Born Global or Gradual Global?

Examining the Export Behavior of Small and Medium-Sized Enterprises Author(s): ystein Moen and Per Servais Source: Journal of International Marketing, Vol. 10, No. 3 (2002), pp. 49-72 Published by: American Marketing Association Stable URL: http://www.jstor.org/stable/25048899 . Accessed: 15/06/2011 07:24
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Born

Global

or Gradual

Global? of Small

the Export Behavior Examining and Medium-Sized Enterprises

Over

models

the past decade, several studies have questioned the stage the internationalization process. Many of of these stud on the versus ies concentrate exporting nonexporting factor,

ABSTRACT

identifying an increasing number of firms that are active in in ternational markets shortly after establishment. Limited empiri cal evidence exists as towhether this actuality indicates simply a reduced time factor in the preexport phase or an important change in the export behavior of firms. Using small and
medium-sized France, ment. exporting the authors focus The results suggest and Denmark, firms from Norway, on the concept of gradual develop that export distribution, intensity,

market selection, and global orientation are not influenced by thefirm 's year of establishment orfirst year of exporting activity. One-third of the firms sampled reported that the time period be
tween establishment and export commencement was less than two years. In terms of export these firms intensity, outperform in those that waited several years The results before exporting.

dicate that the future export involvement of a firm is, to a large extent, influenced by its behavior shortly after establishment. The results further indicate that the development of resources
in support as garded market of international the key issue and that authors review how competitiveness the basic resources be re may and com

petencies
phase. The

of the firm are determined

during the establishment

challenges dif

the management

fer depending
in question.

on the type of firm (age and export involvement)

Inmany studies, the international involvement of a firm has been described as a gradual development process (Bilkey and Tesar 1977; Cavusgil 1980; Johanson and Vahlne 1977). Ac cording to Johanson and Vahlne (1990, p. 11), international
ization increases about is "a process its international in which the involvement. enterprise gradually evolves This process

0ystein Moen Per Servais

and

in the interplay

between

the development
on one

of knowledge
hand and on in the markets

foreign markets commitment creasing

and operations to foreign of resources

other." On the basis of a review of the literature dating from internationalization of the Uppsala the first presentation model, Johanson and Vahlne (1990) conclude that their origi nal model had strong theoretical and empirical support.
Aaby view, and Slater stating (1989) present that the existence an extensive literature development re of a gradual

Submitted October Revised November

2000 2001

? Journal of International Marketing Vol. 10, No. 3, 2002, pp. 49-72 ISSN 1069-03IX

49

process
marketing

is one of the few solid conclusions

research. model have In his and the assessment

in international
stage models,

of the

Andersen
tionalization ization

(1993, p. 227) notes that both the Uppsala

innovation-related acceptance studies new in the have "general

interna

international literature." on what

model

However, have been

in the past decade, termed "international

focused

ventures"

(McDougall,

Shane, and Oviatt 1994), "born globals" (Knight 1997; Knight and Cavusgil 1996; Madsen and Servais 1997), "instant inter
nationals" (Preece, Miles, and Baetz 1999), or "global start

1994). These studies focus on ups" (Oviatt and McDougall are heavily involved in exporting from the time firms that they are established. Such firms are found in large numbers
in several Norway, countries, France, the United States, Australia, including and Canada. discussions Denmark, In-depth

of the major driving forces that enhance the establishment of and Servais these firms have been presented by Madsen as well as Knight and Cavusgil (1996). The empirical (1997),
results question and theoretical the concept in many of these studies reasoning of a gradual internationalization

process through various stages. As expressed by Knight and pre Cavusgil (1996, p. 17), "the Born Global phenomenon
sents an important new challenge to traditional internation

alization theory." McDougall, Shane, and Oviatt (1994, p. that the stage theory "has failed to provide an 476) conclude
appropriate compete This decade new explanation internationally stream New Ventures for why International rather than just in home markets." that has over the past emerged of interna established "truths" on a study existence three-country is to examine a more we empir a key devel de some on

of studies one of the research. the

questions tional marketing ical investigation,

Building aim of our

element opment. scription

of the stage models?the To examine this issue, we present of the stage models. Furthermore, and we been give special as "born described attention

of a gradual detailed include that

critical studies and empirical

models, have what

results that question

to studies global" firms.

the stage
focus

Andersen

(1993) distinguishes
model and the

between

the Uppsala

interna

The Internationalization Process Models

tionalization ization are

innovation-related

international two approaches interna models, of the firm. Man to management's

that these however, model, stating, In the innovation-related related. closely is considered of the an innovation is due An

tionalization

agement's
slow nature

learning is important
learning been

(Bilkey and Tesar 1977); the Different de

process

aversion
velopment

to risk taking and a lack of knowledge.

stages have presented.

example

is Cavus

gil's

(1980) model,

which

differentiates
experimental involvement.

among
involvement, Bilkey

domestic
active and Tesar

marketing, involvement,

stage, preexport and committed

50 Qystein Moen

and Per Servais

(1977) and Czinkota

tions The use of the stages.

(1982) have presented

other classifica

on model focuses Uppsala of knowledge about foreign and and about resource change the state

commitment ing

the acquisition, integration, an and markets, increasing to the markets, allocation includ The and state aspects the resources include allocated the deci the activ is that

knowledge to those markets, sions made about ities performed

foreign and the in these

aspects. markets

change the commitment markets. A

include aspects of resources and primary rationale

the firm will commit itself through incremental steps to grad ually build experience and reduce the risk involved in ex
porting. and The process is conditions described than as evolutionary and

cyclical: The firm's behavior

environmental

is influenced more by internal

by a deliberate develop

ment of strategies. According to Johanson and Vahlne (1990), the process model explains two patterns. The first is the type of engagement. Johanson and Vahlne (1990, p. 13) describe it
thus: "at the start no then later in the market, sentatives, manufacturing and Vahlne cally other distant are activities export regular performed takes place via independent repre export a sales' and eventually through subsidiary, follow." is the The successive second choice Johanson pattern of more psychi also indicate that exist. Their in increase

may explain markets.

