The Internationalisation of Swedish eINVs

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The Internationalisation of

Swedish eINVs

Master’s Thesis 30 credits

Department of Business Studies

Uppsala University

Spring Semester of 2017

Date of Submission: 2017-05-30

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Swedish eINV Internationalisation

Acknowledgements

This study would not have been possible without the contribution of the case companies’ representatives who took their time to let me interview them and gave invaluable insights to their firms. Thus, special thanks go to; Magnus Rehn, Magnus Nilsson, Karl Hermansson, Bernice Glimberg, and Cliff Hazell. I have also had invaluable guidance from my supervisor Cecilia Pahlberg, thank you for the brainstorming sessions and continuous feedback throughout the writing process. To my seminar group, thank you for always being honest during our feedback session and coming with concrete and valuable advice. Lastly, I want to thank Uppsala University and my professors from these last two years. I have gained valuable knowledge in the area of International Business which has not only benefitted me in writing this report but will be invaluable in my future career.

Abstract

This thesis investigates the internationalisation process of eINVs and how they learn and gain knowledge during rapid internationalisation. The study includes aspects of which knowledge sources are important for eINVs and how they learn from them and leverage them during rapid internationalisation. Most international business research has revolved around MNCs and conglomerates and argues for the importance of experiential knowledge during internationalisation, and is limited in explaining how firms that internationalise early and rapidly manage to internationalise with limited international knowledge. By applying a qualitative research method, the goal of this study was to give a better insight to how eINVs overcome these barriers of learning and knowledge creation. The findings suggest that, though previous research has argued against it, these eINVs internationalise and gain knowledge in incremental steps, but at unprecedented speed using aggressive learning methods. This is enabled by the nature of their product offering as well as their use of Web 2.0 tools.

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TABLE OF CONTENT

1. INTRODUCTION ... 4

2. LITERATURE REVIEW ... 7

2.1. The Uppsala Model ...7

2.2. INV Internationalisation ...10

2.3. eINV Internationalisation ...13

2.3.1. Sensing ...13

2.3.2. Scaling ...14

2.3.3. Spreading ...15

2.4. Knowledge management in internationalisation ...15

2.5. Internationalising using the Internet ...18

2.5.1. The effects of Web 2.0 ...18

2.5.2. Active Online Internationalisation ...20

2.6. The Lean Startup and Internationalisation ...21

2.7. Theoretical Framework ...22

2.7.1. Sources of Knowledge ...22

2.7.2. Learning Method ...23

2.7.3. Benefits and Limitations ...23

3. METHODOLOGY ... 24

3.1. Research Philosophy and Approach ...24

3.1.1. Philosophy ...24 3.1.2. Approach ...25 3.2. Research Design ...25 3.2.1. Purpose ...25 3.2.2. Strategy ...25 3.3. Data Sampling ...26

3.3.1. Selecting Case Companies ...26

3.4. Data Collection ...30

3.4.1. Ethics ...30

3.4.2. Operationalisation of Variables ...31

3.4.3. Analysing the Data ...32

4. EMPIRICAL FINDINGS & ANALYSIS ... 33

4.1. The Founders ...33

4.2. The Home Market ...34

4.3. The Foreign Market ...36

5. DISCUSSION ... 39

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7. LIMITATIONS AND FUTURE RESEARCH ... 42

8. CONCLUSION ... 43

9. REFERENCES ... 45

Appendix 1 – Interview Guide ... 49

“The world is changing very fast. Big will not beat small anymore. It will be the

fast beating the slow.”

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1. INTRODUCTION

“The world’s largest taxi firm, Uber, owns no cars. The world’s most popular media company, Facebook, creates no content. The world’s most valuable retailer, Alibaba, carries no stock. And the world’s largest accommodation provider, Airbnb, owns no property. Something big is going on.” (McRae, 2015).

These are examples of great eINVs – Internet-based International New Ventures – the new major companies in our world. Reuber, Fischer and Morgan-Thomas define an eINV as “a venture whose business model is enabled by a digital platform and that, from inception, seeks to derive significant competitive advantage from international growth.” (2014 p. 165). Due to the importance and effects of eINVs on the world economy today it is important that more research is done in relation to them and how they internationalise.

These companies and many more like them are disrupting industries and having a major effect on the world economy and how we view companies today. What is significant is how they have leveraged digital technologies to become the biggest companies in their sectors in a very short amount of time by controlling the interface that connects customers with providers (McRae, 2015). Furthermore, their user base is enormous and spread all over the world. According to traditional internationalisation theories such as the Uppsala model, the internationalisation pattern of these firms, and the speed at which they internationalised is difficult to argued for.

International business research has often revolved around large MNCs and conglomerates who carry physical products. A large company has been argued to be a prerequisite for multinationalism. Thus, stage theories, such as the Uppsala model, do not explain the internationalisation of INVs who have no or little experience in any market and are commonly small organisations when they first internationalise (Oviatt and McDougall, 1994).

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insider in a foreign business network, causing a liability of outsidership rather than a liability of foreignness (Johanson and Vahlne, 2009). According to some research, these models are difficult to apply to rapidly internationalising firms, such as INVs and eINVs. These firms’ speed of internationalisation would suggest they have not been able to gain experiential knowledge or become insiders in a network. Both of which are argued by some researchers, to be prerequisite for successful internationalisation, and take time. Furthermore, their expansion patterns would suggest that psychic distance is not a determinant for market choices.

Though they are different in many respects, internationalisation process (IP) theory, such as the Uppsala model, and the INV field, knowledge accumulation and learning are paramount to internationalising firms. However, there is a lack of explanations to how firms learn (Forsgren, 2002). There is also a gap in research relating to learning in eINVs as explained by Reuber et al. (2014 p. 179) who researched the capabilities of eINVs in internationalisation but recommended further research be done in how eINVs manage to learn during rapid internationalisation.

Due to the importance of these firms on the world economy going forward and the limited understanding in academia on how they overcome certain barriers in internationalisation I have chosen to research the area of learning and knowledge creation during rapid internationalisation. This thesis is based on an exploratory, multi-case study on how eINVs can learn and gain knowledge during rapid internationalisation. To understand how eINVs overcome knowledge and learning barriers we must first consider how scholars have viewed the influence of knowledge and learning on the internationalisation process. As such I present the concepts of knowledge related issues in the Uppsala model, internationalisation of INVs and internationalisation of eINVs. As eINVs are internet based firms it is also important to understand how the Internet and Web 2.0 have affected the business environment of today and how these platforms enable the internationalisation and knowledge creation in eINVs. I also present a modern learning technique related to tech-startups which Ries (2011) calls Validated Learning.

