Uppsala university
Department of Business Studies 2009-01-14
Bachelor Thesis
Authors: Martin Sandberg
Hanna-Christine Sölveborn
The Uncertain Opportunity to
Internationalize
Acknowledgements
We would like to take the opportunity to thank Carl Johan Svaton, director of wine at Arvid Nordquist, for his participation and contribution to this thesis. Additional gratitude to our supervisor Desirée Holm for her support and guidance during our work, as well as to all the opponents for their valuable inputs.
Best regards,
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Martin Sandberg Hanna-Christine Sölveborn
Abstract
The internationalization process is usually viewed from an outward- perspective in international business literature. In this thesis the focus is put on an outward-inward interrelationship perspective. An extensive literature review from literature in international business literature, entrepreneurial literature as well as international marketing literature was conducted in order to extract key variables that affect the process of internationalization of the firm. The key variables that were examined were: Business Contacts, International
Experience, Perceived International Opportunity and Perceived International Uncertainty.
A qualitative interview with semi-structured questions was conducted in order to construct a model that should be used as the basis for a quantitative study of an inward-driven internationalization process, in order to generalize. The results were in line with the propositions based on the relationships between the variables. In other words, the constructed model and the developed questionnaire were of use when examining the relationship between the variables and seem to be of value when applied to an inward oriented context. The variable International Experience received the highest score and seemed to reflect an important contribution for the internationalization process. Nevertheless, further quantitative research is asked for, in order to support the results and be able to generalize.
Table of contents
1. Introduction ... 5
2. Purpose ... 6
3. Theory on internationalization ... 7
3.1 Inward-Outward perspectives of internationalization ... 7
3.2 Background ... 8 3.3 Opportunities ... 10 3.4 Uncertainty ... 13 3.5 Experience ... 13 3.6 Business contacts... 15 4. Preliminary model ... 18 5. Methodology ... 19 5.1 Sample Company ... 19 5.2 Interview... 19 6. Results ... 23 6.1 Investigated variables ... 25 6.2 Questionnaire ... 27
7. Discussion and Conclusions... 30
7.2 Methodological discussion ... 30
7.3 Variable relationships... 31
8. Future research ... 33
9. References ... 34
1. Introduction
The process of globalization is characterized by the increasing interdependencies between nations, firms and people (Labonte R., 2004). Firms that act in this time of globalization face changing conditions and developments, such as new market conditions, technological developments in the areas of production, transportation and communication, and also more elaborate capabilities of people, in terms of the founders and/or entrepreneurs (Madsen and Servais, 1997). These developments have meant that firms now with greater ease can communicate information with foreign partners and networks as well as an increased facilitation concerning the movement of goods and products from one distant market to another. These changed conditions imply increased competition for firms as a result of decreasing barriers into markets and also that the concept of national borders is becoming increasingly irrelevant (Fletcher, 2001). This development is further strengthened by the work of international trade organizations such as the World Trade Organization (WTO) and The General Agreement on Tariffs and Trade (GATT).
Many companies have realized that in order to cope with these changes in conditions and the increased international competition they need to take advantage of the opportunities to which they are presented. In many cases this is done by expanding the firm’s business to new markets and thus acting on perceived international opportunities.
As a result of firms’ increasing internationalization, much research during the last decades has been focused on different ways of explaining, describing or exploring the characteristics of the internationalization process of firms (Johanson Vahlne, 1977, 1990), the antecedents and the reasons for choice of location and choice of partners/relations in foreign markets (Andersen & Buvik, 2002).
has also been focused on the aspects of opportunity as a factor which has implications for the characteristics of the internationalization process of firms, see for example Hohenthal and Lindbergh (2005), and Pahlberg and Persson (2005). Furthermore, research has observed that the experience about foreign markets possessed by the decision maker has implications for which market to enter (Madsen & Servais, 1997). Another factor that have been argued to have implications for how international business are conducted the process of international expansion is the factor of uncertainty (Sanchez-Peinado & Pla-Barber, 2006)
The majority of studies performed has viewed the internationalization of firms as an export-led or outward-driven phenomenon and little research has focused on the internationalization process as an inward-driven or import oriented process (Fletcher, 2001; Björkman & Kock, 1997). In Fletcher (2001) it is argued that internationalization no longer can be viewed solely as an outward-driven activity and that firms also internationalize by undertaking import-led activities.
2. Purpose
3. Theory on internationalization
Our review of the existing literature related to the internationalization process of the firm started out with the traditional view and the findings and model (the IP-model) developed by Johanson and Vahlne (1977) as a starting-point. This view was chosen due to the fact that much later research has used the model in the same way when continuing the research of internationalization of the firm.
Further, by its dynamic and simple nature, the model is applicable on both an outward orientation of internationalization as well as an inward orientation, which is coherent with the perspective of this thesis. Therefore, variables with the most explanatory power for the decision process of internationalization were deemed to be most likely to be found in a review of the literature that connected to the IP-model.
