Born Globals and Entrepreneurial Perspective

8/13/2019 Born Globals and Entrepreneurial Perspective

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Born Globals and Entrepreneurial Perspectives

An exploratory study of entrepreneurial perspectives & Born

Globals.

Authors: Sahibzada Muhammad Ziaullah

Muhammad Ahsan Hassan

Supervisor: Vladimir Vanyushyn

Umea School of Business and Economics

Spring Semester 2012

MastersThesis, Second year, 15 hp


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Acknowledgement

Completion of this theoretical research within the scope of a 15-credit thesis was a

challenging job requiring consistent concentration and hard work. Thus we considered it

an opportunity for an effective learning experience to work competently and to bridge

between academic demand and future anticipation of professional work.

We believe, it was our supervisor Vladimir Vanyushyn who kept us motivated and

focused, in times when we were down in our energies. Indeed, his supervision made it

possible to finish this work in a true spirit and on time. We are thankful to CIIR (Center

for Inter-organizational Research) and all of its members, for their encouragement. We

are thankful to our families for being a permanent source of encouragement and support

for us. We are thankful to USBE for maintaining a wonderful research environment

with cooperation. We are thankful to God for providing us wonderful lives.

Sahibzada Muhammad Zia Ullah Muhammad Ahsan Hassan

[email protected] [email protected]
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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Abstract

This research study further strengthens academic research on Born Globals (BGs). It

provides an understanding concerning the role of entrepreneurial perspectives in rapid

internationalization process of Born Global SMEs, which do not follow the traditional

incremental models of internationalization.

A systematic literature was synthesized by reviewing past 13 years of academic

developments in the area of Internationalization and specifically BGs with Web of Science

used as a primary database.

In order to encompass the whole longitudinal process of BGs, we decided to use a theoretical

framework based on distinguishing characteristics of Pace Scale and Pattern. These are the most

commonly agreed characteristics that differentiate a Born Global from traditional firm that

follow incremental internationalization process. In order to understand the creation of these

three distinguishing characteristics we identified not only the underlying factors that give rise to

these distinguishing characteristics but also the role they play in development of thesedistinguishing characteristics. Further, this role is divided into corresponding developmental

phases (Pre-startup, Pre-Internationalization and Post-Internationalization).

Then by interpreting this role in terms of entrepreneurial perspectives, we have tried to find out

the role of entrepreneurial perspectives in corresponding developmental phases and ultimately

formation of distinguishing characteristics which symbolize a Born Global.

Two entrepreneurial perspectives involved in venture development process i-e Causation and

Effectuation that were broadly explained in the literature. According to Sarasvathy: Causation

is based on prediction logic whileEffectuation that is based on control logic (Sarasvathy,

2001, p.243). Both are considered essential areas of human reasoning and entrepreneurial

decision-making. Further Data was analyzed in connection with BGs distinguishing

characteristics, underlying factors and their relation with entrepreneurial perspectives of

Causation and Effectuation

The findings showed that BGs and the creation of distinguishing characteristics (Pace Scale and

Pattern) are explained by entrepreneurial perspective of Effectuation while Causation was

contradictory and further explanation to causation was abandoned. Effectuation theory based on

it four principles fits with the development of Born Global firms characteristics and its

Internationalization phases. The logic has improved the understanding of a firm international

market behavior to internationalize since inception and its entrance into several markets. The

core supporting areas where effectuation better explains the BGs are; to create opportunities by

exploiting its means, that are the entrepreneurial traits, knowledge of corridors and social

networks. These means are helping a firms in origination, development of its pace, scale, pattern

and further supports in phases of internationalization. Similarly the ways to limit the loss,

developing partnership and acknowledging the contingencies were the key effectual areas

explained the BG distinguishing characteristics and contributed to the Phases of

internationalization. Over all effectual logic gives insight to the BG firms development, its

operation, expansions and fits with the explanation of rapid internationalization concept.

Key words: Born Globals, Ef fectuati on, Causation, D istingui shi ng Char acter istics, Pace

Scale, Pattern, Rapid I nternationali zation , SMEs


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ContentsAcknowledgement....................................................................................................................... i

Abstract ......................................................................................................................................... ii

1 Introduction............................................................................................................................... 5

1.1 Background.................................................................................................................... 5

1.2 Problem Discussion....................................................................................................... 5

1.3 Born Globals and Entrepreneurial Perspectives .............................................................. 6

1.4 Problem Statement......................................................................................................... 7

1.5 Purpose ........................................................................................................................... 7

1.6 Conceptual Framework.................................................................................................. 7

1.7 Key Definitions............................................................................................................ 10

1.7.1 Small and Medium Enterprises................................................................................. 101.7.2 Internationalization..................................................................................................... 10

1.7.3 Born Globals.............................................................................................................. 10

1.7.4 Causation .................................................................................................................... 10

1.7.5 Effectuation................................................................................................................ 11

1.8 Limitations................................................................................................................. 11

1.9 Outline of the Research Study..................................................................................... 12

2 Methodology............................................................................................................................13

2.1 Choice of the Subject...................................................................................................... 13

2.2 Preconceptions............................................................................................................... 13

2.3 Research Philosophy...................................................................................................... 14

2.4 Research Design ............................................................................................................. 14

2.5 Research Strategy ............................................................................................................ 15

2.6 Research Methods........................................................................................................... 15

2.7 Data Collection................................................................................................................ 16

2.8 Data Analysis.................................................................................................................. 16

3 Causation and Effectuation Approach.....................................................................................17

3.1 Causation and Effectuation............................................................................................ 17

3.2 Key Principles of Effectuation and Casual Contrast...................................................... 22

3.3 Dynamic Model............................................................................................................... 24

3.4 Summary ......................................................................................................................... 25

4 Review & Synthesis of BG Studies............................................................................................26


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4.1 Data Synthesis................................................................................................................. 26

4.2 Methodology Description................................................................................................ 27

4.3 Initial Selection Criteria: Key words and Search Terms................................................. 27

4.4 Grouping Publication...................................................................................................... 28

4.5 Compiling the consideration Set..................................................................................... 28

4.7 Internationalization Processes......................................................................................... 31

4.7.1 Stage Models................................................................................................................. 31

4.7.2 Uppsala Revisited Model.............................................................................................. 31

4.7.3 Networking Theory....................................................................................................... 32

4.7.4 International New Ventures or Born Globals (INV)..................................................... 32

4.8 Theoretical Framework for Bon Global.......................................................................... 33

4.9 Internationalization Pace................................................................................................. 34

4.9.1 Entrepreneurial Orientation........................................................................................... 34

4.9.2 Firms Internal Resources.............................................................................................. 36

4.9.3 Innovation...................................................................................................................... 36

4.9.4 External Environment................................................................................................... 36

4.9.5 Motivating Factors........................................................................................................ 37

4.9. 6 Enabling Factors........................................................................................................... 37

4.10 Scale of Internationalization........................................................................................... 38

4.10.1 Business Model........................................................................................................... 39

4.4.2 Organizational learning and collaboration.................................................................... 40

4.5 Pattern of internationalization......................................................................................... 40

4.51Human and Organizational Character............................................................................. 41

4.5.2 Corporate Culture and Environment............................................................................. 41

5 Link to Causation & Effectuation..........................................................................................43

5.1 Pre-startup or Venture Creation Phase .......................................................................... 43

5.2 Pre Internationalization Phase (Internationalization Preparation) ................................ 44

5.3 Post Internationalization phase ..................................................................................... 45

6 Concluding Comment....47

6.1 Revised Conceptual Model............................................................................................. 47

