internationalization process model was developed in1970s to describe how companies expand abroad. Model = Domestic Focus, pre-export state, experimental involvement, active involvement, committed involvement 2. Born Globals and Int’l Entrepreneurships – born global firms internationalize early in their evolution. Reasons for doing so are growing intensity of int’l competition, integration of world economies under globalization. Born Global phenomenon has given rise to a new field of scholarly inquiry, international entrepreneurship IV. How can international firms gain and sustain competitive advantage? a. FDI based explanations i. Monopolistic Advantage Theory – one ore more resources or capabilities a company possesses that few other firms have and that it leverages to generate profits and other returns. Suggests that firms which us FDI as int’lization strategy must own or control certain resources and capabilities not easily available to competitors. ii. Internalizing Theory – explanation of the process by which firms acquire and retain one or more value chain activities inside the firm, minimizing the disadvantages of dealing with external partners and allowing for greater control over foreign operations. iii. Dunning’s Eclectic Paradigm – specifies three conditions that determine whether a company will internationalize: ownership- specific advantages, location specific, and internatlization advantages. iv. Ownership specific – hold knowledge skills capabilities that allow it to compete effectively in foregn markets. v. Location specific – the comparative advantages available in individual foreign countries vi. Internationalization advantages – benefits that the firm derieves fomr internalizing foreign based manufacturing distribution or other stages inits value chain. b. Non-FDI based explanations i. International Collaborative Ventures – form of cooperation between two or more firms. Two major types: 1. Equity based joint ventures that result in the formation of new legal entitiy 2. Non equity based strategic alliances where partner temporarily wors on projects related to R&D, ii. Networks and relational assets. 1. Represent economically beneficial long term relationships the firm undertakes with other business entities
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- Spring '09
- International Trade, New trade theory, Int’l Trade, Trade and Investment