The rationale for the selection of variables found in the literature review can be explained by the variables inherent dynamic and general nature. As the aim of this thesis is to construct a model that can be applied to the inward orientation of internationalization of the firm, an aim that until recently has been used only to a limited extent, a general and dynamic character of the variables was regarded as favourable. These criteria is further justified by the fact that the reviewed literature dealt primarily with an outward orientation of firms, and therefore variables chosen from this kind of review had to be possible to extend to an inward orientation of internationalization in order to reach satisfying result when they were applied on an importing firm. As a demonstration, a choice of a variable of the type labour cost on a specific foreign market would be regarded as too limited to an outward orientation of internationalization, and would subsequently provide little explanation when applied to an inward orientation of internationalization of a firm.
3.1 Inward-Outward perspectives of internationalization
outward-driven internationalization apply, for most part, to inward-outward-driven internationalization and internationalization overall. (Fletcher, 2001)
Similarly, Welch and Luostarinen (1993) stress the important links between inward and outward movements when investigating the internationalization process of a firm. The authors further state these links are broad, across operational modes, and may develop from either inward or outward sides at different stages of overall expansion.
Drawing from the reasoning that inward-outward processes of internationalization should be interconnected, and the notion that previous research on outward-driven internationalization is applicable to an inward oriented perspective of the internationalization process, we concentrate our search for influential variables to include previous research on outward-driven internationalization. Nevertheless, we recognize the fact that in order to be successful in applying such variables, these variables should have the characteristics that make them possible to extent to another context then the one from where they where extracted, that is an outward oriented context. Therefore, as noted above, criteria as being of general, and dynamic character was deemed favourable.
3.2 Background
Internationalization of firms has received widespread attention during the last couple of decades, primarily due to the fact that the global economy has changed and the conditions for firms that act in these changing markets face new conditions when making business in the domestic as well as in foreign markets.
The view of the internationalization of the firm, described as a slow and incremental process, has received criticism as it is accused of being to deterministic and of limited value (Reid, 1983; Turnbull, 1987). Criticism has also originated from the notion that the model based upon this view interprets the process of learning too narrow, which limits the ability of the model to explain certain forms of internationalization behaviour (Forsgren, 2000).
The IP-model, however, is often used as an outset for research on the internationalization process of the firm that aims to provide further explanatory power on how firms internationalize (Madsen & Servais, 1997; Forsgren, 2000; Hohenthal & Lindbergh, 2005). Consequently, the IP-model was considered as an adequate starting ground for our literature review, which was aimed on the extraction of variables that might have the most complementary additional value when related to the internationalization process of the firm.
Researchers of the field of internationalization have found factors claimed to have implications and further explanatory power on the characteristics of the internationalization process, one of which concerns the management characteristic of international experience (Langston & Teas, 1976; Fletcher, 1996). The characteristics and experiences that the decision maker/entrepreneur possesses are argued to cause deviations from the traditional approach because this knowledge has not necessarily been accumulated within the firm in a slow and incremental manner. Contrary, it is an attribute of the decision maker, formerly created, which will influence the decision about which markets are attractive and which opportunities are worth pursuing, as well as a factor that reduce the uncertainty about the specific market (Madsen & Servais, 1997).
A third area of interest in the field of internationalization of the firm relates to the opportunities that the firm and/or the decision maker perceives and is willing to act upon (Johanson & Vahlne, 2006; Hohenthal & Lindbergh, 2005; Dimitratos & Jones, 2005;).
Conceptual approaches and theoretical perspectives of opportunities perceived by the entrepreneur/decision maker have been called upon by researchers who claim that the investigated areas up to date have focused mainly on the activities of international new ventures and born global firms (Dimitratos, Lioukas & Carter, 2004; Zahra & George, 2002). Therefore, researchers should expand the investigated horizon to include entrepreneurial activities of all firms going abroad, irrespective of sector, age size, and stage of internationalization (Dimitratos & Jones, 2005).
Uncertainty has been argued to be a factor that links and influences the relationship between a perceived opportunity and chosen way to act upon this opportunity (Weber & Milliman, 1997). Further, uncertainty has been investigated as a factor that in an internationalization process can be represented by the ambiguous information a decision maker has about the country he wishes to enter (Kogut & Singh, 1988) and also from the perspective of how a manager perceives uncertainties (Miller, 1993). In the same vein as Hohenthal and Lindbergh (2005) we consider the factor of uncertainty be the counterpart to opportunity in an internationalization context. In this sense uncertainty affect discouraging on actions to internationalize, where opportunities are considered to affect encouraging on the decision internationalize.
As this paper aims to investigate the characteristics of research subsequent to the traditional view of the internationalization of a firm as slow and incremental, the focus will be on studies performed in the aftermath of the development of the IP-model by Johanson and Vahlne (1977).
