Country Effect On Internationalization

Country context and
Internationalization
www.bournemouth.ac.uk
Research Overview
Examine the effect of contextual processes
on company internationalization
Existing Perspectives
Internationalization as adaptation to external
markets (Calof 1994)
Direction and Modes of Internationalization (Hill
1999)
Outward
Export
Foreign Direct Investment
Licensing
Inward
Import
FDI
Licensing
Existing Theoretical
Perspectives
MNE
Eclectic (including Alliance Capital)

Internalization
Resource/Knowledge Models
LLL (Dragon Multinationals)
Institutional International Models
Existing Theoretical
Perspectives
SME
Stage Models
Network
Born Global
Resource
International Entrepreneurship
Internationalization as Patterns of
Adaptation
Life Cycle
Predefined path of development (Van de Ven & Poole
1995)
Stage Models
Uppsala (Johanson &Valne 1977)
Innovation Models (Birkley & Tesar 1981)
Teleological
Goal driven development influenced by organizational
and environmental factors
Network models (IMP, etc)
Resource models ( Eclectic/LLL/SME)
Existing Theory= Fixed Context
Are Country Environments fixed?

Resources
Natural Resources
Human Resources
Historical/Cultural
Institutions
Long term formal and informal social structures
that influence:
Business formation and co-ordination
Intra-firm management and entrepreneurial processes
Work and employment relations
Country Environment support

organizations
Macro
Environment
Aggregation
Environment
Task
Environment
Sub
Environment
Resource
Pool
Industrial Policy
Factors and institutions change slowly
However, Countries attempt change
through policy
Classified by intended effect (Bressers and
Jr 1998, Borras 2009).:
Regulatory ,
Economic
Financial
Human Development
Meta .
Industrial Policy and Country

Environments
Macro
Environment
Regulatory
Aggregation
Environment
Task
Environment
Sub
Environment
Resource
Pool
Finance
Human
Development
Country Environment is NOT

Fixed
Countries can and do change within the
lifespan of a company
Influences Firm resource availability and
access
Can affect all organizational actions
including internationalization
Small States
Subset of countries with distinct
characteristics (Easterly and Kraay 2000) :
Small economies
Open Economies
Narrow Resource Base
Limited Institutional Capacity
GDP: Small Economies
http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS/countries
Open Economies
http://data.worldbank.org/indicator/NE.IMP.GNFS.ZS/countries
Narrow Resource Base/

Institutional Capacity
Dependent on Export of limited range of
products for foreign exchange
Small domestic markets do not have the
capacity to develop firms
Limited resources available to develop
institutional capacity
Taxation of imports form a large proportion of
domestic revenues
Difficult to access external capital for domestic
development for sectors other than main exports
Outcome of Constraints
High Domestic Volatility
Firms Exposed to demands of international
markets without the capacity for firm
development of larger countries (Pfeffer &
Salancik, 2003)
Why study Small States?

Distinct Environment
Small states do not have subregions, easy to
observe the effect of policy on entire country
Build or test new theories
Guidance for Policymakers
Guidance for Practice
Beyond countries, lessons can be applied to
other environments where market power is
limited
Theoretical Framework
Meso: Emergent International
Path
Micro: Exporter
Resource Profile
SPBR
DPBK DPBR
SKBR
DKBK DKBR
Adjustment Mode for

individual resources
(Internal or External)
Macro (All
Firms): Country
Reconfiguration
Pressures
Theoretical Framework
Macro
Environmental forces affecting all firms
Influence quantity, nature and value of
resources available to firms
Micro
Firms build and reconfigure resource
combinations
Meso
Trajectory of internationalization, rate, mode,
direction
Firm Level: Resource Based

View
Resources form basis of firms ability to
compete/provide value
Resource Characteristics
Heterogeneity.
Ex ante limits to competition:(Barney 1986)
Ex post limits to competition
Imperfect mobility (Mahoney and Pandian
1992).
Property Based Resources

Require supporting legal framework
Discrete
Patents
Trademarks
Leases
Systemic: Integrated Discrete resources

Distribution Systems
Knowledge Based Resources

Do not require supporting institutional
context
Discrete
Individual skills
Eg. Design
Systemic: Combined skills

Innovation
Production Management
Project Management
Resource Adjustment Modes

Sources of Resources
Development of
Resources
Internal
External
FirmOriented
Adjustment
Network
Oriented
Phase 1
Country Setting: Trinidad and Tobago
Wide variety of Data
Macro: Policy
Micro: Firms
Multiple Methods of Analysis: Narrative,

Visual mapping, Synthetic
Identify major policy periods of TT and its
influence on country resource environment
Phase 2
Major Policy
Periods
Promoter
Entrepreneur
Facilitator
Architect
Phase 3: Micro
Case studies of 23 exporters
Interviews
Observations
Archival Data
Phase 3: Micro
9 firms selected
based on the
policy period in
which they
initiated
operations and
continued to the
present day
Phase 3: Mapping firm

developments over time
Domestic
Production
Regional
Exporter
Activities
Design
Marketing
(Domestic)
Production
Design
Marketing
(Regional)
Production
Systemic
Knowledge
Based Resource
Product
Development
Flexible
Production
Customer
Relationship
Product
Development
Flexible
Production
Customer
Relationship
Firm-External
FirmEnvironment
Firm- Internal
Domestic
Subcontractor
Assembly
Resource
Development
Production
Management
Phase 3
Market Munificence
High
Secure Local
Market
Production Munificence
High
Medium
Local production
challenges
Limited
Production
Resources
Low
Changing
Demand
Characteristics
Hostile
Environment
International
Exporter
TAP/ Panland
Uncommitted
International
Exporter
ACL/MDC
Production
Resource
Available
Low
Medium
International
Exporter
(TAP)
Regional
Exporter
International Exporter
IWES
Uncommitted
International
Exporter
Phase 4: Synthesis
Shift in Resource Composition
Shifts in Resource Development Modes
4 Meso Trajectories Identified
Incremental
Rapid Expansion within Caribbean Region
Rapid Expansion Outside Caribbean Region
De Internationalization
Phase 4: Country effect on

Internationalization Model
2
4
Degree of
Openness
Facilitator/
Architect
Market
Reforms
1
Promoter/
Entrepreneur
Regional
Firm
Organizational Geographic
Presence
Extra
Regional
Firm
Country Affect on
Internationalization
Overall path: Homogenous to
Heterogeneous
Specific Branches
Rate
Slow to rapid
Direction
From outward to outward/reverse
Mode
From export to export/JV/Fdi
Conclusion
Country context can affect
internationalization
Need to identify:
Specific drivers in domestic environment
(policy/resource/institution)
Effect of drivers over time

Country Effect On Internationalization

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Country context and

Eclectic (including Alliance Capital)

Existing Theory= Fixed Context

Are Country Environments fixed?

Country Environment support

Industrial Policy and Country

Country Environment is NOT

GDP: Small Economies

Narrow Resource Base/

Why study Small States?

Adjustment Mode for

Firm Level: Resource Based

Property Based Resources

Systemic: Integrated Discrete resources

Knowledge Based Resources

Systemic: Combined skills

Resource Adjustment Modes

Multiple Methods of Analysis: Narrative,

Phase 3: Mapping firm

Phase 4: Country effect on

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