Halmstad University
School of Business and Engineering
Master of Science in International Marketing
Internationalization of French firms within the medical
technology industry
Dissertation in International Marketing, 15 ECTS 2010-05-28
Clémence Griot
Supervisor: Svante Andersson
ACKNOWLEDGEMENTS
In the first place, thanks to my supervisor, Professor Svante Andersson for his wise and helpful comments, his flexibility and his humor. I would like to thank Hélène Laurell too, for her encouragement, her help and her lovely French.
This thesis would not have been written without the support of Bibbi Johansson and Kazuki Iwanaga.
Thank you, thank you, thank you to Ann Larsson, as she is far too kind.
A huge thank you to Ulf Ivarsson, for his understanding and his encouragement.
I would like to thank my family, for their patience and for financing my never-ending studies.
Finally, thank you to my beloved gang, who supported and helped me constantly all over the year: Maryia, Yuliya, Burkhard and Henk.
ABSTRACT
Title: Internationalization of French firms within the medical technology industry.
Author: Clémence Griot Supervisor: Svante Andersson
Course: Dissertation 15 ECTS, Spring Semester 2010.
Seminar date: 2010/05/28
Key words: medical technology industry, internationalization, Small and Medium sized firms.
Purpose: The purpose of the study is to describe and explain the internationalization process of French medical technology firms.
Theory: this part is composed of four parts reviewing the traditional models of internationalization, theories about born global firms, a comparison of both models and a presentation of the French medical technology industry.
Methodology: The research has a deductive approach. A qualitative approach was selected for this thesis. The data collection was conducted through the interview of five firms.
Conclusions: French SMEs within the medical technology industry follow an internationalization pattern which cannot completely be explained by traditional internationalization models. Going abroad is not a strategy to overcome challenges inherent to the medical technology industry. Instead, it is the positive consequence of their merge with internationalized firms, or an opportunity offered by their network.
TABLE OF CONTENTS
Table of figures ... 6
Table of tables... 6
1. INTRODUCTION ... 7
1.1 Background ... 7
1.2 Problem discussion... 7
1.4 Purpose ... 8
1.5 Delimitation... 8
1.6 Disposition ... 8
2. THEORETICAL FRAMEWORK ... 9
2.1 The traditional model of internationalization of firms ... 9
2.1.1 The crucial question of knowledge ... 10
2.1.2 Psychic distance ... 10
2.2. International entrepreneurship: the born global phenomenon... 11
2.2.1 Definition ... 11
2.2.2 Characteristics of born global firms and fostering trends ... 11
2.3 Comparison between the traditional internationalization model and the international entrepreneurship model ... 15
2.3.1 Speed ... 15
2.3.2 Market choice ... 15
2.3.3 Entry mode ... 15
2.3.4 Attitude towards internationalization ... 15
2.3.5 Networks ... 16
2.4 The medical technology industry ... 16
2.4.1 The industry... 16
2.4.2 In France... 17
2.4.3 In the Rhône-Alpes region ... 19
3. METHODOLOGY... 20
3.1 Research method ... 20
3.2 Validity and reliability ... 20
3.3 Case study ... 20
3.4 Data collection... 21
3.4.1 Theory ... 21
3.4.2 Empirical findings ... 21
3.5 Analysis ... 22
4. EMPIRICAL DATA ... 23
4.1 Sotec Médical ... 23
4.1.1 The firm... 23
4.1.2 Internationalization... 23
4.1.3 Specificity of the medical technology industry... 24
4.1.4 Attitude towards internationalization ... 25
4.1.5 Networks ... 25
4.2 CL Medical... 27
4.2.1 Creation ... 27
4.2.2 Organization ... 27
4.2.3 Production ... 27
4.2.4 Market ... 27
4.2.5 Internationalization... 28
4.2.6 Regulation ... 28
4.2.7 Networks ... 28
4.3 Tornier International ... 29
4.3.1 The Firm ... 29
4.3.2 Production ... 31
4.3.3 The market... 31
4.3.4 Internationalization... 32
4.3.5 Regulation and certification ... 34
4.3.6 Networks ... 34
4.4 Biomet France ... 36
4.4.1 History... 36
4.4.2 The entrepreneurs: the symbiosis of two... 37
4.4.3 Regulation burden ... 38
4.4.4 Internationalization... 39
4.4.5 Network ... 40
4.4.6 Specificities of the industry... 41
4.5 Gambro/Hospal ... 42
4.5.1 General information ... 42
4.5.2 History... 42
4.5.3 Internationalization... 43
4.5.4 Specificities of the sector ... 43
4.5.5 Network ... 44
5. ANALYSIS... 45
5.1 Internationalization process... 47
5.1.1 Speed ... 47
5.1.2 Market choice ... 47
5.1.3 Entry mode ... 48
5.1.4 Attitude towards internationalization ... 49
5.2 Networks and Industry ... 49
5.2.1 Networks ... 49
5.2.2 Industry... 51
5.3 How do specificities of the industry influence the internationalization process? ... 52
6. CONCLUSION... 53
6.1 Conclusion and Discussion ... 53
6.2 Theoretical implications ... 54
6.3 Practical implications ... 55
6.4 Further research... 55
REFERENCES ... 56
APPENDIX ... 59
Questionnaire (French)... 59
Questionnaire (English)... 60
Table of figures
Figure 1: Actors in the medical technology industry……….. 17
Figure 2: The network of Sotec Médical………..27
Figure 3: The network of CL Médical………. 29
Figure 4: Tornier’s network………. 36
Figure 5: Network of Biomet France………... 41
Figure 6: Network of Gambro/Hospal………..44
Figure 7: Network of a medical technology firm………..51
Figure 8: Three internationalization processes……….53
Table of tables
Table 1: Comparison of firms………451. INTRODUCTION
1.1 Background
Globalization factors have enabled firms to implement a global strategy. These factors are among others technological development, lower trade barriers and standardization (Andersson and Svensson, 2009). Not only multinational enterprises (MNE) have benefited from these positive outcomes of globalization. Globalization has namely created a suitable framework for small and medium-sized enterprises (SME) to develop over the boundaries of the domestic market. Expanding abroad is a strategy more and more SMEs choose to grow.
Going abroad is however not only an option, but necessary for some firms. Globalization may create favourable conditions, it can be important for SMEs growth within certain industries.
The highly innovative sector of medical technology devices illustrates this necessity (Laurell et al, 2009).
1.2 Problem discussion
Due to an inherent complexity of the industry, medical technology firms are facing a series of challenges which push firms to expand abroad. However, these challenges are in the same time barriers to the internationalization of firms (Laurell et al, 2009).