3.3 Opportunities
discovered and grasped by routine-resisting entrepreneurial market participants. Opportunities should, however, be related to the entrepreneurial alertness that one is, at all time, spontaneously looking for unnoticed features of the present or the future environment. (Kirzner, cited in Ghauri, Hadjikhani & Johanson 2005, p. 2). Thus, as proposed by the findings mentioned above, opportunity and entrepreneurial research are highly interrelated,
Research on antecedents of opportunity recognition and enactment has linked the managers prior experience related to the opportunity being pursued (Andersen & Rynning, 1994; Leonidou et al., 1998). In a study of the entrepreneur’s perception of risk and opportunities Acedo and Florin (2007) propose a tripartite model of risk perception which states that the perception of risk attached to strategic opportunities in small and medium sized businesses is jointly influenced by the individuals’ past experience related to the opportunity, their cognitive style for gathering and analysing relevant information and their tolerance for ambiguous situations and uncertainty. In the context of an internationalizing firm, this implies that the perception of opportunities to engage in operations in a foreign market will be influenced by the past experience that the decision maker has accumulated from this market, as well as the style he uses to allocate complementary information about the market, as well as his tolerance for ambiguity related to how to successfully perform business activities within the specific market.
inside the firm and, thus, draw benefit from it during the exploitation phase (Anderson, Blankenburg Holm, and Johanson, 2005).
Put in the context of the internationalization of a firm, these findings suggest that the different kinds of information that the firm gains from its network context influence the perception of its opportunities. Hence, it seems reasonable to assume that the firm’s perception of the opportunities to engage in lucrative exchanges with foreign business partners, find desirable products and markets will be influenced by what type of network the firm is a participant of, and the contacts that he is connected to.
In a similar vain, in a note on the Uppsala Internationalization Process Model, Johanson and Vahlne (2006) examines the relationship commitment and opportunity development. In this view, the firms in a relationship possess specific knowledge, to which their relationship partners gain access through mutual relationship commitment. The participants are assumed to be able to see and develop business opportunities, which others can not see and develop. The relationship partners, as stated by the authors, can also create new business opportunities by the privileged knowledge created through the interaction with each other. The discussion is summarized in two propositions, which state that opportunity development in a country market is positively related both to mutual relationships with firms in the market, and to the partner firms’ network embeddedness in the market. Thus, the capabilities and needs of participants of a relationship will become more apparent as the commitment to this relationship increases, hence, the opportunities to act on the created knowledge can be grasped by the actors in the relationship. The same argument serves for the degree of the partner firms’ network embeddedness in the market and both factors will have a positive effect on opportunity development and subsequently on internationalization.
entrepreneur’s/decision maker’s perceived knowledge about customer demand as well as the perceived supporting conditions in technical competence, managerial capabilities, and stakeholder support.
3.4 Uncertainty
Furthermore, a review of the literature of internationalization of the firm reveals a need to incorporate an additional variable of International Uncertainty (Sanchez-Peinado & Pla-Barber, 2006). This variable is justified by the fact that in the process of internationalization the decision maker is likely to be influenced by the perceived opportunities he faces, but if the uncertainty about how to benefit these opportunities outweighs the perceived possible gains, no action will be taken, and no opportunity will be acted upon. The importance of the uncertainty factor increases as it is tied to an internationalization context and research has investigated uncertainty factors in the form of the country (Kogut & Singh, 1988), the behaviour of the people of the country (Gatignon & Anderson, 1988), and the way the manager perceives uncertainties (Miller, 1993).
Uncertainty can be seen as the counterpart to opportunity in that it is the result of the factors that inhibit flows of information about possible outcomes of activities acted upon (Hohenthal & Lindbergh, 2005). The decision to engage in foreign markets incorporates the will to exploit opportunities that are considered to be new to the firm, and newness increases the perceived uncertainty for the firm (Choi & Shepherd, 2003). Furthermore, the importance of understanding the uncertainty can be explained by its role as a link between perceived opportunities and action (Weber & Milliman, 1997).
Drawing from the reasoning of the variable Perceived International uncertainty, we posit that the uncertainty about the action to engage in a foreign market can be defined as one side of the coin, where the perceived international opportunity constitute the other.
3.5 Experience
from other sources than its own operations. Consequently, the internationalization process will be influenced by the experience that the internationalization company can gain from actors in its business environment.
To a great extent, research that relates experience to the internationalization process of the firm has focused on the experience of managers, who are assumed to be the decision maker in the process (Angelmar & Pras, 1984; Brooks & Rosson, 1982; Ganier, 1982). The characteristics of the decision maker that have been found to have an implication for the way decisions are taken include: the manager’s engagement in foreign travel; number of languages spoken; and whether the decision maker was born abroad, lived abroad or worked abroad (cf. Meisenbock, 1988; Reid, 1981).
Reuber and Fischer 1997, in their study of Canadian software product firms, found that the international experience of the management teams was positively related to the internationalization process of these small- and medium sized enterprises (SMEs) as firms with a more internationally experienced management team tended to use more foreign strategic partners and delayed less in obtaining foreign sales after start-up, which lead to a greater degree of internationalization. The experience of management is also claimed to be influential when it comes to observing opportunities, such as the advantages of foreign partnerships, and identifying firms in a different culture.
