International entrepreneurial opportunities: roles of networks, knowledge and serendipity
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Date
01/07/2015Item status
Restricted AccessEmbargo end date
01/07/2065Author
Bell, Valerie A.
Metadata
Abstract
Business relationship networks are of critical importance to firms (Forsgren &
Johanson, 1992; Johanson & Vahlne, 2009). Competitive advantages of individual
firms and their ability to internationalise may be dependent upon whether they are an
'insiders' or 'outsiders' in networks which can provide accumulated experience,
resources and knowledge (Johanson & Vahlne, 2009). The characters of network
relationships arise as a consequence of the interaction strategies of the parties
(Cunningham & Homse, 1982) and can be conditioned by relationships with third
parties. Thus, structural holes (Burt, 1992) and strong and weak ties (Granovetter,
1973) have also been shown to contribute to the competitive advantage of firms.
This research explores the importance of direct, indirect and serendipitous roles that
third parties - including government bodies, trade associations, government advisors,
and immigrant networks - played within the knowledge-based natural health products
(NHP) - i.e., dietary supplements - sector in Canada. The thesis utilises three
representative cases selected from ten revelatory longitudinal case studies that were
developed. One case was selected from each firm type, including regulatory service
consultancies, service-based combination firms that act as both ingredient suppliers
and contract manufacturers, and five manufacturers with their own brands, which had
internationalised in this industrial sector. The cases were developed using semistructured
interviews with small and medium-sized international new venture NHP
firms, secondary interview data and secondary documents. The firms were first drawn
from the membership directory of the Canadian Health Food Association, the largest
trade association representing the interests of this sector and then selected based on
their ability to meet the Canadian SME definition and whether they were Canadian
owned and operated, located in one of two large NHP industry clusters (in the Toronto
or Vancouver greater metropolitan areas), and had already internationalised. A firm
founder, or member of each firm's senior management team, was interviewed and
recorded either in person in Toronto, or using Skype internet telephone service for
firms in Vancouver. The data were then transcribed verbatim and coded using NVivo
International Entrepreneurial Opportunities:
Roles of Networks, Knowledge and Serendipity
software and the Gioia method of analysis to identify scripts, and then developed into
themes and aggregated dimensions prior to theorising.
The research makes a number of unique contributions. First, it brings together
literature from international business, entrepreneurship, migration, information
science, and sociology and a unique institutional environment and a sector about which
little literature exists, to build a range of new theories which are then empirically
supported. Canada's unique institutional environment for trade, immigration,
multiculturalism, post-secondary education and NHPs was found to uniquely allow
these NHP SME firms to internationalise to many more markets and regions than
comparable SMEs in other countries. The Canadian NHP SMEs networked
extensively prior to and during internationalisation using third parties, including
government bodies, trade associations, government advisors, consultants and
immigrant networks. During their internationalisation process, the firms gained
significant institutional, technical, market and internationalisation knowledge which
enabled them to enter many more markets than other SMEs previously noted in the
literature. These geographically-located ties helped firms to: identify previously
unrecognized internationalisation opportunities; select foreign markets to enter; locate
resources; overcome psychic distance, risk, and constrained resource obstacles; reduce
the time required to accumulate knowledge and experience (e.g., internationalisation,
market, and technical knowledge) and access and deepen market penetration; acquire
privileged knowledge about partners, resources, needs, and capabilities which allowed
them to become successful internationalisers; leap-frog internationalisation stages and
co-create and co-produce new knowledge and new firms.
The use of geographically-located ties and structural holes involving these third parties
allowed the NHP firms to develop the competitive advantage necessary for them to
overcome the liability of outsidership and the liability of foreignness in entering new
international markets. This is in contrast to the Johanson & Vahlne (2012) theory that
firms must be insiders in networks in order to internationalise. Canadian immigrant
networks and immigrant transnational firms involved in this process co-created new
International Entrepreneurial Opportunities:
Roles of Networks, Knowledge and Serendipity
firms in their home or regional markets and co-produced knowledge in the process.
The type of technical, market and internationalisation knowledge, its content, and the
sources of knowledge gained from third parties were all shown to have contributed
significantly to the internationalisation process of these firms. The immigrant and
transnational immigrant networks shared market and internationalisation knowledge
and experience to attract the NHP firms to experiment with internationalisation and
Canadian NHP firms shared knowledge of their products and the industry to assist
these groups in the co-creation, development and growth of new businesses in foreign
markets. Learning mitigated the risk of entering new markets for both sets of
entrepreneurs. The research also provided empirical evidence for Mohr &
Shoobridge's (2011) theory of how diversity contributes to SME internationalisation.
The thesis also found that all the NHP firms had utilised only serendipitous
internationalisation methods during all stages of their internationalisation processes.
A new typology of serendipity in internationalisation, and theoretical processes of
serendipity in internationalisation and in entrepreneurship were also created for the
first time.
The research has a wide range of implications for other SMEs as well as for policy and
management. First, it illustrates how a unique institutional environment and a range of
specific government policies allowed firms to rapidly and successfully internationalise
to between 20 and over 50 different markets, unlike other SMEs in other countries and
sectors in the literature. Other governments may, therefore, be interested in adopting
these policies for their own countries. The research also has implications for SMEs
which have not yet undertaken exports or which are new and new to the industry by
enhancing their understanding of the pros and cons of different networking approaches
when engaging in international activities and providing evidence as to how third
parties may be ofvalue during the internationalisation process, based on the experience
of what have grown to become the NHP sector's largest knowledge-based firms.