SCHOOL OF POSTGRADUATE STUDIES

COLLEGE OF MANAGEMENT AND SOCIAL SCIENCES

DEPARTMENT OF BUSINESS ADMINISTRATION

OKEOWO JOHNSON - 20PAB02202

MBA BUSINESS MANAGEMENT

MBA / MSC

SUBMITTED TO

DR ADENIJI
ABSTRACT
The global business fashion approaching internationalization has helped propel the
nation's economic system into a globalized country where international trade and
finance have made the entire economy of the nation highly interconnected. As such,
they could have a significant impact on the national activities and financial well-being
of all other countries. Every organisations desire to enter foreign market to expand
their operations and market share.There are certain factors that drive organisations
towards entering foreign market. It is therefore the aim of this study to explore
explicitly these factors that drive internationalization in business world. This study
adopted systematic analysis of using qualitative method. The study used secondary
data extracted from previous related articles and literature. The findings revealed that
the major driver of internalization are entrepreneurial, economic, technological
cultural and institutional drivers. In this study, a set of entrepreneurial firms who
internationalize immediately after start up was identified and examined, they are
called Born Global firms. Born Global companies are those who are about to embark
on an international expansion strategy shortly after launching their operations. The
theoretical approach employed in this study are The Uppsala model, the Network
approach, and international New Ventures, often known as Born Global. This study
employed empirical review from a research conducted by Cristina and Samuel (2012),
on “ Internationalization drivers in the wine business: a RBV perspective” to
evaluates the internationalization process in the wine business in a RBV perspective.
This study concluded that before organisations should consider to internationalize,
they should possess strong or justifiable reasons which is particular to the industry or
sector of choice. The managerial implication this study provided is that organisations
should run industry analysis before embarking on any strategic movement to
operations beyond their border and failure to conduct thorough analysis implies fatal
failure in international business.
INTRODUCTION
Internationalization describes the design of a product in such a way that it can be
comfortably consumed in several countries. This technique is utilized by companies
seeking to enlarge their global footprint past their domestic market know how,
overseas buyers may also have special preferences or habits. Internationalization
describes the technique of designing goods to satisfy the wants of customers in many
countries, or to design them in a way that can be changed without difficulty in
achieving this goal. Internationalization frequently calls for the modification of
products to the technical or cultural desires of certain people, as well as the
development of socket appropriate for exceptional varieties of electrical outlets.
In an economic context, internationalization can site with an organization that is
taking steps to increase its footprint or gain market share outside of its country by
diversifying into global markets. The global business fashion approaching
internationalization has helped propel the nation's economic system into a globalized
country where international trade and finance have made the entire economy of the
nation highly interconnected. As such, they could have a significant impact on the
national activities and financial well-being of all other countries.
When should a business expand worldwide and what is the outcome of the global
expansion schedule? Why internationalization a little earlier and some later?
Competing theories stemming from exceptional field specifically attempt to address
these questions, pointing to elements associated to the firm, the entrepreneur, and the
market. The first volume is based on a purely resource-based perspective of business
to provide an explanation of the timing and consequences of doing business abroad
and especially its connection to business methods and literature. business world
(Cavusgil & Knight, 2015; Hennart, 2014; Knight & Cavusgil, 2004). The second
volume, which attracts upon entrepreneurship literature and examines the reasons
and behaviors of marketers and how they impact a company's approach (specifically,
the moment of internationalization) and its next development (Andersson, 2000;
Sommer, 2010). The third volume specializes in market factors including buyer
resistance or attraction to a particular product or service (Leonidou, Katsikeas,
Palihawadana, & Spyropoulou, 2007), and attracts on economics and methods.
The fast growth of many small firms internationalizing early in the life cycle has
increased interest in the early internationalization phenomenon and the drivers
behind this action. The early internationalized companies are frequently in
comparison to traditional, slow-pace internationalization processes that resemble the
Uppsala model (e.g., Bell, McNaughton, Young and Crick, 2003; Johanson and
Vahlne, 1990).
In addition, a few agree that early internationalization could herald the overall
operational excellence of many companies (eg, Autio, Sapienza and Almeida, 2000;
Moen and Servais, 2002). "Overall longterm performance monitoring must be
attractive and rewarding," according to Cavusgil and Knight (2015), as empirical
evidence of the consequences of early internationalization is still scarce. There is
