Born Global Firms: A New International Enterprise
Born Global Firms: A New International Enterprise
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Introduction
The born global firm is defined as “a business organization that, from
inception, seeks to derive significant competitive advantage from the use of
resources and the sale of outputs in multiple countries” (Oviatt & McDou-
gall, 1994, p. 49). In due course, these distinctive firms are gradually
becoming the norm among companies that do international business. The
distinguishing feature of born global firms is that their origins are interna-
tional, as demonstrated by management’s global focus and the commitment
of certain types of resources to international activities. Here we emphasize
not the size but rather the age by which the firm ventures into foreign mar-
kets. In contrast to the traditional pattern of businesses that operate in the
home country for many years and gradually evolve into international trade,
born globals begin with a “borderless” view of the world and develop the
strategies needed to expand abroad at or near the firm’s founding. The focus
is on the phenomenon of early internationalization and the approaches that
companies leverage for achieving superior performance in international
business from the inception of the firm.
In this book, we aim to make several contributions. First, we under-
take a comprehensive investigation of a unique breed of international
organization, the born global firm. Second, in the process of describing
born globals, we highlight the importance of key organizational elements
that engender international success in born globals and small internation-
alizing firms in general. We highlight the need to understand the interac-
tion between organizational orientations and strategies. Third, we also
examine the linkage between key orientations and strategies and interna-
tional performance in born global firms.
Specifically, in chapter 1 we introduce born global firms and pres-
ent evidence on how they are emerging in large numbers worldwide. We
summarize conditions for, and distinctive features of, born globals and
describe factors that help explain why such firms internationalize early.
We also discuss born globals as a distinctive category of international
small and medium-sized enterprise.
2 BORN GLOBAL FIRMS
al., 1994; Nakamura, 1992; Rennie, 1993; Wall Street Journal, 1989).
Pioneering global start-ups account for a substantial portion of growth in
national merchandise exports in many countries (e.g., Economist, 1993;
Luostarinen et al., 1994; McKinsey & Co., 1993; OECD, 1997). The
born global phenomenon is occurring literally throughout the world in a
wide range of business environments and industries (e.g., Nikkei Sangyoo
Shimbun, 1995; OECD, 1997; Simon, 1996).
In the business academic field, the born global phenomenon has been
investigated in the management literature (e.g., Knight & Cavusgil, 1997;
Oviatt & McDougall, 1994), in the business and textbook press (e.g., Cavus-
gil, Knight, & Riesenberger, 2008; Nikkei Sangyoo Shimbun, 1995), by
leading business consulting firms (e.g., McKinsey & Co., 1993; Rennie,
1993), and by the OECD and United Nations (e.g., 1993). These develop-
ments underscore how born globals have assumed greater prominence and
become a distinctive category of enterprise in the world economy.
Born globals have various characteristics, summarized in Exhibit 1.1.
These firms exist in most industries and tend to be formed by entrepre-
neurs with a strong international outlook. Managers tend to see the world
as their marketplace, often emphasizing strong international marketing
skills. To the extent this breed of enterprise can be an engine of growth
for global product-market innovations and economic development, the
emergence of born global firms is an important trend.
Historically, it was believed that companies had to build a strong
domestic base before venturing into foreign markets. One reason was the
high fixed costs of entering a new market at a distance, including the costs
of gaining market information and of managing agents or representatives
to establish effective sales organizations. However, dramatic changes in
recent years are facilitating the ability of companies to compete in inter-
national business from the earliest days after the founding of the firm.
Exhibit 1.1. Conditions for, and Distinctive Features of, Born Global
Firms
Facilitating Factors:
• Globalization of markets
• Advances in communications and information technologies
• Advances in production technologies
• Global niche markets
• Global networks
Internationalization Triggers:
• Export pull
• Export push
• Worldwide monopoly position
• Product-market conditions necessitating international involve-
ment
• Superior product offerings
• Global network relationships
• Global niche markets
BORN GLOBAL FIRMS: AN INTRODUCTION 11
reap all the benefits of the global marketplace, some European born globals
are expanding their international reach to markets outside Europe.
SME, Optical Xport, exports optical lenses and frames to customers in West
and Central Africa from its low-cost manufacturing base in Senegal. These
efforts increase the flow of medical supplies and eyeglasses to the poor in
Latin America and Africa (Neupert et al., 2006; World Bank, 2005).