One of the challenges is at the financial level. Medical technology firms are burdened by high costs of research and development. Developing a new product requires important investments which cannot be covered rapidly due to the complexity of the sector. Getting a product accepted on the market requires accreditations (Laurell et al, 2009). The process to get them is long and expensive, and is not ensuring the acceptation on the market (Laurell et al, 2009).
These regulations are different from one country to another. Moreover, this challenge has been enhanced by the economic crisis. It has played an important role in 2009 in the medical sector since it has postponed the purchase decision of potential buyers (Boulègue, 2009). The medical industry is in general strongly regulated. Complying with the regulation is consequently expensive and complicated.
These costs may push firms out of the domestic market boundaries, in order to find other resources, when the domestic market is not sufficient to develop anymore (Andersson and Wictor, 2003). Thus many young firms have been pushed to go abroad very early, therefore they can be called “born global firms” (Andersson and Wictor, 2003).
A further challenge is dealing with the multiplicity of actors. It results from the fact that final consumers are not the prescribers, who are usually doctors, surgeons and therapists. The purchasing decision is also often influenced by insurance companies that pay for the medical equipment. The multiplicity of actors and the complex buyer pattern enhance difficulties as it triggers additional costs and vary from one country to another (Laurell et al, 2009).
Another difficulty that small firms are encountering in the medical sector is the overwhelming presence of large firms (Boulègue, 2009). To exist both on their domestic market and on foreign markets, small firms have to differentiate. That is why many have chosen to enter or create niche markets, offering specialized products and services that large firms do not offer.
This structure is illustrated by the French industry. France has developed a large medical industry, dominated by large multinational enterprises (Boulègue, 2009). However, a large number of French SMEs are successful and can exist on the market thanks to the differentiation strategy (Boulègue, 2009).
Given the complexity of the industry and the structure of the market, many firms have chosen to expand abroad, in order to increase the turnover and cover the high investment as soon as possible. That is why the medical technology industry is highly internationalized (Boulègue, 2009). However, their internationalization process has not been studied in depth. To the knowledge of the author, no study about the internationalization about medical technology industry in France has been conducted so far. More research would be necessary in this field, as this industry is a major asset of the French economy. For this reason, the research question of this thesis is the following:
How and why do firms within the medical technology industry internationalize in France?
1.4 Purpose
The purpose of the study is to describe and explain the internationalization process of medical technology firms with a focus on France.
1.5 Delimitation
Since this study is interdisciplinary as it deals with entrepreneurship, marketing, as well as life sciences, only part of these disciplines will be explored depending on the relevance to the subject. The medical and surgical appliances sector is divided into two branches: medical and surgical equipment together with medical imagery and radiology. This thesis will not study the medical imagery and radiology branch. It will focus on medical and surgical equipment since this branch relies on a large number of internationalized small firms. The pharmaceutical industry will not be explored, except for the links it may have with firms within the medical technology industry.
This paper aims at studying the internationalization of medical technology firms in France and will not study any other market. This thesis especially focuses on the Rhône-Alpes region, due to its concentration of medical firms. Therefore, the rest of France is not studied.
However, an exception is made for one firm, located in the Loire-Atlantique region, in order to assess how important the location in the Rhône-Alpes region is.
Furthermore, only Small and Medium-sized Enterprises (SME) will be studied.
Gambro/Hospal may not be an SME, due to its large size. However, the purpose was to study its history, as it was a French SME, before being bought by the group Gambro.
1.6 Disposition
The theoretical framework is divided in four sections dedicated to the presentation of the traditional internationalization model, a presentation of the theories about born global firms, a comparison between both models, and finally a presentation of the industry in France. Then a part is presenting the method of the thesis, followed by the empirical findings. Then the analysis part is connecting the theories and the empirical findings. The last part presents the conclusion, discussion, theoretical and practical implications as well as recommendations for future research.
2. THEORETICAL FRAMEWORK
The internationalization of firms has been an object of numerous studies, which have attempted to describe the process followed by firms as they go abroad (Laurell, Achtenhagen, Andersson, 2009). Research has traditionally focused on the internationalization of large firms on one hand and on entrepreneurship occurring in small and medium enterprises (SMEs) on the other hand, thus leading to a gap in the theory regarding the internationalization of SMEs (Laurell et al, 2009). This gap has been addressed as the emergence of the phenomenon of born global firms has challenged traditional theories about the internationalization of firms, like the Uppsala model developed by Johanson and Vahlne (Andersson and Wictor, 2003).
This model describes the incremental pattern firms follow to expand abroad (Johanson and Vahlne, 1977, 1990). Born global firms are new ventures which expand abroad right from their creation or within a limited period after their creation (Madsen and Servais, 1997). Over the past few years, many studies have provided deeper understanding of the phenomenon of early internationalization and the advantages it brings to SMEs (Madsen and Servais, 1997).
The research on born global firms has shown that several trends have eased their emergence, like globalization, technological progress, the emergence of niche markets (Andersson and Wictor, 2003).
Research has also highlighted the paramount importance of the role of the entrepreneur and their networks in born global firms (Andersson and Wictor, 2003). Alongside these two influences, two other factors impact on the emergence of born global firms: the industry in which the new venture is operating and globalization (Andersson and Wictor, 2003). The medical technology sector has been a suitable framework for the appearance of born global firms, which entitle SMEs to challenge the characteristics of the sector (Laurell, Achtenhagen, Andersson, 2009).
2.1 The traditional model of internationalization of firms
Studies within the field of international business have described the internationalization of a firm as a process which gradually increases the commitment into foreign countries and international markets (Johanson and Vahlne, 1977). The Uppsala model developed by Johanson and Vahlne (1977, 1990) shows this progressive process of internationalization of firms, which is seen as an amount of decisions to go abroad step by step, from the decision to export to the decision to settle a subsidiary. Consequently, the internationalization is not the result of a strategy sharing out firm’s resources in different countries in order to reach an optimum (Johanson and Vahlne, 1977). On the contrary, internationalization is the result of “a process of incremental adjustments to changing conditions of the firm and its environment”
(Johanson and Vahlne, 1977). The progressive characteristic of the process is due to the lack of information about foreign markets and the difficulty to get the information (Johanson and Vahlne, 1977). The ensuing consequence is uncertainty regarding foreign markets, which pushes firms to be cautious and increase their involvement in international activities on foreign markets at a slow pace (Hörnell, Vahlne and Wiedersheim-Paul, 1973, Johanson, 1970). The lack of information deals with differences in language, culture, political systems, education, industrial development (Johanson and Wiedersheim-Paul, 1975).
