The emergence of born-again global SMEs: A case study from the Netherlands

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The emergence of born-again global

SMEs:

A case study from the Netherlands

International Entrepreneurship

H. R. van Diedenhoven Supervisor: A.N. Kiss University of Groningen

Faculty of Economics and Business

Msc. International Business and Management

Date: 21th of June, 2013 Radesingel 1 9711 ED Groningen 06-22128323 h.r.van.diedenhoven@student.rug.nl Student number: 1535544

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Abstract

The research that is conducted will elaborate within the context of international entrepreneurship on mature SMEs that in a later stage of their production life suddenly and rapidly internationalize. Due to a critical incident or episode from the in- and/or outside environment, these firms change their domestic market orientation, and establish business operations in foreign markets. The aim of this research is to conduct an exploratory case study within the Dutch market. Within the literature review external and internal factors are identified that have influence on the emergence of born-again global firms. The questions that are raised are how the emergence evolves within Dutch born-again global firms, which external and internal factors are important within this geographical context, and how these factors interact towards the emergent process of Dutch born-again global SMEs. The outcomes of this research state a combination of the external factors client follower-ship and supplier pressure with the internal factors growth orientation in size, intelligence generation, international growth orientation, and financial growth orientation. This combination of factors pushes the representative firm in the study to internationalize. This study will contribute to provide a better understanding of the phenomenon of born-again global firms and will provide managers in mature firms with a tool that helps them to start internationalize.

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Models

Model 1: Identified external and internal factors from the literature influencing born-again global internationalization……….20

Model 2: Timeline with the internationalization path of the SME………...27

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Tables

Table 1: Summary of differences and similarities between born-again global, born global, and traditional

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1. Introduction

During the 1990s, a new field of research in entrepreneurship arose in response to newly internationalizing firms. These firms are identified as born global (Rennie, 1993), and International New Ventures (INV) (Oviatt and McDougall, 1994). Born global firms have the tendency to internationalize very rapidly after their foundation, and INVs display after their establishment a competitive advantage through the use of resources and sales that are generated from multiple countries. Furthermore, these particular firms display a more dynamic nature, which is perceived according to the theories of Oviatt and McDougall (1994) and McDougall et al. (1994) as “anomalous to the traditional patterns of firm internationalization” (Peris, Akoorie, and Sinha, 2012). This statement challenges the traditional models of internationalization that according to these models occur slowly and stepwise to countries that are physically close to the domestic market of a firm (Johanson and Vahlne, 1977, 1990; Cavusgil; 1980; Reid, 1982). Beyond the literature about newly internationalizing firms and the traditional models of internationalization of firms, research is also conducted on mature companies (Zahra, 1993; Zahra and George, 2002). These authors state that entrepreneurial activities can be adopted by a firm at any point in time in their life cycle. It is a matter of strategic orientation that is established on firm-level by top management teams, and is not necessarily an activity performed by an individual nascent entrepreneur.

Along with these findings, Bell, McNaughton and Young (2001) found in their studies a type of firm that did not completely fulfill the internationalization process of original traditional firms. Instead it displays, after establishment in the domestic market for a long period of time, a change from their domestic market orientation towards foreign markets after a critical incident. As a consequence, these firms suddenly and rapidly internationalize, and establish business operations within the aimed foreign markets. As can be noted, the typical internationalization process of such firms has a mixture of features that can be related to both traditional and born global firms. The (initial) development phase of these firms is oriented on the domestic market, which is comparable to traditional firms. However, when they start to internationalize, this process occurs very rapidly and is similar to the internationalization process of born global firms (Bell et al., 2001; Bell, McNaughton, Young and Crick, 2003). Bell et al. (2001, 2003) defined this phenomenon in their articles as born-again global firms.

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Page | 7 organizations, and increases the company value. Regardless of the type of industry of a SME, all well-established, mature SMEs which still are oriented domestically are candidates that possibly could adopt this type of internationalization strategy. Research related to this type of internationalization process of firms is still in its infancy. Since there are a great number of potential firms that might adopt the born-again global internationalization process, it is necessary to conduct a more in-depth research on born-again global firms to recognize them and enact on possible opportunities along with this type of internationalization. This insight will enable managers, executives and/or owners of well-established firms to become aware of rapid internationalization and its opportunities, and give them the tools and knowledge in order to succeed when its organization adopts a born-again global internationalization strategy. Furthermore, it will provide new perspectives and tools that can be used by (e.g.) a countries government in order to support existing firms to expand internationally.

Because the existing literature on international entrepreneurship is primarily focused on born global firms and INVs research in combination with (e.g.) venture types, internationalization, networks and social capital, organizational issues and entrepreneurship (Jones, Coviello, and Tang, 2011), in-depth studies about born-again global firms are still lacking. This paper aims to fill up a part of the existing literature gap on this specific phenomenon by conducting an exploratory case study within the Netherlands. Besides the in-depth research of Bell et al. (2001) and the longitudinal case study of Janjuha-Jivraj et al. (2012), only one or maybe a few other authors performed a in-depth study on the phenomenon of born-again global firms. Since the article of Bell et al. (2003) is based within the geographical contexts of the UK, Australia and New Zealand, and the article of Janjuha-Jivraj et al. (2012) has a British context, it could be stated that the small number of geographical contexts is a limitation in these studies. These regions in the world are culturally very similar (Hofstede, 1983) due to their intertwined history, which is caused by British colonization in the past. Only a few other authors have published and/or written (working) papers about this phenomenon within the French and Swiss context.

