Most global companies, such as Microsoft, Apple, Sony and Mercedes grew big in their domestic markets before they emerged overseas and became global. For some companies this is ideal, but for others they have to go global from they start up. This essay will explain and examine the rise of born global firms. This essay is divided into four different sections. The first will give an introduction of born global phenomenon. Subsequently the next section will examine the rise of born global firms. Furthermore the characteristics and constraints with born global firms will be presented. The final section of this answer will then discuss and conclude the role of born global phenomenon in a global market. Throughout this essay a number of examples will be provided to back up and explain the findings.
Born global firms
Most companies that deal and work globally follow the same sequence of internationalisation. Often these companies start with developing their domestic market and then enter the domestic market with exporting their product. If their international sales increase, these companies progressively market and production in these domestic markets. There is however some firms that are going global before they have gone through various stages of development, these are called born global (Gillespie, Jeannet & Hennessey, 2011). The concept of born global was first used in Australia in the early 90’s (McKinsey & Co., 1993). Madsen & Servai (1997) defines global firms as: ”firms that seek to derive significant advantages from the use of resources or from the sales of outputs to multiple countries/continents right from their legal birth”.
The model of born global has much in common with the internationalisation of SME’s. The born global firms are in able to apply a unique mix of orientations and strategies to succeed in international markets (Onkvisit & Shaw, 2009). An example of a typical born global firm are Logitech, which was founded by a Italian and a Swiss citizen, they were also later joined by a Italian third member. Although Logitech is a Swiss based firm the manufacturing and engineering process of the products are located in the US, Europe and Far East, their research and development are situated in Silicon Valley (Deese, 2010). Logitech is now one of the worlds leading PC mouse manufacturers, operating in 100 countries worldwide (Gillespie, Jeannet & Hennessey, 2011).
The rise of born global firms
The born global phenomenon is an artifact of a new global market. The possibility of this phenomenon can be linked to the globalisation and the development in technology (Cavusgil, & Knight, 2009). Could it be possible for firms to be born global before the late 19th century? During the modern era of globalisation and advances in the technology, changes in the global environment has allowed firms to go global and internationalise themselves within the first year of start up (Oviatt and McDougall, 1994). The rise of the born global is much because of the globalisation. Today’s world is “smaller” than 30 years ago, borders have opened up and there is no restrains if a product is sold in another part of the world, manufacturing technology, shipping opportunities, regulations in tariffs and trade have also played in an important role in the rise of born global. Some of the main drivers of globalisation have been the reduction of barriers to trade, advances in technology, growth in the financial market, industrialisation and modernisation worldwide, free trade to India, China and former Soviet countries. These key drivers have contributed to globalisation, which has opened the possibility for born global firms (Cavusgil, & Knight, 2009).
Because of the significant change in the environmental conditions to creating a new firm it has become much easier to start a global firm. The...