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number of Swedish eINVs in the world I questioned if being from Sweden might have an impact on their success. Due to these reasons I limited my research to only Swedish eINVs and how they deal with learning and knowledge creation. This resulted in the following research question;

“How do Swedish eINVs overcome the barriers of learning and knowledge creation during rapid internationalisation?”

As mentioned above this study is based on an exploratory approach using multiple-case companies to investigate the phenomenon. In preparation for collecting empirical data I conducted a literature review to form a theoretical foundation on which I based the interview guide and method of data collection. In order to collect empirical data from the case companies I conducted semi-structured interviews with representatives from each company and collected secondary data from their websites and media articles. The empirical data was collected from four case companies, three of them, Spotify, Barneby’s, and iZettle are all Swedish eINVs with international operations. The fourth company is Stockholm Innovation and Growth (STING) which is an incubator in the tech sector and has 150 companies in their portfolio, a majority of which are eINVs. During and after the data collection I set out to analyse it using an abductive approach.

Through this study I intend to add insights to theory regarding learning and knowledge creation during rapid internationalisation. It is an important area of research as knowledge has been seen as a vital part of internationalisation for decades, but explanations to how firms learn in different conditions is limited, especially regarding eINVs. Furthermore, the impact these firms are having on the world economy is under researched and unclear what the long-term impact might be (McRae, 2015). Thus, for practitioners I hope to add insights into what sources of knowledge are available to firms in their infancy, and how to learn from these source during rapid internationalisation. This can lead to risk minimising during internationalisation and is valuable for founders and managers in their decisions regarding market commitments. Furthermore, I hope to give insight to the possible benefits of being a Swedish eINV and how that may affect learning and knowledge creation. In conclusion, I hope to add value to the internationalisation literature and practice regarding eINVs and how they learn in the modern business environment.

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internationalisation, the importance of knowledge in internationalisation, and learning methods used by Lean Startup practitioners. These areas are summarised in a theoretical framework which will be the basis of the empirical data collection. The report goes on to discuss my choice of research method and its implications of the findings. After this I present the empirical data in combination with its relationships to literature as I analyse its possible impact. The discussion of the most important findings and their impact on literature and practice follow, as well as the limitations of this study. This is followed by some concluding remarks relating to the overall study.

2. LITERATURE REVIEW

Knight and Liesch (2016) argue that the external environment of internationalising firms has changed over the past few decades which has lowered the barriers to internationalisation. As such firms have changed their processes resulting in more firms that internationalise earlier and more rapidly. Consequently, this literature review is spanning back to the original Uppsala Internationalisation model by Johanson and Vahlne (1977) to then discuss development of that theory in relation to business networks. It moves on to discuss internationalisation methods of INVs and eINVs, and how details of the models have adapted over time to the changing business environment. Furthermore, the literature review includes a reflection on how the internet has changed internationalisation and specifically how knowledge effects internationalisation.

2.1. The Uppsala Model

Johanson and Vahlne explain the Uppsala Model as “…focuses on the gradual acquisition, integration and use of knowledge about foreign markets and operations, and on the incrementally increasing commitments to foreign markets.” (1977, p. 23). The model assumes that such knowledge is mainly acquired through experience in foreign operations and that lacking that

experiential knowledge is a barrier to developing international operations (Johanson and Vahlne,

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industrial development” (p. 24). These issues are connected to the term “Liability of Foreignness”, coined by Zaheer in 1995 to explain the disadvantage a firm may incur due to the cost of conducting foreign business. The liability of foreignness increases as psychic distance grows. Consequently, internationalisation often starts in foreign markets that have a small psychic distance to the domestic market, sequentially entering new markets with gradually larger psychic distances. A reason that firms take sequential steps to enter new foreign markets is due to the replicability of activities from one market to another as well as the capacity of learning from the new market. Learning in a market is important to gain experiential knowledge. In comparison to

objective knowledge, which can be taught, experiential knowledge cannot be as easily acquired,

because it derives from personal experiences (Johanson and Vahlne, 1977). Johanson and Vahlne (1977) argue that experiential knowledge is critical in internationalisation due to its importance in reducing uncertainty, and in the recognition and exploitation of opportunities. Objective knowledge makes it possible to formulate theoretical opportunities while experiential knowledge allows a firm to identify concrete opportunities (Johanson and Vahlne, 1977, p. 28). Other differences in knowledge according to Johanson and Vahlne (1977) is between general knowledge and market-specific knowledge. General knowledge can often be transferred between markets in the form of operational knowledge. Comparatively, market-specific knowledge is gained through experience and relates to the specific conditions in a national market in terms of cultural patterns, business climate, structure of the market system, and characteristics of the specific customer. Both types of knowledge are essential for the establishment and success in a foreign market (Johanson and Vahlne, 1977, p. 28).

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In 2009 Johanson and Vahlne adapted their original Uppsala Internationalisation Model as the business environment changed since 1977. The revised Uppsala model is based on business network research and has two major points. Firstly, markets are networks of relationships. Thus, the success of internationalisation depends on the level of insidership in relevant networks. As such, there is a liability of outsidership rather than a liability of foreignness. Secondly, through relationships there is potential for building commitment and trust, and for learning, both of which are necessary to internationalise (Johanson and Vahlne, 2009). Consequently, the root of uncertainty is related to outsidership, from the network, more than psychic distance to a specific country market. Johanson and Vahlne (2009) explain a business network as constructed by a web of connections. Connections mean that exchanges in one relationship are related to exchanges in other relationships that a firm might be involved in. Knowledge is gained through these relationships and networks. As such, knowledge does not only come from the firm’s activities but also from the activities of its partners. In turn these partners gain knowledge from their partners’ activities. Thus, the focal firm is ultimately involved in a knowledge creation process that ranges beyond their own horizon.

Forsgren (2016) challenged the view of outsidership in Johanson and Vahlne’s revised Uppsala model. He argues that one can be an outsider in domestic networks as well. Thus, being an outsider of a network is not a viable judgement for the complications of internationalisation. However, he does argue that the liability of foreignness will complicate becoming an insider in a foreign network (Forsgren, 2016). Consequently, the liability of foreignness should still be regarded as the main barrier of internationalisation. Arguing that psychic distance does influence the difficulties of becoming an insider Johanson and Vahlne (2009) might agree to this point made by Forsgren (2016). To elaborate, these views by Forsgren (2016) are to some degree shared by Johanson and Vahlne (2009) even if they indicate that the correlation between the fashion of how firms enter foreign markets and psychic distance has weakened, not to say it is unimportant. They argue that psychic distance still plays a role in internationalisation, it simply does not affect the decision of gradual internationalisation to the same degree. It still has a strong effect on relationship building and learning.