Considering the influence that international experience is assumed to have on the way a decision maker perceives international opportunities and the opposite characteristic that international uncertainty is assumed to have in relation to international opportunities, the following two propositions are developed:
Proposition 1) The degree of the decision maker’s international experience will be positively related to the extent to which the decision maker perceives international business opportunities.
Proposition 2) The degree of the decision maker’s international experience will be negatively related to the extent to which he perceives international uncertainty.
3.6 Business contacts
relationship approach, which represents the shift in research, and here relationship development theory provides a framework for research on the selection of foreign markets/customers as well as the internationalization process.
In this approach the focus is put on the exchange partner and de-emphasizes the importance of the selection of country. How the exchange partners become aware of each other often depends on the present relationships the actors have (Håkansson & Snenota, 1995).
Having international export/import relationships can provide benefits as increased performance and perception of competence, although the perception of affective commitment relationship in an international export/import context will decrease with time, as the importance of initial mutual trust and commitment decreases (Pressey & Tzokas 2004). In order to minimize the negative side of relationships a language of competence should be used in the relationship to sustain long-term export relationships and thereby support mutual trust and commitment between the firms. Pressey & Tzokas 2004 conclude that in the long run a relational orientation does pay off for the companies involved. Han (2006) argues that relationships will erode passively and actively over time, but positive experiences in the relationship will enhance trust and mutual respect between the actors involved.
Decision-makers can all be seen as social actors who are looking for business opportunities. In an international context opportunity often depends on the information benefits gained from an individual’s social network, whether the person is a buyer, seller or a third party (Ellis 2000). Moreover, Ellis 2000 states the importance of existing connections with others when internationalizing, that companies usually follow the line of least resistance. Due to that, social ties of the decision-maker are often the basis of the identification of international exchange partners. The identification of exchange partners via social ties is also correlated with the degree of market imperfections in the market, depending on if it is an export or import situation (Ellis 2000).
firm can benefit in the process of developing international market knowledge to a low cost, improve learning and increase competitive advantage. Oviatt & McDougall (2005) divide social ties into strong and weak ties, where strong ties are said to support the firms involved in terms of resources, knowledge and information. The down side is that they require high investments in terms of time and financial resources. Weak ties on the other hand are not costly, easier and faster to obtain or lose, but, nevertheless, affect firm performance positively.
Social capital is another factor that has been argued to be an important source of legitimacy, resources, and knowledge and might therefore speed the rate of startup internationalization by experiential learning in market knowledge (Prashantham, cited in Han, 2007, p. 99-100). Many different definitions can be found on social capital. One definition, provided by Inkpen and Tsang (cited in Han, 2007, p. 101), of social capital is: “the aggregate of resources embedded within, available through, and derived from the network of relationships possessed by an individual or organization”. In this case social capital is looked upon in both a private and public perspective, which includes the importance of network relationships as resources for the firm.
Consequently, if a company has limited knowledge of a market, social ties can speed up the process of internationalization, which traditionally has been seen as a slow, incremental process in the IP-model by Johanson and Vahlne (1977).
Proposition 3) The business contacts that the decision maker is connected to will be positively related to the extent to which he perceives international business opportunities.
4. Preliminary model
From a review of the literature of the internationalization of the firm, two key variables
International Experience, and Business Contacts are identified as being factors that have high
influential power on the process in which the decision maker comprehends the international business opportunities and evaluates the uncertainty connected to a subsequent decision to internationalize.
The literature proposes that the higher degree of international experience, the more likely the decision maker is to perceive business opportunities in a foreign market.
Similarly, the more international business contacts that the decision maker has, is proposed to be positively related to his capability of perceiving international business opportunities. The nature of uncertainty as portrayed in proposition 2 and 4 indicates the reverse relationship from that of the variables International Experience and Business Contacts and Perceived
International Opportunity. Thus, drawing from the four developed propositions the following
model of the way a decision maker is influenced in the process of internationalization of the firm is constructed:
5. Methodology
5.1 Sample Company
As the aim of this thesis is to construct a model that can be used to investigate the process that precedes the decision to internationalize a company that performs primarily inward activities, such as import activities, was considered as desirable. The chosen company Arvid Nordquist performs mainly such activities, and the responding director of wine focuses explicitly on such inward oriented activities.
The company Arvid Nordquist H.A.B is a trading company that was founded in 1884 by Arvid Nordquist and is today run by his grandson Anders Nordquist and the firm has around 150 employees in their offices in Sweden, Denmark, Finland and Norway. The company’s head office is located in Stockholm, Sweden. In 2007 was the turnover rate for Arvid Nordquist 998 467 000 SEK. (Alla bolag, 2008) The company conduct business in three areas: coffee with its own label "Classic kaffe", food with brands like the Green Gigant, Guylian, Sun-Maid etc, and finally wine and beer import. The countries that they import wine from are: France, Spain, Italy, Germany, and outside of Europe: Lebanon, South Africa, New Zeeland, Australia, The United States, Chile, Uruguay and Argentina. (Arvid Nordquist, 2008) Their list of customers of wine includes all the Nordic alcohol retailing monopolies, the major duty-free operators, restaurant wholesaler and restaurants in the Nordic region. (Arvid Norquist, 2008)
5.2 Interview
The interview was conducted during one and a half hour in Stockholm in the headquarters of Arvid Nordquist on the 9th of December, 2008. The director of wine, Carl Johan Svaton was the person who was chosen to interview, as he has is responsible for the wine function of Arvid Nordquist. In his role as decision maker concerning wine he has the responsibility for this function and is thereby very familiar with the company’s international business partners as all the wine producers are located all over the world.
