Learning in the Internationalisation Process of Firms

Citation

Rodriguez, C.M. (2004), "Learning in the Internationalisation Process of Firms", International Marketing Review, Vol. 21 No. 1, pp. 121-124. https://doi.org/10.1108/02651330410522952

There has been considerable research and effort focused on understanding the internationalization process of firms as well as learning the steps organizations take in this process and that impact their performance overseas. Different perspectives on internationalization have suggested models such as the international product life cycle model (Vernon, 1966), the innovation‐related international model (Andersen, 1993), the adaptive choice model (Lam and White, 1999), and the Uppsala internationalization process model (Johanson and Vahlne, 1977). Lately, Fletcher (2001) has suggested a holistic approach to internationalization supported on the notion that firms internationalized by inward and outward‐driven activities. The author suggests that a complex form of behavior characterized this perspective and that decision‐making is multidimensional and multifocal.

Professors Blomstermo and Sharma bring to this debate the perspective of knowledge and learning, and how organizations build cognitive capabilities as the firm progresses from exporting, to a full commitment to overseas production. This refreshing perspective is presented through an ensemble of the finest collection of research to date on the understanding of the internationalization process of firms and the role of knowledge and learning within it. Supported on the initial contribution of (Johanson and Vahlne, 1977), the book is organized starting with a review of firm's internationalization models and an introduction to the role of knowledge and experience in the internationalization process. It follows a deep presentation of a network perspective to knowledge accumulation and transfer particularly in explaining product complexity, integration of international business network relationships, and the relevancy of suppliers’ knowledge as the firm consolidates its internationalization process. Furthermore, this book explores the changes in organizational memory as a result of knowledge transfer and how firms benefit from inter‐organizational memory. The arguments suggest that knowledge can be acquired beyond the firm's experiential knowledge through long‐lasting relationships. The last section illustrates the main propositions on knowledge translation and the internationalization of SMEs in a unique international sample of countries such as New Zealand, Korea, and Finland.

The book by Blomstermo and Sharma merits several reflections on the topic of internationalization. First, as firms operate in international markets, they accumulate knowledge through experience suggesting potential opportunities to consolidate or expand operations. It follows a series of consecutive commitment behavior grounded where those experiences were acquired. Within this framework, it is suggested that knowledge determines the nature of the internationalization process. If so, how would this framework explain the organizational changes and strategic decisions that managers face in building competitiveness in international markets? It is not known how acquiring knowledge and learning mechanisms could explain the flexibility, responsiveness, and assessment required for firms to be competitive. Furthermore, should we consider an adaptive cycle as suggested by (Lam and White, 1999) with adaptive challenges and choices as proposed by (McKiernan, 1992) to complement the book's proposed framework.

Second, it is clear that knowledge constitutes an essential component of the firm's strategic foundation. International markets drive organizations to confront strategic, structural, and human resource choices (Lam and White, 1999), which must be resolved with a high degree of internal consistency. Apparently, managers see these choices as referring to particular markets and not much to familiarity with a counterpart (Chetty and Eriksson, 2003). Could the suggested knowledge and learning framework allow for a treatment of the critical challenges during change processes? Explaining why diversity in foreign markets is more important than familiarity may be a prerequisite to understanding the need for internal consistency when managers enter specific markets.

Third, it is a fact that international markets have become competency and capability intensive in recent times. This means that firms cannot exploit competitive advantages without developing internal and external support capabilities (Madhok, 1997) as a platform to strategic decision‐making. As firms become involved in international markets, they develop specific capabilities i.e. international marketing experience and R&D intensity (Atuahene‐Gima, 1995), customer relationships and supply chain management skills (Piercy et al., 1998), and the ability to develop new products (Cavusgil and Zou, 1994). These competencies and processes are rooted in knowledge structures developed through experience and acquired through experiential knowledge and network processes. But, how knowledge builds these specific capabilities is unknown. Most probably, knowledge by itself cannot explain the processes that lead to capability formation and development.

Fourth, survival in international markets depends on adjustment and renewal of capacities in strategy making processes (Burgelman, 1991). Such autonomous processes require renewal capabilities that foster experimentation and new learning and offer the organization the possibility of being adaptive to the environment over a long time horizon. Induced processes depend on adjustment capabilities that build on past success and exploit opportunities defined at the present time. It follows that in determining competitiveness, it is necessary to understand the capabilities that organizations possess at different levels. Higher‐order capabilities may eliminate the marginal impact of lower‐level capabilities, giving the firm competitive advantage. Thus, the source of competitive advantage may reside in higher‐order capabilities (Collis, 1994). Managers face challenges as to how best to develop and nurture the creation process that leads to these capabilities, which in turn improve their decision‐making. Diversity and depth of knowledge acquired through network ties and exchange become a prerequisite but may not suffice the development of these higher order capabilities.

New insights and a provocative perspective characterized the collection of papers edited by Professors Blomstermo and Sharma. As such, I appreciate their efforts and contribution to expanding our understanding of the internationalization process of firms. As always, new questions and research inquiries surface from such a rich and deep endeavor.