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Page | 8 export in general (20 – 50%). Born-again global firms have a comparable internationalization pace as born global firms after they have started to internationalize after a long period of only focusing on the domestic market. It is expected that the born-again global firm type is also present in the Netherlands.

The main question raised in this research aims to find out how born-again global internationalization emerges in SMEs that are founded in the Netherlands. Specifically, the focus will be on how this emergence of born-again global Dutch SMEs is influenced by external factors (e.g. critical incidents or episodes) and internal factors (e.g. organizational capabilities), and to what extent these factors are related with the emergent process. Besides the type of the possible relation, this study aims to find out how the identified external and internal factors are connected with each other.

Based on this, this study aims to contribute academically in the field of international entrepreneurship, with the specific focus on born-again global internationalization, by developing a theoretical model on influential factors of born-again global internationalization in the context of the Netherlands. This new model suggests further research and might be appropriate for empirical studies in order to perform not only a qualitative research, but also a quantitative research.

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2. Theoretical framework

2.1 Born-again global internationalization

The identification of the phenomenon of born-again firms started with the research conducted by Bell, Young, and Crick (1998) on internationalized SMEs in the UK, in which a significant number of firms were identified that did not fit within the classifications of traditional firms. The authors noted that these firms are well-established in their home market for a long period of time, but then suddenly embrace rapid and dedicated internationalization instead of keeping its primarily orientation on the domestic operations (Bell et al., 2001; Tuppura, Saarenketo, Puumlainen, Jantunen, and Kylaheiko 2008; Jantunen, Nummela, Puumalainen, and Saarenketo, 2008; Kuivalainen, Saarenketo, and Puumalainen, 2012). Spence (2003) indicates in his research born-again global firms as: “these types of firms pursued this domestic strategy for some time, and a critical incident has then shook them from their traditional path and sent them into the international arena.” Initially the born-again global firms were not motivated to expand urgently to foreign markets, since their customers from the domestic market occupied most of the resources and competition in the market was rather low. The transition in orientation from purely domestic to a global focus happens within relatively short period of time; after the strategic change, born-again global firms tend to expand their business operations into foreign markets that physically have a great distance. The advantage for well-established mature firms that adopt a born-again global internationalization pattern is that, once they are established abroad, they are able to attract a more qualified and high-skilled workforce due to the access of the international labor market. Furthermore, these firms are able to learn more from their new international situation, due to the fact that they already have a solid and established foundation from their domestic market. Entering the international arena help born-again global firms to improve their products and services, achieve more growth, become more innovative, gain more self-confidence, and are tend to be more sustainable.

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Page | 10 encourage firms to internationalize. De-internationalization of firms may be caused by difficult trading conditions in the foreign markets and the strength of the exporters´ currency, which consequently tend to encourage firms to focus on the domestic market. Firms experience that the episodes of rapid internationalization are followed up periods of de-internationalization. This description of fluctuations in focus is a prominent feature in the internationalization behavior of born-again global firms. Gabrielsson et al. (2008) state on this matter: “ Born-again globals attempt to internationalize but achieve limited success, then turn to building up domestic support and later return to internationalization by means of great leaps and a global vision”.

This is well illustrated by an in-depth case study of the internationalization process of a born-again global firm performed by Janjuha-Jivraj, Martin, and Danko (2012). The authors describe in their paper a British family firm that grew in an incremental way. The firm had spent the early stages of its development and growth focusing on the local national market. Due to the lack of knowledge and infrastructure the business had gone through the previously unsuccessful experiences of trying to enter the overseas market (de-internationalization). Because the organization did not have the resources to obtain essential knowledge from this experience, the reaction of the management is to avoid internationalization again. However, the reformation of the business and the change in ownership led to reconsideration of foreign markets (internationalization).

Kuivalainen et al. (2012) focused in their paper on the start-up phase of SMEs that internationalize, and in line with the internationalization and de-internationalization process, they indicated that the potential born-again global internationalization pattern has two sub-parts, i.e. the true born-again global pattern and the failed born-again global pattern. A true born-again global pattern establishes an international turnover ratio of minimal 25% in the start-up phase of internationalization. A failed born-again global pattern is not able to establish the minimum of 25% of international turnover ratio in the start-up phase of internationalization.

2.2 Differences and similarities between born-again global, born global and traditional firms

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Page | 11 are opponent from each other regarding the path towards internationalization. As can be found in table 1, which displays a summary of the characteristics and behavior of the born-again global, born global and traditional firm, born-again global firms have a mix of features that is both from born global and traditional firms.

Table 1

Summary of differences and similarities in between born-again global, born global, and traditional firms.

