New International Venture: History, Types, Elements and Structures
NEW INTERNATIONAL VENTURE THEORY
New international venture can be defined as : “Business organization that, from inception seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries.” Simply, we can say that the company is international from its inception. When deciding whether we can say this is a new international venture, we need to take in account following characteristics:
Amount of resource commitment from more than one nation (not necesarilly FDI)
Company age when going international, not its size
HISTORY
Actually, international new ventures existed for centuries. Some of the first international new ventures – East India company – chartered in London in 1600. To recognize International new venture from Multinational enterprise, I provided main differences between these two entities:
MULTINATIONAL ENTERPRISE:
Good knowledge of foreign market
Domestic maturation and home market saturation
Large resources
Stable markets
INTERNATIONAL NEW VENTURE:
Little or no knowledge of foreign market
International since inception
Usually small resources
Volatile markets
Also, some theoretical framework comes in handy when deciding whether company belongs to International new ventures. There are these 5 essential elements of international new ventures:
Internationalization of some transactions
Alternative Government structures
Foreign location advantage
Unique resources
1. Internationalization of some transactions Is the most basic, traditional MNE element. It is used for recognizing passive portfolio investment from foreign direct investment, but the ownership of assets is not a defining characteristics of either MNE and INV.
Internationalization of some transactions
Alternative Government structures
Foreign location advantage
Unique resources
2. Alternative governance structures What is typical for International new ventures is lack of sufficient resources for
New international venture can be defined as : “Business organization that, from inception seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries.” Simply, we can say that the company is international from its inception. When deciding whether we can say this is a new international venture, we need to take in account following characteristics:
Amount of resource commitment from more than one nation (not necesarilly FDI)
Company age when going international, not its size
HISTORY
Actually, international new ventures existed for centuries. Some of the first international new ventures – East India company – chartered in London in 1600. To recognize International new venture from Multinational enterprise, I provided main differences between these two entities:
MULTINATIONAL ENTERPRISE:
Good knowledge of foreign market
Domestic maturation and home market saturation
Large resources
Stable markets
INTERNATIONAL NEW VENTURE:
Little or no knowledge of foreign market
International since inception
Usually small resources
Volatile markets
Also, some theoretical framework comes in handy when deciding whether company belongs to International new ventures. There are these 5 essential elements of international new ventures:
Internationalization of some transactions
Alternative Government structures
Foreign location advantage
Unique resources
1. Internationalization of some transactions Is the most basic, traditional MNE element. It is used for recognizing passive portfolio investment from foreign direct investment, but the ownership of assets is not a defining characteristics of either MNE and INV.
Internationalization of some transactions
Alternative Government structures
Foreign location advantage
Unique resources
2. Alternative governance structures What is typical for International new ventures is lack of sufficient resources for