Ismail Karaoglu saw an opportunity in 2000: to source top-quality leather and accessories from Italy, craft exquisite fashion goods in Istanbul, then sell them throughout Russia and the former Soviet republics. His bold venture has paid off! In just four short years his business is thriving - selling millions each year even without tapping into the Turkish market he was familiar with. Clearly Ismail's risk taking has led to exceptional rewards for himself and those who have taken part of this journey with him.
As this example shows, the nature of entrepreneurship is shifting. Where in the past hopeful entrepreneurs would build their new venture in a domestic market before expanding globally, these same entrepreneurs have the opportunity and challenge of participating in a highly internationalized market from the moment they are founded. These “born global” firms face a very different challenge than their more traditional, domestically-focused counterparts. In addition to all of the well-known difficulties of founding a domestic business, these new ventures face the challenge of competing in an international environment. And they do so without the experience and resources of a firm that has already succeeded domestically.
Recently, there has been an emergence of businesses that buck the traditional internationalization timeline by expanding globally from their founding. As research into these so-called "born globals" continues to grow, we are beginning to uncover a wealth of information about why they succeed and fail - as well as what drives such rapid expansion in today's business landscape. In this article, we will explore the nature of born global firms and how various factors contribute to success or failure in order for potential entrepreneurs -and those interested more generally-to understand this increasingly common form of enterprise.
Globalization and Born Globals
Born global companies are those that quickly enter the international market and take advantage of resources from all around the world to gain a competitive edge. These startups use distributed purchasing, manufacturing or sales abroad in order to make their mark on the business landscape within just three years of creation.
There is a clear trend of more and more businesses operating on an international scale, but why? Thanks to the work of management researchers we have made progress in understanding what factors impact this shift towards globalization. Our research combined with available academic literature has helped create a great framework for comprehending how entrepreneurs are driven toward global operation.
Three factors that drive international entrepreneurship
International entrepreneurship is on the rise, propelled by a combination of conditions that can be divided into three distinct categories. Factors such as access to global markets and technologies are providing entrepreneurs with new opportunities while unprecedented levels of risk-taking across borders has seen businesses taking their ventures further than ever before. This expanding field promises exciting possibilities for innovative individuals who strive to make an impact beyond geographical boundaries.
1. The globalization of markets has led to the rapid emergence of born global firms, as former obstacles such as tariffs and legal barriers have been removed. Additionally, some industries like microprocessors or software production were naturally already present on an international scale from their inception - requiring businesses to compete globally right out the gate.
2. The rise of smaller businesses in international markets has been dramatically propelled by cutting-edge technology, with communication and transportation costs significantly reduced. This phenomenon is removing the practical limitations that once hindered firms wanting to enter foreign territories.
3.Third, there is a set of factors growing out of the increasing use of alliances and the changing nature of firms that make internationalizing from inception not only an option, but a strategic necessity for some new ventures. We will consider each of these in turn.
Rapidly Evolving Global Markets
Ismail Karaoglu faced a tough situation - an intensely competitive and saturated local market with limited purchasing power, meaning growth opportunities in the Turkish leather industry were minimal. Long-established domestic brands held significant appeal for customers wanting to purchase luxury goods, such as those made from leather, which further discouraged him from entering at home. Accepting defeat on this front but determined not to give up his hopes of success altogether, he sought foreign markets instead where demand was greater and competition less fierce. That proved a shrewd move - today Ismail is enjoying growing profits thanks to taking that brave leap overseas.
Entrepreneurs everywhere are discovering the potential of an international market - one where pockets of underserved consumers are eager to purchase unique, specialized goods. When these entrepreneurs noticed growing global interest in their products and services, they swiftly expanded their operations across borders so as not to miss out on this unanticipated demand. As a result, highly differentiated offerings have had the opportunity to tap into opportunities that would otherwise be overlooked by major competitors!
Calzeus, a renowned Portuguese-based footwear company, made the daring decision to open its first international store in London 1998. Their success abroad led them to expand their stores worldwide by 2000 with 6 million Euros in sales and 90% of that money coming from overseas markets. With an eye for opportunity and determination to fill unmet needs, Calzeus has become one of the most recognized brands across many major cities around the world.
Communication and Transportation
Entrepreneurs now have unprecedented access to international markets thanks to the amazing advancements in communication and transportation technology. Dwindling cost of long-distance data transmission combined with a ubiquitous internet presence means small businesses can assemble market fragments from around the world into one viable composite market - something that was unimaginable just years ago! As organizations become more familiar with these technologies, they are starting realize their full potential for growth, creating groundbreaking opportunities never seen before..
As global transportation systems continue to expand, businesses are no longer at an advantage being located close to customers. New technologies and logistics solutions have made transportation costs smaller than ever, erasing traditional market boundaries in countless industries around the world. This decrease in cost allows for more open competition between services and products alike - a true revolution of how we conduct business today.
Network Forms of Organization
Born globals are highly interconnected organizations, which leverage the power of collaborative networks to access international markets. Pushing traditional boundaries, these firms draw on a wide range of production and distribution resources around the world in order to maximize their competitive advantage and expand into multiple regions at once. In doing so, born globals have revolutionized business models by reimagining how companies can work within today's global marketplace.
The corporate world is experiencing a shift towards alliance building and specialization. As businesses of all sizes become more proficient in this area, the competitive advantage previously held by large corporations is becoming increasingly diminished; simultaneously small firms are flourishing as they form alliances to rival those of their larger counterparts. This trend has opened up new possibilities for entrepreneurs who can now venture abroad with relative ease thanks to these novel networks sweeping through business markets worldwide.
Born globals can truly benefit from modern networking tools and platforms, but it appears that one of the most effective networks is still built on ethnic or social ties. Our research found this especially true - historical and cultural connections were often a prime driving force behind these businesses' foundations as well as daily operations. These close-knit networks don't just offer moral support - they are an invaluable way to exchange information quickly while also offering learning opportunities across communities which would be otherwise unattainable for individuals not connected through them.
