The Uppsala Model
1. Introduction
There is an abundance of models and theories which describe and explain internationalization, foreign entry modes and the foreign operations of firms (Elo, 2005). These models can be divided into two different perspectives: behavioural and economic (Elo, 2005, p.65). It is also suggested that the literature based on economic theory, which focuses on new market opportunities, internationalization, vertical integration and corporate growth, has been dominating. Whereas, behavioural related theories refer to a firm’s social and organisational side.
The business environment has changed considerably in terms of technology such as the internet, business practices, theoretical advances and the reduction of trade barriers due to globalisation, which have all provided new methods of working.
But what is internationalization? Internationalization in economics is viewed as a process of increasing involvement of firms in international markets (Susman, 2007). Whereas globalisation refers to the increase in global relations of people, cultures and economic activity, it is this increase in relations that facilitates a firm’s internationalization process.
As already stated there are many theories which try to explain the internationalization of firms. This essay evaluates the Uppsala model as an explanation for internationalization, and contrasts the model with the literature on ‘born global’ firms and the network model, which are behavioural theories. 2. The Uppsala Model
The Uppsala Model is a ‘stages’ theory developed by (Johanson & Vahlne, 1977) the framework explains how firms proceed towards internationalization. Their research was a longitudinal case study involving four Swedish firms who were already established aboard.
The 1977 model suggests that firms tend to internationalize in logical steps first to countries that are psychically close, this does not necessary mean close in nautical miles but close in psychic distance. The firms then move to
There is an abundance of models and theories which describe and explain internationalization, foreign entry modes and the foreign operations of firms (Elo, 2005). These models can be divided into two different perspectives: behavioural and economic (Elo, 2005, p.65). It is also suggested that the literature based on economic theory, which focuses on new market opportunities, internationalization, vertical integration and corporate growth, has been dominating. Whereas, behavioural related theories refer to a firm’s social and organisational side.
The business environment has changed considerably in terms of technology such as the internet, business practices, theoretical advances and the reduction of trade barriers due to globalisation, which have all provided new methods of working.
But what is internationalization? Internationalization in economics is viewed as a process of increasing involvement of firms in international markets (Susman, 2007). Whereas globalisation refers to the increase in global relations of people, cultures and economic activity, it is this increase in relations that facilitates a firm’s internationalization process.
As already stated there are many theories which try to explain the internationalization of firms. This essay evaluates the Uppsala model as an explanation for internationalization, and contrasts the model with the literature on ‘born global’ firms and the network model, which are behavioural theories. 2. The Uppsala Model
The Uppsala Model is a ‘stages’ theory developed by (Johanson & Vahlne, 1977) the framework explains how firms proceed towards internationalization. Their research was a longitudinal case study involving four Swedish firms who were already established aboard.
The 1977 model suggests that firms tend to internationalize in logical steps first to countries that are psychically close, this does not necessary mean close in nautical miles but close in psychic distance. The firms then move to
References: Bell, J., McNaughton, R., Young, S. (2001) ‘Born-again global’ firms An extension to the ‘born global’ phenomenon. Journal of International Management, Vol. 7, pp. 173-189. Bell, J., Crick, D., Young, S. (2004) Small firm internationalization and business strategy. International Small Business Journal, Vol. 22(1), pp. 23-56 Carneiro, J., Rocha, A., Silva, F Chell, E., Baines, S. (2000) Networking, entrepreneurship and microbusiness behaviour. Entrepreneurship and Regional Development, Vol. 12, pp. 195-215 Coviello, N., Munro, H Evers, N., Knight, J. (2008) Role of international trade shows in small firm internationalization: a network perspective. International Marketing Review, Vol. 25(5), pp. 544-562 Evers, N., O’Gorman, C Forsgren, J. (2002) The concept of learning in the Uppsala internationalization process model: a critical review. International Business Review, Vol. 11, pp. 257-277. Gabrieisson, M., Kirpaiani, M., Dimitratos, P., Solberg, C., Zucchelia, A. (2008) Born globals: Propositions to help advance the theory. International Business review, Vol. 17(4), pp. 385-401 Gary, A., Knight, S., Cavusgil, T Gilmore, A., Carson, D., Grant, K., O’Donnell, A., Laney, R., Pickett, B. (2006) Networking in SMEs: Findings from Australia and Ireland. Irish Marketing Review, Vol. 18(1-2), pp. 21-28 Hakeranson, L., Ambos, B Hashai, N., Almor, T. (2004) Gradually internationalizing ‘born global’ firms: an oxymoron? International Business Review, Johanson, J., Vahlne Johanson, J., Vahlne. J. (2009) The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, Vol. 40, pp. 1411-1431 Johanson, J., Mattsson, L Korsgaarf, S. (2011) Entrepreneurship as translation: Understanding entrepreneurial opportunities through actor-network theory. Entrepreneurship and Regional Development, Vol. 23(7-8), pp. 661-680 Kirzner, M Oughton, C., Whittam, G. (1997) Competition and cooperation in the small firm sector. Scottish Journal of Political Economy, Vol. 44(1), pp. 1-28 Finnish-Greek Business Network, Abo Akademi University Press Oviatt, B., McDougall, P. (1994) Toward a theory of international new ventures, Journal of International Business Studies, Vol. 25(1), pp. 45- Oviatt, B., McDougall, P Susman, G, (2007) Small and medium-sized enterprises and the global economy. 1st ed. Cheltenham: Edward Elgar Publishing.