Models of internationalisation: The New Zealand experience

This paper examines the models of internationalisation adopted by thirty firms from New Zealand. Analysis of the international model is based on five key dimensions: firm sector and size; international market scope; market entry and servicing strategies; and speed of internationalisation. Drivers and constraints to internationalisation are also considered in the analysis. Evaluation of these dimensions over time finds evidence of both traditional ‘stages’ and emergent ‘born (again) global’ models of internationalisation, and reveals that over one third of these firms experience dramatic change to their international activities and resources initiated by divestment or change of ownership. We refer to the alternative internationalisation trajectory adopted by these firms as the ‘transformational’ model of internationalisation. The paper makes a contribution to the extant literature by providing synthesis of the New Zealand internationalisation and by building on our understanding of how patterns of internationalisation from a small open economy are changing in response to global environmental pressures

Just another BRIC in the wall? The rise of BRICs and educating tomorrow's global managers

The BRIC countries (Brazil, Russia, India, and China) comprise 40 percent of the world’s population (approximately 2.8 billion people), cover more than a quarter of the world’s land area over three continents, and account for more than 25 percent of global GDP (by purchasing power parity). In the ten years since the term BRICs was first coined by Jim O‘Neill, chief economist of the investment bank Goldman Sachs, all economies (except Brazil) have exceeded their predicted growth rates. Integration into the global economy coupled with rising spending power prompts flows of students (and expatriates) to, and from, the BRICs—positioning international business educators at the helm of this sea-change. In this article, we reflect on the implications of the rise of the BRICs for educating the next generation of business managers and leaders. We argue that rather than just another “brick in the wall,” educating tomorrow’s managers requires adoption of a global mindset by international business educators. This enables them to build on, or indeed begin to dismantle, existing theoretical and pedagogical foundations, brick by brick

The impact of foreign direct investment on New Zealand industry

This thesis examines the impact of Foreign Direct Investment (FDI) on industry in New Zealand. The research question addressed by the thesis is “What is the impact of FDI on New Zealand industry?”. The scope of the research incorporates the immediate, or first round impact of FDI on the foreign-owned affiliates operating in New Zealand, and the long-term, or second round impact on other local firms via inter-firm linkages. The thesis operationalises the Investment Development Path (IDP) concept which links economic development to inward and outward FDI. The IDP posits that given appropriate receptor conditions, the unique Ownership-Location-Internalisation (OLI) configuration of the Multinational Enterprise (MNE), via the inward FDI vehicle, might provide the impetus for upgrading of local industry and eventually, outward FDI by indigenous firms. This thesis assesses how this might occur at the firm-level. A survey of all foreign-owned firms operating in New Zealand as at November 1999, resulted in 516 useable responses from an estimated population of 1554 firms. Descriptive statistics, multiple and logistic regression, and cluster analysis were employed to analyse these responses. This is the only major survey of FDI in New Zealand undertaken since the late 1960s, and thus fills a considerable gap in the existing literature. The results reveal that the affiliates are reliant on their foreign parent companies for resources such as finance, technology, knowledge and innovation, that offer them competitive advantage in New Zealand. The affiliates form a variety of linkages with local firms. The most significant of these are indirect competitive linkages, forward linkages with agents and customers, backward linkages to source specialised services, and collaborative linkages. The research model relates the Degree Of Linkage (DOL) of the affiliate within the local economy to its impact on local industry upgrading. The results suggest that as DOL increases, the opportunities for upgrading also increase via quasi-internalisation of ownership-specific advantages by the affiliate. The thesis concludes that FDI has a significant impact on local industry upgrading at the first round level by adding to the competencies of the affiliate, and at the second round level through competitive pressure, creating demand and supply, providing assistance, and transferring firm-specific resources to local firms. The contributions of this thesis to existing knowledge relating to the impact of FDI are as follows. One, examination of a broad range of linkages allows a more comprehensive assessment of the extent and pattern of second round impact. Two, incorporating assistance and collaborative linkages confirms that quasi-internalisation of ownership-specific advantages may occur through intermediate organisational routes as a complement to the hierarchical routes associated with FDI. Three, focus on the second round impact at the micro-level demonstrates the crucial link between inward FDI, upgrading of local industry, outward FDI, and the eventual economic development of a host country. Four, classification of affiliates by DOL enables the identification of distinct types of FDI and thus, different outcomes for industry upgrading. Five, analysis of the key determinants of linkage formation and DOL, provides policymakers with a foundation from which to evaluate the potential of FDI for upgrading in the future

Subsidiary roles, vertical linkages and economic development: Lessons from transition economies

A B S T R A C T Vertical supply chain linkages between foreign subsidiaries and domestic firms are important mechanisms for knowledge spillovers, contributing to the economic development of host economies. This paper argues that subsidiary roles and technological competences affect the extent of vertical linkages as such as well as their potential for technological spillovers. Using survey evidence from 424 foreign subsidiaries based in transition economies, we tested for the effect of subsidiaries' autonomy, initiative, technological capability, internal and external technological embeddedness on the extent and intensity of forward and backward vertical linkages. The evidence supports our main argument that the potential of technology diffusion via vertical linkages depends on the nature of subsidiary roles. We discuss the implications for transition as well as other developing countries.