6.2 Contribution of our study................................................................................................ 50

6.3 Managerial Implications.................................................................................................. 50

6.4 Future Research ............................................................................................................... 50

7 QualityCriteria........................................................................................................................52


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7.1 Creditability..................................................................................................................... 52

7.2 Transferability................................................................................................................. 52

7.3 Dependability.................................................................................................................. 52

7.4 Conformability................................................................................................................ 52

7.5 Authenticity ..................................................................................................................... 53

References......................................................................................................................................54

List of figures

1. Conceptual Framework........................082. Effectuation Process of a Firm.........................................................................183. Effectuation theory .204. Dynamic model of Effectuation..255. Firm Distinguishing Characteristics.336. Factors Affecting the Pace of BGs.. 377. Key distinguishing factors of BGs...398. Conceptual Model49

List of Tables

1. SMEs Definition...10

2. Causation and Effectuation Differences .......................................................19

3. Summary of difference between effectuation and causation .......214. Paper distribution...29

5. Difference in internationalization behavior ..42

List of Charts

1. Published Articles..............................................................................................29

2. Filtured Literature .............................................................................................30

3.Analysed Literature.............................................................................................30

Appendix60


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1 Introduction

This chapter introduces the subject and problem background. It further illustratesissues with logical reasoning and discussion to clarify the research gap. Further, it

leads to research questions, purpose of research and outline of the study.

1.1 BackgroundEarly internationalization of SMEs is a worldwide phenomenon and despite increased

concentration in high tech industry sectors, it is not limited to any specific industry or

sector (Mort et al., 2012, p. 546). Lower trade barriers, increased competition and rapid

technological developments are facilitating, the idea of making significant part of

revenue from foreign market operations (Anderson, 2011, p. 628). Small and mediumsize enterprises (SMEs), starting international business activities at very beginning of

their operations are increasing (Anderson, 2011, p. 628).

Firms exhibiting this phenomenon of early internationalization are commonly called

International New Ventures or Born Globals. These firms are usually defined as:

business organizations that from inception, seek to derive significant competitive

advantages from use of resources and sale of outputs in multiple countries (Oviatt &

McDougal, 1994, p. 49). In lines with previous studies, we will also use the term, Born

Globals (BGs) to refer to these SMEs (Anderson, 2011, p.628).

1.2 Problem DiscussionBGs have several distinguishing operational and behavioral characteristics, which

makes them leading example of successful SMEs internationalization (Knight &

Cavusgil, 1996). Firms direct entry into global markets with highly innovative

products: where domestic market is often bypassed, challenge conventional theories of

internationalization (Oviatt & McDougall, 1994). In addition, their internationalization

also contradicts traditional beliefs, where SMEs are considered to have fewer strategic

options because of their low financial and managerial resources (Mort et al., 2012,

p.546).

Over the last decades, BGs have attracted both academic and practitioners interest

(Rialp et al., 2005). These highly entrepreneurial, high performing small firms challengethe conventional theories of incremental or gradual internationalization (Mort et al.,

2012, P.546). The so called Uppsala model by Johansson and Vahlne (1977) is one of

the most comprehensive efforts made to explain SMEs internationalization. It takes

internationalization as a gradual process, mainly based on successive organizational

learning and increased commitment. Psychic distance is described as a determining

factor for, selection of a specific foreign market and entry mode chosen for operations

in that market. Experiential knowledge is described as one of the main driving force to

affect firmsbehavior in a specific market (Anderson, 2011, p.628-29).

Earlier theories used in international business do not fully explain the phenomenon of

BGs (Oviatt & McDougall 1994; Anderson, 2011, p.628-29). There is a big gapbetween these theoretical internationalization models and actual practices being


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observed in BGs firms (Andersen &Strandskov 1998; OFarrell; Crick & Jones 2000).

Internationalization is often affected by individual decision-making and strategic

choices; where different entrepreneurs choose to internationalize in different ways

(Andersson, 2000; Andersson & Evangelista, 2006). Gradual process of

internationalization is not followed all the time and firms start internationalization

activities at a very early stage or inception. Therefore the internationalization is ratherrapid and firms become global very early (Knight & Cavusgil, 1996; Madsen & Servais,

1997) (cited by Anderson, 2011, p.629).

Johanson and Vahlne (2009) have also acknowledged that, these BGs firms do not

follow the gradual process of internationalization completely in line with psychic

distance concept explained in their model. However, they still maintain relevancy of

their model by arguing that, in BGs, entrepreneurs already have required knowledge and

networks has been established in rather early stages, which results in some leapfrogging

and deviation from gradual internationalization model (Johanson & Vahlne, 2009). In

2010, they have explicitly discussed the importance of entrepreneurial capabilities and

have used Sarasvathys (2001) Effectuation logic to analyze BGs internationalizationprocess (Anderson, 2011, p.629).

1.3 Born Globals and Entrepreneurial Perspectives

Causation and Effectuation are two different entrepreneurial perspectives (Sarasvathy

2001, 2008; Sarasvathy & Dew, 2005). Causation is called designing before execution

(Baker et al., 2003), where particular effect is taken as a goal and an increased focus is

exerted towards means which can create that effect (Sarasvathy, 2001, p. 245). While in

Effectuation, means are considered first and then the focus is on possible effects that

can be created with those means (Sarasvathy, 2001, p. 245; Sarasvathy, 2008). Thus in

case of BGs, existing means of vision, knowledge, experience, connections are used to

create new firm and opportunities (Evers & Gorman, 2011, p.550). Although there arefew studies that have used Effectuation to understand internationalization of BGs

(Anderson, 2011, p.627), yet the evidence is increasing that, process can be well

explained by Effectuation (Baker et al., 2003; Dew et al., 2009). Keeping in view these

evidences, we have decided to study BGs from an Effectuation perspective.

Another drawback of earlier researches is that, much enquiry is cross-sectional in

nature, and consequently has been unable to capture the whole process involving

development of BGs (Anderson, 2011, p. 630-31). Many researchers have suggested

that, observational studies will be useful to find out what decision-makers actually do in

different developmental phases (Andersson & Floren, 2008). It would be interesting to

explore how a company deals with challenges that arise when the company grows(Anderson, 2011, p.639).

An advantage with Effectuation theory is that, it treats the individual level, the firm

level and the environment /network level with a process perspective (Anderson, 2011, p.

631). Therefore, it further supports our choice of subject.

Some of the earlier researches pointed out, Causation can be more useful in later stages

of a firms development (Read & Sarasvathy, 2005). Thus, it will also be interesting to

investigate, if it is possible for a firms perspective to change from Effectuation to

Causation (Anderson, 2011, p.639).

We understand that the conceptual application of effectuation can advance our

understandings of Born Globals because internationalization is a part of


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entrepreneurship with a broad vision of cross boundary activities. Hence International

entrepreneurship is the development of international new ventures or startups, that from

their inception, engage in international business, thus viewing their operating domain as

international from the initial stages of the firm operations McDougall (1989 , 387).

Similarly effectual entrepreneurship deals with the same logic of venture development,

new product development but shaping the future practically rather than predicting it. Itcontrols the future risk and uncertainties by its decisions action, working in

conjunction with pre-committed stakeholders and customer partnersSarasvathy (2001,

243-263). Therefore if looked into BGs characteristic, for example its personal network

development, acting in new markets, the role of risk taking and dealing with

uncertainty, seems to be consistent with the core areas of effectual logic. Therefore, to

enhance complete understanding we need a comprehensive holistic approach. In this

way we will conduct a complete study based on internationalization process, BGs

developments, and explanation with entrepreneurial perspective to see if effectuation

can explain BGs.