manifestations implicitly

the authors However, of the process model assert

arguments

may that a time-dependent

the export intensity of the firm could be expected?as the firm first builds its national activities and then gradually in
to the model, the as According are nature the process the incremental of pects determining to two factors: and uncer related lack of market knowledge associated with the decision process. tainty export involvement. creases

Johanson
deal of the

and Vahlne
literature

(1990) include
that focuses on

references
the

for a great fundamen

take a (1990, "overall, p.

internationalization

process
tally more

of the firm. They

find that many

studies

Some the stage model. studies mentioned and Vahlne view; however, Johanson negative when the literature, conclude that 14), examining support

the model
spectrum confirms

has gained
of countries that commitment

strong support
and situations. and

in studies

of a wide

tors explaining Some a stage criticism

international of the

research empirical are fac experience important business behavior." has been Turn

The

stage models in their

presented. activities.

bull (1987) illustrates

development

that many U.K. exporters do not follow

international Hed

Criticism

of the Process Models

lund and Kverneland (1985) study Swedish firms in Japan, that their behavior is not in accordance with the concluding
Uppsala alization model. They of markets, suggest market that because knowledge of the has internation and increased

Born Global

or Gradual

Global?

51

uncertainty has then decreased, which makes the basic mech anisms of the Uppsala model less important than they had on Hedlund and Kverneland's been in the past. In a comment study, Johanson and Vahlne (1990) state that their results are
consistent and with the process (1985) model, article. indicating a misfit be of

tween the discussion

Kverneland's

and the empirical

results

in Hedlund
study

In a nationwide

small U.S. manufacturers, Brush (1992) finds that 13% of the international activities during the first sample commenced
year of operation. tifies several firms In an Australian whose (1993) study, Rennie views the world management iden as its

right from the birth of the company. Knight and marketplace Cavusgil (1996) even show that studies from the late 1970s
have documented examples of internationalization patterns

similar to those of born globals in different countries. One development

criticism tablished directed

during the past decade

at the stage models exporters. models, we

is that much
on Because

of the

focuses

high-involvement

es newly the studies

focusing
cussion

on these firms are especially

important
a more

in the dis
detailed

of the process next. presentation

provide

The Concept of Born Globals

The interest in born globals started early in the 1990s, and an focused on this issue increasing number of publications
throughout the decade. One of the first attempts these are to summa case an studies

rize the literature was presented

conclude, (1994, p. 47), who indicate that international

by Oviatt

and McDougall
important of

"collectively, new ventures

phenomenon.
tional their new

They have suggesting

identified
than

the formation of interna

ten countries in all parts

ventures

in more

the world,

that global

forces may be promoting

development."

Oviatt
firms

and McDougall
and define an

(1994, p. 49) focus on newly

international new venture

created

as "a business from and the

organization

that, from inception,

the use

seeks to derive significant

of resources This definition or near markets." been start-ups." is in ac its found Other used, in

from advantage competitive sale of outputs in multiple countries."

cordance with

that of Knight

(1997, p. 1), who

defines a born
of its revenue

as "a company from which, company global a substantial to derive ing, seeks proportion in international from the sale of its products describing "instant cluding terms phenomenon internationals" and "global the same

have

In their study of 24 born globals, McDougall, Shane, and Ovi att (1994) conclude that the stage models fail to provide an
appropriate explanation markets national rather garding the governance in inter such firms of why operate Re than just in their home markets. structure of activities, McDougall,

Shane,

and Oviatt

claim

that there are key differences 520ystein Moen

be

and Per Servais

tween established firms and start-up firms because of the amount and source of resources. The latter type of firms will
have with only few resources left for expensive investments must in

distribution

channels,

for example;

therefore,

in comparison

established

structures hybrid ties (e.g., close personal

the entrepreneur firms, for controlling sales relationships,

on rely more activi and marketing joint ventures).

This is in accordance with Bell's (1995) findings in his study of small computer software firms, in which he finds that ex models do not adequately reflect isting internationalization the underlying factors of the internationalization processes in these firms. He finds that the process is strongly influ enced by domestic and foreign client patronage, the targeting
of niche markets, and industry-specific consideration rather

than the psychic distance to export markets. He also finds lit tle support for the notion that firms progress systematically
from finds with to other market exporting an increasing commitment entry modes, to exporting foreign even though the among he re

sponding to Bell

firms. Finally,
sales before

not all firms establish

starting sales.

themselves
According

domestic

(1995), this could be due to the entrepreneurs'

tendency abroad. to initiate

prior
exports

or to experiences entrepreneurs' when for suppliers searching

In contrast
focuses Australian Rennie first on medium-sized

to Oviatt
already

and McDougall
established

(1994), Rennie
small

(1993)
and the for

enterprises. Manufacturing

firms, especially In a study conducted Council that covers into two

310

the emerging splits one consists of more

exporters traditional,

categories. domestic-based

firms, The firms,

75% of the total sample. Firms accounting for approximately in this category typically build a strong domestic base before
exporting. On average, they have been in business 27 years

when

they first export, and they reap 15%-20% of sales in foreign markets. The second category is born globals; they export 75% of their total sales, starting after less than 2 years of operation. They generally produce leading-edge technol international niche markets, ogy products for significant
such as scientific instruments or machine tools. Rennie

them as competing on quality and value (1993) describes created through innovative technology and product design. The mainstream born global of this study is close to its cus tomers, flexible, and able to adapt its products to the rapidly
changing needs and wants.

The latter findings are somewhat in contrast to those of Jolly, Alahuhta, and Jeannet (1992), who conclude that high-tech
nology neous mix. start-ups customers The must choose is that as and minimal homoge in the marketing adaptation cannot take these firms small large firms can, simply because a business area with

argument

multidomestic

approach

Born Global

or Gradual

Global?

53

they do not have

worldwide. markets They first,

the sufficient
are vulnerable where is that access,

scale
because

in their operations
they are dependent

on a single product, which

no matter The rapid reason market graphically. broad and

they must

commercialize
are situated are

in lead

such markets which

such markets

geo to the keys is important because

the fixed costs of these firms are relatively high. Because this is the key factor influencing the choice of the initial market, the importance of psychic distance in the market selection
criterion is reduced. Often, these firms govern their own their sales and

marketing

activities

through a specialized
complement of the firms'

network

in which

that they seek partners because this is necessary

limited

competence; resources.