Born-again global Born-global Traditional Motivation to internationalize Often proactive Adverse domestic market conditions Committed management Often active search

Proactive

Global niche markets Committed management Active search Reactive Adverse domestic market conditions Reluctant management Forced export initiation Objectives to internationalize Competitive advantage Survival of firm Competitive advantage

First mover advantage

Survival of firm Increased sales volume International expansion patterns

Two different phases, first domestic than international Main focus on opportunities Use of networks Concurrent Simultaneous in domestic and international markets Main focus on lead markets Use of networks Incremental, first domestic than international Physically close markets, no specific target markets No use of networks Pace Rapid entering in

global markets Relatively speedy internationalization Several markets at the same time

Rapid entering in global niches Speedy

internationalization Many markets at the same time Gradual entering in foreign markets Slow internationalization Single market at a time Distribution methods and entry modes Flexible

Various entry modes

Flexible Use of existing channels

Use of licensing and joint ventures

Conventional Use of agents and distributors

Strategies to internationalize

Both ad-hoc and structured Trial and error approach to expand internationally Structured Planned strategy to expand internationally Ad-hoc and opportunistic Reactive towards opportunities from export

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2.2.1 Differences in behavior

According to Bell et al. (2003) traditional, born global and born-again global firm display differences, but also similarities to a certain extent, in behavior that is supplemented in motivation, objectives to internationalize, expansion patterns and pace, method of distribution/entry modes, international strategies, and financing.

Firstly, to elaborate on traditional firms, these firms are reactive towards internationalization, due to its management. The motivation to internationalize is caused by the home market conditions, unasked orders, and to generate revenues in order to be able to improve its products/services. Traditional firms tend to focus on the domestic market first, and expand incrementally to psychically close markets (Bell et al., 2003; Tuppura et al., 2008; Jantunen et al., 2008). In the pre early internationalization stage Kuivalainen et al. (2012) found that many traditionally internationalized firms had de-internationalized. According to the authors it seems that in many cases traditional internationalization leads only to moderate growth, and not to real international success. They state that this might relate to the global mindset – or the lack of it – from its management. The international orientation of firm owners has a high influence in the internationalization process of SMEs. Additionally, in terms of channel selection to internationalize, traditional firms use agents or distributors (Bell et al, 2003).

Secondly, to elaborate more on born global firms, these firms rapidly internationalize from inception. Generally, they start their foreign operations within 3 years after establishment, and have derived at least 25% of their turnover from exports (Tuppura et al., 2008; Jantunen et al., 2008). “Born global firms tend to have a management that is more committed towards internationalization, is more proactive, and pursue global niches from the outset” (Bell et al., 2003). Furthermore, these firms tend to act as first movers to gain competitive advantage, and can be found generally in high-tech industries. Another typical feature of born globals is that they skip often the domestic market and start to internationalize from inception by entering many lead markets at the same time with product/services that are applicable for the global market.

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Page | 13 internationalize, they already established business operations in their domestic market with a good revenue stream. “After a certain critical incident that prompted a potential born-again global firm to begin to rapidly expand internationally, the years of domestic operations made it a valuable and purchasable asset in the eyes of international competitors and customers”, (Kuivalainen et al. 2012)

2.2.2 Differences in characteristics

The characteristics of the three different internationalization paths are categorized by their internationalization patterns, their geographic scope and performance scale, foreign operation modes, and the time lag of internationalization in the literature of Olejnik and Swoboda (2012) who have based their literature on the process models from Johanson and Vahlne (1977, 1990) and Kuivalainen et al. (2007).

First of all, the characteristics of traditional firms are described as older firm that are operating in traditional manufacturing industries. When traditional firms internationalizes they adopt a slower pace in order to avoid excessive risks and investment (Jantunen et al., 2008). Furthermore, traditional firms have their business operations in their domestic market. When they start to expand internationally, they tend to do this in psychically and geographically close markets, and expand slowly by a single market at a time. Additionally, traditional firms have limited foreign sales ratios that are rather a small percentage of the total turnover, and when traditional tend to increase their international activities they will use established entry modes.

To continue with the second type of internationalization paths, born global firms are characterized as young firms that operate in knowledge-intensive industries that internationalize by entering in to global niche markets at the same time. The born globals are international from inception (Jantunen et al., 2008; Kuivalainen et al. 2012), and internationalize rapidly. Their expansion is often simultaneously in the domestic and foreign market, and with their global focus on leading markets their operations occur in several markets at the same time. Born global firms have a large share of foreign sales that are 25% or more - in small economies 50% or more - (Olejnik and Swobodo, 2012), and within 3 years after inception (Tuppura et al., 2008; Jantunen et al., 2008). Furthermore, these types of firms have varying entry modes, like exports, use of agents and distributors, and collaborative modes like joint ventures and FDI.

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Page | 14 internationalization process is triggered by a critical incident or episode. It could be therefore stated that they respond reactively towards internalization, and embrace completely. When internationalization starts, the operations are expanding worldwide and serve several foreign and domestic markets at the same time (Olejnik and Swobodo, 2012). Their foreign sales have a large share and tend to be at least 25% derived from exports from the total turnover within 3 years after internationalization (Tuppura et al., 2008; Jantunen et al., 2008). The entry modes of born-again global firms vary, but due to their established operations in the domestic market, more committed modes like mergers and acquisition and FDI are possible.

2.2.3. Similarities born-again global, born global and traditional internationalization

In terms of comparison between born-again global, born global and traditional firms, the born-again globals appear to be a mixture of both traditional and born globals. During the pre internationalization phase which could take for many years, born-again globals appear to follow the same structure as traditional firms that have primarily the focus on the home-market However, after the critical incidents or episodes, born-again global firms start to internationalize so rapidly that it could be compared to a born global firm. Furthermore, both types of firms are also more likely to set up licensing agreements or enter alliances with (new) clients and/or suppliers (Bell et al., 2003). The outcomes of former literature state that born global and born-again global firms are very much alike (Tuppura et al., 2008). Kuivalainen et al. (2012) point out that many of the critical incidents and triggers towards internationalization are the same between born global and born-again global firms and the criterion to make the distinction between them is time. Well-established mature firms are able to internationalize rapidly.

