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Uppsala theory of Internationalization:
Uppsala theory of internationalization, as discussed earlier as well, attempts to describe the process of internationalization incremental stages. First, the firms would start with causal exporting which would gradually turn into aggressive exporting.
Theories of Internationalization.Only if the firm feels after exporting that the market has significant potential and favourable outlook, the company would go on to license its products or enter into a joint venture, which would be followed by a full acquisition or joint venture. From there, the company would keep a close eye on the happenings, industry structure and market potential of that market.
It might decide to follow the same process with the other country or directly enter the country based on many internal and external factors. However, the underlying philosophy of this theory is that firms internationalize in incremental stages and only Theories of Internationalization internationalize when they have learned the rules of the game from their domestic market (Kudina, et al., 2008, p. 43).
Nevertheless, not only born global theory but also as well as many other theories have challenged the assumption and hypothesis put forward by the Uppsala theory. Critics believe that the distance between the home and foreign market and the use of incremental stages to test the waters no longer ranks at the top of the list of smaller firms that are looking to internationalize.
In fact, there is a wide list of factors, which are considered that fall under the umbrella of political, economic, social, cultural and technological risks. For example, despite the closeness to Mexican and Canadian markets, many US companies are focusing on expanding into the Chinese and Indian markets because of the fact that they see much potential in those markets(Rättich, 2011, p. 351).
Network theory:
The Network theory of internationalization, which is very much applicable to the small high tech firms, argues that technology companies do not take an incremental approach towards internationalization. Instead, Theories of Internationalization they aggressively use their networks and linkages of the supply, distribution, customer and other stakeholders to gain insights about foreign markets (Jones, 1999, p. 70; Nummela, 2010, p. 49).
Network theorists see the building of global networks as a stepping-stone towards internationalization of the firm. In other words, they leverage their relationships with their stakeholders in other countries to enter those markets and depending on the capacity of the firm and the strength of that network; the mode of entry could be passive exporting or even a Greenfield investment(Kudina, et al., 2008, p. 43).
This also explains why even the small high tech firms have been able to internationalize at such rapid pace because of their broad base of suppliers and customers, they create relationships, which allow them to gain access to information and resources in foreign markets. Nevertheless, the network theory fails to highlight or realize the impact of cultural differences on these networks(Haar & Meyer-Stamer, 2008, p. 108).
For example, in Chinese and Japanese since people have a long-term orientation, they take time in forming relationships and making decisions. Therefore, relationships and networks in the Chinese and Japanese world may consume more time(Etemad, 2004, p. 74-75).
Technology Gap Theory of Trade:
Technology Gap theory of Trade makes an attempt to capture a glimpse of how small tech firms decide to internationalize. They look for markets where they could have significant protection in terms of their patents and trademarks and where the industry is unaware of the methods, approaches and techniques to manufacture those products(Oviatt & McDougall, 2007, p. 258).
They would enter the markets where their technologies are not available thus allowing them to reap the advantages of the lag time during which the domestic players…
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