Recent research carried out in the Nordic countries by Lind the existence mark and colleagues (1994) also demonstrates of born globals. Based on a study of 328 exporters from Fin
to be as im longer as a have demon studies portant previous "learning place" and Baetz From Canada, strated. Preece, Miles, (1999) report a an increasing interna of instant number toward tendency land, Norway, that the firms' Sweden, domestic and Denmark, no markets the research seem concludes

tionals. In a longitudinal study (1985-93) of 948 newly estab and Jacobsen (1996) lished firms in Denmark, Christensen a rising number of these firms began exporting report that within their first years of existence. The authors conclude (p. 7) that different firms have different routes to international contacts and in established ization "based on differences
knowledge international mer occupations, acquired contacts; prior and to the initiated new business." for of

Market knowledge;

the personal network of the entrepreneur;

relations, from transmitted experience are and education examples

such international

skills obtained before the birth of the firm.

Also from Scandinavia, Moen (2002) finds that the export in tensity of the newly established Norwegian exporters is often porting firms established after 1990 is 65%, and more than 50% of newly established exporters have an export share than 25%. higher Madsen and Servais (1997) discuss the factors giving rise to born globals and conclude that this group of firms should be expected to grow in number and importance throughout the
to come. Developments years and flexible production tance of niche marketing, ternational experience, and in information technology, the number the reduction new technology, the increased impor in of students gaining of trade barriers are remarkably high. In his study, the average export share of ex

to the increasing all examples of the factors contributing number of born globals. In-depth discussion of these factors is provided by Knight (1997), Knight and Cavusgil (1996), and Madsen and Servais (1997). 54Oystein Moen and Per Servais

One

possible

explanation models

is that because

many

industries than

are

"globalized,"
innovation-related

the uncertainty
is

described
less

in the Uppsala

and

important

before.

Hedlund and Kverneland follows that globalization

of the reasons small Both and medium-sized

(1985) have expressed this view. It on the industrial level may be one
in the export behavior the past decade. interna pattern, of

for the change found firms over

tionalization

and the innovation-related the Uppsala model a model describe gradual development

The Hypotheses

based on lack of knowledge and uncertainty (Andersen 1993). Most of the studies focusing on the born globals phenomenon
concentrate porting, on whether the firms are empirical supplying of international activities firms. However, stages after evidence rapid (a short time after establish few of the studies investigate involvement. Therefore, export exporting related versus to a more nonex

start-up in many ment) the development

two scenarios must be considered: First, it is possible that the factors described as giving rise to the born globals are those that most significantly reduce the time from firm establish
ment to initial export involvement. such we If this is the case, a stage

development
may

may

still exist related to operational

what

forms, for

example. still be valid,

In situations

as this, in which the stage models have observed could be character second the scenario would be that in

ized as a change in the time factor related to the initial (pre

export) several stages. factors The have contrasting rendered stage models inadequate

explaining hypothesis,
most markets ternational suitable

the export behavior of firms. In keeping with this we expect firms to choose the distribution form
in their industry, choose the most attractive a strong in and have distance, from establishment.

of psychic regardless orientation right

If there is indeed a gradual development process, the articles that present the original Uppsala model suggest that this de in the firm's distribution be reflected velopment would
method chic and would distance be evident export from an examination (Johanson increase of a firm's markets would of the psy and Vahlne

1977, 1990).
global

Implicitly,

it should

also be expected

that the
the

orientation

of managers

during

process. In addition, itmight be expected that both the number of countries exported to and the export intensity would be dif ferent for firms in different development phases. The firms
in international for a longer period markets operated to serve more markets be expected and achieve of time would a of sales outside their home markets. Also, percentage higher that firms the innovation-related models expectations append that have will ex to an increasing number of countries, gradually to more and distant markets, operations psychologically pand orientation and commitment?as their international develop as as increase from the stage well export intensity, expected export

development Born Global

model

(Bilkey and Tesar 1977). Global? 55

or Gradual

On the basis
view

of the widely

accepted
we expect

nature
that

of the process

of internationalization,

Ha: There
tribution

is a gradual development
used.

in the type of dis in the distance

in the number

H2: There
H3: There markets

is a gradual development
served. development is a gradual served.

to
of

the markets

H4: There
H5: global There

is a gradual
orientation. is a gradual

development
development

toward
in the export

stronger
inten

sity of the firm. This study does not focus on the preexport phase or foreign direct investments. The issue addressed is the identification
of manifestations of a gradual development year among small and

medium-sized
how a firm's

exporting
first year are

firms. This
of exporting,

includes

an analysis

of

of establishment,

and time period between

commencement tensity, number related of export

establishment
to distribution markets,

and export activity

forms, in export interna

management's

tional orientation, and export market selection. difference when comparing the manifestations in the stage models with explicitly described
factors such as a firm's year of establishment

Ifwe

find no implicitly or time-related

of

or first year

exporting, the indication will be that we need to develop bet ter theories to explain the export behavior of firms.
Most international marketing research builds on samples

Methodology

from one nation. This inhibits the researcher's ability to gen eralize the results. In this study, we include data from three
European Both Norway countries: Norway, France, are small and Denmark. countries In total,

this study builds

on returned questionnaires

from 677 firms.

in the north

and Denmark

ern part of Europe. An important difference between

countries is that popular elections and is different and in Norway France from culture have

the two
twice re

sulted
pean

in a majority
Both Union.

vote
Denmark

in opposition

to joining the Euro

are members the two and has section that was in the other other a of the coun

Union.

