirmsGlobal (BGs):Firms” “Born(BGs): Globals” “Bornare Globals” firms are thatfirms thataderive derive largeaportion large portion of their sales internationally from the moment they of their sales internationally from the moment they were founded. (Knight, 1996;were founded. (Knight, 1996; Rennie, 1993). There is certainly some overlap between the BG and INV types, Rennie, 1993). There is certainly some overlap between the BG and INV types, but a key difference is that BGs are international in sales specifically (Rennie, but a key difference is that 1993). Also, BGs while are international it may take INVs a while in sales specifically to build (Rennie, up international sales, BGs 1993). Also, while it may take INVs a while to build up international derive a large portion of their sales from abroad from the very start. sales, BGs derive a large portion of their c. “Born-again Globalsales Firms”from(BAGs): abroad from the very start. c. Born-again d. Global “Ethnic Firms (BAGs): “Born-again Entrepreneurship” (EE): global” firms are long- e. “Transnational Entrepreneurship” (TE): established firms that have operated domestically without pursuing international f. “Small opportunities, Global Firms” but suddenly (SGFs):shift to international operations (Bell et and rapidly g. “Micro-multinationals” (MMs): al., 2001).h. “International Social Entrepreneurship” (ISE): d. Ethnic Entrepreneurship i. “Subsidiaries of(EE): The termFirms” Multinational “ethnic entrepreneurship,” does not (MNs): refer to international j. “Emerging entrepreneurship Market Multinationals” in the sense that activities occur across (EMMs): international borders, but rather the entrepreneurs themselves cross international borders AGE as immigrants and start new ventures in their adopted countries (Ilhan- Nas et al., 2011). According to Drori et al. (2009), ethnic entrepreneurs tend to Established focus on entirely domestic MM businesses in their new home countries. Ethnic entrepreneurs also tend to focus on starting businesses that have a history of SGF BAG success as entrepreneurial ventures within their local ethnic communities. In MN essence, if membersISE of their community (Subsidiary) have succeeded in a specific type of EMM venture, ethnic entrepreneurs may have more confidence in the opportunity and access toEEadvice & TE and/or other resources. e. Transnational Entrepreneurship (TE): “Transnational entrepreneurship” refers New to activities INVby individualsBG who migrate to a new country Level or external and use business control relationships from Independent both their original Corporate country parent and Government (Governance) to newly adopted country pursue entrepreneurial opportunities (Drori et al., 2009). Unlike “ethnic entrepreneurship,” “transnational entrepreneurship” does involve activities Source: Adapted from Zucchella & Magnani (2016) and Zucchella et al. (2018). organized across international borders. 4  f. Small Global Firms (SGFs): “Small global firms” are established firms that are small in size (e.g., 3~50 people) and maintain the capacity to sell their products in many different countries/markets (Dimitratos et al., 2010). g. Micro-multinationals (MMs): Micro-multinationals are very small firms (e.g., 1- 3 people) that pursue global international entrepreneurial opportunities through various entry strategies (Dimitratos et al., 2003), and they tend to focus on niche markets (Zucchella & Palamara, 2006). h. International Social Entrepreneurship (ISE): In “international social entrepreneurship”, entrepreneurs attempt to create both positive social value for the people they serve and financial value (Zuchella et al., 2018). This means that entrepreneurs will explicitly prioritize entrepreneurial opportunities with positive social impacts (Dees et al., 2001). i. Subsidiaries of Multinational Firms (MNs): Subsidiaries of large multinational firms can be established in new international markets via foreign direct investment (FDI). By establishing subsidiaries in new markets, large multinationals are showing a strong “entrepreneurial orientation.” Pursuit of the entrepreneurial process in large multinational firms can also be called international “corporate entrepreneurship” (Morris & Kuratko, 2002). j. Emerging Market Multinationals (EMMs):” Emerging market multinationals” hail from emerging markets (as the name suggests) and tend to pursue global growth across many markets early in their establishment, and the pace of this growth tends to be rapid (Guillen & García-Canal, 2009; Luo & Tung, 2007). Emerging market multinationals often times, but not always, have at least some level of state/government ownership (Zuchella et al., 2018). AGE Established MM SGF BAG MN ISE (Subsidiary) EMM EE & TE New INV BG Level or external GOVERNANCE control (Control) Independent Corporate parent Government (Governance) Source: Source: Adapted Adapted from from Zucchella Zucchella & Magnani & Magnani (2016) (2016) and and Zucchella et al.Zucchella (2018). et al. (2018). Topic 2 References: Bell, J., McNaughton, R., & Young, S. (2001). ‘Born-again global’ firms: An extension to the ‘born global’ phenomenon. Journal of International Management, 7(3), 173-189. Covin, J.G., & Wales, W.J. (2012). The measurement of entrepreneurial orientation.  Entrepreneurship Theory and Practice, 36(4), 677-702. Dees, J., Emerson, L., & Economy, P. (2001). Enterprising nonprofits: A toolkit for social entrepreneurs. London: Wiley. Dimitratos, P., Johnson, J., Slow, J., & Young, S. (2003). Micromultinationals: New types of firms for the global competitive landscape. European Management Journal, 21(2), 164- 174. Dimitratos, P., Plakoyiannaki, E., Pitsoulaki, A., & Tüselmann, H.J. (2010). The global smaller firm in international entrepreneurship. International Business Review, 19(6), 589-606. Drori, I., Honig, B., & Wright, M. (2009). Transnational entrepreneurship: An emergent field of study. Entrepreneurship Theory and Practice, 33(5), 1001-1022. Guillén, M.F., & García-Canal, E. (2009). The American model of the multinational firm and the “new” multinationals from emerging economies. Academy of Management Perspectives, 23(2), 23-35. Ilhan-Nas, T., Sahin, K., & Cilingir, Z. (2011). International ethnic entrepreneurship: antecedents, outcomes and environmental context. International Business Review, 20(6), 614-626. Knight, G. (1996). Born global. Wiley International Encyclopedia of Marketing. London: Wiley. Lumpkin, G. T., & Dess, G. G. (2015). Entrepreneurial orientation. Wiley Encyclopedia of Management, 1-4. Luo, Y., & Tung, R.L. (2007). 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