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Showing posts with label globalization. Show all posts
Showing posts with label globalization. Show all posts

Saturday, March 10, 2012

Internationalization (I18N)

In economics, internationalization has been described as a process of increasing involvement of enterprises in international markets. A variety of theories explain the existence of the multinational companies and the I18N process.The models explain why do multinationals exist? What should be the pattern of I18N? What should be the entry mode?

The Uppsala Model

Probably the most know I18N model is the Uppsala Model developed in 1977 and conceptualizing I18N as a sequential, path dependent learning process. The model is based on empirical observations from studies in international business at the University of Uppsala, that showed that Swedish firms often develop their international operations in small steps, rather than by making large foreign production investments at single points in time.

Johanson & Vahlne (1977) observed that I18N is a gradual, incremental process, lack of foreign market knowledge create uncertainty and psychic distance disturb learning (accumulation of such knowledge). As a result companies will carry out gradual market commitments (investments). The firm will start exporting to similar/well known countries and gradually expand to other countries.