some empirical evidence for an overall performance of early internationalized firms
(eg, Kuivalainen, Sundqvist & Servais, 2007; cf. Casillas & Ased, 2013). For example,
Kuivalainen, Saarenketo, and Puumalainen (2012) observed that many companies
following a so-called “true international strategy” can expand their global presence,
both independently and through mergers and acquisitions. It is difficult to judge early
internationalization and illegal internationalization. For example, terms that appear
internationally or have a new global mission (born global) appear in broad search
terms but are not clearly defined in terms of their meaning on phrases or their
implications on the overall performance (Kuivalainen et al., 2012; Verbeke &
Ciravegna, 2018).
Regarding the effects or importance of internationalization, there are numerous
feasible results to consider (Kuivalainen et al., 2012). For example, answering the
comprehensive question "what occurs after the prior Internationalization" (Casillas &
Acedo, 2013; Kuivalainen et al., 2007; Zahra & George, 2002). We need to increase
our participation in the global market by leveraging market start-ups or organising
subsidiaries that might make a central institution into a so-called "micro-
multinational", a technique we call multinationalization (Vanninen, Kuivalainen &
Ciravegna, 2017). Some companies lifted or withdrew near the domestic market after
the prior surge in foreign sales (Benito & Welch, 1997), and few may
internationalize shortly after establishment, and then withdrew inward and possibly
at a later level once more end up worldwide. (Bell et al., 2003; Casillas & Acedo,
2013). Overall, the timing of internationalization can have multiple consequences
(Kuivalainen et al., 2012), but there is limited evidence of the key factors with
specific consequences. Therefore, it is advantageous to construct theories and
structures that can provide an explanation for the phenomenon (Cavusgil & Knight,
2015; Jones, Coviello, & Tang, 2011; Oviatt & McDougall, 1994).
We can classify 2 groups of drivers related to internationalization that occur
unexpectedly after establishment as “entrepreneurial internationalization” and
“strategic internationalization”, while the third group of drivers cause highly late
"reactive internationalization”. With such a model, and with a specific reassessment
of an organization's overall performance over time, we shed mild upon the viable
effects of early internationalization implemented with the aid of using companies; for
example, whether or not the drivers seem to point companies in the direction of a
greater domestic, regional or global "path" in their internationalization process, with
fundamentally different views and with entrepreneurs and their mindset in the
direction of internationalization at central. The moment of internationalization also
applies particularly to companies in small economies where domestic development
alternatives are limited.
Consequently, we discuss about what are the drivers of the timing of
internationalization and do they shape particular strategic varieties of
internationalization connected to the effects of the timing? We put together
approximately the drivers and effects of early (and late) internationalization,
providing to the literature on global enterprise and the way it pertains to rising
economies. Moreover, with the use of a combined multi-theoretical structure to
examine the occurrence, we develop and verify a group of various varieties of drivers
describing the timing of internationalization. We offer a significant interpretation of
those groups, which permits us to indicate a categorization or typology of
internationalization timing drives and their associated progressive consequence for
the companies. We hence discuss with a studies gap that exists because,
notwithstanding several dissemination specializing in early internationalizing
companies, just a few research observe what occurs to the distinguished companies
after their preliminary internationalization (Casillas & Acedo, 2013; Cavusgil &
Knight, 2015). Our studies is extra analytic however the goal is to offer a
comparative base for research specializing in exceptional varieties of
internationalizing companies with regards to the antecedents of timing of
internationalization, and the results of each drivers and actual timing.
With the existence of the era innovation and the actuality of the internet, the
globalization inclusive of international financials flows, transportations and
marketplace opposition turn out to be bases of changing and adapting the wants
within the new services and products delivers. This consists of doing a strategic new
market environment. in addition, the global market turns into increasing in all
elements of the globe while it makes use of the communication with the aid of
getting access to the transportations (private and public) and multi financial resource.
Some elements want to contemplate on the international marketplace opposition:
1. Global opposition within the domestic marketplace: There are lots of latest
products appears and contributes within the domestic market and likely to
lose our own customers very soon; due to the fact our competition might also
provide proper goods and services quality than we did. The competitor costs
can also decrease than our product price. The worldwide competitions at
domestic markets also are rushing up a brand-new innovation and introduced
value to the clients, it consists of growing and enhancing the present-day
services and products with the excessive quality of standard.

