globalization 1 assignment ib
TRANSCRIPT
TABLE OF CONTENT
1. Introduction
2. A Brief Discussion
2.1. The INV phenomenon
2.2. Types of international new venture
2.3. Dynamism of International Business Environments
2.4. Learning from New ventures in the global marketplace
3. Conclusion
References
1
1. Introduction
Entities that are global in nature-for instance recently established global enterprises constitute a
significant trend which does not align with conventionally anticipated attributes of global
companies. A model has been made available to describe this trend by factoring in global trade,
enterprise and techniques applied by managers. The model lists four required and efficient
aspects which are needed for global enterprises to fare well: 1) the manner in which the firm is
instituted by its techniques 2) heavy dependence on a backup plan of methods to use assets,3)
instituting benefits stemming from global addresses and 4) managing assets.
The write up whipped up interest in INVs by cross questioning the acceptability and the
functioning efficiency of the current formulation particularly in the context of the Uppsala
procedure framework of globalization.
2. A Brief Discussion
Oviatt and McDougall’s (1994) studies have been taken forward in six primary regions in the
world via four categories: INVs, naturally international entities, increased globalization and IE.
A part of the studies conducted have stuck with the original assertions of the authors.
Many scholars though have applied other hypotheses taken from business, management and
practical psychology to improve and take forward the initial model. The leads have provided
good perspectives and given new data but still cause new uncertainties which will have to be
studied further and examined.
Owing to the intense focus on Oviatt and McDougall’s model, this study analyzes the extent of
studies, filters and validates the role of the initial research by Oviatt and McDougall (1994).
Their role has been pioneering. Also the study goes over a number of factors in the actual
research that must be re questioned to find out practical outcomes. Once these factors have been
looked into, the work done by Oviatt and McDougall will gain further significance and will assist
forthcoming studies in the field. This study emphasizes on the many significant outcomes of
Oviatt and McDougall’s (1994) research
2
2.1. The INV phenomenon
Analysts have pointed out to the contribution of small and medium enterprises and taken note of
their increasing participation in imparting information and handling skills at the international
level. A major reason for Oviatt and McDougall’s (1994) research being at the receiving end of
intense scrutiny is because of their acceptance of INVs as a business entity which from the very
beginning makes efforts to gain considerable benefits by using assets and selling its products in
many nations. (p. 49). Hence, globalization is viewed to imply a great deal for the proper growth
of firms, sustainment and progress.
2.2. Types of international new venture
Oviatt and McDougall (1994, 52–54) applied two aspects to examine four varieties of INVs:
managing the value series tasks and the extent to which nations are involved (some versus
several.) Using these two aspects produced four varieties: new enterprises, global sellers,
regional entities and international units. Oviatt and McDougall applied research and rationality to
suggest that these various types of INVs have a host of added benefits.
Based on perspectives gained from studies on enterprises, Oviatt and McDougall(1994) proved
that INVs have individual benefits which permit them not just to outshine their foes but also
rapidly beat the competition resulting in expansion and development. These perspectives and
assertions are a reaction to and have taken forward Casson's initial projects which recommended
the requirement to factor in the companies' enterprise aspects at the time of deliberating
globalization. Analysts have taken up on Oviatt and McDougall's (1994) recommendations to
especially concentrate on the aspects of companies while deliberating on globalization choices.
2.3. Dynamism of International Business Environments
Owing to the vigorousness of the foreign industry scene, one must halt and find out the
frequency and manner in which the four INVs vary their methods and techniques. It is also
crucial to examine the circumstances that motivate INVs to behave thus and to factor in the
outcome of these variations in order to progress and make profits. For instance, we must have
3
more knowledge about the functions of the top rung authorities, their qualifications with regard
to time and knowledge in order to bring about bring about shifts in the functioning of INVs.
Heads could and do frequently gain lessons by grappling with global matters and hence could
perceive chances to begin shifts in techniques and methods to improve the standing of their
INVS.
These issues have not been addressed properly in the research works. (Zahra and George,
2002b). To be true, in a rare kind study till now, only, McDougall and Oviatt (1996) have
indicated assorted results regarding the consequences of shifts on INVs' success. This re-
emphasizes the requirement for increased studies in the field.
Oviatt and McDougall (1994, 1995) have correctly observed that a great many skilled workers
have been minutely exposed to global functions in number INVs and global firms. This kind of
exposure is helpful in gathering assets, using available global hubs and managing the INVs'
value series.
Shrader et al. (2000) have moreover said that such exposure helps in arriving at choices
regarding viable bargains that heads may have to make while structuring their INVs' value series.