Further the interview was conducted in a face-to-face manner in Swedish as this is the mother tongue for both the interviewee and the questioners.
favourable in comparison to a survey based study, because we wanted to have a greater deal of control than such a study would provide us with. At the same time the person who is being interviewed has the possibility to speak freely. The flexible nature of semi-structured questions enables us to change questions along the interview, which is deemed to be beneficial in an exploratory study of an area where relatively little research has been conducted, and is also in line with the purpose of this study. We created a template (appendix 2) for the interview questions and structured the questions into themes that each took into account the different areas of our research. A Likert-scale that ranged from 1 to 5, where 1 represented the least degree of agreement (Totally Disagree) and 5 represented the highest degree of agreement (Totally Agree), was used in order to capture the respondent’s attitude towards the statement.
Notes were taken during the interview and it was also recorded to enable more sufficient description of the answers. In the end of the interview time was given to the interviewee to speak freely, in case he wanted to change or add something to his statements.
In order to test to which extent the developed propositions and the constructed model would reveal the assumed relationships, the constructed questionnaire included factors related to the two independent variables. These factors were then included in statements, which related them to the two dependent variables and thereafter presented to the respondent Carl Johan Svaton. The factors that were chosen to represent the variables International Experience and
Business Contacts and the statements in which they were included are shown in tables 1 and
2.
Table 1. Factors that might affect Perceived International Uncertainty and Perceived International Uncertainty
International Experience Statement No.
Prior occupation 1.1 3.1
Prior residence in a foreign country 1.2 3.2
Business trips to foreign countries 1.3 3.3
Table 2. Factors that might affect Perceived International Opportunity and Perceived International Uncertainty
Business contacts Statement
No.
Connection with business contacts 2.1 4.1
Suppliers as business contacts 2.2 4.2
The actions of competitors 2.3 4.3
The contacts of business contacts 2.4 4.4
Contacts made on trade fairs 2.5 4.5
The factors that were chosen to represent International Experience and Business Contacts were then included in statements which coupled them to the variables Perceived International
Opportunities and Perceived International Uncertainty, as depicted in figure 2 below.
Figure 2. Linkage between statements and the variables Perceived International Opportunity and Perceived
International Uncertainty
International Business Experience
International Business Contacts
In order to capture further factors that might be of significance when evaluating the importance of the two variables International Experience and Business Contacts, a set of background questions was used to prevent missing out on additional information that could be of use when evaluating the relationship between the variables. These background questions was also regarded as important for the discovery of additional factors that might not have been described in the used literature and thereby not captured by the developed propositions
and the constructed model. The potential findings made by the use of background questions were also deemed to be of importance for the construction of a refined model of the inward internationalization of a firm.
6. Results
The performed interview contained a set of background questions that were thought to be of use when analyzing the results and thereafter refining the proposed model. The outcome of these questions revealed that the respondent had in fact considerable international experience and was also used when the respondent wanted to explain his choice of agreement when he was given the propositions.
The respondent, Carl Johan Svaton, studied the international program of economics in Örebro, Sweden, where he focused in business marketing and business organization. After concluding his university studies he continued to study at Grythyttan Akademi, Restaurant and Hotel in Örebro, where he concentrated on courses related to beverage knowledge. Consequently, Carl Johan studies are related to the international factor of his present occupation as well as the products which he is managing.
Considering time spent abroad, during grade school and high school Carl Johan spent his summers in France where he lived with different French families. This time was aimed at learning and developing his knowledge in the French language. Furthermore, prior to undertaking studies at the university, Carl Johan spent seven months in Wyoming, U.S.A., where he devoted his time to studies in the field of business administration, business marketing and public speaking and at his spare time to leisure activities such as skiing. Growing up Carl Johan has also lived in Nigeria, Lagos and Belgium.
profitability, and future potential for these two factors. In order to establish the potential for a supplier, the focal company is categorized as an , B-, or C-company, where the A-companies are deemed to be of the highest value and the C-A-companies are compelled to show capability to develop their business to reach a future potential. Carl Johan states that, if he considers a supplier to not be able to reach profitability within the time span of two years, he will act no further on establishing cooperation with this supplier.