2.1.1 The crucial question of knowledge
The knowledge about foreign market and operations is of paramount importance. The knowledge that firms need to commit resources in a foreign market is of two kinds: the
“objective knowledge” and the “experiential knowledge” (Johanson and Vahlne, 1977). The objective knowledge can be learned by the firm without committing resources on the market, whereas the experiential knowledge can be gained only through experience, as they intensify gradually their operations on the foreign market (Johanson and Vahlne, 1977). Experiential knowledge is inseparable of the individual and cannot be passed on (Johanson and Vahlne, 1977). This difference in the kind of knowledge a firm needs to move to a foreign market impacts on the opportunities on this new market (Johanson and Vahlne, 1977). Indeed, objective knowledge of the market can make opportunities emerge; this opportunity will however remain theoretical, unlike opportunities detected by experiential knowledge (Johanson and Vahlne, 1977). Knowledge can be seen as part of the human resources, as a result of which the more a firm has market knowledge, especially experiential knowledge, at its disposal, the better are the resources (Johanson and Vahlne, 1977). Thus, a firm can increase its resources on the foreign market (Johanson and Vahlne, 1977). Experiential knowledge can be acquired through the following three operations, which must be combined:
current activities of the firm, employment of experienced people and counseling by experienced people (Johanson and Vahlne, 1977). Since experience is of two kinds, the firm experience and the market experience, which is not possible to buy, acquiring knowledge is a complicated and long operation, which accounts for the slow pace of the internationalization of firms (Johanson and Vahlne, 1977, 2003). The slow and incremental process of internationalization of a firm goes through the operations from occasional exports to the settlement of a manufacturing subsidiary on a particular foreign market (Johanson and Wiedersheim-Paul, 1975).
2.1.2 Psychic distance
The Uppsala model was developed from two empirical observations of the internationalization of firms regarding the foreign market entry and foreign market expansion (Hörnell et al, 1973, Johanson and Wiedersheim-Paul, 1975). These observations were that when it comes to expand abroad, a firm first chooses to go to a country which market is similar to the domestic market (Johanson and Vahlne, 2003). There is a “psychic distance”
between markets, and firms go to the markets where the psychic distance is the smallest (Johanson and Vahlne, 2003). The psychic distance measures cultural distances to countries and markets (Hörnell, Vahlne and Wiedersheim-Paul, 1973). It explains why Swedish firms first expand to Scandinavian countries, then to Germany, the United Kingdom, the Netherlands, and finally to other countries which have similar levels of development (Johanson and Vahlne, 1990). However, the notion of psychic distance between nations has been nuanced by the authors of the Uppsala model, as they state that psychic distance is be linked to organizations and individuals, instead of nations (Johanson and Vahlne, 2003).
The Uppsala model has been subject to critics, and other models of internationalization have been developed (Oviatt and McDougall, 1994). Indeed, studies have described how certain entrepreneurs decide to expand internationally from the creation of the firm or briefly after, challenging the incremental pattern of internationalization provided by the Uppsala model (Laurell, Achtenhagen, Andersson, 2009). However, the Uppsala model should not be
completely rejected, since several characteristics are still to be found in the born global phenomenon (Madsen and Servais, 1997).
2.2. International entrepreneurship: the born global phenomenon
2.2.1 Definition
More and more small and medium-sized companies (SMEs), called born global firms, have managed early internationalization, being successfully in competition with large firms already set up in the global market (Madsen and Servais, 1997, Rennie, 1993). These firms start to sell abroad directly from their creation or briefly after (Andersson and Svensson, 2009). A born global is a firm which sell at least 25% in volume of its production abroad within three years of its creation and attempts to reach competitive advantage as they use resources and sell their production in numerous countries (Andersson and Wictor, 2003, Oviatt and McDougall, 1994). There are several advantages provided by a strategy of early internationalization: it can provide a first mover advantage, it entitles firms to boost their turnover, and early internationalization can foster the emergence of a company culture which helps to distinguish which knowledge can be converted into competitive advantage (Andersson and Wictor, 2003).
2.2.2 Characteristics of born global firms and fostering trends
- the framework of Globalization
Andersson and Wictor (2003) have shown that globalization has positively participated in the rise of born global firms, together with the industry, networks, and the entrepreneur.
Globalization tendencies have created positive conditions for born global firms to emerge, within the development of technology in communication and transports (Levitt, 1983). The development of communication and technology has been highlighted by Knight and Cavusgil (1996) as facilitating factors of the emergence of born global firms. Globalization and its technological development have made communication easier with partners all over the world, entitling firms to be present everywhere in the world without necessarily settling a subsidiary in other countries (Andersson and Wictor, 2003).
The globalization of marketing demand and of marketing strategy together with reduced trade barriers has fostered a positive framework for born global firms to develop (Levitt, 1983). The internationalization of networks has eased the emergence of born global firms (Knight and Cavusgil, 1996).
Despite globalization and its positive developments, differences in languages and cultures remain. Therefore, using nations as a segmentation variable is still relevant (Andersson and Svensson, 2009). Nevertheless, born global firms manage these differences, and it does not prevent them from entering foreign markets (Andersson and Svensson, 2009). These remaining differences tend to prove that globalization on its own cannot explain the emergence of born global firms (Andersson and Svensson, 2009). Globalization offers tremendous opportunities to firms; however, the intervention of individuals sensitive to these
opportunities is necessary, there must be someone to seize the opportunity (Andersson, 2000).
That is the role of the born global entrepreneur (Andersson, 2000).
- The role of the entrepreneur
All studies on international entrepreneurship agree on the role played by entrepreneurs (Knight and Cavusgil 96, Madsen and Servais 97, McDougall et al 94).
One of the characteristics of born global firms is the vision of the entrepreneur, who does not make distinction between foreign markets and the domestic market: the entrepreneur sees the world as a market directly at the creation of the firm (Rennie, 1993). Oviatt and McDougall (1994) also found that the vision of the world as a single market place is the most important feature of the entrepreneur in a born global firm. The entrepreneur has been found by Andersson and Wictor (2003) as being one of the four influences of the born global phenomenon, alongside the network, globalization, and the industry.