Born-digital: The Internationalisation path of digital firms

While digital firms are playing an increasingly important role in the world economy, their international expansion remains an emergent topic for international business researchers. We still lack a clear understanding of the characteristics and patterns of internationalisation by digital firms. This study aims to address this research gap by examining the path of digital firms’ international expansion. Applying the research methods of tabulation analysis and mini case study, our study reveals that digital firms expand into foreign markets in a way that significantly differs from conventional brick-and-mortar firms, thus questioning explanations provided by extant internationalisation theories. Three patterns of digital firms’ internationalization are identified. Based on analysis of archival data, this study contributes to theoretical development of internationalisation theory and provides guidance to managers of digital firms creating and implementing international expansion strategies

A network perspective on foreign entry modes of small knowledge-intensive services firms

Purpose: Integrating network attributes from studies of social networks, business relationships and small to medium-size enterprise (SME) internationalisation, this study adopts a perceptual view of a firm’s focal ‘net’ of relationships to examine foreign market entry mode choice. Our study examines how the interaction between knowledgeintensive service (KIS) firm’s focal network ties, embeddedness and position is related to entry mode choice and subsequently the firm’s perceived insidership status within its focal net. Methodology: This research is based on qualitative interviews with 25 small to medium-sized KIS firms engaged in direct exporting or foreign direct investment (FDI). Our study derives an empirically grounded framework of four distinct network patterns of these KIS firms through an iterative process of triangulation between cases and theory. Findings: The four network patterns illustrate the complex interaction between network attributes and entry mode choice by KIS firms. Our findings suggest formal ties and centrality in closed network relationships provide the ‘central controller’ firm over their entry mode choice. Resource-intensive FDI by ‘opportunistic investors’ proved essential to securing centrality through formal, institutional ties. Less optimal patterns lacking institutional ties and centrality, however, precluded choice of FDI by ‘specialised exporters’ and ‘client followers’. The study finds that entry modes are less likely to be influenced by the firm’s embeddedness in open or closed network relationships, but rather by the desire to achieve a more central network position and legitimacy through more formal, less imitable ties. Research implications: Our findings demonstrate the importance of network structure, a position of centrality, and strength of professional and institutional ties to small KIS firm internationalisation. By adopting a more finely grained examination of the interaction between key attributes of the firm’s focal net, our study provides a valuable first step in conceptualising the complexities associated with networking and adoption of export/investment internationalisation modes. Practical implications: There are a number of implications for the strategic and operational facets of smaller KIS firm internationalisation. To avoid excessive network liability for resource-deficient SMEs, practitioners should consider network positioning as a strategic activity, with the costs associated with building and maintaining networks offset against economic and resource-related returns. Originality/value: We contribute to a better understanding of entry mode choices of KIS by taking a network perspective that accounts for the combined effects of different network attributes. The four network patterns identified extend current theoretical knowledge on the role of networks for entry mode choices of small KIS by highlighting that entry mode choices reflect the particular firm’s focal net and its attempt to achieve insidership status through highcentrality and formal ties

Asset-seeking investment by Chinese multinationals: Firm ownership, location,and entry mode

Chinese outward foreign direct investment (FDI), although still emergent, is rapidly growing, widely dispersed amongst host locations, and increasingly driven by asset-seeking motives. However, characteristics of Chinese Multinational Enterprises (MNEs) differ considerably – not only from counterparts in the West, but also within China’s institutional environment. Drawing on a survey of Chinese MNEs, the paper investigates differences in asset-exploratory behaviour by location and ownership. The results reveal Chinese MNEs are motivated to invest in specific locations for asset exploration: strategic assets in North America, relational assets in Asia, and natural assets in Latin American and Australasia. State-owned enterprises are more likely to possess experiential advantages and to invest for strategic asset-seeking motives, whereas non-state-owned enterprises invest to seek relational assets. Chinese MNEs with advantages relating to technology and experience are more likely to employ full-control modes of entry than those with advantages relating to guanxi. Implications for policy and practice are discussed