1.4 Problem Statement

How Effectuation can explain Born Globals?

What can be an optimal mix of Causation and Effectuation for explaining BGs

internationalization process?

1.5 PurposePurpose of this research is to better understand and explain BGs in terms of

entrepreneurial perspectives. In this study, we will encompass the whole longitudinalprocess of BGs development i.e. from inception to internationalization and analyze it in

terms of entrepreneurial perspectives. An evaluation will be made to see, if Effectuation

alone can explain BGs or if it is a mix of Effectuation and Causation. We will also try to

find out phases of BGs that support Effectuation and the ones that can be better

explained by Causation or where Causation is a better strategy to adopt with.

1.6 Conceptual FrameworkDuring the preliminary literature review about the subject, we came across several

articles and books related to BGs. This exposure of existing literature further broadened

our vision and understanding of the subject and in combination with our own analytical

thinking. We come up with the idea of studying BGs in terms of entrepreneurialperspectives. In order to further elaborate idea of this study, we have developed a

conceptual model. The model represents structure of the study and address the research

gap mentioned in introduction.

In this conceptual model, we assume that, entrepreneurial perspective plays a vital role

in the creation of BGs. We think entrepreneurial perspective is one of the major reasons

that differentiate BGs from incremental SME internationalization. At the

commencement of study the importance and composition of entrepreneurial perspective

in creation of BGs is not fully known. Hence, we are not sure that, if this entrepreneurial

perspective is Causation or Effectuation or if it is a combination of both. Our results and

analysis will further clarify our assumptions.


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Figure.1, Source: Self-Developed

The conceptual model starts with two significantly different entrepreneurial

perspectives that are, causation and effectuation. The effectuation is based on control

logic while causation is based on prediction logic. The figure link both perspectives to

the knowledge gap where decision for internationalizing firm is based on whether to

adopt an effectual a non-predictive reasoning perspective or casual a predictive and

rational reasoning perspective. Both perspectives can affect internationalization process

with its core principles and can result in incremental or rapid international operation.

The non-predictive logic deals with the minimizing risk and uncertainty by consideringaffordability and acceptability criteria of its resources and takes direct action without

complete planning process. Hence the future is controlled by exploiting firm resources,

knowledge and developing partnership. While the market shares are obtained through

cooperative strategies. Hence, in venture development, surprises and contingencies

(unplanned activities) are considered useful for innovation and opportunities

development. Sarasvathy (2003, p. 203-220).

On the other side the predictive logic stands on preferred outcome through rational

planning, broad market analysis, conducting a research process, identifying the need of

a specific most attractive segment and designing strategies to market their products or

services. Here the logic to control the future by planning in advance and surprises arenot accepted Sarasvathy (2003, p. 203-220). Thus our conceptual model limits our

Effectuation

?

Entrepreneurial

Perspective

Born Global

SME

Internationalization

Causation


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boundary of the research to these two perspectives and assumes that entrepreneurial

perspective play a key role in the development of BG SMEs that can be further

explained and investigated.

Causation: Market definition, Segmentation, Targeting, Positioning, Sarasvathy (2003,

p. 209).

Effectuation: Customer identification, segment definition through effectual partnership

and selling, Adding segments and partners, Definition/creation of one or several

possible markets, Sarasvathy (2003, p. 209).


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1.7 Key Definitions

1.7.1 Small and Medium EnterprisesFirst step in our research study on internationalization of SMEs is to get an idea; what

are the proper criteria to define an enterprise as an SME? Depending on the nature and

composition of the industry, there are several connotation-defining SMEs in differentcountries. However, for this research project, we will follow European Commissions

definition of an SME. It defines the category of micro, small and medium-sized

enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons

and which have an annual turnover not exceeding 50 million euro, and/or an annual

balance sheet total not exceeding 43 million Euro(European Comission,2003).

Enterprise

Category

Headcount Turnover Balance sheet

Medium-

Sized

< 250 50 Million 43 Million

Small-Sized < 50 10 Million 10 Million

Micro-sized < 10 2 Million 2 Million

Table.1 Source: European Commission

1.7.2 InternationalizationThere is no generally accepted definition explaining internationalization or

international entrepreneurship, but internationalization is viewed as the process of

increasing involvement in international markets (Welch & Luostarinen, 1998) (cited by

Gerlad & Susman, 2007, p.281). According to Lehtinen & Penttinen,Internationalization of a firm concerns the relationships between the firm and its

international environment, derives its origin from the development and utilization

process of the personnels cognitive and attitudinal readiness and concretely manifested

in the development and utilization process of different international activities, primarily

inward, outward and cooperative operations(1999, p.13).

1.7.3 Born GlobalsSeveral terms have been used to refer to these firms: International New Ventures

(McDougall et al., 1994; Oviatt & McDougall, 1995), BGs (Knight & Cavusgil, 1996;

Madsen & Servais, 1997), Born International SMEs (Kundu & Katz, 2003), or early

Internationalizing firms (Rialp et al. 2005a as cited by Rialp et al., 2010, p.109).

BGs are the firms that start international operation rapidly after inception (Efrata &

Shoham, 2012, p.01), Oviat & Mcdougall defined BGs as, a business organization that,

from inception, seeks to drive significant competitive advantage from the use of

resources and the sale of output in multiple countries (Oviatt & Mcdougall, 1994, p.

49).

1.7.4 CausationCausation is where, a process takes a particular effect as given and focus on selecting

between means to create that effect, itis based on prediction logic (Sarasvathy, 2001,

p.243-45). It is called designing before execution (Baker et al., 2003), where particular


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effect is taken as a goal and an increased focus is exerted towards the means which can

create that effect (Sarasvathy 2001, 245).

1.7.5 EffectuationEffectuation is defined as, a process that takes a set of means as given and focus on

selecting between possible effects that can be created with that set of means.Effectuation is based on control logic, in which means are considered first and then

focus is on possible effects that can be created with those means (Sarasvathy 2001, 243-

245; Sarasvathy, 2008).

1.8 LimitationsIn this study, BGs are discussed; based on three distinguishing characteristics of Pace

Scale and Pattern. In our study, we have used the same criteria of BGs developmental

phases that is used by Rialp et al (2010). According to this criterion, development of

BGs is divided into following phases

1. Pre startup and New Venture Creation Phase2.

Pre Internationalization Phase (Internationalization Preparation)3. Post Internationalization Phase 1 (early international entry - development)

4. Post Internationalization Phase 2 (International Growth and Consolidation)Our study is only fully valid for first three phases of BGs development. Due to

transformational change and highly dynamic environment of Post Internationalization

Phase 2 (International Growth and Consolidation) the implications may be different.

As cited by (Gabrielsson et al, 2008 p.1) there are different types of BGs

1. BGs, which are SMEs with potential for accelerated internationalization and aglobal market vision and which are going to be international for the first time.2. Born Again Globals, which attempt to internationalize but achieve limited

success, then turn to building up domestic support and later return to

internationalization by means of great leaps and a global vision

(Bell,McNaughton, & Young, 2001).

3. Inward internationalizers, which import intermediates and components fromglobal sources and/or import R&D and internationalize rather rapidly through

exports and/or in other ways (Korhonen, Luostarinen, &Welch, 1996).

4. The usual more slowly internationalizing SMEs, which are a subset that includessmall spin-offs from MNEs.

Among all different types of BGs, we want to be more specific, thus our study is

mainly related to type 1 BG and we limits our boundaries to other types of BGs to avoid

complication.