Madsen and Servais (1997) show that the characteristics of the entrepreneur of a born global firm and the diverging market conditions explain why some firms do not follow the pattern of expansion as the “rings of water” described by the Uppsala model. Firstly, the basic assumptions found by the Uppsala model are to be found in born global firms as well: they are seeking to growth and long term benefits, and trying to reduce the risk to the minimum level at the same time (Madsen and Servais, 1997). Madsen and Servais (1997) show that the vision and the attitude of the entrepreneur is a key to explain early internationalization, since entrepreneurs of born global firms together with their employees benefit from a previous international experience prior to the creation of the born global. Consequently, they perceive international markets as being a lesser source of uncertainty (Madsen and Servais, 1997).
Moreover, it has been found that the entrepreneur of a born global firm has knowledge of the industry acquired thanks to years of experience in this particular industry (Madsen and Servais 1997). To sum up, experience at an international level and experience in the industry fosters an international vision of the entrepreneur in a born global firm (Madsen and Servais, 1997). These findings are similar to the ones of Bloodgood et al (1996), who found a strong correlation between work experience at an international level among the top management and the internationalization of new ventures in a study in the United States.
However, the importance of the knowledge gained through lifelong experience can be nuanced by the age of born global entrepreneurs. Indeed, an old entrepreneur brings his network built during his/her career and his/her lifelong experience whereas entrepreneurs of the young generation who grew up in the era of globalization brings international experience gained through travels and studies abroad (Andersson et al, 2004). That is the reason why many young entrepreneurs can be found in born global firms, since they are able to seize opportunities on foreign markets thanks to their experience (Andersson et al, 2004).
Born global entrepreneurs are therefore motivated to do trade abroad thanks to their strong international experience they acquired through the combination at an international level of studies, travels, previous work experience and the informal networks they created (Andersson and Svensson, 2009).
International experience is the key characteristic that makes the difference between born global entrepreneurs and regular entrepreneurs (Andersson and Svensson, 2009). Born global entrepreneurs may face the same opportunities on foreign markets as regular entrepreneurs,
but the difference is that born global entrepreneurs seize the opportunity, since they have a friendly attitude to international activities. This attitude was called Global Mindset by Nummela et al (2004). At the creation of their firm, born global entrepreneurs do not elaborate strategies according to traditional strategy models, like the one of Porter (1980), instead they see the industry in which they trade and its environment differently and try to modify this environment (Andersson and Svensson, 2009).
It is hard to classify born global entrepreneurs, since the backgrounds and characteristics of born global entrepreneurs are not the key factors in international entrepreneurship; the global vision is rather the key to success, since it is necessary to convince key partners like customers, financers, associates, etc (Andersson and Svensson, 2009). Born global entrepreneurs have this in common with “regular” entrepreneurs that where “others see problems, they see challenges and opportunities” (Andersson and Svensson, 2009).
Andersson (2000) has made the distinction between technical entrepreneurs and marketing entrepreneurs, showing that marketing entrepreneurs initiate more internationalization than technical entrepreneurs who are rather technology development oriented and do not focus on international marketing tasks.
Networks at several levels are keys to explain international entrepreneurship and are one of the influences found by Andersson and Wictor (2003).
- Networks
Numerous studies have highlighted the role of international networks in the firm’s internationalization (Laurell et al, 2009). New ventures depend on a dense network of contacts like customers, suppliers and financiers (Oviatt and McDougall, 1995). Studies have underlined that several levels of networks are of importance: social and business levels (Johannisson and Mönsted, 1997), formal and informal levels (Knight and Cavusgil, 1996), at international and local levels (Johannisson, 1994), international, national, regional or personal (Laurell et al, 2009). Networks are crucial resources at the creation and for the development of a born global firm (Andersson and Svensson, 2009). Born global firms need new networks at the firm level in order to develop their business idea (Andersson and Svensson, 2009).
These new networks are created through personal networks (Andersson and Svesson, 2009).
Born global entrepreneurs use networks to implement their strategy; they use them as a tool (Andersson and Svensson, 2009). For example, in the medical technology industry, academic and research networks are used to diffuse information regarding the devices manufactured by firms (Andersson and Svensson, 2009). A network is not only a way to get resources but also a resource itself (Coviello and Cox, 2006).
The importance of the local network is highlighted by the findings of Porter (1990). He maintained that a firm can derive a competitive advantage from the presence in its home country of international buyers, suppliers, and related industries. These actors foster a favourable environment for change and improvement, and they turn to partners to the firm for the innovation process (Porter, 1990). Porter (1990): “Having a strong cluster at home unblocks the flows of information and allows a deeper and more open contact than is possible when dealing with foreign firms. Being part of a cluster localized in a small geographic area is even more valuable”. Moreover, Porter (1980) states that a firm should settle its headquarters at the same place where important buyers, suppliers, competitors, or “especially significant factor creating mechanisms for its industry such as universities with specialized programs or laboratories with expertise in important technologies” are concentrated. Being geographically closed tightens and improves the relationships within a cluster (Porter, 1990). Together with the environment in which the entrepreneur works, the location of the firm in a given country
or even in a region within a country influences the firm’s potential to come up with breakthrough innovations (Porter, 1990). Porter’s diamond (1990) impacts on “which nation (and even on which region within that nation) will be the source of an innovation”.
- Industry and markets
Despite born global firms operate in various industries, some industries offer characteristics that foster internationalization (Andersson and Svensson, 2009). It can even be more relevant to classify firms according to their industry than according to nationality when it comes to understand the firm’s international behaviour (Boter and Holmqist, 1996). It is relevant to understand the industry in which the born global firm operates, it is however more relevant to observe the industry of suppliers and customers as well (Andersson and Svensson, 2009). If the industry of partners is internationalized, then the born global firm is more likely to consider more the option of entering foreign markets (Andersson, 2000).
Industry specific features should not overlap national specificities in certain industries (Andersson and Svensson, 2009). For example, the medical technology industry is heavily influenced by laws and rules, which differ from nation to nation (Laurell et al, 2009). Firms must be aware of specific regulations on every foreign market and have to adjust to them (Laurell et al, 2009).
The research has found common characteristics regarding the markets on which born global firms operate. According to Madsen and Servais (1997), the scope of the born global trend is positively correlated to the level of internationalization of the market, which means that the more a market is internationalized, the more born global firms may be found in this market.
Madsen and Servais (1997) have also suggested that born global firms are operating on niche markets and are thus rather specialised firms, manufacturing products that “are either more custom made or more standardised”. This latter trend has been emphasized by Knight and Cavusgil (1996), who have found that the rising importance of niche markets have fostered the emergence of born global firms. Niche markets are a solution for born global firms that work within mature industries (Andersson and Svensson, 2009). Niche markets enable born global firms to be leaders in one part of the industry (Andersson and Svensson, 2009). In growing industries, like the medical technology industry, internationalization is a common strategy (Andersson and Svensson, 2009). Consequently, a born global firm can be found in a niche market within a mature industry or in a growing industry (Andersson and Svensson, 2009). However, in both cases, it has been found that the born global entrepreneurs do not use the industry to define their firm, since being in a niche market differentiates them from the mature industry and being in a growing industry implies that the structure of the industry is not developed, and cannot, as a result, be used to define the firm (Andersson and Svensson, 2009).
