Introduction
Underpinning literature
International opportunity and international opportunity identification
Category | Terms | Definition/meaning (if available) OR approach/view adopted OR the way the respective term is used in IE literature | Examples in IE literature (selected references) |
---|---|---|---|
Mainstream terms for IO identification modes | Discovery | ‘[…] recognizing or discovering a “fit” between particular market needs and specified resources’ | Ardichvili et al. (2003, p. 109) |
Entrepreneur’s reactive behaviour in IO identification | Nordman and Melén (2008) | ||
‘The discovery view focuses on the elements of the social situation, such as resources and markets determined as means and ends in international opportunities’ | Mainela et al. (2014, p. 120) | ||
‘Act or process of perceiving or finding a favorable set of circumstances to create value’ | Chetty et al. (2018, p. 70) | ||
Passive search for IO | Kontinen and Ojala (2011b, p. 494) | ||
‘[…] spontaneous and unplanned cognitive process’ | Oyson and Whittaker (2015, p. 329) | ||
Used contextually and interchangeably with IO identification | Zahra et al. (2005) | ||
Used contextually and interchangeably with IO recognition | Oviatt and McDougall (2005) | ||
Elaboration on Kirzner’s (1997) approach | |||
Elaboration on Mainela’s et al. (2014) view | Blankenburg Holm et al. (2015) | ||
No specific definition; the term is nuanced on the basis of interpretation and integration of different studies within IE and entrepreneurship domains | |||
Creation | Formation of ‘a new “fit” between earlier separated market needs and resources’ | Ardichvili et al. (2003, p. 110) | |
Result of enactment, i.e. IO can only be created when it is exploited | Zahra et al. (2005, p. 140) | ||
‘The creation view focuses on the acting and interacting’ in the process of IO identification | Mainela et al. (2014, p. 120) | ||
‘[…] purposive and deliberate process involving both cognition and behaviour’ | Oyson and Whittaker (2015, p. 329) | ||
‘[…] act or process of shaping or creating a favourable set of circumstances to create value’ | Chetty et al. (2018, p. 71) | ||
Elaboration on Schumpeter’s (1934) approach | |||
Elaboration on Mainela’s et al. (2014) view | Blankenburg Holm et al. (2015) | ||
No specific definition; the term is nuanced on the basis of interpretation and integrations of different studies within IE and entrepreneurship domains | |||
Alternative terms for IO identification modes | Recognition | Entails opportunity perception, discovery and creation | Ardichvili et al. (2003, p. 110) |
Entrepreneur’s mental process, which is a part of IO discovery | Oyson and Whittaker (2015, p. 328) | ||
‘[…] realization that a market opportunity objectively exists for someone’ | Reuber et al. (2018, p. 397) | ||
Used contextually and interchangeably with IO identification | |||
Used contextually and interchangeably with IO discovery | |||
Search | Entrepreneur’s proactive behaviour in IO identification | Nordman and Melén (2008) | |
Active search | Kontinen and Ojala (2011b) | ||
Deliberate search | |||
Purposeful search | Zaefarian et al. (2016) | ||
Systematic search | Kontinen and Ojala (2011b) | ||
Used as the opposite for IO discovery | |||
No specific definition; the term is nuanced on the basis of interpretation and integrations of different studies within IE and entrepreneurship domains | |||
Perception | ‘[…] sensitivity to opportunity’ | Ardichvili et al. (2003, p. 110) | |
Starting point in IO development; related to cognitive capabilities and expectations of entrepreneurs | Lorentz and Ghauri (2010, p. 241) | ||
Cognitive process shaped by ‘what we know (i.e. knowledge), by what we think we know, and what we do not know’ | Renko et al. (2012, p. 1239) | ||
Mental process, which is a part of IO discovery | Oyson and Whittaker (2015, p. 328) | ||
Development | ‘[…] continuous, proactive process essential to the formation of a business’ | Ardichvili et al. (2003; p. 109) | |
‘[…] creating, combining or utilizing more effectively new or existing resources, and the coordination of their flows, through new or enhanced activity links with suppliers, distributors, or other supporting actors such as logistics service providers’ | Lorentz and Ghauri (2010, p. 241) | ||
Two-stage process consisting of IO recognition and exploitation | Blankenburg Holm et al. (2015, p. 342) | ||
IO type | Primary/initial | Opportunity to enter international markets for the first time | |
First or first-time IO | |||
Subsequent | IO succeeding initial/first/first-time IO | ||
Duality of IO identification modes | Discovery and creation modes of IO identification are not mutually exclusive | ||