European tries in terms Denmark. questionnaire

France

of both

language

popula

tion approximately

ten times larger than either Norway

of

or
the pre sam

In Norway the main and France, is a translation of a questionnaire

viously
survey

used
covers

in the United
most of the

States (Knight 1997). The Danish

issues addressed

ples, though the questions are expressed somewhat differ ently. It should be noted that the Danish data do not include
the various the question In Norway managers aspects about and of global orientation, of markets the number nor do they include served. addressed to top firms (less

France, questionnaires in small and medium-sized

were

exporting

56Qystein Moen

and Per Servais

than 250 employees), which were classified Denmark, firms within the range of 10-499
targeted. address

as producers. In employees were

pass in Denmark. 335 usable

In Norway and France, classification and company lists were obtained from Kompass and Kom Norway was France and the database CD-Direct used databases, rate was the response 23%, yielding returns. 70 usable In France, responses generated rate of 5%, and the Danish from 272 response In Norway, a response a three-nation rate of 48%. survey differences. included in all three national sam Overall, were the advantages considered

a response firms yielded of having

sample

more

important than the limited response

design sectors were

rate in France and

the questionnaire All industrial

ples. Table 1 gives some key information about the included firms from each nation. As indicated in Table 1, the Danish firms are the largest (in terms of employees and total sales) the and oldest and have the highest export involvement;
French firms are smaller and younger and have less export in

volvement

than the firms from both Norway we included

and Denmark. regarding the

To test the hypotheses,

year of establishment, annual total ployees,

questions

of em of exporting, number of countries share, number sales, export were most Focus markets and which to, important. exported we on distribution, to select which dis asked managers ing first year

Measurement

tribution concept
in the most

they used for the most

important products

In Norway and France, export market. important or dis of agents direct included the alternatives sales, usage answers re The sales offices, and joint ventures. tributors,

vealed that few of these small firms were involved in joint ventures (less than 10 of 405 firms), so joint ventures were
subsequently excluded from the analysis. Because some of

Norway (n = 335) Annual

Mean

France

(n = 70)

Denmark (n = 272)

Table 1. Firm Descriptives

Total Sales

(1000 Euro)
8.008 5.392 2.366

16.282
9.254

Median Number Mean of Employees 49

4.142

33 18

84 39

26 Median Year of Establishment Mean 1970 Median First year of Exporting Mean 1985 Median Export Share
Mean 40.8

1960

1970 1981 1985 1990

30.9 22.0

1955 1966 1973 1977

48.6 50.0

1976

Median

34.3

Born Global

or Gradual

Global?

57

the firms combined more

in cooperation with their

than one method,

agents, the

often direct sales

percentage

summary

in may be higher than 100. In Denmark, the classification cluded two groups: direct sales to end users and sales through intermediaries (agents or distributors). The concept development
firms start expanding chic with

of psychic distance of the stage models,

exporting to more Both to countries distant their in the

has been important in the the expectation being that

regarded nations. and as "close," later and St?ttinger previous between these

Schlegelmilch
distance.

(1998) investigate
results

both geographic show inconsistent

and psy
studies

(Holzm?ller
great

and Kasper
variations

1991)

results,
mea

correlation

sures. We therefore decided to use both geographic and psy chic distance in the study. Focusing on the most important export market of the firm, we classified the market on a 1 to 4 scale regarding the psychic and geographic distance. We into groups according to psychic dis based the classification
tance on Hofstede's (1980) cultural dimensions. or Denmark. This means

that each group

country

is classified

differently
France,

depending

on the

of origin?Norway,

In both the Norwegian

sions of global orientation

and French
were

studies,

several dimen
were based

included.

These

on the original questionnaire presented by Knight (1997), in which he provides a detailed description of the theoretical
base French and the testing of these constructs in a U.S. of global validity. year For into three the of estab of es setting.

Table 2 presents
samples than

the coefficient
regarding

alphas in the Norwegian

aspects measure

and
orien

the various

tation. As Table 2 illustrates,

higher We .60, indicating the firms until using

10 of the 12 alpha scores are

satisfactory three

classified

dimensions:

Classification

of the Firms

lishment,
lishment establishment,

first year of exporting,

and time period from estab

year groups,

commencement. export divided the firms were

tablished before 1975 (old firms), between 1976 and 1989, and after 1989 (new firms). The division between firms estab lished before versus after 1975 is based on Sengenberger, Loveman, and Piore's (1990) results. The shift in importance is well firms in the mid-1970s of small and medium-sized
documented tion United man, and in their Development Organisation report. and Using for Economic numbers Co-opera from several

nations

(including,

among others,

the United

Kingdom,

the

States, Germany, find both and Piore

France), Sengenberger, a growing and an number

Love increas

of small firms after 1975. The division ing importance between 1989 and 1990 is founded on the studies that de
scribe are the emergence of born globals, late which 1980s. report that many we

of the main driving forces for the establishment

evident beginning in the

of these firms

Furthermore,

580ystein

Moen

and Per Servais

Alpha International International financial

resources)

Orientation commitment investments,

.62 .56

(Norway) (adequacy of of human

Alpha (France)

Table

2.

sufficiency

of the Indexes: for the Alphas = (n 335) and Norwegian French (n = 70) Samples Description Cronbach's

International
communicates markets,

vision
focused

(world as marketplace,
to succeed developing in export resources) .78 .81 on

mission

(culture for exploring proactiveness boldness in decision making, opportunities, conservativeness in international environment) International customer orientation (understanding
needs, after-sales International customers discusses understand success by satisfying .68 .71 (communicates responds and weaknesses, to create value) .74 .66 quickly, needs, service)

International

.61

.54

responsiveness experiences, strengths how

International marketing
of customers, product

competence
adaptations,

(knowledge
effective pricing,

advertising, ability to use marketing

effective

effective

distribution, tools for differentiation)

.76

.80

used

the same

year markers

as

previously

to classify

the firms

according to their first year of exporting and divide them into some of the firms groups. On the basis of this classification,
may be old according to year of establishment but new as ex

porters according to their first year of exporting. The third classification addresses the time between establishment and the first year of exporting, grouping the firms as born globals less than two years after (those that began exporting within
establishment), and late starters number Two all of firms average-time (more than in each must group be made exporters ten years). and on to ten years), (three 3 presents Table the classification. the basis of Table 3. First,

observations three nations

a large number of firms (ranging between

began tablishment. As many less exporting

30.7 and 38.8%) in

two years of their es within exporting as one of three firms from these nations than includes two years a after larger samples. a one-way analysis of vari establishment. number of firms Sec es

began ond, the French

sample

tablished
than We do

late that began exporting within

the Norwegian and Danish

the past decade

performed

the analysis

using

ance in SPSS 9.0. It should be noted that we decided tomark statistically significant differences even though they were in the opposite direction of the hypothesis. The first issue ad
dressed porting, measured was and the among relationship time from establishment of sales firm age, first until export, year ex a with

Results

focus on the export involvement

as the percentage

of the firm (export intensity

in international markets).