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and the liability of foreignness. The lack of business knowledge relates more to the liability of outsidership as its market-specific and, per the business network view, is linked to the relationships amongst firms in the foreign market environment (Johanson and Vahlne, 2009).

While the original Uppsala model was more focused toward the minimising of uncertainty, the revised Uppsala model is more opportunity focused. The Uppsala model is basically a model concerning the recognition and exploitation of opportunities related to foreign risk (Forsgren, 2016). Johanson and Vahlne (2009) identify opportunity creation as a knowledge-producing activity. They indicate that opportunity research differentiates between two stages of opportunity discovery; recognition and exploitation, it is an interactive process of gradually increasing recognition (learning) and exploitation (commitment) just as in the original Uppsala model regarding experiential knowledge and commitment to a market that results in opportunity development. In 1977 Johanson and Vahlne argued that a crucial aspect of experiential knowledge is that it enables a firm to perceive “concrete” opportunities and supports “feeling” about how an opportunity can fit into present and future activities. In their revised model from 2009 they add that opportunity recognition is likely an effect of continuous business activities that add more experiential knowledge. This knowledge is not only generated from the own firm but also from network relationships (Johanson and Vahlne 2009). This challenge’s the ability of INVs and eINVs to internationalise and identify opportunities with very little experiential knowledge and possibly small or non-existing networks. As Forsgren (2016) argues, one vital notion in business network theory is that, in some way or another, all firms are insiders in a network, possibly except for new ventures. As such one can question if these models are adaptable to INVs and eINVs.

2.2. INV Internationalisation

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and stable, learning becomes easier as psychic distance is reduced. Also, they argue that previous experience from entering a foreign market can be generalised and used when entering a similar market, through general and experiential knowledge. Comparatively, Chetty and Campbell-Hunt (2004) identified INVs actively seeking engagement and testing, accepting initial failure, and aggressively seeking solutions to problems as they arise, thus using a more aggressive learning style, this also correlates with the concept of The Lean Startup from Ries (2011).

Oviatt and McDougall (1994) mention conditions that ease and shorten the internationalisation process of firms. In their 1994 and 1997 articles, they explain the difference in firms’ internationalisation during the 1970s to the 1990s with reasons such as markets being more internationally integrated, transportation and communication being faster, better, and cheaper, and the introduction of digital commerce. The ways in which we communicate have transformed the business environment even more since the 1990s. We are now reachable around the clock through our mobile devices, be it over the phone or on email. Furthermore, with the high-tech capabilities of today there is, in many cases, no need to travel to have a meeting or deal with a business activity (McKinsey, 2009). Furthermore, information was more limited in the 1970s, thus first-hand experience was important to understand a foreign market (Autio, 2005). Until today and onwards these factors increased further, potentially allowing for more rapid international growth. According to Oviatt and McDougall (1997) the traditional view of risk averse and gradual firm internationalisation is evidently both theoretically and empirically weak and that its relevance is challenged by changing market conditions. The Uppsala model has been argued to apply best to early stages of internationalisation. This would indicate that INVs are most likely candidates of using slow, incremental, risk averse internationalisation modes, however they certainly do not (Oviatt and McDougall, 1997). In both traditional stage models and INV theory, knowledge and experience are important for successful entry into new foreign markets. However, regarding INVs, its argued that such knowledge and experience can be attained at an earlier stage in the firm’s existence (Chetty and Campbell-Hunt, 2004). Thus, questioning if internationalisation still happens in stages as described by the Uppsala model.

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products and services, and be started by entrepreneurs with international experience and aggressive growth goals (Oviatt and McDougall, 1997). Autio (2005) also found that in INV theory, the rapid internationalisation is made possible by the international competence, vision, and experience of the individual entrepreneurs. Chetty and Campbell-Hunt (2004) add to this by arguing that compared to the traditional MNEs the new species of international companies are different in that they are founded by individuals with international experience and have a global vision from the beginning, capturing the opportunities of an increasingly inter-connected and integrated global economy. Other researchers have also concluded that the owner-manager profile will affect the rapidly internationalising firm (e.g. Weeravardena et al., 2007). With such founders and in those conditions, perhaps international operations are inevitable and the knowledge of foreign markets is so sufficient that the incremental steps in traditional internationalisation theory do not apply (Oviatt and McDougall, 1997).

The mode of entry is critical for young firms that want to internationalise quickly. As such, Chetty and Campbell-Hunt (2004) argue that international business networks are an essential resource for successful foreign market entry. Through these networks, firms will find intermediaries that support them in their internationalisation efforts. Forsgren (2016) suggests that when viewing the internationalisation as an entrepreneurial process, including risk taking activities, it is reasonable to assume that deep relationships with business actors in a firm’s network will ease establishing a position in a foreign business network when developing a business opportunity. This view may be applicable to “traditional” INVs, however it is not as clear if it applies to eINVs based on the assumption that eINVs rely on a digital capacity and the global access to the internet more than local intermediaries (Reuber et al., 2014).

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2.3. eINV Internationalisation

Empirical research on the internationalisation of INVs focuses on young firms’ resource limitations and how internationally experienced founders, and partnerships help overcome them (Oviatt and McDougall, 1994). In their article, Reuber et al. (2014) suggest that, from a theoretical standpoint, eINV internationalisation is enabled by other factors than those affecting INVs. This is due to the trajectory growth many of these eINVs have seen when internationalising which results in them not being resource poor for very long, as they, in many cases, have received significant funding early on for internationalising, examples include companies such as AirBnB and Skype among others (Reuber et al., 2014). As such, Reuber et al. (2014) do not see the eINV theory as an extension of INV theory but as its own entity. Rather than focusing on resources Reuber et al. (2014) focus on the capabilities of eINVs. They have divided these capabilities into three “Ss”; Sensing, Scaling, and Spreading.

Capabilities enabling the success of eINVs Source: Reuber et al. (2014)

2.3.1. Sensing

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Another key driver in the Uppsala model is that of psychic distance and the sequential foreign market entries dependant on psychic distance and the reduction of uncertainty in foreign market entry. However, research has shown that the decision on market entry into psychically distant markets is positively influenced by the market size, suggesting that if market potential is greater psychic distance matters less in the decision making (Reuber et al., 2014). The ways in which eINVs may learn about foreign markets might be constrained by the virtuality trap as they rely more on online data when they internationalise rapidly and widely (Yamin and Sinkovics, 2006). At the same time, research by Autio et al. (2000) showed that, to enhance learning capabilities an INV should internationalise as early as possible. However, this has not been tested on eINVs (Reuber et al., 2014).

