International Marketing ReviewEmerald Article: The International Commitment of Late-Internationalizing Brazilian Entrepreneurial FirmsAngela Da Rocha, Renato Cotta de Mello, Henrique Pacheco, Isabel de Abreu Farias

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To cite this document: Angela Da Rocha, Renato Cotta de Mello, Henrique Pacheco, Isabel de Abreu Farias, (2012),"The International Commitment of Late-Internationalizing Brazilian Entrepreneurial Firms", International Marketing Review, Vol. 29 Iss: 3 pp. 1 - 1

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[Article title] The International Commitment of Late-Internationalizing Brazilian Entrepreneurial Firms Author Details (please list these in the order they should appear in the published article) Author 1 Name: Angela da Rocha Department: Departamento de Administração University/Institution: Pontifical Catholic University of Rio de Janeiro Town/City: Rio de Janeiro State (US only): Country: Brazil Author 2 Name: Renato Cotta de Mello Department: University/Institution: Federal University of Rio de Janeiro Town/City: Rio de Janeiro State (US only): Country: Brazil Author 3 Name: Henrique Pacheco Department: Departamento de Administração University/Institution: Pontifical Catholic University of Rio de Janeiro Town/City: Rio de Janeiro State (US only): Country: Brazil Author 4 Name: Isabel de Abreu Farias Department: Departamento de Administração University/Institution: Pontifical Catholic University of Rio de Janeiro Town/City: Rio de Janeiro State (US only): Country: Brazil NOTE: affiliations should appear as the following: Department (if applicable); Institution; City; State (US only); Country. No further information or detail should be included Corresponding author: [Name] Angela da Rocha Corresponding Author’s Email: amc.darocha@gmail.com

Please check this box if you do not wish your email address to be published Acknowledgments (if applicable): Biographical Details (if applicable):

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[Author 1 bio] Angela da Rocha has a PhD from IESE Business School, Spain, and has published in several international journals including the Journal of Business Research, Journal of International Entrepreneurship, Entrepreneurship and Regional Development, International Marketing Review, and Journal of International Business Studies, among others. She is the head of NUPIN, the Center for International Business Research at PUC-Rio. [Author 2 bio] Renato Cotta de Mello is an Associate Professor of Strategy at The Federal University of Rio de Janeiro, where he got his PhD in Production Engineering. He did postdoctoral work at Ohio University. Before developing an academic career, he worked for several years as a top executive responsible for international decisions in Brazilian firms. [Author 3 bio] Henrique Pacheco is a Research Associate at the Center for International Business Research (NUPIN) at the Pontifical Catholic University of Rio de Janeiro. [Author 4 bio] Isabel Farias finished her MBA degree at the Pontifical Catholic University of Rio de Janeiro. She was at the time a Research Assistant at the Center for International Business Research (NUPIN), Pontifical Catholic University of Rio de Janeiro. Structured Abstract: Purpose: This paper aimed at contributing to the understanding of international commitment of entrepreneurial firms from an emerging economy to their foreign operations. Specifically, it intended to help bridging an existing gap in the literature by (i) focusing on the international commitment of established small entrepreneurial firms, a topic that has been largely overlooked; (ii) investigating small-firm commitment to foreign investments whereas most studies focus on exporting; (iii) combining the different research streams that studied international commitment; and (iv) using the RBV to explore the interplay between resource allocation and commitment in the foreign investments of small entrepreneurial firms. Design/methodology/approach: The study adopts an abductive approach to theory development and uses the case method of investigation. Three case studies were developed from primary and secondary sources. A total of 153 pieces of documentation were used to reconstruct past events, in addition to the interviews and information from company sites, permitting triangulation. Pattern-matching logic was employed as case development progressed, continuously comparing with the theoretical background used in the study. Findings: The interplay between resource availability, goal congruence, entrepreneur’s desire to internationalize and family attitude seem to have a combined impact on the arousal and initial development of international commitment. The relative importance of managerial over financial resources in the early stages and the impact of preparatory activities on the speed and scope of internationalization seem to be specific manifestations of commitment among emerging market firms. As to the outcomes of commitment, performance appears both as an outcome and an antecedent, and, knowledge acquisition and opportunity development seem to increase pari passu with international commitment of emerging market firms. Research limitations/implications: The study suffers of limitations due to the specific research setting (country and industry) and the applicability to large publicly-held firms. Also, although the choice of three firms from the same industry and of equivalent size, products, and resources enabled us to avoid the impact of these differences on firm’s international commitment, the choice also limits the applicability of the research results. Practical implications: The findings can be useful to emerging market firms by pointing out the potential negative impact of low international commitment on a firm’s internationalization process. Since most firms from emerging markets cannot count on previous internationalization knowledge accumulated by other firms in their (domestic) institutional environment to be used as guides to international expansion, this type of research can provide some guidelines to help their internationalization efforts.

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Originality/Value: While certain results agreed with the extant literature, new findings generated a set of theoretical propositions regarding international commitment of late-internationalizing entrepreneurial firms from an emerging Latin American market. Keywords: Internationalization, Foreign Investment, Brazil, case studies Article Classification: Research Paper

For internal production use only Running Heads:

The International Commitment of Late-Internationalizing Brazilian

Entrepreneurial Firms

Abstract

Purpose: This paper aimed at contributing to the understanding of international

commitment of entrepreneurial firms from an emerging economy to their foreign

operations. Specifically, it intended to help bridging an existing gap in the literature by

(i) focusing on the international commitment of established small entrepreneurial firms,

a topic that has been largely overlooked; (ii) investigating small-firm commitment to

foreign investments whereas most studies focus on exporting; (iii) combining the

different research streams that studied international commitment; and (iv) using the

RBV to explore the interplay between resource allocation and commitment in the

foreign investments of small entrepreneurial firms.

Methodology: The study adopts an abductive approach to theory development and uses

the case method of investigation. Three case studies were developed from primary and

secondary sources. A total of 153 pieces of documentation were used to reconstruct past

events, in addition to the interviews and information from company sites, permitting

triangulation. Pattern-matching logic was employed as case development progressed,

continuously comparing with the theoretical background used in the study.

Findings: Among the factors influencing international commitment, the interplay

between resource availability, goal congruence, entrepreneur’s desire to internationalize

and family attitude towards internationalization seem to have a combined impact on the

arousal and initial development of international commitment of small established

entrepreneurial firms. Manifestations of commitment tend to bundle together;

international commitment seems to manifest itself in several highly correlated

dimensions. The relative importance of managerial resources over financial resources in

the early stages of internationalization and the impact of preparatory activities on the

speed and scope of internationalization seem to be manifestations of commitment

specific of emerging market firms. As to the outcomes of commitment, performance

appears both as an outcome and an antecedent. In addition, knowledge acquisition and

opportunity development seem to increase pari passu with the international

commitment of emerging market firms.

Research limitations: The study suffers of limitations due to the specific research setting

(country and industry) and the applicability to large publicly-held firms. Also, although

the choice of three firms from the same industry and of equivalent size, products, and

resources enabled us to avoid the impact of these differences on firm’s international

commitment, the choice also limits the applicability of the research results.

Practical implications: The findings can be useful to emerging market firms by pointing

out the potential negative impact of low international commitment on a firm’s

internationalization process. Since most firms from emerging markets cannot count on

previous internationalization knowledge accumulated by other firms in their (domestic)

institutional environment to be used as guides to international expansion, this type of

research can provide some guidelines to help their internationalization efforts.

Originality: While certain results agreed with the extant literature, new findings

generated a set of propositions regarding international commitment of late-

internationalizing entrepreneurial firms from an emerging Latin American market.

1.Introduction

Commitment is a central construct in the Uppsala internationalization process model, in

network theory, in the international entrepreneurship (IE) and born globals (BG)

literature, and in the export marketing literature. Nevertheless, these theoretical

developments and related empirical studies differ as to (i) when and how commitment

appears in the internationalization process, (ii) how different facets of the commitment

construct are manifested, and (iii) the interplay between factors influencing commitment

and its outcomes. In addition, each research tradition has focused on different entry

modes (exporting vs several entry modes) and different types of firms (small vs large,

new ventures vs established firms). The present state of knowledge on international

commitment suggests therefore the need for further research on the topic.

The Uppsala model in its several versions assumes that commitment – either to the firm

(Johanson and Vahlne, 1977) or to a relationship (Johanson and Vahlne, 2003, 2006,

2009) – appears gradually during the internationalization process. In the original model,

internationalization typically occurs once a firm has reached a certain size and national

coverage, starting with exporting and moving to higher-control entry modes; this view,

however, is considered to have “declining validity” in recent versions of the Uppsala

model (Johanson and Vahlne, 2009:1420). Network theory, one of the key theoretical

foundations of the new versions of the model, also sees internationalization as an

incremental process, since trust between partners in a relationship takes time to build.

