Business Models and Internationalization Speed: How a business model determines the internationalization speed of a company

Michaeler, Thomas ; Stisager, Niclas Lund

4. Term

Economics and Business Administration (International Business Economics), Master

2015

2015-06-07

138 pages

Most authors attribute the modern phenomenon of companies internationalizing right off the start or at a very early stage in their existence to the characteristics and previous international experiences of the managers in charge. Jean-François Hennart challenges this assumption and argues that the properties of a business model might have a bigger influence on the internationalization speed as previously thought. Based on this idea, the objective of this paper is to analyze whether the characteristics of a business model allow to predict a certain internationalization speed. The latter is defined by the time a company takes to start offering its value proposition abroad. In order to generalize the research and to be able to focus on a general concept, in this paper the term internationalization is defined as entering a foreign market in an oversea region. After analyzing relevant internationalization theories, the degree of additional integration and adaptation are identified as most influential drivers in such a scenario. Furthermore, the business model concept is discussed and a suitable framework is defined, which leads to a thorough discussion of the transaction cost theory. The theory allows to use its basic assumptions and core concepts in order to score the components of a business model in an internationalization scenario in terms of how much integration and adaptation efforts can be expected during a market entry overseas. This leads to the generation of a scorecard and the need to test the validity of it with actual companies. By scoring each business model component of five internationally already accomplished companies, the results can be compared to their individual expansion history and to the outcomes of the other companies. The analysis ends with the observation that there are indeed correlations between a company’s business model and the observed internationalization speed.

Business model ; Internationalization speed ; Fast expansion ; Uppsala model ; International new ventures ; Traditional firm ; Born globals ; Reborn globals ; Transaction cost theory

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