International New Ventures

Topics: International trade, Globalization, Internationalization Pages: 3 (835 words) Published: March 14, 2013
For the past quarter century, internationalization has been considered as a main foster contributing to the rapid changes of the global economy (Madsen & Servais 1997). The firms that globalize are able to take competitive advantages in term of profit, human resource, technology development and market expansion. However, the challenges and risks of doing business internationally are inevitable, especially, in political systems, risks might arise in term of political, economic or cultural risks. Within the limits of this article, cultural risk is identified as the main problem affecting the international businesses. According to Ripolle´ s, Blesa & Monferrer (2011), the choice of different entry modes is an important strategic decision when deciding to go internationally, which must be based on the obtaining of market knowledge in international operations. One quite similar research called ‘Uppsala model’, developed by Johanson & Vahlne (1977), emphasizes that the lack of knowledge about foreign markets is a main problem to internationalization. That lack of knowledge could be due to cultural differences between the home and the host country like different dimensions of culture that affect work practices in different nations include Individualism vs. Collectivism (Hofstede, 1984), Democratic or Totalitarian, High-Low context of culture (E. T. Hall's, 1976) and Political risks (Wild, Wild & Han, 2008). Particularly, in some Western countries that generally lean toward individualism, people often pursuit of individual goals that perhaps do not fit into group goals and they are not willing to contribute to collective action unless their own efforts are recognized. On the other hand, in a collectivist culture, people will readily contribute to the group and share group rewards. High-Low context of culture is another example emphasizing on the differences in communication styles across cultures. International businesses are posed challenges in the...
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