Despite substantial empirical support for incremental theories, their assumptions were

challenged by empirical studies on the “instant” internationalization of new

entrepreneurial firms. Commitment to internationalization at the firm’s inception or

even before (in the entrepreneur’s earlier trajectory) seems to lead to an accelerated

internationalization process (e.g. Gabrielsson et al, 2008; Melén and Nordman, 2009)

using one or several simultaneous entry modes. From this perspective, therefore,

commitment precedes internationalization. The IE and BG literature focuses on

international new ventures (INVs) and pays scant attention to the internationalization

process of established entrepreneurial firms and to how these firms commit themselves

to foreign operations. In fact, Ripollés-Meliá et al (2007:66) point out to “the need to

extend the boundaries [of IE research] to include previously established companies,”

that is, entrepreneurial firms that ventured abroad later in their lifecycle.

The commitment construct has also been intensely used in the export marketing

literature since the 1970s (Bilkey, 1978; Leonidou and Katsikeas, 2010). Recent studies

on export commitment, however, have shed new light into the complex relationships

between export commitment, export marketing strategy and tactics, firm competitive

advantages, and export performance, suggesting the need for further research (e.g.

Lages and Montgomery, 2004; Navarro et al. 2010a, 2010b, 2011). In addition, since

this stream of the literature looks at exporting, there is little assurance that the findings

are applicable to other entry modes, such as foreign direct investment or contractual

modes.

Another research stream that appears as a promising avenue for research on

international commitment is the resource-based view (RBV). Previous theoretical and

empirical studies have seen resource allocation as a major manifestation of international

commitment (e.g. Johanson and Vahlne, 1977, 2009). In spite of this, only recently has

the RBV been deployed as a theoretical foundation in the international marketing

literature (Ruzo et al., 2011). To our knowledge, few recent studies on export

commitment have used the RBV (e.g. Navarro et al, 2010a, 2011).

Our study is novel in several regards. First, it focuses on the international commitment

of established small entrepreneurial firms, a topic that has been largely overlooked

compared with the substantial attention garnered by INVs or BGs. Second, whereas

most of the literature on international commitment of small firms focuses on exporting

as an entry mode, the present study investigates small-firm commitment to foreign

investments. Third, the study combines contributions from the different research

streams that studied the phenomenon of international commitment. Fourth, the study

uses concepts from the RBV to explore the interplay between resource allocation and

commitment in the foreign investments of small entrepreneurial firms.

Finally, the study focuses on small entrepreneurial firms from an emerging market.

There is substantial disagreement among scholars as to whether internationalization

processes of emerging market firms are similar to those of firms that expanded abroad

earlier from developed countries (e.g. Dunning et al, 2008; Ramamurti, 2009).

Differences come from emerging markets characteristics (such as regulatory instability,

economic and political volatility, technological backwardness, cultural aspects, etc.) that

can and should impact organizational capability, flexibility, and risk aversion, among

other factors. Hence, it is reasonable to suppose that firms from emerging markets may

develop and manifest international commitment in ways that do not necessarily

reproduce the experience of those that expanded earlier and from developed countries.

In fact, the literature is still scarce when it comes to scrutiny of the ways by which

commitment relates to the internationalization process of firms from emerging markets

(exceptions are the works by Javalgi & Todd, 2011; Sharma et al, 2006; and Wood et al,

2011). Furthermore, to our knowledge, the topic has not been studied in the context of

any Latin American emerging market.

The main research question of the study is: How do small established entrepreneurial

firms from an emerging economy develop and show international commitment in their

foreign operations? Related questions addressed by the study ask: How do different

factors interact to engender firm commitment to foreign operations? How do different

manifestations of commitment relate to each other? How do these firms mobilize

resources in their commitment to foreign operations? What types of resources seem to

be most relevant as manifestations of their commitment to foreign operations? What are

the outcomes of different levels of commitment? To address these questions we have

adopted an abductive approach to theory development using the case method of

investigation (Dubois and Gadde, 2002; Schweizer et al, 2010). The use of the case

method is justified by (i) the fairly extensive period that needs to be covered to

understand the phenomenon of international commitment in a firm’s history, (ii) the

possibility of using several sources to recover past events, and (iii) the desire to

understand the underlying logic of the choices made by entrepreneurs.

The paper proceeds as follows: In the next section we review the literature on

international commitment, focusing on the contributions of the Uppsala model, network

theory, the IE, BG, and export-marketing literature, as well as the potential contribution

of the RBV. We then discuss the methodology adopted and justify the use of a

comparative case study. In the following section, we present our findings and develop a

set of propositions that emanate from the study. In the final section we discuss our

findings, present future research directions and implications for management, and

acknowledge certain limitations of the study.

2. Commitment and Internationalization

The relationship between commitment and internationalization has received several

theoretical conceptualizations. Commitment appears under three different, albeit closely

related, multi-dimensional constructs: market commitment (e.g. Johanson and Vahlne,

1977), relationship commitment (e.g. Johanson and Vahlne, 2003, 2006, 2009) and

commitment to internationalization (e.g. Gabrielsson et al (2008) or to exporting (e.g.

Lages and Montgomery, 2004). In addition to the three different types of commitment,

several dimensions of commitment have been reported (e.g. Sharma et al, 2006; Stump

et al, 1998). They can be grouped in two categories: attitudinal, that is, a positive

disposition towards international activities (Blesa and Ripollés, 2008; Freeman and

Cavusgil, 2007); and behavioral, expressed by the allocation of resources and efforts to

internationalization (Blesa and Ripollés, 2008). The same firm may display more than

one type of commitment and not all dimensions of commitment (Stump et al, 1998).

2.1. Commitment in the Uppsala model and network theory

Market commitment is a central construct of the original version of the Uppsala Model

(Johanson and Vahlne, 1977). Experiential knowledge acquired while developing

activities in a foreign market is critical to the advancement of the internationalization

process, reducing uncertainty, thereby paving the way for increased market

commitment. The amount of resources and the extent to which they are specialized, as

well as the entry mode adopted, are recognized as a manifestation of market

commitment. In the original model, higher levels of commitment entail direct

investments in foreign production assets.

Developments in the area of industrial marketing and purchasing, especially the

contribution of the IMP Group (e.g. Ford, 1990; Anderson et al, 1994), and the literature

on buyer-seller relationships and distribution channels (for a review, see Sharma et al,

2006) have changed the understanding of the interplay between commitment and

internationalization in the context of business relationships. Since firms engage in

relationships with other firms when operating in external markets, the key issue is not

commitment to an abstract entity – a “faceless” market (Johanson and Vahlne, 2003:92)

– but, rather, commitment to specific business relationships or networks. Networks are

formed because, for long-term business, knowledge acquired about partners is crucial to

build trust (Johanson and Mattson, 1993). A reasonable time of coexistence between the

partners is needed to acquire this kind of knowledge, which is of a tacit/experiential

nature. Firms operating in a network share knowledge and resources when making

decisions regarding internationalization (Lamb and Liesch, 2002; Solberg and Durrieu,

2006).

In their reassessment of their model, Johanson and Vahlne (2003) proposed a network-

based model, reframing the mechanism of internationalization as an interplay between

knowledge development and relationship commitment. In subsequent work, Johanson

and Vahlne (2006) explore a reverse path, in which relationship commitment impacts

knowledge development, which in turn affects uncertainty reduction and opportunity

development. Finally, in a more recent discussion of the revised model, Johanson and

Vahlne (2009) emphasize the role of trust as an antecedent of relationship commitment.

Relationship commitment could eventually be manifest only psychologically, but

“usually … will be visible through changes in entry modes, the size of investments,

organizational changes, and definitely in the level of dependence” (Johanson and

Vahlne, 2009:1424).

2.2. Commitment in the IE and BGs literature

The IE literature (e.g. Freeman and Cavusgil, 2007; Melén and Nordman, 2009) also

ascribe central importance to commitment to internationalization. Gabrielsson et al

(2008) concluded that commitment is caused by factors unrelated to the

internationalization process in the case of BGs, a view in opposition to the Uppsala

model. Instead, decision-maker characteristics are considered a factor driving

international commitment (e.g. Gabrielsson et al, 2008; Nadkarni and Perez, 2007).

International entrepreneurial orientation, at firm-level or decision-maker level, seems to

be the most relevant attribute influencing the internationalization of entrepreneurial

firms (Freeman and Cavusgil, 2007; Ripollés-Meliá et al, 2007). Related constructs

such as global vision, global mind-set, desire to internationalize, and market orientation

(Gabrielsson et al, 2008; Javalgi and Todd, 2011) have also appeared in several studies.