Madsen and Servais (1997) have also highlighted that born global firms have a stronger tendency to be located in small home markets than in large markets, unless they are operating in the high technology industry. Likewise, born global firms are likelier to be found on a home market located in a country home to numerous immigrants (Madsen and Servais, 1997).
The location of the markets on which born global firms operate are strongly related to the experience of creators and associates (Madsen and Servais, 1997). The choice of markets may also be influenced by the location of outer partners, like customers in the case of trading firms, service firms or outsourcing firms (Madsen and Servais, 1997).
2.3 Comparison between the traditional internationalization model and the international entrepreneurship model
In this part, a comparison between the traditional internationalization model and theories about born global firms was made, based on five internationalization process dimensions:
speed, market choice, entry mode, attitude towards internationalization and networks.
2.3.1 Speed
According to the traditional model of internationalization of firms as the Uppsala model (Johanson and Vahlne, 1977) firms follow a slow pattern to go abroad, whereas theories about the phenomenon of born global firms describe how fast those firms expand abroad: within the three years after their inception (Andersson and Wictor, 2003).
2.3.2 Market choice
The Uppsala model (Johanson and Vahlne, 1977) showed through the psychic distance theory that firms first enter markets which are close and similar to their home market. As firms gain knowledge and experience on close markets, they increase the psychic distance and enter markets more and more culturally different from their home market. On the contrary, born global firms develop within the framework of globalization, which has eased communication (Andersson and Wictor, 2003).
2.3.3 Entry mode
The Uppsala model describes the way firms internationalize from sporadic export activities with independent representatives to the settlement of a subsidiary in the very long run (Johanson and Vahlne, 1977). On the contrary, due to their development within the framework of globalization and its communication and transport technology, born global firms do not necessarily have to settle a subsidiary abroad; they can manage from the headquarters without facilities on the foreign market.
2.3.4 Attitude towards internationalization
Internationalization process is slow due to uncertainty created by the lack of knowledge and experience of foreign markets, which prevents firms from entering new markets according to the Uppsala model (Johanson and Vahlne, 1977). This model has been criticized for excluding the role of individuals. This differs from the born global firms, which are created and run by entrepreneurs who are the key in the development of the firm (Andersson and Wictor, 2003).
Those entrepreneurs have positive attitude towards internationalization as they see the world as the market place, without distinction between the home market and foreign markets (Rennie, 1993). The difference between born global entrepreneurs and the others can be explained by the international experience of born global entrepreneurs (Andersson et al, 2004).
2.3.5 Networks
Sharma and Blomstermo (2003) state that the internationalization process for born global deals with the learning through networks. They maintain that it is crucial to make early contacts with internationalized firms on the domestic market or contacts abroad. Otherwise it is then more difficult to change mentalities and processes within a firm in order to conduct activities abroad (Sharma and Blomstermo, 2003). These contacts within an internationalized firm or abroad may influence to firm to the extent that they can push new ventures to start activities abroad as they are “client followers” (Sharma and Blomstermo, 2003). Firms can learn from their links within internationalized firms and thus gain knowledge (Sharma and Blomstermo, 2003).
However, as Andersson and Wictor (2003) warn, it is crucial to take into account the various contexts so that the definition fits, and thus makes the research relevant to its environment.
For this reason, it is now important for the relevance of the paper to study the medical technology industry in France and in the Rhône-Alpes region.
2.4 The medical technology industry
2.4.1 The industryThe medical technology industry is due to its complexity and specificities interesting to study (Laurell et al, 2009).
- Complex buying pattern:
One of the specificities is the fact that the end consumer is not the buyer and the buying pattern is complex, since the purchase decision is made by several actors, like the medical staff and insurance companies sometimes, which are also the payers (Laurell et al, 2009).
Medical technology firms are consequently facing many actors, since end-consumers, buyers and prescribers are different people (Sidén, 2003). Moreover, intermediaries of two kinds are involved: financial intermediaries like insurance companies and product intermediaries like pharmacies, wholesalers, group purchasing organizations (Laurell et al, 2009).
Figure 1: Actors in the medical technology industry
Payers Financial Providers Product Producers Intermediaries intermediaries
Source: Stremersch and Van Dyck (2009)
Government Patients Employers
Insurers
Health maintenance organizations
Hospitals Physicians
Integrated delivery networks
Pharmacies Wholesalers
Group purchasing organizations
The life sciences industry and its boundary industries
- high product development costs push firms to expand abroad
Developing a product within the medical technology industry requires strong financial commitment as firms have to invest large amounts of money in research and development (Laurell et al, 2009). In order to amortize these costs and to find resources, firms have to rapidly expand abroad to reach a sufficient turnover to survive, and this is especially the case of firms located on small home markets (Laurell et al, 2009). This expansion is however hard to implement, since it creates new costs and hinders to internationalization are numerous (Laurell et al, 2009). One of the strongest barriers to internationalization is another specificity of the medical technology industry: the regulation which differs from a country to another (Laurell et al, 2009). Firms must meet the local regulations and must have the necessary accreditations to be authorized to sell on the local market. Another barrier to internationalization is due to the specific healthcare systems which are different in all countries, some are more relying on health insurance funding and others rely on taxes (Laurell et al, 2009). Finding a suitable partner was identified by Bradley, Chakrabarti and Palihawadana (2006) as being one of the strongest barriers to internationalization for SMEs within the healthcare technology industry.
Consequently, medical technology firms are facing a challenge: going abroad is necessary to find resources to cover high costs, however there are a lot of barriers on the way (Laurell et al, 2009).
- regulatory burden
Medical products are strongly regulated (Laurell et al, 2009). Clinical trials and accreditation processes are long-lasting and expensive (Laurell et al, 2009). Materials used during the production and production processes must be documented (Sidén, 2003). In order to get the product accepted on the market and prove the quality, firms have to be granted the CE accreditation or the American FDA accreditation (Food and Drug Administration) to be able to sell on the US market (Laurell et al, 2009). Getting these accreditations is a long and expensive process, during which firms cannot sell their products and thus cannot cover the investment made to develop the product.
