13 May 2014
Simon has provided a summary of the article:
Internationalization Knowledge: What, Why, Where, and When?”
Margaret Fletcher, Simon Harris and Glenn Richey
Defined as the procedures and routines for how to learn in local markets, internationalization knowledge represents the learning capability that firms need to achieve successful and performance-enhancing entry into successive new markets. It builds with experience of internationalization and can be transferred across markets. Its importance for achieving internationalization, and for gaining success from internationalization has long been recognized, but understanding of what it is in precise terms, why firms need it, where they source it from, and when in different stages of international growth they need it remains poorly defined and understood. To address this problem this study employs strategic management theory (in the resource-based view of the firm) and the behavioural theory of internationalization process, and undertakes a detailed longitudinal study of ten internationalizing firms.
What Internationalization Knowledge comprises
The authors discriminate three categories of internationalization knowledge, for gaining market entry, for localizing strategies, and for organizing international enterprise structures, shown below.
Why Firms Need the Three Categories of Internationalization Knowledge
New internationalization knowledge is required as firms internationalize more and more; a firm’s previous experience is usually insufficient. The study shows that without new relevant internationalization knowledge, internationalization stalls. As firms pursue market entry strategies into similar territories they develop their own ‘way of market entry’, and this may well work well for a while, but then they encounter, often painfully, a new market where it doesn’t. Firms in this study also needed localization internationalization knowledge to be able to reconfigure their business models, practices and operational structures in new territories to develop locally competitive businesses.
International enterprise internationalization knowledge is needed if firms are to develop an effective and efficient international business. The firms in this study found that the need emerged when the necessary experiential knowledge of supportive international processes and systems is not built alongside territory-by-territory expansion. So not having it meant that firms might internationalize successfully, but could fail in business terms because the growth was not profitable.
Where Firms Source the Three Categories of Internationalization Knowledge
Previous research has emphasized previous experience and networks as the main sources of this knowledge. This study shows these sources to be insufficient or inadequate. Localization and international enterprise internationalization knowledge involves senior level skills and knowledge for developing new strategies and breaking with old ways of doing things internationally; these skills may not result from experience. The internationalization knowledge involved is highly experiential in nature and is highly firm specific, making extensive interaction between the source and the recipient of the knowledge necessary. Advisors and consultants will give this interaction; it is unlikely that network contacts would do the same. We also spot that international enterprise internationalization knowledge requires international processes, systems and structures for knowledge to be assimilated and shared across territories so that international capability can be developed in response to changes. International enterprise internationalization knowledge therefore represents a capability that is critical for sustaining international competitiveness over time and as the firm develops.
When the firms need the different categories of Internationalization Knowledge
We find that the internationalization knowledge that firms need depends on the challenges they face associated with specific stages of development, shown in the figure below. Market entry knowledge is needed to enable the development of an initial presence in new territories, and localization internationalization knowledge is needed when that presence needs to be developed into a viable and effective local business. As firms internationalize further and become international businesses, they need to know how to work across borders in an efficient and effective manner to sustain international competitiveness and success.
Overall, the study specifies the internal capability deficiencies that tend to inhibit internationalization. Managers of internationalizing firms should seek to acquire the different types of internationalization knowledge before they reach the stage that it becomes critical. Firms benefit from external help in accessing and implementing this knowledge, in finding and accessing markets, and in forming and implementing their internationalization strategies. Those firms (in this study) that did not do so failed as firms, or failed to grow as successfully as their international potential should have allowed.
Note: This paper was selected by the JIM Editorial Board, in conjunction with the Award Committee, for the 2013 S. Tamer Cavusgil Award for research quality in the field of International Marketing. The full citation is: Fletcher, M., Harris, S. and Richey, G. (2013) ‘Internationalization knowledge; Who, What, Why and When?’, Journal of International Marketing, Vol. 21, No. 3, pp. 47-71. ISSN 1069-003IX (print) 1547-7215 (electronic)