Student Registration Number: 0816945

The Product Strategy of

Knowledge-Intensive Born Global

Firms in SMOPECs and Its Effect

on Internationalization pace and

Performance

Date of submission: 01.09.2010

Campus:BI Oslo

Supervisor:Carl Arthur Solberg

BI Norwegian School of Management

Master of Science in International Marketing andManagement

This thesis is delivered in partial fulfilment for the Master ofScience degree at BI Norwegian School of Management. The schooltakes no responsibility for the methods used, results found andconclusion drawn..

Acknowledgements

First and formost I would like express my gratitude

towards my supervisor, Carl Arthur Solberg, for his

constant encouragement, support and help. He gave me one

year extension for this research on Born Globals,

enabling me to learn and experience the complete course

as a potential researcher. This whole year has a rich

and colourful year with unforgettable events in my life.

I am really glad to be one of his students, so I could

feel his wisdom and art of supervision.

I would like to thank all the company representatives

who accepted my interview and helped me develop the

concept of product globality. They are Cecilie Amundsen

from Redpill Linpro, John Martin Christensen from Miros,

Jorn S. Husemoen from Sonitor, Turid Kristoffersen from

Medistim and Alf Bjørseth from Scatec.

Next I would like to thank all the firms that

participated in my survey and gave me valueable

feedback, especially those who offered me extra help.

They are Tone Resell from Smartmotor, Håvard K. Bjor

from Energy XT, Young N. Nguyen from d2o Consulting and

Arnstein Havro from Sea Hawk.

1

I also owe a lot to my friends who have always stood by

me when I experience difficulties and challenges in both

my research and personal life. One person worth

mentioning is Angelina Hansen. She is so talented and

capable in research.

At last I would like to say thanks to this research on

Born Global firms, for it has brought me a job

opportunity. No pay, no gains.

2

Abstract

This study explores

3

Chapter 1 Introduction

1.1 Background

Traditionally, the internationalization of firms has

been considered as a gradual, on-going process, taking

place in incremental stages and over a relatively long

period of time (Bilkey & Tesar, 1977; Cavusgil, 1980;

Johanson & Vahlne, 1977, 1990). However, the stage

theories have been increasingly challenged by a

conspicuous phenomenon “Born Global” after the

millennium. These small and middle-sized enterprises are

characterized by starting internationalization at

founding or very shortly thereafter. The emergence and

prevalence of Born Global firms (as BGs later) indicates

another important dimension of internationalization

pattern departing from the traditional stage models.

The purpose of this study is to investigate the

relationship between the product strategy of BGs, the

pace of internationalization and business performance.

According to prior studies, the innovative processes

that drive the development of superior and unique

products appear particularly important to BG firm

performance, despite numerous approaches identified for

achieving international business success (Kudina, Yip &

Barkema, 2008; Knight & Cavusgil et al., 2004; Knight,

Madsen & Servais, 2004; Moen et al. 2002; Rennie, 1993;

4

Jolly, Alahuhta & Jeannet, 1992). Moen et al. (2002) who

has done the most research on Norwegian BG firms

concludes that Norwegian BGs have built their

competitive advantage on product innovation and

technology leadership. Rainey (2005), who has over 30

years of experience and leadership in both industry and

academia in global enterprise management, technological

entrepreneurship and product innovation, stress that

product innovation is an essential strategic approach

for creating competitive advantages in the dynamic

global business environment. He also point out that

product innovation focuses on integrating the

capabilities and resources of the organization into an

agile and creative entity for developing new solutions

that exceed customer and stakeholder expectations.

Gabrielsson and Gabrielsson (2003) state that the core

competence of BGs in small and open economies (SMOPECs,

e.g. Norway and Finland) is often the R&D and capability

to innovate unique products, but these BGs often lack

the global business management and global marketing

skills. Therefore, it is critical for BGs in SMOPECs,

besides improving managerial and marketing capability,

to maintain or even enhance its strength on product

innovation and technology leadership in order to survive

and thrive in international markets.

BGs from small and open economies (SMOPECs), such as

Norway and Finland are believed to globalize because5

they are pushed while BGs in US are pulled to

internationalize due to domestic market demand

(Luostarinen, Gabrielsson, 2001; Karlsen, 2007;

Sperling, 2005). In such economies the domestic market

is often too small to justify start-up of BGs and the

founders might fear that future competition from global

firms in larger countries and other factors will push

them to find new markets (Karlsen, 2007).

According to Luostarinen and Gabrielsson (2006),

although the pioneering BGs appeared even before 1985,

BGs seem mainly to be a recent phenomenon. Kudina, Yip

and Barkema (2008) group the factors from prior research

giving rise to the emergence of BGs into three

categories: new market conditions, advances in

technology and managerial change. The related change in

macro-environment has been a growing globalisation of markets

and industries over the past two decades (Wiersema, Bowen, 2007;

Rialp, Rialp, Urbano, Vaillant, 2005; Etemad, 2004,

Knight, Cauvsgil, 2004; Knight, Madsen & Servais, 2003;

Moen, 2001; Madsen & Servais, 1997). The drivers of

globalisation are removing the barriers that segregated

the competitive space of the small and the large firms

in the past and organisations of all size and shape have

begun to share the same competitive space (Etemad,

2004). The new market conditions include increasing role

of niche markets, market homogenization, increasing

global demand for more specialized and customized6

products (Knight & Cavusgil, 1996, Madsen & Servais,

1997; Oviatt & McDougall, 1994, et. al; Rennie, 1993)

Another trend is technological advances in information and

communications technologies, production methods, transportation and

international logistics, which have reduced business

transactions costs and facilitated extraordinary growth

in international trade (Rialp, Rialp, Urbano, Vaillant,

2005; Knight & Cauvsgil, 2004; Knight, Madsen & Servais,

2003; Moen, 2001; Madsen & Servais, 1997). Based on

Rainey (2005), these trends have resulted in turbulent

market conditions, shortened product life cycles and

created demands for better, cheaper and more effective

products. The changing business conditions and trends

require a higher level of management sophistication to

keep pace with a rapidly evolving world. Faced with

increasingly dynamic macro environment, managerial focus

has also shifted from continous improvement and managing

continous change to innovation and leading change, from

national/regional to global market, from managing two-

dimensional product/market concept (mid 20th century),

three-dimensional business integration (mid 1980s, e.g.

Porter's value system) to multiple-dimensions enterprise

(Rainey, 2005). The enterprise-management models link

not just suppliers and customers, but every entity

involved with in the management system on a global basis

while the focus is on integration and innovation, and leading change

using product, technological innovation and strategic relationships

with multiple partners, alliances and networks (Rainey, 2005).7

Other factors include more elaborate capabilities of

people, more international mobility of human capital

(Madsen & Servais, 1997; Oviatt & McDougall, 1994).

BGs as a branch of internationalising SMEs are usually

considered to face the following key constraints on one

hand: lack of economies of scale, lack of financial,

human and tangible resources. Under the changing

business environment, BGs are more capable than those

big companies of introducing innovative or unique

products with superior performance and great market

potential, thanks to small size, flexible organization

structure, global vision and entrepreneurial mind

(Solberg et al., 2008; Sundal and Thoresen, 2008;

Freeman, Edwards, Schroder, 2006; Karlsen, 2007). These

internal factors of BGs plus external environment of

globalisation and changing business environment have

created the necessary conditions for BGs to survive and

thrive.

Murtha, Lenway and Hart (2001) point out that the

growing knowledge-intensiveness of global economic

activity demands new ways of thinking about industry,

competition and strategic management. They believe that

the essential dynamics to be managed in the new

competitive era are global learning and knowledge-

creation processes that necessarily engaged an

international community of companies. This is in line8

with the finding of Saarenketo, (et al 2004) that under

the competition dynamism pressure, high tech firms

emphasize on R&D and innovation, so they address old

needs with new solutions by inventing ground-breaking

products and services, e.g. the mobile phone and the

internet. The innovative and unique products of BGs have

been a key competitive advantage when competing in

global market. In addition, the competitive orientation

of knowledge-driven industries (i.e. high tech industry)

accordingly varies from that of generic competitive

strategies (Murtha, Lenway and Hart, 2001). BG’s

capability of knowledge acquisition through developing

network with key clients, collaborative partners has

enabled BGs to quickly address customers’ needs, grab

opportunities in international markets and realize rapid

internationalisation.

In addition, BGs are mainly engaged in high-tech or

knowledge-intensive industries. High technology

competition is high-speed competition and is also global

competition (Murtha, Lenway & Hart, 2001). The high

globality or high level of global integration of high

tech industries may be another driver for BGs to enter

foreign market, especially for BGs in SMOPECs (Kudina,

Yip & Barkema, 2008; Karlsen, 2007). Knight and Cavusgil

(1996) argue that one reason for the differences

observed in the speeds by which traditional MNEs and

fast globalizing firms become international/global, is9

due to different environment conditions. In other words,

when the environmental conditions rapidly change, as

they do when there is increased globalization, the

process of internationalisation is likely to speed up as

well (Karlsen, 2007)

1.2 Research questions

Based on Karlsen’s study, the pace of

internationalisation of BGs is proposed to be related to

four variables: personal experience, network, industry

globality and product characteristics. Moreover, he

calls for further study on some propositions based on

the preliminary findings. The topic of this study is

originated from one of his proposition that the pace by

which a firm enters new markets and the increase in the

firm’s export share, is positively related to the

product offering’s degree of specialization and

uniqueness. Thus, the research questions addressed in

this thesis are:

Are high-tech BGs’ product characteristics positively

related to internationalization pace and geographical

reach, also consequently the export performance?

1.3 Research Objective

This study intends to explore whether BG’s product

offerings influences internationalization pace and

export performance. It attempts to provide reference for

10

BG’s management, entrepreneurs, government agencies and

policy makers.

Therefore, the research objectives are:

To explore impact of product characteristics on

internationalization pace and the relationship

between them.

To probe the relationship between

internationalization pace and export /business

performance.

Chapter 2 Critical Literature Review

In this chapter, an overall literature review is given

on the definition, internationalization and performance

of BGs.

2.1 Definition of Born Global Firms

Rennie (1993) and McKinsey & Co. (1993) introduce the

term Born Global to describe those small to medium-sized

firms in Australia that achieve substantial

international sales from an early stage, successfully

competing against large, established players in the

global arena. According to Knight and Cavusgil (1996),

BGs are global at inception, relying on cutting-edge

technology to develop relatively unique products or

11

processes. This is a commonly-used definition. However,

Knight and Cavusgil (2004) redefine BGs as business

organizations that from or near their founding, seek

superior international business performance from the

application of knowledge-based resources to the sale of

outputs in multiple countries. The modification of

definition indicates that BGs’ competitive advantage of

developing innovative products, services or processes

are embedded in their capability of knowledge

acquisition and learning.

Madsen and Servais (1997) note there are different names

for what they also call born globals, including global

start-up (Oviatt and McDougall, 1995), high-technology

start-ups (Jolly et al., 1992) and international new

ventures (McDougall et al., 1994). More recently, Jim

Bell (2001) introduced “born again globals” as well-

established firms that suddenly embrace rapid and

dedicated internationalization, despite having

previously focused on their domestic markets. Born again

activity can occur in either large or small

organisations and this characteristic differentiates

them from BGs (Parker, 2005).

The previous researchers have hardly agreed on the

definition of BGs in terms of the age of starting

foreign sales after establishment and the ratio of

foreign sales. Due to the large size of home market, BG12

scholars from US (Knight & Cavusgil, 1996) seem to be

less strict about the number with 25% of foreign sales

at the age of three. However, European authors are far

more demanding on the requirement of being a BG and they

suggest at least 50% of foreign sales after two years of

its inception (Luostarinen, Gabrielsson, 2006). Solberg

et al. (2008) argue that such definitions with numbers

may be flawed for research purpose because the ratio of

exports or range of geographic international activities

are influenced by the size of the BG’s country of origin

and economy. For example, some spin-off from large MNEs

or companies with intensive inward internationalisation

activities can easily fall into the strict numerical

definitions.

To be consistent with Solberg, the definition of BG is

supposed to emphasize on the nature of BGs rather than

the numbers concerning their international activities.

Solberg et al. (2008) propose that a BG firm should meet

the following requirements: 1) its products are

innovative with global market potential; 2) an

entrepreneurial capability to seek methods of

accelerated internationalisation; 3) have a global

vision at inception; 4) be able to carry the risks of a

small start-up company; 5) not a spin-off of a larger

firm that is prepared to help it float; 6) their

business area includes both high tech and low tech

industries.13

Oviatt and McDougall (1995) believe that BGs share the

characteristics as below: 1)a global vision exists from

inception; 2)managers are internationally experienced;

3)the entrepreneurs have strong international business

networks; 4) exploit pre-emptive technology or

marketing; 5)have a unique intangible asset, e.g. tacit

knowledge; 6)product or service extensions are closely

linked; 7)the organization is closely coordinated

worldwide. However, items3, 4, 6 and 7 are not always

true according to empirical studies (Solberg et al.,

2008; Luostarinen & Gabrielsson, 2006; Karlsen, 2007).

According to Luostarinen, Gabrielsson (2006), BGs

concentrate in five business areas: (1)high tech,

(2)high-design, (3)high-services, (4)high-know-how,

(5)high-system business. High-tech companies utilize

advanced innovative technologies in their products. The

research and development (R&D) expenditure of such

companies is often more than 5% of total sales. High-

design companies use unique design in their products and

invest heavily in creating attractive designs. High-

service companies provide exceptionally high-quality

services. High-know-how companies sell unique know-how

as their product. This know-how is specific know-how

that is protected with a trademark or patent and is

usually licensable. High-system companies sell

sophisticated systems include a combination of physical14

goods, services and/or know-how (Gabrielsson, Sasi &

Darling, 2004; Luostarinen, & Gabrielsson, 2004).

In this paper, BGs in high-tech industries are supposed

to consist of high-tech, high-know-how, high-service and

high-system business areas. High-design companies tend

to exist more in low-tech l industries, such as food,

apparel, shoes, furniture, etc (Solberg, 2008). There is

no general agreement on how to define high tech

industries (Wong, 1990). Wong (1990) suggests that the

lack of standard definition may hinge on the very nature

of the industry itself, with changing characteristics,

influenced by market forces, public policy or technology

itself. According to Solberg, Sundal and Thoresen

(2008), the boundary between high tech and low tech

industries is the input of research and development

(R&D) plus innovation, impact on the traditional

industry, origin of competitive advantage and perception

of entry barriers. In addition, one more point can be

added: the speed and intensity of knowledge creation and

learning (Murtha, Lenway and Hart, 2001).

Definition used for this study:

Building on Solberg’s suggestion, a BG firm is defined

here as an independent SME with a global vision and

entrepreneurial mind at inception, who has innovative or

unique products (including services) with market

presence in more than one continent simultaneously. BGs15

generally engage in high-tech, high-know-how and high-

system business areas. The foreign sales ratio can vary

depending on the size of home market. The smaller is the

home market, the higher the foreign sales ratio should

be. Therefore for Norwegian BGs, the foreign sales

should account for at least 50%. The age of BGs when

going internationalisation usually should not be over

three years. However, in case of long period of product

development, the age can be extended to five years.

Flexibility should be given when dealing with special

cases. The most critical standard is the nature of the

firm such as global vision, entrepreneurial mind and

innovation (Solberg et al., 2008). The products must be

those with distinct differentiation as compared with

products that are already on the market. Such products

have either unique technology and/or know-how, systems

or other highly specialised competence (Gabrielsson &

Kirpalani, 2004). They may involve new production

methods and new processes. The Uniqueness is rooted in a

knowledge base and a related learning process that is

built in a manner that differs greatly from that of a

traditional firm (Solberg et al., 2008).

In Appendix 1, a summary is presented on distinctive

features of BGs and conditions for the emergence of BGs.

2.2. Internationalization theories

16

Internationalization literature can be divided into

three major schools: the ‘Economic school’ (FDI), the

‘Network school’, and the ‘Behavioural school or Stages

theories’. The economic and behavioural schools of

research have both been well-established while the

network school is developing fast (Coviello & McAuley,

1999).

2.2.1 The Behavioural school/Stage theories

Behavioural models propose an incremental stages

approach and are generally more dynamic than FDI theory

(Johanson & Vahlne, 1990; Melin, 1992). There are

several stage models, but the most influential one is

definitely the “Uppsala Model” (Johanson & Vahlne, 1977;

Johanson & Wiederscheim-Paul, 1975), which influenced a

great deal of research on the internationalization of

small firms (Bell, 1995). The Uppsala model (U-model)

belongs to the ‘Nordic School’ whose researchers have

been more interested in SMEs from SMOPECs whereas North

American researchers have concentrated mainly on large

MNEs (Korhonen, 1999; Luostarinen, 1979).

The U-model is based on theories concerning the growth

of the firm (Penrose, 1959) and the behavioural theory

of the firm (Aharoni, 1966; Cyert & March, 1963). The

model is founded on four core concepts: market

knowledge, market commitments, commitments decisions and

current activities. Market knowledge and commitment are

assumed to affect decisions and the way current17

activities are performed, which in turn changes in

market knowledge and commitment. The U-model suggests

that firms’ internationalization activities occurs

incrementally and are influenced by increased market

knowledge and market commitment (Johanson & Vahlne,

1977). Firms are supposed to enter new markets with

successively greater psychic distance and the market

investments develop according to the so-called

establishment chain (Forsgren, 2000). The model’s main

focus is a firm’s experiential learning through ongoing

activities.

However, though ever widely supported by empirical

research, stages models have been criticized a lot as

controversial theories. The following are the main

criticisms:

Firms do not necessarily adopt consistent

organizational approaches to internationalization

(Buckley, Newbound & Thurwell, 1979).

The underlying assumption of step-wise progression

and forward motion have been challenged by many

passive exporters who were, at one time, active and

firms may omit stages to accelerate the process

(Cannon & Willis, 1981).

The stage models are “too deterministic” and the

internationalization patterns and processes of

individual firms may be unique and highly situation-

specific (Reid, 1984).

18

The U-model is valid only in the early stages of the

internationalization process, when a lack of market

knowledge and market resources is still a

constraining force (Forsgren, 1989).

The U-model is weak, because it use only explanatory

variable (experiential knowledge) and is not likely

to provide any sufficient explanation for a firm’s

internationalization. Moreover, General

internationalization of industries and markets can

role out the market knowledge factor (Johanson &

Vahlne, 1990).

The models lack explanatory power as to how the

process takes place or how movement between stages

can be predicted and they have not been rigorously

tested on a longitudinal basis (Andersen, 1993).

The approach stresses the inertial and reactive

character of business organizations, neglecting the

entrepreneurial strategic choice opportunities (Autio

et al. 2000)

The stage models were mainly developed in 1970s and widely supported by

earlier empirical research. The global business environment has changed

dramatically since 1980s. It is understandable why the stage models have

failed to explain the rapid and early internationalization of SMEs, as the

competitive landscape has been far more complicated and dynamic.

2.2.2 The Economic School

19

This school includes monopolistic advantage theory, FDI

theory, product life cycle theory and transaction cost

theory, etc (Saarenketo, Puumalainen, Kuivalainen &

Kylaheiko, 2004). Monopolistic advantage theory suggests

that firms will internationalize when they can use their

established advantages in foreign countries at little or

no additional cost (Caves, 1982). The product cycle

theory contends that firms internationalize in an

attempt to protect their existing markets of mature

products (Vernon, 1966). But here the focus is placed on

FDI theory, since the eclectic paradigm is a synthesis

of elements from various theories, e.g. transaction cost

theory, market power theories, product life cycle and

monopolistic advantage theory (Dunning et al., 2000;

Cantwell & Narula, 2001).The FDI theory was developed

from neoclassical and industrial trade theory (Sperling,

2005). Internationalization is viewed as a pattern of

investment of MNEs in foreign countries explained by

rational economic analysis of location, ownership and

internalization advantages, in order to seek market,

resources, efficiency and strategic assets (Dunning,

2000). This is rather static approach where the firm

evaluates the cost of economic transactions in each

stage in order to choose their optimal organizational

structure, ownership of value-chain activities and

choice of locations (Sperling, 2005).

FDI theory seems to explain the activities of MNEs

rather than the process of internationalization20

(Johanson & Vahlne, 1990). Critics of FDI theory claim

that the Economic School research is used primarily to

explain a pattern of investment and not a long-term

process of international expansion (Johanson & Mattsson,

1987; Melin, 1992). However, FDI theory was mainly

developed to explain FDI in foreign activities by MNEs

in attempt to understand the “why”, “where” and “how” of

the international operations, leaving many questions

unanswered regarding the growth and internationalization

process (Sperling, 2005).

It is considered improper to use FDI theory to explain the BG phenomenon,

due to its MNE origin. For instance, the empirical evidence shows those

technology-intensive BGs rarely establish foreign manufacturing

subsidiaries.

2.2.3. The Network Approach School

In the network approach, the system of exchange

relationship between firms is described as a network and

it focuses on non-hierarchical systems where companies

are supposed to invest in build up and monitor their

position in international networks (Johanson & Mattson,

1988, 1991). Firms engaged in a business network are

dependent on each other and coordinate with others

within the network. According to this school,

internationalization depends on an organization’s set of

network relationships rather than a firm-specific

advantage (Coviello & McAuley, 1999). These21

relationships often involve customers, suppliers,

competitors, public support agencies.

Pedersen & Petersen (1998) suggest that the inclusion of

other internal and external factors provide a more

complete explanation of the pace by which a firm commits

resources to foreign markets. Gadde, Huemer & Hakansson

(2003) assert that it is crucial for a firm to relate to

those around it, which presumes an ability to generate

and sustain business relationships to enhance its

performance, and it is through the continuous combining

and recombining of resources that new resource

dimensions are identified and further developed within

business relationships. Suggested by Freeman, Edwards &

Schroder (2006), successful network entry is a critical

factor for allowing the firm to be considered and

treated as an “insider”; this means that the firm needs

to get involved with channel members, government, and

advertising to overcome many of the market-related

constraints to exchange.

In the case of BGs, network theory offers significant

explanatory power. Due to limited resources, BGs must

leverage the resources of network members to obtain

knowledge and generate sales. The network development

has been proved essential for BGs to achieve

simultaneous multiple modes of entry to foreign markets

and increase foreign sales (Freeman, Edwards, Schrode,

2006). Moreover, Daniel, Hempel & Srinivasan (2002)

identify significant evolutionary patterns in the22

development of collaborative relationships that remain

successful in the long run, including the creation of

research capacity that yields advances in processes and

product knowledge, technology transfer behaviour among

participants, partners’ satisfaction with outcomes and

continuity of industry sponsor support.

2.3 Born Global-related theories

2.3.1 Evolutionary economics view and innovation theory

According to Autio et al. (2000), McDougall et al.

(1994), Zahra et al. (2000), the ability to

internationalize early and succeed in foreign markets is

a function of the internal capabilities of the firm

(Autio et al., 2000; McDougall et al., 1994; Zahra et

al., 2000). The importance of internal capabilities is

rooted in evolutionary economics (Nelson & Winter,

1982), in which innovation processes are explicitly

described. The evolutionary economics view implies that

the superior ability of certain firms to sustain innovation

and create new knowledge leads to the development of

organizational capabilities, consisting of critical

competences and embedded routines. These intangible firm

resources in turn result in superior performance,

particularly in highly competitive or challenging

environments (Nelson & Winter, 1982).

Innovation results from two major sources: (1) internal

R&D that draws on the firm’s accumulated knowledge, and23

(2) imitation of the innovations of other firms (Lewin &

Massini, 2003; Massini et al., 2003; Nelson & Winter,

1982). In addition to introducing new products and

methods of production, R&D also supports the opening of

new markets and reinvention of the firm’s operations to

serve those markets optimally (Nelson & Winter, 1982;

Schumpeter, 1934).

Theoretical support for born-global firms is derived

initially from innovation theory, which views innovation

as the pursuit of novel solutions to challenges that

confront the firm, including the creation of new

products and the pursuit of new markets (Miller &

Friesen, 1984). In the context of pursuing new markets,

internationalisation within the firm (e.g. Cavusgil,

1980) and innovation theory provides a useful framework

because even in the face of limited financial and human

resources, early internationalisation is a fundamental

characteristic of BGs.

A key advantage is that BGs appear to lack the deeply-

rooted administrative heritage characteristic of long-

established businesses (Collis, 1991; Miller & Friesen,

1984). In older firms, embedded structure tends to

constrain strategic choice. Companies that venture

abroad late in their existence must unlearn routines

rooted in domestic operations before new and

internationally-oriented routines can be learned.

Unlearning established practices becomes more difficult24

as firms get older, because new knowledge that leads to

new practices tends to conflict with existing operations

and management’s embedded mental models (Autio et al.,

2000; Barkema & Vermeulen, 1998).

In contrast, from their earliest days, BGs’ organisation

culture and strategic approaches tend to more

appropriate for operating in foreign markets. Managers

experience fewer infrastructural and mental barriers to

overcome in internationalisation process. Youth confers

greater flexibility and agility, which are particularly

important for success in diverse foreign markets. In

short, there are inherent advantages to being young when

venturing abroad (Liesch & Knight, 1999; Oviatt &

McDougall, 1994).

2.3.2 Resource-based view (RBV)

Much theoretical support for the BG phenomenon can be

found in resource-based perspectives. RBV regards a firm

as a bundle of resources and it is the totality of

unique idiosyncratic resources that give a firm a

sustainable competitive advantage (Wernerfelt, 1984;

Barney, 1991; Grant, 1991). BGs tend to lack substantial

financial and human resources as well as property, plant

and other physical resources. This is the key because it

is these traditional, primarily tangible resources that

older firms typically have leveraged to succeed in

foreign markets. Opposite, BGs appear to leverage a25

collection of fundamental intangible resources. These

intangible resources derive from the know-how, skills

and experiences that reside in the managers who work at

these firms (Knight, Madsen & Servais, 2003).

To achieve and sustain international competitive

advantage, BGs must possess resources that are rare,

valuable, inimitable and non-substitutable (VRIN

attributes, Barney, 1991; Collis, 1991; Hunt, 2000;

Mahoney, 1995). BGs may be relatively unique regarding

the nature and extent of specialised knowledge held by

individual managers or embedded in the firm. In

addition, causal ambiguity and social complexity can

give rise to the development of firm-specific knowledge

and capabilities that imperfectly imitable by rival

firms (Barney, 1991). Generally, these attributes

provide a basis for resource advantage because managers

at rival firms typically lack the knowledge of the

particular circumstances, social structure, and causal

relationships o the BG within which actions need to be

interpreted (Mahoney, 1995).

Although widely accepted, RBV has been criticized for

being conceptually vague and tautological (Williamson,

1999) and not applicable to dynamic markets as the

sustainable competitive advantage is hard to achieve in

such an environment (D’Aveni, 1994). However, many

researchers think that the ‘static’ RBV approach can be

extended to more dynamic environment (Teece & Pisano,

26

1994; Teece et al., 1997; Eisenhardt & Martin, 2000;

Blomqvist & Kylaheiko, 2000).

Traditional RBV might be static due to the past competition context in which

firms often competed on tangible resources. However, since 1990s the

competitive landscape has been changed dramatically and companies have

been increasingly competing on intangible resources. The RBV can be

enriched and updated by introducing some dynamic elements and

emphasizing intangible resources and capabilities in the changing

competitive environment, e.g. the dynamic process view, also known as

knowledge-based view of the firm. BGs’ competitive advantage is usually

based on intangible resources or capabilities, so BG phenomenon can

provide a useful source for theory extension.

2.3.3 Strategic choice theory

Strategic choice theory suggests that firms facing

strategic complexities respond opportunistically to

changing market opportunities through a careful

evaluation of risks with managers actively determining

manage features of a firm’s internationalization

(O’Farrerl et al. 1998). As Madsen and Servais (1997)

note, “the internationalization process of the firm

cannot be seen in isolation; it can only be analyzed by

understanding the environmental conditions as well as

the actual relationships of the firm in question”. The

definition of “environment” is perceived to relate to

degree of internationalization of the market or degree

of globalization (Karlsen, 2007). A large body of27

literature has focused on strategic responses to the

increasing degree of globalization in markets, but

mainly on MNEs and the strategic responses of SMEs to

the development have received relatively limited

attention (Solberg, 1997; Knight, 2000).

Strategic choice theory implies that rapid and early

internationalization of BGs is the strategic choice made

by the management based on perception and assessment of

external environment and internal resources and

capabilities. This view emphasizes the process of making

strategic decisions based on competition reality, which

is extremely important to understand BG’s

entrepreneurial behaviour.

2.3.4 Knowledge-based view: a dynamic capabilities

perspective

The knowledge-based view from a dynamic process

perspective is extended from RBV mentioned above

(Saarenketo, Puumalainen, Kuivalainen & Kylaheiko).

Weerawardena, Mort, Liesch & Knight (2007) suggest

knowledge in general as a factor in early

internationalisation is treated in two ways in the

literature. 1) It is captured at the taxonomic level by

various authors in the identification of the role of

entrepreneur’s prior international experience (Autio &

Sapienza, 2000; Harveston, Kedia & Davis, 2000; Madsen &

Servais, 1997; McDougall, Oviatt & Schrader, 2003) in

addition to the owner-manager’s prior experience being28

cited as a factor contributing to the speed of market

entry (McDougall & Oviatt, 2005). 2) It is suggested

that prior business experience leads to greater

absorptive capacity in the firm (Cohen & Levinthal,

1990) which in turn facilitates the acquisition of

additional knowledge required for speedier international

market entry (McDougall & Oviatt, 2005).

Innovation has been suggested as a possible link between

market orientation and firm performance (Han, Namwoon &

Srivastava, 1998; Menguc & Auh, 2006), where innovation

requires external learning (which includes market

learning and network learning for new technology

acquisitions) and internal experimental learning (R&D)

(Arora & Gambardella, 1990). Therefore whilst market-

based learning enables the firm to learn what the market

needs, the firm must acquire knowledge from other

sources to develop leading edge innovative products and

services that will fulfil these needs (Weerawardena,

Mort, Liesch & Knight, 2007).

As dynamic capabilities denote the firm’s ability to

sense and seize opportunities (Teece, 2000), they

represent the entrepreneurial facet of management

(Teece, 2003). These capabilities are nurtured,

reconfigured and reconstituted by persons in the firm.

The dynamic capabilities view suggests the need to

distinguish capabilities from resources and stresses the

importance of the dynamic processes of capability

building in gaining competitive advantage (Jarvenpaa &29

Leidner, 1998). Incorporating the dynamic capabilities

view enables us to capture the development of

capabilities that facilitates the BGs accelerated market

entry.

2.3.5 Population ecology view

In the biological sciences, population ecology describes

how different populations of organisms (i.e. species)

use their individual resources to adapt to their

environment. Those species best “fitted” to the

contingencies of the environment survive and prosper,

while less well-fitted rivals fail and disappear because

of their inability to adjust themselves to the changing

environment (Charles Darwin, 1859). This perspective

portrays businesses or groupings of businesses as

species that inhabit environments in a dynamic process

based on competition for scarce resources (Hannan &

Freeman, 1977; Suarez & Utterback, 1995). According to

the population ecology view, firms evolve and interact

with other firms in much the same way that animals do in

a particular “biomass” and firms that adapt to the

contingencies of their environment are “selected” for

survival and ultimate success (Knight, Madsen & Servais,

2004). The population ecology indicates that whereas

large MNEs perform well by possessing more resources,

especially tangible resources, BGs may be viewed, at

least in the early years of their existence, as niche

players that survive and thrive via the efficient use of30

limited resources and by adapting themselves to the

changing macro-environment and the demands of

international markets (Knight, Madsen & Servais, 2004).

Population ecology view vividly portrays the competition reality where firms

of varied size and type survive through configuring different resources in

different way, creating various competitive advantage and serving their

respective target market. BGs are able to survive and thrive against giant

MNEs by leveraging their strength in organization culture and structure,

technology advance or design, adapting themselves to rapidly changing

competitive environment and serving the global niche with value-added

product.

2.3.6 International entrepreneurship

International entrepreneurship has been a new academic

field with the development of the new journal, Journal of

International Entrepreneurship, combining two research paths of

entrepreneurship and international business (Sperling,

2005). This is a result of increasing emergence and

prevalence of BGs in recent years (Giamartino et al.,

McDougall & Oviatt, 2000, Zahra & George, 2002).

Traditionally, research in international business field

mainly focused on large MNEs and entrepreneurship

research on venture creation and the management of SME

with domestic context (McDougall & Oviatt, 2000).

International entrepreneurship definition has evolved in

recent years. McDougall (1989)’s definition is “the

development of international new ventures or start-ups31

that, from their inception, engage in international

business, thus viewing their operating domain as

international from the initial stages of the firm’s

operation”. This early definition reflects the

traditional mainstream focus of entrepreneurship

research on creation of new ventures. A more recent

approach focuses on three dimensions of the behaviour of

entrepreneurs: innovation, proactive and risk taking and the

updated definition is “international entrepreneurship is

a combination of innovative, proactive and risk-taking

behaviour that crosses national borders and is intended

to create value in organizations” (McDougall & Oviatt,

2000). Other scholars instead emphasize the process of

creatively discovering and exploriting opportunities

that lie outside a firm’s domestic markets in the

pursuit of competitive advantage (Zahra & George, 2002).

In 2005, Oviatt and McDougall refined their definition

again. In their revised conceptualization, international

entrepreneurship is defined as “the discovery,

enactment, evaluation and exploitation of opportunities-

across national borders-to create future goods and

services” (Oviatt & McDougall, 2005a). The updated

definition stresses on opportunities instead of the

formation of a new venture.

International entrepreneurship offers unprecedented

opportunities to employ and integrate theoretical

approaches that enrich the development of theory and32

implications regarding BG firms (Cavusgil & Knight,

2009). Zahra and George (2002) distinguished two

principle streams of research in international

entrepreneurship: the growing international role played

by young entrepreneurial ventures and the international,

entrepreneurial activities of established firms. The

second stream examines entrepreneurial orientation in

the international activities of well-established

companies (Cavusgil & Knight, 2009; Zahra & George,

2002). It is also termed as “international

intrapreneurship” or “corporate entrepreneurship” in

international markets (Rialp et al., 2005).

Jones and Coviello (2005) argue that the development of

unifying direction for international entrepreneurship

can be built on a deep understanding of the

commonalities in the literature of entrepreneurship and

international business. For instance, Schumpeter

emphasized acting as an important criterion for

entrepreneurs and introduced the view of “innovator” into

entrepreneur’s role (Andersson, 2000). His early

entrepreneurial concept is broad enough to stand for a

long time, “not only the introduction of new products,

but also of new production methods, the opening of new

markets, the gaining of new sources of supply and raw

materials and the reorganization of an industry”

(Schumpeter, 1934; 1949). Jones and Coviello (2005) view

entrepreneurship and internationalization as behavioural33

process and develop a general model of entrepreneurial

internationalization consisting of two primary process

dimensions (time and behaviour) and four key constructs

(entrepreneur, firm, external environment and

organizational performance). Contemporary

internationalization is conceived as a firm-level

entrepreneurial behaviour manifested by outcomes and

events in relation to time (Jones & Coviello, 2005).

Time has been a key dimension in BG research, which is

demonstrated in the definition.

2.4 Product Strategy

BGs typically compete on differentiation (Kudina, Yip &

Barkema, 2008). It is assumed that the product strategy

of BGs is based from the start on an innovative, global

product, which has been developed in response to a

detected global industry shift (Alahuhta, 1990; Jolly,

Alahuhta & Jeannet, 1992). This assumption accords with

the entrepreneurial orientation and it has been proved

by most research on BGs which appears to be in agreement

that BGs gain competitive advantage by differentiating

themselves from competitors through introducing

innovative products and offering quality service

(Kudina, Yip & Barkema, 2008; Solberg et al., 2008;

Jantunen, Nummela, Puumalainen & Saarenketo, 2008,

Karlsen, 2007, Knight & Cavusgil, 2004, Rennie, 1993).

BGs are often able to achieve high value creation

through product differentiation, leading-edge technology34

products, technological innovativeness and quality

leadership (Rialp et al. 2005; Kudina, Yip & Barkema,

2008). Products here include services and systems. BGs’

market focus on a niche product or customer segment

gives direction to the R&D efforts and offers a source

for economies of scale. This focus also requires them to

go internationalisation early and fast to generate the

large quantity necessary for achieving scale economies

(Kudina, Yip & Barkema, 2008; Luostarinen & Gabrielsson,

2006; Etemad, 2004). Some BG founders state that they

are very careful not to step on the toes of the big

actors in the industry (Karlsen, 2007). This concern is

in line with Porter and Caves (1977) who asserts that

focus allows the small player to avoid head-to-head

competition with larger, broadly-based firms that tend

to target mass markets. Therefore, in small and open

economies particularly, BGs with unique and highly

specialized products tend to follow international niche

focus strategy (Moen, 2001).

2.5 Performance

Based on previous research findings, Zou, Taylor and

Osland (1998) summarize five broad groups of

determinants of export performance: firm

characteristics, product characteristics, market

characteristics, industry characteristics and export

marketing strategy. At the same time, Zou and Stan35

(1998) investigate the determinants of export

performance by a thorough review of the empirical

literature between 1987 and 1997. They find that product

adaptation and product strength are important factors

determining export sales, profits and growth (Zou &

Stan, 1998). Product adaptation can be seen as a part of

product globality while product quality and product

innovativeness/uniqueness can be categorized into

product strength. Their explanation is consistent with

other empirical finding that an customized/specialized

product can satisfy foreign customers’ needs and

preference better (Cavusgil & Zou, 1994) and a strong

product allows a firm to more easily enter international

markets (Zou & Stan, 1998). Knight, Madsen and Servais

(2004) suggest that BGs may enjoy “first mover

advantage” by rapid entry to new markets abroad with a

unique or innovative product or process. Because first

movers in a given product market tend to reap advantages

or competitors that follow later (Kerin et al., 1992).

In particular, Lambkin (1988) found that early market

entry was associated with superior market share among

new and young firms. Advantages may accrue to the

pioneering firms for several reasons. 1. For a period of

time, it enjoys a monopoly in the given product market;

2. The first mover has a better chance to establish a

leading market position; 3. It advances early up the

relevant product-market learning curve; 4. First movers

are more likely influence initial consumer preferences36

regarding the features and benefits of the new product

(Carpenter & Nakamoto, 1989).

Solberg (1988, 1994) after analysing 114 Oslo-based

Norwegian exporters, conclude that embodiment factors

(e.g. management commitment), skill factors (e.g.

product development skills, marketing capability) and

attitude factors (marketing orientation) are key

determinants for export success. He also suggest that

smaller firms are better able to create the right

atmosphere for successful exporting, necessitating a

closeness to market and an open-minded organization that

not always present in large corporations with rigid

bureaucratic decision (Solberg, 1994). Selnes, Henriksen

and Olsen (1993) review the export performance of 33

Norwegian technology-based firms and find sales share to

largest foreign customers, firms size (employee number),

number of customers and degree of customer orientation

are influential factors.

Chapter 3 Conceptual Framework

Strategy is to make the choice by targeting, positioning

(Porter, 2008) and it reflects how the firms will

compete at the nexus of its products and markets

(Knight, Madsen & Servais, 2004). The strategy variables

are the most important elements for driving company

37

performance. Knight and Cavusgil (2004) find out in

their study that BGs tend to achieve superior

performance by leveraging technological competence,

unique products development and quality focus.

International entrepreneurial orientation and

international marketing orientation, as part of the

organizational culture, influence the business strategy

of BG firms as well as performance in international

markets (Knight & Cavusgil, 2004).

BG firms in SMOPECs (e.g. Nordic countries) usually

build their competitive advantage on innovative, unique,

quality and technology-advanced products by adopting

strategy of differentiation or global niche focus

(Madsen & Servais, 1997; Moen et. al, 2002; Knight,

Madsen & Servais, 2004; Sperling, 2005). Luostarinen and

Gabrielsson (2006) point out that only by focusing the

development work on highly specialized niche products

can this be carried out within a short time frame. A

shortening of R&D phase is crucial for some high-tech

industries, since the global competition is so intensive

that the first-mover advantages can be enormous

(Luostarinen & Gabrielsson, 2006). The first mover who

introduces the novel product first may reshape an

industry and develop a new industry standard. However,

the R&D stage usually involves a large investment, which

leads to a need to rapid entry to international markets

simultaneously (Karlsen, 2007).

38

The customer determination at an early stage is also

necessary, so BGs can direct their R&D efforts on the

critical aspects and it offers a source for economies of

scale (Luostarinen & Gabrielsson, 2006). Karlsen (2007)

finds that focusing on global niche is also a way of

avoiding the confrontation with those big players in the

massive market. A customer insight is required for

developing superior products and this is usually ensured

in close collaboration with leading reference customers

(Luostarinen & Gabrielsson, 2006). The strategy of

product and market is therefore extremely important for

BGs’ success, as it determines the essential features of

BG firms’ offerings for target market segment as a

strategic choice.

Karlsen (2007) proposes four factors may positively

relate to the pace of internationalization of BGs: the

founder’s experience/background, personal network,

industry globality and product characteristics. It is

also logic to assume that a fast internationalization

pace will result in high business performance, as the

scale of economy is secured for revenue growth and this

may pave the way for development of new generation

product. Therefore the conceptual framework is in an

attempt to represent how product characteristics of BG

impact the pace of internationalization and consequently

business performance.

3.1 The constructs and linkages of conceptual framework39

Figure 2: Conceptual Framework

The conceptual framework is based on Karlsen’s (2007)’s

proposition and the model developed by Knight and

Cavusgil (2004) in Appendix 2.

3.1 Independent variable: Product characteristics

3.1.1 Technology competence

Emphasis on developing new technologies is a natural

routine for innovative, entrepreneurial firms (Nelson &

Winter, 1982; Schumpeter, 1934). Entrepreneurship

derives from ‘the capacity of small firms to leverage

resources and transform existing markets through

innovation’ (Steensma et al., 2000). The basic

Productglobali

ty

Productinnovativen

ess

Productquality

Technologycompetence

Internationalizationpace

Performance

Industryglobality

40

innovativeness results in new ideas and creative

processes, reflecting a willingness to depart from

existing technologies (Lumpkin & Dess, 1996). Technology

competence facilitates the creation of superior products

and the improvement of existing products, as well as

greater effectiveness and efficiency in production

processes. Many prior studies support that technological

excellence as a core competence helps BG firms to

develop products that appeal to niche markets around the

world (Moen et al., 2002; Moen & Servais, 2002;

Saarenketo, Puumalainen, Kuivalainen, Kylaheiko, 2003;

Knight & Cavusgil, 2004; Karlsen, 2007; Solberg et al.

2008). Moen (2002) find that BGs usually build their

competitive advantage on innovative product offering

with leading edge technology and in the study the

highest competitive advantage score is seen on the

technology scale among BGs in both Norway and France. BG

firms surveyed by Rennie (1993) rank technology as the

second key competitive advantage. Aggarwal (1999) argues

that technology and globalization have become mutually

reinforcing, with technology facilitating globalization

and with globalization enhancing the profitability of

technology.

H1a: Technology competence is positively related to internationalization

pace.

H1b: Industry globality reinforces the correlation between technology

competence and internationalization pace.

41

3.1.2 Product innovativeness/uniqueness

Jolly, Alahuhta & Jeannet (1992) suggest that innovative

products are usually based on an industry shift which

creates new rules of competition and is associated with

major changes in product and function, thus it is vital

for BGs to get in early and find a niche, riding on the

industry shift. Developing unique products is also

consistent with differentiation strategy. The knowledge

used to develop a unique product is usually tacit and

hard-to-imitate, enabling BGs to keep such knowledge

proprietary (Barney, 1991; Grant, 1996). It also serves

customers’ special needs and minimize direct competitive

rivalry(Knight & Cavusgil, 2004). Product uniqueness or

innovativeness facilitates profitable pricing that

minimizes the need to consider competitors’ offerings,

inimitability helps ensure that profits will not be

competed away (Nelson & Winter, 1982; Teece & Pisano,

1994). Karlsen (2007) posits that some Norwegian BGs

serve complex and highly-specialized industrial products

to a very small niche market, so they had to

internationalize rapidly due to the need to reach target

global customers.

Product uniqueness/innovativeness implies the degree of

distinctiveness from other offerings existing in the

market. It may be achieved by reconfiguring product

development, using innovative product process or

different material, leading-edge technology, or offering

innovative service etc (Ray, 1989).42

H2a: Product uniqueness/innovativeness is positively related to

internationalization pace.

H2b: Industry globality reinforces the correlation between product

uniqueness /innovativeness and internationalization pace.

3.1.3 Product quality

Knight, Madsen and Servais (2004) posit that in a global

economy buyers are exposed to a variety of competing

goods, which may increase their expectations and

expertise regarding product quality and competition

pushes companies to improve their offerings. It is a

common practice for producers and consumers to benchmark

their quality standards (Knight & Cavusgil, 2004).

Consumers tend to favour products with the best quality

and are willing to pay a premium (Kotler & Armstrong,

1996; Buzzell & Gale, 1987; Deming, 1982). Because

superior quality reduces rework and service costs while

enhancing value, market share and profits, which is

likely to connect to firm performance (Chetty &

Hamilton, 1993; Deming, 1982). Early empirical studies

reveal that high-quality products are able to easily

succeed in global niche markets (Rennie, 1993; Knight &

Cavusgil, 2004; Knight, Madsen & Servais, 2004). Knight

(1997) in his Phd dissertation expresses that emphasis

on product and product-service quality is an important

feature of the BG and a significant antecedent to export

market performance. Superior product quality reflects a

perceived fundamental characteristic of products and43

accompanying service that meet or exceed customer

expectations regarding features and performance (Kotler

& Armstrong, 1996; Buzzell & Gale, 1987; Showers &

Showers, 1993).

H3a: Product quality is positively related to internationalization pace.

H3b: Industry globality reinforces the correlation between product quality

and internationalization pace.

3.1.4 Product globality/ Product globalization potential

Based on Karlsen (2007)’s case study, several BG

founders intended to develop a product to be sold

internationally or globally. This reveals international

entrepreneurial orientation from BG founders and it is

also in line with Jolly, Alahuhta and Jeannet (1992)’s

finding that most high-tech ventures (BGs) begin with a

founder’s insight which is most often of a technological

or product nature. A question arises here. How do those

BG firms define their product globality/globalization

potential, besides the previous three attributes? In the

interview some BG company representatives help to shape

this concept.

Redpill Linpro in IT industry suggests product

standardization in the interview. This matches the

finding of Jolly, Alahuhta and Jeannet (1992) that BGs

in IT and ICT industry usually focus on standard

products aimed at a homogeneous segment in order to

internationalize rapidly, as it reduces time and

resources involved in product customization. Then the44

former CEO of Scanwafer and REC (Renewable Energy

Corporation) points to global demand. According to

personal experience, developing a product in global

demand makes the product global in nature. Scanwafer

entered solar energy industry at a very early stage when

there was only one competitor in the world and the

market was about to grow. A huge global demand soon

brought Scanwafer and REC a huge success. Two companies

engaged in maritime industry suggest the compatibility

and integrability of products determine the

globalization potential. It is important for their

products to compatible or integrable with different

local standards and requirements. This advice is

consistent with Luostarinen and Gabrielsson (2006) that

‘the product must be modular to allow for country-

specific variations with separate country kits or easy

installation of software’.

Kudina, Yip and Barkema (2008), Johnson (2004),

Bloodgood and Sapienza (1996), Bell (1995) and Rennie

(1993) point out that those highly-global high-tech

industries show high level and fast pace of

internationalization in Europe, Australia, Israel and

USA. They also find in these global high-tech industries

where the competition is extremely fierce and

technological changes have been profound (Bridge,

O’Neill & Cromie, 2003). A primary product that is in

the value chain of some global customers enables BG

firms to internationalize early and serve global or45

multinational customers (Karlsen, 2007; Luostarinen &

Gabrielsson, 2006). Karlsen (2007) and Sperling (2005)

also find that products in those global technology-

intensive industries are global in nature and tend to

have a short life cycle and high R&D costs, so early

internationalization is a must due to small home market

size like Norway, Finland or Israel. It is noticed that

all these high-tech products are not confined by

cultural differences between national borders and they

are addressing homogeneous demands of global customers.

It may be the outcome of culture globalization. Parker

(2005) argues that there is an emerging global culture

with products ranging from cola beverages to autos and

computers throughout the world.

H4a: Product globality is positively related to internationalization pace.

H4b: Industry globality reinforces the correlation between product globality

and internationalization pace.

3.2 Moderator variable: Industry globality

Moderator variable affects the relationship between an

independent variable and a dependent variable and it

changes the strength of the independent-dependent

variable relationship (Hair, Black, Babin, Anderson &

Tatham, 2005).

It is found in Karlsen (2007) case study that a couple

of BGs (e.g. Opera, Fras) have achieved very fast

internationalization by cooperating with only large

customers and they all operate with strong-character46

products in a truly global industry which is

characterized with high concentration degree of

competition and customers. More important, partnering

these big giants helps BGs internationalize faster, as

these big players are globally presented. Kudina, Yip

and Barkema (2008) find that some BGs internationalize

fast in order to provide quality customer service to

highly demanding clients located overseas. The finding

is confirmed in the interviews with TMC and Miros in

maritime industry. It is seen from the case study that

there is a direct interaction between the product

attributes and industry globality as well as between

industry globality and internationalization pace. On one

hand when the industry globality is high, BGs tend to

develop the product with strong attributes: high degree

of product globality, innovativeness/uniqueness, quality

and technology advance. On the hand, the high industry

globality also pushes BGs to internationalize fast. Thus

the industry globality changes the strength between

product attributes and internationalization pace as a

moderator.

3.3 Dependent variable: Internationalization pace

BGs tend to favour exporting as their primary entry mode

due to their small size and limited resources and they

often choose agents, distributors and importers as their

main export channels (Madsen, Rasmussen & Servais, 2000;

Karlsen, 2007). Buckley and Casson (1998) explain that47

exporting offers a high degree of international business

flexibility and cost effectiveness. Kudina, Yip and

Barkema (2008) point out that the software and hardware

IT BGs in UK typically employ a licensing and /or

royalty model, as they need huge volumes to generate

significant revenues. Using low-commitment or

collaborative modes of entry and operation reduces the

resource involvement and the risk, so BGs can enter all

important markets they target in a short time. For those

BGs whose home market is very small (e.g. Norway), they

are faced with greater pressure to enter foreign markets

fast in order to justify the high R&D costs and shorter

product life cycle. Moreover, Rainey (2005) emphasizes

the importance of timing to be the first mover in new

markets because of competitive pressure.

Based on previous research, some BGs are able to

leapfrog to markets with most psychic distance when

starting their internationalization, especially those in

technology-intensive industries that are changing

rapidly, e.g. IT and ICT industries (Sperling, 2005).

The industrial environment facing these high-tech firms

is characterized by unpredictable and high-speed changes

and hypercompetition (Evans & Wurster, 2000; Riolli-

Saltzman & Luthans, 2001). Consequently, the products

developed by BGs in these industries are global in

nature and the firms are forced to compete globally from

inception in order to survive (Jones, 1999). Lindell and48

Karagozoglu (1997) also identify strategic opportunities

in global markets as the most important factor behind

small firms’ internationalization. These technology-

intensive firms proactively seek new opportunities

globally, regardless geographic or psychic distance. The

BGs in other industries where competition is less fierce

are less likely to reach so widely-spreading geographic

areas (Karlsen, 2007). Inspired by Karlsen (2007)

operationalization of internationalization pace, it

consists of two dimensions: time frame and reach of

areas, reflecting how fast and how far BG firms enter

international markets.

H5: Internationalization pace is positively related to performance in

international markets

3.4 Dependent variable: Performance

In the dynamic high-tech sectors a factor that appears

to influence the performance of smaller firms is speed

to internationalization (Freeman, Edwards & Schroder,

2006; Crick & Spence, 2005). According to the definition

of BGs by Knight and Cavusgil (2004) and the

conceptualization of export performance (Madsen, 1987;

Shoham, 1997), the speed and geographic reach of

internationalization is directly linked to BGs’

performance, especially export performance.

Knight, Madsen and Servais (2004) suggest that BGs may

enjoy “first mover advantage” by rapid entry to new

markets abroad with a unique or innovative product or49

process. Because first movers in a given product market

tend to reap advantages or competitors that follow later

(Kerin et al., 1992). In particular, Lambkin (1988)

found that early market entry was associated with

superior market share among new and young firms.

Advantages may accrue to the pioneering firms for

several reasons. 1. For a period of time, it enjoys a

monopoly in the given product market; 2. The first mover

has a better chance to establish a leading market

position; 3. It advances early up the relevant product-

market learning curve; 4. First movers are more likely

influence initial consumer preferences regarding the

features and benefits of the new product (Carpenter &

Nakamoto, 1989).

By entering as many markets as possible and as fast as

possible, BG firms would increase the number of

customers (Selnes, Henriksen & Olsen, 1993) and market

coverage (Zou, Taylor & Osland, 1997), strengthen their

market position (Madsen, 1987; Zou, Taylor & Osland,

1997), develop their networks (Madsen, 1987) and improve

internal capability (Madsen, 1987). All these items lead

to superior export performance.

Chapter 4 Research Methods

The research intent is to demonstrate the relationship

between product characteristics, internationalization50

pace and performance of BG firms, which falls into

explanatory study category. Deductive approaches are

concerned with developing propositions from current

theory and making them testable in the real world

whereas theory is systematically generated from data

with inductive approaches (Saunders, Lewis & Thornhill,

2009). In the research deductive approach has been used

earlier to generate the conceptual framework for data

testing.

4.1 Research design

As few empirical studies have been conducted to focus on

product strategy, quantitative and qualitative research

are both employed as mixed-methods in order to

accomplish the research objectives. Saunders, Lewis &

Thornhill (2009) state that the data collected using a

survey strategy can be used to suggest possible reasons

for particular relationships between variables and to

produce models of these relationships. The two-phase

research design begins with qualitative data collection

technique, such as semi-structured interview to confirm

the conceptual framework in the Norwegian context and

provide an opportunity for model improvement. In the

second phase, a questionnaire survey is carried out as a

quantitative technique to validate findings from the

qualitative stage and yield the generalisability. A

pilot experiment is made to check the feasibility of

survey design before the questionnaire finalized.51

Tashakkori and Teddie (2003) point out that mixed

methods are useful when they provide better

opportunities for the researcher to answer research

questions and allow a better evaluation on the extent to

which your research findings can be trusted and

inferences made from them.

4.2 Data collection

The research is mainly based on primary data and but

secondary data source is also used for supplementary

purpose. The primary data is collected through semi-

structured interview of qualitative research, and

questionnaire survey of quantitative research. The

secondary data source includes external information

sources, such as export portal Nortrade, company

website, for identifying BG firms.

Figure 3: Description of BG Firms

Variable Classificatio

n

No. % Mean Media

n

Foundationyear

From 20001990-1999

Before 1990

413611

46.6%39.8%12.5%

1997 1999

Pre-exportperiod

0-3 years4-5 years

Over 5 years

551018

66.3%12%21.7%

3.16 2

Global vision (total point:

7)

Point 7Point 6Point 5Below 5

48141115

54.5%15.9%12.5%17%

5.83 7

Industry Point 7 63 71.6% 6.43 7

52

globalness(total point:

7)

Point 6Point 5Below 5

1285

13.6%9.1%5.7%

Figure 3 gives a general description of BG firms in the

sample. 77 firms out of 88 were established after 1990,

accounting for 87.5% out of total. More than half of BG

firms were established after 1999, indicated by the

median. 66.3% BG firms started exports within 3 years.

However, depending on the industry characteristics, the

pre-export period can vary to a big extent. For

instance, BGs in health care industry have a far longer

product R&D stage and it is quite common to take 10

years. 83% respondents agree that the BG firm founder

has a global vision while 17% respondents either don’t

know whether the founder has a global vision or

disagree. However, though some founders did not have a

global vision when the venture was founded, the global

vision may be formed later when macro-environment and

market condition change. So these firms may fall into

Born Again Global category. Concerning the perception of

industry globalness, 94.3% sample firms perceive they

are operating in a global industry.

The research starts with semi-structured interview and

six Norwegian firms are interviewed. The firms are

selected in an attempt to represent all the major

industries in Norway including marine, oil & gas, IT,

53

health care and renewable energy. Before the interview a

preliminary questionnaire is formulated, based on

related theory, previous research and Solberg’s

suggestions. Four marketing professionals and two CEOs

accepted the interview. During the interview all the

participants helped develop the concept of product

globality and measurement scale of internationalization

pace by answering predefined questions. Detailed

information of the semi-structured interview can be

found in Appendix 3 and 4. The questionnaire is revised

accordingly after each interview.

After repeated modifications, the questionnaire survey

is checked by Solberg and sent out via Confirmit (online

survey software) to a few companies for a pilot study.

Built on their feedback, the questionnaire is modified

further and tailored to the setting of Confirmit. When

the survey design is finalized, 352 Norway-based firms

are contacted by phone first and followed by email if

they agree to participate the survey. Among these 352

ventures, some are already identified as BG firms by

prior empirical research while others are selected as

prospective BGs after visiting Nortrade and company

website. 90 questionnaires are answered either through

Confirmit or email at the convenience of participants.

86 out of 90 questionnaires are usable with valid data.

54

This study is cross-sectional in terms of time horizon.

Utilizing Confirmit eliminates much of the danger of

missing values through the use of forced entry. The

responses by email are also examined when inputting data

manually and followed up by phone or email if there are

any answers missing. So the quantitative data is

collected in a controlled manner.

Figure 4 shows the industries the Norwegian BG firms

have engaged in. 32 sample firms are from ICT industry,

taking up 36% of total samples. ICT industry is the

biggest source for sample case in this study, with no

any other industry having more than 10 samples and it is

followed by Health care, oil & gas and shipping &

maritime industry in terms of sample number ranking.

What worthy mentioning is there are 12 companies

operating in at least two industries simultaneously.

55

IndustryFrequency Percent

ValidPercent

Valid ICT 32 36.0 36.4Oil & Gas 8 9.0 9.1Shipping & Maritime 7 7.9 8.0Environmental Technology

5 5.6 5.7

Aquaculture 3 3.4 3.4Health Care 9 10.1 10.2Electronics 3 3.4 3.4Marketing 2 2.2 2.3Defence 2 2.2 2.3Others 5 5.6 5.7At least in two sectors

12 13.5 13.6

Total 88 98.9 100.0Missing System 1 1.1Total 89 100.0

Figure 4: Industry Distribution of BG Firms

4.3 Measures

Except four measures of product globality, industry

globality, market globality and internationalization

pace, all the rest constructs are developed by Knight

and Cavusgil (2004) and modified according to Solberg’s

suggestion. The measurement instrument of industry

globality is developed, based on Solberg (1997).

Product globality is measured using a scale developed

through the semi-structured interview in the qualitative

research phase under the supervision of Solberg. The

scale of internationalization pace is developed by

Solberg and tested in the semi-structured interview. The

56

unit of analysis is the BG’s venture to its

international markets. Seven-point Likert scales are

used for all the variables to remain consistent. For a

full overview of all items and categories, see Appendix

6.

Scale reliability

As mentioned above, four constructs (product globality,

industry globality, market globality and

internationalization pace) are developed by myself with

Solberg’s supervision. So it is important to check the

reliability of the scales developed in this study. One

of the most commonly used indicators of a scale’s

internal consistency is Cronbach’s alpha coefficient

(Pallant, 2007). Ideally, the Cronbach alpha coefficient

of a scale should be above .7 (DeVellis, 2003).

After running reliability analysis with SPSS for all the

scales, the results are displayed in Appendix 6. Except

market globality whose Cronbach’s alpha is .432 (< .7),

all the other scales have a satisfactory internal

consistency with Cronbach’s alpha above .7. The scales

developed by by Knight and Cavusgil (2004) also show a

high reliability.

4.4 Data reduction: Factor analysis

Independent variables

57

Due to the fact that most of the measurement instruments

used in this research were previously developed and

validated, they are unrelated to the newly-designed

ones. Therefore, an initial factor analysis for

independent variables is conducted including all the

scale items.

Figure 5: KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

.725

Bartlett's Test of Sphericity

Approx. Chi-Square 671.898df 136Sig. .000

The suitability of the data for factor analysis is shownby Figure 3 above. The Kaiser-Meyer-Olkin measure ofsampling adequacy is .725, above .6 which is suggestedas the minimum value for a good factor analysis(Pallant, 2007). In addition, Bartlett’s test ofsphericity is signicant (.000 < .05). So the datasupports using factor analysis.

Since factor analysis is appropriate for data reduction,

exploratory factor analysis is performed as a following

step. All the scales including 17 items are input into

SPSS. Based on initial Eigen-values index (Eigen value

should be above 1), principle component analysis (CPA)

suggests a five-factor solution with 68% total variance

explained (see Figure 4). The original rotated component

matrix can be found in Appendix 7.

Figure 6: Eigen-value Index

ComponentInitial Eigenvalues

Total % of Variance Cumulative %

58

ComponentInitial Eigenvalues

1 5.192 30.539 30.5392 2.339 13.758 44.2973 1.677 9.864 54.1614 1.311 7.714 61.8755 1.102 6.485 68.361

As for creating and keeping variables, relatively strictrequirements must be met that items should have factorloadings above .50 and no large crossloadings (Robertsonet al, 1999). After removing those items one by one(PI4,PQ2, PI2, PI3, PI1) which do not satisfy the criteria,four factors are finally retained (see Figure 5). It isnoticeable that the scale of Product Globality isadvised to divide into two groups: one group isconcerned about product demand (PG4, 5 &3) while theother product standar-dization/adaptation (PG1&2).

Figure 7: Rotated Component MatrixComponent

1 2 3 4TC 4 .849TC 1 .771PI 2 .677PQ 1 .646TC 2 .595PG 4 .834PG 5 .823PG 3 .753PG 2 .908PG 1 .900PQ 4 .882PQ 3 .869

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Suggested by the result in Figure 5, all the retaineditems are clustered into four renamed factors according

59

to the remaining items: Technology Leadership (TC4, TC1,PI2, PQ1, TC2), Product demand (PG4, PG5, PG3), ProductStandardization (PG2, PG1) and Product Quality (PQ4,PQ3). The scale instrument of Technology Leadershipcontains PI2 and PQ1, which are from varied measure. Soa careful check should be included. PI2 concerns a newand innovative approach to addressing the customers’needs while PQ1 deals with higher quality standards ofproducts. PI2 may stand for a new and innovativetechnology here for developing products. However, thelink between PQ1 and Technology Leadership may indicatethat technology leadership usually results in higherquality standards or higher quality standards requireleading-edge technology for product R&D.

Dependent variables

Similar to independent variables, data reduction is alsocarried out to dependent variables with the sameprocedure. It begins with the check of reliability ofscales developed for dependent variables in Appendix 6.The scale reliability of Internationalization Pace(.827) and Performance (.737) are both satisfactory withCronbach alpha coefficient above .7, which demonstratessufficient internal consistency.

Because Internationalization Pace is a scale developedin this study, it is better to go through factoranalysis. The assessment is made next regarding thesuitability of the data for factor analysis. The Figure6 confirms that the data is suitable for factor analysiswith KMO value above .7 and significant for Bartlett’stest of sphericity (< .05).

60

Figure 8: KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.

.733

Bartlett's Test of Sphericity

Approx. Chi-Square 211.671df 15Sig. .000

Principle component analysis is then conducted and theoutcome is displayed in Figure 7. It indicates twofactors should be extracted from the six items in total,since two Eigenvalues are bigger than 1 with capabilityof explaining some 70% variance.

Figure 9: Initial Eigenvalue Index

ComponentInitial Eigenvalues

Total % of Variance Cumulative %1 3.219 53.645 53.6452 1.012 16.866 70.5113 .832 13.866 84.3774 .412 6.860 91.2375 .293 4.884 96.1216 .233 3.879 100.000

The questionnaire (see Appendix 5) is examined in order to find the distinction between two categories. The difference is the time horizon. The first category may mean a longer term if the firm was founded before 2006 and the second a short term of 3 years. In our samples, over 80% companies were established between 1990 and 2006. IP1 means the time period from the first product ready to market to present while IP2 concerns only the last three year.

61

Figure 10: The Modified Conceptual Framework after CPA

4.5 ValidityWhereas reliability concerns how much a variableinfluences a set of items, validity deals with theadequacy of a scale as a measure of a specific variable(DeVellis, 2003). Put it in another way, validity testswhether we are measuring what we intend to measure. Mosttextbooks suggest that three types of validity should beexamined: content validity, criterion validity andconstruct validity (Streiner & Norman, 2003).

Construct validityConstruct validity is the extent to which a set ofmeasured items actually reflects the theoretical latentconstruct those items are designed to measure (Hair,

ProductStandardiza

tion

ProductDemand

ProductQuality

TechnologyLeadership

InternationalizationPace 1

Performance

Industryglobality

InternationalizationPace 2

62

Black, Babin, Anderson & Tatham, 2005). It is made up offour components: convergent validity, discriminantvalidity, nomological and face validity (Hair, Black,Babin, Anderson & Tatham, 2005).

Convergent validity and discriminant validity are usedby the previous BG study (Knight & Cavusgil, 2004).Reliability is also an indicator of convergent validityand coefficient alpha remains a commonly appliedestimate (Hair, Black, Babin, Anderson & Tatham, 2005).Therefore the measure instrucments Product Globality,Industry Globality and Internationalization Pace haveshown good convergent validity (see Appendix ???:Reliability Analysis of all the scales) with allCronbach Alpha value above .7.

Discriminant validityDiscriminant validity is the extent to which a constructis truly distinct from other constructs and highdiscriminant validity provides evidence that a constructis unique and captures some phenomena other measures donot (Hair, Black, Babin, Anderson & Tatham, 2005). Beingunable to conduct confirmatory factor analysis, a simpleobservation method can be employed here. A gooddiscriminant validity can be found in the correlationsbetween measures and the cross-measure correlationcoefficients should be very low.

63

Inter-Item Correlation MatrixTechleadersh

ipPG

demand

Pro-qualit

y

Prostandardizati

on IP1 IP2 IGPerfor

mTechleadership 1.000 .184 .355 .091 .033 .070 .105 .063PGdemand .184 1.000 .340 .257 .063 .045 -.013 -.041Proquality .355 .340 1.000 .721 -.028 .027 .100 -.083Prostandardization

.091 .257 .721 1.000 .078 .109 -.076 -.043

IP1 .033 .063 -.028 .078 1.000 .520 .022 .294IP2 .070 .045 .027 .109 .520 1.000 .195 .343IG .105 -.013 .100 -.076 .022 .195 1.000 .060Perform .063 -.041 -.083 -.043 .294 .343 .060 1.000

Figure 8: Inter-Item/Cross-measure Correlation Matrix Figure 8 shows that there are two inter-itemcorrelations are very high whereas all the othercorrelations are acceptably low. One is the correlationbetween Product Quality (PQ3 & PQ4) and ProductStandardization (PG1 & PG2) with coefficient .721. Itindicates a strong correlation between productstandardization and product quality. It can beunderstood that product standardization processgenerally leads to product quality improvement in theindustry, as the industry standards set criteria forfirms to meet or excel. Therefore knowledge-intensiveNorwegian BG firms often offer standardized productsthat truly meets customers’ expectations. Another one isthe correlation between Internationalization Pace 1 and2. It is not surprising that they are two subgroups forthe same measure Internationalization Pace but with adifferent time frame.

Chapter 5 Results

64

5.1 Multivariate analysisBecause of the sample size (87 valid respondents), SPSSis chosen for multivariate analysis with linearregression. Ideally, with a large sample size (usuallyabove 200) Lisrel should be used for confirmatory factoranalysis (CFA) or structural equation modeling (SEM).Due to this fact, the whole model cannot be tested bySEM for concept development. Instead, linear regressionis conducted step by step with dependent variable fromIP1, IP2 to Performance. In order to explore otheroptions of model structure, linear regression is alsodone for other two subgroups of independent variable:one excludes moderator variable IG (see Option 1 column)and the other includes TL × IG, PD × IG, PQ × IG and PS× IG (see Option 2 column).

Figure 9: IP1 (dependent variable)Option 1 Option 2 Model

Technology leadership (TL)

.104 .981**

Product demand (PD) .086 .194Product quality (PQ) -.239 -1.346**Product standardization (PS)

.234 1.224**

Industry globality (IG)

.219

TL × IG .030 -1.805**PD × IG .105 -.192PQ × IG -.185

.1152.521**-1.149**PS × IG

F .774 .158 1.375R Square .036 .008 .140

Adjusted R Square -.010 -.041 .038Sig. .545 .959 .214

65

Notes: * p < 0.10, ** p < 0.05, *** p < 0.001

Model column in Figure 9 shows all the standardizedcoefficients with ** that are significant at p < 0.05.They are TL, PQ, PS and TL × IG, PQ × IG, PS × IG. Itsuggests that Technology Leadership (TL), ProductQuality (PQ) and Product Standardization (PS) indeedplay a significant role on internationalization pacewhereas there is no strong relationship between ProductDemand and IP1. Both Technology Leadership and ProductStandardization are positively related tointernationalization pace 1 while a shocking negativerelationship is found between Product Quality andinternationalization pace 1. Prior research mainlyfocuses on examining the causal relationship betweenproduct quality and performance, without involvement ofinternationalization pace. Industry globality enhancesthe strength of the correlation between TL, PQ, PS andIP1, but it changes the direction of the relationship,which is not predicted. These results will be discussedin detail in Chapter 6 with possible explanations. However, the independent variables in Model column haveno significant effect on IP1 with the time frame fromfirst product to market to present. As it is seen thatadjusted R square is far smaller than R2, implying noenough data per independent variable (Hair, Black,Babin, Anderson & Tatham, 2006). R2 value means that 14%of variance of IP1 is explained by the independentvariables in Model column.

Option 1 and Option 2 columns indicate that the othertwo groups of independent variables do not have asignificant effect on IP1, so these two options formodel linkage are rejected.

66

What worth mentioning is the adjusted R square valuesare both negative under Beta1 and Option 2 column.Adjusted R square is an adjustment of R2 based on thenumber of independent variables relative to the samplesize and it decreases as there are fewer observationsper independent variable (Hair, Black, Babin, Anderson &Tatham, 2006). Adjusted R square increases only if theadded variable improves the model more than would beexpected by chance, unlike R2 and and it will always beless than or equal to R2 (Wikipedia, 2010). Thus adjustedR square can be negative when there are no adequatesamples per independent variable or the model need to beimproved. Faced with a small sample size, it issuggested that the negative adjusted R square values arecaused by too few samples per independent variable.

Figure 10: IP2 (dependent variable)Option 1 Option 2 Model

Technology leadership (TL)

.102 1.189**

Product demand (PD) .043 .085Product quality (PQ) -.172 -1.780**Product standardization (PS)

.228 1.362**

Industry globality (IG)

-.190

TL × IG -.014 -2.292**PD × IG .102 -.023PQ × IG .032

.1253.579**-1.250**PS × IG

F .637 1.018 2.430R Square .031 .048 .226

Adjusted R Square -.017 .001 .133

67

Sig. .637 .403 .018**Notes: * p < 0.10, ** p < 0.05, *** p < 0.001Figure 10 shows a very similar pattern to Figure 9,except the significant overall effect of Model column ondependent variable. It indicates thatinternationalization pace 2 is significantly driven byTechnology Leadership, Product Quality and ProductStandardization and these three product characteristicsare reinforced by industry globality. Again Productdemand is found no significant effect on IP2. BothTechnology Leadership and Product Standardizationpositively drive up internationalization pace 2 whileProduct Quality is negatively related to IP2. Theexplanation may be pursuing a superior product qualitydemands substantial time and resources, which areprecious to BGs, and it slows down theinternationalization pace. Being identical to Figure 9,industry globality changes the direction of correlationbetween TL, PQ, PS and IP2. A further discussion isgiven in Chapter 6 on this topic. R2 value is .226,indicating that 22.6% of variance in IP2 is explained bythe independent variables in Model column. Adjusted Rsquare drops to .133, due to too few samples perindependent variable.

Option 1 and Option 2 columns demonstrate that the othertwo groups of independent variables do not significantlyinfluence IP2, so the other options of model linkage arerejected. The same result happens to IP1. Adjusted Rsquare in Option 1 column is negative, suggesting noenough data for the number of independent variables.This is also termed data overfitting when the degrees offreedom is small (Hair, Black, Babin, Anderson & Tatham,2006).

68

Based on the findings from Figure 9 and Figure 10, it isseen that Technology Leadership, Product Quality andProduct Standardization do play a strong role ininternationalization pace in the past three years, butno significant influence for a longer time periodranging from first product to market to present.

Figure 11: Performance (dependent variable)Option

1Option 2 Option

3Model

Technology leadership (TL)

.102

.497

Product demand (PD) -.018

-.057

Product quality (PQ) -.151

-.790

Product standardization (PS)

.049

.511

Industry globality (IG)

-.271

TL × IG .152 -.828PD × IG -.010 .083PQ × IG -.073 1.475PS × IG -.036 -.533IP1 .151IP2 .268**

F .329 .156 .432 6.583

69

R Square .016 .008 .049 .137Adjusted R Square -.032 -.041 -.064 .116

Sig. .858 .960 .914 .002**

Notes: * p < 0.10, ** p < 0.05, *** p < 0.001

Figure 11 demonstrates that merely IP2(internationalization pace in the last three years)strongly affects short-term BG firms’ businessperformance (in the last three years). This is logicaldue to the consistence of time period. In addition, onlythe linkage suggested by the model is statisticallysignificant, so all the three options are rejected.

5.2 Between group comparison: high IG group and low IGgroupShown in pervious part, industry globality as amoderator variable does affect the correlation betweenmost independent variables and IP2, but not IP1 andPerformance. In order to investigate further the role ofindustry globality, a between-group comparison isconducted here to see how the IG score impacts ondependent variables.All the samples are divided into two groups, based onthe IG (Industry Globality) median score: one with theIG score above 4 (high IG group) and the other below 4(low IG group).

5.2.1 IG’s effect on IP1First independent-samples t-test is carried out to seewhether industry globality has any effect oninternationalization pace 1. The results is interpretedand discussed in four steps.Step 1: Checking the group information

70

Figure 12: Group Statistics

IG N MeanStd.

DeviationStd. Error

MeanIP1 >= 4,00 52 3.7660 1.62254 .22501

< 4,00 34 3.7525 1.86277 .31946

In figure 12, it is found that there are 86 valid scores

for IG in total. 52 are equal or above 4 and 34 are

below 4. Regarding the dependent variable IP1, the mean

value gap between the two IG groups is very tiny, .0135

(also shown in Figure 13 and discussed in next page).

The standard deviation of the high IG group is smaller

than that of low IG group and the difference is .24023.

Figure 13: Independent Samples TestLevene'sTest for

Equality ofVariances t-test for Equality of Means

F Sig. t df

Sig.(2-tailed)

MeanDifferen

ce

Std.Error

Difference

95%ConfidenceInterval of

theDifferenceLower Upper

IP1 Equal variances assumed

1.390 .242 .036

84 .972 .01357 .37955 -.74120

.76835

Equal variances not assumed

.035

63.7

.972 .01357 .39075 -.76710

.79425

Step 2: Checking the assumptionIn Figure 13 the Sig. value based on Levene’s Test forEquality of Variance is .242, which is larger than .05,so the first line of results should be used (Pallant,

71

2005). It meets the assumption that there is an equalityof variances.

Step 3: Assessing differences between the groupsUnder the Column of t-test for Equality of Means, theSig. (2-tailed) value .972 is above .05 (cut-off point),so the outcome is that there is no statisticallysignificant difference in the mean IP1 scores for highIG group (>= 4) and low IG (< 4) group.

Step 4: Calculating the effect size for independent-samples t-testEffect size statistics provide an indication of themagnitude of the differences between the groups and themost commonly used one is eta squared (Pallant, 2005).

t2

Eta squared = t2 + ( N1 + N2 -2 )

0.0362

Eta squared = 0.0362 + ( 52 + 34 -2 )

= .000015The guidelines for interpreting the eta squared valueare: .01 = small effect, .06 = moderate effect, .14 =large effect (Pallant, 2005). Therefore only .154percent of the variance in IP1 is explained by IG, whichis really tiny and can be neglected. The conclusion oft-test is that IG (industry globality) has a very small andneglectable effect on IP1.

5.2.2 Summary of IG’s effect on IP1, IP2 and PerformanceThe same procedure is gone through to find out IG’seffect on Performance. In order to avoid repetition, asummary of IG’s effect on three dependent variables isgiven below.

72

DependentVariable

Sig.(inLevene’stest)

t Sig. (2tailed)

Etasquare

d

Size effect

IP1 .242 .036 .972 0.000015

very small

IP2 .671 2.141

.035** .052 moderate

Performance

.798 .482 .631 0.0028 very small

Figure 14: Summary of IG’s effect on dependent variables

Though the eta squared value for IP2 is .052, slightlybelow .06, and it is significant at p <0.05. Afterhaving discussed with Solberg, it is concluded that thesize effect is moderate.Based on the results displayed in Figure 14, it isconcluded that industry globality has a very smalleffect on IP1 and Performance, but a moderate effect onIP2. Because an extremely small variance in IP1 andPerformance is found between high IG and low IG groups,but over 5% variance is found in IP2 between high IG andlow IG groups.5.3 Summary of hypotheses test resultsBased on the outcome of previous data analyses, theresults of hypotheses test are revised accordingly andsummarized as below.

Figure 15: Summary of hypotheses test resultsHypothesis Resul

tH1a: Technology leadership is positively related tointernationalization pace 1. SH1b: Industry globality reinforces the correlation betweentechnology leadership and internationalization pace 1. R

73

H1c: Technology leadership is positively related to internationalization pace 2. SH1d: Industry globality reinforces the correlation between technology leadership and internationalization pace 2. RH2a: Product demand is positively related to internationalization

pace 1.

R

H2b: Industry globality reinforces the correlation between product demand and internationalization pace 1. RH2c: Product demand is positively related to internationalization pace 2.

R

H2d: Industry globality reinforces the correlation between product demand and internationalization pace 2. RH3a: Product quality is positively related to internationalization pace 1.

R

H3b: Industry globality reinforces the correlation between product quality and internationalization pace 1. SH3c: Product quality is positively related to internationalization pace 2.

