III Entrepreneurship and Exporting

Emerging-Market Born Globals: The Influence of Product-Related Factors on Internationalization Mode in the Indian Apparel Industry

S. Raghunath and Krishna Kumar Balaraman

Introduction

The internationalization of emerging-market firms is an area of increasing interest to researchers, as more of the emerging economies become active players in international trade and the global economy (Gaur & Kumar, 2010). In keeping with the trend of increasing internationalization of emerging markets, the Indian economy has been rapidly internationalizing for the past few decades, and this has led to the rise of born global firms in various industries. Studies indicate that there is a growing trend of new ventures going global at, or near, startup (e.g., Oviatt & McDougall, 1994; Shrader, Oviatt & McDougall, 2000), having a strong

S. Raghunath

Indian Institute of Management Bangalore, Bengaluru, India K.K. Balaraman (h)

Indian Institute of Technology Madras, Chennai, India e-mail: This email address is being protected from spam bots, you need Javascript enabled to view it

© The Author(s) 2017

S. Raghunath, E.L. Rose (eds.), International Business Strategy, DOI 10.1057/978-1-137-54468-1_9

international vision right from inception (Oviatt & McDougall, 1997), and focusing on meeting the demands of markets that are inherently international (Oviatt & McDougall, 1997). The study of born global companies, which internationalize rapidly, almost from inception, has been of interest for the past several decades (e.g., Johanson & Vahlne, 2009; Knight, Madsen & Servais, 2004; Rialp, Rialp & Knight, 2005; Persinger, Civi & Vostina, 2007; Melen & Nordman, 2009; Kim, Basu, Naidu & Cavusgil, 2011). While there are many studies on the initial internationalization approach of born globals, there seems to be limited research on the continued internationalization of these companies (Melen & Nordman, 2009). Further, the influence of product-related factors on the choice of internationalization modes, especially for emerging-market born globals, has not been heavily researched. We have investigated the internationalization modes of Indian-born global organizations in the apparel industry, to provide a better understanding of product life-cycle influences on choices related to internationalization.

In the Indian context, there are some studies on internationalization and born globals (e.g., Elango & Pattnaik, 2007; Verma, 2011; Kim, Basu, Naidu & Cavusgil, 2011). However, there are very few in-depth studies on the internationalization modes of born globals from India (Kim et al., 2011; Varma, 2011). This chapter addresses that gap by studying born globals in the Indian apparel industry. The longitudinal study attempts to understand the rationale behind the internationalization modes used by these organizations, and the product-related influence on the choices made by these organizations in the process of their internationalization efforts.

Johanson and Vahlne (1977) suggested that internationalization is the product of a series of incremental decisions. The same authors revisited the Uppsala model (Johanson & Vahlne, 2009) and revised the original model to incorporate the network view of internationalization. They proposed that insidership in relevant network(s) is necessary for successful internationalization, and that relationships offer the potential for learning and for building trust and commitment, both of which are preconditions for internationalization. Johanson and Vahlne (2009) further emphasized that such learning develops within relationships between partners (e.g., suppliers and customers) that are located in different countries. This is especially visible in international new ventures, where the founders often have prior knowledge and contacts with potential customers located in different geographies. In new ventures that experience accelerated internationalization, such as born global firms, the entrepreneurs’ networks, and prior knowledge of international markets, including meeting new customer demands, are understood to influence the commitment level of the entry mode selected (Shrader, Ovaitt & McDougall, 2000). The continuing internationalization by born globals, which Melen and Nordman (2009) categorized as low, incremental, and high commitment, can thus be viewed as contingent on the development of knowledge regarding customer needs and preferences. Kim et al. (2011) studied how born globals’ customer (market) orientation leads to innovativeness through technological capability associated with customer relationship management and marketing orientation. While studies (e.g., Freeman, Deligonul & Cavusgil, 2013; Yu, Gilbert & Oviatt, 2011) have indicated that acceptance of a firm by foreign customers is essential for successful internationalization, there is a gap in the literature, in terms of understanding product-related factors in context of the knowledge-based perspective on the internationalization process. The Indian apparel industry, which is one of the country’s most globalized industries, offers an interesting context to study, in order to address this gap.

The chapter is based on data collected through questionnaires and interviews with born globals in the Indian textile industry, aimed at understanding the internationalization modes adopted by these firms. Our results should provide insights into the internationalization processes of born globals from other emerging economies with business conditions that are comparable to those in India. In addition, there are other sectors in India, such as computer software, jewelery, and leather, which also have substantial numbers of born globals.

The chapter begins with a theoretical framework, followed by discussions of results of previous research, the research methodology, and the case data study and analysis, and ends with concluding remarks, a discussion of the limitations, and suggestions for future research.

 
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