2.3.2. Scaling

The next step is for the eINV to exploit these opportunities through Scaling, referred to as “the rapid expansion of operations in terms of volume, value or scope.” (Reuber et al., 2014, p. 172). The emphasis on the enlargement of an opportunity and rapid expansion is what differentiates Scaling from other types of opportunity exploitation (Reuber et al., 2014, p. 172). Scaling helps the firm realise economies of scale and capitalise on the network effects, as such effective scaling is essential for value creation. Even if there are benefits related to this rapid internationalisation for eINVs, there is substantial risk involved with foreign expansion and rapid growth. However, research on platforms suggests that, concerning some eINVs, the strategic imperative of rapid geographical expansion outweighs profitability concerns (Reuber et al. 2014).

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Swedish eINV Internationalisation 2.3.3. Spreading

Scaling triggers the need for Spreading, referred to as “developing awareness of the eINV’s existence and appreciation of its offerings across a geographically dispersed base of online stakeholders.” (Reuber et al., 2014, p. 174). Developing awareness of a digital product can be difficult, so eINVs must find ways to increase their credibility in an ever more competitive environment. Thus, it is key for eINVs to showcase their affiliations with customers, not the least across geographically dispersed regions to ensure potential customers of their international business capabilities (Reuber et al., 2014). Also, eINVs may increase their perceived legitimacy through symbolic communication practices, such as publicising the credibility of the entrepreneur and hosting a well-functioning website (Reuber et al., 2014). Some research in international business suggests that companies who have a good reputation in their home market can use this asset to attract attention in new foreign markets where they will already know of their reputation in their home market. This can be difficult for eINVs as they may not have a track record in their home market, arguing against this aspect of international business research (Reuber et al. 2014). Research in INVs has shown that a startup can leverage some of the resources of their affiliate firms, such as reputation, to help spread their international credibility and visibility (Reuber et al. 2014). Another way for eINVs to spread is through online communities where they may create networks among online stakeholders which can benefit them. Further online practices that may help eINVs in their Spreading is that of managing the huge amounts of data from online activity that the firm may harness to monitor online behaviours of their customers (Reuber et al., 2014). Such Spreading activities may result in feedback to Sensing through online user-generated content which can be analysed to Sense new international opportunities (Reuber et al., 2014).

2.4. Knowledge management in internationalisation

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knowledge, market knowledge, and internationalisation knowledge (Fletcher and Harris, 2012). These types of knowledge are acquired through three sources of experiential knowledge (direct, vicarious, and grafted experience) and two sources of objective knowledge (externally and internally searched) (Fletcher and Harris, 2012).

Source: Fletcher and Harris (2012)

In their article, Fletcher and Harris (2012) find that internationalisation knowledge is key to a sustainable process of internationalisation. It is important for both the lateral expansion into markets and the subsequent growth within foreign markets where the firm operates. Continuous interaction between senior managers who provide and receive the internationalisation knowledge is important. Fletcher and Harris (2012) argue that business network relationships are not capable of providing internationalisation knowledge to the focal firm and that such knowledge is best acquired from government advisors and consultants. As internationalisation knowledge is mostly experiential, managers must learn it themselves. They can do this over time, directly through their own experiences, or indirectly through interacting with others who have it (Fletcher and Harris, 2012). This goes against Johanson and Vahlne’s (1977) argument that experiential knowledge cannot be learned from others.

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firms. They suggest that firms may acquire internationalisation knowledge internally from the experience of top managers and externally from close interaction with consultants and government advisors.

To successfully internationalise, new ventures need to leverage both internal and external international knowledge (Fernhaber, McDougall-Covin, and Shepherd, 2009). International knowledge is an intangible resource that is key for an internationalising new venture. Much of the international entrepreneurship literature has focused on the international experience of the management team or founders at INVs as a key source of international knowledge (Fernhaber et al., 2009). According to Fernhaber et al. (2009), new ventures that can access international knowledge from their management’s international experience are thought to be better at recognising foreign opportunities. Reuber and Fischer (1997) further argue that these new ventures tend to internationalise earlier and that their managers international experience also assists in forming international relations. As such, this type of knowledge is key for INVs and eINVs. While this is related to internal knowledge of the firm it is important to remember that the internationalisation to foreign markets may be improved by external sources of international knowledge (Fernhaber et al., 2009). If a firm has internal international knowledge they have a better understanding of which external international knowledge is most valuable to them. However, a firm without the internal international knowledge will be more open to learning from the external sources. Consequently, the firm without the internal international knowledge will benefit more from the external source (Fernhaber et al, 2009). These external sources of international knowledge include venture capital (VC) firms. A young firm does not only gain the tangible resource of financial leverage, but also the intangible resource of international knowledge, if the VC in question has experience from international business. New ventures may also gain external international knowledge by having their HQ location near other companies that compete in international markets. Research shows that in such a cluster the international knowledge is likely to spill over to the new venture (Fernhaber et al, 2009).

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entrepreneur should look for international experience in the management team but also look beyond and to external sources of international knowledge.

2.5. Internationalising using the Internet

The Internet has gone from being a facilitator of internationalisation, allowing firms to communicate more efficiently and effectively, have access to more information on international markets, and establish a global presence. It was later argued to be an enabler of internationalisation allowing firms to operate in supply chains, introduce new e-offerings, transact online, and adopt new business models. Today, researchers see the Internet as a creator or driver of innovative international opportunity involving co-creation and collaboration (Bell and Loane, 2010).

2.5.1. The effects of Web 2.0

According to Etemad, Wilkinson and Dana (2010) decision making in today’s information intensive world needs more timely, pertinent and reliable information. The internet, especially Web 2.0, has had a huge information impact on the world with consequences in business and in society. Regarding internationalisation, decision making is inherently more complex than in the home market, thus more information is needed about mostly less-familiar international environments and customers. Timely and pertinent information about the whole world and each region’s local characteristics, is now available through the internet and especially in Web 2.0 in which much of the content is user generated. This user interaction in Web 2.0 is affecting the innovative and productive process world-wide, regardless of user location (Etemad et al., 2010). The internet has in many ways changed how business is conducted, example areas include; global distribution of digital services and goods, disintermediation, and computer-mediated customer communication (Wirtz, Schilke and Ullrich, 2010). In their 2010 article Wirtz et al. propose significant factors related to Web 2.0. In their research, they found that Social Networks are used by internet users to connect with each other in different and intense ways. Thus, being active on Social Networks has become a crucial tool to stay in touch on the Web 2.0. Organisations will generally use them to reach out to their customers or interact with other professionals and increase their network. Together with the Social Networking trend, the importance of Interaction