The role of different underlying factors giving rise to Pace Scale and Pattern in different

developmental phases of BGs is discussed. That is later generalized as their role in BGs.

This role is divided into corresponding developmental phases. This discussion is based

on the evidence from existing literature about their emphasized role in those particular

developmental phases. This discussion does not define the clear boundaries of their role

and further empirical studies will be required for a clearer definition of these factors and

their roles.


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1.9 Outline of the Research StudyFollowing outline structures this study

Chapter-2 Methodology

This chapter illustrates scientific methods related to this research study. It provides

information addressing research philosophy, design, methods, and strategy to conduct

the whole research. Scientific methods include choice of subject and plan for

conducting research. It also includes information about data collection, analysis and

data presentations.

Chapter-3 Causation and Effectuation

This chapter focuses on entrepreneurial perspectives of Causation and Effectuation. The

chapter also describes various principles of these entrepreneurial perspectives.

Chapter-4 Reviews & Synthesis of BG Studies

This chapter is composed of literature related to BGs and Internationalization models. It

also describes our theoretical framework for BGs that is developed by synthesizing data

from the review of previous literature. Data is mainly categorized into distinguishing

characteristics of BGs i.e Pace Scale and Pattern. The underlying factors giving rise to

these distinguishing characteristics and the role of these factors in various

developmental phases of BGs (Venture Creation, Internationalization and Post

Internationalization).

Chapter-5 Link to Causation and Effectuation

This chapter focuses on analysis of already developed and structured data to searchappropriate answers to research question. Data is analyzed in connection with Born

Globals distinguishing characteristics, underlying factors and their relation with

entrepreneurial perspectives of Causation and Effectuation

Chapter-6 Conclusion

This chapter provides outcomes obtained from analyzed data and answer to research

problem with new conceptual model. In addition, it also provides suggestion for further

research.

Chapter-7 Quality CriteriaIn this chapter quality of the research is explained on the basis of Creditability,

Transferability, Dependability, and finally Conformability.


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2 Methodology

This chapter illustrates scientific methods related to this research study. It provides

information addressing research philosophy, design, methods, and strategy to conductthe whole research. Scientific methods include choice of subject and plan for

conducting research. It also includes information about data collection, analysis and

data presentations.

2.1 Choice of the SubjectVery idea of this study originated in our minds while, we started to analyze our post-

graduation options in terms of employment and businesses. Our profiles include higher

education from a top ranked European university, international travelling experiences,

multicultural group works and background of a developing country. All of these factorsare persuading to generate such business idea where we can use all of these skills,

knowledge and experience. We believe that realization of this idea seems very closer to

the emergence of a BGs idea. This was one of the main reasons for selection of this

subject as a research area.

As explained in literature, phenomenon of BGs is becoming more frequent and more

global. Hence, it is getting more and more attention of people belonging to the domain

of Business Administration and specifically to Business Development and

Internationalization. On the other hand, Effectuation is a relatively new entrepreneurial

perspective, which is getting attraction, because of its better explanation and closer

proximity to real world entrepreneurial operations and practices.

As being the students of Masters In Business Development and Internationalization, we

also got some exposure of these two significant developments and our inherent interest

of being successful entrepreneurs urged as to make an effort, where we can contribute to

the existing knowledge and mean while further enhance our understanding of the

subject. Our motivation and passion to be innovative leaders developed our interest in

emerging subjects like BGs, Effectuation and their relation. We believe this subject will

satisfy our desire to some extent, increase our attractiveness for International employers

and help us to be better entrepreneurs and researchers.

2.2 PreconceptionsIf we talk about our previous knowledge, experiences and skills towards the topic wewill say that, it is highly influenced by our Master program In Business Development

and Internationalization. Both authors are admitted to this program at Umea University.

This program contains several courses of subjects related to SMES and

Internationalization. Further. Both authors have already taken courses like Business

Research Methods and have already successfully conducted two different research

projects named Managing Commercialization of Academic research and Role of

Emotional Factors in Outsourcing of SMES. These researches were conducted as one-

year master thesis. Based on above-mentioned facts we can claim that we have enough

theoretical preconceptions to study this subject and conduct this research.


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If we talk about practical experiences, one of the authors has worked in Philippine as a

part of a BPO industry. His further experiences include working in organizations like

Trade Development Authority Pakistan and ENS Umea University. While the second

authors have experience as an internee in telecommunication company and selected by

Marcus Evan Company as a business developer for Business Intelligence Services, that

developed a good knowledge to understand business activities of companies and trendsin the market. Both authors have also worked at Uminova Innovation, which is Umea

Universitys Business Incubator.

We believe that these theoretical and practical preconceptions positively affect our

perception towards International Businesses and have broadened our vision. We think

this will help us in better understanding of the subject, conducting this research and

better interpretations. There is always a possibility that preconceptions can have some

negative impact on the research. Therefore, we will try our best to be neutral, and un-

biased. Our mission will be to produce, as much objective knowledge as possible,

without being affected by our preconceptions.

2.3 Research PhilosophyResearch philosophy means: the nature of knowledge and how that knowledge will be

produced (Saunders et al., 2009, p. 107). It contains essential statements concerning the

way author view the world and it helps to construct research strategy and the methods

used as part of that strategy. The adopted philosophy is influenced by practical

considerations: where the main influence is the particular view of the relationship

between the knowledge and the process by which it is developed (Saunders et.al, 2009,

p.108).

Philosophy of this research is ontologically constructionist that asserts that social

phenomena and their meanings are continually being accomplished by social actors(Bryman & Bell, 2009, p.23). For this research, paper concepts will be developed

through existing knowledge from literature. Thus, the reality will be constructed on the

basis of available literature which describes different distinguishing characteristics of

BGs and the process by which BGs come into existence. Literature also explains the

role of the important factors and actors, where different researchers have interpreted

them in different way and we are going to study it from an Effectuation perspective. So

the reality is socially constructed. As the purpose of our study is to produce a better

understanding and enrich the existing theories thus it will be done by the review and

synthesis of data from existing theories. Thus we can say that, our research is a

combination of deduction and induction. In the same way Interpretivism is an

epistemology which advocates that, it is necessary for the researcher to understanddifferences between humans role as social actors (Saunders et.al, 2009, p.116). In this

research, we will consider the subjective discussion and opinion given by the previous

authors.

2.4 Research DesignResearch design is considered a general plan of how to turn research question and given

objectives into a complete project: with consideration of, adopted strategies, choices and

time horizons (Saunders et.al, 2009, p.137). As in this research we are trying to have a

better understanding of BGs with an objective of interpreting them in an entrepreneurial

perspective of Effectuation, thus it is comprehensible, that an exploratory research can

better clarify and explain our research. An exploratory study is valuable means of


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finding out what is happening: to seek new insights: to ask questions and assesses

phenomena in a new light, Robson (2002) (cited by Saunders et.al, 2009, p.139).

For the same reasons Our Systematic Literature Review was to collect the best

possible available information related to problem area in order to develop a framework.

We have developed an inclusion and exclusion criteria in other to keep only reliable andauthentic literature that will further keep a higher quality of the research. As the

phenomenon of our research was to see how entrepreneurial perspective can define the

rapid internationalization approach. Therefore to develop a significant insight, a

framework was developed from available internationalization theories, models and more

importantly the BGs that is the core area of the research. We mainly considered the

basic areas of the study and generated relevant literature systematically from web of

science data base. Therefore we adopted a longitudinal process with a holistic approach

rather than conducting interview or selecting some specific cases. Similarly literature

relevant to entrepreneurial perspectives was gathered from Sarasvathy articles, books

and journals that broadly explained the core areas: causation and effectuation.

