A theory of international ventures: a decade of research

¶ … Competitive Advantage for INVs

Competitive Advantage in Global Economy

The seminal work of Oviatt and McDougall (1994) on international new ventures (INV) informed the literature, particularly with regard to posing different tenets than those commonly accepted in Uppsala model. Principally, the Uppsala model theories pointed to a number of attributes that were considered basic to firms moving into or intensifying their participation in foreign markets. The indicators of the Uppsala model are generally considered to be as follows: (1) firms gain experience from the domestic market before they engage in foreign diversification; (2) foreign operations are typically begun in countries that are geographically or culturally close to those of the home country of the firm, and move gradually to countries that are geographically distal or are culturally more different; (3) firms begin operating in foreign countries through traditional export activity and move gradually to modes of operation that are more demanding and intensive -- and that this holds true at both the company level and at the target market levels. The international entrepreneurship (IE) literature also made a theoretical entry in this work by Oviatt and McDougall who suggested that the age of a firm might influence the a firm's capacity to successfully internationalize.

Zahra respectfully examined the model put forth by Oviatt and McDougall by, categorically speaking, considering three facets of the work: Aspects of the theory that still seem to be a good fit, identification of new pillars of the INV model, and new questions that warrant future research. Zahra reasonably suggests that focusing on the age at internationalization, managerial capacity, and organizational form -- while important frames for examining the transactions that lead to international diversification by a firm -- have in common a high level fly over. Zahra argues that the landscape from this high level is important to an understanding of articulation to internationalization, but the perspective tells us nothing about the geology. We have to dig deeper into the stage model, rather than discard it, and appreciate the complexity of internationalization for INVs.

The stage theory is grounded in the knowledge-based theory, in that, there is an underlying assumption that knowledge is accumulated in a linear fashion, the corpus of knowledge on the Y-axis and time in the foreign markets on the X-axis: The longer the INV is engaged in responding to diverse foreign markets, the greater the learning -- and in correspondence, the greater the managerial capacity. However, Zahra argues that this is not necessarily true, calling for consideration of the traits of entrepreneurs that can work in opposition to the open-mindedness that Oviatt and McDougall argued is necessary for success in foreign diverse markets.

I am in firmly in Zahra's camp -- with the same high regard for the establishing shots of Oviatt and McDougall -- and agree that it is important to view the INV as epical and as complex as any other human endeavor played on the big screen. The variables that Oviatt and McDougall examined are far from linear in their dynamics. Instead, each element functions like a door that opens to hundreds of variations, each plausible but not equally probable. Zahra deconstructs the learning advantages of the newness variable of INVs, and in doing so, taps the richness of the options, schemas, and realities of environments that are never static. The variability that Zahra parades is akin to doing a genome study, there is a rhyme and reason coda; it is simply too complex for a close up view and metaphorically is chaos theory.