Born Global

or Gradual

Global?

59

to the stage models, we expected that old firms According firms that had exported for a long time would have a and higher export involvement than younger firms and firms that had been exporting for a shorter period of time. The results are displayed in Table 4.
The ment cant first on issue was the influence As year of establish in Table 4, no signifi reported in the samples from Norway and of a firm's

export differences

intensity. were found

Denmark, but the youngest firms in the French sample had a significantly higher export share than did older firms. Exam ining the first year of exporting, the results in both Norway and Denmark showed that the firms that began exporting be fore 1975 had a higher export share than firms that began ex
porting possible later. In France, to interpret this no such effect was found. process. It is How as part of a gradual

Table 3. Number of Firms in Each Classification Group

Norway (n = 335) Year of Establishment 1800-1975 1976-89 1990-98 First Year of Exporting 1800-1975 1976-89 1990-98 Time Before Export
3-10

France

Denmark

(n = 70)

(n = 272)

57.1% 27.3% 15.7% 34.5% 35.1% 30.4% (Years)

0-2 38.8% 23.3%

37.1% 47.0% 15.8% 11.9% 37.3% 50.7% 34.3% 22.4% 43.3%

67.4% 24.0% 8.6% 46.6% 36.7% 16.7% 30.7%

21.1%

11-100

37.9%

48.2%

Table 4. Firm Classification Versus Export Intensity

Norway (n = 335) Year of Establishment 1800-1975 38.1

1976-89 45.6

France (n = 70)

Denmark (n = 272)

20.9 29.5 58.9 11.056**

49.0 48.3 44.7 .188

1990-98
F-value 1.84

43.8

First Year of Exporting 1800-1975 48.4

1976-89 41.6

15.3 37.1 30.1 6.242* 2.065

54.8 47.7 33.6 7.562*

1990-98
F-value

32.7 (Years)
0-2 54.3 37.3 30.5 18.787 **

Time Before Export

3-10 11-100 F-value

48.9 26.5 20.2 10.223**

58.7 49.2 40.6 7.752*

*p<.01. **p< .001.

600ystein

Moen

and Per Servais

ever,

closer

examination

of the data

reveals

that

the

signifi

cance of the first year of exporting in Norway and Denmark is due to several old firms that began exporting late, achieving limited export sales. If the old firms (established before 1975) are excluded from the analysis of the first year of exporting,
no significant countries, differences there was occur. a strong indication that the time

In all

between firm establishment and the first year of exporting is an important indicator of later export intensity. The differ
ence was in export share 24%, 28%, and between 18% born in Norway, and late starters globals and Denmark, France,

respectively. Itmay be that the old firms had established con siderable sales in their home markets so that the use of export
share would volvement. export found. in an underestimation in of their export result we also performed the analysis Therefore, using variable. The same results were sales as the dependent was no difference in Norway and on year in export sales based and there were Denmark,

There

of establishment

higher sales in the newly established French firms. Signifi cantly higher export sales were found in the firms that began
of the low in Norway and Denmark because early of the same older firms that began late. exporting export and exporting establishment the time between Furthermore, exporting sales

differentiated the groups significantly: the highest export sales.

In conclusion, on volvement the key the basis element of these

The born globals had

in understanding is the results

time

in export between seem sales. to

establishment
be

and the first year of exporting. Old firms trying

to export after they are established several decades in terms of export and export "losers" intensity

The
among

second

issue

is the differences
in the different

in global
groups

orientation
Accord

the managers

of firms.

ing to the stage models, older firms and firms that have ex to score higher with ported for a long time are expected
regard firms. in Table The to their managers' results from 5. High the scores orientation than are newer global are the Norwegian sample provided a strong orientation. indicate global of establishment, we found no sig

Examining

firm's

year

nificant

differences

in global orientation.

Regarding
higher later.

the first
on proac in rea estab a ex

firms scored the oldest year of exporting, tiveness that began than firms exporting

Again,

depth

investigation

showed
after Considering

that old
the

firms
were time

that began
the main

many years exporting son for this difference. lishment and export in terms

establishment

between

significance and responsiveness.

commencement activity of international vision, More precisely, the firms

revealed proactiveness, that began

porting

shortly

after their establishment Global?

had

the highest

Born Global

or Gradual

61

Table 5. Firm Classification Versus Global Orientation = 335) (Norway, n

Customer Commitment Vision Proactiveness Orientation Responsiveness

Marketing Competence

Year of Establishment 4.06 1800-1975 1976-89 4.02 1990-98 3.83

F-value .640

4.86 5.04 5.26

1.812

4.21 4.39 4.38

.824

5.17 5.42 5.21

2.014

4.67 4.19 4.91 4.89

1.966

4.33 4.23
.865

First Year of Exporting

1800-1975 1976-89 1990-98 F-value 4.13 4.06 3.88 1.09 5.11 4.88 4.86 1.22 4.52 4.20 4.12 3.49* 5.29 5.30 5.10 1.40 4.81 4.26 4.23 4.84 4.21 4.69 .10 .65

Time Before Export (Years)

0-2 3.94 3-10 11-100 F-value 4.07 4.06 .359 5.21 5.20 4.64 6.843** 4.58 4.29 4.00 7.483** 5.31 5.41 5.10 2.444 4.98 4.81 4.16 4.57 4.893** .997 4.28 4.29

*p<.05. **p<.01.

scores for these three global orientation gives the results for the French firms.
we the mean values, Examining the Norwegian however, sample; find these the

dimensions.