Orientation has increased in relation to Web 2.0 online businesses. Taking users interests to heart

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feedback and inquiries around the clock. User Added Value is also a significant factor related to Web 2.0. It is the capability of firms leveraging customers as a key production input by being an active contributor in the value creation process. This is further argued for by Bell and Loane (2010) who mention that through co-creation, making user feedback, and supplier and expert interaction a key part in product development, Web 2.0 tools can deliver productivity gains and fundamentally change business processes. Web 2.0 technologies that are properly deployed allow companies to cost-effectively increase their productivity and competitive advantage. These technologies can assist in improving communication and collaboration across multiple vertical industries (Andriole, 2010). O’Reilly (2005) also mentions these benefits as he concludes that a major benefit and difference of Web 2.0 is the ability to harness collective intelligence, firms that can perform such knowledge management have a competitive advantage. Furthermore, Web 2.0 has enabled firms to interact in business relationships to a higher and more fluid degree. Especially with clients by enabling user-feedback channels in the development of its product offering in the market. This is further argued by Etemad et al. (2010) who find that the initial basis for a company’s value creation is the information generated by early adopting customers using Web 2.0. This information sharing is magnified by what is commonly known as “the cloud” which allows computing to be performed anywhere at any time (Bell and Loane, 2010) on basically any device with an internet connection. This has revolutionised how individuals and companies interact and work, and has spread digital content all over the world (Bell and Loane, 2010).

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processes in the firm.” (Etemad et al., 2010, p. 320) They further explain “the concept of internetisation provides for the increasing involvement of practically all influential agents whose involvement and connection through the internet linkages are crucial for acquiring, transmitting, and processing information that enables the firm to capture the ultimate customers’ value expectation.” (Etemad et al., 2010, p. 320)

2.5.2. Active Online Internationalisation

As market participants in e-commerce can communicate at a very low cost one can reach very high numbers of people very cheaply. This is the most outstanding property of online business (Yamin and Sinkovics, 2006) and has been described by Cairncross (2001) as the “death of distance”.

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During active online internationalisation (AOI) firms actively adapt their digital product to the foreign market they are entering. As such, it can be argued that there are similarities to be found between AOI and traditional internationalisation and not only significant differences (Yamin and Sinkovics, 2006). The biggest difference between the two is that AOI does not have to entail foreign investments in assets or activities abroad but can use dedicated assets and activities at home to serve the foreign market. During traditional market entry both pre- and post-entry knowledge acquisition are important (Pedersen and Petersen, 2004), like objective knowledge and experiential knowledge as explained by Johanson and Vahlne (1977). Pre-entry knowledge is acquired by the parent company through market research activities and sometimes through managers with previous experience from the foreign market (O’Grady and Lane, 1996) and is mostly done from the home market. Post-entry knowledge is mostly acquired as experiential knowledge by the affiliates located in host countries and their operations in the foreign market (Yamin and Sinkovics, 2006). While the distinction of pre- and post-entry knowledge is clear in traditional internationalisation it is more blurred in AOI as the distinction between pre (home) and post (host) is partly eliminated. The pre-entry knowledge is still gathered in a similar way however the post-entry knowledge is no longer necessarily gathered from foreign affiliates’ operations located in a host country but from the interaction with customers in the foreign country from “home” through cyberspace (Yamin and Sinkovics, 2006).

Online market entry has shown to be more informed of the dos and don’ts in target markets than traditional market entry. Yamin and Sinkovics (2006) believe that marketing blunders are fewer in online market entry and that if there are blunders they will be faster to rectify as the communication of customer reactions will be quicker.

2.6. The Lean Startup and Internationalisation

The main concept of The Lean Startup is to weed out unnecessary activities that do not add value to the startup. I have chosen to include this in my literature review as I believe some of the techniques used in The Lean Startup can be applied to early internationalisation and eINVs who are startups. The book discusses the development of products and methods for opportunity recognition and exploitation and the continuous validated learning outcomes.

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managerial circles. This is due to the tendency of using it as an excuse in failure; “if it all goes wrong at least you learned something”. Yet, from his perspective, learning is the most vital function in entrepreneurship - since the goal in entrepreneurship is to build an organisation in conditions of extreme uncertainty. Ries (2011) promotes a method of innovation through trial and error as it has shown to require less resources than long-term planning and analysis while reducing uncertainty through learning. This development, through trial and error, requires continuous user feedback. A Minimum Viable Product (MVP) will be released to the market for instant experimentation with customers rather than waiting with the release until the product is perceived, by the company, as perfect. This reduces the risk of using resources on developing and releasing a product that will not be adopted by the market. This process allows the firm to learn about customer preferences and what works and does not work. Thus, involving the users in the product development. By using actionable metrics when studying how the changes to the MVP are adopted by the users they can perform validated learning and quickly rectify any misinterpretations and changes that were not value adding. Reis (2011) explain validated learning as “…a rigorous method for demonstrating progress wen one is embedded in the soil of extreme uncertainty in which startups grow.” (Ries, 2011, p. 38). The speed of learning should be maximised and costs kept low to use resources efficiently (Ries, 2011). I believe these methods can be used when entering foreign markets and analysing if they are worth pursuing or not.

2.7. Theoretical Framework

Following the literature review the following framework was created as a guideline for the interview guide and the collection and analysis of the empirical data. The framework is based on the most important themes found in the literature review regarding how eINVs learn during rapid internationalisation. These categories are key to answering the research question “How do Swedish

eINVs overcome the barriers of learning and knowledge creation during rapid internationalisation?”.

2.7.1. Sources of Knowledge

Theory argues for the importance of internationally experienced founders and how eINVs can gain internal internationalisation knowledge through such founders. It also explains how a firm can benefit from knowledge spill-over if located in a cluster. Furthermore, through interactions with

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experience can turn to government agencies, consultants, and/or partners for international knowledge.

2.7.2. Learning Method

Traditional methods of learning are related to experience form operations in foreign markets and relationships in networks that have been nourished over time. For eINVs, who do not have previous experience and a limited network if any, other types of learning methods have been identified. They include and aggressive learning method as described by Chetty and Campbell-Hunt (2004),

online interaction through Web 2.0 tools, and validated learning using Lean Startup methods.

2.7.3. Benefits and Limitations

Being internet-based firms it is assumed that eINVs enjoy extensive use of Web 2.0 tools through

internetisation in their learning process. Furthermore, literature argues for specific capabilities

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Theoretical Framework

3. METHODOLOGY

This section argues for the choice of conducting a qualitative multi-case study to investigate the research question.

