Network Based Internationalization Theory
The main view at a company had considered it as separated subject until 1990s. The ways to receive advantages in internationalization have taken in account resources, market and costs’ factors, institutional environment and company’s experience. However Johanson and Mattsson (1988) have provided community with a new view which considered a company bonded in a bundle with other companies by social and business relationships forming a network.
As each person is connected to his friends and relatives so every company is linked to its suppliers, agents, competitors and other units. Those links are conducted via communication between organizations and their management’s mutual social and business activity. Thus, existence of such kind of relationships
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Preferable internationalization approach is determined by combination of two factors: company’s internationalization level and network’s (market’s) internationalization level. The former refers to the total company experience at the certain market while the latter means the total activity of international organizations (including competitors, suppliers and etc.) at the market. Those factors matching combine four different types of firms: the early starter, the lonely international, the late starter and the international among others. The next table is drawing the relationships between factors and types of …show more content…
So, “the early starters” prefer expand through the agents, “the lonely international” can use opportunities of more complex and expensive entry modes benefiting from its highly competitive position. The late starters act in a highly competitive international environment while have hardly valuable links to a local network. So, they pursue the goal of high coordination and should to establish sales subsidiary as fast as it possible starting from the less commitment modes. The last type of the firms is internationalized well equally to the local network. It means higher integration and interdependence between most of the market participants. Accordingly, the companies can benefit more via implement of their own local sales and production subsidiaries, making their influence stronger and pushing rivals harder (Johanson and Mattsson
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