Table 6

same

values

as in tendency are not statisti

cally significant. Only one significant difference was identi fied, signifying a higher score for international proactiveness firms. These results from the among the newly established
Norwegian and French samples do not support a time-depen

dent development toward increased global orientation; Danish questionnaire did not include these measures.

the

Table 7 presents the results pertaining to the use of the differ ent distribution methods included. As explained previously,
more the percentage than one be higher than 100, may distribution within method agents combined with direct as the sales some firms use same market? efforts.

for example,

All
sults

the questions

pertain

to the most
for the nations:

important product

in

the most

market important are similar for all three among the groups

differences

re firm. The respondent are no significant There of firms. there is no Therefore,

in dis indication of a time-dependent (gradual) development tribution forms. As noted in the "Methodology" section, joint
ventures were not the them?though altered the conclusion. included, inclusion because few firms of joint ventures in partook not have would

62Qystein Moen

and Per Servais

Customer Commitment Vision Proactiveness Orientation Responsiveness

Marketing Competence

Year of Establishment
1800-1975 1976-89 1990-98 F-value 4.30 3.83 4.50 1.501 4.24 4.95 5.42 2.614 3.31 3.87 4.51 4.209* 5.15 5.04 5.91 2.017 4.78 4.62 5.15 4.90 4.98 5.09 .915 .708

Table 6. Firm Classification Versus Global Orientation = (France, n 70)

First Year of Exporting

1800-1975 1976-89 1990-98 F-value 3.94 4.38 4.00 .722 4.14 5.36 4.48 3.018 3.58 4.03 3.60 1.607 4.71 5.56 5.21 .703 4.90 4.57 5.16 5.02 4.83 4.82 .610 1.599

Time Before Export (Years)

4.41 0-2 3-10 11-100 F-value .05. 3.97 4.00 .814 5.21 4.66 4.48 1.436 4.17 3.71 3.42 2.320 5.58 5.39 4.98 1.773 5.02 5.255.22 4.76 1.134 4.63 1.742 4.94

*p<

Norway Sales

(n

335)

France

(n

70)

Denmark

(n

272)

Direct Agentor
Distributor

Sales
Office

Direct
Sales

Agentor
Distributor

Sales
Office

Direct to
End Users

Through
Intermediaries

Table 7. Firm Classification Versus Distribution

Year of Establishment 1800-1975 1976-89 1990-98 F-value First Year of Exporting 1800-1975 53.6 1976-89 1990-98 F-value Time Before Export 0-2 3-10 11-100 F-value (Years) 53.8 50.6 54.5 .129 53.9 47.7 52.9 .333 16.8 19.4 16.5 .138 73.9 73.3 68.9 .087 69.6 53.3 58.6 .559 13.0 20.0 10.3 .385 48.0 62.6 56.4 1.531 54.1 43.8 45.4 1.284 52.7 54.6 .873 50.9 55.4 47.4 .712 15.5 17.9 17.5 .478 75.0 72.0 60.5 .031 74.2 64.0 55.9 .627 12.5 20.0 8.8 .548 49.5 52.6 58.7 .619 48.3 53.0 41.6 1.125 52.7 48.3 60.0 .873 54.4 51.7 48.0 .341 15.3 20.7 14.2 .741 61.5 78.8 63.6 1.114 62.2 60.6 62.3 .015 15.4 12.1 18.2 .139 43.2 48.5 56.1 38.5 1.371 53.4 47.2 .357

The next issue addressed is the differences among the groups of firms in terms of the geographic and psychic market cover
8 presents the age. Table no sults reveals significant results. An examination between of the a firm's re relationship year

of establishment

or the first year of exporting

and the geo

or psychic to the most market. distance important graphic In the is consistent This for all three national result samples.

samples

from both Norway or Gradual

and France, 63

it was

found

that

Born Global

Global?

Table 8. Classification of Firms Versus Export Markets

(n Norway Geographic Cultural Distance Distance

335) Number of Countries

France Geographic Distance

= (n 70)_ Cultural Number of Countries

Denmark Geographic Distance

= (n 272) Cultural Distance

Distance

Year of Establishment 1800-1975 1976-89 1990-98 F-value First Year of Exporting 1800-1975 2.24 1976-89 1990-98 F-value 2.10 2.02 .947 2.03 1.93 1.84 .996 14.5 10.6 7.3 8.980*** 1.43 1.69 1.63 .166 1.86 2.26 1.91 1.135 26.3 16.3 8.12 7.933** 1.47 1.32 1.26 1.114 1.95 1.77 1.84 1.615 2.05 2.23 2.22 .857 1.91 1.98 1.96 .153 11.5 11.5 8.2 1.542 1.46 1.80 1.71 .661 1.92 2.20 1.92 .728 15.5 12.3 9.6 .853 1.44 1.33 1.27 1.450 1.88 1.83 2.00 .455

Time Before Export 0-2 3-10 11-100 F-value (Years) 2.35 2.08 1.96 3.533* 2.16 1.82 1.81 4.158* 13.1 11.7 8.8 3.481* 1.60 1.94 1.46 1.213 2.05 2.29 1.89 .847 13.0 11.5 13.9 .152 1.43 1.21 1.44 1.089 2.01 1.76 1.80 2.349

*p<.05. **p<.01. .001. ***p<

firms that had been exporting for the longest period of time exported tomore nations than did firms that began exporting the questionnaire did not include the later. In Denmark,
question ports. about In Norway, the number the firms of countries that began to which exporting a firm soon after ex es

tablishment exported to the most distant markets in terms of psychic and geographic distance, and these firms were found
to export to a greater No of countries. such differ number ences were in the samples from France and Denmark. found

Discussion

Table 9 summarizes the results presented in the study. It should be noted thatwith regard to global orientation, one weak signif icant relationship was found that was contrary to the hypothe ses (year of establishment in France), but another relation (first year of exporting in Norway). supported the hypotheses
Because are 22 of 24 relations directions, in different are nonsignificant a conclusion and of no the other differences two is

recorded in Table 9 for the interaction of global orientation with year of establishment and first year of exporting. Table 9 indi
cates whether the stage models are supported or whether the re

sults indicate that the most important differences are linked to the short time period from establishment to exporting ("BG sup
ported"). and This notation is also used when the most recently es

tablished or new exporters significantly differ from older firms

exporters, contrary to the stage models' expectations.

in international ac We expected to find gradual development to export intensity, distribution, distance to tivity with regard
markets served, number of countries, and global orientation.

64Oystein Moen

and Per Servais

Norway
Export Intensity Year of establishment First year of exporting

France

Denmark

Table

9. of Results

Summary
? BG ? ?a ?a ? supported

Time before export

Global Orientation Year of establishment First year of exporting Time before export Distribution Year of establishment First year of exporting Time before export (Distance) Export Markets Year of establishment First year of exporting Time before export ? ? ? ? ? ? ?

