inv presentation 31march2011
TRANSCRIPT
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Benjamin M. Oviatt & Patricia Phillips McDougall
Journal of International Business Studies (1994) 25, 45-64
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Awarded 1st prize in the1993 Competition for theBest Paper on
Entrepreneurship &Innovation (NYU’sCenter forEntrepreneurial Studies
2004 Decade AwardWinning Article
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Benjamin M. Oviatt
• Professor of Managerial
Sciences
• Director of the HJ Russell, Sr.
International Center for
Entrepreneurship in the
Robinson College of Business at
Georgia State
• focuses on the
internationalization
of new ventures
Patricia P. McDougall
• currently Interim AssociateDean of Academics
• William L Haeberle Professor of Entrepreneurship at IndianaUniversity’s Kelley School of Business
• focuses on the
InternationalizationOf new ventures &new venturestrategies
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To define & describe the phenomenon & to
present a framework explaining how
international new ventures fit within the theory
of the MNE Hope that a well-delineated, theoretical
framework will unify, stimulate, and guide
research in the area
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the success of international new
ventures seems to depend on
having an international vision of the firmfrom inception
an innovative product or service marketed
through a strong network
tightly managed organization focused on
international sales growth
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as a business organization that, from
inception, seeks to derive significant
competitive advantage from the use of resources and the sale of outputs in
multiple countries
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The stage theory of MNE evolution
after a period of domestic maturation and
home market saturation
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Scale and the MNE
Requirement for multinationality: scale …
▪
ability to efficiently manage internationalcommunication & transportation & exchange of
production & market information
▪ Some makes feasible a large scale R&D effort
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The Changing of International Environment Large Size economic, technological and social conditions …
Markets link more efficiently
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Necessary & Sufficient elements for
sustainable international new ventures
With many markets internationalizing,fewer new ventures can escape
confrontations with foreign competition
more entrepreneurs are adopting a
multinational viewpoint
Thus, incongruent new framework
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Internalization of some transactions
most basic and is clearly part of traditional MNE theory
Organizations form where economic transactions are
inefficiently governed by market prices defining element of all organizations
transaction costs of
constructing and executinga contract & monitoring the
performance of the
contracting parties
hierarchical
authority willbe the
governance
mechanism
chosen
transaction is said tohave been internalized
within an organization
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Alternative governance structures
Poverty of resources & power defining
characteristic of the new venture▪ lack sufficient resources
▪ tend to internalize, or own, a smaller % of the resources
essential to their survival than do mature organizations
Hybrid partners
Network structure
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distinguishes new ventures &
established organizations:
minimal use of internalization & >
use of alternative transactiongovernance structures
poverty of resources & power new
ventures use such structures whenthe risk of asset appropriation by
hybrid partners is high.
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Foreign location advantage
The location advantage
▪
firms are international because they findadvantage in transferring some moveable
resources
Disadvantages
Barriers, laws, language & practices
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Unique resources
3 elements - necessary conditions
not sufficient conditions for sustainable competitiveadvantage
For Sustainable competitive advantage…
▪ knowledge-based INV - public good
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Kept proprietary by direct means
Imperfect imitability
Licensing The fact that new ventures frequently
use network governance structures The relationships inherent in a network can have
high personal and economic value because networkmembers share fees than…
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Framework
explains the existence of international new
ventures, and appears useful in describingtheir distinct types
describes sustainable international new
ventures as controlling assets
identifies ways of protecting rents derivedfrom such knowledge empirical research
is needed
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