2. Stagnant or shrinking domestic market: The worldwide verbal exchange as

well support stagnant domestic market. E.g., a new product that is not yet
released but it is been advertised has mentioned and this could permit
customer to wait for the new product rather than buying an occurring one
with antique fashion.

3. Foreign markets with great opportunities: Globalization provide opportunities

for expansion of foreign markets, but entrepreneurs must be aware of various
problems including the international trade system, foreign country economic
environment, foreign country political and legal system, foreign culture and
tradition its environment (Armstrong & Kotler. 2010:580-585). The
international trade system may be limited to one country or with potential
international locations. For example, to guard the domestic merchandise and
its company, the authorities of the country might also position excessive tariff
or taxes to the imported items which gain more advantage on sales to the
country. the economic environment, businessmen must examine foreign
country business framework and distribution of income, (Armstrong &
Kotler,2010: 582). The business structure collectively has a currency-based,
 commodity export economy, and an industrialized economy. They also look
at the distribution of income for low individual incomes, middle and high or
excessive household. The foreign nation political and legal; organizations.
Political stability, bureaucracy, and legal system are key factors and
indicators for entry into new markets in the country. In addition,
entrepreneurs need to understand the targeted country's traditions and norms
rather than trying to increase the marketing of their products and services.
They have unique norms and beliefs. For example, fast food containing pork
cannot be sold in Islamic countries.
4. Expansion of potential customers to worldwide markets: Create a very good
connection with potential customers and with the existing ones because it
could help with an increase in new product and service, it consists of
introducing new product from foreign countries.

LITERATURE REVIEW
Welch and Luostarinen (1988) define internationalization as “the process of
increasing involvement in international operations”.

Drivers for BG Firms

Generally speaking, Born Global companies are those who are about to embark on an
international expansion strategy shortly after launching their operations. The term
"precocious and expressive exporting behavior" was coined by Rennie (1993), who
identified enterprises that displayed precocious and expressive exporting behavior
within two years of their establishment. Rennie (1993) underlines the significance of
these firms because, despite their tiny size, they are able to compete with large
established companies and grow at a rate that would not have been possible during
previous decades.
There are various drivers for BG firms to internationalize at a far faster rate than
traditional corporations, as compared to the latter. According to Madsen and Servais
(1997, p. 565), an increasing number of such corporations may be emerging.
This can be attributable to several factors, including: (1) shifting market conditions, (2)
technology advancements in the fields of manufacturing, transportation, and
communication, and (3) more sophisticated capabilities, including those of the
entrepreneur or founder.
BGs have a number of unique resources, which Laanti, Gabrielsson, and Gabrielsson
(2007) point out, such as entrepreneurial orientation, product and technology
advancements, and networking opportunities.
The abilities and collected knowledge of the founders derived from their previous
professional experiences. Entrepreneurs' motivation, vision, expertise, and ability are
all considered to be important factors in determining the rate at which their companies
expand internationally (Autio, Sapienza & Almeida, 2000; Knight & Cavusgil, 2004).
Kuivalainen (2001) also focuses on the founders, arguing that their previous foreign
ventures and personal international networks can serve to substitute the expertise that
enterprises must gather in their home markets in order to be successful in
internationalization. BG firms must have, in addition to founders' abilities,
international communication skills and an understanding of different cultures, which
are developed through international experiences. "Such capabilities are clearly a
prerequisite for exploiting the opportunities offered by new production,
communication, and transportation technology," says the World Bank (Madsen &
Servais, 1997, p. 566). The authors (1994) highlight that this phenomenon is a result
of the rising scope of cultural homogeneity, societal change, and company strategy.
Oviatt and McDougall (1994) state that As a result, the first two aspects facilitate the
entry of foreign enterprises into worldwide markets by opening up international
marketplaces. Foreign trade agreements that have been liberalized, as well as
technology advancement, have finally provided them with the possibility to readily
interact with international customers, distributors, partners, and suppliers (McDougall
& Oviatt, 2000). Because small entrepreneurial enterprises profit from sophisticated
information and communication technologies, the internet plays an important role in
this issue (Bell & Loane, 2010). (Loane, 2005). Additionally, Knight and Cavusgil
(2004) find that globalization is the primary economic force behind the growth of the
BG phenomenon. Most companies are able to offer very specific goods and services
in international markets because of the growing number of niche markets that are
leading to further product specialization. When demand within the domestic market
base – even in larger markets – becomes insufficient, entrepreneurs in high-tech
niches are encouraged to sell their innovative products worldwide (Madsen & Servais,
1997). In addition, consumers' preferences are shifting away from standardized
products and services and toward more personalised options (Rennie, 1993). As a
result, in order to internationalize their businesses, BGs typically hunt for a niche in
the global market (Knight & Cavusgil, 2009).
These enterprises, according to Mort, Weerawardena, and Liesch (2008), are known
for their inventive and risk-taking mindsets, which they employ in order to serve
niche markets that large corporations are hesitant to enter and serve.
For further information see Bell, McNaughton & Young (2001), who believe that
specific circumstances, such as new business possibilities in foreign markets,
attractive exchange rates or severe economic conditions in the native market, can
cause enterprises to internationalize more quickly than they would otherwise. To
support an evolving international strategy, it is essential to have knowledge of the
international marketing environment, as well as additional resources such as relational
resources in the context of networks and competencies (Eisenhardt & Martin, 2000).