3.1. Research Philosophy and Approach

The paragraphs below explain why I took an interpretivist philosophy and an abductive approach when conducting this study.

3.1.1. Philosophy

The empirical research in in this thesis was conducted among people, in the form of interviews, and is based on an interpretivist research philosophy. Thus, the collected empirical data is affected by the research subject’s view of their part in the world. While the interpretation of it is affected by my personal experiences from working with internationalisation in the tech-industry. This philosophy is argued to be very fitting for business and management research as business situations are complex and unique. They are the result of a specific set of conditions and persons coming together at a particular time (Sounders et al., 2009, p. 116).

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Swedish eINV Internationalisation 3.1.2. Approach

An abductive approach to research was chosen for this thesis. The existing literature and theory is used as a guideline to understand the research topic and help find relationships in the empirical data and theory. This is achieved by a continuous comparative process between theory and empirics which allows for the adjustment of the originally conceived theoretical framework dependent on empirical findings. This was an important process due to the “newness” of the research topic. To get a deep and rich understanding of how the case companies in this study managed learning and knowledge creation during internationalisation I chose to use a qualitative research method to collect the empirical data.

3.2. Research Design

Below I argue for the choice of conducting an exploratory research with a multi-case strategy. 3.2.1. Purpose

The purpose of this study is to add new insights to theory about the internationalisation of eINVs. As such, this is an exploratory study as it is valuable when seeking new insights into a phenomenon. It suits the research question as it is useful in clarifying a problem, the precise nature of which is unsure (Saunders et al, 2009). Also, the exploratory nature of the research is suitable as the research question is unstructured (Ghauri and Grønhaug, 2010). Exploratory studies also allow for flexibility which, as argued above, is important to this study due to the “newness” of the research topic and that literature indicates a gap in literature related to this topic. This research has partly been executed by collecting secondary data through external sources, both published and commercial, including literature in the subject areas of internationalisation, entrepreneurship, international entrepreneurship, INVs, and Web 2.0, to try find similarities in the internationalisation process of eINVs regarding knowledge creation and learning. The primary data has been collected through interviews with persons involved in the case companies.

3.2.2. Strategy

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involves only a limited number of cases (Saunders et al, 2009). However, the purpose of this study is not to produce a theory that can be generalised across all eINVs but to gain deeper insights to the specific research setting of learning and knowledge creation during rapid internationalisation. Furthermore, the empirical validity is increased by studying multiple cases according to Eisenhardt (1989). The empirical data has mostly been collected through interviews with persons in the case companies. The reason for this is to gain primary data and get an insider view of the internationalisation process in the selected eINVs (Lindahl, 2016). The reason to use both primary and secondary data is that a combination of the two can often best answer a research question (Ghauri and Grønhaug, 2010). This also assists in the triangulation of the data which helps to see that it has been correctly interpreted (Saunders et al., 2009).

3.3. Data Sampling

As this thesis is of an explorative nature, I used a non-probability sampling technique. This type of sampling is also more suitable for case studies as the samples are chosen based on certain criteria (Saunders et al, 2009). Using a combination of purposive and self-selection sampling, I identified a small sample group based on my judgement and their homogenous profiles (Saunders et al, 2009). This group was asked to participate in the research and the ones who chose to take part resulted in a self-selected sample. The eINVs that I chose to investigate are a sub group to Swedish global firms, with a specific profile, that have agreed to part take in the research. This sampling method was imperative to find qualitative data related to the researched phenomena of knowledge management during rapid internationalisation among Swedish eINVs. It was also the most suitable due to the exploratory nature of the investigation and that I could identify specific profiles to interview. However, it is important to note that this causes the results of this research to not be statistically sound, thus the level of generalisability is low (Saunders et al, 2009).

3.3.1. Selecting Case Companies

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and B2C marketing is conducted. 4) A case company is to be selling a service to a local entity and local users thus being dependent on the adoption of its services on a country specific level. Apart from companies with fitting profiles I also included a tech-startup incubator in Stockholm to gain insights from persons with an extensive range of experience in assisting tech-startups to enter foreign markets. The reason I include these persons is their multiple involvements in the internationalisation process of eINVs, thus expecting them to have invaluable insights to the process. Through contacts in the industry I managed to get in touch with influential persons at one incubator and three eINVs which are presented below.

3.3.1.1. STING

Stockholm Innovation and Growth is a Stockholm based incubator and accelerator taking tech-startups from idea to becoming a global company. They have numerous eINVs in their portfolio, including; Barneby’s, Fish-Brain, Karma, Sellpy, Appjobs, and many more. They offer support in business development, recruitment, coaching, and a network of investors, business contacts, and experts. Having played part in the launch and international growth of over 150 innovative startups STING was a great source of empirical data for this thesis. I interviewed Magnus Rehn who is one of the business coaches and has been involved with numerous STING companies since its inception in 2002. Magnus Rehn has significant experience from international business and internationalisation having worked in a CEO position for different companies all over the world. Mr. Rehn was my first interviewee and as STING and Mr. Rehn were such a rich source of data relating to the theme of this thesis it had a big influence on the remaining empirical data collection and overall structure of this thesis.

3.3.1.2. iZettle

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Having started in Sweden in 2011 they quickly expanded to Norway, Denmark, and Finland before entering the UK and Germany in 2012. By January 2013 they had expanded to Spain, Mexico and Brazil through a partnership with a bank in Spain (iZettle, 2017). The UK is currently iZettle’s largest market and they are the leading mobile card-payment application provider in the UK according to Johan Bendz, their Chief Marketing and Communications Officer (de Lange, 2017).

iZettle differs slightly from the other companies in this study in that they do not only have an online platform but they supply physical products in relation to their credit card payment options. However, as their core business is providing payment options through an online platform they are a great example of a Swedish eINV, especially considering their exponential growth and international successes.

I had the opportunity to interview one of the co-founders of iZettle, Magnus Nilsson. After a 13-year career in EF Education Group where he held different senior roles, including Executive Vice President, Mr Nilsson went down the entrepreneurial rout and started Novestra AB in 1996 in the finance sector. He subsequently also started Nordic Wireless, another investment firm focused on the tech-industry. With this background, he had good knowledge within the industry when starting iZettle together with Jacob de Geer in 2010.