As we were dealing with two core ideas BGs and entrepreneurial perspectives therefore

our starting aim was to describe, develop, correlate and make explanations in the

interested area to further predict the phenomena, such process is almost similar in other

studies (Bunge, 1997; DiMaggio, 1995; Sutton and Staw, 1995; Weick, 1995).

The generated information in the developed framework was further analyzed and

discussed. As a result of knowing extensively from literature about BGs and two

perspectives, we were at the position to make comparisons and explore areas where

entrepreneurial perspectives has a role in defining and development of BG SME firms.

2.5 Research StrategyQualitative and Quantitative are two main strategies available for research studies andselection of research strategy further determines selection of different methods that will

be used for data collection (Kekle & Borelli, 2009). According to business dictionary,

a qualitative research is associated with subjective quality of a given phenomenon and

knowledge of qualitative aspects is gained through interpretive understandings of the

underlying phenomenon (Business dictionary). Our study is based on key, concepts

BGs, which requires more subjective knowledge providing better understanding of

different context as well. Therefore based on the research question, philosophical

constructs and the mentioned objective of the research, the choice of the research

strategy is qualitative. Which asserts that, subject is not quantifiable, but can be based

on deep explanation and understanding of the phenomenon.

2.6 Research MethodsIn order to have a good understanding of the existing knowledge about BGs and to

evaluate contribution of previous studies, we decided to start with a well-organized

systematic review of literature. This review was also helpful in performing a scientific

analysis leading to identification of research gaps in subject areas (Ginsberg &

Venkatraman, 1985). With the application of logically connected and well-defined

procedures of data collection, evaluation and categorization, we have tried to maintain

the quality of our research. We believe this approach will increase the understanding,

transparency and standardization of our review process and will differentiate it from an

unstructured review (Tranfield et al., 2003). Although there were several challengeslike, time constraints as compared to number of articles, their examination to see


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relevancy with and then finding logics for their use and synthesis of theoretical

framework. However, we believe we followed a scientific approach that helped us in

accomplishing the objectives of our study within our limitations (Pittaway et al. 2004).

The data collection process can be divided into following three steps, data collection,

and data analysis and data synthesis.

2.7 Data CollectionData can be collected by utilizing several methods, for example; a researcher having

knowledge in specific area can look for relevant articles based on his understanding

related to phenomenon. Relevant data can also be searched by using specific keywords

in several databases. In addition, involvement of a specialist team can direct a

researcher towards relevant literature.

Thus, data collection can be more debatable and arguable. Therefore In order to

eliminate the prejudice argumentation related to subjective nature of data collection, we

based our study on systematic review with predefined eligibility and selection criteria.

In this connection, we will search for data that is relevant, rich of information andhelpful to support our subsequent argumentation. Therefore, In order to strive for

relevant literature, we mainly used Web of Science database to look for scientific

articles and journals.

2.8 Data AnalysisData collection, analysis and verification of proposition are very much interrelated and

interactive set of processes (Sander et al, 2009, p.488). For example analysis can also

occur during collection of data and after selection of data, in this way data analysis

during data collection directed us to specific and relevant data to shape our literature

framework in a consistence way.

Based on research objective, analysis can be performed in several ways. However, the

result of analysis will depend on the review of the articles that are selected during data

collection process carried in several methods. Thus, an analysis aimed to reflect the

combined contribution of several empirical studies could be performed both

qualitatively and quantitatively. But a qualitative analysis is considered superior to

support meta-analysis (Hunter & Schmidt, 1990).

Aim of our review was to develop a conceptual insight and a broad overview to

understand BGs and the core areas in a coherent way. Therefore, in our analysis, we

restricted to explanation based on subjective quality rather than statistical interpretation.

As in our study, we have used key concepts of BGs, and entrepreneurial perspectivesthat are qualitative in nature. Therefore by using pattern matching and explanation

building techniques in accordance to the nature of the phenomenon, we followed

qualitative data analysis. In order to be more precise we further followed eyeballing

technique to search to reach a conclusion. The pattern-matching is not a precise science

and thus the researcher should look for gross matches and mismatches in which even

an eyeballing technique is sufficiently convincing to draw a conclusion (Yin, 1994

cited by Grossan & Apaydin 2010, p.1155).


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3 Causation and EffectuationApproach

This chapter focuses on entrepreneurial perspectives of Causation and Effectuation.

The chapter also describes various principles of these entrepreneurial perspectives.

3.1 Causation and EffectuationCausation and Effectuation are two perspectives which are involved in any

entrepreneurial venture development process. According to Sarasvathy: the creation of

artifacts relies on two notions: Causation that is based on prediction logic while

Effectuation that is based on control logic (Sarasvathy, 2001, p.243). Both are

considered essential areas of human reasoning and entrepreneurial decision-making.

Causation: a Causation process take a particular effect as given and focus on selectingbetween means to create that effect (Sarasvathy,2001, p.245).

Effectuation: Effectuation, take a set of means as given and focus on selecting

between possible effects that can be created with that set of means (Sarasvathy, 2001,

p.245)

Suppose, to develop a new firm the Causationprocess will focus on a goal (new firm)

as an effect and will set off for different means i.e. market research, segmentation,

marketing strategies and several other analytical efforts to predict the uncertain future.

On other side, Effectuation begins with possible means i.e. What they know? Whom

they know? Who they are?, their knowledge corridors and the social network,(Sarasvathy, 2001, p.249). After recognizing the means, Effectuation involves focus on

other actions like: search for investor, strategic partners, or opening a counter in existing

business. However, the basic thing that differentiates and distinguishes between

Causation and Effectuation is the perspective towards means and effect. Setting a

particular effect as a goal first and then selecting particular set of means to create that

effect is Causal perspective. While on the other hand identifying the available means

first and then recognizing the set of possible effects that can be created from these

means is Effectuation, where the selection of a particular effect is determined later.

Therefore, we can say that, Causation model can be mapped as many to one, while

Effectuation is one to many (Sarasvathy, 2001, p.245).

Causation ----------Effects-------------Means

Effectuation--------Means------------ Effects


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Effectuation Process of a Firm

Fig.2, self developed, Based on the explanation made by Sarasvathy (2001, 243-263).

To concise the whole discussion, the core difference between Effectuation and

Causation mentioned by Sarasvathy are as follows:

Causation is the maximization of a potential return for a particularly selected decisionby selecting optimal means and the strategy to use those means, while Effectuation is

experimentation based, where means are identified first and an affordable loss is

predetermined, and then focus is on experimenting as many strategies as possible. The

effectuator prefers long term benefits as compared to short term returns (Sarasvathy,

2001, p.252).

Causation is more focused on competitive analysis, while Effectuation focuses on

strategic alliances and pre commitment to involve stakeholders to create synergic effects

like, reducing uncertainties, increased capabilities and resources (Sarasvathy, 2001,

p.252).

Effectuation can handle surprises in a better way and is more flexible in terms of

exploiting opportunities that arise out of contingencies, while Causation is better

structured to exploit pre-existing knowledge (Sarasvathy, 2001, p.252).

In Causation the logic is, if we can predict the future, we can control it. The focus is on

predicting the future first and then controlling it. Effectuation contradicts by arguing

that, we should focus on the extent of future which we can already control, thus we do

not need to predict it (Sarasvathy, 2001, p.252).

To understand Causation and Effectuation from different entrepreneurial characteristic

two summarized tables are derived from Sarasvathy articles with clear specific areas.


