The Internationalization Process in the 21st Century: Born-Global, Born-Again Global versus Gradual Global pathways

October 10, 2022

The Internationalization Process in the 21st Century: Born-Global, Born-Again Global versus Gradual Global pathways

First, credit goes to McKinsey & Company for exploring the “born global” concept in 1993. The motivation for this blog arose from a number of events including an internal debate on the utility of the traditional internationalization process in the 21st century’s VUCA global business environment, the rapid/dedicated internationalization pathways pursued by smaller entrepreneurial firms since the 1990s, and some critical takeaways from the 2008 Boston Consulting Group Hal Sarkin’s book titled “Globality: Competing with Everyone from Everywhere for Everything”.       But what exactly are born global and born again global firms? Born global firms are generally smaller entrepreneurial firms which internationalize at, near or shortly after inception (circa 2-5 years) by deriving a substantial proportion of their total (global) revenue from foreign markets.  From the author’s perspective, they are pursuing a “globalization on steroids” strategy or something to that effect. This concept seems to have been well embraced/implemented first, by Australian exporters and then insatiably by emerging markets entities but in particular the recently globalized emerging companies from China and other rapidly developing economies of Africa, Asia, LATAM and MENAT.  Underpinning the success of the “born global” phenomenon is the shift away from the traditional gradual internationalization process {Uppsala model, etc}. There is no need to take a deep dive into the traditional views of the internationalization process of the firm. But at its core, the traditional view holds/argues that it is fundamentally an incremental/gradual process wherein enterprises first venture into adjacent markets and then eventually expand the geographic footprint into the more distant markets. As firms venture further away from the home country they increase commitment to international markets which necessitate acceptance/tolerance of relatively higher risks inherent in international business environment. However, this is done in a gradual, stepwise manner through a number of sequential evolutionary stages. Why the need for the relatively lengthy process you might ask? Well, the model correctly argues that foreign market knowledge deficit is a prime barrier to organizations eager to explore/exploit the opportunities in selling to non-domestic customers. To manage this foreign market knowledge gap, organizations embark on a trial and error approach while acquiring the requisite knowledge of foreign market(s).  In essence, the foray into foreign markets is a gradual/sequential process with risk minimization and internalization (control of foreign operation(s)) at a premium.  As these entities gain knowledge/experience in operating in the foreign market(s) they become a bit more risk tolerant because they can better manage/handle the inherent foreign market risks/uncertainties through the incremental decision-making process wherein lessons learned from previous phases of internationalization process can be applied to the next phase. Consequently, the organization is more likely to hike its commitment in the foreign market(s) by increasing investments therein. Fast forward to the 21st century with its fast evolving competitive landscape and we now have the emergence of the “born again global” phenomenon. Born again global firms are typically firms that are well established in and derive virtually all their global sales from the domestic market.  These firms had no apparent need to internationalize operations but have suddenly embraced the rapid/accelerated and dedicated internalization. So what are the strategic triggers for this radical turnabout and/or conversion to accelerated internationalization?