Challenges for BG Firms in the Information Age

As described by Gabrielsson and Kirpalani (2004), the environment in which BGs can
grow is characterized by an increasing level of uncertainty and dynamism. They will
be successful if they have an understanding of the home market and industry features,
market and segment knowledge, past international experience with foreign markets,
product innovation and the firm's innovativeness as well as access to business
networks. Therefore, BGs encounter a variety of hurdles that are both internal and
external in nature as they embark on their internationalization journey. Already in
1993, Rennie (1993) indicated that the primary issues faced by BG enterprises differ
from those confronted by larger corporations that take a more traditional strategy to
internationalizing their operations. The lack of critical resources, such as financial
assets or human capital, that BGs face as a result of their young age and characteristic
small size is one of the most significant issues they face (Knight & Cavusgil 2009;
Luostarinen & Gabrielsson, 2006; Oviatt & McDougall, 1994, Rasmussan, Madsen &
Evangelista, 2001). A driving force for BGs is, according to Madsen and Servais
(1997), the human resource side of the business in particular. This conclusion is
backed further by Moen (2002), who highlights the importance of recruiting processes
and human resource management in the process of hiring the most qualified
candidates.
As a result of their age and size, they are unable to capitalize on the experience and
knowledge that traditional firms have gained in their home markets, as well as the
immediate economies of scale that they have gained for their entire portfolio of goods
and services (Freeman, Edwards, and Schroder, 2006). When BGs are considered
SMEs (small and medium-sized enterprises), a lack of capital is only the second most
significant constraint; it is only outranked by a lack of market knowledge (Gallup
Organization 2007). It is essential in various internationalization models, such as the
Uppsala model, where it is seen as an entry barrier, to have knowledge of worldwide
markets (Johanson & Vahlne, 1977; Johanson & Wiedersheim-Paul, 1975). Three
factors have an impact on the activities of BGs: their newness, their smallness, and
their foreignness.
In order to be successful in their international operations, businesses must incorporate
cultural differences, shifting customer preferences, changing laws and regulations,
institutional arrangements, and legal requirements into their strategic plans from the
beginning. BGs may find that business partnerships are more complex and difficult to
build as a result of differing cultural values and attitudes than they had anticipated
(Cullen & Parboteeah, 2010; David, 2011). Luostarinen and Gabrielsson (2006)
provide a succinct assessment of the issues raised, categorizing them as follows: (1)
entrepreneurial obstacles, (2) governmental challenges, and (3) educational challenges
for small and medium-sized enterprises.
Using the literature review to compare and contrast different scientific movements in
search of intersections, five major areas of inquiry have been identified as the
conceptual foundation for this research: Among the factors that influence and
challenge entrepreneurs are (1) entrepreneurial drivers and challenges; (2) economic
drivers and challenges; (3) technological drivers and challenges; (4) cultural drivers
and challenges; (5) institutional drivers and challenges. The drivers and obstacles for
BGs discovered in the literature review and used as the conceptual framework for this
study are depicted in the figure below.