Some IO can be discovered, while others are results of creation by entrepreneurs | Oyson and Whittaker (2015) | ||
The outcomes of one IO identification and pursuit become the antecedents of the identification and pursuit of subsequent IO |
Networks in international opportunity identification
Network ties descriptor | Categories | Definition/key features |
---|---|---|
Type of ties | Business networks | |
Social networks | ||
Institutional networks | ||
Strength of ties | Strong ties | Long-term, intensive relationships based on trust and commitment between network actors involved (Elfring and Hulsink 2003) |
Weak ties | Infrequent, irregular and non-affective relationships between network actors involved (Elfring and Hulsink 2003) | |
Locality of ties | International networks | Networks comprising actors originating from a number of countries (Andersson et al. 2013) |
Local networks | Networks, comprising actors originating from the same country/region (Andersson et al. 2013) | |
Development of ties | New ties | Ties formed as a result of network extension, i.e. establishing new relationships (Ojala 2009) |
Existing ties |
Mature industry context and firm late internationalisation
Methodology
Research design and case selection
Firm | Alpha | Beta | Gamma | Delta |
---|---|---|---|---|
Country of origin | Sweden | Norway | Norway | Sweden |
Form of business organisation | Joint-stock company | Joint-stock company | Joint-stock company | Joint-stock company |
Industry/types of operations | Manufacture of soap and detergents, cleaning and polishing preparations | Manufacture of rubber and plastic products | Machining Repair and installation of machines and appliances | Machining Experimental development engineering |
Type of industrial production | Mass manufacturing | One-of-a-kind manufacturing | Small series manufacturing | Small series manufacturing (machines) Mass manufacturing (spare parts) |
Examples of product/services | Detergents, impregnation liquids, fine particles for maintenance and restoration of natural stone floors | Design, production and installation of furniture and other interior elements (reception counters for hotels, product displays for stores, desks for TV studios) | Design and manufacture of machinery, tools and spare parts for a wide range of industries; machinery maintenance services | Design and manufacture of machinery, tools and spare parts for automotive, electronics, pulp and paper and offshore industries |
Year founded | 1909 | 1995 | 1987 | 1994 |
No. of employees | 10 | 8 | 36 | 9 |
Total sales (kSEK or kNOK), 2017 | 17,870 | 11,471 | 42,249 | 9,883 |
Approximate share of foreign sales (% of total sales): low (25–40%), medium (41–60%), high (61–70%) | Medium | Low | Low | High |
Interviewee(s) | Owner/CEO Owner/Board member | Founder/Owner/CEO | Founder/Owner/CEO | Founder/Owner/CEO Board member |
Principal owner/founder’s prior experience | Higher education studies Involvement in the firm as a successor | Higher education studies | Employment in the same industry | Higher education studies Employment in the same industry |
Data collection
Data analysis
Case findings
Firm | Alpha | Beta | Gamma | Delta |
---|---|---|---|---|
Country of origin | Sweden | Norway | Norway | Sweden |
Year founded | 1909 | 1995 | 1987 | 1994 |
1st IO | The Netherlands | UK | Sweden | Norway |
Time of 1st IO identification | 1980s | 2014 | 2010 | 2006 |
Mode of 1st IO identification | Creation | Discovery | Creation | Discovery |
1st IO exploitation | Yes | Yes | Yes | Yes |
Mode of market entry for 1st IO | Direct export | Direct export | Direct export | Indirect export Piggybacking |
Subsequent IOs | Australia South Korea Italy Germany UK Norway Denmark Ireland Finland United Arab Emirates | Latvia Lithuania | Poland Lithuania | Denmark UK Germany The Netherlands Australia USA Mexico Poland |
Mode of subsequent IO identification | Creation | Creation | Discovery | Creation |
‘False’ IOs | France Spain Turkey Croatia Bosnia Poland | Italy The Netherlands Sweden Denmark USA | – | United Arab Emirates |
We are very much a niche company but we got a feeling that there were good market opportunities outside Sweden. There are many more stone floor manufactures abroad than in Sweden, like in Italy, France, Spain… So we decided to search for customers via relevant trade shows which are also ‘niche’ and concentrate on stone floors. The largest trade show, which we considered quite relevant for our detergents, is regularly arranged in Amsterdam, where a lot of both manufactures and agents are represented.
