The features of the internationalization of emerging market multinational companies (EMNCs) create a laboratory for extending theory. In this paper, we argue that a high level of asymmetry between prior knowledge and a non-incremental commitment, such as an acquisition, lies at the core of understanding these types of internationalization processes. Our proposed theoretical view is that while some uncertainties in opportunity development are known to the firms and can be managed by available knowledge, disruptive commitments can result in complexes of unstable and unilineal dynamics that bring about unexpected and hence unforeseeable uncertainties. These uncertainties may be a source of future unintended consequences that will have an impact on the firm as the internationalization process unfolds. This view is used for analysis of a longitudinal case study concerning the acquisition of a Swedish firm, Vargon Alloys, by the Turkish corporation Yildirim Group, focusing on the opportunity discovery and exploitation period between 2008 and 2013. By dividing uncertainty into two types (foreseeable and unforeseeable) and analysing the hidden problems that emerged after the sudden fusion of the two networks, the study nuances understanding of the emergent and non-orderly nature of the internationalization process as it unfolds. From a process point of view, the study may aid deeper understanding of complications when discovering and exploiting opportunities.
This book seeks to find out how government interventions affect the performance of an economy. It develops notions on trade, industrial sector, and firms and examines them for the case of Iran. The analyses suggest that the excessive interventions of the Iranian government in trade and industrial sectors resulted in small benefits at high costs. Government interventions, for example, reduced the incentives of firms to undertake technological investments. They rather invested to increase their political competencies and aimed at short-term profits. Low technological investment is argued to have been one of the major reasons behind the poor performance of industrial sector in Iran.
This article introduces the view of political entrepreneurship, which is based on the development of unique interaction with political units to assist firms in their business. Based on a business network perspective, the aim is to develop a theoretical frame for analysis of this interaction. The question raised is how small entrepreneurs can develop relationships with political units in order to strengthen their business opportunities. Relationship commitment and knowledge are introduced as managerial elements determining the firms' influential and adaptive behaviour. A case study of a new venture in life science is used to illustrate the reasoning. The results manifest how even small firms can use their resources and knowledge to develop specific relationships with political units that support their business efforts. Issues related to loosely coupled relationships are brought forward as a theoretical foundation to aid the understanding of political entrepreneurship.
Purpose – Adding to the theoretical view of relationship development, this paper holds the view that relationship change encompasses not only smooth incremental change but also includes crises which can trigger relationship weakening, dissolution and/or recovery. The aim is to develop a theoretical view that allows understanding of both smooth incremental and critical changes in the process of relationship development.
Design/methodology/approach – Based on a business network perspective, the paper's relationship view holds uncertainty, commitment and trust as central explanatory elements. The process view is composed of three episodes: incremental relationship development; relationship crisis; and ending or survival. The paper employs a longitudinal case study method and discusses how the relationship between the Swedish firm, Ericsson, and its counterpart, Telefónica, develops in the emerging market of Argentina during the period of 1998-2004.
Findings – Conclusions demonstrate the vulnerability of relationships due to counterparts' behaviour and network embeddedness. This is a risk of commitment deterioration, and remedial actions like investment in new commitments will reduce distrust and uncertainty. Re-energizing relationships incrementally requires behaviour like waiting strategies, when otherwise the choice is to exit.
Originality/value – Few researchers have combined the findings from stable relationship development studies with the findings from research on crisis into one model handling both stability and instability in business relationships. This is despite the fact that episodes of turbulence and instability are becoming more common in business relationships, due to entrance into more unstable markets, and markets crises of various types.
Although there is extensive research in the field of services and lately on the internationalization of services, the topic of how service firms interact with society and political organizations, during their internationalization process, remains almost untouched. As an answer to the call for further research on the interaction between service firms, society and policy makers, this paper aims to advance the knowledge by proposing an integrative theoretical view. Dissimilar to the earlier research where each study stands on a specific theoretical discipline (economic, behavioural or political science), the proposed theoretical view asserts the need for an interdisciplinary approach. The integration of these three perspectives is vital since business, policy and society have different legitimacy and dependency grounds and yet their goals and objectives have been converging over the years. Isolating these disciplines from each other is, thus, not very helpful in advancing the knowledge and understanding the conditions, motives and consequences of multinational enterprises in foreign markets. Moreover, the internationalization of services and the extent of heterogeneity in service products/solutions, from banking to retailing and e-commerce, create new challenges that need for interaction between these parties; the three pillars of our society.