In addition, other studies have identified an influence of family commitment in the

internationalization of family firms (e.g. Graves and Thomas, 2008). Organizational

variables, such as marketing capabilities (Blesa and Ripollés, 2008), or preparatory

activities (Knight, 2001), were also identified in the IE and BG literature as relating to

commitment to internationalization. This research stream also connects commitment to

entry modes; more committed new ventures show a variety of entry modes (Freeman

and Cavusgil, 2007). Finally, Blesa et al (2008:171) consider degree (percentage of

foreign turnover), scope (geographic diversification), and speed as “the most

representative variables of a firm’s international commitment” in the case of INVs.

2.3. Commitment in the export marketing literature

The export marketing literature has given substantial attention to export commitment. In

this case, commitment is neither associated to a given geographic market, nor to a

specific partner or network, but, rather, to export activities (Navarro et al, 2010a). This

research stream suggests that certain firm variables and decision-maker characteristics

are antecedents of export commitment. Such antecedents include export market

orientation, export marketing capabilities and export experience, the status of the

organizational unit or manager in charge of international operations, and preparatory

activities to internationalize (e.g. Katsikeas et al, 1996; Navarro et al, 2010a, 2011).

Marketing mix adaptation is seen either as a manifestation or as an outcome of

commitment (e.g. Lages and Montgomery, 2004; Navarro et al, 2010b); however, these

results are somewhat controversial. In addition, while several literature reviews (e.g.

Zou and Stan, 1998) have concluded that export commitment has a positive impact on

export performance, more recent studies have pointed to the complex nature of this

relationship (e.g. Navarro et al, 2010a, 2011; Lages and Montgomery, 2004).

2.4. Commitment and the RBV

The concept of a firm as a bundle of productive resources (Penrose, 1995[1959]) is

behind both the Uppsala model and the RBV (Barney, 2011; Dunning, 2003). In fact,

the basic mechanism of internationalization in the original Uppsala model builds on

Penrose’s ideas of the importance of experiential knowledge and the relationship

between knowledge accumulation and growth. For Penrose, the availability of

resources and the coordination of the administrative framework to exploit them are

critical to the firm’s growth.

Barney (2011:121) classified firm resources in four categories: financial (including all

“money resources”), physical (technology, plant and equipment, location, and raw

materials), human (managerial and non managerial, including “training, experience,

judgment, intelligence, relationships, and insight”), and organizational (such as formal

and informal structure, planning and control systems; firm relationships and reputation;

organizational culture). Barney does not distinguish between resources and capabilities.

Firm resources determine the extent to which a firm is capable of exploring

opportunities and of facing the challenges posed by competitors in new markets. In the

export marketing literature, Navarro et al. (2010b, 2011) found evidence that export

commitment enables firms to establish and protect positional advantages in foreign

markets.

Our literature review thus shows that several research traditions, such as the Uppsala

model and network theory, the IE and BG literature, the export marketing literature, and

the RBV provide complementary or competitive explanations of international

commitment (Table 1).

Take in Table no.1

3. Methodology

In this research, we have used an abductive approach characterized by “systematic

combining,” where “theoretical framework, empirical fieldwork, and case analysis

evolve simultaneously” (Dubois and Gadde, 2002:554). As described further in this

section, the process by which we identified the three cases and developed our research

questions was to some extent serendipitous, and the analytical framework used also

became more refined as the study progressed.

3.1. The choice of Brazil as the focal country of the study

The growing importance of Brazil in the global economic arena and its economic and

cultural differences to other emerging markets (such as India and China) justify the

choice of Brazil as the focal country for the study. As with many emerging market

firms, Brazilians companies have been late to internationalize. However, since the mid-

1990s, regardless of their size and industry, firms from Brazil have increasingly

engaged in international activities. To our knowledge, very few studies in the

international literature have addressed the internationalization of entrepreneurial firms

from Brazil, and none has explored the issue of international commitment vis-à-vis

foreign direct investments.

3.2. Case selection

We aimed at studying how small entrepreneurial firms that were already established for

many years in the domestic market developed international commitment to foreign

operations (FDI). Moreover, we wanted to look at firms whose internationalization

occurred while the founders were still in command. Accordingly, the three cases

selected for the study were of Brazilian steakhouse chains that offered similar products

and service and were quite successful in the Brazilian market. Their founders were still

leading the firms. All three firms expanded abroad in the 1990s (see Appendix 1 for

firms’ characteristics).

The comparative study of these three cases afforded several advantages from the point

of view of theory building. The firms showed several similarities, which enabled to

control for the impact of industry, size, timing of internationalization, and foreign

market effects on international commitment, thereby allowing the researchers to look at

specific issues associated with international commitment, and, to the extent possible,

excluding potential interference of these other variables.

3.3. Data collection

Our first contact with one of these companies occurred in the early 2000s, when a first

interview was conducted with the founder of Plataforma, and extensive secondary

information was gathered. At that time, this specific firm had just one operation abroad

and the level of international commitment seemed quite limited. A case study report

was prepared and all the data gathered was entered in a database of internationalizing

firms held by a local university research center. Two years later, there was an

opportunity to interview the top management of a second steakhouse chain (Porcão),

which had started operations in several countries albeit with limited penetration in each.

Again, the interview was taped and transcribed, secondary information was collected;

all the data were kept in the same database, and a preliminary case report was prepared.

Later, the researchers became aware of a third chain (Fogo de Chão), which had favored

growth in the U.S. market to the detriment of growth in Brazil. Such contrasting

strategic choices seemed to stem from different degrees of international commitment,

suggesting an opportunity to an in-depth investigation of the construct. The research

questions thus became more focused and we conducted an interview with the top

management of the third firm.

Based on these preliminary results, we decided to return to each firm to conduct a

second, more-focused, in-depth interview, again with top management. During this

period, additional secondary data was gathered and organized. Although one of the

companies would not agree to a second interview (Fogo de Chão), we were able to visit

one of its restaurants in the U.S. to observe the operation; there, we conducted an

interview with the shift manager. Each interview, with the exception of the last, required

one to two hours. Interviews were taped and transcribed. No inconsistencies were found

between the information from interviews and secondary sources (except for specific

dates of market entries, which were resolved by cross-checks with each company).

Interviews, however, provided information on more subtle issues, often passed over by

business articles.

Because these companies were well-known in Brazil, despite being small and

entrepreneurial, a wealth of published data was available, enabling us to adopt a

longitudinal approach and to reconstruct past events and decisions. In addition to the

documentation already available in the database, collected in the previous years,

secondary data was gathered from several different sources in English and Portuguese,

including company websites and articles published (1992 to 2009) in business

magazines and newspapers, either printed or electronic. Too, one of the firms (Fogo de

Chão), had published a book on its foreign experiences. A total of 153 pieces of

documentation were used to reconstruct past events, in addition to the interviews and

information from company sites, thereby enabling triangulation (Eisenhardt, 1989; Yin,

1989). The data collected covered: (i) company history and entrepreneur background;

(ii) a detailed account of international activities though 2009, including pre-

internationalization activities, market selection and entry modes, marketing strategies

adopted, and outcomes; (iii) specific issues examined in the study relating to

international commitment (i.e., factors influencing international commitment before and

after internationalization started, manifestations of international commitment, and

outcomes of international commitment).

3.4. Data analysis

Data analysis (as well as data collection) proceeded in several steps during the years

these companies were monitored by the research team. The first step, as mentioned

before, preceded the intention of studying international commitment. Our initial

intention was merely to gain an understanding of how the internationalization process of

this type of businesses had evolved. Because of the late internationalization of these

firms, our theoretical framework at this point was very much limited to the Uppsala

model and network theory. Also, at this point, we only used within-case analysis.

The second step was reached as we moved to the interview with one of the founders of

the third company. At this point we had become aware of differences in the

internationalization process of the three firms and had decided to focus specifically on

the issue of international commitment. Our theoretical foundation encompassed at this

point both previous framework (the Uppsala model and network theory) and variables

extracted from the literature on export commitment, including factors influencing export

commitment and the relationship between the construct, export marketing strategy and

export performance. In addition, we looked into IE and BG literature for additional

insights. Thus, the third interview was conducted using a more focused framework,

albeit from a broader set of theoretical perspectives. Again, this step generated a within-

case analysis.

The third step started by comparing the transcripts and the case reports in order to

identify the information missing in each case. This analysis suggested that the RBV

could be helpful, mainly by clarifying the different types of firm resources that could be

employed by the firm in the internationalization process. We then performed the second

round of interviews. This process of going back and forth between the cases and the

theoretical framework permitted to adopt an abductive approach to theory building

(Dubois and Gadde, 2002), blending inductive and deductive reasoning as the research

progressed.

The fourth step consisted of a consolidated report prepared for each case, encompassing

the complete body of information collected for the study. This “storytelling” procedure

affords a chronological and holistic view of each case (Ghauri, 2004); and because the

trajectories of the firms had been studied for several years before this paper (with its

own specific research agenda) had been conceived, each case report was the result of

combining new information with earlier drafts.

The final step was a cross-case analysis (see, for a similar treatment, Schweizer, 2005).