DRIVERS FEATURES CHALLENGES

Entrepreneurial Sophisticated capabilities Lack of resources
Networking capabilities Employee recruitment
Global Vision Network building
Founder's experience

Economic Changing market Time limitation

 conditions Overcome smallness
Small domestic market Lack of brand image
base
International market
potential

Technological Technological advances in Complexity

transportation &
communication.
Innovative/ customized
product
Role of internet/e-services

Cultural Cultural homogeneity Lack of foreign market

Market acceptance knowledge
Language barriers
Institutional Relaxation of trade Complexity
barriers
Globalization
Overcome entry barriers

Figure 1: Drivers of economic Internationalization

Source: (Fonso, Timo, and José Ednilson, 2017). Drivers and Challenges for
Internationalization – A Study with Born Global Firms.

THEORETICAL REVIEW
The Uppsala model, the Network approach, and international New Ventures, often
known as Born Global, are three of the most prevalent philosophies of
internationalization today.

The Uppsala Model

The Uppsala model is a hypothesis that describes how corporations gradually increase
their activity in foreign markets. It was developed by Jan-Johansson and Jan-Erik
Ahlen in 1977 and first published in the journal Economics. The slow and progressive
nature of worldwide expansion was stressed in their model. This technique would be
the most effective for organizations looking to minimize their risk level.

The Network Approach

Johanson and Mattsson (1988) proposed the concept of 'The Network Approach to
Internationalization,' which emphasizes the importance of relationships with suppliers,
consumers, and the market, all of which can encourage or assist a company in
expanding internationally. It is believed that networking will provide a source of
market information and knowledge that will bridge the gap between the interested
parties' customers, suppliers, the industry, distributors, regulatory and public
authorities, and other market participants. The advancement of technology,
particularly in the information and communication industry, aids enterprises in their
efforts to internationalize more quickly by using the experience and resources of
network partners.

International New Ventures/Born global

Born global enterprises, according to Oviat and colleagues (1994), are corporate
organizations that have sought resources and sold products in order to achieve
competitive advantages from worldwide marketplaces from the beginning of their
existence.

RECENT RESEARCH

Cristina and Samuel (2012) conducted a research on “ Internationalization drivers in

the wine business: a RBV perspective” to evaluates the internationalization process in
the wine business in a RBV perspective.The research adopted a concept centric
approach with the aim to provide a systematic analysis of the literature review about
internationalization in the wine business. An overview of main theoretical issues on
RBV and internationalization, together with the description of the major changes
occurring in the wine industry, was provided in research.
METHODOLOGY
This work is based on the review of existing literature which were used to obtain the
required data. The study made use of descriptive research design thereby trying to
explain the phenomenon of drivers of internalization in reference to BG firms. The
use of secondary data was used in the preparation of this work. For this study, we
began by breaking down the drivers of BG into several factors according to Madson
and Servais (1997). After which we moved on to the influencers, after which we
buttressed on the challenges. This study is mainly qualitative as there was no much of
analysis done in it. This study made use of processed information from secondary data
outlets and we built on the already laid down findings. The study focused on the
issues surrounding the drivers of economic internalization inculcating BG firms.
CONCLUSION
From the content of this article as well as other cited articles, it is therefore
established, that for a company to risk being run in a foreign country, with the
difficulties and risks it can bring, they need to possess strong or justifiable reasons.
These strong reasons are particular to the industry or sector of choice. However, they
are tagged the drivers of economic internationalization. They help the organization
understand if they really would have to embark on this journey of economic
internalization. The drivers are involved in getting organisations within the globe to
strategically make decisions on whether to take their businesses to the international
space. If yes, where they should be situated, when they should go about it, and
ultimately, how or in what way it should be undergone (This will involve; The
resources it will entail, both material and human resources). Hence, their relevance of
drivers in economic internationalization cannot be overemphasized.

MANAGERIAL IMPLICATIONS
While economic internalization is bears with it a huge form of advantages, it is
undeniable that limitations will still be present. However, as managers it is important
that we run industry analysis (The firm, her competitors and her market), from time to
time, so as to have in-depth understanding of our organization’s capacity and product,
before ever deciding to embark into the business internationalization phase. If such
analysis is not done, the businesses will face the risk of crumbling.
Also, beyond Industry analysis, a good knowledge of the drivers of economic
internationalization, with respect to our organization, is a necessity in business
internationalization. Making business decisions from the stand point of why our
business should be internationalized, having assessed the drivers of economic
internationalization, helps the organization reduce the risk levels that are bound to
economic internationalization in the global economy.
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