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INTERNATIONALISATION
PROCESS IN DEVELOPED
AND DEVELOPING
COUNTRIES
By Diptesh banerjee & Nikolaos B.
INTRODUCTION

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The continuous relationship of individuals,
companies and nations through globalisation has
caused firms to move out of their domestic
market on to the international stage to gain
sustainable competitive advantage (Michael E.
Porter, 1985).
Internationalisation was historically perceived to
be the strategy of large firms. Small firm’s
internationalisation is more often combined with
threat than with opportunities and for this
reason they are however often considered to be
home market oriented (Lindmark, 1998 in Laine &
Kock, 2001).
CONTS.

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However, internationalisation today is a strategy
of all firms irrespective of size. Firms are no
longer interested to stay at home even where
there are good prospects in the home market.
With the development of internationalisation,
many small firms are growing as a result of scale
advantages they derive from the expansion. This
has made the process of internationalisation a
topical issue in many literatures.
This study aims at discussion about
internationalization and analyzes its effects in
firms of developed and developing countries as
well as examples[].
OVERVIEW

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MEANING OF
INTERNATIONALISATION

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Internationalization(sometimes
 With reference to the 
shortened to “I18n”) is the
process models of process of planning and
implementing products and
internationalisation, services so that they can easily
Welch &Luostarinen adapted to specific local
languages and cultures, a
(1988) define process called localization. The
internationalisation internationalization process is
sometimes called translation
“as the process of or localization enablement.
increasing
involvement in
international
operations”.
FORMS OF INTERNATIONALIZATION

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 This

MODEL OF INTERNATIONAL THESIS

model
has
taken

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from
lecture
slide
Globalis
ation
versus
Internati
onalisati
on
Dr. Anna
Zueva
ADVANTAGES

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 Internationalization can provide MNC’s with
specific competencies that they were not available
to the domestically operating firm
 Arbitrage and leverage opportunities for MNC’s.

 Increasing economies of scales for the MNC’s.

 Economies of scope

 More managerial perspectives

 Rapid expansion of knowledge based services (i.e.

professional and technological services banking ,
insurance etc.)
 Reduction of the telecommunication’s cost.
CONTS.

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 Higher economy growth with the participation
of the developing countries
 Helps balancing the recession in the US with
the development in Asia
 Increase of the consumption in the whole
world
 Decrease of the unemployment
 Setup of institutions in developing countries
 Protection of the environment (i.e. Kyoto’s
agreement)
 Monetary stability (i.e. euro currency)
INTERNATIONALISATION FOR FIRMS
IN DEVELOPED COUNTRIES

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‘‘Internationalization’’ has been widely used to describe the
outward movement of the international operations of a firm
(Welch and Luostarinen, 1988).
Theories on the internationalisation of firms are largely based on
Western multinational corporations. Starting from Vernon’s
product life cycle theory (1966, 1971) through the Uppsala
international expansion stage model (Johanson and
Weidersheim-Paul, 1975; Johanson and Vahlne,1977) and the
more recent works of Dunning on his eclectic paradigm theory
(Dunning, 1993, 1995) and Investment Development Path
(Dunning, 1981, 1986) - predominantly concerned
multinational firms from industrialised developed countries.
CONTS.

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Research has found that firms from advanced
economies derive ownership advantages
from their technological and size superiority.
They typically extend their sales and
operations to foreign markets through a
process of ‘‘evolutionary, sequential build up
of foreign commitments over time’’ (Welch
and Luostarinen, 1988).
In support of this we are presenting example of
HELLENIC TELECOMMUNICATIONS
ORGANISATION (OTE S.A.)
OTE COMPANY PROFILE

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 Founded in 1949
 Telecommunication’s company
 30000 employees in 6 countries
 Owns the 54% of Romtelecom
 Owns 20% stake in Telecom Serbia
 Cosmote
 AMC participation by 85% in the capital of the
Albanian mobile operator (2000)
 Cosmfon acquisition of the 100% of it’s shares
(2003)
 Cosmote Romania participation by 70%in the capital
of the Romanian mobile operator (2005)
 Global acquisition of 100% of it’s shares (2005)
COMPANY AT GALANCE