To move from a historical to a conceptual perspective, the information was coded and

organized in analytical categories. Some of these categories had been previously drawn

from the literature (as depicted in Table 1), while others emerged from the study. Tables

2 to 5 present the final set of categories used with examples of the data collected for

each category. Two of the authors independently classified the data on the different

categories and the few cases where differences occurred were then discussed and

resolved. Comparative tables were prepared and these helped to identify differences and

aspects in common. Pattern-matching logic was employed as case development

progressed, with continuous comparison with the literature (Yin, 1989; Dubbois and

Gadde, 2002). While certain findings were consistent with the literature, others

generated a set of propositions regarding international commitment of late-

internationalizing entrepreneurial firms from an emerging economy.

4. Findings

The firms have a similar history: all are entrepreneurial family firms quite successful in

the Brazilian market and started their internationalization around the same period.

However, the nature of the internationalization processes, their escalation, and the level

of commitment of these firms radically differ.

We identified different paths followed by each firm. Porcão had the potential to develop

commitment to internationalization and relationship commitment when it started its

internationalization process with a joint venture, and relationship/network commitment

when it changed from a joint venture to a franchise system. Nevertheless, this potential

never developed into actual commitment. Also, the firm did not show market

commitment to any of the several foreign markets it entered. The Plataforma experience

depicts a case of high market commitment, but low commitment to internationalization.

Internationalization was not a goal per se, and the experience, albeit perceived as very

successful, remained geographically limited. Fogo de Chão showed a strong

commitment to internationalization, as well as high market commitment.

4.1. Factors influencing international commitment

Several factors seemed to influence international commitment from the start of the

internationalization process. Table 2 presents excerpts from the interviews related to

factors that were deemed to influence international commitment.

Take in Table no.2

Table 3 presents factors also used as analytical categories that did not seem to influence

international commitment. In fact, several aspects, including pre-existing relationships

in a foreign market, international experience, market orientation, international

entrepreneurial orientation or global mind-set, and competitive advantages seemed not

to have any significant impact on the level of international commitment.

Take in Table no.3

With two firms, the decision to internationalize had similar triggers. First, the

enthusiasm of foreign visitors with the Brazilian-style steakhouse encouraged the

entrepreneurs; second, attractive business proposals led the entrepreneurs to enter into

joint ventures with foreign partners. In both cases the investments in physical facilities

were made mainly by the foreign partner, and the Brazilian firms were expected to

provide know-how and trained employees. At first, the entrepreneurs in both firms had

no intention of internationalizing, having already refused proposals from other

interested parties. However, in both cases, the business opportunity was attractive

enough to make them reconsider their decision. In the case of Plataforma, it was the

son’s interest in managing the new venture abroad that paved the way to

internationalization. The third company, however, Fogo de Chão, showed a totally

different pattern. Despite similar encouragement of foreign visitors, the main trigger

was a trip one of the entrepreneurs made to the U.S., when he was impressed with the

buying power of Americans. Further visits fueled his belief that the U.S. was the future

for his firm to grow. It seems that the different ways these firms approached

internationalization from the start helped engender commitment.

Proposition 1a: When established entrepreneurial firms from an emerging

economy are pulled to internationalization by attractive business proposals

(reactive motives), commitment tends to be lower from the start.

Proposition 1b: When the trigger to internationalization is opportunity discovery,

commitment tends to be higher from the start.

The desire to internationalize the firm appeared in only one case (Fogo de Chão), but it

was initially rather vague. However, after the entrepreneur “discovered” the

opportunity, he showed a manifest desire to internationalize and convinced the other

partners to go ahead with the venture.

Proposition 1c: Opportunity discovery by the entrepreneur in established firms

from an emerging economy combined with a latent desire to internationalize

tends to be a key factor in engendering international commitment.

The aspect that seemed most important to create international commitment was the

interplay between resource availability and goal congruence. Although the three firms

had availability of financial resources to invest abroad, their goals were different. Fogo

de Chão entrepreneurs focused on growth; Porcão owners prioritized domestic

expansion; and Plataforma owners did not have plans for growth, focusing instead on

(satisfactory) profitability. This last choice is explained by Penrose (1995), who argues

that not all entrepreneurs, in spite of how competent they are, are ambitious, particularly

those that manage family firms.

Proposition 2a: Resource availability is not a sufficient condition to international

commitment if a firm’s strategic goals do not contemplate growth through

internationalization.

Proposition 2b: Congruence with firm’s strategic goals tends to be a mediator

between entrepreneurs’ desire to internationalize and commitment.

4.2. Manifestations of Commitment

We looked at several manifestations of commitment. Table 4 presents examples of data

for manifestations of commitment.

Take in Table no.4

4.2.1. Resource allocation

The size of investments was an unmistakable manifestation of international

commitment. Porcão was expanding in Brazil, and did not have extra financial resources

available to invest abroad, unless it sacrificed domestic growth (which it did not).

However, managerial resources were more of a problem for Porcão, where managerial

talent was said to be lacking even for domestic expansion. In the case of Plataforma,

financial resources were not key to understanding commitment, because of the partners’

investments. Rather, this company committed the most critical and scarce resource,

family managerial competence, since the son of the founder went to New York to

manage the operation abroad. As to Fogo de Chão, although there was an initial pool of

resources available, investments substantially increased over time, denoting increased

commitment. Local financing and reinvestment of profits were followed, at a later point,

by the partnership with a venture capital firm. Also, the firm increased its debt to

support these activities. In addition, one of the founders led the expansion of the firm in

the U.S. It thus seems that the lack of managerial resources for foreign expansion might

be a more serious obstacle faced by emerging market firms than the lack of financial

resources. Frequently, a structural unavailability in these countries of well-trained

managers and managers with international experience curtails the speed of expansion. In

a later stage of international development, however, as the firm eventually manages to

form an international managerial team, financial resources may become a more

important impediment to foreign expansion.

Proposition 3a: When established entrepreneurial firms from an emerging

economy start their internationalization process, the allocation of financial

resources may be a lesser manifestation of international commitment than the

allocation of managerial resources to a new foreign venture.

Proposition 3b: In established entrepreneurial firms from an emerging economy,

a critical manifestation of international commitment is the designation of a

family member to manage firm operations abroad.

Proposition 3c: As the international commitment of established entrepreneurial

firms from an emerging economy increases, financial resources become more

critical than managerial resources.

The commitment to internationalization also manifested itself by the allocation of

organizational resources, including the status given to the organizational unit and to the

person in charge of foreign operations in each firm. At Porcão there was no

organizational unit dedicated to foreign operations per se, and a professional manager

controlled the franchisees in Brazil and abroad. At Plataforma the founder’s son went to

the U.S. to manage the operations. But Fogo de Chão established a full subsidiary: all U.S.

operations were overseen by a central office in Dallas, which was managed by one of the

Brazilian founders. Additionally, two professional managers were hired, one of whom was

American. These findings are consistent with the export marketing literature (e.g. Katsikeas

et al, 1996).

4.2.2. Relationship development

In spite of its importance in the literature, relationship development did not seem to be a

manifestation of commitment in any of the three firms. Examples of relationship

development in Table 4 do not suggest any major effort to establish a network of

relationships as suggested by the revised Uppsala model (Johanson and Vahlne, 2003,

2009) and network theory.

4.2.3. Mode of entry and operation

The mode of entry decision also appeared as a manifestation of commitment. Porcão

initiated foreign operations with a joint venture, but soon after operations started,

management felt unable to provide the support required by the international venture. As

the company focus remained on Brazil, the Italian partnership started to wear thin and

the partners converted the joint venture into a franchise. Accordingly, subsequent

restaurants opened in foreign countries were also franchises. Management believed that

the franchise model was far from ideal; franchising was adopted simply because it did not

require further commitment of resources. In contrast, Plataforma used a joint venture, and

Fogo de Chão invested in wholly-owned restaurants. These findings follow the

traditional view of higher-risk, higher-control entry modes as manifestations of higher

commitment (e.g. Johanson and Vahlne, 1977).

4.2.4. Planning for internationalization

Planning for internationalization seemed to be associated to commitment to foreign

operations. Pre-entry activities in the case of Porcão and Plataforma were very much left

to the foreign partner, although managers did visit the foreign market. In the case of

Plataforma, the entrepreneur rested on the partners’ local knowledge and on his own

intuition. Such behavior fits the pattern identified by Solberg and Durrieu (2006) and

supports Johanson and Vahlne’s (2009) contention that trust in a partner may be a

substitute for knowledge. The entrepreneurs at Fogo de Chão, however, moved slower

than their counterparts. Differently from the other two chains, Fogo de Chão shows a

careful and detailed planning for internationalization during the five years preceding

entry, including the formation of a team of experienced employees to transfer

operational know-how to the new units and services rendered by a consulting firm and a

marketing research agency. Another early problem faced by the firm was the need to

find local suppliers that could deliver Brazilian cuts of meat; to this end, one of the

entrepreneurs spent a year developing suppliers in Texas and Illinois. The view of

preparatory activities as a manifestation of commitment is supported by previous

research (e.g. Katsikeas et al, 1996; Knight, 2001).