Some of our overseas customers are small in terms of their contributions to our sales, other are quite large, some (this mainly applies to agents, distributors and wholesalers) have largely increased volumes of their buy-ins. There are those who during this year alone have bought more than they had ever bought before. For example, an Italian wholesaler has already purchased the whole year’s production volume, until the end of the year. It is really amazing!
We have understood that there was much more to do with the stone, in France, Italy and Spain.We have had a lot of contacts with our prospects in Croatia, sent samples of our product to them, but not much has happened there yet… But we still continue working with Croatia, also with Poland, Bosnia and Turkey. For example, we established quite good relationships with Turkey, but costs of delivery… Well, product delivery down there seems to be quite problematic now.Our primary focus was on Europe, and our ambition was to expand to European countries, but via trade shows we have established contacts with other customers from other parts of the world. We have established very good relationships with Dubai, and we realised that it is a very promising market for us.
The mentality of our customers in different markets differs a lot. While our customers in some markets are not so strict with regard to, let us say, how the product packaging would look and often simply accept our suggestions, it is completely different for our customers in other markets. A communication process can be much longer, and we might be required to negotiate every detail on the packaging: how large the label should be, which font size should be used on the label, how large certain symbols should be and where exactly on the label they should be positioned.
There [at trade shows] we meet people, we talk to them and we try to build trust between us and them.
When we meet, it is always good to talk about others’ experiences: what was good, what worked well… As a result of these meetings we understand, OK, this would be good to do together with X, or that is something we have to think about when we make a similar thing.
What is interesting about us is that we have not been good at marketing ourselves… We have not been so good at building our visibility online or using Google optimisation… We did not work with social media at all because for us it was a tool that was not much associated with B2B, and in the beginning we chose to abstain from that since we did not want to have B2C. We did not do anything internationally in the beginning. What helped us the most is actually ‘jungle telegraph’, I mean previous projects, which we did for our customers and put a lot of effort into. For us, it always starts with someone seeing our products and then getting in touch with someone in their network. That works!
We decided to map all the interior designers in this country, both large and small, and then we selected a smaller sample using a number of criteria (including the size) of those potential partners, whom we chose to introduce ourselves to, so we went straight to them. But it was a bit divided, we realised that there were many others who were contacting the interior designers, but they often wanted to have just one partner to have strong relationships with. It is not common that an interior designer wants to buy for example Corian from us and woodwork from someone else. So it made us think in terms of developing ‘packages’ for our potential partners, and it means we may need to dare to have more breadth and more skills for several types of materials. I think we can get more orders and grow faster than we do now just with Corian and Plexiglas acrylic we are good at.
We have some customers overseas, and we have mostly dealt with the interior design for various TV productions. Our first British customer was X, which is a TV channel. The main reason why they approached us and afterwards we got our first order from them is that we are the main supplier to Y, a Norwegian TV channel. Y is considered to be very good at designing their studios for different programs, so they received a number of inquiries from other TV companies, not only in Norway but also abroad. Basically, it was Y who promoted us and it all started in this way.
We also produce merchandising displays, we design and manufacture a lot of displays for globally renowned brands, but mainly for their points of purchase in Norway. Usually it’s the wholesalers here in Norway who choose our displays, as they generate more sales to them compared to other displays, which often look a little bit boring. That is why wholesalers are inclined to put some more money into displays. I asked: ‘Why not use similar displays in the rest of Europe?’ and we actually got a visit from Italy (brand A), they looked at our displays, and we received very good feedback. Then we got a visit from the Netherlands (brand B), and they liked our displays too. However, both logistics and costs were not optimal for them, so it did not result in anything.
Now we have also found a partner in Latvia, they will manufacture products designed by us for our European customers. This solution should cut total costs for our European customers. We have realised from our previous experience that as soon as the cost issue pops up in the process of negotiations, we are no longer on track.
