Week 5: INV

Question 1

INV/ Born global =

Answer 1

International New Ventures:
= Business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries.

Question 2

INV/ Born global =

Characteristics

Answer 2

• High activity in international markets from or near the founding
• Relatively small in scale
• Limited in financial & tangible resources
• Endowed with distinctive intangible resources & capabilities
• Origins & fundamental orientation are strongly international
• Emphasis on differentiation strategies

Question 3

4 Elements for Sustainable INVs

Answer 3

1) Internalization of some transactions.
–> can be done when:
- low transaction costs exist
- when they can identify best performance

2) Alternative governance structures
- not relying only on own knowledge
* use hybrid structures -> to be more flexible ( - licenses, franchising)
* having networks of partners -> some more focus on key activities -> more based on trust & moral obligation

3) Foreign Location Advantages
Relying on:
- private knowledge of founders
- leads to international from inception

4) Unique resources to be sustainable (RBV)
Need:
- unique RBV, FSAs
- patents, copyrights
- imperfect imitability
- the way they manage business: network government structure

Question 4

MNEs vs. INVs

Answer 4

MNEs: Stages Model
- MNEs develop after a period of domestic maturation
- incremental, risk, averse and reluctant steps
- process preserves home market routines
* what they have worked with in home country, they apply international

• Large size -> often argued to be key to internationalization
• economies of scale in R&D, production, marketing ect.
• efficiently manage international communication, transport & info exchange
• Olipolistic market power.

INVs
- observe firms skipping stages (radical change)
- observe very quick internationalization
- managers knowledge and beliefs not aligned with stage of internationalization

Question 5

What is affecting the increasing amount of INVs?

Answer 5

• changing International environment
• technological change in ICT
• reduction in TC of multinational exchange (transport, communication)
• homogenization of some markets (due to: regionalization + globalization)
• efficient & affordable logistics
• more business owners exposed to IB
• easier access to capital (int. finance & human capital)
• RBV of competitive advantage gaining in explanatory power.