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Table. 2, Causation and Effectuation Differences by Sarasvathy (2001, p.25).

Contrasting Causation and Effectuation

Categories of Differentiation Causation Process Effectuation Process

Givens Effect is Given Only some means or tools are given

Decision Making Help choose between means to achieve the given effectHelp choose between possible effects that can be created

with given means

Selection Criteria

Selection criteria based on expected return

Effect Dependent: Choice of means is driven by

characteristics of the effect the decision makers wants

to create and his or her knowledge of possible means

Selection criteria based on affordable loss or acceptablerisk

Actor dependent: Given specific means, choice of effect

is driven by characteristics if the actor and his or herabilities to discover and use contingencies

Competencies Employed Excellent at exploiting knowledge Excellent at exploiting contingencies

Context of relevance More ubiquitous in nature More ubiquitous in human actions

Nature of UnknownsFocus on the predictable aspects of an

uncertain futureFocus on the controllable aspects of unpredictable future

Underlying LogicTo the extent we can predict future we can

control itTo the extent we can control future, we dont need to

predict it

Outcomes Market share is existent through competitivestrategies

New markets are created through alliance andcooperative strategies


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The Theory of Effectuation

Fig. 4, Effectuation Model by Saravathy (2001, p. 251)

Causation is upside down because it is effect dependent and is excellent in exploiting

pre-existing knowledge and focus on the predictable aspects of an uncertain future,

while Effectuation is downside up process. It is actor dependent and excellent at

exploiting contingencies and focus on the construable aspect of an unpredictable

future. (Sarasvathy, 2001, p.250).

Some of the contrasting difference between effecual and casual logic are mentioned in

the table 4. It show the findings of several emperical studies conducted to see if

entrpereures use effectual elements in developing new ventures, Dew et.al (2008, p .46)

Who I am (t1...t...)Individuals level:

Traits, tastes and abilities

Firm level:

Physical resources

Level of economy:

Demographics

What I know (t1.., t2...)

Individual Level:

Knowledge corridors

Firm Levels:

Human Resources

Level of economy:

Technology regimes

What I know (t1, t2...)

Individual Level:

Social networks

Firm Levels:

Organizational Resources

Level of Economy:

Social politicalInstitutions

The Effectuations

(given) set of means

Effect 1

Effect 2

Effect 3

Effect

Effect

Effect

Effect

Effect

Effect

Effect

Effect

The Effecuators

(Contingent) Aspiration

The logic of

Control

Strategic

Partnership

Acceptable

Risk

Affordable

Loss

Immigration

Contingencie

Human Aspiratiion T1






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Table. 3, Contrasting Casual and Effectual Logics, Dew et.al (2008, p .46).


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3.2 Key Principles of Effectuation and Casual ContrastSarasvathy developed five distinguished set of principles that were named Effectuation

Principles. All of these principles deal with uncertainty.

1. The Bird in Hand Principle: this principal is based on assessment of means.

(Who am I? What do I know? Who do I know? Where entrepreneurs emphasizes and

focus on creating something new with existing means, rather than discovering new

means to achieve some predetermined goal (Sarasvathy, 2008, p.15). It is a more action-

based principal that says: Instead of waiting for the opportunity and right time we

should act and create an opportunity. Nevertheless, the action should be in connection

with possible available means to create that opportunity.

According to Sarasvathy there are normally two methods complete a business task

(2008, p.15) the causal logic and effectual logic. The casual logic forces an entrepreneur

first to develop a goal and onward analyze the market for best possible opportunity.

When an opportunity is explored with a regular search then effective marketing

strategies are adopted. For the same purpose Kotler (1991) process for market entrance

to launch a new product or service is the best example that can explain the typical causal

logic. Thus causal procedure starts with the following assumptions that are derived from

Saravathy book on Effectuation (2008, p.77).

1. Analyze the long term opportunities in the market2. Research and select target markets

a) Identify segmentation variables and segment the marketb) Develop profiles of develop segmentsc) Evaluate the attractiveness of each segmentd) Select the target markete) Identity the possible positioning concepts for each target segmentf) Select, develop and communicate the chosen positioning concept

3. Design marketing strategies4. Plan marketing programs5. Organize, implement and control marketing effort, (Sarasvathy (2008, p.75).

Thus, the causal logic is a complete rational process based on evaluation of effective

methods to explain the opportunity and calculate the expected outcomes. An

entrepreneur move from a general wide market to a most advantageous segment that is

predetermined through a developed plan.

The second contrasting way to solve or organize task is Effectuation. In effectuation an

entrepreneur follows a bird in hand principle that can be adopted both at individual and

firm level. They utilized available set of means that are entrepreneur taste, trait,

abilities, the knowledge, and social networks. At a firm level it is Physical resources,

Human resources, Technology, organizational resources and sociopolitical institution.

On the basis all these available means are made a starting point. Entrepreneur directly

takes action without broad planning and creates an opportunity rather the waiting for the

opportunity. In this way innovation and creativity take place by utilizing available

means and creating venture rather than predicting.

2.The Affordable loss Principle: this principle suggests that, instead of focusing onhistoric data and future prediction, entrepreneurs should focus on calculating affordable


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loss and possible ways to limit that loss. It prescribes committing in advance to what

one is willing to lose rather than investing in calculations about expected returns to the

project(Sarasvathy, 2008, p.15).

Again if we look into Kotlar principles, casual logic aims to increase the expected

return. It adopts the best possible strategy that can increase the predicted outcomes. Inthese way entrepreneurs makes marketing calculation and come up with future sales

estimations, cost of the production, and the capital that is required in venture

investment. Thus in a causal process entrepreneurs have an estimated budget for all kind

of expanses and future investment. Hence this process can be expansive and timing

consuming and searching for enough capital to make it happen in advance.

In contrast effectuation logic is independent of prediction, an entrepreneur tries to

estimate the down side and examine what he/she is willing to lose in order to start the

venture (Sarasvathy, 2008, p.81). For the same purpose entrepreneur tries to involve

other stake holders to develop the venture successfully from the very beginning. In this

way all resources are utilized and more options for success are developed. In order tomake calculation of the affordable loss, an entrepreneur needs to know their resources

and commitment in order to be prepared for worst situation. Thus Effectuation is a sort

of cognitive logic to think how one can utilized his knowledge, skills, and limited

financial resources to start a new venture and draw limits for investment. All

informations are in the control of effectuator, while in casual logic informations are

not in the control of entrepreneur but dependent on effect that he want to create. For

example for an effectuator if one door is closed he can find other door according the

strength of his means, commitment and action, while in causation one have to follow

one direction to reach goal and in case of failure he will not make profit.

3. Crazy Quilt: In this principle, entrepreneurs are not supposed to be puzzled with

development of a competitive strategy or opportunity cost. They are supposed to

develop partnership with stakeholders who are ready for actual commitment

(Sarasvathy, 2008, p.15).

In the third principle, effectuation supports cooperation and alliance development while

causation is based on based on competitive analysis development. Effectuators develops

partnerships, alliance and further build up stakeholders pre-commitment from the very

beginning of the action. The alliance is not develop after knowing the project or goal but

it is develop from the beginning in order to eliminate the role of risk and uncertainty

from the start. Thus stakeholders join the venture without knowing the future cost and

opportunities. According to Sarasvathy A bird in hand is worth two in the bush

(Sarasvathy, 2008, p.15). In short, products, firms and markets are developing by joint

working in a partnership either with people or organization.