There are other types of formal contractual arrangements in this industry. It’s not like what I was used to before. Actually, I come from a completely different industry, from the electronics industry, where I used to bind myself by contract. It does not work here, in this industry, in the same way. It is possible to enter into a contract for delivery of storable products on a regular basis, however, it is almost impossible to enter into an agreement for becoming an exclusive supplier. For us it would mean to deliver everything – from design to installation. Instead we have a lot of one-time orders, and most of them are quite unique. Can you imagine, most of our products are not standardized, like a reception desk, a table for a TV studio or a display for a well-known brand? They should look special, and it’s not often that our customers have to order such products again. In practice, it means that you need to sit down together with your customer to design, for example, a display and try to agree on a huge number of details. To come to an agreement you have to have a good dialogue with the customer, and good personal contacts are important. This is quite an old way to work – to visit your customers, to sit down with them, to talk to them. These personal meetings work best.We are members of an industrial association here in town, but I have to admit we are quite a passive member. Then we are a part of the cluster… It’s interesting to hear from others how they do things, what problems they have, it’s almost more interesting than hearing about what’s happening in our own industry. It is interesting to learn from other industries.
We wanted to try to do something outside Norway. I do not know why. We had a feeling that we were grown up enough for this step.
We are located quite near the Norwegian-Swedish border, and we knew that on the other side of the border there were some companies that might be interested in what we do. So I made a call to one of them, and we agreed on a meeting at their site. While there were no more than 80 km between us, we had never been in touch before. So we drove there to introduce ourselves. We wanted to indicate – we are here, we are not far away and we can deliver this and that.
It was not a big success. We started getting orders from Sweden now and then. At the same time there were a lot of positive things around that. First, we learnt a lot from our Swedish customers, about their needs, their expectations… In general we got a better understanding of the Swedish market. Then we realised what we are worth, that our efforts to achieve technical excellence have actually resulted in something. We got a good reputation in Sweden, people got to know who we are.
They realised that we had the same type of customers, often the same customers, but we served different needs. So they wanted us to be a partner and to serve all their customers. Consequently we expanded internationally together with our customers.
I met this guy here, in the city. Originally, he comes from Lithuania, but he had already lived in Norway for more than five years by the time we met. In our small place we do not have a lot of people from Eastern Europe, so it was interesting to talk to him. About different things at first, then about business. He was friendly, trustful and knowledgeable. So, we started thinking about moving a part of our production to Eastern Europe.
It started by coincidence. We did not think about serving foreign customers. We just designed and manufactured machines, different pieces of equipment and tools for various industrial companies in the region.
Then, in 2006, we ended up in the international market directly. First, we started to deliver to Norway, then it just moved forward. After five years our international sales generated most of our revenues. This is the balance we still have. We have some single customers from Sweden, but the majority are foreign.
Basically, we wanted to have someone who’d take care of processing our new customers. It was the main point to have this sales agent. We have a kind of gentleman’s agreement with them. We take care of production and further product development, and they take charge of marketing and sales.
It goes quite well. They sell of course, but maybe not to the extent we’d like them to do. We sell to the whole world via Norway, but we can do more… We can increase our production capacity tenfold, we need another channel to sell even more…
We take part in trade shows regularly (three-four times a year), we do extensive market research, we talk with Business Sweden, we try to establish contacts with our prospects, and we try to present ourselves to them. Trade shows seem to be the most important for us, there we have good chances to establish new as well as maintain current relationships with prospects, customers and potential agents.
We visit them [partners] often, and they come here often too. Actually, some visit us very often, it could be like every two months, others less often. But these visits and personal contacts, they generate so much for us. We share our experiences, discuss our problems, and try to find solutions. We observe that after these meetings things start happening, we have another dynamic.
Cross-case analysis and discussion
Identification of primary international opportunities
By means of discovery
Type of IO | Mode of IO identification | Case firms | Enablers of IO identification | Network ties used in IO identification | |||
---|---|---|---|---|---|---|---|
Type | Locality | Strength | Approach | ||||
Primary | Discovery | Beta Delta | Firm’s strong reputation in domestic market | Business | Local | Strong | Ties strengthening |
Creation | Alpha Gamma | Development, acquisition and accumulation of technological knowledge | Business | International | Weak | Ties extension | |
Subsequent | Discovery | Gamma | Acquisition of context-specific experiential knowledge in the process of identification and pursuit of primary IO | Social | Local | Weak | Ties extension |
Creation | Alpha Beta Delta | Acquisition of internationalisation knowledge in the process of identification and pursuit of primary IO Successful pursuit of primary IO | Business | International | Weak | Ties extension |