When it comes to markets where Arvid Nordquist has established partners Carl Johan considers South Africa to be the most valuable from a turnover and profitability perspective. In addition to this, he also points out that the South American market is regarded as having a significant future potential, and he thinks that this market will experience a considerable growth in the future. According to Carl Johan, the South American market will become to Arvid Nordquist what the South African market is today, in terms of importance. A considerable advantage that, for example, the Argentinean suppliers possess, is that they can offer low prices for each unit of wine, which is, as noted above, coherent with the strategy of Arvid Nordquist. Contrary to the South American suppliers, when dealing with the French suppliers Arvid Norquist faces tighter margins. The French market is, however, the one where Arvid Nordquist has the most business connections. This is explained by Carl Johan by the fact that the French market is highly diversified when it comes to the origins of the different wines. Although Arvid Nordqvist has the most business connections on the French market, Carl Johan emphasizes that all his contacts around the world are of equal importance, since relations within the wine business are characterized as being very personal. He therefore will not name a single market as the one with the highest potential when it comes to generating future business contacts.
sources of information can be, for example, different types of media. After gathering the needed knowledge about the market, a further evaluation of the competition within the market is made, and thereby the company adapts its efforts which are thought to be necessary in order to establish a relation with a specific contact in that market.
Further investigation is established by sending personnel to the market, who are then able to make a more thorough assessment of the future potential of the chosen supplier. Here Carl Johan mentions the flexibility when it comes to travelling as a factor of great importance. Because activities performed by Arvid Nordquist to a great extent consist of travelling, there is no possibility to put the responsibility of a single market on one single employee, which in turn means that everybody within the wine business of Arvid Nordquist travels extensively. Consequently, the company has a number of people connected to each and every producer, which will prevent that a connection made might cease to exist due to personnel turnover.
Another kind of internationalization may stem from the process where a producer in the already existing network expands its business to other markets. Carl Johan makes the example of a French producer that might buy a vineyard in Algeria. Arvid Nordquist thereby can make use of the new products that the supplier will be able to produce and, in turn, offer the markets still more products. Thus, the entering if a certain market can be highly influenced by the buyer of the product as well as the producer of the product.
6.1 Investigated variables
The results of the possibility that Carl Johan was given to elaborate on the chosen degree of agreement show that, when it comes to the relation between prior occupation and the ability to perceive opportunities, he considers the ability developed during prior occupation to be creative, flexible, and diplomatic to be of great importance. His experience from prior occupation has also influenced his ability to interact with other people, which is presently an important part of his job assignment. Prior occupation has taught him to act in a “business manner”, which he points out to be essential for being able to understand what a potential cooperation is supposed to generate.
Concerning the value of other people’s experience Carl Johan states that the most valued experience exists within the industry, explained by the fact that products are of complex character, demonstrated by the differences in taste, origin, ingredients, appearance, and so on. The industry is characterized by a high degree of competition and, consequently, the most valued experience is hard to get hold of, since competitors are reluctant to share the information they possess.
When asked a question whether business contacts are of importance when evaluating the potential at a foreign market, Carl Johan refers to the investigation that takes place when Arvid Nordqvist search for new products. He mentions journalists as a potential contact that might be of value when conducting such a search.
Concerning to which extent prior occupation has decreased his uncertainty about foreign markets, Carl Johan motivates his choice (Agree) by the fact that the more he has exposed himself to new situations, the more secure he has become when facing new situations in general.
The question of to which extent the experience of people outside the company has reduced his own uncertainty of a foreign market, Carl Johan refers to his own private network. This network contains experience that he can make use of on a fundamental business level.
Concerning the extent to which Carl Johan’s business contacts made on industry fairs have influenced his perceived international uncertainty, he states that these fairs are of great importance since they, among other things, offer the opportunity to benchmark against other companies.
6.2 Questionnaire
The questionnaire revealed that, in all, the variables to a high degree were estimated by Carl Johan as being influential when it comes to the decision to internationalize. The options “Agree” or “Totally Agree” was chosen in every case except for two, which were in the statements 1.4 and 3.1. Even in those two cases Carl Johan, however, pointed out that there was an indirect relationship and therefore choose to neither agree nor disagree.
With a possible total correlation score of 25 for each of the four variables, the highest score was found between International Experience and Perceived International Opportunity with a total score of 23. Even so, the gap between the highest score of 23 and the lowest score of 20, between Business Contacts and Perceived International Uncertainty, can be regarded as being of modest significance. Consequently, all the independent variables can be said to influence the dependent variables, judging by the high scores displayed in figure 2 below.
