Needs of Global Start-up companies (Deliverable 2) GlobalStart wp1 Studies Deliverable 2 Needs of Global Start-up Companies Table of contents p

DISCUSSION

The identification of born global firms is not a trivial issue in the study of entrepreneurship and international business (Harveston, 2000, Oviatt and McDougall, 1997, Wakkee and Van Der Sijde, 2001). Indeed the ability to effectively identify born global firms has hampered the development of this field of inquiry as it makes building on previous research very difficult. We began this paper with a discussion of existing literature on born globals and suggested that many existing definitions and operationalisation methods fail to capture the empirical reality of such firms. Specifically, they will lead to including firms that are either not really global, or no longer startup (at the time of globalisation or investigation) and not including firms that are both startups and involved in a variety of international activities around the globe, but not in international sales. We believe that many of these studies have failed to fully capture the complex reality of born global firms. Also we argued that the use of different methods to identify such firms will lead to less comparable samples and therefore make it more difficult to build on previous work.

The major contribution of this research is a full review of research that identifies and/or measures born global firms. A total of 49 articles were reviewed and presented in a literature review table assessing identification, definitions, operationalisation, and approach. The variety of definition and measurements were collapsed into the two most popular measures. Then, an extended method of identifying born global firms was introduced that builds and extends existing measures. Our identification method is closely linked to the definition that we use to describe the phenomenon. We hope our model illustrates possible relationships among the methods of measurement. There are other dimensions of internationalisation which are certainly relevant for the development of born global firms; however, we chose to focus on those dimensions that most often appear in the literature in order to explore in some depth the role that they might play on this process. In future endeavours, one might examine the role of such dimensions as role of network, commercialisation opportunities or managerial mindset on the born global process. Our review of the literature and development of a new approach to identify born global firms lead us to believe that the born global concept should not be seen as a dichotomous variable but rather as a scale.
LIMITATIONS AND IMPLICATIONS
As with any research, this investigation is not without limitations. The new measure to identify born globals uses several constructs (measure of the global opportunity) and classifications that have not yet been validated by earlier research. Currently, we have a pilot study in the field to validate these constructs before initiating a larger scale, global study. The results of our full-scale investigation that will take place between August and December 2003 will provide a better insight in the measures and the relationship between these measures. Another limitation concerns the global validity of our measures. One of the problems with many existing constructs is their limited applicability across cultures. Whereas we will try to increase the cultural and geographical validity of our measures by conducting our full-scale study in a large number of countries and across two continents, the cultural spread remains limited. In order to make sure that these measures apply to born global firms around the globe, future research should ensure that at least three different continents are included.

For researchers of born global firms, our research has two main implications. The first implication is that future researchers should clearly define and operationalise born global firms. There is so much variety and idiosyncratic definitions and operationalisations that researchers may be studying different parts of the same phenomenon while impairing the ability of others to build on their research. Our review of the research showed a multitude of definitions and operationalisations. For example, some defined born globals as those founded since 1976 with at least 25% of their sales in exports (Knight, 1998), others defined born globals as those firm that conducted business activities in five or more countries, sold 40% of sales overseas, and began these international activities within two years of commercial sales (Kandasaami and Huang, 2000). Clearly, each of these researchers may not fully include the other’s sample within their definition of born global firms although they are talking about the same phenomenon. We believe this is indicative of the early stage of development in the field of born global firms. To move into the mainstream of entrepreneurship and international business research, we believe more standardized definitions are necessary. As such, we encourage researchers to recognize the significance of these differences and find commonalities. In doing so, future research will be able to further elaborate and more clearly identify the born global phenomenon.

The second implication deals with the lack of attention on activities across the global environment. This implication is really two-fold. First, research has tended to count the number of countries (generally a minimum of three) that a born global firm is active in without considering the proximity of these countries to the firm’s home base. Specifically, there is no consideration of activities outside of the firm’s region. For example, a Dutch firm could have sales in the Netherlands, France, Germany and Switzerland and be considered born global versus born regional. We argue that firms should be active in at least two regions to be considered born global. A second consideration is that research has focused on counting the percentage of sales in international markets without considering the range of value chain activities (i.e., sourcing, manufacturing) that can be conducted on a global basis. Thus, we argue that researchers should consider both the number of regions and the range of value chain activities across these regions that are actively engaged in born global firms.

We encourage researchers to explore other dimensions that may affect born global firms. We hope that our propositions have highlighted the importance of further exploration of this phenomenon and the theoretical patterns that could possibly exist among the three methods for identifying born global firms. These propositions were formulated to stimulate further research and thinking in this important area at the intersection of entrepreneurship and international business.

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An Empirical Exploration of the Global Startup Concept in an Entrepreneurship Context¹

Paul Kirwan