2.3 External and internal factors influencing born-again global internationalization

The external and internal factors that are related to born-again global firms can be found summarized in table 2, and are explained in the two following sections.

2.3.1. External factors related to born-again global firms

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Page | 15 change in scope of a domestic customer”. Typically for a born-again global firm, transition in ownership/management occurs mainly in three ways: MBO (Management buyout), takeover, and being bought from an administrator. Furthermore, by acquiring a firm new capital is infused. Additionally, through an acquisition inward technology is transferred, and rights are distributed. Finally, the change of scope of a domestic customer occurs in two ways. Either a domestic customer internationalizes, or a foreign client enters the domestic market (Bell et al., 2001).

Furthermore, Spence (2003) stated in his paper that the Internet also is an external factor for born-again global firms. After the Internet became accessible for many firms, some of them saw its possibilities and opportunities. Their products and services were developed based on the Internet in order to serve a global market. This led eventually to a competitive advantage, and with this proactive attitude and innovativeness, doors were opened to foreign markets.

In this research the aim is to find out which specific external factors that are indicated in the literature to have a relation in the emergent process of internationalization Dutch born-again global SMEs. The external factors, change in ownership, an acquisition, client follower-ship, and the Internet are indicated as possible factors from the outside environment that have a positive relation towards the emergent process of internationalization of born-again global firms. This study also take in to account that the four external factors that are mentioned, are possibly not the only factors that will lead to critical incidents or episodes that will influence the emergence of Dutch born-again global SMEs. The following question concerning external factors is stated as following:

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Page | 16 Table 2

External and internal factors influencing born-again global internationalization

External factors Internal factors

Change in ownership Growth orientation (size)

Acquisition Intelligence generation

Client follower-ship First mover orientation

The Internet Entrepreneurial orientation

International growth orientation

Based on Bell et al. (2001, 2003), Olejnik and Swoboda (2012), Tuppura et al. (2008), Jantunen et al. (2008) and Spence (2003).

2.3.2. Internal factors related to born-again global firms

Besides the external factors of a SME that could influence a born-again global firm, internal factors that are positively related to born-again global firms are found by Olejnik and Swoboda (2012). Vermeulen and Barkema (2002): “The internationalization pattern depends on a set of firm-specific capabilities”. The capabilities that had the strongest relationship with born-again global firms were growth orientation and intelligence generation. In order to coordinate the international activities, born-again global firm rely on intelligence generation in order to better coordinate these activities. Intelligence generation is the desire of firms to gain more knowledge, by learning and exchanging information. Growth orientation of firm size seems to be an odd factor within the context of born-again global firms, but is considered as a good indicator of international expansion. International expansion is in that sense correlated to expansion in size. Tuppura et al. (2008) considers that firms with high first mover orientation and high international growth orientation are born-again global. Jantunen et al. (2008) indicates that entrepreneurial orientation has a positive relation towards firm performance of born-again global firms. Entrepreneurial orientation is the desire of the firm to focus more on entrepreneurial activities. This is underlined in the literature written by Spence (2003), who state in his literature that higher education and previous international experience are elements of entrepreneurial orientation.

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Page | 17 account that the five factors that are mentioned are possibly not the only factors that will lead to changes in orientation or capabilities that will influence the emergence of Dutch born-again global SMEs. The following question concerning internal factors is stated as following:

What are the internal factors that have initially motivated, stimulated, or incented the emergent process of internationalization of Dutch born-again global SMEs?

2.3.3. Expected relations of the other external and internal factors

Within this section predictions are made on the expected relationships between the external and internal factors, which are basically assumed on the existing literature.

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Page | 18 Thirdly, in relation with client follower-ship also growth orientation, intelligence generation, entrepreneurial orientation and international orientation are expected to be positive towards the internationalization of born-again global SMEs. The first mover orientation is expected not to have relation with client follower-ship, due to the already existing client base; it can be assumed that the product or service from the SME already exists. In case of client follower-ship the domestic customers tend to go overseas and still purchase the product/service of the SMEs or foreign customers pick-up the product/service and import it to its own countries for own use or reselling, which both cause an episode that lead to born-again globalization, but has nothing to do with a first mover orientation. The description of client follower-ship that is mentioned might however be a trigger to an increasing tendency in growth, intelligence, entrepreneurial and international orientation.

Finally, the Internet as an external factor is expected have to mixed relations with the internal factors in relation with born-again globals and their internationalization pattern. Growth orientation and first mover orientation are expected to have a weak relation with the Internet as an episode for born-again globalization. Firms that internationalizes through the Internet do not necessarily have to increase in size and do not necessarily bring product or services on the market for the first time. The intelligence generation and entrepreneurial orientation on the contrary are expected to have a positive relation with the Internet. As an explanation, the intelligence and entrepreneurial orientation is triggered to increase when a firm is active on the Internet. Furthermore, it is supported by the literature of Spence (2003) that the international orientation through the Internet increases as an instrument in the implementation of a born-again global internationalization strategy.