Sarasvathy in her book Effectuation mentionedthat causal logic is similar to Porter

model in strategic management: emphasizes on detail competitive analysis (2008,

p.88). Such analysis enhances understanding to know about competitor objective, his

strategy, and resources. Thus competitor analysis is considered very important in the

strategic planning. Hence, effectuation considers partnership to build up future, while

causation focuses on competitive analysis to compete with one another.


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4.lemonade Principle: this principle suggest that acknowledging and appropriating

contingency by leveraging surprise rather than trying to avoid them, overcome them, or

adopt to them (Sarasvathy, 2008,p.15).

For an effectuator the un-expecting events and happening are considered as

opportunities, thus contingencies are welcomed and not avoided. According to

Sarasvathy When life give you lemon make lemonade (Sarasvathy, 2008, p.90).

Contingencies give opportunities and possibilities that can be completed interestingly

and entrepreneur need to get hold on the emerging happenings rather than avoiding.

In contrast the effectual logic is against the unexpected events because everything is

planned and predetermined. For planned business contingencies may not considered as

opportunities because it can increase risk and uncertainties and are considered errors.

5.Pilot in the Train: This principle focus on working practically rather than thinkingtheoretically. It Urges to relying on and working with human agency as the prime

driver of opportunity rather than limiting entrepreneurial efforts to exploiting exogenous

factors such as technological trajectories and socio economic trends (Sarasvathy, 2008,

p.16).

Both logics seek to control the future but with different approaches. Causation focuses

on the predictive aspect of an uncertain future, it says that the extent we can predict the

future, we can control it Sarasvathy (2008, p.91). While effectuation stands on

controllable aspects of un-predictive futurethat is not planned. Thus future comes from

what entrepreneur and his co partners want to decide and their commitments. Hence,

effectuation logic here is to the extent that we can control the future, we dont need topredict it Sarasvathy (2008, p.91). When the future is predicted may be it is not

controlled, but when actions are controlled by means then future dont need prediction.

3.3 Dynamic Model

The dynamic model is presentation of the effectual mecahnism that illistrates the

operation of effectual entrepreurship in creation of a venture (Sarasvathy & Dew,

2005,p. 543).

In the dynamic model in Fig 6, the project starts questioning who I am, representingentrepreneurial traits, abilities and resources, what I know, the knowledge corridor and

whom I know the social networks. With available means that are the information and

resources lead an entrepreneur towards possible actions. Thus an entrepreneur is not

searching for an opportunity but, utilizing their available means to create an

opportunity. It further reaches to self-selected stakeholders who makes commitments on

the venture and shares their knowledge, skills and increases the resources of the venture.

Hence, this process is continuously developed with a network of stakeholders that later

results into a new market, products or services. All the core principles of effectuationare applied at each stage of processing and the model repeats itself at the end with new

means and resources.


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Fig. 5, Dynamic model of Effectuation, by Sarasvathy (2008, p.101).

In contrast to the dynamic model, causal process begins with exploration and

exploitation of the markets that are more predictable. Here entrepreneurs first explorethe market and recognize or discover the market opportunities. It is followed by a

series of tasks to exploit the market opportunities. The standard set of causal tasks

includes (a) developing a business plan based on (b) extensive market research and(c)

detailed competitive analyses, followed by (d) the acquisition of resources and

stakeholders for implementing the plan, and then (e) adapting to the environment as it

changes over time with a view to (f) creating and sustaining a competitive (Sarasvathy

& Dew, 2005, p. 543).

3.4 Summary

This chapter outlined the key prespectives that are going to inform the subsequentanlaysis. It developed and understading of decision making related to entrepreurial

exptise: casuation and effectuation that are two contrasting logics involved in venture

creations. The causation process is more predictive and rationally planed process where

entreprure follow a certian rules, keep the goal clearer and abdopt possible means to

reach that goals. While the effecutal process is based on non predictive control logic,

where means are utalised to see what can be best possible produced rather then planning

and predicting. Casuation follows kotlar priniciples of marketing and is considered to be

more useful when the product idea is converged and business is devloped. Such

convergens need no replication for further extenstion but need to scale the busniess.

While effecutaion birngs people on bord and develops its own business opportunities

and limit the associated risk by analysing each step if they can afford. Effectuation is

based on the its own five priciples that keeps to shape the future rather then prediction.

Hence both effectuation and causation are completly crotradictary logics on goal

development, decisionmaking, market competition development and future unespected

happenings. The principles that develops effecual logic sucessfully, seems to be errors

or can be associated with risk and uncertainity in caual logic. Both logics play very

important role in venture development and decision making. To know the best opstion

one must know the pros and cons of each performance for the projects.


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4 Review & Synthesis of BG Studies

This chapter is composed of literature related to BGs and Internationalization models.

It is divided in two parts the first part is related to data synthesis process, while the

second part describes our theoretical framework for BGs that is developed by

synthesizing data from the review of previous literature. Data is mainly categorized

into distinguishing characteristics of BGs i.e Pace Scale and Pattern. The underlying

factors giving rise to these distinguishing characteristics and the role of these factors in

various developmental phases of BGs (Venture Creation, Internationalization and Post

Internationalization).

4.1 Data SynthesisData synthesis is the primary value-added product of a review as it produces new

knowledge based on thorough data collection and careful analysis (Grossan & Apaydin2010, p.1157). Our data synthesis process was mainly comprised of three steps.

Step one

In first step, we analyzed collected data related to entrepreneurial perspectives and

compiled our chapter related to entrepreneurial perspectives of Causation and

Effectuation. All the data related to entrepreneurial perspective was generated from

Saravathy published literature. While data obtained on internationalization was from

several theories, models, and published articles. The next step was to organize the data

systematically. For the same purpose we developed two chapters: chapter three based on

causation and effectuation while chapter was based on the review and synthesis of BGsfirm. The two chapters idea was to clearly explain the core areas individually and later

make correlation. Thus, causation and effectuation were broadly explained theoretically

and presented along with key four principles in tables and figures. Similarly the data

generated from articles and theories of BGs were divided into mainly two dimensions,

the internationalization processes, and the Born Globals. Internationalization processes

explained all the previous models, trends and development in the internationalization

process, while the second parts mainly focused on the internationalization of BG SMEs.

Step two

The second step was more critical and analytical, in which we reviewed previousliterature related to BGs. In this step we developed a theoretical framework for BGss

distinguishing characteristics of Pace Scale and Pattern. Although the criteria of Pace

Scale and Pattern was already developed in few earlier studies But in this study we tried

to make it more comprehensive by fetching data from several other articles finding its

logical connections and then categorizing it to the defined categories. In order to raise

the depth of our study we further categorized these characteristics into their sub

categorize, which were composed of factors giving birth to these distinguishing

characteristics. Data was further analyzed to find links towards role of these underlying

factors in the development of BGs. Later based on relevance and logical connections,

these links were categorized in different developmental phases of BGs (Venture

Creation Internationalization and Post Internationalization).


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Step three

In third step, data from first two steps was analyzed and interpreted in a way to find the

logical connection between BGs and entrepreneurial perspectives. Our aim was to

ultimately answer the research questions and fulfill the purpose of research. For thesame purpose systematically developed literature from preceding chapters made it easier

to conduct analysis of designed data. In the succeeding chapter all BGs distinguishing

characteristics were allocated into three phases according to their similarities and

properties. Thus, in the step three we developed two dimensions: causation and

effectuation, and correlated each phase based on BG characteristics to see if these

phases have links to effectuation and causation. Each phase was broadly explained and

compared with effectuation and connections were developed. In the same way we

approached to the last part of concluding comments obtain from analyzed data in order

to answer the research question.

