Phenomenon of “Born Globals” in the internationalization of small and medium-sized enterprises in the Czech Republic

Abstract

1. Introduction Companies operating in EU countries have enjoyed the advantage of a relatively long duration of market economy principles. Although the business environment there also naturally underwent various changes (political influences, world economy influences, EU expansion, etc.), such changes were usually of evolutionary nature. Businesses were thus able to develop gradually and to respond to changes in the market and to the emerging trends. Such environment can be referred to as relatively foreseeable to some extent. The internationalization of enterprises described in literature is of a certain nature, and despite various differences and deviations in the results of individual studies, a certain set of characteristic features, the of internationalization, can be observed. Such characteristic features of the western pattern of internationalization include for instance a gradual development of expansion onto foreign markets (Bilkey and Tesar, 1977; Cavusgil, 1980; Johanson and Vahlne, 1977; Luostarinenem, 1979). Many studies confirmed a theory according to which companies develop their exposure on foreign markets in gradual steps, however they may be defined or distinguished. Although modern research shows that progress in small steps is diminishing in importance, and provides evidence of a growing frequency of exceptions and other internationalization patterns, the theory of gradual exposure on foreign markets apparently does not lose its general importance because this model is still followed by a great number of SMEs. On the other hand, there are many companies, which, once they achieve a certain degree of internationalization, stop developing and do not progress any further. They focus for instance on development within the relevant internationalization level, or expand on more foreign markets. According to available literature, European companies in the past tended to enter culturally, mentally and geographically closer markets (frequently, their neighboring countries), and to enter markets that are mentally, culturally and geographically more distant as they gain experience, develop capacities and contacts. A contrario, the Tihanyi et al. (2004) study shows that cultural differences may be an asset for the business and its healthy development. Moreover, the validity of this phenomenon is currently more and more under debate in connection with improvements in communication and transportation technologies. A growing number of European enterprises does not seem a significant problem in launching their international activities in a market exhibiting the nature of a mentally or geographically distant one. The Czech Republic as only a small part of the world economy, participation in international markets is very important with a view to long-term sustainability, prosperity and economic growth, as it represents growth potential for domestic companies, options for increasing production and domestic sales, and improvement of the quality of products and services because of a competitive environment. Most of the studies on the internationalization of SMEs in the Czech Republic focus on the gradual expansion of the SMEs onto foreign market, and little attention has been given to the Born Globais phenomenon. The scientific objective of this article is to focus on an examination of this phenomenon in the Czech environment, and to prepare a theoretical basis for a research study. 2. Literature review With growing global competition, disappearing international trade barrier and improvement of communication and information networks, many companies, even small ones, are forced to compete on foreign markets. However, studies have shown that some companies stop in the process of their internationalization at a certain point (stage). It is often one of the first steps in a stage model, however, the company usually stops the process before it reaches a stage requiring a fixed commitment on the foreign market e. …