BG supported
? n.i. ? n.i. ? ? ? n.i.

BG supported

BG supported

BG supported

? ?

?? ? ?

? ? BG supported ? n.i. ? Stage model supported n.i. ? ?

(Number) Export Markets Year of establishment First year of exporting Time before export

Stage model supported ? BG supported n.i.

aComment in text. Notes: BG = influence of year of establishment/born tion, n.i. = not included in this national survey.

global behavior,

= no significant

rela

Examining
between ket the

the emerging
firms' year

pattern, we
of foundation

found no relationship
and export These intensity, results

global orientation,
distance,

distribution,

psychic

or geographic mar
served.

or the number

of markets

were consistent in all three countries included The first year of exporting had no significant
global orientation, distribution, or distance

in this study. influence on

to export mar

kets. Higher export intensity was found among the old ex in the "Results" section, this is porting firms. As discussed
because some of the older later. One firms result began exporting with late, which

effectively
began

lowered

the average representation

in accordance

of firms that
the stage

exporting

models did occur: Firms that had exported for a long period of time exported to a larger number of countries than did newly established exporting firms. The third classification
tween establishment and

of firms was based on the time be

the first export involvement. Con

Firms that began identified. differences two years of establishment within had a signifi exporting share than did the other firms in all three cantly higher export siderable
nations. gan In the Norwegian soon after exporting global orientation establishment sample, managers were establishment in terms and of vision, in firms found that be to have a

were

stronger time

proactiveness, commence

and responsiveness
between

than did managers

export

in firms that had more

activity

ment. Also, these firms had a greater degree of export activity in the more geographically distant markets and psychically Born Global or Gradual Global? 65

and

exported

to a greater

number

of markets.

These

relation

ships were not found in the sample from France. It should be in the distribution noted that time-dependent development did not emerge. In total, these results indicate that a type firm's export involvement is influenced by the period of time
between and this establishment time period and is more the commencement important than of exporting, the firm's year of

establishment
These three occur results situations in small and

or first year of exporting.

are not consistent with the premises of the

stage models.

However,
in which steps:

Johanson and Vahlne

(1990) define

not necessarily the process would sta environmental resources, focusing

In these authors' from similar markets. experience bility, in sta firms having considerable resources, view, operating or from similar markets ble environments, having experience

would have the opportunity to leapfrog several stages. There is no reason to expect that the firms included in this study would suit these conditions. The median for the number of
is 39, employees France, respectively. resources siderable have as expected may 26, and 18 Consequently, are an explanation in the process model. be expected in Denmark, it is not why Many rapid Norway, that likely and con

they do not be small of these

exporters use leading-edge

environment

technology;
to undergo

in such settings,
changes.

the
Fur

thermore, it is not likely that experience from similar markets should be more widespread among the firms in these three
samples than to explain results in other exporting firms. This means that the

exceptions
seem

presented

by Johanson and Vahlne

observed.

(1990) do not

the results

The

Implications

implications research. In most

in this study have several important presented for public and further management, policy,

Implications for Public Policy

tant ance

European to stimulate

of payment Because growth.

exports. considerations, employment, most in many nations firms

countries, and increase

government This

considers is because and are small,

it impor of bal economic stimu

lating and developing the export involvement of these small firms has received considerable attention. This has driven the
establishment of export promotion with An or export a small development

programs.
trade volves

The Norwegian
has worked

Export Council, throughout

founded

by the in

department, a

and medium-sized of the content

enterprise

export program
large number

the 1990s, which

of firms.

examination

and focus of this program shows that the focus is small and medium-sized established (old) firms, not newly established
firms. small with On the basis of the results enterprise experience. of our study, and medium-sized no or little export It seems the Norwegian is target program

ing a group of firms with

export

limited export potential?old

that the most

firms
no

66Qystein Moen

and Per Servais

table export potential is found among old firms with strong export involvement, and many newly established exporting
firms also show As promise. In both Norway and Denmark, information in various related manners. this to

study is part of activities

foundations. the results

sponsored by the national

research

a part of these projects, is distributed and presented

to public policy study's most important contribution be the development of knowledge regarding the impor may tance of export activity by newly established firms, which un derlines the need for the inclusion of this group of firms in the This
developing public programs. Implicitly, these results also sug

of new firms with international gest that the establishment is important for the export development marketing potential
in a nation, suggesting lic export development a need for coordination start-up between programs. pub and business

At the firm level, managers are facing different situations de pending on the type of firm in which they work. Managers in old firms with strong international involvement should take
note that they highly are increasingly specialized, their firms' tablished, competing and aggressive against firms. because es newly The man

Implications

for Managers

agers of the old exporting firms should be especially

on preserving competitiveness,

focused
Moen's

(1999) results
technological Furthermore, than younger

suggest

that many

firms gradually

lose their

as they grow older and larger. competitiveness are more it seems that many old firms reluctant firms to use new marketing such as infor tools,

mation
velop

and communication

technology
and

(Knight 1997). To de
to avoid too acting are therefore firms.

competitiveness in terms conservatively some of the most

consistently of using new tasks

important

technology for managers

in these

The challenges for the managers of older firms with limited ex port involvement are different and are likely to be even more
difficult. It seems that many of these firms are unable to com

pete successfully

in international markets. This may be due to

a lack of the firm's competencies, and an competitive products, resources to commit to the export venture. The unwillingness

managers
First,

in these firms should heed three important points:

the firm's international offered and the products competi the tech

to examine they need not least regarding tiveness,

used. Developing nology success for export should

needed the competitive advantages be a critical management responsibil

ity. Second,
focus

the firm should target selected market

Third, management commitment

segments to
is impor

its resources. If the

tant, especially

in developing

the international
of our results trying to engage

orientation
in international in order

of

employees. implications firms treme, old nonexporting from velop the basic a successful organization export orientation

are taken

to the ex

markets may find that setting up a special export project away

may venture and be necessary to de of the existing independent A new firm with little or culture.

organization's

Born Global

or Gradual

Global?

