BY AURELIA MITCHELL DURANT Globalization has become a reality for the planet. The very loose and fluid definition of globalization is summed in an often-quoted quote by former Secretary-General of...
Originally posted 2014-08-11 11:00:35.
By Eliana Rocchi | amdlawgroup.com
What is a born global firm? Think of Skype, Google, Logitech, etc. A born global firm is “a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries.”
Many companies go global, but that does not make them born global firms. What distinguishes born global firms from the rest of international organizations is that they originate internationally. Born global firms, from their beginnings, have a global focus and commit their resources to international ventures. Most companies operate from their home country, and after years of doing business domestically, slowly evolve to do business internationally. By contrast, born global firms begin with a borderless world view, and immediately develop strategies to expand themselves abroad. Born global firms have many distinctive features that allow them to start, and thrive in the international arena.
One way born globals begin internationally is that they rely on exporting as their main method of foreign market entry. They begin exporting their goods within a couple of years after their founding, and may even export a quarter or more of their total production. Because of this, born globals must rely on external facilitators, such as FedEx, to organize international shipments. By using these external facilitators, born globals can enter or withdraw from foreign markets quickly and easily.
Born globals also have a distinct way of doing business. Top management in born globals tend to view the world as their marketplace from the very beginning, and use their aggressive entrepreneurial mindsets to pursue international markets immediately. Furthermore, when developing their markets, born globals employ differentiation strategies so as to make a niche for themselves internationally. Because of specialized resources, born globals can offer specialized and customized products, satisfying a market that is too small to interest larger firms.
Not only are born global goods specialized, but they strive for superior product quality. More often than not, born globals are leading their industries technologically. This advantage allows them to not only pursue markets around the world, but offer superior products designed for the specialized markets they have made niches out of.
Born global firms are of special interest not because of the size of these organizations, but by the age which the firm ventures into foreign markets. Born global firms are entirely unique from other major international organizations because they are born doing business abroad: something that many larger firms operate for years before even considering. These distinctive firms will eventually become the standard model for how companies do international business.
In the last few years the phenomenon of born global startups has been skyrocketing and more and more companies try to exploit the benefits of born-global. An insightful 2-phase assessment tool can be found in Mason A. Carpenter and Sanjyot P. Dunung’s “Challenges and Opportunities in International Business”: http://2012books.lardbucket.org/books/challenges-and-opportunities-in-international-business/s15-04-from-entrepreneurship-to-born-.html.
Sources: S. Tamer Cavusgil, Gary Knight: “Born Global Firms: A New International Enterprise”.
Image Credit: http://www.smeadvisor.com/2012/03/born-to-be-global--