Figure 3. Correlation Score
Perceived International
Opportunity 23 22
Perceived International
Uncertainty 21 20
International Experience Business Contacts
Figure 4. Average Agreement Perceived International Opportunity Average Agreement 4,6 4,4 1 1,5 2 2,5 3 3,5 4 4,5 5
International Business Experience International Business Contacts
A g reem en t S c o re Perceived International Opportunity
Figure 5. Average Agreement Perceived International Uncertainty
Average Agreement 4,2 4 1 1,5 2 2,5 3 3,5 4 4,5 5 International Business Experience
International Business Contacts
A g re em en t S co re Perceived International Uncertainty
Figure 7. Chosen degree of agreement on International Experience
Statement No. International Experience Perceived International Opportunity Perceived International Uncertainty 1.1 3.1 Prior occupation 5 3
1.2 3.2 Prior residence in a foreign
country 5 5
1.3 3.3 Business trips to foreign
countries 5 5
1.4 3.4 The experience inherent in
contacts outside the company 3 4
1.5 3.5 The experience of a foreign market possessed by a colleague/employee
5 4
Figure 8. Chosen degree of agreement on Business Contacts
7. Discussion and Conclusions
As the business world develops in a globalizing manner, the connections between actors of different national markets become increasingly important. Due to this developing, researchers of international business have extensively focused upon the internationalization of the firm and the characteristics of this process.
The precedent research has primarily focused upon outward-driven internationalization of the firm and to a lesser extent on inward-driven internationalization, such as importing. This lack of research in the field of internationalization was the main rationale for our study and, consequently we focused on applying theories found in the literature of internationalization, mainly outward-driven, on a company that first and foremost conducted inward-driven activities, and on a business of this company that solely conducts importing activities.
7.2 Methodological discussion
The main contribution of this study should be seen as a methodological contribution in the form of a development of a preliminary model which aims to work as a framework for explaining internationalization. The respondent of the qualitative interview has extensive knowledge in the subject of international business and therefore his answers can be viewed as valid in a sense that his understanding for the questions can be seen as high. Furthermore, he was able to motivate his standpoint concerning the closed questions in the interview. The motivations show that the respondent fully grasped the terms and nature of the questions asked. Overall, the standpoints he gave to the closed questions were in most cases high. This phenomenon to our minds might be an indication of the questions as being valid in the sense that they are important in the context of the variables International Experience, Business
Contacts, Perceived International Opportunities and Perceived International Uncertainty
relation to internationalization. Nevertheless, what can be discussed is whether his answers are influenced by the fact that he is a representative of a company, and not being able to speak freely as a private person. In our opinion, we find it rather unlikely that this should be the case, as the questions asked were not to our minds of sensitive nature for the sample company, Arvid Nordquist.
regarded as the two variables that influence the decision to internationalize. Subsequently the two variables International Experience and Business Contacts were found to influence the two former variables. Factors that were regarded as representative for the two independent variables were developed and included in statements presented in a questionnaire to the director of wine, Carl Johan Svaton, of the sample company Arvid Norquist.
7.3 Variable relationships
The results from the questionnaire reveal that the developed propositions are supported and the variables International Experience and Business Contacts seem to have a positive and negative relation to Perceived International Opportunity and Perceived International
Uncertainty respectively. It seems as International Experience would be more influential than International Business Contacts as this variable scores higher on both dependent variables.
We believe that this might be due to the fact that personal experience may be strengthened by the existence of business contacts, for example through the sharing of information about specific markets and/or products. This notion is supported by the respondent’s choice when evaluating the importance of experience of a foreign market possessed by a colleague/employee, a statement that the respondent chose to totally agree with. The reversed relationship, where experience would influence the importance of business contacts, were not as clearly stated in the statements and it is therefore difficult to make any conclusions about to what extent the importance of business contacts are strengthened by their personal experience explicitly.
Furthermore, the high average score which indicates that the respondent agrees to that the independent variables influence the dependent ones show us that the chosen variables, which were sorted out from outward-oriented literature, also are applicable in an inward-oriented context of internationalization of the firm.
We consider the difference between the highest score of 23, for the relationship between
International Experience, and the lowest score of 20, between Business Contacts, to be a
from. This is hardly unique for the wine business, but, nevertheless, important to consider when making conclusions about it.
8. Future research
As the aim of our thesis was to develop a model that should work as a base for further research, a quantitative study where our results could be statistically tested and generalized conclusions could be drawn would be desirable. In such a study it would be interesting to examine if our results are supported or not and what might be the reasons for it. Furthermore, in such a study it would be interesting to see respondent firms that originates from different fields of business and different sizes, in order to investigate if the different variables we have collected is of different amount of importance in different contexts.
The variable Perceived International Uncertainty is to our minds connected to the international experience as well as general business experience of the firm. However, in the globalized world today, where it seems that the particular business partner is of larger importance than where the firm originates from, obstacles as language, culture and war must be creatively overcome for the firm to attain international business opportunities. A firm has to be continuously scanning for future opportunity to be able to be competitive in its field. Additional quantitative studies that focus on what factors that influence successful cases of entrepreneurial opportunities might be of interest.
Our research is to some extent limited to investigating whether or not the chosen variables are valid in an inward-oriented internationalization context of the firm, and though the propositions made to the respondent imply a decision to internationalize in any way, they do not reveal in which way this process is undertaken. Consequently, it would be interesting to conduct further research on the characteristics of this process and, thus contribute with additional explanatory power and insights in an inward-oriented internationalization of a firm. Also, the character of the variables chosen by in this study is highly general and this implies the opportunity to focus on a single variable and investigate what features of it is more influential on the decision to internationalize. Deepening the reasoning on, for example,
Business Contacts might reveal interesting facts in terms of which contacts are considered as
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Appendix 1. Complementary questions and Questionnaire
Bakgrundsfrågor :Personliga till vindirektören A. Ålder?
