![Distinctiveness of Uppsala model ‘We do not believe that [internationalization] is the result of a strategy for optimum allocation of resources to different countries where alternative ways of exploiting foreign markets are compared and evaluated. We see it rather as the consequence of a process of incremental adjustments to changing conditions of the firm and its environment.’ (Johanson and Vahlne 1977, p. 35)](https://image.slidesharecdn.com/ib2011-04-110217081541-phpapp01/85/CESA-IB-2011-04-18-320.jpg)
CESA: IB 2011 04
- 2. Review
- 3. CwF
- 4. Insourcing
- 5. Fukiyama
- 7. Y2K
- 9. F1
- 11. Islamic Banking
- 12. Paris Accord
- 13. GAAP
- 14. IBM / Linux
- 15. British Telcom
- 16. Another View
- 17. Explaining InternationalizationEarly contribution of ‘Uppsala model’: Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977Key insight: internationalization is an incremental commitment, in terms of (a) geographical sequence and (b) entry mode choice, due to the gradual accumulation of experiential knowledge of foreign markets reducing the uncertainty effectinterplay between knowledge and commitment the key driver
- 18. Distinctiveness of Uppsala model ‘We do not believe that [internationalization] is the result of a strategy for optimum allocation of resources to different countries where alternative ways of exploiting foreign markets are compared and evaluated. We see it rather as the consequence of a process of incremental adjustments to changing conditions of the firm and its environment.’ (Johanson and Vahlne 1977, p. 35)
- 19. Empirical basis for model: e.g.PHARMACIA: 9 overseas affiliates at the time. In the case of 8, the firm had received orders from foreign market, then signed an agency/licensing agreement. After a few years, established sales subsidiary (or made an acquisition in 1 case). In two countries began manufacturing, but only less complicated production at first. In case 9, started a sales subsidiary almost immediately, but company decision-maker had prior country experience. (Johanson & Vahlne 1977)
- 20. Incremental pattern (1): ‘Establishment chain’No regular exportDirect exporting, via independent agent/distributorEstablishing foreign sales subsidiaryForeign production/ manufacturingJohanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977; cf Bilkey & Tesar 1977, Cavusgil 1980, Czinkota 1982
- 21. Psychic distance
- 22. Why these patterns? A process explanation‘the firm develops knowledge when it operates in the market, this knowledge enables the firm to better see and evaluate business opportunities, consequently, to make new market commitments. In their turn, these commitments lead to learning and the ability to identify new market opportunities, and so on.’ (Johanson and Vahlne 2003, p. 9)
- 23. The Uppsala modelSTATE ASPECTSCHANGE ASPECTS Market (Experiential) KnowledgeCommitment DecisionsCurrent Activities Market CommitmentJohanson & Vahlne 1977, p. 37
- 24. The Uppsala modelLack of market/operations knowledge =main obstacle to internationalization
- 25. Can only be acquired through first-hand experience
- 26. Includes i.e. getting to know customers, suppliers, government agencies
- 27. Includes firm’s internationalization knowledge: firm’s own resources and ability to develop international operations
- 28. Reduces uncertainty associated with foreign market commitment
- 29. Provides framework for perceiving and formulating business opportunitiesJohanson & Vahlne 2003, p. 10STATE ASPECTSCHANGE ASPECTS Market (Experiential) KnowledgeCommitment DecisionsCurrent Activities Market CommitmentJohanson & Vahlne 1977, p. 37
- 30. The Uppsala modelSTATE ASPECTSCHANGE ASPECTS Market KnowledgeCommitment DecisionsResult of the conception of business opportunities, which in turn are a result of market (experiential) knowledge.Johanson and Vahlne 2003, p. 12Current Activities Market CommitmentJohanson & Vahlne 1977, p. 37
- 31. The Uppsala modelLargely consist of ‘everyday contact with customers, intermediaries, suppliers, authorities and other individuals and organisations important to their firm’
- 32. ‘current activities evidently have a continuous impact on internationalisation, occasionally being interrupted by discontinuities…’
- 33. By interacting with other firms in a market, the firm learns about their needs and situation
- 34. Interaction builds trust, which is an important element in commitment building(Johanson and Vahlne 2003:11)STATE ASPECTSCHANGE ASPECTS Market KnowledgeCommitment DecisionsCurrent Activities Market CommitmentJohanson & Vahlne 1977, p. 37
- 35. The Uppsala modelMarket commitment: i.e. not just investment, but also marketing and sales e.g., after-sales service commitments
- 36. Amount of commitment: i.e. level of investment
- 37. Degree of commitment: extent to which commitment cannot easily be withdrawn, and is defended by the firm
- 38. Degree of commitment dependent on firm’s resources and capabilities at homeJohanson and Vahlne 2003, p. 12STATE ASPECTSCHANGE ASPECTS Market (Experiential) KnowledgeCommitment DecisionsCurrent Activities Market CommitmentJohanson & Vahlne 1977, p. 37
- 39. Culture
- 40. Is ice cream affected by culture? In what way?What cultural effects does unilever face when selling ice creamHow does is the presentation, flavor and name of a prodct depend on culture?
- 42. Hall
- 45. Dimensions of National Culture
- 46. Multiple of Cultureor ‘interfaces’ (Saner)
- 47. The Contexts ofInternational Negotiations
- 49. Influence of Culture on Negotiation: Managerial PerspectivesDefinitions of negotiationNegotiation opportunitySelection of negotiatorsProtocolCommunicationTime sensitivityRisk propensityGroups versus individuals emphasisNature of agreementsEmotionalism
- 52. National Communication PatternsFinland USAGermany