4.2.5. Speed, scope and degree of internationalization

Contrary to the contention of several IE authors (e.g. Blesa et al, 2008) that speed and

scope are manifestations of commitment, in the first two cases lower commitment to

foreign operations was associated with a faster pace to enter foreign markets, while in

the third case, preparatory activities – a manifestation of commitment – demanded more

time and thus reduced the speed of the first foreign market entry. Also, the one firm

with a broader geographic scope of operations was in fact the one that showed lower

overall commitment to foreign operations. As to the degree of internationalization, the

firm with a higher percentage of revenues coming from international operations (Fogo

de Chão) was in fact the one with the highest commitment in almost every regard.

Proposition 4a: In established entrepreneurial firms from an emerging economy,

preparatory activities to internationalization are a manifestation of commitment.

Proposition 4b: Preparatory activities tend to delay the beginning of international

activities of established entrepreneurial firms from an emerging economy.

Proposition 4c: The extent of preparatory activities by established

entrepreneurial firms from an emerging economy tends to limit the geographic

scope of their initial foreign markets.

4.2.6. Adaptation of marketing mix

This factor could not be considered a manifestation of international commitment in the

cases studied (see Table 4). Neither Porcão nor Fogo de Chão adapted their offer to

foreign markets, although Fogo de Chão did introduce changes in operational

procedures. In contrast, Plataforma used a system different from that used in Brazil.

Prices varied from one market to another in the three cases.

4.3. Outcomes of Commitment

Outcomes of commitment also influenced commitment as internationalization

progressed (Table 5). Commitment had an impact on international performance, as well

as a feedback effect. It seemed that Porcão’s failures in internationalization

compounded to reduce its already limited initial commitment. In the other two cases, the

results obtained in the U.S. were considered overwhelmingly good. Good performance

reinforced commitment, and both companies have expanded their operations in the U.S.

Take in Table no.5

Proposition 5: International commitment tends to have a positive impact on the

international performance of established entrepreneurial firms from an emerging

economy., which in turn reinforces commitment.

A similar finding has to do with the interplay between knowledge acquisition and

commitment. There was almost no experiential learning about foreign markets in

Porcão’s case, since management did not get involved directly with foreign operations.

Management did, however, learn how not to pursue internationalization in the future.

Plataforma’s New York operation served to obtain experiential market knowledge. Fogo

de Chão acquired extensive experiential knowledge from its international operations. In

general, there was little transfer of knowledge from foreign to domestic operations. It

seems in fact that experiential knowledge is associated to the size of investments, a

manifestation of commitment in the original Uppsala model (Johanson and Vahlne,

1977).

Opportunity recognition and development is another controversial issue in the literature.

In this study, we found that opportunity recognition and development was more a result

of internationalization than an antecedent. Interestingly, the three companies reported

seeing the U.S. market as an excellent opportunity, despite their different levels of

market commitment. The management of Porcão and Plataforma only saw the real

opportunity in the U.S. market after operations were already established. For Porcão,

this understanding did not change the level of commitment, at least until the end of the

period studied, whereas in the case of Plataforma it led to opportunity development. As

to Fogo the Chão, although the seeds of opportunity appeared earlier, the opportunity

only fully developed as the firm increased its commitment to the U.S. market.

Proposition 6: Knowledge acquisition and transfer, as well as opportunity

development, tend to increase pari passu with international commitment among

established entrepreneurial firms from an emerging economy.

5. Discussion and Conclusions

In this study we used systematic combining of theory and real cases (Dubois and Gadde,

2002) to arrive at a better understanding of how international commitment evolves in

established entrepreneurial firms from an emerging economy. Several variables, and the

relationships among them, were identified. Though some of these variables have already

been described in the literature, others, to our knowledge, constitute a contribution of

this study.

5.1. Contributions of the Study and Suggested Research Directions

Our findings suggest that there is a complex interaction among factors influencing

international commitment. First, there is an interplay between resource availability and

goal congruence. Resources can be used by the firm to pursue strategic goals, such as

domestic or international expansion (Penrose, 1995). Accordingly, firm goals must be

consistent with internationalization. Second, the entrepreneur’s desire to venture abroad

may be in conflict with the firm’s previously set (and agreed upon) strategic goals,

which might be domestic expansion, thus reducing the impetus and the commitment to

internationalization. Third, in a family firm it is necessary to reconcile the different

views of family members concerning internationalization, also impacting international

commitment. Therefore, resource availability, preset strategic goals, entrepreneurs’

personal desires, and family attitude towards internationalization seem to have a

combined impact on the arousal and initial development of international commitment of

small established entrepreneurial firms. Although some of these factors have been

previously recognized in the literature, the understanding of the complex interaction

between them is a contribution of this study and deserves further investigation.

Among the antecedents of commitment that appear in the literature, those relating to

international orientation, global vision, or global mind-set, were not found in the study.

However, this lack of international orientation among Brazilian firms can be explained

by the fact that Brazil (i) is a continental country insulated from its neighbors by

extreme natural obstacles; (ii) remained closed to foreign competition for many

decades; and (iii) has a huge domestic market to tap into and develop. Therefore, these

findings cannot be extended to other emerging economies with different characteristics.

Further research is needed to explore these issues in different research settings.

In general, the case studies show that manifestations of commitment tend to bundle

together; international commitment seems to manifest itself in several highly correlated

dimensions, possibly because they are dependent of each other for the company to reap

the full benefits of international commitment. Although resource allocation is in general

seen as a manifestation of international commitment (e.g. Johanson and Vahlne, 1977),

the most critical resource for emerging market firms seems to be the managerial talent

devoted to internationalization, preferably by a family member. This finding suggests

that the critical resource to internationalize varies between developed and emerging

economies, where often the lack of trained managers is a serious obstacle to

internationalization.

Several manifestations of commitment found in the literature were not identified in the

study. Commitment to relationships or networks (Johanson and Vahlne, 2003, 2009) did

not seem to play an important role in the internationalization processes studied. One

possible explanation is that, compared to INVs, established entrepreneurial firms may

be less concerned with networking because several of the resources needed are already

available. This is supported by Gabrielsson et al (2008:397), who note that in a later

stage of their international growth, BGs may adopt a “break out strategy” from the

network and proceed in their international trajectories alone. Another issue relates to the

lack of adaptation of marketing strategy or tactics, which might be explained by

industry specificities. In fact, the distinctive capabilities of a Brazilian steakhouse in a

foreign market are exactly its ability to replicate the original concept, which includes

tacit know-how that cannot be easily copied by local competitors.

Also, it is possible that speed and scope of internationalization, which are

manifestations of international commitment among INVs (Blesa et al, 2008), must be

interpreted differently among established entrepreneurial firms. Established firms tend

to proceed with more caution than new ventures, since the former have more to lose in

the case of failure. In addition, firms from emerging markets that pioneered

internationalization in their industry do not have examples or models of success of

domestic firms that internationalized earlier to inspire them. As a result, delayed entry

caused by detailed preparatory activities may reflect greater international commitment

than rapid entry. These results permit to conciliate contradictory findings in the

literature concerning preparatory activities and speed of internationalization as

manifestations of international commitment.

Performance, an expected outcome of commitment, shows a feedback effect, as

suggested by recent export marketing studies (e.g. Lages and Montgomery, 2004;

Navarro et al. 2010a). In fact, it is possible that the interplay between international

commitment and international performance is a continuous process, with higher

performance leading to higher commitment and vice-versa, in a manner similar to the

interplay between commitment and knowledge development described in the Uppsala

model. However, differently from knowledge, which tends to accumulate over time,

performance can vary from one period to another due to factors external to the firm (for

example, a recession). The impact of variations of performance on international

commitment of established entrepreneurial firms is an interesting issue to be explored in

future research.

Opportunity discovery occurred in different moments of the internationalization

processes, but not necessarily linked to international performance; it seemed to be rather

a result of knowledge acquisition. In spite of this, opportunity development seemed to

be linked to international commitment and also to knowledge acquisition and transfer.

This distinction between the role of opportunity discovery and of opportunity

development in international commitment is a contribution of the study and should be

the object of additional investigation.

5.2. Implications for Management

This study’s results suggest that established entrepreneurial firms should not embark in

foreign investments unless they are prepared to commit several types of resources to

international activities. In particular, top management from emerging market firms

should be aware of the need to allocate scarce managerial resources to

internationalization, since it seems to be critical to the success of a foreign venture. In

addition, a whole set of preparatory activities may delay a first entry, but is also critical

to success. Premature market entry without preparing and mobilizing adequate

resources might in fact contribute to failure, even when the opportunity is worth being

developed.

