Born Globals: Think Global AND Act Global

As announced in the introduction, we will start our mini-series with an overview of the Born Globals world and its features.

Think and act local first, then go global

Today, small startups that grow rapidly across borders and that attack multiple international markets at the same time are so prevalent that it seems entirely normal. However, this is a relatively new concept, a major departure from the traditional internationalization process of firms.

“Think and act local first, then go global”, the well-traveled, traditional path to internationalization implemented by many big, well-established firms, has been a centerpiece of entrepreneurial studies for over 30 years. Authors like Johanson & Vahlne, Steinmann, Welch & Luostarinen have described the internationalization process as an incremental process, enabled by increasing experiential knowledge and progressively reduced risks, much like “rings in the water.” A process that follows a slow, methodical path of “scaling up the strategy-ladder of internationalization”. Business stability and security were big inhibitors to rapid internationalization.

Starting in the late 1970’s, throughout the 1990s and today, research and evidence have underlined a different tendency of rapid internationalizing firms: an increasing number of firms have become international, sometimes even global, at much earlier ages than before, practically from inception, and have more actively pursued strategies involving international activities. As we all know, world is not just more connected and integrated than before, but has also nurtured a suitable environment for growth and performance of SMEs at an international level.

Enter the Born Globals

Among the most used terms to define these companies, Born Globals has been considered the most accurate. It was only with Rennie’s empirical work on Global competitiveness of firms published in 1993 (from the analysis of the survey for The Australian Manufacturing Council run by McKinsey consultants), that the term Born Globals appeared and described firms that did not focus solely on their local market but rather internationalized from inception, albeit slowly, and were successful in the global marketplace. The survey, conducted on 56 Australian exporters, revealed that a large number of small firms were engaged in international operations from inception, competing successfully against larger firms, which were already established in global markets.

However, besides numerous attempts to define this emerging behavior, there is no universal agreement around it yet. This won’t prevent us however from using Born Globals to refer to, integrating different definitions, small-medium enterprises that quickly enter foreign markets and compete globally, from inception or early on in their life cycle. In a few words, these micro enterprises:

• commit their sales, resources, and activities in psychically and geographically close and distant countries, in a short amount of time, not waiting to be locally established before they internationalize;
• be independent and flexible, with no established domestic routines;
• compete in niche markets, with an aggressive foreign market entry strategy.

As growth defines the very essence of entrepreneurial firms and is a key factor for any business to survive and prosper, it is then interesting to see how rapid, even instantaneous internationalization of Born Globals informs how these firms grow. Do they follow a typical internationalization pattern and have a common life cycle? Which challenges do they face when entering foreign markets?

Stay tuned and don’t miss our next post to find out the new breed of research which will help understand the causes, the influencing factors, and a new possible frameworks for the internationalization process of Born Global firms.

Image by Flickr/Robert Freiberger — CC