The Born Global Strategy

The Born Global
Strategy
A Guiding Policy Framework for the Internationalizing Small
Firm
Ricardo Siller Cardenas
MSc in Economics and Business Administration

The Beginning
• A relatively few years ago:
• Today:
• This global phenomena leads to examine this idea:
• But how can small businesses internationalize?

The Born Global Strategy
• The present Master Thesis focuses on studying the elements
of strategy that predispose a small and medium-sized
company to become international either early on or in later
stages. A strategic guiding policy framework is proposed, and
for that matter, the born global profile is the model by which
this research is based on.

SPECIFIC RESEARCH PROBLEM
What, Why and Therefore
THE ARISING QUESTION
What are the key attributes and factors of strategy and
drivers of performance from born global firms, which
under a guiding policy framework contribute to early
internationalization and survival?
Outcome: proposal of what the researcher calls a “Guiding Policy
Framework”

Purpose of the Study
• The purpose of this study was to identify attributes, factors
and strategies that supports internationalization and survival
from born global companies, and group those strategies under
a common framework that would serve as a basis for
launching new ventures.

Umbrella of Terms (Not in
Thesis)
International
Small Business
Born Globals
Internationalize After 3 years
Micro-
Multinational
Become international by
emergence
International
Small Ventures
Start-up related
Other
Definition

Theoretical Background
• Based on the Kernel of Good Strategy by Richard P. Rumelt
• Strategy = design
• As such, is all about fitting various pieces together so they
work logically towards a common purpose. These pieces
(Resources, actions, and the rationale of the situation that has
direct influence on the organization) must be configured in a
way that the dynamics and interrelations within them yields
and advantage in a situation that poses a challenge.

Set of Coherent Actions
Puts the guiding policy to execution. “Hands on” element of
the overall strategy. Direct response to challenge.
Falls into the specific nature of the company; its business
plan or business model.
Guiding Policy
Framework that deals with the identified challenge.
Set of principles or policies to follow when facing the
challenge; does not indicate either specific goals or actions.
Diagnosis
Describes the overall factors that surrounds the economic
environment of the organization.
Market conditions, industry cycle, technoogical
developments.

Diagnosis
Guiding
Policy
Set of
Coherent
Actions
• We are interested in researching
these:
• And not in this: why? Because in
order to respond our research
question, we need a broader
descriptive approach (Kirpalani,
1985). The Set of coherent
actions falls into the specific
nature of the business and its
business models and business
plan.

Literature review: Approx. 45
sources
Intro
• Definitions
• Characteristics
• Micro-
Multinationals
Strategy
• Role of ICT
• Networks
Performance
• Drivers of
performance
in BG firns

Methods
• What was needed: “a research method for making replicable
and valid inferences from data to their context, with the
purpose of providing knowledge, new insights, a
representation of facts and a practical guide to action”
(Krippendorff, 1980). This insight leads to conclude that
qualitative content analysis is the research method that
provides better fit for the purposes of this study.

Methods (Continued)
• The nature of this research question and the overall study calls
for a method for analyzing written, verbal and/or visual
communication messages (Cole 1988), and one that allows the
application of this simple process:
• a).- to extract raw information from the born global profile
• b).- to analyze and categorize the extracted information and place
it either on the diagnosis element or the guiding policy element
of the Kernel of Good Strategy, and
• c).- to develop and test the end product, the Guiding Policy
Framework for the Internationalizing Small Firm.

Methods (Continued)
• From this research method, inductive and deductive content
analysis are derived as practical approaches. Since the
purpose of this thesis is to generate and test new theory, both
approaches were applied. The next figure explains visually the
outline and rationale of the methodology:

Inductive Approach: ToConstructthe
Kernel
Gather Data
•Specific Level of
Focus
Look for Patterns
•Analyze data to
construct theory
Develop Theory
•General Level of
Focus
Theorize / Hypothize
• General Level of
Focus
Analyze Data
• Analyze data to
support hypothesis
Hypotheses supported
or not
• Specific Level of
Focus
Deductive Approach: To Test the Kernel

DevelopGroundedTheory:Observationsfrom
documents
Gather Data from
Literature Review /
Documents
• Measurement instrument:
Matrix of Codes
Analyze data to
construct theory
Develop Theory
• Preliminary Kernel of Born
Global Strategy
Theorize /
Hypothize
•Measurement
instrument: interviews
Analyze Data to
support theory
Hypotheses
supported or not
•Guiding Policy
Framework for the ISB
Test Grounded Theory: Conduct Interview for case
study

Deductive Approach Sources: Interviews
(App D/E) and two BG case studies

Results: Industry
• Industry: Traditionals and low rates of innovation. Disruption
powered by technological change.
• Born globals DO NOT operate in industries characterized by
rapid growth; rather, these companies are servicing traditional
or off-line industries with the support of technologies
• At the same time, these technologies facilitate the
development of international entrepreneurial orientations in
the firms.
• Beyond operating in “tech” industry per se, BG’s are applying
technological capabilities in order to transform social aspects
of the internet and redesign existing business processes,
which at the same time, has the consequence of evolving into
new business models.