Analysts (e.g., Reuber and Fischer, 1997) have also pointed to numerous advantages of foreign
exposure, for instance making contact with potential firms-this helps in notching up increased
global revenues.
Two attributes of Oviatt and McDougall’s assertions regarding the importance of foreign
exposure need thought and introspection. As per this formulation, McDougall et al (2003) have
practically discovered that foreign exposure helps in initial phases of globalization. Of course
few heads acknowledge such matters and gather a lot from a foreign industry scene and also gain
knowledge on the manner in which to implement their functions to generate worth. Still, not all
knowledge is useful. Exposure could allow strictness to creep in as heads usually have their
individual methods of handling issues of globalization. Globalizations throws up complicated
issues and a few heads react to this by conceptualising new methods of getting work done. If the
easy way is taken, traversing on this path could cut off INVs from creative ways of doing their
4
work. INVs must innovate to find new business methods and selling techniques. Heads must
welcome this kind of innovation.
2.4. Learning from New ventures in the global marketplace
Oviatt and McDougall’s (1994) article has not considered one aspect- the outcome of INVs on
going to other countries. The regular phase framework (Johanson and Vahlne, 1977) had
recommended that companies should grasp through experience while venturing into international
destinations. They can thus gain in depth information which will permit them to take enhanced
risks in future tasks. The knowledge also enables firms to apply increased entrance levels, thus
lending new information to companies.
The regular phase framework (Johanson and Vahlne,1977) was premised on the exposure of
veteran firms and the manner in which they weighed the equation between hazards and profits.
As opposed to this, Oviatt and McDougall have recommended that INVs skip these phases and
directly venture into international destinations through enhanced entrance levels. This model of
globalization further suggested that various levels of entrance need specific qualities and hence
impact the manner in which knowledge is gathered in diverse ways in INVs. More recent studies
(Zahra et al., 2000) endorse two aspects, indicating that entities frequently penetrate international
destinations through higher levels of entrance. Moreover INVs seem to be gaining knowledge
from international destinations regarding advanced technology and trends. This is presupposing
that heads concentrate on making use of information gleaned from international destinations.
3. Conclusion
The release of Oviatt and McDougall’s ‘Toward A Theory of International New
Ventures’ (1994) has inspired eagerness across the globe to comprehend the reasons that resulted
in the premature globalization of new companies, the manner in which these enterprises evolve
and sustain their remarkable plus points and the way in which INVs handle their value chain to
gain elasticity and also develop health and gains making practices.
The publication gave a number of perspectives that describe the growth of INVs, however, many
research studies have not succeeded with regard to the same. (McDougall et al., 1994).
5
Preserving the sanctity of the basic assertions, analysts have displayed innovativeness in fine
tuning and taking forward the ideas of the two authors. Analysts have realized that globalization
did not happen overnight and there is much scope for improvement as INVs sustain their
functions.
Analysts have applied perspectives and hypotheses from practical psychology to comprehend the
manner in which enterprise makers, who invented the concept of INVs, are aware and revise the
leads they are keen on. Taking perspectives from financial geography and coming to know of
formulations can assist forthcoming analysts in sustaining their plus points through time and add
some vigor to the research being done on the growth of these companies. Evidently, Oviatt and
McDougall (1994) have begun a significant and impacting study field which can generate a host
of valuable solutions.
References:
1. McDougall, P.P. and Oviatt, B.M. (1996) ‘New venture internationalization, strategic
change, and performance: a follow up study’, Journal of Business Venturing 11(1): 23–
40.
2. Oviatt, B.M. and McDougall, P.P. (1994) ‘Toward a theory of international new
ventures’, Journal of International Business Studies 25(1): 45–64.
3. Shrader, R.C., Oviatt, B.M. and McDougall, P.P. (2000) ‘How new ventures exploit
trade-offs among international risk factors: lessons for the accelerated internationalization
of the 21st century’, Academy of Management Journal 43(6): 1127–1248.
4. Reuber, A.R. and Fischer, E. (1997) ‘The influence of the management team’s
international experience on the internationalization behaviors of SMEs’, Journal of
International Business Studies 28(4): 807–825.
5. Zahra, S. and George, G. (2002b) ‘International Entrepreneurship: The Current Status of
the Field and Future Research Agenda’, in M. Hitt, D. Ireland, D. Sexton and M. Camp
(eds.) Strategic Entrepreneurship: Creating an Integrated Mindset, Strategic Management
Series, Blackwell Publishers: Oxford, pp. 255–288.
6
7