Three elements are essential when it comes to get a product well-accepted on the market: the clinical acceptance, the reimbursement and the cost efficiency (SwedenBio et al, 2005). In addition to the CE accreditation, customers may want to check by themselves the reliability of the product and conduct thus clinical trials, which is all the more complicated for small and young firms, which have not yet built their brand (Laurell et al, 2009). When hospitals and clinics make the purchase decision, they are likely to consider the potential reimbursement by health insurance, which means that they may refuse to buy a product if there is no reimbursement by insurances (Laurell et al, 2009). Medical technology products are not only required to be medically efficient, but also cost efficient.
2.4.2 In France
The medical and surgical equipment and appliances industry is composed of two branches:
the medical and surgical equipment branch, and the medical imagery and radiology branch.
In France, the medical and surgical equipment and appliances industry was composed of 263 firms and employed around 25 500 persons in 2007 (Boulègue, 2009). The medical and surgical equipment branch accounts for 73% of the industry turnover. Among the 263 firms
are 255 firms producing in the branch of medical and surgical equipment, employing 22 482 people. The medical imagery and radiology branch is highly concentrated, since there are 8 firms operating in this branch, employing 3012 persons.
The French market is dominated by foreign firms, and notably North American firms operating in the medico-surgical technology area (Medtronic, Stryker), in the healthcare industry (Abbott, Johnson and Johnson) or even in the electrical and electronics industry (Covidien, General Electric). Firms owned by foreign investors account for 80% of exports and two thirds of the turnover. German firms are also present on the French market (Siemens, Paul Hartmann, Fresenius). The leaders are Philips France, General Electric Medical Systems, Siemens, Abbot France, Baxter. All in all, 75% of the sector turnover is created by foreign- owned firms and 80% of the exports are also done by foreign-owned firms (Boulègue, 2009).
- A market with growth perspectives
In spite of restricting refund policies by the government, the medical care consumption keeps presenting growth perspectives and the industry will maintain high level of activity in 2010, according to economic forecasts (Boulègue, 2009). The demand for medical equipment and technology is increasing in France. This increasing demand is supported by increasing health expenses financed by the state, a greater awareness of health matters, an aging population, a better offer due to technological progress (Boulègue, 2009). All these factors support long- lasting growth perspectives.
- Dependent upon public healthcare policies
Medical technology firms’ customers are health institutes (hospitals, clinics, retirement homes, etc). Consequently, these firms are strongly dependent on public health policy measures, like the new schemes and plans “SROS 3” or “year 2012 Hospital Plan”, for which the French state invested 10 billion euro over the period 2008/2012 (Boulègue, 2009). These plans offer new perspectives for growth on the French market. This may be balanced by the new reduction cost policy, which aims at reducing healthcare expenses. This slow-down concerns both heavy equipment and individual appliances like prostheses, catheters, dressing, etc (Boulègue, 2009).
- Focused on innovation and service
In order to benefit of the growth opportunities on the French market, firms must focus on innovation, which can be reached through investments in Research and Development, renewals of their products, differentiation of their product range (Boulègue, 2009). Both for producers and distributors, breakthrough innovations are the key to succeed, together with developing services and customer relationships, through networks, sales force, after-sales service, training sessions, etc (Boulègue, 2009).
- Specialized small and medium sized firms alongside large globalizing firms
The French market is dominated by large firms, which are currently globalizing their offer, as they implement an external growth strategy through acquisitions of strategic resources and capacities in order to widen their offer (Boulègue, 2009). Alongside these large firms, there is a great number of SMEs which are able to survive and succeed on the French market thanks
to a hyper-specialization and a precise focus on niche markets, in order to avoid a direct competition with large firms (Boulègue, 2009). French SMEs are constantly improving their structure and are now able to offer high quality breakthrough products, thanks to an environment which is favorable to innovations and to a cluster effect linked to competitiveness poles (Boulègue, 2009).
2.4.3 In the Rhône-Alpes region
The Rhône-Alpes region has a focus on the health industry through competitiveness pole (Chambre du commerce et de l’Industrie du Rhône-Alpes, CCI Rhône-Alpes). Several large firms within the pharmaceutical industry (like Sanofi Pasteur, BioMérieux), the biotechnology applied to the health sector (Genzyme) are located in the region. In addition to these large firms, there is an intense cluster of SME operating in these industries.
Avenel et al (2005) analyzed the determinants of growth for French firms within medical biotechnology industry during two periods: from 1996 to 1999 and from 1999 to 2002.
Several regions were analyzed; among them was the region of Rhône-Alpes. They found that the location of medical biotechnology firms in France had an impact on the firm growth.
More precisely, it was pointed out by them that for the period from 1996 to 1999, being located in the Rhône-Alpes region (especially in the clusters of firms located in Lyon and in Grenoble, two major cities in the region) had a more favorable impact on growth than being located in another region in France. The Rhône-Alpes region gathers 55 firms working in the biotechnologies applied to the health sector (CCI Rhône-Alpes). The research pole in Lyon is home to 800 researchers working for 100 labs and 18 000 students within the health sciences (CCI Rhône-Alpes).
Thus, the region of Rhône-Alpes gathers research, universities, labs, and firms within the health sector. Audretsch and Feldman (2003) maintained that biotechnology firms were forming alliances in order to find new resources, even if this strategy is not the most efficient in the long term. Consequently, these authors claim that medical biotechnology firms should follow an internal growth strategy, with a vertical integration of the various production steps.
Zeller (2001) maintains that medical biotechnology firms are willing to form alliances with international pharmaceutical firms. This was also studied by Niosi (2003), who showed that alliances within the biotechnology industry are only one of the elements to explain the expansion of biotechnology firms and these alliances can be of several kinds, since they can be with firms, with universities, with pharmaceutical larger firms, etc.
Audretsch and Stephan (1996) studied the question of the presence of firms and scientists in the same area, whether this collocation incites firms to create contact with local scientists. The results show that the answer depends on the role played by scientists within the firm. If knowledge transfers are crucial in the relation, especially when scientists were involved in the creation of the firm, the network is all the more likely to be local.
3. METHODOLOGY
In this part, the choice of a deductive approach and a qualitative method with a case study is explained.
3.1 Research method
Jacobsen (2002) states that the conduct of scientific research is of two kinds: the quantitative approach and the qualitative approach. The relevance of one of the two approaches depends upon the research question and the purpose of the study. Selecting a quantitative approach is relevant when the purpose of the study is to emphasize the scope and the frequency of a phenomenon. Whereas selecting a qualitative approach is more relevant when the purpose of the study is to gain deeper knowledge about a phenomenon. As stated in the introduction, the purpose of the present study is to get a deeper knowledge of the internationalization process of French firms within the medical technology industry. As a result of which the selection of a qualitative study is more relevant.