5.3. Limitations of the Study

The study has several limitations. First, it studies firms from a single emerging

economy, Brazil, which is believed to differ substantially from other large emerging

giants, such as India and China; that said, Brazil might represent, at least to some extent,

the characteristics of other Latin American firms. Another major limitation of the study

is the selection of cases. Although on the one hand the choice of three firms from the

same industry and of equivalent size, products and resources enabled us to avoid the

impact of these differences on firm’s international commitment, on the other hand, it

also limits the applicability of the research results. Also, since the cases portray smaller

entrepreneurial firms, application of the findings to large publicly-held firms is

questionable. An additional limitation refers to the fact that part of the data was

extracted from an already existing database, and collected with a somewhat different

purpose. Finally, because of our choice of research locus several contributions of the IE

and BG literature do not apply; nevertheless, the understanding of differences between

INVs and established firms may help to expand IE theory in the directions proposed by

Ripollés-Meliá et al (2007). In addition, our cases failed to depict situations were

relationship commitment was particularly relevant to the internationalization process.

Thus, the theoretical propositions emanating from the study will certainly need to be

refined to accommodate such situations. In spite of this, we believe our study can

contribute to the understanding of how international commitment is built and its role in

the internationalization of established entrepreneurial firms from emerging economies.

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20

07

C

om

pet

itve

advan

tages

IE

and B

G ,

RB

V

Fre

eman

and

Cav

usg

il,

20

07

; N

adkar

ni

and

Per

ez,

20

07

T

rust

U

ppsa

la,

net

work

theo

ry

Johan

son a

nd V

ahln

e, 2

00

3,

20

06

, 2

009

Man

ifes

tati

on

s of

Com

mit

men

t

R

eso

urc

es

Sev

eral

tra

dit

ion

s Jo

han

son a

nd V

ahln

e, 1

97

7,

20

09

; S

har

ma

et a

l, 2

00

6

E

ntr

y m

od

es

Uppsa

la,

IE a

nd B

G

Johan

son a

nd V

ahln

e, 1

97

7,

20

09

; F

reem

an a

nd

Cav

usg

il,

20

07;

Nad

kar

ni

and

Per

ez,

20

07

O

rgan

izat

ional

ch

anges

/str

uct

ure

E

xport

mar

ket

ing,

IE a

nd B

G

Kat

sikea

s et

al,

19

96;

Ble

sa a

nd

Rip

oll

és, 2

00

8

P

rep

arat

ory

act

ivit

ies

Export

mar

ket

ing,

IE a

nd B

G

Kat

sikea

s et

al,

19

96;

Kn

igh

t, 2

001

; B

lesa

an

d R

ipo

llés

, 2

00

8;

Nav

arro

et

al,

20

10a

A

dap

tati

on o

f m

arket

ing m

ix

Export

mar

ket

ing

Nav

arro

et

al, 2010b

D

egre

e, s

cope

and

sp

eed

of

inte

rnat

ion

aliz

atio

n

IE a

nd B

G

Rip

oll

és-M

eliá

et

al,

200

7;

Ble

sa e

t al

, 2

00

8

Ou

tcom

es o

f C

om

mit

men

t

A

dd

itio

nal

res

ourc

e al

loca

tio

n

Uppsa

la

Johan

son a

nd V

ahln

e, 1

97

7

K

no

wle

dge

acq

uis

itio

n

Uppsa

la

Johan

son a

nd V

ahln

e, 1

97

7,

20

03

, 2

006

A

dap

tati

on o

f m

arket

ing s

trat

egy

Export

mar

ket

ing

Lag

es a

nd M

on

tgo

mer

y,

20

04

; S

olb

erg a

nd

Du

rrie

u,

20

06

C

han

ges

in

th

e org

aniz

atio

nal

cu

ltu

re

L

amb a

nd L

iesc

h,

20

02

P

erfo

rman

ce

Export

mar

ket

ing

Kat

sikea

s et

al,

19

96; Z

ou a

nd S

tan, 199

8

Ap

pen

dix

1 –

Des

crip

tion

of

Case

s S

tud

ied

Ch

ara

cter

isti

cs

Porc

ão S

teakh

ou

se

Pla

tafo

rma

Fogo d

e C

hã

o S

teakh

ou

se

Yea

r o

f in

cep

tion

197

5, R

io d

e Ja

nei

ro

1980, R

io d

e Ja

nei

ro

1979, R

io G

rande

do S

ul

En

trep

ren

eurs

Th

e M

oce

llin

cousi

ns,

wai

ters

, m

igra

ted f

rom

the

South

of

Bra

zil

to R

io d

e Ja

nei

ro

Alb

eric

o C

amp

ana,

Ita

lian

imm

igra

nt,

fir

st j

ob a

s a

wai

ter

Tw

o C

ose

r bro

ther

s, w

ho

work

ed i

n

rest

aura

nts

, plu

s tw

o o

ther

par

tner

s,

who s

ubse

quen

tly l

eft

the

com

pan

y

Cap

ital

Str

uct

ure

–

end

of

200

9

Wholl

y-o

wned

, M

oce

llin

fam

ily

(fiv

e co

usi

ns)

F

amil

y

Fam

ily +

Ven

ture

cap

ital

(35%

,

since

2006)

Yea

r o

f

Inte

rnat

ion

aliz

atio

n

19

91

1996

1997

Fir

st f

ore

ign m

ark

et

Mil

an,

Ital

y

New

York

, U

.S.

Dal

las,

U.S

.

Fore

ign

op

erat

ion

s –

end

of

200

9

New

Yo

rk (

1)*

N

ew Y

ork

(3)*

16 A

mer

ican

cit

ies

Op

erat

ion

s C

lose

d

Mil

an,

Lis

bon,

Rom

e, M

iam

i -

-

Do

mes

tic

oper

atio

ns

– e

nd

of

20

09

Rio

de

Jan

eiro

(4

)* a

nd t

wo o

ther

Bra

zili

an c

itie

s (1

)*

Rio

de

Janei

ro (

1)*

S

ão P

aulo

(3)*

and t

hre

e oth

er

Bra

zili

an c

itie

s (1

)*

Note

: *n

um

ber

of

rest

aura

nts

Tab

le 2

– E

xa

mp

les

of

Da

ta f

or

Fa

ctors

In

flu

enci

ng I

nte

rnati

on

al

Com

mit

men

t

Ca

tego

ries

P

orc

ão

Pla

tafo

rma

F

og

o d

e C

hã

o

Tri

gger

s “M

any f

ore

ign

ers

cam

e to

Bra

zil

and s

aw

Po

rcão

as

a re

cipe

for

succ

ess

... T

hey

wan

ted

to

open

a P

orc

ão i

n t

hei

r ow

n

cou

ntr

y ... T

hen

cam

e th

is I

tali

an w

ith a

pro

po

sal

— i

rres

isti

ble

.”

“A B

razi

lian

who

had

a r

esta

ura

nt

in N

ew

York

pro

pose

d t

o m

e to

lau

nch

Pla

tafo

rma

ther

e ..

. I

sai

d I

was

n’t

inte

rest

ed…

But

he

insi

sted

...

An

d t

hen

my s

on g

ot

inte

rest

ed…

.”

“I w

ent

skii

ng in

th

e U

.S.

and

sa

w th

e

bu

yin

g

po

wer

o

f A

mer

ican

s.

So

I

tho

ugh

t: “

If I

bu

ild

my b

usi

nes

s her

e, i

t

wil

l re

ally

mak

e a

spla

sh.”

…

It w

as t

ime

to g

o.”

En

trep

ren

eurs

’

des

ire

to

inte

rnat

ional

ize

“At

the

tim

e, w

e did

n’t

hav

e a

go

od

stru

cture

fo

r it

. W

e w

ent

on a

void

ing

inte

rnat

ion

al o

per

atio

ns

unti

l a

pro

posa

l

app

eare

d t

hat

was

so g

ood w

e co

uld

n’t

say n

o.”

“So,

it d

idn’t

inte

rest

me

bec

ause

...

my

life

is

her

e in

Rio

. I’

m n

ot

goin

g

anyw

her

e, I

don’t

lik

e an

y o

ther

pla

ce, I

only

lik

e it

her

e.”

“Aft

er t

he

eco

no

mic

lib

eral

izat

ion

in

Bra

zil,

I k

new

we

had

to

be

som

ewh

ere

else

in

th

e w

orl

d,

bes

ides

Bra

zil.

”

Fam

ily a

ttit

ud

e

tow

ard

s

inte

rnat

ion

aliz

atio

n

“This

her

e is

a f

amil

y s

truct

ure

...

Dec

isio

ns

are

mad

e b

y t

he

wh

ole

gro

up

, so

ever

yth

ing i

s th

oro

ughly

deb

ated

an

d q

ues

tion

ed.

