D. Deo Sharma

EXPERIENTIAL KNOWLEDGE AND COST IN THE INTERNATIONALIZATION PROCESS

In furthering our understanding of the dynamics of the internationalization of firms, process models have played a significant role [Bilkey and Tesar 1977; Cavusgil 1980, 1984; Czinkota 1982; Johanson and Vahlne 1977, 1990; Luostarinen 1980; Reid 1983]. In these models, market-specific experiential knowledge is central in explaining the firm’s internationalization process. A vast amount of research, using the concept of experiential knowledge, on the internationalization process and the choice of mode for entering foreign markets has been accumulated [Barkema, Bell and Pennings 1996; Beamish 1990; Calof and Beamish 1995; Erramilli 1990, 1991; Erramilli and Rao 1990, 1993; Hirsch 1993; Kogut and Singh 1988; O’Grady and Lane 1996; Reid 1984; Root 1987; Sharma and Johanson 1987; Wiedersheim-Paul, Olson and Welch 1978]. Surprisingly, none of the above-mentioned work has explicitly dealt with the cost of the internationalization process. This is surprising since the management of internationalization unavoidably gives rise to the question of cost [Carlson 1974]. An internationalization process entails risk and the investment of resources. Here the issue of the effects of the critical experiential knowledge on the cost of the internationalization process becomes important. Cost aspects have a bearing on the profit generated by firms [Bilkey 1982], on a firm’s inclination to enter foreign markets [Dichtl, Koeglmayr and Mueller 1990], and on the selection or changing of foreign market entry mode [Calof and Beamish 1995].

Effect of Variation on Knowledge Accumulation in the Internationalization Process

Abstract This article examines the effect of variation in the geographical scope of international business operations on experiential knowledge development in the internationalization of the firm. Based on learning theory, this article develops five hypotheses on the effects of variation on three interrelated components of international experiential knowledge: internationalization knowledge, business knowledge, and institutional knowledge. LISREL analysis indicates that variation has a positive effect on the accumulation of experiential knowledge in internationalizing firms. In particular, it demonstrates that internationalization knowledge is a key variable that mediates the effect of variation on the other knowledge variables.

Competence Development through Business Relationships or Competitive Environment? — Subsidiary Impact on MNC Competitive Advantage

The need for studies of how MNCs make extensive use of the knowledge of subsidiaries is stressed in the literature. The relevance of such studies has its origins in the belief that an MNC is a knowledge-seeking organisation and that knowledge transfer between its separate units leads to competitive advantage (Cantwell 1990, Kogut/Chang 1991, Madhok 1997, Teece/Pisno/Shuen 1997, Frost 2001). An important condition, though, is that subsidiaries actually do develop unique knowledge, a “fact” confirmed in several studies which partly has been explained by the characteristics of subsidiary environments (Bartlett/Ghoshal 1986, Andersson, Forsgren, and Holm 2002, Foss/Pedersen 2002). For instance, besides other explanations, such as the internal co-ordination of resources and the entrepreneurship of individual managers, the environment is assumed to contribute to the development of corporate “strategic leaders” (Bartlett/Ghoshal 1989), “centers of competences” (Solvell/Zander/Porer 1991), and “centers of excellence” (Forsgren/Johanson/Sharma 2000, Holm/Pedersen 2000) and, thus, competitive advantages for the MNC (Cohen/Levinthal 1990, Dunning 1998, Nobel/Birkinshaw 1998).

Classifying buyers to gain marketing insight: A relationships approach to professional services

The service industry firms are increasingly engaged in international operations. The significance of international marketing of services is increasing. It is being recognized that forming relationships with the customers is important to sell professional services. The existing service marketing literature has paid little attention to this aspect of service marketing. In this paper a buyer-seller relationship-based marketing scheme is developed. Two dimensions of buying situations are identified. Combining the above two buying dimensions four different types of buyers are identified and appropriate marketing strategies are discussed. The paper is based on face-to-face interviews with the executives. The paper also develops a scheme for movement from one marketing situation to another.

Industrial policy liberalization and TNCS: The Indian experience

In recent years a number of host governments have declared their intention to liberalize their industrial policies toward transnational corporations (TNCs). Taking India as an example. economic liberalization is defined here as an industrial policy implementation issue, and is studied with reference to licensing procedures between 1984 and 1990. Liberalization is effected through a Government-TNC network. The four dimensions used to measure the results of liberalization show that this network has remained more or less intact during the period, so that it is still time- and resource-consuming to obtain licences. A study of changes in the number of controls and the efficiency of the executive bodies also indicates that policies towards TNCs have been only partially liberalized. This result is explained by an institutional organization theory.

International Entrepreneurship at the Foreign Market Level: Towards a Network Perspective

The purpose of this chapter is to contribute to research in the field of international entrepreneurship by complementing existing levels of analysis with a network perspective that captures how the pursuit of international opportunities at the foreign market level unfolds through processes ingrained in the network structures that firms are embedded in. By performing a multilevel review of 50 studies within the international entrepreneurship research field, the chapter contributes with an analysis of the evolvement of the international entrepreneurship field between the years 1994 and 2010, a discussion of the fields current status and where it is going from here. The results of the review show that whereas early work in the field of international entrepreneurship is primarily concentrated on individual entrepreneurs or individual firms, network-level-focused studies dominate among the later publications. Studies that adopt explicit network approaches have the potential to contribute to international entrepreneurship research by being able to shed light on the actual mechanisms and processes by which foreign market opportunities are exploited.

International Marketing: The Case of Management Contracts

The past decade has witnessed a growing preference, particularly by the developing countries (IDC), for non-traditional mechanisms in the international business arena. One such non-traditional mechanism is management contracts. The preference for management contracts is based on the notion that this allows the local managers in the local firm a full control over its own decision making, including marketing decisions. This paper presents a case study of a management contract in a IDC whereby the Swedish firm successfully integrated the local firm in its own international marketing strategy in spite of the fact that the Swedish firm owned almost no equity shares in the local firm.

The First Client Abroad

Over the last years the significance of the service industries in the economies of the world have increased. However, few researchers have focused attention on the international operations of the service firms. In this paper one aspect of international operations,e.g., the first client abroad, is studied. The study is limited to the firms in the field of technical consultancy. It is concluded that the shape of the network of relationships in which the technical consultancy firms are engaged has significant influence over the first client abroad.

The International Entry Modes Selection of Service Firms

In their seminal paper published in the Journal of Management Studies Johanson and Wiedersheim-Paul (1974) argued that foreign market entry is an incremental process. Firms first enter markets at a short psychic distance. Since than a number of other studies have appeared on the • subject. These studies are based exclusively on the experience of the manufacturing industries and they are based on economic theories, namely, the eclectic theory (Hymer, 1976; Dunning, 1988) or the transaction cost theory (Williamson, 1975). Both the above mentioned approaches are static and supply a snap-shot picture. The process aspects of the foreign market entry are not highlighted. We believe that a process approach to study foreign market entry mode selection will be rewarding for the reason that a course of action taken by a firm is contingent upon its resources (finance, information etc.).

Contract Strategies in Hotel Industry: Swedish Hotel Firms Abroad

In the Post War years there has been a general increase in international production and trade and the structure of the economy changed. This created demand for hotels. Several hotel companies established hotels abroad and contract arrangements were negotiated. In 1982 in the hotel industry management contract and franchising were the two most widely used mechanisms to operate abroad (Dave’ 1984). For what reasons hotel firms internationalise their operation? Which channels are used for the purpose? What strategies are pursued and for what reasons? What are the advantages respective disadvantages of these strategies?