Jacobsen (2002) distinguishes two kinds of data collection methods: the inductive method and the deductive method. Opting for a deductive method amounts to collecting theoretical data in a first place and then linking these theoretical data to an observable phenomenon in reality in order to draw conclusions. On the contrary, the inductive method is the opposite process. The inductive method aims at collecting first empirical data without precise expectations and second link these data to relevant theoretical data. To sum up, as Jacobsen (2000) maintains, the deductive method is an approach from theory to empiric whereas the inductive method is an approach from empiric to theory. Considering that this study is based on the theory related to the international process and that the purpose of the study is to test how applicable the theory is within the medical technology industry in France, selecting a deductive approach is more relevant.
3.2 Validity and reliability
Jacobsen (2002) maintained that empirical findings must fulfil two requirements: validity and reliability. Despite the impossibility to make a statistical generalization of this paper’s findings as it is based on the study of five firms, the author tried to guarantee the validity and reliability of the findings as using primary and secondary data. Furthermore, interviewees were selected for their ability to relate and discuss the firm’s strategy, history and vision.
They are experts in the field of this research and have been part of the firm for long time.
They hold key positions in the firm regarding international activities. Therefore, the data collected during interviews is valid and reliable.
3.3 Case study
A case study was thought more appropriate to the paper. As the purpose of the thesis it to explain and describe the internationalization process and to enhance the important components of it, conducting a case study with interviews was the most suitable option.
3.4 Data collection
3.4.1 TheoryA theoretical part was devoted to the study of the traditional internationalization model (Uppsala model), then the phenomenon of born global firms was studied. Then a comparison between both theories was made, based on internationalization process components. Since the internationalization process cannot be understood if the context and the environment in which it occurs is not taken into account (Andersson and Wictor, 2003), the medical technology industry was described. The selection of articles was made through the database of Halmstad University library Samsök. Google Scholar was used to find the articles mentioned in other articles.
3.4.2 Empirical findings
To collect empirical data, a mix of qualitative methods was used. Face to face and phone interviews were conducted and many articles from the websites of economic French Journals were retrieved. Firms’ institutional websites were also browsed. This triangulate approach was meant to provide different types of information about firms.
3.4.2.1 Selection of firms
The selection was done according to the location and the size of the firm. Given the importance of the network in the industry (Andersson and Wictor, 2003), it was seen as relevant to choose an area in France where healthcare industry is concentrated, in order to understand the role of the network in this particular industry. Lyon and the Rhône-Alpes region in general are concentrating many firms operating within this industry (CCI rhône- Alpes). However, comparing with another region which does not present the same focus on healthcare industry was necessary, in order to assess how important this concentration of firms, or this potential network, is.
Thus, four firms were selected in the Rhône-Alpes region: one in Valence (Biomet France), one in Grenoble (Tornier International), and two in Lyon (Gambro France and CL Médical).
Another firm (Sotec Médical) was selected and is located in Nantes, on the Atlantic coast.
Regarding the size, the five firms are SMEs. One is a very young firm (CL Médical) and was chosen it was deducted from the information gathered before the interview that it is a born global firm. Tornier, Biomet France and Gambro/Hospal were selected on the base of their history, as they were created many years ago and are well established on the market. This was meant to observe the internationalization process history. Furthermore, contacts within these firms were suitable to answer the questions of the study. The choice of Gambro/Hospal, despite its large size, is justified by the purpose. The aim was to study this firm when it was a French SME, before being bought the group Gambro.
3.4.2.2 Interviews
- Phone interview of Claudia Abbondanti, sales manager of Sotec Medical, Nantes (France), 2010-03-12.
- Face to face interview of Maëlle Gresset, Business Analyst for Tornier International, Saint Ismier (France) - 2010-04-02.
- Face to face interview of the marketing and sales manager of CL Médical, Sainte-Foy-lès- Lyon, 2010-04-02
- Face to face interview of Mounir Alaoui, Strategic Accounts Manager, and Christian Calleja, Maintenance Manager for Biomet France, Valence (France), 2010-04-07.
- Face to face interview of Brice Roquet, communication manager for Gambro/Hospal, Meyzieu (France), 2010-04-06.
Face to face interviews took place at the work place. The interview at Biomet France was interrupted, as Mounir Alaoui had to leave for a meeting. The CEO came to greet. At the end of the interview, a guided tour through the firm was made by Christian Calleja, to show the production workshops, the R&D department, the logistic department, and their latest innovations.
The interviews were open, as interviewees were free to elaborate on certain components of their strategy, without being influenced by the questions order (Windell, 2006). As the aim of the interview was to understand what components of their environment, their strategy and their firm were important to explain the firm internationalization process, it was important not to guide the respondents too much 8Windell, 2006). The questionnaire was meant to make sure that all themes would be discussed.
The themes which were broached are the following: creation of the firm, internationalization process, the activities abroad, the entrepreneur: his vision and his motivation, the networks the firm relies on: what kind of network, at what levels, to what extent they contribute to the firm, the entrepreneur and the networks, what are the specificities of the sector, what are the difficulties they encountered at different stages, how their development occurred. The interviews of firms located in the Rhône-Alpes region were face to face, whereas the firm located in Nantes was interviewed by phone. The face to face interviews were conducted in French and were recorded on a Dictaphone. This recording of interviews made it possible to save respondents’ time and to focus on the interview instead of focusing on the note-taking (Windell, 2006). However, this implies a risk. Interviewed employees may feel like being extremely careful with their statements as they are recorded, as one explicitly asked not to be posted on the web and another asked for anonymity (Windell, 2009). Thus, interviews were recorded and then transcribed.
Phone interviews are not optimal, as they tire interviewees and interviewers. Due to the geographical distance, it appeared as the unique solution. However, considering that the selection of this firm (Sotec Médical) was meant to compare its use of networks with firms located in the Rhône-Alpes region, conducting a face to face interview was not as crucial as for the other firms.
3.5 Analysis
The data analysis was proceeded through the research of a common pattern to firms internationalization process on the basis of internationalization process components: speed, entry mode, market choice, attitude towards internationalization and networks. This was meant to find common features and differences. Based on this pattern, it was then easier to conduct analysis. In order to conduct analysis, empirical findings were clustered into major topics that were relevant to the study, and then compared to the theory.
4. EMPIRICAL DATA
In this part, empirical data are presented, according to the material collected during interviews.