For

exam

ple

,

in M

iam

i ju

st o

ne

[bro

ther

] ca

me

in a

s

par

tner

.”

“Who r

uns

ever

yth

ing i

n N

ew Y

ork

is

my

son,

wh

o a

ssum

ed t

he

resp

onsi

bil

ity. I

told

him

: ‘Y

our

fath

er d

oes

not

wan

t

to b

e h

ere

[in N

Y].

But

as f

or

your

life

, yo

u d

ecid

e.’”

“It

was

ver

y e

asy.

I sa

id t

o t

he

oth

ers:

‘Let

's

do

it?’

They

th

ought

it

was

via

ble

; th

ey t

rust

ed i

t w

ould

work

out.

‘Let

's d

o i

t?’

‘Let

's.’

”

Res

ourc

e av

aila

bil

ity

“We

wer

e n

ot

pre

par

ed,

at t

he

tim

e, t

o

sust

ain

gro

wth

abro

ad.”

“We

had

ca

sh to

st

art

the

busi

nes

s; w

e

had

th

e sp

ace

...

And

my

son

b

ecam

e

inte

rest

ed i

n g

oin

g t

her

e to

man

age.

”

“We

had

res

ourc

es f

or

that

. A

fter

, yo

u g

o

on

re

inves

tin

g,

or

yo

u

get

re

sourc

es

ther

e.”

Co

ngru

ence

wit

h

firm

’s s

trat

egic

go

als

“Po

rcão

, at

th

at t

ime,

was

gro

win

g

qu

ickly

in

Bra

zil;

all

th

e at

tenti

on

was

focu

sed

on

her

e ... T

he

fore

ign o

per

atio

n

was

no

t so

im

po

rtan

t.”

“We

hav

e not

exp

anded

her

e [i

n B

razi

l].

Ther

e ar

e to

o m

any c

om

pet

itors

, it

’s n

ot

wort

h.”

“I

wan

t to

sel

l G

au

cho s

tyle

bar

bec

ue

to

the

rest

of

Bra

zil

and

th

e w

orl

d.”

Tab

le 3

- E

xa

mp

les

of

Data

fo

r F

act

ors

th

at

Did

Not

See

m t

o I

nfl

uen

ce I

nte

rnati

on

al

Co

mm

itm

ent

Ca

tego

ries

Po

rcão

Pla

tafo

rma

Fo

go d

e C

hã

o

Pre

-exis

ting

rela

tion

ship

s

“In

Ita

ly, th

ere

was

no p

rior

rela

tionsh

ip.

In M

iam

i, t

he

par

tner

s w

ere

reco

mm

end

ed b

y a

consu

ltan

t ..

.. I

n

New

Yo

rk, th

e in

itia

tive

was

dri

ven

by a

fran

chis

ee f

rom

Mia

mi.

”

“He

conta

cted

me;

it

was

n’t

my i

dea

….

He

was

not

a fr

iend,

but

som

eon

e I

had

met

bef

ore

.”

“I k

new

on

e p

erso

n h

ere

in B

razi

l, w

ho

was

m

y

clie

nt,

m

y

frie

nd

. A

nd

h

e

reco

mm

end

ed a

co

nsu

ltin

g f

irm

th

ere

[in

the

U.S

.] t

o a

dvis

e us.

”

Mar

ket

ori

enta

tio

n

“Yo

u h

ave

to t

ry t

o u

nder

stan

d

cust

om

ers'

tas

tes

and n

eeds.

Our

trai

nin

g

her

e is

alw

ays

focu

sed o

n s

ervin

g y

ou

bet

ter.

So

that

— a

nyw

her

e in

the

worl

d

— y

ou

can

do

.”

“A g

ood b

usi

nes

s is

one

wher

e yo

u're

doin

g i

t bec

ause

you e

njo

y i

t. I

t's n

ot

just

money

; it

's w

atch

ing t

he

cust

om

er

leav

e her

e sm

ilin

g.

It's

a p

erso

nal

sati

sfac

tion.”

“Cu

sto

mer

s, n

ot

man

ager

s, d

efin

e th

e

gro

wth

rat

e of

a fi

rm.”

“I l

ove

cust

om

ers

wh

o a

rriv

e h

ere

up

set.

Bec

ause

I'll

ch

eer

him

up

; h

e's

go

ing t

o

be

my c

ust

om

er f

or

rest

of

his

lif

e.”

Co

mpet

itiv

e

Ad

van

tages

“The

maj

or

dif

fere

nti

al w

ith P

orc

ão i

s

the

qual

ity o

f th

e se

rvic

e; t

od

ay,

the

qu

alit

y o

f th

e m

eat

is n

o l

onger

a b

ig

dif

fere

nti

ato

r. S

o w

e tr

y t

o g

ive

the

cust

om

er a

n u

nfo

rget

table

exp

erie

nce

.”

“It's

a par

ty,

it's

not

a re

gula

r re

stau

ran

t.

And r

egula

r re

stau

rants

are

a d

ime

a

doze

n .

.. I

t' s

a d

iffe

rent

way

of

do

ing

busi

nes

s —

it's

ser

vin

g m

eat

fro

m a

skew

er .

.. I

t w

as a

spec

tacl

e th

at m

ade

ever

ybody l

ook..

. ”

“Ou

r su

cces

s in

the

U.S

. co

mes

fro

m a

new

co

nce

pt:

th

e sp

eed

of

fast

fo

od

, th

e

ab

un

da

nce

of

the

Ital

ians,

an

d t

he

qu

ali

ty a

nd

ser

vice

of

the

Fre

nch

.”

“All

w

ho

tr

y

it,

and

li

ke

it

thin

k

the

serv

ice

is a

mo

ng t

he

bes

t in

th

e w

orl

d

...”

Tab

le 4

– E

xa

mp

les

of

Da

ta f

or

Man

ifes

tati

on

s of

Inte

rna

tion

al

Com

mit

men

t

Cate

gori

es

Porc

ão

Pla

tafo

rma

Fo

go d

e C

hão

All

oca

tio

n o

f

Fin

anci

al R

eso

urc

es

“Porc

ão c

ame

in w

ith o

per

atio

nal

par

t, t

he

kn

ow

-how

, th

e bra

nd. T

he

inv

estm

ent

was

th

e fr

anch

isee

's.”

“The

par

tner

s ar

e in

ves

tors

only

;

they

are

not

in t

he

rest

aura

nt

bu

sines

s.”

“The

level

of

inves

tmen

t re

quir

ed t

o

open

a c

hurr

asc

ari

a (

stea

khouse

)

ther

e is

ver

y h

igh f

or

Bra

zili

an

stan

dar

ds.

.. T

o b

uil

d a

n a

uth

enti

c

churr

asc

ari

a f

rom

the

gro

und u

p

takes

thre

e m

illi

on d

oll

ars.

”

“Eac

h o

utl

et h

as a

mil

lion t

o s

ix

mil

lion d

oll

ars

inves

ted.”

All

oca

tio

n o

f P

hysi

cal

Res

ou

rces

“The

inves

tmen

t in

loca

tion

s, i

n

ou

tlet

s, w

as t

he

resp

onsi

bil

ity o

f th

e

fran

chis

ee.”

“We

took e

ver

yth

ing f

rom

her

e,

incl

udin

g t

he

mac

hin

es…

”

“One

of

the

par

tner

s had

a r

esta

ura

nt

avai

lable

... T

he

per

son

who o

ver

saw

the

work

was

anoth

er p

artn

er...”

“We

hav

e ow

ned

and r

ente

d s

pac

es

in t

he

U.S

. It

dep

ends

on f

inan

cin

g.”

“We

chose

a g

ood f

irm

of

arch

itec

ts

ther

e; w

e b

rou

ght

them

to B

razi

l…

Lat

er w

e se

lect

ed a

buil

din

g

contr

acto

r.”

All

oca

tio

n o

f

Man

ager

ial

Res

ourc

es

“We

did

no

t p

rovid

e m

uch

man

ager

ial

support

. S

o i

t w

as v

ery

dif

ficu

lt t

o h

old

th

e fr

anch

isee

s

acco

un

table

, to

im

ple

men

t

gu

idel

ines

...”

“My s

on w

ent

to l

ive

in N

ew Y

ork

.

He

man

ages

the

thre

e re

stau

rants

in

New

York

wit

h o

ne

oth

er m

anag

er.”

“My b

roth

er w

ent

ther

e si

x m

onth

s

bef

ore

op

enin

g. A

noth

er p

artn

er

spen

t one

yea

r th

ere.

An

d m

y b

toth

er

man

ages

the

oper

atio

n i

n t

he

U.S

.

now

.”

All

oca

tio

n o

f O

ther

Hum

an R

esou

rces

“Em

plo

yee

s w

ere

tak

en f

rom

her

e [t

o

Mil

an].

They

wer

e tr

ain

ed o

n s

ite.

Bu

t su

per

vis

ion w

as l

ack

ing;

contr

ol

was

lac

kin

g.”