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INTERNATIONALISATION FOR
FIRMS IN DEVELOPING
COUNTRIES

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Most of the studies have been confined to firms operating in well –
established developed countries. The pattern of internationalization
in less developed and newly industrializing economies is different.
Since the late 1960s, an increasing number of firms from these
economies have emerged as active players in foreign direct
investment (FDI) (Wells, 1978; Lau, 1992; Erramilli et al., 1997).
Developing-country MNCs first appeared as a focus of interest about 25
years ago, with the advent of some overseas expansion by
companies from a few countries (Lecraw, 1977; Lall, 1983; Wells,
1983).
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The earliest major developing-world sources of FDI in
this period were a small group of economies,
including Argentina, Brazil, Hong Kong (China), India,
Republic of Korea, Singapore, and Taiwan (Province of
China).since, 2003, the growth rate of outward FDI
(OFDI) from emerging markets has outpaced the
growth from industrialized countries (UNCTAD, 2005).
While OFDI from the BRIC countries – Brazil, Russian
Federation, India and China – has received more
attention (Sauvant,2005). In context to this we are
presenting example of TATA GROUP.
WHY TATA
 Turnover > US$28 bn, equivalent to over 2.5% of India's GDP
 Traditionally the biggest market capitalization(now reliance)

 India’s largest employer in the private sector(222,000+85)

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 Many firsts/largest for India:

first private sector steel mill (TISCO 1970)

first private sector power utility
first luxury hotel (Taj)
first airline (now Air- India)
India's largest software company (TCS)
India’s largest watch & jewellery firm (Titan)
India’s largest cross-border M&As (Tetley, Corus)
Some unique characteristics
Family
Philanthropy
Outward orientation
GROUP HOLDING STRUCTURE
Sir Darobji Tata Trust Sir Ratan Tata Trust Other Tata Trust

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Tata sons[65.89% share holding]
TCS Trent Rallis
Tata steel Tata investment corporation
Tata Motors Tata Teleservices Tata industries
Tata Power Tata international Tata advanced materials
VSNL Idea cellular
Tata Chemicals Tata Teleservices
Tata tea Information tech. park
Indian Hotels Tata autocomp systems
Tata InfoTech [28.62% share holding]
Titan
Voltas
Tata ELXI
 INTERNATIONALISATION STRATEGY
 Driven by operating companies
 Geographically selective

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 Greenfield, JVs, acquisitions
 Partner development of select countries
Tata’s internationalisation:
Most Tata companies have internationalised
Revenue from overseas geographies
Country prioritization:
Priority countries (mostly OECD, mostly inorganic
growth) – USA, UK, Germany, China
Emerging economies(mostly Organic Growth) – South
Africa, GCC, Thailand, Indonesia, Vietnam, Brazil,
Chile, Mexico, Uruguay
Neighboring countries – Sri Lanka, Bangladesh
M&A’s, mostly in higher-income country, ex- Tetly,
Daewoo, Natsteel, Corus, INCAT, Tyco Teleglobe,
Jaguar, etc
CONCLUSION
 The pattern of internalisation for less developed and newly
industrialized countries are different.
Developed economies typically extend their sales and

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
operations to foreign markets through a process of
‘‘evolutionary, sequential build up of foreign commitments over
time’’ (Welch and Luostarinen, 1988).
 Developed economies have ownership advantages from their
technological and size superiority.
 Different types of networks are evolving that is beyond mere
export, investment and FDI from developing economies.
 The government has supported emerging MNEs by providing
appropriate policy framework and infrastructure so that they can
boost overseas expansion.
 In the coming years, the trend of OFDI and internationalization
of enterprises from emerging countries is likely to further
deepen.
REFERENCES
 Industry evolution and internationalization processes of firms from a
newly industrialized economy - Ho-Fuk Lau[Department of Marketing,

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The Chinese University of Hong Kong, Shatin, NT, Hong Kong, China]
 Internationalisation of Firms in Developing Countries: Towards an
Integrated Conceptual Framework - John Kuada[Aalborg University]
 The internationalisation of indian companies: The Case of TATA –
Andrea Goldstien[OECD – organisation for economic co-operation and
development]
 Tata website
 Internationalization and economic performance of enterprises, Jan
Hagemejer Marcin Kolasa, May 2008
 www.ote.gr
 www.cosmote.gr, www.cosmote.ro
 www.inesee.gr, www.cosmofon.com
 www.economywatch.com
 http://europa.eu
 www.imf.org
 www.globul.bg
 www.telecom.yu
 www.oecd.org
 www.amc.al
QUESTIONS

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