Additionally, it is of interest of this research to find out how the identified external and internal factors that are important for the emergent process of internationalization of Dutch born-again global SMEs are interlinked with each other. It is expected that certain combinations of connected external and internal factors will have a positive relationship towards a firm’s internationalization process. The following question is raised:

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Page | 19 Eventually, the combination of the answers concerning the external and internal factors, and the interaction between these factors should be able to answer the main question of this research which is:

How does the internationalization process emerge in Dutch born-again global SMEs?

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Page | 20 Model 1

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3. Methodology

The research method of this study is an exploratory single case study. Through this qualitative research method, data is derived that is rich in detail about the observed phenomenon born-again global SMEs in the Netherlands. Also intimate knowledge is gained about the context and history of a born-again global SME (Hohenthal, 2006). In international business research, case study research is a very common and dominant type of qualitative methodology (Andersen and Skates, 2004; Hohenthal, 2006). According to Eisenhardt (1989) case studies are perfect suitable to generate new testable theory, which is definitely necessary in the research field of born-again global firms.

Using a single case study brings certain advantages. “The case is selected either because it predicts to display the same characteristics (literal replication) or because it predicts to exhibit different ones (theoretical replication)” (Thomas, 2004). In this research it is chosen to use literal replication. The study of the case may eventually support the theoretical propositions from the literature review or the outcomes may be different from expectations.

However, the analysis of the data of case studies is one of the least developed aspects of these types of research (Yin, 2008). The development of computer programs, like for example Kwalitan, in the past decades is therefore a very helpful tool in the analysis process of the derived data (Peters and Wester, 2006).

3.1 Problems with case studies

According to the book of Thomas (2004) case studies are be criticized to be a type of qualitative research that is an inadequate or inappropriate strategy for conducting research. Issues are concerned to the internal validity due to problems with the production of rigorous data and findings. Furthermore case studies are concerned with issues of external validity, due to the problem of generalization.

3.1.1. Internal validity

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3.1.2. External validity

“Critics of case studies argue that since it is impossible to generalize from a single case, such research is inherently flawed. At best, a case study can only be used for exploratory purposes. Its role is therefore secondary and perhaps even relatively trivial in comparison with that of the survey or experiment”, (Thomas, 2004). To respond to this, it can be argued that case study research is mainly concerned with particularization instead of generalization. Case studies are valuable since they can form a foundation for sources of (new) theories. Furthermore, a case may so specific and unique that generalization is out of place.

However, in some situations, some kind of generalization from a case study is appropriate. This is especially appropriate when case studies are generalized to theoretical propositions and can be used to develop (new) theories.

3.2. Data collection

3.2.1. Selection of case

The selection of the born-again global SME case for studying the emergent process internationalization will be focused on the geographical context of the Netherlands. The emergent process of their internationalization is researched in order to perform an in-depth study about the external and internal factors that influence the emergent process, and how these influential factors are interlinked to each other.

3.2.2. Data collection

Within this study, data will be collected from a company that fulfills the role as case study. By taking an one hour interview, information is generated that is concerning the initial internationalization phase and the international expansion of the firms. Open questions are asked about the evolvement of the firms’ internationalization strategies, and the aim is to find out how external and internal factors of the firm pushes into internationalization, how these factors influences the emergent process of these born-again global firms and to what extent, and how these factors are related with each other. In order to identify the Dutch born-again global SME, the firm has to meet the following criteria:

 The firm has to be a well-established, mature SME, which is founded in the Netherlands by a Dutch founder, and that is least 20 years old.

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Page | 23  During the pre-internationalization stage the SME has had its main focus primarily on the

Dutch market.

 The sudden change in orientation towards foreign markets has to be caused by a critical incident or episode, e.g. a change in ownership, an acquisition, a client follower-ship strategy (Bell et al., 2001, 2003), or the Internet (Spence, 2003).

 After embracing the internationalization, the business operations tend to be focused on the domestic market, and simultaneously on (several) foreign markets which are psychically close or distant.

 The internationalization pace has to be rapid, preferably within 3-5 years after internationalization has started the sales generated from exports and foreign activities has to be at least 20 - 25% of the total turnover (Jantunen et al. 2008: Tuppura et al. 2008). 3.3 Analysis

3.3.1. The single case study

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Page | 24 recently with the preparation of opening a business unit in Singapore to expand its business to Asia.

Concerning the European continent, the company is also expanding internationally. Among other factors, the pressure of its main suppliers, and in order to follow large domestic clients to foreign markets, the decision was made to internationalize. In 2008, business operations successfully were expanded to the Flemish part of Belgium, and in March 2013, the firm established also a subsidiary within Germany. The future plans for further business expansion are entering the regional market of the Walloon part of Belgium and North-France.

3.3.1. Unit of Analysis

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3.3.3. Process of analysis

As already stated above, the holistic design of this case study is conducted with an analytical strategy based on theory and description. In order to create a better understanding for the reader of the analytical process, an explanation is given of the protocol for this specific case study. The process of analysis is supported by the software of Kwalitan, in order to simplify the process and enhance the level of analysis.

The process starts off with creating a list of key words that are based on the theoretical assumptions from the literature review and has to fit within the specific case study criteria. After that the list of key words are categorized into four categories, which have as theme ´Born-again global`, `External factors`, `Internal factors`, and `Specific case study criteria`. All the key words are placed within the specific category in which it fits best, which actually means that the words are connected with their origin. The theoretical categories contain words are mainly derived from the literature review, and the key words for the specific case study criteria are based on the context of the research.

