HRMANAGEMENT
The Uppsala Internationalisation Model
Introduction
A number of Swedish researchers, Johanson, Wiedersheim-Paul and Vahlne, at the University of Uppsala studied the intemalisation process during the 1970s. They were influenced by Penrose's theory on the growth of the firm. The Uppsala model seeks to explain and predict two aspects of intemationalisation of the firm: the step-by-step pattern of industrial development within individual national markets and the expansion of companies across national markets, as they move from nations which are proximal to those which are increasingly psychically distant. Johanson, Wiedersheim-Paul and Vahlne studied the intemationalisation of Swedish manufacturing companies and developed a model of the companies' choice of market and form of entry when going abroad. It is a dynamic model that describes the internationalisation of the company as a process. They were also influenced by Aharoni's seminal study from 1966.
The Stage Model The Swedish researchers interpreted the pattern in the internationalisation process they had observed in the Swedish companies. The first thing they noticed was that the companies had begun to operate abroad in a nearby market and then slowly penetrated markets far away. Another conclusion was that it appeared as the Swedish companies chose to enter new markets through export, instead of using sales organisation or manufacturing subsidiaries of their own. After several years of exports the company could establish wholly owned or majority-owned operations. The process is interplay between the development of knowledge about foreign market and operations on one hand and an increasing commitment of resources to foreign markets on the other. The geographical dimension in this figure shows that companies enter new markets with successively greater psychic distance. Psychic distance can be defined by factors such as differences in language, culture and political systems, which disturb the flow of
Introduction
A number of Swedish researchers, Johanson, Wiedersheim-Paul and Vahlne, at the University of Uppsala studied the intemalisation process during the 1970s. They were influenced by Penrose's theory on the growth of the firm. The Uppsala model seeks to explain and predict two aspects of intemationalisation of the firm: the step-by-step pattern of industrial development within individual national markets and the expansion of companies across national markets, as they move from nations which are proximal to those which are increasingly psychically distant. Johanson, Wiedersheim-Paul and Vahlne studied the intemationalisation of Swedish manufacturing companies and developed a model of the companies' choice of market and form of entry when going abroad. It is a dynamic model that describes the internationalisation of the company as a process. They were also influenced by Aharoni's seminal study from 1966.
The Stage Model The Swedish researchers interpreted the pattern in the internationalisation process they had observed in the Swedish companies. The first thing they noticed was that the companies had begun to operate abroad in a nearby market and then slowly penetrated markets far away. Another conclusion was that it appeared as the Swedish companies chose to enter new markets through export, instead of using sales organisation or manufacturing subsidiaries of their own. After several years of exports the company could establish wholly owned or majority-owned operations. The process is interplay between the development of knowledge about foreign market and operations on one hand and an increasing commitment of resources to foreign markets on the other. The geographical dimension in this figure shows that companies enter new markets with successively greater psychic distance. Psychic distance can be defined by factors such as differences in language, culture and political systems, which disturb the flow of