B. Utbildning? C. Tid utomlands?
D. Vad innebär din position på Arvid Nordquist? Ansvarsområde? E. Tidigare anställningar?
F. Talade språk?
G. Svenska, Engelska och Franska. Om organisationen:
H. Hur ser organisationen bakom vinimporten ut?
I. Hur stor vikt har de olika leverantörerna? Är vissa viktigare? Olika nivåer av samarbete?
J. Vilken utländsk marknad anser du vara viktigast? Ur ett omsättningperspektiv? Ur ett relationsperspektiv?
Följande frågor kommer ha formen av ett påstående och besvaras genom att den svarande väljer ett sifferalternativ där skalan går från 1-5 och har följande betydelser.
1. Tar helt avstånd ifrån 2. Tar avstånd ifrån
3. Tar varken avstånd eller instämmer 4. Instämmer
5. Instämmer helt
International Experience - Perceived International Opportunity
1.1 Tidigare anställningar gör det lättare för mig att se möjligheter när det gäller samarbeten på nya marknader.
1 2 3 4 5 1.2. Mitt tidigare boende i ett land annat än Sverige har förbättrat min förmåga att uppfatta möjligheter på en ny utländsk marknad.
1 2 3 4 5
1.3. Mina tjänsteresor utomlands har förbättrat min förmåga att uppfatta möjligheter på en utländsk marknad.
1 2 3 4 5
När du svarar på nästkommande fråga, var snäll och tänk på en specifik utländsk marknad.
1.4. Erfarenheter hos människor jag känner utanför företaget underlättar för mig att se nya möjligheter på den specifika utländska marknaden.
1 2 3 4 5
1.5. Erfarenheten av en utländsk marknad hos en anställd/kollega har underlättat för mig att uppfatta möjligheter på denna marknad.
Business Contacts - Perceived International Opportunity
2.1. Internationella affärskontakter ökar vår kunskap om en nya utländska marknader.
1 2 3 4 5
2.2 Kontakten med våra leverantörer har fått mig att uppfatta möjligheter i en ny utländsk marknad.
1 2 3 4 5
2.3. Våra konkurrenters agerande har fått mig att inse möjligheter på en ny utländsk marknad.
1 2 3 4 5
2.4. Mina affärskontakter har fått mig att uppfatta möjlighet att etablera nya utländska affärskontakter.
1 2 3 4 5
2.5. Kontakter som jag har gjort på branschmässor eller liknande har bidragit till min förmåga att se möjligheter på en ny utländsk marknad.
International Experience – Uncertainty
3.1. Tidigare anställningar har minskat min egen osäkerhet angående en ny utländsk marknad.
1 2 3 4 5
3.2. Mitt tidigare boende utomlands har bidragit till att minska min osäkerhet om en ny utländsk marknad.
1 2 3 4 5
3.3. Utlandsresor som jag gjort i tjänsten har bidragit till att minska min osäkerhet om en ny utländsk marknad.
1 2 3 4 5
3.4. Erfarenheten av en utländsk marknad hos personer utanför företaget har bidragit till att minska min osäkerhet av denna marknad.
1 2 3 4 5
3.5. Erfarenheten av en utländsk marknad hos en anställd/kollega har bidragit till att minska min osäkerhet om denna marknad.
Business Contacts – Uncertainty
4.1. Internationella affärskontakter ökar vår kunskap och minskar osäkerheten om en ny utländsk marknad..
1 2 3 4 5
4.2. Kontakten med våra leverantörer har bidragit till att minska osäkerheten på en ny utländsk marknad.
1 2 3 4 5
4.3. Våra konkurrenters agerande har bidragit till att minska osäkerheten om en ny utländsk marknad.
1 2 3 4 5
4.4. Mina affärskontakter har bidragit till att minska osäkerheten av att etablera nya affärskontakter på en ny utländsk marknad.
1 2 3 4 5
4.5. Kontakter som jag har gjort på branschmässor eller liknande har bidragit till att minska min osäkerhet om en ny utländsk marknad.
1 2 3 4 5
Vidareutveckling!
Kommunikation är enligt Carl Johan Svaton helt avgörande för att bli framgångsrik inom sina internationella relationer. Kommunikationen till företagets kontakter benämns också vara kopplade till hur resultatet kommer att se ut. En höjning av kommunikationen ger ett högre resultat och vise versa. Kommunikation är även av betydelse när hinder påträffas på en marknad, här beskriver Carl Johan vikten av tydlighet och klarhet som direkt avgörande för ett positivt eller negativt utfall av kommunikationen. Carl Johan säger även att han uppfattar kommunikationen och tiden man tar sig för att kommunicera mellan parter ofta är den största bristen hos företag idag.
Övrigt:
