Theoretical Perspectives on the Internationalization of Firms

Morten Rask, Jesper Strandskov & Dorthe Døjbak Håkonsson

Abstract

The purpose of this paper is to build a coherent framework of the four main theories relating to the internationalization of firms, in order to facilitate better business teaching and research. Yet, theories of the internationalization of firms are broad and rest on different underlying assumptions. With the purpose of clarifying the potential for integration of partial theories and fragments in a more logically connected theoretical area, this paper offers a meta-theoretical overview of four perspectives within international business economics: Research and its related background, basic assumptions, study area, and implications of the theories in the internationalization of the firm

Keywords: Internationalization, coherent framework, background, basic assumptions, study area, implications

Introduction

The internationalization of the firm constitutes the process of adaptation, change, and development in a long range of successive transformations within the firm’s fundamental functions, systems, and structures. And it is a consequence of interaction with the multinational and transnational environment (Strandskov, 1995). During the years, a number of different theoretical approaches have seen the light of day. To some extent, the theoretical pluralism, which has affected the perception of the company’s interaction with the international environment, can be seen as a result of a fragmentation within the basic research area of business economics, i.e. micro-economics as well as management and organization research.

Consequently, it is important to examine the differences between the individual theories as regards what problems they address, what questions they try to answer, and what business understanding they rest on. In this paper, we try to shed light on the differences and linkages between the theoretical perspectives with the prospect of reaching beyond the “theoretical jungle” (i.e. the plural and fragmented theories), which characterizes international business economics in general, and the internationalization of firms in particular. We review four theoretical perspectives on the internationalization process of the firm: The institutional-economic perspective, the learning perspective, the strategic competition perspective, and the inter-organizational perspective (Strandskov, 1995).

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

2 Theoretical Perspectives on the Internationalization of Firms

Later in the paper we will argue that theories relating to a certain perspective cannot be used interchangeably with theories belonging to other perspectives. This does not amount to saying that the researcher/student/manager should use only one theoretical perspective in order to understand the internationalization process of a certain firm. On the contrary, it can be very fruitful to use several theoretical perspectives. The successful methods of utilizing several theoretical perspectives creates better international business teaching by facilitating a coherent learning process with regards to the internationalization of the firm. Each perspective will produce distinctive insights with their own pattern of strengths and limitations. The challenge is to integrate the insights in order to obtain an understanding, and in order to design a plan for taking action that will suit the specific purpose of the analysis (Morgan, 1997).

In the international business literature we have seen several attempts to integrate different contributions into one framework (e.g. Andersen, 1993; Andersen and Buvik, 2002; e.g. Dunning, 1988), yet none of these have been substituted for existing models. Perhaps because, quite understandably, they have only taken a partial view on the process of internationalization, and therefore have not been regarded as sufficiently encompassing.

In this paper, we do not try to identify one theory, but rather provide a meta-theoretical framework, showing the differences and connections between the theories, and how they can be fruitfully applied together. We do this first of all by identifying their drivers and the nature of their decisions, and secondly, based on this, by identifying the background, assumptions, study areas, and implications of each. Hence, rather than taking a partial and/or prejudiced view of the internationalization of the firm, this paper combines four selected contributions into a meta-theoretical analytical framework, i.e. we work towards an integration of partial theories and fragments in a more logically connected theoretical area within international business economics research. In essence, we try to achieve a middle-range approach (Bourgeois, 1979) contrary to the development of general theory. It is argued that it is not sufficient to focus on only one theory in order to explain the pattern and process of internationalization. In most cases it will be necessary to apply several different theoretical perspectives in order to understand the diversity, complexity, and particular nature of internationalization.

The purpose of this paper is to build a coherent framework for understanding the background, the basic assumptions, the study areas, and the implications of the theories in the internationalization of the firm, and it serves to facilitate better business teaching and research within international business field. The paper is organized as follows: First, the popularity of the four selected perspectives is identified, followed by a discussion of why the different perspectives do not reference each other. Secondly, we present a meta-theoretical analytical framework of the four theoretical perspectives. Based on this framework the third section discusses the differences in the theoretical perspectives. In the end of the paper we suggest directions in which researchers, teachers, students, and managers may take the framework.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 3

The Four Perspectives and the Discourse between the Perspectives

To clarify, throughout the paper we deliberately use the connotation: “perspectives” rather than “theories” or “models”. This is because we understand “perspective” as the choice of a context or the result of this choice from which to cohesively form a coherent belief, typically in order to compare with another. It enables us to create a theoretical construct with a broader view than had we used the term “theory”, which is a logically self-consistent model or framework for describing the behavior of a related set of social phenomena. Similarly, we see the term “model”,as an ideal to follow in order to enable reasoning within an idealized logical framework. Table 1 illustrates the four perspectives along with some of the major publications within each of these. As appears, we do indeed face a theoretical jungle of names, and hopefully the table below will help the reader navigate the jungle, by reading the names of related theories as they are described by different authors.

Table 1: The theoretical jungle of names Perspectives Names of related theories and models (Source that gave the name) Institutional-economic

• Internalization approach (Buckley, 2002; Buckley and Casson, 1998), • Internalization theory (Buckley, 1988; Buckley and Casson, 1996) • The existence and the behavior of the multinational cooperation

(Bartlett and Ghoshal, 1991) • Transaction cost approach (Johanson and Mattsson, 1987) • Transactions cost analysis model (Hollensen, 2007)

Learning • Internationalization process of the firm (Johanson and Vahlne, 1992) • Non-systematic approach to international market selection (Andersen

and Buvik, 2002) • Process models that describe internationalization as a gradual step-by-

step commitment (Johanson and Matsson, 1988; Johanson and Mattson, 1986)

• Stage model (Buckley, 2002) • Stage theory (Andersen, 1993) • Stages models of entry (Buckley and Casson, 1998) • Uppsala internationalization model (Andersen, 1993; Hollensen, 2007;

Johanson and Vahlne, 1990) Strategic competition

• Development of the firm's international competitiveness (Hollensen, 2007)

• Global strategic management (Bartlett and Ghoshal, 1991; Ghoshal, 1987)

• Industrial-organization-based view of strategy (Bartlett and Ghoshal, 1991)

• Model of transnational (Buckley, 2002), • Systematic approach to international market selection (Andersen and

Buvik, 2002) Inter-organizational

• Network approach (Johanson and Matsson, 1988; Johanson and Mattson, 1986; Johanson and Mattsson, 1987)

• Network mode (Hollensen, 2007) • The relationship approach to international market selection (Andersen

and Buvik, 2002) • Network perspective (Johanson and Vahlne, 1992)

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

4 Theoretical Perspectives on the Internationalization of Firms

Table 1 lists many sources that mention the name of related theories and models. These sources also referred to some classic texts on each of the perspectives. A quick search on Web of Science reveals that some of these perspectives are generally applied more often than others (table 2). As appears, the strategic competition perspective is the winner of the popularity contest with markedly more citations than the other perspectives. Likewise, the inter-organizational perspective is the bottom scraper. The learning and the institutional-economic perspective fall in between these two other perspectives.

Table 2 illustrates the recognition of classics texts of the four perspectives measured in a number of citations, and they are based upon research made in Web of Science (Thomson Reuters, 2008) that also include the Social Sciences Citation Index that covers literature from 1956 until the present.

Table 2: Number of citations of the classics in the four perspectives Citations

An institutional-economic perspective Buckley, P. J., & Casson, M. (1976). The future of the multinational enterprise. London: Mcmillian. 583

A learning perspective Johanson, J., & Vahlne, J.-E. (1977). The Internationalization Process of the Firm - A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies, 8 (1), 23-32.

566

A strategic competition perspective Bartlett, C. A., & Ghoshal, S. (1989). Managing across Borders: The Transnational Solution. Cambridge, MA: Harvard Business School Press. 754

An inter-organizational perspective Johanson, J., & Matsson, L.-G. (1988). Internationalization in industrial systems- a Network approach. In N. Hood & J. E. Vahlne (Eds.), Strategies in global competition. London: Wiley.

82

Web of Science, June 6, 2008

A second and perhaps more interesting insight is that there are few relations and comparisons to other perspectives. However, the reflective text (Bartlett and Ghoshal, 1991) within the strategic competition perspective relates to the institutional-economic perspective. It is also possible to find a text (Buckley and Casson, 1998) within the institutional-economic perspective that relates to the strategic competition perspective and to the learning perspective. However, the discourse between the perspectives is generally limited. For instance, within the learning perspective the reflections (Johanson and Vahlne, 1990; Johanson and Vahlne, 1992) are only related to the inter-organizational perspective and (almost) vice-versa (Johanson and Vahlne, 1992). There are some reflections (Håkansson, 1982; Johanson and Mattsson, 1987) - and these are not dedicated to internationalization - that relate to the institutional-economic perspective. When the founding fathers of the different perspectives are not participating in a broader discourse than within their own perspective, a discourse may be fruitful. On the other hand, the lack of discourse is not surprising since in their reasoning the theoretical perspectives are quite different.

One place in the literature in which such a discourse is found is within the more recent area of Born Globals or New International Ventures. This view relies on

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 5

a combination of experimental learning, ICT, and inter-organizational networks to explain Born Global’s accelerated internationalization process (Freeman and Cavusgil, 2007; Gabrielsson and Manek Kirpalani, 2004; Knight and Cavusgil, 2004; Luostarinen and Gabrielsson, 2006; Madsen and Servais, 1997; Mainela and Puhakka, 2006; Moen and Servais, 2002; Moen, 2002; Moen et al., 2004; Mort and Weerawardena, 2006; Sharma and Blomstermo, 2003; Weerawardena et al., 2007), and in that way it is perhaps less surprising that there is an abundance of cross- citations. However, on an overall level it is interesting to note that there are very few uses of and references to cross-perspectives within existing literature. In the following we will discuss possible reasons for this, and further elaborate on how we think a meta-theoretical framework is beneficial for teaching purposes as well as for holistic research agendas.

Four Theoretical Perspectives of the Internationalization of the Firm in a Meta-Theoretical Analytical Framework

For the purpose of positioning the four theoretical perspectives along a meta-theoretical framework we work with two dimensions: drivers and the nature of the decision. The term drivers refers to attention-evoking factors (Wiedersheim-Paul et al., 1978), i.e. whether the internationalization takes place as a result of an internal development process in which resources, competences, and skills are built and maintained - or, alternatively, are externally determined by outside conditions (opportunities and threats). Drivers are either internal or external (Crick and Chaudhry, 1997) and describe whether the form and direction of internationalization is explained primarily by factors within the company itself (strengths and weaknesses), or whether the process is first and foremost determined by factors within the company’s environment and its interaction with these factors.

The nature of the decision indicates whether the internationalization has come about as result of planned actions or as a result of a gradually emerging process (Strandskov, 1995). In the former it is assumed that the company’s internationalization strategy (choice of geographical market, operational form, etc.) rests on a carefully considered plan based on a thorough analysis of all relevant decision alternatives and choices. In this way, the strategic choices acquire a nature of deliberateness. In the latter case, the direction and shape of the internationalization emerges gradually; there is a gradual increase with regards to the consciousness of the decisions and the actions, which are implemented - and the consequences of this is an increase of learning and experience within the company. Thus a pattern appears, which is not intended à priori. No matter whether the direction of the internationalization is planned or emerging, it is materializing – either successfully or unsuccessfully.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

6 Theoretical Perspectives on the Internationalization of Firms

Figure 1: Four theoretical perspectives to the firm’s internationalization: Drivers and Nature of the decision process

Drivers Internal External

Pla

nned

An institutional-economic Perspective

A strategic competition Perspective

Nat

ure

of d

ecis

ion

Em

ergi

ng

A learning perspective An inter-organizational Perspective

Strandskov (1995)

Figure 1 positions the four theoretical perspectives along the two dimensions: drivers and the nature of decision. In that way the figure serves to classify existing theories in a clearer way. In order to understand the limits of a unique focus on one perspective, we will depart from the meta-theoretical framework developed by Strandskov (1995). This framework allows us to achieve a breadth of view of the different theories; their underlying mechanisms and consequently their differences and potential overlaps, which we think are beneficial with regards to teaching as well as analytical use.

The upper left square contains the institutional-economic perspective. Transaction cost analysis (Coase, 1937; Williamson, 1975; Williamson, 1985) and the internalization theory (Hymer, 1976) are the fundaments for the combination of transaction cost and internationalization (Buckley, 1988; Buckley and Casson, 1976; Buckley and Casson, 1996; Buckley and Casson, 2003; Buckley and Casson, 1998; Casson, 1983; Casson, 1987) as the most important contributions. The institutional-economic perspective is placed in the upper left hand corner with internal drivers and planned decisions. This is due to the fact that this perspective presupposes that conditions inside the company constitute the necessary but insufficient condition, which determines whether the company’s business activities may be internationalized. In addition, it is presupposed that the company’s international activities, not least those decisions which lead to a direct foreign investment, are the results of a rational plan; a plan that has been decided upon and implemented by top management based on thorough analyses of the transaction costs. As noted, this literature also contains an extensive discussion of assumptions of bounded rationality, opportunism, uncertainty, and small numbers conditions (Simon, 1947; Williamson, 1975). Furthermore, these ideas have been extended into discussions on the size of control, coordination costs, as well as decisions of centralization vs. de-centralization of foreign subsidiaries, etc.

The learning perspective is classified in the lower left-hand corner with internal drivers and emerging decisions. This is because decisions about future actions are formed on the basis of retrospective interpretation: Companies launch a number of

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 7

foreign activities and gradually acquire experience through these. The perception of risks and uncertainty is balanced against the growing (economic and organizational) involvement, which is successively realized on the foreign market. It is implied that the internationalization occurs through a process that is gradually emerging – following certain characteristic phases – in which commitment and experimental learning function as the driving forces in opposition to companies acting on the basis of a “rational” plan. The Uppsala-school (Johanson and Vahlne, 1977; Johanson and Vahlne, 1990; Johanson and Vahlne, 1992; Johanson and Wiedersheim-Paul, 1975; Vahlne and Johanson, 2002) and the stages model (Bilkey and Tesar, 1977; Cavusgil, 1980; Czinkota, 1982; Luostarinen, 1970; Reid, 1981) represent this theoretical perspective. An important note is that Johanson and Vahlne (2002) explicitly stress that they do not focus on stages but on the actual learning. Their contemporaries (Bilkey and Tesar, 1977; Cavusgil, 1980; Czinkota, 1982; Piercy, 1981; Reid, 1981; Steinmann et al., 1980) explicitly focus on stages, but also on the firm’s customer- and competitive-based motivations as the triggers and motives for expanding firm activities beyond the domestic task environment (Czinkota and Johnston, 1981; Samiee et al., 1993; Samiee and Walters, 1990; Samiee and Walters, 1991). Altogether, the learning perspective, as the institutional-economic perspective, assumes that internationalization is initiated and further developed on the basis of some internal conditions created by the company itself. The difference between the two is that the decisions are consequences of actual actions, i.e. through a form of retrospective rationality in which preferences, goals, and strategies are acquired. Thus, it is possible to speak of an “unplanned” internationalization process, which still unfolds itself through a number of characteristic patterns.

The strategic competition perspective is classified in the upper right-hand corner, with external drivers and planned decisions (Bartlett and Ghoshal, 1986; Bartlett and Ghoshal, 1989; Bartlett and Ghoshal, 1991; Douglas and Craig, 1989; Ghoshal, 1987; Hamel and Prahalad, 1985; Kogut, 1985a; Kogut, 1985b; Kogut, 1989). With a background in industrial economics and business-policy (Porter, 1980; Porter, 1985), the understanding is that the internationalization choices take place on various levels based on analyses of competitors, and they are terminated with an assessment of a number of alternative methods by which the business system can be internationalized: With regards to what parts of the value chain can and should be transferred to foreign markets, where the activities should be located, and how can and should the interaction between the individual links in the chain take place? These assessments are balanced against the company’s competences and resource base. The choices are mostly determined by external industry-related conditions.

Finally, the inter-organizational perspective (Johanson and Matsson, 1988; Johanson and Mattson, 1986; Johanson and Vahlne, 1992) is classified in the lower right-hand corner with external drivers and emerging decisions. In the literature on internationalization, this perspective is the least researched. As distinct for this perspective, it views a company’s interaction with other players from an angle of power and influence. Companies are assumed to be part of internal and external coalitions, which have arisen as consequences of social exchange. Social exchanges in turn occur as an element in exercising influence and controlling behavior. The choices relating to internationalization are made on the basis of political negotiations about services and trade-offs. The results of these choices cannot be determined in advance, as they are made on the basis of a political decision process, which is

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

8 Theoretical Perspectives on the Internationalization of Firms

controlled by relative positions of power and dependence. Thus, the process is emerging.

What appears from this meta-theoretical framework is of course the obvious fact that the models rely on different underlying mechanisms, i.e. drivers and the nature of decision-making, wherefore the framework in itself provides a useful way of distinguishing between the perspectives. Perhaps even more relevant for the purposes of this paper, the framework also provides students as well as practitioner’s with an easy overview and an understanding of what limitations a unique focus on one perspective entails, i.e. it provides an overall understanding of why some of those shortfalls arise that are mentioned in the section below. To take a concrete example, a unique focus on the institutional-economic perspective (inner drivers, planned nature of decisions) clearly would not include in the analysis a consideration of more emergent characteristics of decision-making situations. For instance, this institutional-economic perspective has been criticized for portraying human relations as atomistic, and for not taking into consideration the more emerging, long-run consequences of social relationships, as contained in e.g. the inter-organizational perspective. With the meta-theoretical framework we quickly become aware of this fact, because it categorizes the nature of decisions as planned, thereby leaving out emergent characteristics of decision-making situations. Similarly, the institutional-economic perspective was seen in the above section to have been criticized for its unique focus on cost minimization, while disregarding such aspects as the perceived value of goods, which, for example, is apparent in the strategic competition perspective. With the meta-theoretical framework we quickly realize that this is due to the perspective’s focus on the internal rather than the external drivers of change.

Finally, the meta-theoretical framework illustrates what we believe to be a reasonable insight: That the way forward for theories of internationalization is not to attempt an integration of theories. This is not advisable, as they clearly depart from different underlying assumptions, and we should rather ensure that they maintain their specific theoretical rigors.

The Theoretical Perspectives’ Differences in Reasoning

Instead of further integrating the views on internationalization, we think it is a matter of employing the theories in a combine but not necessarily integrated way, and for clarifying the different assumptions and hence implications that one is able to draw from each of the distinct theories. Therefore, in order to discuss the different insights and assumptions behind the four selected perspectives, we now find it useful to compare the four perspectives along the four categories of: (1) Background (2) Assumptions (3) Study area, and (4) Implications, which we believe provide a good background for the understanding of a meta-theoretical framework. Table 3 contains a categorization of the four perspectives along these four categories.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 9

Table 3: Summary of the four perspectives of internationalization of firms

Institutional-

economic perspective

Learning perspective

Strategic competition perspective

Inter-organizational

perspective

a) Theoretical approach

Traditional micro-economic theory

Behavioral decision theory

Industrial economics and business-policy

Organizational sociology

1) B

ackg

roun

d

b) Empirical focus

The choice between internalization and externalization in relation to sales, distribution, production, and supply

The choice of geographical markets and international entry modes

Competitive positioning and development of the competitive advantage

International expansion through existing inter-organizational relationships

a) Basic assumptions about firms’ behaviour

Opportunistic behavior is real because the single manager is a self-interest follower.

The firm creates an experience that pushes the firm to more and more risky markets and entry modes.

It’s possible to find an optimal position based upon the company specific advantages and comparative country advantages

The relationship that keeps the network together is based upon technological, economic, legal and especially personal ties.

2) A

ssum

ptio

ns

b) The primary objective of the firm

One single goal is to maximize the company’s economic efficiency

Several simultaneous goals in relation to satisfying growth ambitions

One single goal is to survive and maximize earnings

Several simultaneous goals in relation to maximizing the company’s position of power and influence vis-à-vis others and minimize dependence

a) Analytical level

The transaction or set of transactions

The company as a whole

Industry-company relation

Company-to-company relation

3) S

tudy

are

a

b) Unit of analysis

Transactions costs (search, contracting, monitoring and enforcement) and control costs

Experience, objective knowledge, commitment, and psychic distance

Business area/unit

Social relations, economic relations, technical relations, legal relations, etc

a) Theoretical results

The internationalization process explained as geographical growth with an increasing degree of vertical integration

The internationalization process of the firm unfolds as a learning-by-doing-process in relation to choice of geographical markets, operational forms, etc.

The internationalization process depends on the firm’s competitive position in the industry

The internationalization process is a result of continuous investments in market assets and market contact, which takes place both through collaboration and competition among firms.

4) I

mpl

icat

ions

b) Managerial implications

Internalize if the transaction costs is higher than control cost associated with building and maintaining an internal hierarchical system

Chose new geographic markets with low psychic distances from existing markets Chose an entry mode with few marginal risks

Analyze the environment, create a strategy as response, and monitor the performance of the firm

Use the relationship of the firm on the established domestic network as a bridge to networks in other countries

Inspired by Hollensen (2007) & Strandskov (1995)

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

10 Theoretical Perspectives on the Internationalization of Firms

Background

The institutional-economic perspective is a further development of micro-economics. Here assumptions of bounded rationality and opportunism, uncertainty, and small numbers conditions (Coase, 1937; Hymer, 1976; Williamson, 1975; Williamson, 1985) form the basis for explaining the transaction costs related to choices between internalization (incorporating the activities in the current firms hierarchy) and externalization (excluding the activities to be handled by the market) in relation to sales, distribution, production, and supply.

This theoretical background is different and yet related to the background of the learning perspective, which also builds on the implications of bounded rationality (Simon, 1947) and on the manner in which this work has also been integrated into classical economic decision theory and the further development hereof (Cyert and March, 1963). Experimental learning theory (Penrose, 1959) has also worked as a source of inspiration. Consequently, the empirical focus here is on explaining the choice of geographical markets and international entry modes as an incremental sequence of experience-based decisions.

In contrast to these two, the strategic competition perspective in its present form originates primarily from the industrial economics school (Porter, 1980; Porter, 1985) and includes contributions from strategic management literature. The empirical focus is on explaining the competitive positioning and development of the competitive advantage of firms or groups of firms.

The inter-organizational perspective finds its roots in organizational sociology and also comprises elements of political science. The research has been done primarily by the IMP Group of researchers in industrial marketing and purchasing (Ford and Håkansson, 2006). The empirical focus is on interpreting the internationalization of the firm as an expansion of existing inter-organizational relationships.

Assumptions

Based on assumptions of bounded rationality and opportunism, the institutional-economic perspectives provide clear guidelines on when firms should internalize, and when they should not: Internalization is preferable whenever the transaction costs associated with reducing problems that deal with bounded rationality and opportunism are substantial. These are usually situations with small number’s conditions and high uncertainty. Thus, with the institutional-economic perspective, the company’s goal is clear and unambiguous: The success criterion is efficiency. Those companies, which are better at controlling the transaction costs, are the most (economically) efficient companies. And, as noted by Williamson in response to criticisms against this unique focus on costs: Cost minimization is the best strategy. Naturally, such considerations have crucial consequences for the shape of the internationalization process.

Under the learning perspective, the internationalization materializes as a part of the company’s efforts to achieve growth in new geographical markets. The decision-makers of the company are assumed not to act on the basis of a predetermined complex of goals. The international activities emerge gradually, and during the initial stages they appear more or less coincidentally, as preferences are developed and

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 11

acquired based on the contents of experience: The firm creates an experience that pushes the firm towards riskier markets and entry modes. Problem solutions of this nature occur because the perspective relies on assumptions of bounded rationality (Simon, 1947). This means that the company only has little or insufficient knowledge, attention, and time to solve problems in the traditional, analytical way. Consequently, this perspective sees the company as a learning system, in which goals are gradually acknowledged and formulated.

Within the strategic competition perspective, the company’s goal is first and foremost determined by its interest in survival and financial earnings. It is believed that it is possible to find an optimal position based upon the company’s specific advantage and comparative country advantages. Industry “pressure” and the position of the business area in the industrial structure constitute the structurally decisive factors; e.g. the existence of industry characteristics, barriers to mobility, number of business units and their distribution by size, the overall demand elasticity of the market, possible utilization of economies of scale, possibilities for product differentiation, etc. These are important conditions, which determine the industrial structure and the development of competition. In this theoretical perspective the goal is also very clear: Survival and maximization of profits. Yet, in contrast to the institutional-economic perspective, in the strategic competition perspective above-average financial results are determined by the context of the industry, which will be achieved especially by companies in industries characterized by high entry barriers, a low level of product differentiation.

The inter-organizational perspective applies a less restrictive - and thereby more accommodating – assumption for determining what goals the company pursues. Considering the company’s current goals as a complex of several and often contradicting goals, this is assumed to complicate the analysis of choice of direction and shape of internationalization. This inter-organizational perspective is especially relevant in those cases in which the company operates in a more “friendly” environment. In such cases, contrary to restrictive and unfavorable conditions, the company’s utility function is primarily determined by its inter-organizational position vis-à-vis other actors, e.g. competitors, suppliers, authorities, etc. This is caused by the fact that the company is dependent upon its environment through technological, economic, legal, and especially personal ties – a viewpoint clearly reflective of this perspective’s departure from a sociological angle.

Study Area

Given these different backgrounds and underlying assumptions, it is not surprising that the four perspectives also focus on different analytical levels and units of analysis.

With the institutional-economic perspective, the analytical focus is placed on the individual micro-economic transaction or on a set of transactions. Transactions relate to the exchange of goods and services among economic actors, and the transactions costs refer to the discovery of what the prices are, negotiating, and renegotiating (Coase, 1937), and they occur whenever individual companies or groups of companies perform interactions. Typically, the micro-economic theory sees the transaction (“the exchange”) as a momentary and anonymous event without any historical ties.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

12 Theoretical Perspectives on the Internationalization of Firms

The learning perspective analyzes the company as a whole with regards to its objective knowledge, experience, competences, resources and related perceived psychic distances, commitment, and risk-taking. It is the company’s individual learning process and experience that is in focus, not notions of e.g. market relatedness.

The strategic-competitive perspective has the industry as its primary unit of analysis, i.e. the competitive position of the individual company at industry level. Thus, in order to explain firm heterogeneity it focuses on the structure of the industry in which the firm operates. As the competitive powers and their intensity and form are determined by the active participation of several actors, the analysis departs from the individual company’s preconditions in order to create lasting competitive advantages. However, it is carried out on the level of industry and strategic company groups. Given this focus on the industry as its unit of analysis, recent applications of this perspective often combine it with e.g. resource-based views of the firm (e.g. Amit and Shoemaker, 1993). This focus serves to include a consideration of the unique skills and competencies that a firm brings to an industry, and use a combination of these skills in order to assess competitiveness.

Under the inter-organizational perspective the analytical level is the individual transaction, or possibly several relations (networks) among companies. The units of analysis include for example social relations (social exchange), economic relations, technical relations, legal relations, etc. This means that the company’s organizational boundaries towards the environment become blurred. Similarly, the relations are not only “present” – momentary and anonymous – but instead they are both “past” (experience based) and “future” (based on expectations). The inter-organizational perspective seems to add new angles to the treatment of problems, especially with regards to purchase, sales, and R&D relating to industrial products and services.

Implications

The institutional-economic perspective explains the internationalization process as a result of management’s rationally considered distinction between what international activities and tasks to carry out within the company’s own organization (internalization) and what activities and tasks to carry out outside the company (externalization through the market). The managerial implication is simple: Internalize if the transaction costs are higher than control cost associated with building and maintaining an internal hierarchical system. The creation of “internal markets” facilitates an increasing degree of control and influence on international activities, which improve possibilities for utilizing economies of scale and scope. The gradual progression of internationalization can be seen as geographical growth towards an increasing degree of vertical integration. The integration may be downstream in the value chain towards the distribution and sales channels, and/or upstream in the production and manufacturing part of the value chain, in which sub-suppliers are acquired/bought-up or re-placed by the company’s own suppliers.

The learning perspective explains the internationalization process as an internal development process in which insufficient knowledge, market uncertainty, limited resources, etc. are gradually overcome through action, experience, and increasing commitment. These are factors that slowly lead the company towards the international markets in a certain (sequential) pattern, which has not been planned in

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 13

advance but which appears gradually. Therefore, the recommendations for the management of the firm are: To choose new geographic markets with low psychic distances from existing markets, and to choose an entry mode with few marginal risks.

The strategic competition perspective does not lead to a specific analytical result: The internationalization process, its form and speed, depend on the situation, i.e. it is dependent upon the company’s existing competitive position at industry and company group levels. The company’s competitive position will provide the framework for the choices in relation to its internationalization. Therefore, it is important for the management of the firm analyze the environment, to create a strategy as a response, and to monitor the performance of the firm on a continuous basis.

The inter-organizational perspective analyzes those international decision- situations in which the company will likely prefer to develop cooperation strategies towards foreign actors, such as competing companies, sub-suppliers, host-country authorities, financial institutions, etc. This is due to the fact that the business environment or other actors possess a number of critical resources, which are necessary for the strengthening of the company’s international competitiveness, and they can only be acquired under the circumstance of an extremely high level of market uncertainty. This means that the company must try to “circumvent” the business environment’s demands and conditions and perhaps try to influence the environment to move in a particular (desired) direction in order to gain access to the required critical resources. The internationalization process is a result of continuous investments in market assets and market contact, which take place through both collaboration and competition among firms. When a company expands its activities geographically, the attempts to build various types of dependency relations may be the right tool for acquiring access to important foreign resources, whose costs are prohibitively high and may otherwise be impossible to acquire. By entering into committed coalitions with important sub-suppliers, for example by becoming partners in a joint venture, the company may be able to minimize the uncertainty attached to suppliers. If there is geographical distance and if being physically close to the market is of decisive importance, such organizational solutions become more attractive. If there are also considerable political risks (dependent upon host-country) combined with substantial financial involvement from the company, shared ownership and control often represent better alternatives than the expansion of the company’s organizational set-up through vertical integration. Therefore, the managerial implications of the perspective serve to emphasize the use of the relationship of the firm on the established domestic network as a bridge to networks in other countries.

As the above review has shown, each of the different perspectives have rather different backgrounds, underlying assumptions, study areas, and consequently rather different implications.

Each of the four perspectives individually represents a theoretically rigorous perspective on internationalization. While this is their strength, such rigor usually comes with a limitation.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

14 Theoretical Perspectives on the Internationalization of Firms

For instance, by integrating notions of bounded rationality as well as opportunism into transaction costs analysis, Williamson (1981) clearly depicts a more realistic view on human behavior than that proposed by neoclassical economic theories. Granovetter (1985) argued that Williamson’s view still depicts human behavior as too atomistic. Instead, Granovetter (1985) argued that transactions are embedded within networks of social relationships, and that asset specificity and uncertainty are not the only concerns of managers. In that sense, it may be fruitful to combine the institutional-economic perspective with the inter-organizational sense that it focuses on exchanges and relationships as its units of analysis.

The learning perspective, similar to the institutional-economic perspectives departs from assumptions of bounded rationality. Yet, it essentially builds on a behavioral view on firm behavior (Cyert and March, 1963) in which learning is portrayed as myopic and decisions are incremental, wherefore decisions to internationalize are path dependent. While this rigorous focus is an advantage, which allows parsimony, it has also been criticized for not including views on market relatedness as e.g. contained in the inter-organizational perspective. Furthermore, the learning perspective has been criticized for not incorporating notions of long jumps, which recent studies have found to be essential for e.g. born globals (Freeman and Cavusgil, 2007; Gabrielsson and Manek Kirpalani, 2004; Knight and Cavusgil, 2004; Luostarinen and Gabrielsson, 2006; Madsen and Servais, 1997; Mainela and Puhakka, 2006; Moen and Servais, 2002; Moen, 2002; Moen et al., 2004; Mort and Weerawardena, 2006; Sharma and Blomstermo, 2003; Weerawardena et al., 2007). Similarly newer topics relating to e.g. global e-business would seem to question this assumption of non-relatedness underlying the learning perspective, as these theories focus on the independence of physical borders and the nation state.

As a final example, the institutional-economic perspective has been criticized for focusing solely on cost efficiency as the overarching goal. While this may be advisable in certain static environments, surely recent findings within strategic management and resource based theory in particular (e.g. Barney, 1996; Granovetter, 1985) would inform us that those products, which are not perceived as valuable by customers, will not sustain in the long run. In that sense, incorporating insights from the strategic management perspective in terms of what constitutes firm competitiveness could be fruitful. Just as acknowledging the potential benefits of long-run relationships, which might provide insights and valuable knowledge on a long-term basis, which a short-term analysis could not reveal. In that sense, this would seem to imply that integrating insights from the inter-organizational perspective might be advisable as well.

Discussion and Conclusion

The paper outlines a review of the background, basic assumptions, study area, and implications of four selected main perspectives on the internationalization of the firm: The institutional-economic perspective, the learning perspective, the strategic competition perspective, and the inter-organizational perspective.

The purpose of the paper was to provide teachers, students, and managers with an overview of the differences as well as the potential (missing) overlap between the different perspectives. Towards this goal, we departed from Strandskov’s meta-

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 15

theory (Strandskov, 1995), which we believe provides a coherent framework for an understanding of what limitations this unique focus on one perspective entails. Next, we discussed the different backgrounds, assumptions, study areas, and implications of the different perspectives, and discussed the limitations stemming from these underlying mechanisms of the perspectives.

In conclusion, this paper argues that theories relating to a certain perspective cannot be used interchangeably with theories belonging to other perspectives. This does not amount to saying that the researcher/student/manager should only use one theoretical perspective in order to understand the internationalization process within a certain firm. On the contrary, it can be very fruitful to use several theoretical perspectives. The use of several theoretical perspectives generates a better international business teaching by facilitating a coherent learning process with regards to the internationalization of the firm. Each perspective will produce distinctive insights with their own pattern of strengths and limitations. The challenge is to integrate the insights in order to obtain an understanding and an approach to designing the right way of taking action that will suit the specific purpose of the analysis (Morgan, 1997).

In terms of the implications of this paper, one issue could be to turn the focus on how researchers, teachers, students, and managers originally are taught to define the internationalization of the firm. This type of research could include an investigation of traditional international business curriculums and textbooks based upon the framework presented in this paper.

Perhaps on a broader level, there also seems to be a need for a broader discourse than the few contributions of the founding fathers of the different perspectives. This type of supplementary research could have as its point of departure the central perspectives and debates in organization theory (Astley and Ven, 1983). Even though the internationalization of firms is understood as a process, there seems to be a lack of longitudinal research. This is a limitation in itself, especially in relation to the understanding of the different perspectives. Could it be that the perspectives succeed each other during the process of internationalizing the firm? Another approach to a better understanding of the theoretical perspectives could be to challenge them with newer topics on the international business research agenda. A phenomenon such as global e-business is (in an international business setting) characterized by independence on physical borders and the nation state; factors that traditional international business literature implicitly takes for granted. Another central assumption of all the theoretical perspectives on the internationalization of firms is that, in theory, the firm has the opportunity to control the upstream as well as the downstream value chain. Can the theoretical perspectives on the internationalization of firms serve as a coherent and compressive framework, if this is not the case in the empirical analysis? What happens if, for example, the rise of global private label and OEM contracts totally removes the control of downstream value chain activities? Or if outsourcing activities remove all production activities from the domain of the firm? Then the internationalization of the firm is only related to the hub of coordination in which the firm is a spider in the web or the coordinator of the value chain, and does not have any direct contact to the product, production, or to the customer.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

16 Theoretical Perspectives on the Internationalization of Firms

References

Amit, R., & Shoemaker, P. J. H. (1993). Strategic Assents and Organizational Rent. Strategic Management Journal, 14 (1), 33-46.

Andersen, O. (1993). On the Internationalization Process of Firms: A Critical Analysis. Journal of International Business Studies, 24, 209-231.

Andersen, O., & Buvik, A. (2002). Firms' internationalization and alternative approaches to the international customer/market selection. International Business Review, 11 (3), 347-363.

Astley, W. G., & Ven, A. H. V. d. (1983). Central Perspectives and Debates in Organization Theory. Administrative Science Quarterly, 28 (2), 245-273.

Barney, J. B. (1996). The Resource-Based Model Theory of the Firm. Organization Science, 7 (5), 469-478.

Bartlett, C. A., & Ghoshal, S. (1986). Tap your subsidiaries for global reach. Harvard Business Review, 64 (6), 87-95.

Bartlett, C. A., & Ghoshal, S. (1989). Managing across Borders: The Transnational Solution. Cambridge, MA: Harvard Business School Press.

Bartlett, C. A., & Ghoshal, S. (1991). Global Strategic Management: Impact on the New Frontiers of Strategy Research. Strategic Management Journal, 12, 5-16.

Bilkey, W. J., & Tesar, G. (1977). The Export Behavior of Smaller-Sized Wisconsin Manufacturing Firms. Journal of International Business Studies, 8 (1), 93-98.

Bourgeois, L. J. (1979). Toward a Method of Middle-Range Theorizing. Academy of Management. The Academy of Management Review, 4 (3), 443-443.

Buckley, P. J. (1988). The Limits of Explanation: Testing the Internalization Theory of the Multinationial Enterprise. Journal of International Business Studies, 19 (2), 181-194.

Buckley, P. J. (2002). Is the International Business Research Agenda Running out of Steam? Journal of International Business Studies, 33 (2), 365-374.

Buckley, P. J., & Casson, M. (1976). The future of the multinational enterprise. London: Mcmillian.

Buckley, P. J., & Casson, M. (1996). An Economic Model of International Joint Venture Strategy. Journal of International Business Studies, 27 (5), 849-876.

Buckley, P. J., & Casson, M. (2003). The Future of the Multinational Enterprise in Retrospect and in Prospect. Journal of International Business Studies, 34 (2), 219-222.

Buckley, P. J., & Casson, M. C. (1998). Analyzing Foreign Market Entry Strategies: Extending the Internalization Approach. Journal of International Business Studies, 29 (3), 539-561.

Casson, M. (Ed.). (1983). The growth of international business. London: George Allen & Unwin.

Casson, M. (1987). The Firm and the Market. Cambridge, Mass: MIT Press. Cavusgil, S. T. (1980). On Internationalization process of firms. European Research,

8 (November), 273-281. Coase, R. H. (1937). The Nature of the Firm. Economica, 2-4 (16), 386-405. Crick, D., & Chaudhry, S. (1997). Small businesses' Motives for Exporting: The

Effect of Internationalization. Journal of Marketing Practice: Applied Marketing Science, 3 (3), 156-170.

Cyert, R., & March, J. G. (1963). A Behavioral Theory of the Firm. New Jersey: Printice-Hall International.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 17

Czinkota, M. R. (1982). Export development strategies: U.S. promotion policy. New York, N.Y.: Praeger.

Czinkota, M. R., & Johnston, W. J. (1981). Segmenting U.S. Firms for Export Development. Journal of Business Research, 9 (4), 353-366.

Douglas, S. P., & Craig, C. S. (1989). Evolution of Global Marketing Strategy: Scale, Scope and Synergy. Columbia Journal of World Business, 24 (3), 47-59.

Dunning, J. H. (1988). The Eclectic Paradigm of International Production: A Restatement and Some Possible Extensions. Journal of International Business Studies, 19 (1), 1-31.

Ford, D., & Håkansson, H. (2006). The Idea of Business Interaction. The IMP Journal, 1 (1), 4-27.

Freeman, S., & Cavusgil, S. T. (2007). Toward a Typology of Commitment States Among Managers of Born-Global Firms: A Study of Accelerated Internationalization. Journal of International Marketing, 15 (4), 1-40.

Gabrielsson, M., & Manek Kirpalani, V. H. (2004). Born globals: how to reach new business space rapidly. International Business Review, 13 (5), 555-571.

Ghoshal, S. (1987). Global Strategy: An Organizing Framework. Strategic Management Journal, 8 (5), 425-441.

Granovetter, M. (1985). Economic action and social structure: the problem of embeddedness. American Journal of Sociology, 91, 481-510.

Hamel, G., & Prahalad, C. K. (1985). Do You Really Have a Global Strategy? Harvard Business Review, 63 (4), 139-149.

Hollensen, S. (2007). Global Marketing – A decision-oriented approach (4 ed.). Essex, England: Financial Times Press.

Hymer, S. H. (1976). The international operations of national firms: a study of direct foreign investment. Cambridge, Mass: MIT Press.

Håkansson, H. (Ed.). (1982). International marketing and purchasing of industrial goods: an interaction approach. Chichester: John Wiley & Sons.

Johanson, J., & Matsson, L.-G. (1988). Internationalization in industrial systems- a Network approach. In N. Hood & J. E. Vahlne (Eds.), Strategies in global competition (pp. 287-314). London: Wiley.

Johanson, J., & Mattson, L.-G. (1986). International marketing and internationalization process-a network approach. In P. W. Turnbull & S. J. Paliwoda (Eds.), Research in international marketing (pp. 234-265). London: Croom Helm.

Johanson, J., & Mattsson, L.-G. (1987). Interorganizational relations in industrial systems: a network approach compared with the transaction cost approach. Working paper: Department of Business Studies, Uppsala University.

Johanson, J., & Vahlne, J.-E. (1977). The Internationalization Process of the Firm - A Model of Knowledge Development and Increasing Foreign Market Commitments. Journal of International Business Studies, 8 (1), 23-32.

Johanson, J., & Vahlne, J.-E. (1990). The Mechanism of Internationalism. International Marketing Review, 7 (4), 11-25.

Johanson, J., & Vahlne, J. E. (1992). Management of foreign market entry. Scandinavian International Business Review, 1 (3), 2-2.

Johanson, J., & Wiedersheim-Paul, F. (1975). The Internationalization of the Firm: Four Swedish Cases. Journal of Management Studies, 12 (3), 305-322.

Knight, G. A., & Cavusgil, S. T. (2004). Innovation, Organizational capabilities, and the born-global firm, Journal of International Business Studies (Vol. 35, pp. 334-334).

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

18 Theoretical Perspectives on the Internationalization of Firms

Kogut, B. (1985a). Designing Global Strategies: Comparative and Competitive Value-Added Chains. Sloan Management Review (Summer), 15-28.

Kogut, B. (1985b). Designing Global Strategies: Profiting from Operation Flexibility. Sloan Management Review (Fall), 27-38.

Kogut, B. (1989). A Note On Global Strategies. Strategic Management Journal, 10 (4), 383-390.

Luostarinen, R. (1970). Foreign operations of the firm. Thesis, Lic. Sc., Helsinki School of Economics, Helsinki.

Luostarinen, R., & Gabrielsson, M. (2006). Globalization and marketing strategies of Born Globals in SMOPECs. Thunderbird International Business Review, 48 (6), 773-801.

Madsen, T. K., & Servais, P. (1997). The internationalization of Born Globals: An evolutionary process? International Business Review, 6 (6), 561-583.

Mainela, T., & Puhakka, V. (2006). Role of Networks in Ermergence of International New Ventures. Paper presented at the 22nd Annual IMP-Conference, Milan, Italy.

Moen, Ã. y., & Servais, P. (2002). Born Global or Gradual Global? Examining the Export Behavior of Small and Medium-Sized Enterprises. Journal of International Marketing, 10 (3), 49-72.

Moen, O. (2002). The Born Globals. International Marketing Review, 19 (2/3), 156. Moen, Ø., Gavlen, M., & Endresen, I. (2004). Internationalization of small, computer

software firms: Entry forms and market selection. European Journal of Marketing, 38 (9), 1236-1251.

Morgan, G. (1997). Images of Organization (2nd ed.). Thousand Oaks, CA: Sage Publications.

Mort, G. S., & Weerawardena, J. (2006). Networking capability and international entrepreneurship: How networks function in Australian born global firms. International Marketing Review, 23 (5), 549-572.

Penrose, E. T. (1959). The Theory of the Growth of the Firm. Oxford: Blackwell. Piercy, N. (1981). Company Internationalisation: Active and Reactive Exporting.

European Journal of Marketing, 15 (3), 26. Porter, M. E. (1980). Competitive strategy: techniques for analyzing industries and

competitors. New York: Free Press. Porter, M. E. (1985). Competitive advantage: creating and sustaining superior

performance. New York: Free Press. Reid, S. D. (1981). The Decision-Maker and Export Entry and Expansion. Journal of

International Business Studies, 12 (2), 101-113. Samiee, S., Walter, P. G. P., & DuBois, F. L. (1993). Exporting as an Innovative

Behaviour: An Empirical Investigation. International Marketing Review, 10 (3), 5. Samiee, S., & Walters, G. P. (1990). Influence of Firm Size on Export Planning and

Performance. Journal of Business Reserach, 12, 141-157. Samiee, S., & Walters, P. G. P. (1991). Segmenting Corporate Exporting Activities:

Sporadic versus Regular Exporters. Journal of the Academy of Marketing Science, 19 (2), 93.

Sharma, D. D., & Blomstermo, A. (2003). The internationalization process of Born Globals: a network view. International Business Review, 12 (6), 739-753.

Simon, H. (1947). Administrative Behavior: A Study of Decision-Making Processes in Administrative Organizations (4th ed. in 1997 ed.): The Free Press.

Steinmann, H., Kumar, B., & Wasner, A. (1980). Conceptualizing the Internationalization Process of Medium-sized Firms. Some Preliminary

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502

Theoretical Perspectives on the Internationalization of Firms 19

Considerations for a Research Design. Management International Review (MIR), 20 (1), 50-66.

Strandskov, J. (1995). Internationalisering af virksomheder (Internationalization of Companies). København: Handelshøjskolens Forlag.

Thomson Reuters. (2008, May 30). Web of Science. Thomson Reuters. http://scientific.thomson.com/products/wos/ [2008, June 6].

Vahlne, J.-E., & Johanson, J. (2002). New Technology, New Companies, New Business Environments and New Internationalisation Processes? In V. Havila; M. Forsgren & H. Håkansson (Eds.), Critical perspectives on internationalisation (pp. 209-227). Amsterdam: Pergamon.

Weerawardena, J., Mort, G. S., Liesch, P. W., & Knight, G. (2007). Conceptualizing accelerated internationalization in the born global firm: A dynamic capabilities perspective. Journal of World Business, 42, 294-30.

Wiedersheim-Paul, F., Olson, H. C., & Welch, L. S. (1978). Pre-export activity: The first Step in Internationalization. Journal of International Business Studies (9), 47-58.

Williamson, O. E. (1975). Markets and hierarchies: analysis and antitrust implications, a study in the economics of internal organization. New York: Free Press.

Williamson, O. E. (1981). The Economics of Organization: The Transaction Cost Approach. American Journal of Sociology, 87 (3), 548.

Williamson, O. E. (1985). The economic institutions of capitalism : Firms, markets, relational contracting New York: Free Press.

This is an Author's Accepted Manuscript of an article published in Journal of Teaching in International Business, Vol. 19, Iss. 4, 2008, 12 Dec 2008, copyright Taylor & Francis,

available online at: http://www.tandfonline.com/10.1080/08975930802427502