67

no export activities should be aware that itmay be more and more difficult tomanage an export venture the longer the firm operates with only limited export sales. New firms with high international ambitions need access to external funding for their export ventures, which implies
that access portant sources may to capital from different for them than for any other of group be more firms. im Moen

(2000) shows that a consistent

nificant, positive firms. For small mogeneous market impact firms with on

niche
the

focus strategy has a sig

of small export performance limited ho resources, targeting standardized the resources products, needed. Mannerma, as

segments

with

recommended
advantageous small exporting

by Jolly, Alahuhta,
in that it reduces firms, software

and Jeannet (1992), will be

For Alajoutsijarvi,

and Tikkanen (2000, p. 157) state that a critical endeavor is "to identify actions which reduced the uncertainty and risks
perceived by foreign customers." For many for small reasons firms, de

velopment

of close relations

to established

firms in their tar

of market

will be geted markets access and the reduction

advantageous of customer

uncertainty.

For all firms, the necessity of having a global orientation should be stressed. Li when they develop new products on U.S. software firms, finds that the inter (1999), focusing
face is strong development international derscore the marketing, and new processes, markets. importance The results of firms among new product research and in performance in our study un presented a orientation, having global product

particularly when firms in the establishment oping their first product generation.

phase are devel

Implications

for Research

The results presented in this study have important implica tions for research. It should be noted that all firms included in sized. It is possible that this study were small and medium the type of distribution most often these firms established used within their industrial sector when they began export
ing. Consequently, handle considerable agents sales in several growth, markets which may makes be able to it unneces

sary for the firm to change the type of distribution used. A dis tribution development according to the stage models would
occur only if the firm had grown much larger, reaching a size

not included in this study. Following this argument, most firms do not develop into larger small and medium-sized firms, which implies that the stage models have limited valid ity for these firms. The situation may be different for large firms, as is illustrated by the case studies that form the basis for the development of the Uppsala model that Johanson and
Vahlne Overseas and manufactur (1977) present. production to occur still be expected among larger ing may primarily and experience; international firms with engagement prior

this implies that some gradual development 68Oystein Moen

still exists. and Per Servais

Another of this study's implications involves the necessity for further empirical studies of the international involvement of firms and the development of better models and theories to explain the real behavior of the firms. The need for such model has been discussed by Knight and development and McDougall, and Oviatt (1994). Shane, (1996) Cavusgil Furthermore, most empirical studies in the field of interna
tional marketing treat firms as one homogeneous group, as

by Zou and Stan (1998). There may be different key performance factors for the newly established, highly in volved exporters than for the larger, older, highly involved exporters and old firms with limited export sales. Another important issue for research is the investigation of whether one general theory is able to explain the export behavior of firms. It is possible that firms operating in their home market for a long time before entering international markets may fol described
low a behavioral pattern in congruence with the stage mod

theories should be applied els, but new ormodified established exporting firms. Some of the main findings
1.

to newly

of this study are as follows:

and ac

In Norway, and Denmark, France, 38.8%, 34.3%, of the exporting firms commenced their export 30.7%

Conclusions

tivities within two years of establishment. This means that there are large numbers of newly established exporting
firms.

2. Three of four of these firms that began exporting within two years of establishment had an export share higher than 25%. 3. The time period between a firm's establishment and first
year of exporting seems to be important. It seems that the

future export involvement large extent by its behavior

4. The results empirical international gradual process

of the firm is influenced to a shortly after establishment.

of a general, concept in various stages occurring the

question

among the firms included in the study. 5. Itmay be that firms' development of resources in order to in international markets is the key issue be competitive
and that the basic resources and competencies of a firm

are determined within the establishment phase. 6. For managers, the challenges differ depending on the de
gree of international involvement and the age of the firm.

However
opment studies

different

the Uppsala
models

and the innovation-related

describe a gradual devel Several their process. criticizing

in

ternationalization

are, both these

pattern have questioned

of the

internationalization models,

lim

ited ability to explain the phenomena of newly established firms with strong international involvement (Aspelund and Moen 2001; Oviatt and McDougall This study in 1994). cludes both newly established and older small and medium
sized exporting firms from Norway, France, and Denmark. It

Born Global

or Gradual

Global?

69

the preexport phase or the development of direct investment), but the results in operation type (foreign dicate that the phenomenon of a gradual development among small and medium-sized exporting firms may be questioned. does not include The stage models
of international the reason

have had a considerable

impact on the field

decades. of this well Perhaps per and stage written

spective to understand easy keters to structure

for nearly three marketing for the strength and acceptance is that several of these studies were the provided and research teaching and

opportunity in a manner

for mar that has

It has been easy to find examples of individ been welcomed. ual firms that fit this gradual development model. Although firms that follow this incremental development pattern may still exist, the normal pattern may be different in the new
millennium. It is possible that a new situation now exists in

which
compete marily

firms either will

be established
resources or will For

with
be firms

the products,
to successfully established pri that are not es as Moen

competencies,

and orientation, in international markets a home-market later into focus.

with

tablished with a strong international

to develop high-involvement

focus, itmay be difficult

exporters,

(2002) argues. It is possible, however, that these firms that do not start exporting shortly after establishment will develop more in line with the stage models of internationalization. To an important change in the export understand what might be
behavior of small and medium-sized firms, further research

to investigate the development is recommended of the inter national activities of both newly established and older firms.
on and S.F. Slater (1989), "Management Influences Aaby, Nils-Erik A Review Literature Performance: of the Empirical Export 6 (4), 7-26. International Review, 1978-1988," Marketing Alajoutsijarvi, "Customer K. Mannermaa, and H. Tikkanen (2000), and the Small Software Firm: A Frame Relationships in Marketing," work for Understanding Faced Challenges Infor 37 (3), 153-59. & Management, mation Kimmo, "On the Internationalization (1993), A Critical Analysis," Journal of International 209-31. 24 (Second Quarter), Studies, Otto Process Business of

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Department Economics Management,

Norwegian
Science Per and

University
Technology.

of

Servais

is an associate Department of

Entry Changing? International Studies 15 (2), 41-59.

"Are Strategies for Invest of Swedish and Orga International CA: Sage Pub

professor,

Marketing,
Southern

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