The accelerated internationalization of born global firms: a knowledge transformation process view
| DOI | https://doi.org/10.1108/JABS-03-2013-0015 |
| Date | 02 August 2013 |
| Published date | 02 August 2013 |
| Pages | 244-261 |
| Author | Hsiu Ying Huang,Ming Huei Hsieh |
| Subject Matter | Strategy |
The accelerated internationalization of
born global firms: a knowledge
transformation process view
Hsiu Ying Huang and Ming Huei Hsieh
Abstract
Purpose – This study aims to employ a knowledge-based capability approach to explore how born
global firms accelerate their internationalization.
Design/methodology/approach – The paper adopts a qualitative in-depth case study approach.
Various types and sources of data were collected to provide a rich and solid foundation for theory
development and data triangulation. These comprised semi-structured interviews, field observations
and archival material.
Findings – The findings show that the transformation process of international knowledge may more
adequately account for the difference in internationalization at conventional globals and born globals
than the ‘‘indigenous’’ knowledge resource, i.e. founder experience. Born global firms accelerate their
internationalization process through a three-stage transformation process: knowledge acquisition and
dissemination, knowledge integration, and knowledge institutionalization. Two underlying knowledge
mechanisms are identified: vertical and horizontal knowledge thrust.
Originality/value – The knowledge transformation process constitutes the basis of ‘ ‘acceleration’’ of
born globals’ internationalization. The speed of a born global’s internationalization is rootedin its ability
to transform internationalization knowledge resident in individual employees into organizational
strategies and operational procedures. The finding br idges the gap by identifying effective
organizational mechanisms in management of the knowledge process. The ‘‘speed-up’’ mechanism
identified in this research can equip born globals as well as conventional globals with the ability to
respond quickly in a dynamic international environment.
Keywords Born global firms, Accelerated Internationalization, Knowledge transformation,
Knowledge mechanism, Knowledge management, Globalization, International trade
Paper type Research paper
Introduction
Past research suggests that firms usually broaden their international involvement as they
gradually gain experience and knowledge about foreign markets. This gradual strategy of
internationalization is conceptualized in the Uppsala internationalization model (Johanson
and Vahlne, 1977). However, an alternative internationalization pattern undertaken by
so-called born global firms (hereafter ‘ ‘born globals’’) has eme rged and become
widespread in recent decades. Without taking the gradual approach of
internationalization typically adopted by conventional global firms, born globals engage
significantly in international activity soon after their establishment. Because most born
globals are relatively young and resource-scarce compared to their larger global rivals
(Freeman et al., 2006; Knight and Cavusgil, 2004), their accelerated internationalization has
drawn substantial research attention (Rialp et al., 2005).
Substantial research progress has been made in explaining the appearance of born globals
and the drivers behind the born global phenomenon (e.g. Knight et al., 2004; Oviatt and
McDougall, 1994). For example, among important drivers that have been identified are the
environmental factor of the trend towards globalization, and organizational factors such as
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VOL. 7 NO. 3 2013, pp. 244-261, QEmerald Group Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-03-2013-0015
Hsiu Ying Huang is
Assistant Professor and
Ming Huei Hsieh is a PhD
Candidate, both at Institute
of International Business,
College of Management,
National Taiwan University,
Taipei. Taiwan
global orientation and founder experience. Despite the significant progress made, scholars
still find the existing explanations for born globals’ accelerated internationalization to be
insufficient (Chetty and Campbell-Hunt, 2004; Jantunen et al., 2008). Recently, some
scholars have advocated a capability approach as a way to more adequately explain the
born global phenomenon (e.g. Weerawardena et al., 2007). Because knowledge-based
capability has been identified as influential in the internationalization process of a firm (Rialp
et al., 2005), this study examines how knowledge-based capability facilitates born globals’
internationalization.
This study particularly focuses on the knowledge transformation process within born
globals. A firm can create value through a knowledge transformation process, which
translates the knowledge into concrete strategies and actions for producing goods and
services (Grant, 1996a; Kogut and Zander, 1992). In the context of global firms, a global firm
can turn its international knowledge into global strategies and actions to serve a global
market and thus facilitate its internationalization. Though the importance of
knowledge-based capability in the internationalization process of a firm has been
underscored by both the Uppsala model and research into born globals (Gassmann and
Keupp, 2007; Johanson and Vahlne, 2003; Liesch and Knight, 1999), few studies have
explored the knowledge mechanisms behind the knowledge process (Foss and Pedersen,
2004). Following this line of research, this study attempts to explore how the knowledge
transformation process and its underlying mechanisms facilitate a born global’s accelerated
internationalization.
Given that market knowledge plays an important role in the internationalization of a firm
(Madsen and Servais, 1997; Johanson and Vahlne, 1977) and that a firm’s
marketing/product strategy typifies its knowledge capability, this study focuses on
examining the knowledge transformation process in the context of the global marketing
strategy development process within a born global. Because most born globals adopt a
global niche strategy in international markets due to resource constraint and small firm size
(Knight and Cavusgil, 1996), we conduct an in-depth case study of a born global porcelain
firm, Franz Collection Inc. (Franz), originated from Taiwan, an emerging economy in Asia.
The firm has adopted a global niche strategy to rapidly penetrate multiple markets soon after
its establishment. As such, it provides a solid basis for the research subject of our study.
Field evidence reveals that the internationalization of born globals is accelerated by an
efficient knowledge transformation process. It is a three-stage process comprised of
knowledge acquisition and dissemination, knowledge integration, and knowledge
institutionalization. The knowledge process assists born globals in accelerating their
internationalization by rapidly transforming individual-level knowledge into
organizational-level knowledge. More specifically, the born global transforms the tacit
international market/product knowledge resident in employees into explicit firm strategy and
concrete working procedures. Two accelerating mechanisms underlying the knowledge
transformation process have been identified from the study. One mechanism is vertical
knowledge thrust, which enhances transformation efficiency by shortening the time and
effort for identifying and transferring critical internationalization knowledge across the firm.
The other is horizontal knowledge thrust, which improves transformation effectiveness by
furnishing the firm with the innovative and adaptive ability to respond to the dynamic global
environment. These two accelerating mechanisms allow a born global to efficiently and
effectively reap the benefits of its knowledge at minimal cost and drawing minimally on
resources (Freeman et al., 2006), and thus enable a born global to leapfrog the long and
incremental internationalization process that is the norm in conventional global firms.
Theoretical background
Born globals
Born globals, or international new ventures, are those firms that engage heavily in
international activities since, or near, their founding (Knight and Cavusgil, 2004; Moen, 2002;
Oviatt and McDougall, 1994). Their immediate and significant international involvement after
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