Internationalization Strategies: Circumventing the Liability of Newness – A Case Study of Irregular Internationalization Paths

Introduction

The globalization process has driven firms’ internationalization (Ietto-Gillies, 2012; Ribau et al., 2015). Normally, Small and Medium-sized Enterprises (SMEs) seek to exploit their competitive advantages in overseas markets involving exporting activities as the main outward internationalization modes of entry (Ribau et al., 2018; Stanisauskaite & Kock, 2016). However, with the globalization process, firms have been changing their international behavior according to the dramatic socioeconomic shifts in the international environment. As a result of the increasing international competition, several models and theories of internationalization have been used to categorize firms’ behaviors in international markets, namely SMEs.

Nowadays, the international environment is complex, since SMEs and multinationals are increasingly adopting various forms of internationalization strategies (Ribau et al., 2015) that aim to: “serve global markets, rapidly deploy new products in several countries, or adapt their brands to global/multidomestic environments” (Ribau et al., 2015, p. 529).

Naturally, the concept of internationalization has evolved over time and varies depending on the area under study. Moreover, it depends on firm-based factors, such as size, age, management mode, among others (Paul & Sánchez-Morcilio, 2019; Ribau et al., 2015; 2018). Briefly, internationalization can be described as the process of increasing involvement in international operations, that is, increasing activities in foreign markets (Calof & Beamish, 1995).

According to the literature, international expansion represents an opportunity for company’s growth and added value creation, particularly for SMEs. Indeed, companies that enter international markets usually increase their technological and market knowledge, improve their performance, and become more innovative. In this way, they also become stronger competitors in domestic markets (Engelman et al., 2015).

Ribau et al. (2015) offer an evolutionary schematic perspective of the main internationalization theories, foci and assumptions following a historical perspective. Paul & Sánchez-Morcilio (2019) defend that the internationalization process is conservative and predictable. As such, it is possible to claim that behavioral theories emerged as more or less predictable explaining the internationalization of SMEs.

Several models have been put forward to explain the internationalization path followed by SMEs—born globals (BGs), born regionals (BRs) or born again globals (BAGs)—as an alternative to the traditional Uppsala model in order to explain the scale, scope, and speed of internationalization. As the internationalization path can hardly be explained by a single theory, the aim of this chapter is to, based on a single case study known as CASTLE—which for confidentiality reasons its name cannot be disclosed—, discuss the characteristics of the internationalization of CASTLE and identify the typology of internationalization that fits CASTLE the most. For that, four internationalization models are going to be used to understand CASTLE internationalization path—Uppsala model, BGs, BRs, and BAGs—to identify the one that resembles the most to CASTLE’s. CASTLE’s characteristics are unique as the company started to expand abroad right from its inception and, nowadays, is present in all continents. In this sense, several topics will be addressed and discussed, such as: the modes of entry abroad, the main internationalization drivers and barriers when entering foreign markets. Moreover, the four internationalization modes are analyzed using CASTLE’s internationalization path, reasons for internationalizing, modes of entry and speed of internationalization, among others.