The question raised in this papers is how two EU firms penetrate and expand into new emerging markets in Eastern Europe. The theoretical view relies on the firms' Internationalisation and business network theories and the varieties in the behaviour is explained by the degree of business commitment and knowledge. The outcomes add new knowledge to the internationalisation and business relationship theories for the better understanding of market entry and expansion and offer managerial implications for management of political relationships.
In this chapter we examine how two banks, each in their own way, expand into new foreign markets. Using well-known theories relating to the internationalisation process and business networks, we investigate how their entry processes evolve and which network relations are essential in the development of a successful new unit. Our analysis shows that the two banks ahve encountered different opportunities and problems in their expansion processes, which can partly be related to the timing of their entry. In both cases political relations appear to be of critical importance for the success of the expansion process. Not only did the banks have to devote time and resources to developing business relations in the new environment, they also needed to commit themselves to and learn about the political environment. This outcome leads to discussions about how to include political relationship development into the internationalization process model.
Two significant features during the post-war period have been an increasing internationalization of ecohomic activities and a growing role for financial services in the world economy. Considerable attention has been devoted to both these features separately, while attention to the internationalization of financial service firms has been more limited. Even more limited have been the efforts to combine this work with studies of the influence of market turbulence on financial service firms. The present special issue is an attempt to provide a remedy to this state of affairs. In this introduction we first provide a background to the topic. We then give a brief summary of the characteristics of financial services as well as a short review of extant literature, before presenting the six papers that make up the issue and providing some conclusions.
This article proposes a managerial decision framework to deal with internationalization whether in stable or dynamic environments. While displaying the effects of unstable and stable environmental settings on commitment decisions, the framework is the result of an inferential abductive approach that merges the risk management model with empirical data collected from a 32-year longitudinal case study on nine Swedish MNCs. The longitudinal analysis shows that when environmental changes are perceived as detrimental, firms tend to decrease their tangible assets and commit in a more intangible way. On the opposite, when changes to the environment are perceived as beneficial, firms follow an incremental path of commitment, preferably in tangible kind. The findings contribute new knowledge to understand such diversities in commitment decisions as divestment, wait-and-see, market-exit and re-entry.
The internationalization process model introduced three decades ago still influences internationalbusiness studies. Since that time, a growing number of researchers have tested the model to showits strengths and weaknesses. Among the critics, some focus on the weakness of the theoreticalaspects, while others argue against parts of the model. This paper will review these criticisms andcompare them with the original ideas in the internationalization model.One criticized aspect of the internationalization model is the concept of commitment,which is treated by researchers via measurable indicators, i.e. tangible commitment. The aim ofthis paper is to study commitment from a different angle and deal with intangible commitmentswhich are connected to the concept of psychic distance in the internationalization model.Exploration of the elements in commitment strengthens the model for the internationalizationprocess. It also opens new doors for the use of the model for other internationalization modes,like project selling. To test the concept, a summary of a historical study in which firms lose theirtangible commitments and rely only on intangible commitments is given.
This paper considers an on going study dealing with organizing project selling. Earlier studies aredominated by the traditional decipline, where the actions are viewed to be temporary. Sellers,buyers and sub-contractors have a specific goal and the strategy is a short term economical profit.This study employs network theory for analysis of cases and arrives at another conclusion. The casestudies illustrate prior and post project networks and also explains the dynamism and changes inthe project network. The case studies also outlines a horizon for project selling constituted of activeand inactive or sleeping relationships, where the maintenance actions and their roles before andafter project selling has been under focus.
Repurchasing is one of the crucial marketing areas that has recently occupied the attention of both researchers and marketing managers of retailers. While most consumer-retailer relationship studies concern the behaviour of either retailer or consumer, this article develops a notion of the relationship as an interactive phenomenon that needs an integrative approach in which the characteristics and behaviour of both parties are taken into consideration. By using the relationship theory to expose the repurchasing behaviour of consumers, the attempt is to further enlarge the understanding of relationship interdependencies between retailers and consumers. The discussion put forward in this article is based on a research proposal and application that formed the starting ground for a larger research project at the Department of Business Studies at Uppsala University. The research project involves four senior staff and three doctoral candidates and was started in 2003. The purpose of this article is to develop an interaction model for relationships between consumers and retailers based on earlier research in the area, thereby opening up a new research field. This model will in future years be used for empirical studies of both a qualitative and a quantitative nature, which may further revise and / or confirm the statements made here.