What\u2019s so special about born globals, their entrepreneurs or their business model?

Jean-François Hennart,Birgit Hagen,Antonio Majocchi

doi:10.1057/s41267-021-00427-0

Abstract

There is near unanimity among international business scholars that it takes more time to expand internationally than domestically. Hence, this is why some are puzzled by born globals (BGs), firms that make large foreign sales at birth or shortly afterwards. Explanations given for this “anomaly” are that BGs have exceptional resources—advanced technologies and a high international orientation on the part of their entrepreneurs, and that they rely on cheaper internationalization strategies like the Internet and networks. What is almost completely overlooked is the role of the BG’s business model (BM). We analyze the time it took for a sample of Italian SMEs to reach BG status (25% foreign over total sales) within a three-year time span. Entering both international entrepreneurship (IE) and BM variables, we find that, among the IE variables, a firm’s technological intensity, the number of years their founders studied abroad and their foreign language fluency, as well as their use of domestic networks, are statistically insignificant. Variables measuring a firm’s focus on a niche BM, on the other hand, are statistically significant, along with the international work experience of the founders, with the niche BM explaining a higher level of variance with greater accuracy.

Highlights

The Uppsala internationalization process model (Johanson & Vahlne, 1977, 2009) and the export development process literature (e.g., Leonidou & Katsikeas, 1996) assume that achieving significant sales abroad is more difficult, costly, risky, and time-consuming than doing it at home
The model’s pseudo R2 jumps to 13.36%, the percentage of observations correctly classified to 82.43%, and the LR Chi2 to 27.15 (p \0.000). These results show that global niche business model variables are better predictors of the speed at which firms develop their foreign sales than traditional international entrepreneurship (IE) variables, explaining a higher level of variance with greater accuracy
Most born globals (BGs) scholars have looked for special circumstances under which Uppsala and export development process theories do not apply

Summary

Introduction

The Uppsala internationalization process model (Johanson & Vahlne, 1977, 2009) and the export development process literature (e.g., Leonidou & Katsikeas, 1996) assume that achieving significant sales abroad is more difficult, costly, risky, and time-consuming than doing it at home. The apparent disconnect between the export development process and the Uppsala-inspired views of international expansion as a slow and gradual process, on one hand, and the empirical reality of super-fast internationalizing firms, on the other, has generated a large and growing literature. Almost all of it is in the field of international entrepreneurship, so at the risk of oversimplifying, we will call it the IE stream. The development of new transport and communication technologies (e.g., Knight & Cavusgil, 2004); second, their use of networks (e.g., Coviello, 2006; Coviello & Munro, 1997; Mort & Weerawardena, 2006); third, their possession of unique internal resources, high-tech products as well as founders with a global mindset and other favorable personality attributes (e.g., Gerschewski, Rose & Lindsay, 2015; Knight & Cavusgil, 2004)

Objectives

Methods

Results

Conclusion