Environmental Factors Influencing the Internationalisation of a New Venture in the German Pork Industry: a Case Study

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Environmental factors influencing the internationalisation of a new venture in the German pork industry: A case study

By George ten Kate

University of Groningen
Faculty of Economics and Business
June 2012

Gerbrand Bakkerstraat 51
9713 HC Groningen
(06)58967820
sjorstenkate@hotmail.nl
Student number 1565095

Abstract
This paper offers exploratory insights into the ways in which environmental factors influence the internationalisation of a new low-technology firm, two topics that are largely understudied in the field of international entrepreneurship. By analysing data and literature, the influence of market conditions, industry characteristics and global niche market opportunities are examined, using a case study of a company that is active in the German pork market. The findings of this study are: (1) the major driver for the company's internationalisation are market conditions; (2) the degree of industry internationalisation, the stage of evolution of the industry and global niche market opportunities influenced the process to a lesser degree.

Keywords: New venture internationalisation – environmental factors – industry characteristics – low-technology sector - Germany

1.INTRODUCTION

According to McDougall et al. (1994) the international landscape is rapidly becoming a strategic route for survival for new companies. The global economic integration, the changing global business environment and advances in technology and communications have created unprecedented opportunities for small companies to extend their sales activities beyond the domestic market (Evers, 2011). International entrepreneurship seeks to exploit these opportunities. It has been considered 'the process of creatively discovering and exploiting opportunities that lie outside a firm's domestic markets in the pursuit of competitive advantages' (McDougall et al, 2003). When these opportunities are exploited, international new ventures arise. An international new venture is characterized by its search for competitive advantage from the use of resources and the sale of outputs in multiple countries from inception (Oviatt & McDougall, 1994).

The research question why these INV arise is one of the most interesting and relevant in current international entrepreneurship. A lot of research has been done in this field, and researchers have agreed on several factors explaining why new ventures internationalise. This research has been focused on firm specific attributes as key drivers in the internationalisation process. For example, McDouggal et al (2003) suggested that INVs are created because of innovative unique high-tech products, are led by top management teams and have a wealth of international work experience and contacts. However, early studies on international entrepreneurship emphasize the importance of environmental factors as drivers for new ventures to go international (Bell, 1995). Zahra and George (2002) put forward that limited research has been done on these factors. Fernhaber (2007) states that there is especially a need for deeper understanding of the various ways in which industry structures impact internationalisation of new ventures.

Furthermore, the knowledge on international entrepreneurship has mainly been built upon studies of high-technology firms. The nature of the industry in which high-technology firms operate leads to rapid and early internationalisation (Roberts and Senturia, 1996). These industries are characterized by short product life cycles and high R&D costs (Johnson, 2004). Because of this, most research regarding INVs has been done in sectors in which these high-technology, knowledge-intensive firms are found. The findings of INV research are closely linked with these high-tech firms. Little research has been done on which factors influence the internationalisation of new low-technology firms (Evers, 2010). As Fernhaber concludes, 'the need for a deeper understanding of how...
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