These lists of categorized words are the foundation for the code words that are use to analyze the written out answers of the interview. This interview can be found in Appendix A at the end of this research paper. The code list is transformed in a numbered code scheme which can be found in Appendix B. The numbers indicate which codes are the main codes within its category, and which one are the sub-codes, e.g. 1. indicates the main code; 1.1 the sub-code. These codes were imported in the Kwalitan software.

Along with the coding, the written interview is imported into the software of Kwalitan, and the analyzed text is per question and answer segmented for analyzing, except for the answer of the first question, since in contained elements that could be connected to answers of the other questions. Per segment the text is analyzed and codes are connected to specific words or text fragments that are connected. During this process even new codes were indicated to certain words or text fragments which are case specific, but which also indicated factors of influence on the emergent process of internationalization of born-again global firms, that were not identified by previous authors who wrote about the phenomenon of born-again global firms. Also a few codes are in the process from translating the codes to the tree model submerged or deleted. This deletion and submerging of the codes has a function to clean up and simplify the tree in order to perform an analysis.

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4. Results

After extensively analyzing the written interview for the exploratory case study research, the outcomes of the study of the representative case of Dutch born-again global firms indicate external and internal factors which are related to the theories of Bell et al. (2001, 2003) and Olejnik and Swoboda (2012). Furthermore, the case displays as well external and internal factors that were not defined by the former authors, but which have influence on the emergent process of internationalization in this representative case of Dutch born-again global SMEs. An extensive description of the results of the analysis, including the identification of the factors during the initial phase and expansion phase of internationalization, the firms´ expansion methods, strategies and concerns, and the foreign markets of the firm, is stated below. The path of internationalization of the representative case is displayed in the time line of model 2.

Model 2

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Page | 28 4.1. The initial internationalization

During the initial internationalization phase it becomes clear for this specific case that the path to internationalization has been turbulent. It is safe to say that the first attempt to internationalize in the beginning of the existence of the firm failed. Short after the firm´s founding it tried to enter to markets of Belgium and Great Britain. However, due to the lack of knowledge and commitment of the management, the firm had to de-internationalize. The firm went back to basic in the domestic market and kept the main focus on this market for a long period of time to establish its business operations in the Netherlands. Fifteen years after the foundation of the firm in 1965, another attempt to internationalize succeeded in 1990 within the Australian market.

4.1.1. Internal factors during initial internationalization

The international expansion to Australia was mainly driven by the internal motive of the firm to grow internationally, along with the emigration of one of the sons of the founder to this country. The subsidiary in Australia rapid entered the local market, and with the relatively speedy internationalization, an export ratio of 25% of the total turnover was established within 3 to 5 years. After this episode of rapid internationalization, the firm kept the focus on the Australian and Dutch market for a while, and the business units in both countries exchanged information and knowledge in order to benefit from the advantages of internationalization.

4.1.2. External factors during initial internationalization

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Page | 29 Table 3

Summary of the initial internationalization of the firm Initial internationalization Years (foundation/inter national activity) Years (export ratio 25% of total turnover) External factors Internal factors First market Represent ative firm case study

15 years 3 - 5 years Client follower-ship Supplier pressure Internation al growth orientation Australia

4.2. The expansion of internationalization

After entering the first foreign market Australia in 1990, the firm took its time to establish the existing business operations within Oceania and Europe. In 2008, another episode of internationalization occurred in the firm, and expansion took place in several foreign markets on both continents at the same time. Within Europe the firm expanded internationally to Flanders, Belgium, a physically close market which is closely related to the Dutch market. This second attempt of internationalization in Belgium succeeded, not only through the easily accessible market of Flanders, but also to the more committed and experienced management who has, with the experience of opening a the subsidiary in Australia, more knowledge about how to internationalize and setting international strategies. Due to the easy access of the regional Belgium market, the firm saw the opportunity to extent their business operations in order to grow further.

Within Oceania, the Australian subsidiary also chose in 2008 to expand to a physically close market which is New Zealand. With the same motivation as in Europe, the choice for further expansion is based on entering easy accessible markets that are closely related to the subsidiary´s market. For both the New Zealand and Belgian market counts, rapid entering of markets and speedy internationalization, within a time span of approximately 3 to 5 years. The subsidiaries are now also well-established business units, and the firm has concrete plans to expand business further in Europe and Asia.

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Page | 30 have had influence on the further international expansion, and the expansion methods, strategic orientation, and concerns of internationalization of the firm are stated below and summarized in table 4.

4.2.1. Internal factors during the expansion of internationalization

The motive to internationalize within Europe has been a proactive response to the adverse domestic market condition regarding to grow further in size. As stated by the Deputy Managing Director of the firm, in general a firm needs to grow in order to survive. The internal factor orientation to grow in size is indicated by Olejnik and Swoboda (2012), as an indicator of international expansion. Along with the desire to grow further in size, the intelligence generation plays within this representative case also an important internal factor. Exchanging knowledge and experience between the international subsidiaries and the home-based country benefits the firm in total and led to a better coordination of the international activities of the firm. Furthermore, the firm desires to expand further in foreign markets, which indicates that international growth orientation is also a pushing factor on the expansion of internationalization. Since there is in the Netherlands limited space to expand further, concerning market share, an internal factor that motivates to internationalize is the desire to financially grow further and generate more profit. This last internal factor that influence the expansion of internationalization of the representative case firm was not indicated as an internal factor in the former literature. However, this internal factor has influence on the emergent process of this born-again global SME. In table 4 the newly identified internal factor is highlighted in bold.