4.2 Methodology DescriptionIn order to precede our study and present data in coherent way, we followed Tranfield

three stage processes that include planning, execution and reporting (Grossan &

Apaydin 2010, p. 1157). In first stage of planning, we clearly formulated our research

objectives and focused on relevant and significant data from Web of Science database.

We aimed to develop a conceptual input, to generate knowledge about BGs,

differentiate such firms based on distinguishing characteristics compared to traditional

incremental internationalization and analyze them in terms of entrepreneurial

perspective. We limited our search to most citied, highly reviewed and most recent

articles. This systematic process for literature selection thus increased validity of theknowledge and showed potential in the field (Podsakoff et al, 2005). For the whole

selection process, we followed Web of Science database, which provided a

comprehensive coverage to the world papers and provides a meaningful data, based on

its unique features and researchers needs. This database made it easier to search for

most citied, revived and recent articles along with proceeding and refining contents. In

second stage we have five parts; the first three are related to data collection and

organization, while the last two are more associated with processing and analysis. Thus

the second part of data review includes, (1) Initial Selection Criteria, (2) Grouping

Publication, (3) Data Compilation, (4) Data Classification and (5) Data Synthesis

4.3 Initial Selection Criteria: Key words and Search TermsTo generate published information systematically, we focused on a comprehensivesearch to be unique from traditional way of searching information. However,

traditional 'narrative' reviews frequently lack thoroughness, and in many cases are not

undertaken as genuine pieces of investigatory science (Tranfield, 2003, p.207). As

internationalization is a wide topic and BGs is a form of internationalization, therefore,

in order to be more systematic and specific, we developed our selection requirement. In

this way, database was limited to Web of Science, and only business and management

category as a subject area were selected. The basic keyword used for the initial search

was Born Globals and its characteristics. For example, Topic = (Born Globalss),

Refined by web of science categories = (Business). In order to get knowledge and

understand the international phenomena, there was a need to read all-important articlestitles and abstracts of BGs firms. So we did not put any further restriction at initial


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search. At first search, we found 400 samples of papers that develop a base for the rest

of study, later on we further refined the search with BGs characteristics and other

relevant areas.

4.4 Grouping Publication

The core purpose of our research was to comprehend clearly the extensive literaturerelated to the BG firms in order to develop a base for the study and to come up with

some specific research area. Therefore, for a theoretical foundation we constructed four

groups systematically. First group was based on articles reviews and meta-analysis,

while the second selected group was based on citation criteria. In similar way, the third

group was based on the most recent publications. We selected some books in-group four

for a holistic view of the phenomenon because articles are published with a specific

objective and not fully covering all areas. In group four we also followed some articles

and books from Science Direct and university data base. In case of duplication, we

focused on main themes of groups, regardless of the other group characteristics. For

example, in group one, the subject was to collect all articles based on review or Meta-

analysis, there might be some articles that were highly viewed and at the same time canbe highly cited, but we have to put them in group one regardless of their overlapping

with group two. However, in other groups we eliminated the duplication as the papers

were already selected in former groups.

4.5 Compiling the consideration SetIn order to practically generate the available literature from Web of Science database we

used two titles and two topics i-e Title= (Born Globals) OR Topic= (Born Globals) OR

Title= (International New Venture) OR Topic= (International New Venture). Hence, a

total number of 6837 results were obtained having Born Globals and International new

venture in the topic or title. In order to condense this pool of data result into more

specific context, we refined the search criteria to business and management literature.Thus, we obtained results 400 papers.

Group 1: Review and Meta-analysis: In order to classify articles based on reviewand Meta-analysis we focused on the 400 refined articles for further purification. Again,

we limited our search to only review and a total number of 39 papers were obtained. We

did not include the rest of paper that were preceding papers, editorial material and book

chapters.

Group 2: Highly Cited Papers: Analysis based on citation validates quality of theresearch paper and takes part in knowledge contribution, generation and further

development (Saha et al, 2003). As we started with title and topic search a total numberof 6837 papers were obtained. Out of this big total result, 400 articles belonged to

business and management area. For citation purpose, we considered 1992 as a base year

and for highly citied articles in the last 20 years. The lower limit for citation was

selected 10 to any higher value. Thus, we obtained a total number of 121 articles by

excluding the books, preceding papers and editorials. These 121 were still complicated

to generalize therefore we further reduced it by reading their titles and abstract in order

to be more specific and decrease the overlap with group one.

Group 3: Recent Papers: The citation and review methods for articles selection can be

more subjective and favoring articles published years back or older ones. It can show

biased result for the most recent articles as being published recently and not yet getcitation and reviews. Thus, we formed a group representing recent publication because


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such publication explore new area in filed and discover new dimensions. Therefore, we

obtained 125 articles published during 2010 until 2012. In order to reduce the number to

be more specific, we eliminated the articles that were overlapping with other groups.

Group 4: In group four we included books from Science Direct as required for a

holistic view of the problem area, because articles are written with a specific purposethat limit other areas of interest. We obtained a total number of 10 books according to

search criteria, and seven books were used in this study. We also followed research

books from university library in order to be aware of research procedure, structure and

laws of conducting pure theoretical research. In some situation, we needed to reach the

primary source mentioned in secondary data so some articles were generated from

Science Direct database.

Table. 4, Paper distribution in each group.

Chart. 1

Published articles on BGs and International New Venture. Derived from Web of

Science Data base.

Group Initial Pool BusinessRelatedLiterature

Filtered AbstractAnalyzed

Group-1:

Highly ReviewedPapers

6837 400 39 25

Group-2:

Highly Cited Articles

6837 400 121 30

Group -3:

Recent Papers6837 400 125 19

Group-4:

Books6837 400 10 7

Total 400 292 81


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Chart. 2, The Pie chart shows the number filtered papers for different groups out of 400

papers that belong to business and management area from total pool of 6837 papers.

Chart. 3, The pie chart presents the analyzed papers contribution of each group.


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4.7 Internationalization ProcessesInternationalization related to SMEs can be viewed as a holistic approach by focusing

on different theories and models. It is not important to follow a single approach for

internationalization process; firms can follow some parts from different theories to

develop its internationalization process. Hence, there is no generally acceptable model

that can assure an SMEs successful international operation. Several approaches have

been developed, but our study will focus on the main areas that captured international

importance. Therefore, the main areas i.e. the Stage Models, International New

Ventures Theory and Network approach will be explained to get an overview of

internationalization.

4.7.1 Stage ModelsVermon in 1960s developed three-stage model based on product lifecycle and

international trade. He suggested that new products are produced in home countries

because of domestic environmental favorability and awareness of market trends that

encourage innovation. After local market success, the products are lunched

internationally by exporting. As the company gets maturity in the local market and the

product obtain international orientation due to standardization and increase in demand,

the company focus on huge production to get economy of scales. While In the maturity

stage, companies approach to low advanced countries for foreign direct investment to

further minimize the production cost and new international markets links to explore.

This theory showed how product could be locally produced and gradually moved

internationally with cost minimization (Vermon, 1966, p.190-207).

Second stage model was developed by Johanson and Vahle (1977) and is based on the

behavioral approach of a firm. It has similarity with Vermon stage model. In both cases

firm initially get experience in domestic market and then internationalize incrementally.

In Uppsala model, the mechanism is based on the gradual internationalization with

process of increasing market commitment and knowledge. It focus on four stages of

internationalization i-e (1) No regular export, (2)

Born Globals and Entrepreneurial Perspective

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