“We

had

an e

xce

llen

t tr

ainer

; he

pu

t th

e

team

toget

her

...

We

trai

ned

them

her

e.

No o

ne

spoke

En

gli

sh,

but

to w

ork

at

a ch

urr

asc

ari

a,

you o

nly

nee

d a

hund

red w

ord

s.”

“We

star

ted t

o t

rain

the

staf

f her

e to

spea

k E

ngli

sh. S

o t

hat

was

the

firs

t

step

. It

took t

wo y

ears

.”

“Over

tim

e w

e pla

n t

o c

ut

bac

k o

n

the

num

ber

of

Bra

zili

ans

ther

e,

bec

ause

th

e co

st i

s sk

y h

igh.”

All

oca

tio

n o

f

Org

aniz

atio

nal

Res

ou

rces

“We

did

n't

hav

e st

ruct

ure

for

that

. A

t

the

tim

e th

ere

was

no H

R

dep

artm

ent;

ther

e w

as n

one

of

that

adm

inis

trat

ive

stru

cture

. I

t w

as v

ery

chao

tic.

”

“Ther

e's

no s

truct

ure

her

e.

Ever

yth

ing i

s m

anag

ed b

y m

y s

on

and a

noth

er m

anag

er t

her

e… M

y s

on

giv

es m

e al

l th

e in

form

atio

n.”

“Ther

e's

an o

ffic

e in

Dal

las,

wh

ich

coord

inat

es e

ver

yth

ing i

n t

he

U.S

.;

and h

ere

in B

razi

l, t

her

e's

anoth

er,

whic

h c

oord

inat

es e

ver

yth

ing h

ere.

Ever

yth

ing i

s co

nn

ecte

d o

nli

ne,

both

her

e an

d t

her

e.”

Rel

atio

nsh

ip

Dev

elo

pm

ent

“Porc

ão h

ad e

ver

yth

ing t

o g

row

out

ther

e, b

ut

the

par

tner

ship

s w

ere

wo

rn.

It w

as d

iffi

cult

try

ing t

o

reco

ver

.”

“Ther

e w

as r

esis

tance

to s

ugges

tion

s

for

chan

ge

and w

e w

ere

forc

ed t

o

tak

e bac

k t

he

bra

nd...”

“We

now

hav

e th

ree

ou

tlet

s th

ere

in

New

York

, w

ith t

he

sam

e par

tner

s ..

.

They

are

good

nat

ure

d p

eople

who

do t

hin

gs

the

right

way ...

It's

bee

n

ten y

ears

to

get

her

... “

“To g

et t

he

right

cuts

of

bee

f, w

e had

to t

each

the

mea

t cu

tter

. …

My s

on

bec

ame

his

fri

end.”

“Bef

ore

we

op

ened

ther

e, w

e

dev

eloped

all

asp

ects

of

supply

. O

ne

of

the

par

tner

s sp

ent

a yea

r th

ere

doin

g j

ust

that

.”

Mod

e of

entr

y a

nd

op

erat

ion

“A c

om

pan

y w

as s

et u

p i

n M

ilan

...

An

d w

hen

we

saw

that

th

ere

was

no

way t

o c

onti

nue

ther

e, w

e d

ecid

ed

that

fra

nch

isin

g w

as t

he

solu

tion.”

“Aft

er t

hat

we

cou

ld s

ee t

hat

that

the

fran

chis

e ag

reem

ent

is n

ot

an

effe

ctiv

e in

stru

men

t of

con

trol.

”

“It’

s al

l ow

ned

by t

he

par

tner

s.”

“We

wen

t in

alo

ne

and m

ade

the

inves

tmen

t. S

om

e outl

ets

are

ou

r

ow

n a

nd o

ther

s ar

e le

ased

.”

Pla

nnin

g f

or

inte

rnat

ion

aliz

atio

n

“It

was

not

just

the

lan

gu

age

bar

rier

bu

t al

so a

lac

k o

f p

lannin

g .

..”

“In

Mia

mi,

they i

nvit

ed u

s ... T

her

e

was

no

pla

nnin

g ...

In N

ew Y

ork

ther

e w

as s

om

e qu

esti

onin

g;

but

it

was

no

t pla

nn

ed ...

“

“We

wen

t th

ere

thin

kin

g 'p

ut

it i

n

God's

han

ds'

— t

her

e w

as n

o

pla

nn

ing.”

“I

did

no r

esea

rch. ...

I got

ther

e. I

saw

the

pla

ce.

The

spac

e w

as w

ithin

what

was

nee

ded

. B

ig e

nough. T

he

rest

— I

did

n't

worr

y a

bo

ut.

..”

“We

did

what

they a

lways

do w

hen

we

go t

o s

om

ewher

e ...

We

hir

e th

e

bes

t ad

vic

e ...

I don

't w

ant

just

anyon

e. I

wan

t so

meo

ne

who's

cred

ible

, so

meo

ne

wit

h l

oca

l

bac

kin

g.”

Adap

tati

on

vs.

Sta

ndar

diz

atio

n

“But

on

e th

ing t

hat

we

mak

e su

re o

f,

in p

rinci

ple

, is

that

the

syst

em t

hat

we

are

takin

g w

ith

us

abro

ad i

s a

stan

dar

diz

ed s

yst

em. T

he

syst

em

mu

st b

e th

e sa

me

her

e as

th

ere.

”

“The

syst

em i

s dif

fere

nt.

In B

razi

l it

's

a l

a c

art

e; i

n t

he

U.S

., i

t's r

odiz

io.

Bec

ause

rodiz

io i

s re

ally

a d

iffe

rent

thin

g f

or

Am

eric

ans,

giv

en t

hat

ever

y

corn

er h

as a

ste

akhouse

. “

“Ever

yth

ing i

s th

e sa

me;

ever

yth

ing

has

a s

ingle

id

enti

ty ... I

t to

ok m

e

twen

ty y

ears

to g

et t

he

busi

nes

s th

e

way I

wan

ted.

“

Tab

le 5

– E

xa

mp

les

of

Da

ta o

n O

utc

om

es o

f In

tern

ati

on

al

Co

mm

itm

ent

Cate

gori

es

Porc

ão

Pla

tafo

rma

Fo

go d

e C

hão

Per

form

ance

“

If i

t w

ere

just

Mil

an,

I co

uld

acc

ept

that

th

e er

ror

was

w

ith

that

outl

et

alo

ne.

B

ut

it

was

th

e su

m

of

all

pla

ces.

..”

“Pro

fita

bil

ity i

n t

he

U.S

. is

stupen

dous.

We

wer

e in

the

bla

ck

imm

edia

tely

, w

ithin

tw

o y

ears

. It

was

an a

wes

om

e in

ves

tmen

t.”

“A

bout

80%

of

our

reven

ue

com

es

from

the

U.S

. m

arket

.”

“Our

stea

khou

ses

in t

he

U.S

. hav

e

gro

wn a

n a

ver

age

of

35

% a

yea

r.”

Kno

wle

dge

acqu

isit

ion

an

d

tran

sfer

“I'v

e co

me

to t

he

concl

usi

on t

hat

it's

no

use

hav

ing a

mai

n o

ffic

e her

e an

d

go

ing

roun

d

the

worl

d

open

ing

fran

chis

es.

We

hav

e to

be

out

in t

he

wo

rld t

o g

row

alo

ng w

ith

it.

”

“We

lear

ned

ab

ou

t dif

fere

nce

s

bet

wee

n

Am

eric

an

and

Bra

zili

an

consu

mer

s…”

“My s

on k

no

ws

ever

yth

ing n

ow

; h

e

tell

s m

e th

at

I don

't u

nder

stan

d

anyth

ing a

bou

t re

stau

rants

.”

“W

e had

to u

nder

stan

d A

mer

ican

cult

ure

if

we

wan

ted t

o t

each

Am

eric

ans

abo

ut

Gauch

o c

ult

ure

.

The

most

dif

ficu

lt p

art

was

wit

h o

ur

firs

t re

stau

rant;

but

we

lear

ned

fro

m

our

mis

takes

and g

ot

bet

ter

wit

h e

ach

open

ing.”

Opp

ort

un

ity

reco

gn

itio

n a

nd

dev

elo

pm

ent

“In

the

U.S

., y

ou

hav

e h

ow

to m

ake

mo

ney

, m

uch

more

mon

ey t

han

her

e,

usi

ng

the

sam

e sy

stem

, h

avin

g

the

sam

e n

um

ber

of

peo

ple

and

cli

ents

.”

“In o

rder

to a

chie

ve

succ

ess

wit

h a

rest

aura

nt

chai

n,

one

nee

ds

to b

e in

a

coun

try w

her

e th

ere

is a

lot

of

money

such

as

the

U.S

.…”

“The

opport

un

itie

s ar

e im

men

se

ther

e.”