3.3.1.3. Barneby’s

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At Barneby’s I had set up a meeting with the co-founder and Head of Content, Pontus Silfverstolpe. However, as I arrived at their offices he had been called into a last-minute board meeting. Thus, they had arranged I meet with Barneby’s Head of Global Sales Karl Hermansson, and Global Content Controller, Bernice Glimberg. They had both been at the company since early days and been involved with international expansion, which made them great substitute interviewees.

3.3.1.4. Spotify

Spotify is an online music streaming platform that was founded in 2006 by Daniel Ek and Martin Lorentzon. By 2015 Spotify had 75 million users who had access to 30 million songs, was the most venture capital backed company in Europe, and was valued at US$8 billion (Streatfield, 2015). The road to such success was not straight. With a ground-breaking idea, the founders had to work extremely hard to get the record labels on board. The idea of giving users access to unlimited music was for them a concept that was related to piracy, thus they were reluctant to embrace the idea of Spotify (Gripenberg and Rosén, 2013; Rowan, 2014). However, by 2008 Spotify had managed to sign licensing deals with major record companies and their platform was launched in October that year (Streatfield, 2015). In 2008, they also rose their first major financing round of more than US$20 million which allowed them to launch across Europe. In 2011, they raise another US$100 million to support their launch in the US (Streatfield, 2015).

Co-founder and CEO Daniel Ek has a background in tech. He started his first company at age 14 working with building websites. By the age of 23 he had started and sold Advertigo, an online advertisement company, to TradeDoubler which was founded by Martin Lorentzon (Rowan, 2014). The two men then joined efforts in developing Daniel Ek’s music streaming idea which resulted in Spotify.

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3.4. Data Collection

As mentioned above, apart from primary data from interviews, secondary data were also collected. However, there is a limitation to the secondary data collected as the focus of the study is to understand how the firms learn and manage knowledge which is an internal process that does not necessarily show in secondary sources. However, I did use a number of documentary secondary sources in combination with my primary data where I found it fit, to triangulate primary and secondary findings, strengthening the credibility of the research (Saunders et al, 2009).

As the study is qualitative, with quite a specific research question, and the aim is to understand the “how”, the primary data was collected through semi-structured interviews with representatives from the case companies. As such, I used a list of subjects and questions to cover, but that were adaptable to each specific interview. This is beneficial as it allows the questions to vary depending on the flow of the conversation (Saunders et al, 2009). Due to the nature of semi-structured interviews I could ask additional questions to encourage the interviewees to elaborate, or explain their responses. This gave me the possibility to dig deeper and better explore some areas of the case company related to the research question. The interviews were held on a one-to-one basis between myself and the company representative with a timeline of approximately 45-60 minutes. To ensure the possible inclusion of all answers in the analysis the interviews were audio-recorded.

3.4.1. Ethics

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Swedish eINV Internationalisation 3.4.2. Operationalisation of Variables

To collect the relevant empirical data for answering the research question I used my findings in theory to design my interview guide, which can be found in Appendix 1. As I tool in this process I operationalised the main variables and themes I found in the literature that best could assist in answering the research question. These were summarised in my theoretical framework. To transfer these variables into a comprehensive interview guide I have chosen to operationalise them by demonstrating from which parts of the literature the questions are generated. This increases the internal validity of my thesis (Drogendijk, 2016). In table 1 on the next page I present the operationalisation and illustrate the relationships between concepts, literature and questions.

Theme Description Literature Question

Sources of Knowledge Experienced Founders Clusters Users/Customers Government Agencies Consultants Partners

• Oviatt and McDougall (1997) • Autio (2005)

• Chetty and Campbell-Hunt (2004) • Weeravardena et al. (2007)

• Reuber and Fischer (1997) • Johanson and Vahlne (2009) • Wirtz, Schilke and Ullrich (2010) • O’Reilly (2005)

• Andriole (2010) • Fernhaber et al. (2009) • Fletcher and Harris (2012)

3, 4, 5, 6, 7, 8, 9, 11 Learning Methods Aggressive Online Interaction Validated Learning

• Wirtz, Schilke and Ullrich (2010) • Chetty and Campbell-Hunt (2004) • Ries (2011) 5, 6, 10, 11 Learning Benefits Web 2.0 Internetisation Capabilities

• Yamin and Sinkovics (2006) • McKinsey (2009)

• Reuber et al. (2014)

• Oviatt and McDougall (1994) • Autio et al. (2000)

• Bell and Loane (2010)

3, 5, 6, 7, 10, 11 Learning Limitations Inexperience Liability of Foreignness Virtuality Trap Incorrect Learning • Zeng et al. (2013)

• Yamin and Sinkovics (2006) • Johanson and Vahlne (1977, 2009)

5, 6, 7, 11

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There is a limitation of secondary data collected as the focus of the study is to understand how the firms learn and manage knowledge which is internal knowledge that does not necessarily show in secondary sources apart from other interviews. However, I did use a number of documentary secondary sources in combination with my primary data.

When conducting the interviews, I was avoiding asking leading questions in order to get answers that I could then determine the nature of knowledge about as not to frame their answers. This was also important to focus on as I have an insider view of the industry as well as experience in the role of international expansion. Thus, the risk of interviewer bias is present but I made an effort to be as objective as possible. However, it is important to note, as this research is exploring complex and dynamic circumstances. As such, I cannot ensure that this research can be replicated (Saunders et al., 2009).

3.4.3. Analysing the Data

To ensure the inclusion of all the data collected for analysis all interviews were recorded and transcribed. To analyse the empirical data, I chose to summarise it. This lead to the emergence of key points and principal themes from the data. I did this for each interview separately and in between interviews which allowed for the exploration of these themes during the following interviews (Saunders et al, 2009). As such, guiding questions could be adapted in between data collection points to identify similarities in the next case interview (Strauss and Corbin, 2008). This process had major implications from the STING interview which in turn affected the subsequent interviews with the case companies. Through this process I discovered three prominent themes that covered my theoretical framework and divided the findings and subsequent analysis into a clear structure of Founder, Home Market and Foreign Market. These three themes all had an effect on the learning and knowledge creation during rapid internationalisation of the case companies in this study.

When conducting this analysis, I followed these steps;

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2. Relying on an abductive approach, I went back and read my literature review over again to remind myself of its contents and see if I could identify any new relevant topics dependant on the recently reviewed empirical data.

3. I then carefully read my transcript again and summarised it based on the identified key points.

4. After summarising the transcript, I would go over the literature review again to confirm or find new relationships.

5. I performed these steps for each interview separately and in between interviews so to bring potentially new findings to the next interview

The key points led to the main categories of Founder, Home Market, and Foreign Market. These categories have determined how I present my findings and analysis in the subsequent chapter of this thesis.