4.2.2. External factors during the expansion of internationalization

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Page | 31 markets. Like indicated in the section of external factors during the initial internationalization, this critical incident was not identified by Bell et al. (2001, 2003). However, in this specific case, this external factor has had a large influence on the further expansion of internationalization of the firm. Therefore, this factor is identified as well for further expansion as new external factor, and is highlighted in bold in table 4.

4.2.3. Expansion methods

Concerning the international expansion methods, which can be found in table 4, the representative firm makes use of existing distribution channels like networks and agents and distributors, as well in Europe as Oceania and Asia. Through yearly returning seminars which are organized by the supplier of the firm for all the importers, the firm can make use of the large network of the supplier in identifying potential dealers who distribute the dishwashers to the end users. These so called dealers of the firm function as agents and distributors who in general sell complete professional kitchens. They rely on the existing networks of their agents and distributors on selling the dishwashers to the end users, and beforehand these agents and distributors are trained by the firm in order to be a good salesperson of the firms´ products and services.

4.2.4. Strategic orientation

The strategic orientation towards the international expansion is for this firm planned, structured, and repetitive as can be seen in table 4. In order to expand internationally, the firm remains importing the machines from its suppliers, and in order to resell the machines to its end users in the foreign markets, it makes use of the selected agents and distributors of the specific foreign market in which it sells its products and services. This strategy is adopted worldwide by the firm to expand internationally.

4.2.5. Concerns

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Page | 32 the unburdening of the suppliers is meant that when a machine is malfunctioning, the firm acts as a mediator and take care of the defect machine, instead of relying on the supplier for repairing or replacing the machine. With the case of warrantee and service for the clients, the firm wants to ensure that the client will receive a good service when it buys a dishwasher from the company and is being served immediately when a machine is malfunctions. In that sense of service, the firm heavily relies on its image and marketing in expanding internationally and within the borders of the domestic market. The firms concerns are also summarized in table 4.

Table 4

Summary of the expansion of internationalization of the firm Expansion of internationalization Subseq. markets External factors Internal factors Expansion methods Strategic orientation Concerns Represen tative firm case study Europe: -Belgium (Flanders) Germany Belgium (Wallonia) North-France Oceania: New Zealand Asia: Singapore Client follower-ship Supplier pressure Growth orientation Intelligence generation Int. growth orientation Financial growth orientation Agents distributors Networks Planned and repetitive Buying from suppliers, reselling through agents and distributors Increase turnover Concern of buying and reselling Concern of satisfying customers and suppliers Image (marketing)

4.3. Case specific external and internal factors and their interaction

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Page | 33 internationalization from two sides, the supplier as well as the client drives in this case the firm to internationalize.

The internal factors that have influenced the emergent process of internationalization of the representative firm of Dutch born-again global SMEs are in this specific case growth orientation in size, intelligence generation, international growth orientation, and financial growth orientation. These organizational orientations and capabilities ensured in this specific situation the initial internationalization and expansion of the internationalization of the firm from the inside environment. Regarding the relationships between the internal factors, these four mentioned factors are all in the specific case firm related with each other. In line with the literature of Olejnik and Swoboda (2012), growth orientation in size and intelligence generation functions both as an indicator and coordinator of international growth within born-again global firms. Both internal factors are related to the more specific international growth orientation that function and function as a causal relationship. Regarding the relationship of newly identified internal factor financial growth orientation; this factor is more connected to the growth orientation in size, and to a lesser extent related towards intelligence generation, and international growth orientation. Regardless of the intensity of the relationship in this case, the mixture between the internal factors have influenced the emergent process of internationalization and in the discovering and enactment of international opportunities of the trading firm.

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Page | 34

5. Discussion

Within this section the firm specific external and internal factors are discussed that have influenced the emergent process of internationalization of this typical Dutch born-again global SME. Furthermore, the relation between these external and factors towards the emergent process of internationalization is elaborated.

5.1. Findings

Within this exploratory case study a Dutch SME is approached which fulfilled the specific case criteria for this research. The firm is as well-established SME which is founded in 1965, and had eventually, after it was established in the Dutch market for fifteen years, successfully internationalized in the Australian market. Within 3 to 5 years years after its entrance in the Australian market it already derived an export ratio of 20 to 25% of the total turnover. The conducted interview with Deputy Managing Director of the representative was aimed to find out how the internationalization process emerged, and how this was influenced by the interaction between external and internal factors that were important in the firms’ internationalization process. After conducting and analyzing the interview, it appeared within the representative firm that the initial internationalization and the expansion of internationalization phases were influenced by several external and internal factors that were identified in the existing literature. The external factor that had a positive relationship towards the emergent process of internationalization for this representative firm was the client follower-ship. The internal factors that had a positive relation with the emergent process were growth orientation size, intelligence generation, and international growth orientation.

What is also of particular interest of these outcomes is that a new external and internal factor was identified. Within the representative firm the pressure of the suppliers had also a positive influence on the firm, and pushed the firm towards further internationalization. However, in the literature on critical incidents and episodes that have influence on born-again global firms of Bell et al. (2001, 2003) this specific factor was not mentioned. Therefore the supplier pressure is identified as a new external factor that has influence on the emergence of internationalization of born-again global firms.

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Page | 35 influence. Therefore the financial growth orientation is identified as a new internal factor that has a positive influence on the emergence of internationalization of born-again global firms.

