How do you account for the rise of the Born Global?
Since 1980s, along with the development of economic globalization, there is a new form of enterprise internationalization in the global range which called Born Global enterprises. This type of firm normally engages in significant international activity and promptly starts penetration to the international market from its establishment. But more remarkably, those Born Global firms get involved in international market and participate in international competition without any previous experience. The first purpose of this paper will focus upon the explanation of the reasons for the rise of Born Global based on relevant theoretical studies and characteristics. The second section of this paper provides a selective example of Chinese Born Global firms which focus on explain and analyse the reasons for emergence of Born Global phenomenon and assess the influence and benefits to the development of internationalization on Chinese small and medium-sized enterprise( SMEs).
An Explanation of Born Global Characteristics based on Typical Examples The Born Global firm is defined as “a business organization that, from inception, seeks to derive significant competitive advantages from the use of resources and the sale of outputs in multiple countries” (Oviatt and McDougall, 1994, P.49). While Knight and Cavusigil (1996) think Born Global refers to those small technology oriented business that engage in operating international markets since it has been in early stage of being established. Therefore, from the stated definitions above, we can get basic characteristics of Born Global. Furthermore, there is a variety of reliable samples for Born Global which reveal that the typical characteristics of Born Global. For instance, History and Heraldry is an England company that specializes in gifts for history buffs and those with English ancestry. History and Heraldry was selling in 60 countries, with exports generating about 70% of total production. The biggest markets the firm target in are France, Germany, Italy, Spain, and the United States (Cavusgil and Knight, 2009). Another example, Cosmos Corporation Inc. is a young company in US that produces telescopes and various optical devices. Cosmos has begun selling its products in Japan and Europe since it has been founded for a few years. Moreover, the firm had expanded its scales to 28 countries around the world soon after that (Knight and Cavusigil, 2009). Thus, from previous examples, we can see that companies conduct international business at or near their founding and have engaged in international business throughout history and gain competitive advantages by seeking a wide range of resources located around the world. Furthermore, Born Global firms are characterized by limited financial and tangible resource.
The Reasons for the Rise of Born Global
Since the early 1980s, international business rapidly developed which is initially facilitated by the globalization of markets. Historically, the most internationalization business appeared in advanced-economy countries such as North America and Europe, Japan. However firms today increasingly target emerging market, such as Brazil, China, India, Mexico (Wall, Minocha and Rees, 2010). As there are substantial market opportunities even in developing countries, meanwhile companies seek growth via market diversification and gain economies of scale in production and marketing, basically most Born Global firms achieved considerable success in international business early in their development. In the last decades, internationalization was in the field of large multinational enterprises (MNEs), however, globalization trends and high technology have facilitated the emergence of born global firms in recent years. The appearance of plenty of Born Globals helps to reshape the global economy; these firms tend to be formed by entrepreneurs with a strong international outlook and managers...
References: Andersson, S. and Wictor, I., (2003), “Innovative Internationalisation in New firms: Born Globals-the Swedish Case”, Journal of International Entrepreneurship, Vol. 1, No. 3, pp.249-276.
Cavusgil, S. T. and Zou, S. M., (2002), “The GMS: A Broad Conceptualization of Global Marketing strategy and Its Effects on Firm Performance”, Journal of Marketing, Vol.66, No.4, pp.40-56.
Freeman, S., Edwards, R. and Schroder, B., (2006), “How Smaller Born-Global Firms Use Network and Alliances to Overcome Constraints to Rapid Internationalization”, Journal of International Marketing, Vol.14, No.3, pp.33-63.
Knight, G. A. and Cavusgil, S. T., (2009), Born Global Firms: A New International Enterprise. New York: Business Expert Press.
Knight, G. A. and Cavusgil, S. T., (1996), “The Born Global Firm: A Challenge to Traditional Internationalization Theory”, Advances in International Marketing, Vol.8, pp.11-26.
Oviatt, B. M. and McDougall, P. P., (1994), “Toward a Theory of International New Ventures”, Journal of International Business Studies, Vol.25 No.1, pp.45-64.
Robinson, R., (1986), “Some new competitive factors in international marketing”, Advances in International Marketing, Vol.1, pp.30-45.
Wall, S., Minocha, S. and Rees, B., (2010), International Business, 3rd edition, Gosport: Ashford Color Press.
Yang Z., Zhang X., Chen Y. and Liao W. Y., (2007). “Study on the sustainable driving force, the case study of the stage difference of cycle of born global firms” (in Chinese), Management World, Vol.6, pp.122~136.
Zhao Y. Z., (2004), “The born global firm, concept, phenomenon, cause and enlightenments” (in Chinese), International Business Study, Vol.3, pp.65-69.
Please join StudyMode to read the full document