4. EMPIRICAL FINDINGS & ANALYSIS

During the empirical data collection, coding and analysis I discovered prominent categories and relationships. Following this I decided to look at the data again from the perspective of these categories. They represent different sources of knowledge that the firms showed to access during different stages of their internationalisation. Thus, I have divided my findings into these categories and analysed it from that perspective using the theory from the literature review. Below I present the findings and directly connect them to the theories in order to give you, the reader, an easy overview of the summarised important empirical data and how it compares to the literature.

4.1. The Founders

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(Nilsson, 2017). Also at Spotify there was international business experience from one of the co-founders, Martin Lorentzon, who had started another company in 1999 that was operational in several countries by the time he started Spotify with Daniel Ek in 2006 (dn.se). This correlates well with previous findings in INV research which argues that it is common for INVs to have founders with international experience. (Oviatt and McDougall, 1997). It is further argued by Fletcher and Harris (2012) that it is beneficial for a young firm to acquire internationalisation knowledge internally from the experience of top managers. According to Chetty and Campbell-Hunt (2004), this is one of the major differences between classic MNCs and this type of modern firm.

However, internal internationalisation knowledge among the founders or top managers is not a prerequisite for rapid internationalisation as shown by Barneby’s. In the case of Barneby’s the co-founders did not have more international experience than having visited a few different countries (Glimberg, 2017; Hermansson, 2017). How they overcame enough international knowledge to rapidly internationalise can be explained by their interaction with STING and Business Sweden. This also correlates with Fletcher and Harris (2012) who argue that in the case of a firm lacking internal internationalisation knowledge the best source of such knowledge is from government agencies and consultants.

Fernhaber et al. (2009) argue that both internal and external internationalisation knowledge is important for the firm. A firm with internal knowledge is however less susceptible to learning from external sources (Fernhaber et al., 2009). This would suggest that Barneby’s had more to gain from a relationship with STING and/or Business Sweden than did, for example iZettle. This was also indicated in the empirical research as Barneby’s was part of a STING programme and used many of Business Sweden’s services during their internationalisation to London (Hermansson, 2017). While iZettle on the other hand, only used Business Sweden for legal advice mostly concerning labour laws in the foreign markets (Nilsson, 2017).

4.2. The Home Market

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technological advances which is also beneficial for a firm with innovative products (Rehn, 2017; Russell, 2014). Also, it is a great environment for innovation compared to other countries due to cultural characteristics and circumstances that motivate a problem-solving mentality (Rehn 2017; Carter, 2015). This would suggest that Sweden is a good environment for practicing Lean Startup methods (Ries, 2011) when developing a product. This can also be argued for considering STING uses The Lean Startup methods at the core of their programs and business coaching (Rehn, 2017).

Furthermore, there is access to financial resources through sponsorships and government grants, something that is very unusual in other countries. Also, as mentioned above, firms have access to government agencies such as Business Sweden whom hold an abundance of objective knowledge relating to the specific markets which helps in opportunity development (Johanson and Vahlne, 1977). Such agencies may assist in minimising the liability of foreignness and outsidership when a firm is entering a country in which they operate. They can be a good source for small firms to gain internationalisation knowledge Fletcher and Harris (2012). These aspects make Sweden a good first market to start in, and expand from (Rehn, 2017).

For all the case companies this proved to affect their successes. Barneby’s used Sweden to develop their product and reach proof of concept before expanding internationally. Spotify enjoyed the expansive music industry in Sweden as well as the tendency of Swedes adopting new technological solutions. Another important aspect that made Sweden a good place to test Spotify’s product was the Swedes tendency to download illegal music which was one of the major issues Spotify wanted to solve with its platform (Rowan, 2014). For iZettle, Sweden was an ideal market to create a MVP and test it as Sweden is the most cash-free country in the world (Nilsson, 2017; Russell, 2014).

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increasing a firms insidership in relevant networks (Johanson and Vahlne, 2009). Combining this with Business Sweden, one can say it is a great source of both institutional, and business market knowledge. Forsgren (2016) argues that all firms are insiders in a network, perhaps apart from new ventures. However, it could be argued that in a small but tight business environment like Stockholm these new ventures have easy access to valuable networks from the outset. Arguing that perhaps the Uppsala model can be applied to these Swedish eINVs. Furthermore, having access to these networks would probably give access to non-virtual international business networks which is an important resource for an internationalising firm (Chetty and Campbell-Hunt, 2004). This would be further strengthened if the firm establishes deep relationships with business actors in the network as it could ease the establishment in a foreign network (Forsgren, 2016). It also begs to question the ability to build strong relationships faster which differs from the opinion of Fletcher and Harris (2012). They argue that young and rapidly internationalising firms do not have time to develop strong relationships and must seek other sources of internationalisation knowledge. The founders of all the companies had previous experience in similar industries and an extensive network in Stockholm, as such relationships can be built more rapidly. For firms who do not have a previous network through its founders can turn to organisations such as STING.

Another important source of knowledge can be from potential employees. In an interview with Wired Magazine, Spotify CEO, Daniel Ek, said the reason they did not relocate the HQ from Stockholm was due to the pool of diverse talent available in Europe that they could hire from (Rowan, 2014). This is another benefit that Swedish eINVs can enjoy from their home market. However, they Spotify did open subsidiary offices in other locations such as; Berlin, New York, and London among others, and according to Hazell (2017) this was to further increase their ability to attract talent in different regions that did not want to relocate and to offer employees the chance to relocate to attractive locations if they wanted to. Thus, this resource of knowledge is perhaps as much a reason to enter a foreign market.

4.3. The Foreign Market

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the Swedish market was too small a market for a high profit potential. Thus, entering bigger markets was their plan from inception. Similarly, Rehn (2017) said that a major influence for Swedish firms to look for foreign opportunities is the small size of the Swedish market. These reasons also coincide with the other case companies. Take Spotify, essentially, their product needs a global presence to have access to the music that is available in the world. Also, their product was disrupting an industry when they first launched and was proven to be so popular in Sweden and the Nordic countries that international opportunity recognition and expansion was basically inevitable (Rowan, 2014). Furthermore, iZettle argued that the limited market in Sweden made foreign expansion a necessity for them to create a successful company based around their payment solution (Nilsson, 2017). Another value they gained from a larger market is that their payment application becomes better the more users they have as they can provide their clients with information on customers’ buying patterns etc. (Nilsson, 2017). Niklas Zenström, founder of Skype, also said in an interview with The Telegraph, about the global success of Swedish tech-startups, that “We think globally from the outset,” Stockholm’s successful startups “all realised the domestic market is not big enough,” (Davidson, 2015).