Finally, the interaction between the external and internal factors led to an influential mixture of factors upon the emergent process of internationalization and enhances for the representative firm the possibility to discover and enact upon opportunities. The external factors from the outside environment triggered the change in orientation and capabilities within the inside environment of the firm, and pushed together the firm into the international arena. To conclude this, these specific external and internal factors influenced the emergent process of the representative case of Dutch born-again global firms. The explained relations between the external and internal factors are summarized and visible in model 3.

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Page | 36 Model 3

Expected process model of the representative for Dutch born-again global firms

5.2. Theoretical implications

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Page | 37 As a suggestion for possible further research, other researchers are invited to extent the number of cases in the study of the emergent process of internationalization of (Dutch) born-again global SMEs, in order to find out if the expected relations of the other external and internal factors which are stated in the theoretical framework of this paper will be the outcome in the emergent process of internationalization of other born-again global firms in the same or in a distinct geographical area. With more explanatory cases a more robust theory can be build which could function as a starting point for empirical research. Further research within the context of born-again global firms is welcome to within the field of international entrepreneurship, since this part of the field is still lacking extensive research.

5.3. Practical implications

This study will contribute to provide a better understanding of the phenomenon of born-again global firms and will provide managers in mature firms with a tool that helps them to start internationalize. This insight will enable managers, executives and/or owners of well-established firms to become aware of rapid internationalization and its opportunities, and give them the tools and knowledge in order to succeed when its organization adopts a born-again global internationalization strategy. Furthermore, it will provide new perspectives and tools that can be used by (e.g.) a countries government in order to support existing firms to expand internationally.

5.4. Strong and weak points

A strong point in this research is that it is covering a subject in the field of international entrepreneurship on which a relatively limited of academic papers are published. This opens up the discussion about born-again global firms, and what could to a source of inspiration for other researchers to conduct further study on this specific type of firm.

Another point to mention is the use of computer software during the analysis process. As already mentioned within this paper, the analysis process of case studies is the least developed aspect comparing to other type of research methods. Using the software of Kwalitan to support this process enables the researcher to conduct text analyses that are more structured and clarifies which parts of the text are important for analysis. It is a useful tool which enhances, when it is used correctly, the research.

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Page | 38 more consistent and robust (Eisenhardt and Graebner, 2007). Additionally, the derived theories for multiple case studies are more suitable for generalization and testing, due to the construction and specification of the studied relationships (Eisenhardt and Graeber, 2007).

Furthermore, only one interview is drawn from this specific case study with the Deputy Managing Director of the firm within the Netherlands, who gave an extensive insight in the internationalization path of the firm in Europe, but lacks in giving specific information about the subsidiary in Australia. Although the company has worldwide the same internationalization strategies, it would be better for the validity of the research and deriving first hand information about the international expansion in Oceania and Asia. Furthermore, it should be noted that initially the aim of this research was to conduct interviews with more Dutch representative firms of born-again global SMEs. This process in deriving data was however quite hard. Many firms were approached for this research but unfortunately did not want to participate.

Finally, the interview is biased by the interest of the interviewer, which also counts for the interpretation of the derived data. It is important for the researcher to remain as objective as possible, but it would never be completely unbiased. Furthermore, the interview was held in Dutch, which is the language of the interviewer and respondent, in order to avoid misunderstanding and –interpretation during the interview. Therefore, in order to increase reliability the interview is recorded. However, the transcript of the interview is written in English, and the translation of the words depends on the interviewer. In order to increase the reliability, the Dutch version of the transcript was emailed to the respondent in order to be approved. After that the transcript was implemented for the exploratory case study research.

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Page | 39

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Appendices

Appendix A

Interview

Interview with the Deputy Managing Director 6th of June, 2013, Soest, Utrecht, the Netherlands

Questions concerned with the initial internationalization.

1. After how many years after founding/establishment did the firm start to internationalize?

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Page | 44 growing. They actually grow along with us and we learn from each other. We have a lot of contact, and there is also someone from the business unit in Australia who is going to work over here for a half year, purely to exchange knowledge. They are within the firm good at certain things and a little bit better than we, and we are in other things a little bit better, that is how we integrate knowledge. We are both better of this way.

2. After how many years, after internationalization did the firm reached at least 25% from export or foreign activities of the total turnover?

It depends a little bit, when you look at both the Netherlands and Australia, and you would sum that up, than this happens relatively very quickly, like within three years. But this of course was possible, since Australia is a large country. When you only look at Europe than we still do not reach 25% of our total turnover, I think that approximately 20% is generated from foreign activities of turnover, but it is strongly increasing, so it is only a matter of one or two years and then we have reached the 25%. Especially Germany is a large country, so it might be possible that within the future that we will have the smallest market share within the Netherlands. With that type of things is the present time very difficult, since the economical market is rather weak. How are we supposed to know how the next five years will look like, when our government does not even know what the budget surplus will be the following year? Of course we have ideas and we can make assumptions within this market situation, but it remains guessing.

3. What was the initial motive, incentive, stimuli to expand internationally?

a. Was it driven by critical incidents or episodes like 1) a change in ownership; 2) an acquisition; 3) a client follower-ship strategy; 4) the Internet; or 5) a combination of the mentioned critical incidents/episodes; (External factors) and how did it evolve in your company?

The emergence of born-again global SMEs: A case study from the Netherlands