Overview
History of UPPSALA
Swedish researcher
University of UPPSALA 1977
Definition of UPPSALA Model
Introduction the model
Important definitions
The IPM
Example
Limitations
The new IPM
Conclusion
How does Uppsala differ from 2 other models
Important Definition
Uppsala since 1977
Definition of Internationalization
Example: An internationalized software program
The Liability of Foreigness
Example : Wal-Marts Failure in Germany
Example IKEA
Limitations
Experience
The Born Global approach
Different routes to internationalization
The New IPM (2009)
Change variables
The New IPM (2009)
References
State variables
Success in Japan 2001-2006:
International Business
Aston Business School
Nico, Kunle, Che, Rufus, Mashkur and Amina
Recognition of opportunities to the knowledge concept
Consists of two variables:
Learning, creating and trust building
Originally labelled as “current activities”
Joint Venture and Strategic Alliance Route (e.g. Ningbo Bird in China)
Acquisition Route (e.g. IBM’s personal computer business by Lenovo)
Other importance concepts of knowledge include needs, strategies, capabilities etc
‘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’ (Oviatt & McDougall, 1994)
Carneiro, J. et al. (2008) Challenging the Uppsala Internationalization Model: A Contingent Approach to the Internationalization Process, Brazilian Administration Review, Vol. 5, Issue 2, pp. 85 - 103
Child, J. and Rodrigues, S.B. (2005) The Internationalization of Chinese Firms: A Case for Theoretical Extension? Management and Organization Review, Vol. 1, Issue 3, pp. 381 – 410.
Edgett, S. and Parkinson, S. (1993) Marketing for Service Industries – A Review. The Service Industries Journal, Vol. 13, Issue 3, pp. 19 – 39.
Forsgren, M. and Hagström, P. (2007) Ignorant and impatient internationalization?: The Uppsala model and internationalization patterns for Internet-related firms. Critical Perspectives on International Business, Vol. 3 Iss: 4, pp.291 - 305
Hadjikhani, A. (1997) A Note on the Criticism against the Internationalization Process Model, Management International Review, Vol. 37, Special Issue, pp. 43–6 6
Hill, C.W.L. (2009) International Business: Competing in the Global Marketplace, New York: McGraw Hill
Johanson, J. and Vahlne, J. (1977) The Internationalization Process of the Firm. Journal of International Business Studies, Vol. 8, Issue 1, pp. 23-32.
Malhotra, N. and Hinings, C.R. (2010) An organizational model for understanding internationalization processes. Journal of International Business Studies, Vol. 41, Issue 2, pp. 330 - 341
Millington, A.I. and Bayliss, B.T. (1990) The Process of Internationalization: U.K. Companies in the EC, Management International Review, Vol. 30, Issue 2 pp.151 – 161
Rennie, Michael W. (1993) The McKinsey Quarterly, Issue 4, pp. 45 – 52.
Sullivan, D. and A. Bauerschmidt (1990) Incremental internationalization: A testof Johansonand Vahlne's thesis, Management International Review, Vol. 30, Issue 1, pp. 19-30.
Why create a new version?
Economic and regulatory behaviour
Company behaviour is also different in some aspects
Research frontier has moved as well
Experience as a problem
Not always necessary
Potentially hinder growth
Psychic Argument
Forsgren (2007) investigation
Findings:
Fast and discontinous internationalization process
Level of Internet usage determined market choice
Inability to explain complex nature of firms
Time Factor
Potentially expensive
Nature of Firm
36 Capell,K. (26.04.2006). Ikea’s New plan for Japan. Cited from (01.05.2009)
http://www.businessweek.com/globalbiz/content/apr2006/gb20060426_821825.htm
37 Lewis, E. (28.03.2005). Is Ikea for everyone? Cited from (10.05.2009)
http://www.brandchannel.com/features_effect.asp?pf_id=256
“IKEA: The Japanese Misadventure and Successful Re-entry”,
http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy/IKEAJapanese%
20Misadventure%20and%20Successful%20Re-entry.htm
The Uppsala internationalization process modell revisited: From liability of foreigness to liability of outsidership; Jan Johanson and Jan-Erik Vahlne 21st May 2009)
Kogut, B. and Singh, H., (1988), The effect of national culture on the choice of entry mode, Journal of International Business Studies, Vol. 19(3), pp. 411-432.
O'Grady, S. and Lane, H. W., (1996), The psychic distance paradox, Journal of International Business Studies, Vol. 27(2), pp. 309-333.
Penrose, E. T., (1959), Theory of the growth of the firm. Oxford, Basil Blackwell.
Prashantham, S., (2005) Toward a knowledge-based conceptualization of internationalization, Journal of International Entrepreneurship, Vol. 3(1), pp.37-52.
Welch, L. S. and Luostarinen, R., (1988), Internationalization: evolution of a concept, Journal of General Management, Vol. 14(2), pp. 34-55.
Young, S., (1987), Business strategy and the internationalisation of business: recent approaches, Managerial and Decision Economics, Vol. 8, pp. 31-40
Aharoni, Y., (1966), The foreign investment decision process. Boston: Harvard University Press.
Chetty, S. and Campbell-Hunt, C., (2003), Paths to internationalization among small- to medium-sized firms, European Journal of Marketing, Vol. 37(5/6), pp. 796-820.
Dunning, J. H., (1981), International production and the multinational enterprise. London: Allen and Unwin.
Dunning, J. H., (1988), The eclectic paradigm of international production: a restatement and some possible extensions, Journal of International Business Studies, Vol. 19(1), pp. 1-31.
Benito, G. R. G., and Gripsrud, G. (1992) The expansion of foreign direct investments: discrete rational location choices or a cultural learning process? Journal of International Business Studies 23(3): 461–76.
Brouthers, K.D. and Brouthers, L.E. (2003) Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust. Journal of Management Studies, Vol. 40, Issue 5, pp. 1179 – 1204
State variables
Change variables
Relationship committed decisions
Originally labelled as “committed decisions”
“Japan is much more open, and we are much stronger company” (CEO Anders Dahlvig)
“Today is the right time to come to Japan” (CEO Anders Dahlvig)
Network position
This variable was identified in the original model as “market commitment”
it is pursed within a network
What are the Internationalization Models
Conclusion
Example IKEA
There are three models explaining Internationalization.
Uppsala 1977
Transactional Cost Analysis
Business Networking Model
Failure in Japan 1974-1986:
“The Japanese market and consumers were not ready for Ikea,
and Ikea was definitely not ready for Japan at the time” (CEO Tommy Kullberg)
The internationalisation establishment chain:
No regular export activities
Export via independent representatives
Establishment of a foreign sales subsidiary
Foreign production/ manufacturing units
Following the concept of psychic distance:
1963 Norway
1969 Denmark
1973 Switzerland
1974 Germany
1975 Australia
“Outsider ship makes it impossible to develop a business” (Johanson & Vahlne)
Understanding Uppsala
Differences & Observations
How does Uppsala differ from the 2 others.
Hofstede’s 1972 link to Uppsala 1977.
There are four aspects to understanding the Uppsala Model
Market Knowledge and decisions
Commitment Decisions
Current Activities
Market Commitment
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