Results: Industry (Continued)
• It was not clear if internationalized industries provided the
main motivators for these companies to go global. Rather, it
seemed that technological capabilities and the size of the local
market were the main drivers of internationalization of the
born globals, independently of the levels of maturity of an
industry.
• Actually, it seemed that the older an industry, the more
opportunities for disruption, as in the case of Drivr.
• The level of competition in target markets did not prove to be
a main motivator for going international. Rather, the size of
local markets that is not sufficient for firm’s products or
services proved to be a better incentive for
internationalization.

Results: Industry (Continued)
• These born globals operate in either:
• a).- traditional off-line industries comprised by several activities
that are ripe for technological disruption, or
• b).- traditional off-line industries with low rates of innovation and
industry change.

Results: Markets
• The assumption that for some companies, the local market for
their offerings is non-existent was not proved in this study,
since for the two cases studied, there were some levels of
activity in the local market.
• For Conferize, it is the possibility to command a ratio of 50% of
their total sales; for Drivr, it was the possibility to forge
partnerships with local taxis.
• Contrary to what research indicates, product orientation and
its relation with business development was more important
than market orientation.

Results: Markets (Continued)
• It was not easy to determine whether the changing nature of
international markets would have direct influence on born
global strategy; rather, it was technological capabilities and
the prospects of disrupting old industries the factors that
provided competitive advantage.
• The intense focus on product development and supply side
catering made difficult to determine the levels of knowledge
of these born globals on their respective markets, making it
not conclusive to determine whether global niche markets
might has brought opportunities or the levels of market
growth.

Results: Markets (Continued)
• It was possible to detect the initial intention to be born global
by design.
• But not because the stagnation of the local market; rather,
because according to these companies, there was not any
sense on operating exclusively local if their technological
capabilities and disruption potential in traditional industries
would provide better chances to internationalization and cater
a bigger market share.
• Additionally, the patterns of internationalization proved to be
more regional than truly global.

Results: Managerial
• Preliminary inductive study indicated the characteristics of the
typical born global founder or key individual:
• A self-starter with a background in technology or research
• Who hire young and educated people with little business
experience to manage the company.
• He is also an individual with substantial international experience
and language abilities.
• The conclusive arguments regarding these characteristics prove
that all these insights are equally valid.
• Yet, in other research, international experience seemed to be not
significant.

Results: Managerial
• Characteristics of the founders were clear; people with
technological or research background, with a precedent in
entrepreneurship.
• And not surprisingly, internationalization from the beginning
was always in the back of the mind of the entrepreneurs.

Results: Networking
• Networking had a substantial weight on born global
development; even as important as depending on the whole
business model on it, as proved by Drivr, since the resources
from foreign partners would provide a competitive advantage.
• Conferize also proved this assumption to be of critical
importance when the findings indicated that the purpose of
their partnerships were for incremental and scalability
objectives.

Results: Product Model
Strategy
• Surprisingly, a new pattern emerged. Product Model Strategy
was not a code that was considered in the axial design.
• This was inductively constructed and equally considered under
the principle of chain of evidence, and it seemed to have a
substantial weight in the internationalization process.
• Basically, the Product Model Strategy describes the policies
that these born globals employ in their international pursuits;
namely, basing their uniqueness (and hence, competitive
advantage) in business model innovation, developing
proprietary technology, and surprisingly, instead of orientating
toward market learning, these born globals are entirely
focused on the supply side and product development.
• The rationale is that there is no use in focusing in a market
where you are still in early stages of product development.

Born Global Diagnosis:
State of the Industry, New Market Conditions,
Technological Disruption
International
Management
Policy
International
Entrepreneurial
Orientations
Policy
Knowledge and
Learning
Orientations
Policy
Technological
Capabilities
Policy
Networking
Policy
Product Model
Policy

Limitations of the study:
• “If I had to do this study again, in what way would it differ?
Would another approach affect outcomes, and if so, how?”

What I did wrong
1. Rushed results analysis and discussion
2. Unproper use of deductive methods
3. Performance not well addressed
4. Limitations that did not let a quantitative component
5. Confirmation Bias

The Born Global Strategy

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The Born Global Strategy