R

H3d: Industry globality reinforces the correlation between product quality and internationalization pace 2. SH4a: Product standardization is positively related to internationalization pace 1. SH4b: Industry globality reinforces the correlation between product standardization and internationalization pace 1. RH4c: Product standardization is positively related to internationalization pace 2. SH4d: Industry globality reinforces the correlation between product globality and internationalization pace 2. RH5a: Industry globality is positively related to Internationlization pace 1.

R

H5b: Industry globality is positively related to Internationlization pace 2.

R

H6a: Internationalization pace 1 is positively related to performance.

R

H6b: Internationalization pace 2 is positively related to S

74

performance.

Notes: S = supported, R = rejectedChapter 6 Discussion and Conclusion

In this chapter all the results of hypotheses test arediscussed and a conclusion is drawn at the end.

6.1 Technology leadership (TL) and Internationalization pace (IP)Technology leadership is confirmed as an effectiveproduct strategy in both short-term and long-terminternationalization process, since it has a significantpositive effect on both IP1 and IP2. This result is inline with the finding of previous empirical studies thatBG firms with technology competence tend to have goodbusiness performance (Knight & Cavusgil, 2004; Moen,2000; Moen et. al, 2002; Moen, 2002; Rennie, 1993). Thisis also consistent with Parker (2005)’s statement thatwith globalization technological competence in bothproduct and process has been a critical success factorin most industries.

However, as seen in Figure 9 and Figure 10, industryglobality enhances the strength of the correlation, butchanges the direction of the relationship between TL andIP. Referring to this finding, case studies by Karlsen(2007) and interview notes have been reexamined. A logicexplanation may be that the higher industry globality,the more likely BG firms pursue technology advancement.It takes time and resources to develop technology-advanced products for resources-restrained BG firms.More important, it also takes a considerable amount oftime and resources to push the leading-edge technologyinto those highly global industries in which the

75

industry networks are well-established and a few bigplayers dominate the market. It is reflected in the SeaHawk Navigation’s experience “even though the companywas established 10 years ago, we have been through anextremely lengthy development process to develop theunique products which now is commercialized in severalversions. Most of the time however, has been spent ongetting funding for our very capital demandingdevelopment process, now finalized and with a patentedtechnology as basis. In essence we are very happy withthe product performance feedback, but extremely unhappywith the slow-moving sales process which we had expectedto grow much faster than experienced to date. We dohowever struggle with a lot of old 'dogmas', wellestablished supplier/customer relationships/networks andalso general 'credibility' challenges as a new andrelatively seen very small supplier and a product withhigher price than 'standard' products. Our only salesargument is the performance which to some customersrepresents operational savings, increased security,providing early warnings etc., which makes our productattractive for them.” This experience is not uncommonamong Norwegian BGs in highly global but well-definedindustries or sectors such as shipping, as some of themare faced with challenges of lack of funding, marketingcapability and network. They need to overcome thebarrier of established industrial networks as unknownnew-comers, in order to make a successful productlaunch. Though pursuing technology leadership generallyresults in superior firm performance, the process can belengthy and full of difficulties in some particularsituations, e.g. when the industry is truly global. Thisresult is partly in line with the findings of prior

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research (Knight & Cavusgil, 2004; Moen, 1999; Moen,2000; Rennie, 1993).

6.2 Product demand (PD) and Internationalization pace (IP)Positively related to internationalization pace, butproduct demand is found to have no significant impact onIP in both long-term and short-term. The result seemssurprising. The item of PD is suggested by the formerCEO of REC, Alf Bjørseth who claims that the early andfast internationalization of REC has been to a bigextent the outcome of huge market demand. Scan Wafer(part of REC in 2000) was established in 1994, whenthere was only one competitor, Bayer Solar, in themarket and the market was about to grow, the industrywas about to accelerate. It is discovered from REC casethat timing has been a critical attribute for growingproduct demand and it usually happens at the early stageof industry development. As the data from REC revealsthat the solar power industry has been growing at anannual rate over 30% since later 1990s. Checking theindustry distribution of BG firms in this research (seeFigure 4), very few industries are at this favourablephase, such as ICT and environmental technology(including solar power). However, unique and innovativeproducts can always create market demand, even in well-defined industries, e.g. Sea Hawk Navigation in Maritimeindustry. But under such circumstances, fastinternationalization has been proved more challenging,hinted by Sea Hawk Navigation after-survey feedback. Sothe finding is understandable, due to the fact that themajority of samples are not at this early industrydevelopment stage when the product demand is growingfast, and the market condition may not facilitate rapidinternationalization.

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Moreover, in those truly global industries where thereis high degree of concentration of competition,suppliers, customers, the product demand is not expectedto grow much, since the industry has been or is close tomature (Johnson, Scholes & Whittington, 2005). Thisprobably explains why industry globality does notreinforce the correlation between product demand andinternational pace.

6.3 Product quality (PQ) and Internationalization pace (IP)It appears shocking to find in this study that productquality is significantly but negatively related tointernationalization pace in both long-term and short-term. A possible explanation may be most BG samples inthis study target at business to business market wheresuperior product/service quality and higher price arenot always favoured, since it may increase thecustomers’ costs and affect cost structure, revealed inthe semi-structured interview with TMC. Simply stressingon product quality is not sufficient to achieve fastentry to international markets, other factors also playtheir part. After receiving the finished questionnairefrom Sea Hawk Navigation, a phone call was followed upto find out the cause of slow internationalization. Iwas told that “The feedback from our present customershas been overwhelming due to the unique performance, butwe have just exported products for 1 year and don't havemuch experience.” When faced with this challenge,marketing competence and network are probably equallyimportant for product distribution (Luostarinen &Gabrielsson, 2006; Moen, 1999). It is found in thisfield research that some Norwegian BG firms with astrong technology background need to tackle their

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weakness in marketing, even though they have productswith superior quality and performance. However, industry globality is found to change thedirection of the correlation between PQ and IP. Thismeans that high degree of industry globality would helphigh quality products including service accelerateinternationalization pace. This result is supported bythe finding of Kudina, Yip and Barkema (2008) that BGfirms in UK need to provide quality customer service tohighly demanding clients overseas, that necessaitatesopening overseas offices. Moen (2001) posits that somesuppliers in the highly global Norwegian shippingindustry are pushed by their customers internationalizefast. So both self-push and being pulled by customerswill speed up internationalization pace. In addition,business-to-business buyers and sellers in truly globalindustries are more inclined to benchmark their qualitystandards against each other, since high quality reducesrework and service costs while increasing value, marketshare and likely leading to good performance (Knight &Cavusgil, 2004). This finding is consistent to theprevious findings (Knight & Cavusgil, 2004; Knight,Madsen & Servais, 2004; Moen, 1999; Moen, 2000)

6.4 Product standardization (PS) and Internationalization pace (IP)Product standardization is found to positively correlateto internationalization pace, which is compatible withthe finding of Karlsen (2007) that 7 out of 12 casecompanies sell standardized products and 3 firmsinternationalize fast. Product standardization canenable BGs to distribute their products all over theworld without adaptation, which definitely speeds upinternationalization. As product modification takes timeand requires customers to pay the premium (Bennett &

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Blythe, 2002). This is also consistent with the findingof Jolly, Alahuhta and Jeannet (1992) that BG firmsusually rely on a standardized product to achieve earlysuccess in leading markets.

Again industry globality reverses the relationshipbetween PS and IP. This outcome suggests that productcustomization may speed up internationalization pace.This finding may relate to global niche market BG firmsusually serve in those highly global industries.Specialized and customized product demand is creatingglobal niches, which offer BGs opportunities tointernationalize fast (Rennie, 1993; Knight & Cavusgil,1996). Product specialization and customization doincrease costs and price, but also lead to customersatisfaction and loyalty. Customer satisfaction andloyalty may help BGs internationalize rapidly and usingreference customers is a common way for BGs to convinceearly customers (Luostarinen & Gabrielsson, 2006). SomeBG firms like Opera and Miros (Born Again Global) offercustomers both standardized and customized products.

6.5 Industry globality (IG) and Internationalization pace (IP)There is no significance in the correlation betweenindustry globality and internationalization pace. Thissounds understandable, industry globality is just amoderator, creating an environment for BG firms tointernationalize or facilitating internationalizationpace. However, it is those BG-related factors that havea great impact on internationalization pace of BG firms,e.g. founder’s experience and network, product strategy,marketing competence, international entrepreneurialorientation and international marketing orientation(Karlsen, 2007; Knight & Cavusgil, 2004; Knight, Madsen

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& Servais, 2004; Luostarinen & Gabrielsson, 2006; Moen,2001)

6.6 Internationalization pace (IP) and PerformanceIP2 is found to have a significant and positivecorrelation with Performance, but not IP1. As explainedbefore, this result may owe to the compatibility of timehorizon. The measurement of IP2 and Performance involvesthe same time frame of three years while IP1 can be muchlonger, depending the foundation year of samplecompanies. It is logic to find the direct relationshipbetween internationalization pace and performance. Fastinternationalization pace can result in good businessperformance. Connecting the product variables toperformance, it is found that technology leadership,product quality and product standardization may all leadto good performance in some specific situations, butindustry globality may also reverse the performanceresult. The finding implies that high industry globalitymeans hyper competition and the firm performance maychange considerably. It is mirrored in this statement“Globality is not a new and different term forglobalization, it is the name for a new and differentglobal reality in which we’ll all be competing witheveryone, from everywhere, for everything” (Sirkin,Hemerling & Bhattacharya, 2008).

6.7 ConclusionThe BG firms operate in a complicated and dynamiccontext, fairly beyond the present comprehension ofacademic research arena. This study is in an attempt toshed light on the impact of BG product strategy oninternationalization pace and performance. The originalconceptual framework (Figure 2) has been changed

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considerably after principle component analysis and newitems has been introduced. The modified model (Figure10) has shown very interesting results in Figure 15,e.g. in highly global industries such as ICT, shipping& maritime, product quality has the most significant andpositive impact on short-term internationalization pace(in the last three years) while technology leadershipand product standardization have a significant butnegative effect on short-term internationalization pace.Generally speaking, technology leadership and productstandardization are positively related to short-terminternationalization pace, but product quality isshockingly found to negatively relate to short-terminternationalization pace. These results suggest thatthere may be some varied situations in which industryglobality may affect internationalization pace andperformance in different way. However, this model mayhave some hidden structure problems due to somelimitations, elaborated in Chapter 7, therefore itshould be improved when a big sample size allows.

Chapter 7 Limitations

The inadequate sample is a problematic and primaryweakness in the study. As a result, it is impossible toconduct confirmatory factor analysis or structuralequation modeling. So the conceptual framework can bemodified. The small sample size also makes a comparisonbetween industries out of the question.

The low ratio of items to variables and the complexityof product variables reduce the confidence with which we

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can claim to have captured the phenomenon essence. Themeasurement of product characteristics may be improved.For instance, product specialization is missing in theresearch, but proved important in numerous studies(Karlsen, 2007; Knight, 1997; Moen, 2001). Furthermore,the impact of product standardization and adaptationshould be separate, due to the fact that some BG firmsprovide both standardized and customized products.However, the strategic rationale and applicationcircumstances remain unclear.

Though this study has generated interesting findings,especially the interactions between industry globality,product features and internationalization pace, theresults may be depart from the truth because of thelimits of linear regression. Linear regression cannotreflect complicated relationships like curves.

The operationalization and decoding ofinternationalization pace is complex in this study,which poses a question on the accuracy, to what extentdo we demonstrate the reality and represent theinternationalization pattern of BG firms.

This research is conducted in Norway only, where theindustries are concentrated in a narrow range, comparedwith some big nations. Since industry-specific factorsmay also play a role in strategy formation andinternationalization, there may be concern on generalityof BG firm’s product characteristics and its relation tointernationalization pace.

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Chapter 8 Implications

8.1 Managerial implicationsBased on the findings and discussions earlier, thisstudy implies that Born Global (BG) firm’s managementshould give a careful thought about their productdevelopment strategy. Though product demand is not foundto significantly impact internationalization pace, itshould be the starting point for leaders to investigateas well as the industry life cycle (annual growth rate,attractiveness). Knowing product demand requires BGfirms to listen to the target customers and learn theirneeds. Having a customer and industry insight will makea sound beginning for future success.

Technology leadership has been Norwegian Born Globals’strongest competitive advantage (Moen, 1999). Theyusually result in rapid internationalization and goodbusiness performance. However, the management needs torecognize that we are competing with everyone fromeverywhere in such a dynamic and global environment.Under some particular circumstances, the traditionalcompetence may not always lead to positive results. SoBG companies are suggested to keep monitoring theindustry trends and macro environment changes. Moreimportant, companies acquiring advanced technology fromoverseas perform better than those relying solely ondomestic R&D (Kudina, Yip & Barkema, 2008). This pointexplains the strategic rationale of a successful CEO inmy interview, who regularly visits the top universitiesand R&D labs all over the world to learn the latesttechnology updates. Therefore BG firms are suggested toacquire outside technology and knowledge to empower

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innovation through networking. Networking is encouragedto happen both inside and outside the industry, sinceinnovation occurs most likely at the intersection ofdifferent industries (Porter, 2008)

Product quality (including service quality) is found tohave the greatest impact on internationalization paceand consequently performance in highly globalindustries, which is consistent to the results of otherresearchers (Rennie, 1993; Moen, 1999; Knight &Cavusgil, 2004). So an emphasis on product qualityshould be always remained, as customers in global nichemarket look for products with superior quality.

Product innovation has been a core competence for manyBG firms. The management may need to focus on thefollowing issues: how to maintain an open andentrepreneurial organizational culture, a flexiblecompany structure and seamless teamwork, continuousknowledge sharing and creation, rethinking conventionalworking process and methods, building a network with keyplayers (including top universities, R&D labs, industryassociations, government agencies, strategic groupsetc.).

Product specialization reflects the degree of product

adaptation tailored to the needs of target customers or

special conditions (Kotler & Armstrong, 1996). It is an

important way for BG firms to direct their focus on a

niche market, though it is not discussed much in this

study. Developing highly specialized and unique products

creates a global niche, enables rapid globalization

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(Knight, 1997) and avoids direct competition with big

firms in massive market.

Product standardization and adaptation has been an oldtopic. BG firms usually start with a standardizedproduct to achieve early success in leading markets.However, it would be wise to develop follow-on productsand build a core competence quickly. Product adaptationwould benefit BGs in a long run due to inimitableexpertise, higher profit margin. Many successful BGfirms have both standardized and customized products.The point may be how to manage them in balance andoptimize the performance outcome. Luostarinen andGabrielsson (2006) suggest that products should bemodular to allow for country-specific adjustment withseparate country kits or easy installation of software.

8.2 Other practical implications Government agencies and policy makers

Access to funding has been a big challenge for many BGfounders and management. Though BGs may choose to useexternal capital, it will reduce their control andownership of the firms (Moen, 2001). So it would beideal if government agencies or policy makers establishsome initiatives or programs to assist BG firms withfunding and provide other necessary help, e.g. training,international networking. Some researchers mention thatInnovation Norway requires all newly-established firmsto have a foothold at home before granting financialsupport for exports (Karlsen, 2007; Moen, 2001). Thispolicy reflects the attitude of government towardsbusiness risk and entrepreneurship. Hopefully, thisattitude can be changed in the near future.

86

Educational institutionsBI has recently opened a master program on Innovationand Entrepreneurship. However, how can we ensure whatlearn at school is closely linked to reality and makethe program attractive to also practitioners? Thereshould be a linkage with the entrepreneurship-tailorededucation and entrepreneurs in practice. BI mayestablish some forums and have some regular activitiesto build and maintain this connection. It also appliesto other educational institutions In addition, going toa business school or university is not only foreducation, also for networking. Networking can help BGsleverage resources from outside and tap into some areasbeyond their own capability.

8.3 Implication for future research

This study focuses on the impact of product features on

the internationalization pace and performance. Based on

the findings of Karlsen (2007) and this field research,

other factors the founder’s network, marketing

competence may also have a significant influence on

internationalization pace. Further research can be

conducted on how these factors impact

internationalization pace and how they interact with

product features.

How to group the product characteristics of BG firms in

a realistic way is also worth further investigation. It

can help us understand better how BG firms respond to

their customers’ needs and formulate their product

87

strategy. More important, developing valid measure items

to represent the product characteristics may require

tremendous research skills and efforts.

As industry globality does have an effect on product

characteristics, but how it affects product variables,

are there any apparent patterns, under what

circumstances? All these questions will carry on our

interest into new research areas.

Internationalization pace is an interesting concept. How

to define, measure and decode this concept properly may

demand further research with collective endeavour. It

can help us understand better the real pattern of BG

firms’ internationalization process and further discover

the linkage or relationship between internationalization

pace and business strategies.

88

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Zou, S., Taylor, C.R. & Osland, G.E. (1998) The EXPERFScale: A Cross-National Generalized Export PerformanceMeasure, Journal of International Marketing, Vol.6. No.3. p37-58

http://en.wikipedia.org/wiki/Coefficient_of_determination

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Appendix 1: Conditions for, and DistinctiveFeatures of BG Firms

----based on the summary of Cavusgil & Knight (2009) andSperling (2005)

Facilitating factors: Globalization of markets Advances in communications and information

Technologies Advances in production technologies Low cost transportation Global niche markets Global networks More mobile and capable of human capital

Internationalization triggers: Export pull Export push Worldwide monopoly position Product-market conditions necessitating

international involvement Superior product offerings Global network relationships (e.g. clients'

network) Global niche markets

Distinctive features: Global vision Highly active in international markets from or near

founding Characterized by limited financial and tangible

resources Found across most industries Management have a strong international market and

entrepreneurial orientation Importance of network as a part of its growth

strategy International experience of management or key

players

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Flexible and responsive organisation culture andstructure

Core competency tend to embed in intangibleresources, e.g. technology, knowledge and moreefficient of use of resources

Often employ differntiation strategy Focus on innovative/unique products and superior

product quality Leverage advanced communication and information

technologies Often use external , independent intermediaries for

distribution in international markets

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Appendix 2 Conceptual Framework on Innovation,Organizational Capabilities and the Born Global Firm byKnight & Cavusgil (2004)

Organization

al

Culture

Business

Strategi

es

Performance

International

Entrepreneurial

Orientation

International

MarketingOrientation

Unique Product

Development

QualityFocus

GlobalTechnologi

calCompetence

Performance inInternational

Markets

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LeveragingForeign

Distributor

Appendix 3: The Background of Firms Participating inQualitative Interview

Company Location

Industryengaged

Interviewee

Redpill-Linpro Oslo IT Marketingconsultant

Tamrotor MarineCompressors(TMC)

Oslo Marine MarketingDirector

Miros Asker Marine, Oil &Gas

MarketingDirector

Scatec Oslo RenewableEnergy

CEO

Sonitor Sandvika

Health Care CEO

Medistim Oslo Health Care MarketingDirector

Appendix 4: Interview Objectives and Questions

Objectives:1. to develop a good understanding of productglobality/product globalization potential;

2. to learn how managers define their expectation orgoal of internationalization pace if they do have;

3. to listen to the comment on the questionnaire fortesting (no need to answer it)

Questions:

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What do you think of the globalization potential of yourproducts? Why?

Does the founder or/and top management have anexpectation towards the internationalization pace(including both speed and reach of geographic areas)? Ifthey do, how do they define them?

Estimated time: between 30 minutes and one hour

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Appendix 5: Questionnaire Survey

BORN GLOBALS

Welcome to my survey on product strategy and

firm performance.

Part One: Company Information

1. Which year was your company established?

2. Which industry/industries has your company engaged in?

3. How many years from foundation did it take before your company started exporting?

4.How many international markets and continents did yourcompany enter when the company had been exporting for 3 years? (Europe, America, Asia, Africa, Australia & New Zealand, and other areas) countries in continents

5. The founder/founders had a global vision (see the world as its marketplace) when the company was established or soon after. Please choose the rating.

1= totally disagree (1)

2= strongly

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disagree (2)3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally agree (7)

6. Your company is operating in a global industry/industries. Please choose the rating.

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally agree (7)

Part Two: Product Characteristics

1. Globalization potential of main products

1.1 Our primary/main products are standardized.

1.2 There is no or little need for product

customization.

1.3 Our primary/main products satisfy global demand.

1.4 Our products are compatible or integrable with

different local standards and requirements.

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1.5 Our primary/main products are in the value chain of some global customers.

1.1

1.2

1.3

1.4

1.5

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally agree (7)

2. Product innovativeness/uniqueness

2.1 Our primary export product satisfies a specialized

need that is difficult for our competitors to match.

2.2 Our product represents a new, innovative approach to

addressing the customer’s needs in the industry.

2.3 Compared with our main competitors’ products, our

product is unique regarding design.

2.4 Compared with our main competitors’ products, our product is

unique regarding technology.

2.1

2.2

2.3

2.4

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5)

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2.1

2.2

2.3

2.4

6= strongly agree (6)

7= totally agree (7)

3. Product quality

3.1 Compared to our competitors, our products are

considered having higher quality standards.

3.2 Compared to our competitors, our products are

considered solving customers’ problems better.

3.3 The performance of our products truly meets our

customers’ expectations.

3.4The service and other support provided with our product truly

meet our customers’ expectations.

3.1

3.2

3.3

3.4

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally agree (7)

4. Technology/knowledge competence

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4.1 Our firm has the leading-edge technology/knowledge

in the industry and in the market.

4.2 We invest a lot in R&D and keep creating the

technology/knowledge embedded in our product.

4.3 Compared with our competitors, we are often first to

introduce product/service innovations or new operating

approaches.

4.4 We are recognized in our main export markets for our

technology/knowledge-superior products.

4.1

4.2

4.3

4.4

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally agree (7)

Part Three: Industry globality and market globality

1. Industry globality

Our industry can be characterized as following:1.1 High degree of concentration of competition(few

competitors operating globally)

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1.2 High degree of concentration of suppliers (few

suppliers operating globally)

1.3 High degree of concentration of buyers (few buyers

operating globally)

1.4 High degree of concentration of endusers (few customers

operating globally)

4.1

4.2

4.3

4.4

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally agree (7)

2. Market globality

The market for our products can be characterized as following:

2.1 No or limited entry barriers to international markets

2.2 The demand tends to be same across all markets.

2.3 Customers/end-users have easy access to the product through distribution channels.

2.4 We are operating in a global market.

2.5 The global market for our products is expected to grow rapidly for next 3-5 years.2.6 The global market for our products has been growing rapidly overpast 3-5 years.

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2.1

2.2

2.3

2.4

2.5

2.6

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally

agree (7)

Part Four: Internationalization Intensity

1.1 After the first product was developed and ready to

the market, how many years did your company take to

reach the export sales ratios (export sales/total sales)

shown below?

export sales ratio

25% 50% 75% over75%

number of years

1.2 After the first product was developed and ready to

the market, how many years did your company take to

enter key markets in the following areas?

areas Norway

Europe

America

Asia Other

number of years

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1.3 After the first product was developed and ready to

the market, how many years did your company take to have a solid position in the following markets (e.g. a lasting relationship

with key customers)?

areas Norway

Europe

America

Asia Other

number of years

1.4 Over the last 3 years, we have expanded to all key markets in the world.

1= totally disagree (1)

2= strongly disagree (2)

3= disagree (3) 4= neutral (4) 5= agree (5) 6= strongly agree (6)

7= totally agree (7)

1.5 Over the last 3 years, the export ratio of our company has reached

1= below 25%

2= 25%-40%

3= 40%-50%

4= 50%-60%

5= 60%-70%

6= 70%- 80%

7= over 80%

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1.6 Over the last 3 years, how many new countries has your company entered?

1= no new markets

2= 1-2 new markets

3= 3-4 new markets

4= 5-6 new markets

5= 7-8 new markets

6= 9-10 new markets

7= more than 10 new markets

Part Five: Performance

1.1 Relative to expectations, how satisfied have you

been over past 3 years with market share of your main

products in your most important markets.

1.2 Relative to expectations, how satisfied have you

been over past 3 years with sales growth of your firm.

1.3 Relative to expectations, how satisfied have you

been over past 3 years with profitability of your firm.

1.4 How successful have your products been in main

export markets over the past 3 years?

1.5 How successful has your firm been gaining new knowledge in

export markets?

1.1

1.2

1.3

1.4

1.5

1= extremely unsuccessful/unsatisfied (1)

2= very unsuccessful/unsatisfied (2)

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1.1

1.2

1.3

1.4

1.5

3= unsuccessful/unsatisfied(3)

4= neutral (4) 5= successful/satisfied (5) 6= very successful/satisfied (6)

7= extremely successful/satisfied (7)

Thank you very much for your participation in this

survey. The findings and managerial suggestions will be

emailed to your company when they’re ready. I sincerely

wish you a successful 2010.

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Appendix 6: Reliability Analysis of all the scales

Scale: Product globality

Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.723 .730 5

Scale: Product innovativeness

Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.763 .763 4

Scale: Product quality

Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.743 .760 4

Scale: Tech competence

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Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.776 .773 4

Scale: Industry globality

Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.702 .706 4

Scale: Market globality

Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.432 .430 6

Scale: Internationalization pace

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Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.827 .828 6

Scale: Performance

Reliability Statistics

Cronbach'sAlpha

Cronbach'sAlpha Based

onStandardized

Items N of Items.737 .731 5

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Appendix 7: Factor Analysis for Independent Variables(original)

Rotated Component Matrixa

Component1 2 3 4 5

TC 4 .847TC 1 .747TC 3 .682 .359PQ 1 .649 .359PI 4 .645 .566TC 2 .514PI 2 .459 .752PI 3 .713PI 1 .623PQ 2 .571 .517PG 4 .843PG 5 .787PG 3 .769PQ 3 .851PQ 4 .823PG 2 .901PG 1 .893

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

Appendix 8: Descriptive Statistics of Variables

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Descriptive Statistics

N Minimum Maximum MeanStd.

DeviationTechleadership 88 2.00 7.00 5.4114 .98418PGdemand 88 1.67 7.00 5.5985 1.22152Proquality 88 3.67 7.00 5.2159 .85027Prospecialization

88 1.00 7.00 3.5966 1.66757

IP1 88 1.00 7.00 3.7159 1.71667IP2 86 1.00 7.00 3.6279 1.59691IG 86 1.00 7.00 4.0029 1.33312Perform 88 2.40 6.80 4.4591 .87265Valid N (listwise)

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