A study of Indian Born Global Firms

By Amrita Manohar
What is CGR PhD's research about? 
Introducing research projects of CGR PhD members

The survival and success of a company internationally is dependent on a multitude of factors, such as their financial resources, past experience, and familiarity with their own domestic market in order to achieve this international presence. However, certain firms called ‘born global’ firms have been able to establish international operations despite not possessing the resources or experience. According to Knight and Cavusgil (2004), Born global firms (BGs) are companies that begin international operations either at or soon after their establishment, with a notable part of their revenue generated from their activities in foreign markets.

Apart from early internationalization, BGs are characterized by their small size, limited resources, lack of prior experience in the domestic and international markets, and limited knowledge. These characteristics serve to differentiate them from large multinational enterprises, domestic firms, and small and medium-sized enterprises that follow a more gradual internationalization path.

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Armed with a greater acceptance of risk, openness to international opportunities and learning, BGs have been found to enable home countries to survive financial recessions (Hessels and Stel, 2011), contribute more than a domestic firm of similar size in terms of innovation, tax, investments, and generating employment (Spence, Orser and Riding, 2011), and outperform other types of firms in five years of operation in terms of profits over sales and productivity (Braunerhjelm and Halldin, 2019). Meanwhile, BGs generally face multiple liabilities, such as those of foreignness, smallness, and newness which put them at a disadvantage in new markets and against larger and more experienced competitors. BGs’ characteristics also make them particularly vulnerable to their external environment, which may affect their speed of internationalization (Hennart, 2014), strategies and operations (Efrat and Shoham, 2013), and market performance (Hallbäck and Gabrielsson, 2013).

The number of BGs established has been increasing across industry sectors globally, aided by environmental macro trends such as economic conditions, rise of technology, global networks and alliances. However, they have received limited academic attention. An extensive systematic literature review revealed that existing academic studies on BGs are unevenly distributed geographically, with 48% of articles studying Europe and 18% in Asia (Sepulveda and Gabrielsson, 2013; Cavusgil and Knight, 2015; Dzikowski, 2018). Qualitative methods and a reliance on surveys and questionnaires is also noticed, partly owing to the lack of secondary data on young firms, many of which are private. Research on BGs in general is still nascent, with no consensus on underlying theories of the firm, a quantifiable definition of BGs, and even the antecedents and modes of early internationalization.

My research studies BGs from India, an emerging economy that has received limited attention in BG literature, despite multiple calls for further research in emerging economies. India offers an interesting context due to the high levels of institutional dynamism and subnational heterogeneity notable in the country. Despite starting on a liberalized economic trajectory from 1991, with simplification in the tax structure and laws permitting high levels of outward foreign direct investment, there remain vast differences in the economic growth, availability of infrastructure, and support provided to young firms in different states. The cultural and political differences between states only adds to the institutional heterogeneity.

In the recent years, India has become the 3rd largest hub of start-up activity in the world with over 1300 start-ups founded in 2019 alone, many of which begin international operations and become BGs (NASSCOM and Zinnov, 2019). This entrepreneurial effort is supported by governmental initiatives, investors, academic institutions, and large multinational companies, providing them with a supportive network that helps BGs overcome the liabilities associated with them and the dynamic institutional setting in India. This forms the context for my research, in which I am attempting to look at the role of networks in enabling BGs internationalize successfully, and the performance of BG firms from different states and in different industries. I use the Institutional Theory and Network Theory to understand the strategies and performance of these firms better.

References

Braunerhjelm, P. and Halldin, T. (2019) ‘Born globals – presence, performance and prospects’, International Business Review, 28(1), pp. 60–73. doi: https://doi.org/10.1016/j.ibusrev.2018.07.004.

Cavusgil, S. T. and Knight, G. (2015) ‘The born global firm: An entrepreneurial and capabilities perspective on early and rapid internationalization.’, Journal of International Business Studies, 46(1), pp. 3–16. Available at: http://10.0.4.33/jibs.2014.62.

Dzikowski, P. (2018) ‘A bibliometric analysis of born global firms.’, Journal of Business Research, 85, pp. 281–294. Available at: http://10.0.3.248/j.jbusres.2017.12.054.

Efrat, K. and Shoham, A. (2013) ‘The interaction between environment and strategic orientation in born globals’ choice of entry mode.’, International Marketing Review, 30(6), pp. 536–558. Available at: http://10.0.4.84/IMR-10-2012-0171.

Hallbäck, J. and Gabrielsson, P. (2013) ‘Entrepreneurial marketing strategies during the growth of international new ventures originating in small and open economies.’, International Business Review, 22(6), pp. 1008–1020. Available at: http://10.0.3.248/j.ibusrev.2013.02.006.

Hennart, J. (2014) ‘The Accidental Internationalists: A Theory of Born Globals.’, Entrepreneurship: Theory & Practice, 38(1), pp. 117–135. Available at: http://10.0.4.87/etap.12076.

Hessels, J. and Stel, A. (2011) ‘Entrepreneurship, export orientation, and economic growth.’, Small Business Economics. Springer Nature, 37(2), pp. 255–268. Available at: http://10.0.3.239/s11187-009-9233-3.

Knight, G. A. and Cavusgil, S. T. (2004) ‘Innovation , organizational capabilities , and the born-global firm’, pp. 124–141. doi: 10.1057/palgrave.jibs.8400071.

NASSCOM and Zinnov, 2019. Indian Tech Start-up Ecosystem – Leading Tech in the 20s, Noida: NASSCOM.

Sepulveda, F. and Gabrielsson, M. (2013) ‘Network development and firm growth: A resource-based study of B2B Born Globals’, Industrial Marketing Management. Elsevier Inc., 42(5), pp. 792–804. doi: 10.1016/j.indmarman.2013.01.001.

Spence, M., Orser, B. and Riding, A. (2011) ‘A Comparative Study of International and Domestic New Ventures.’, Management International Review (MIR). Springer Nature, 51(1), pp. 3–21. Available at: http://10.0.3.239/s11575-010-0065-9.

One thought on “A study of Indian Born Global Firms

  1. I am associated with a born global sme in the field of cancer diagnosis. I am particularly interested in use of network alliances for internationalization. Do send me any references if you can.

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