Sotec Médical
CL Médical
Tornier International
Biomet France
Gambro France
4.1 Sotec Médical
4.1.1 The firm
The firm was created 25 years ago as a family company within the metal industry. It was sold about ten years later to an entrepreneur, who sold it again about 5 years later to another entrepreneur.
Sotec Medical produces medical beds. It can produce up to 30 000 beds a year. 65 people are employed, 6 work for the sales department, 15 for the administrative department, the direction and the quality department, and 44 people work for the production department. Claudia Abbondanti, who was interviewed, is the sales manager. The production unit occupies 10 000m².
Claudia Abbondanti positioned the firm as being the leader in the medical beds market in France.
Their customers are healthcare establishments (hospitals, retirement homes) and private customers, who they offer a range of homecare equipment.
4.1.2 Internationalization
Many years ago, there was an attempt to go abroad “by accident”. A large English customer contacted them to purchase medical beds. Claudia Abbondanti characterized this attempt as a
“stroke of luck” and as an “accident”. The potential was not exploited. They did not foster the customer’s loyalty by a marketing policy. As a result of which they lost the customer, who turned to Chinese competitors. This experience can be seen as a pre-internationalization.
Except for this international experience, there were only sporadic exports to other European customers, which were contacting Sotec directly. There was absolutely no willingness from the company to export; they were just answering punctual demands.
There was no strategic internationalization.
A conjectural reason has incited medical technology firms in France to expand abroad. A law passed in 2009 has modified the way clinics finance the medical beds. Because of this new law, the French market has been more risked since it has triggered a decrease in the demand.
French firms in the medical technology industry were consequently not forced to expand abroad to survive, but had better find other markets in order to decrease the risk, allocating their resources on several markets, instead of depending on a single risked market.
A sale manager was hired to start a strategic internationalization. The reason of his hiring was his skills in English: “he was hired because he spoke English” (Claudia Abbondanti).
However, the experience did not work, because of his lack of experience in the sector. In September 2009, Claudia Abbondanti was hired to replace him. Her mission is to create and implement an offensive international strategy. Her background is crucial to understand her hiring. She is American, her mother is Italian, and she grew up in the US. She is multilingual, as she can perfectly speak English, French, Italian, Spanish and another language. She worked both in the US and in France for American and French firms within the medical technology sector. She was manager in several firms. Her educational background matters as well, since she completed a Master of Business Administration (MBA) and focused during her studies on the medical technology industry. She explained that this focus was found by coincidence, there was no prior interest in this industry, and she added that she could have worked “in the perfumery industry or any other industry”.
Basically, she was hired for her experience and knowledge of the industry, for her international experience and her language skills.
Today, they have international activities in Australia, the Emirates, Canada, England, Ireland, Belgium, Switzerland, Germany, Spain, Portugal and Lithuania.
Before September 2009: simple export activities answering spontaneous demands issued directly by foreign customers.
Since September 2009: international sales, including sales, prospection, follow-up, seek to customers’ loyalty through marketing planning. This new marketing planning includes a price policy adapted to the international market instead of a single price policy for both the French market and international activities. The new marketing planning also includes documentation regarding Sotec Medical in English, instead of French. One of the tools used by sales representatives is to contact again foreign customers who had previously asked Sotec for products.
Since September 2009, Sotec Medical has been in the developing phase of its international activities.
For the moment, Sotec is looking for exclusive distributors. They don’t want several distributors to operate on the same market, in order to avoid internal competition between distributors. Sotec Medical uses the American concept of “multi card agents”, who act as interfaces between the firm and distributors. They have contracts and get commissions related to the customers they find. Claudia Abbondanti is using this concept to find customers in Canada and Europe. Another employee is in charge of Asia and South America. This method permits them not to have to go to the regions they are in charge of.
In the very long run, they might settle subsidiaries. However, this vision is not applicable to all markets. For example, the difficulties encountered on the German and the English markets, whose actors usually turn to Chinese suppliers, push Sotec Medical to plan an earlier settlement of a subsidiary on these markets, instead of turning to a distributor.
4.1.3 Specificity of the medical technology industry
The regulation in this industry is probably the strongest characteristics and the strongest barrier to export. However, Claudia Abbondanti described it as a very interesting challenge, rather than a problem. She explains that the lack of standardization between nations regarding
norms in the medical technology industry raises consequent supplementary costs. Since norms vary from a country to another, they have to adapt the products in order to satisfy local regulations. The supplementary costs will play on the decision to produce and sell to another market. If the potential market is significant, the Return on Investment (ROI) is satisfying and if the impact on the production capacity is reasonable, then they can make the decision of producing special goods for the market. For example, producing special medical beds meeting the Canadian regulation is feasible, since Canada is a market Sotec Medical wants to enter and is seen as a strong potential market. On the contrary, they will not decide to adapt the production for a country with a small market.
Claudia Abbondanti highlighted the lack of standardization even within the European Union despite the common norm CE.
The regulation is not only strong but also complicated. Norms and recommendations have to be distinguished. For example, the height of the barrier of a medical barrier is a recommendation, not a norm. So the height of the mattress has to be adapted to the height of the barrier, so that it does not go beyond the height of the barrier. Sweden has implemented a norm regarding the height of the mattress. This is just an example of how tricky the regulation can be within this industry and an example of what kind of problem they face.
Distributors can be the ones in charge of dealing with the local regulations.
4.1.4 Attitude towards internationalization
Claudia Abbondanti has a very positive attitude towards internationalization. Where one can see a problem, she sees a challenge. As she puts it, without these exciting challenges, the job would be boring. She points out that internationalization amplifies everything. When it comes to selling to French customers, the process is already well established, there is no problem.
However, selling abroad raises several issues:
- logistics
- Transports: the delivery can be risked. For example, what happens if the beds are broken when they are delivered? Should it be sent back for repair or should it be repaired on the spot? Thus, the question of the after sales service has to be taken into consideration.
- Instructions may be in the language of the local market. Claudia Abbondanti emailed several weeks after the interview to ask for a translation in Swedish, as she was preparing marketing material for the Swedish market.
4.1.5 Networks
Local networks
Claudia Abbondanti mentioned the crucial importance of the local network. She stressed how helpful the governmental “Chambre de commerce et d’industrie” of the region Pays de la Loire has been. The help provided implies financial support through subsidies and advice regarding export. She characterized this help as a French specificity and maybe from the region Loire Atlantique (Pays de la Loire), compared to what she experienced in the United States.
International networks
Claudia Abbondanti mentioned the WTC (world trade center) networks active in France.
Sotec Medical refers notably to the local office in Nantes. The firm has strongly used
