Essay Prompt
Norbäck and Persson (2014) suggest that some firms are “born to be global firms,” like Google and Facebook. Others, however, sell themselves and their innovations to incumbent firms. The authors argue that both strategies can be beneficial, depending upon the market. How do the authors’ findings align with Peng’s five entrepreneurial strategies? Do Norback and Persson’s assertions complement or contradict Peng’s? What are the implications for small, new, innovative firms?
Sample Essay
According to Norback and Persson (2014), some firms such as Facebook and Google were born to be global, while others such as Skype sell themselves as well as their innovation to existing companies. These according to Karra et al. (2004), born to be global firms are companies that contain about 25% international sales in three years of development and that drive their competitive advantage from the sales of services or goods and utilization of resources in multiple nations. They are novel ventures that sell their products internationally and obtain the same advantage from global distributed sales, manufacturing or purchasing. These companies turn to be international leaders within a short time and generate considerable revenue out of exports within a very short period of time. On the contrary, those that sell themselves to existing company lacks the financial or innovation ability to enter into the international market and become competitive. They find more benefit in selling themselves to others and working under them since they are already famous.
This perception of globalization presented by Norback and Persson (2014) differs greatly with Peng (2008) perspective of globalization and entry to the global market. According to Peng, there are five entrepreneurial strategies which include innovation, growth, financing or governance, network and exit or harvest. According to Peng, entrepreneurs are highly attracted by the excitement of developing a new company. They try to use capabilities and resources that include vision, drive and leadership to enhance the growth of a new company. They also employ innovative strategies to enhance differentiation and to develop more sustainable competitive advantage. At this stage the company takes more risks as compared to the developed nations. The network stage entails developing international ties, connections, and relationships that organizations and individuals have developed. This networks are translated to value adding networks. Network facilitates entry to the global market and development of higher level of the market shares at global level. To survive during early years the new organization gets to the stage of governance and financing where they opt so accept external assistance to be able to grow or if a company is growing at a good pace, it only obtain more finance to expand. Finally the company enjoys its success in the global market or exit by selling the business, merging with another company, declaring bankruptcy, or selling an equity stake. Peng clearly states that selling of such companies does not signify failure.
Contrary to Peng, Norback and Persson, demonstrates that different companies goes through different stages based on whether accompany is born to be global or is just born to be sold to other existing companies. The survival of the company in the market according to Norback and Persson is determined by four stages that include nature of the business which is characterized by trade cost level, the entrepreneur selected innovation effort which highly determine the success and failure of an organization. The next stage is acquisition or entry game where weak companies are acquired while the strong ones go global and succeed on their own. The final stage refers to the interaction of the company product with the market, where the success of a born to be global company is highly determined by its ability to survive in the market. While all firms in Peng’s opinion goes through the five stages together, most companies in Norback and Persson view follow different path based on whether the companies are able to survive on their own or can be acquired. Although what determine if a company will go global or not is its level of innovation and networking in Peng’s perspective, this is determined after the company demonstrate the ability to survive alone or to be acquired in Norback and Persson.
Although the two strategies differs slightly in their application, they both demonstrates the importance of innovation in a business growth and in determining whether a company will be acquired or succeed on its own in the market. The level of growth of the business based on its nature in both case highly determines whether a business will operate locally or internationally either on its own or even after being acquired. However Norback and Persson focuses more on business cost and its role in determining business operation level. However Norback and Persson insist more on cost as one of the main determinant of the company growth from certain level to another. In Peng’s case, finances and governance play a part, however, the level of innovation may highly determine the growth of a company than cost. New companies in the two cases are challenged by their nature and how unique they are in the market. Their uniqueness which is highly associated with innovation will highly determine the company’s rate of growth and ability to survive market challenges at local level. This survival ability gives them the ability to overcome challenges at global level and thrive even in the global level (Rezvani et al., 2013).
References
Karra, N., Philips, N., & Philips, N. (2004). Entrepreneurship goes global. IVEY Business Journal. Retrieved from< http://iveybusinessjournal.com/publication/entrepreneurship-goes-global/>
Norback, P., & Persson, L. (2014). Born to be global and the globalization process. The World Economy. doi: 10.1111/twec.12132
Peng, M. (2008). Global strategy. Cengage Learning.
Rezvani, M., Ghamari, Y., & Ghahramani, S. (2013). Identifying themes of entrepreneurial strategy of new ventures in international markets entry. Journal of Economics, Business and Management, 1(2), 217-219.
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