The 16th Annual McGill International Entrepreneurship Conference: Researching New Frontiers

Oian, Kuiyalainen - How does a born global firm transfer and absorb knowledge in its internal nexus of relations?

Jan-Tore Oian, Norse Insurance Brokers, Norway

Olli Kuivalainen³*, Lappeenranta University of Technology, School of Business, Finland

SUMMARY

Born global (BG) firms or global start-ups are a breed apart. Among the all types of international new ventures (INVs, cf. e.g. Oviatt et al., 1994) they are, by default, the most international, operating in a multiple countries, or even regions, and they need to possess skills and capabilities which make and enable them to follow this difficult internationalization strategy or approach (Kuivalainen et al., 2012; Kuivalainen et al., 2007). There are several studies in which the factors or characteristics of the entrepreneurs in these firms, which enable them to internationalize early and rapidly after their foundation, have been studied (e.g. Aspelund et al., 2007; Harveston et al., 2000; Knight et al., 1996; Mathews et al., 2007 to name a few).

Recently also the changes and developments among the born global firms have been taken under scrutiny and the questions, how do these firms evolve after the initial internationalization have been raised (Kuivalainen et al., 2007; Nummela et al., 2006; Zahra et al., 2002b). Jones and Coviello (2005) point out that there may be several episodes of internationalization that eventually emerge as a long-term pathway of internationalization, for example. Hence, studies in which life-cycles or phases of INVs or born globals are being emphasized have emerged (e.g. Gabrielsson et al., 2008). Internal change in these organizations has been less studied in the extant literature, however.

Our focus in this paper is on knowledge transfer and absorptive capacity within a born global firm. Among the multinational enterprise (MNE) literature this topic has been of great interest over the years (Kogut et al., 1993; Subramaniam et al., 2001) but in the context of born globals or global start-ups this issue has gained surprisingly little attention. We do know much more, for example, about the role of the external networks in the emergence and success of born globals (Coviello et al., 1997; Gillian Sullivan et al., 2006). Consequently, in this paper we are interested in questions such as ‘how does a born global firm transfer and absorb knowledge in its internal nexus of relationships’ in the context when this rapidly internationalized, but young and resource-constrained firm has already subsidiaries around the globe. What does being new and global actually mean from the knowledge transfer perspective? Based on the single case study focusing on a young born global firm from a small open economy and having subsidiaries in several continents, we analyze antecedents/factors which increase and/or hinder absorptive capacity of the born global firm and discuss what kind of consequences ‘born globalness’ has for this, and eventually for the firm’s capability development in its quest for competitive advantage. We conceptualize absorptive capacity by using Zahra and George’s (2002a) conceptualization and focus on acquisition, assimilation, transformation and exploitation of knowledge. The preliminary results show that a born global can overcome the resource constraints related to rapid and early internationalization and the problems this create for knowledge transfer mechanisms by utilizing ICT communication widely within a firm as well as by encouraging informal communication. Young age of the firms also create advantages and the earlier expertise of the workers seem to be relevant and of use for the current activities and inertia is not a big burden (cf. also 'learning advantage of newness' in Autio et al. 2000). Furthermore, both real ownership and so-called illusionary ownership as special characteristics of the organizational culture enhance the absorptive capacity and especially exploitation of the possessed knowledge for the quest of competitive advantage.

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