The international business landscape is ever-changing, and the concept of Born Global Multinational Enterprises MNEs has intensified a dynamic academic debate. Scholars like Oviatt and McDougall (2018) define Born Global firms as those “organizations that enter international markets early in their development, without using the home market for activities apart from the initial production of goods. A more thorough investigation is warranted by the claim that Born Global enterprises’ traits are strikingly similar to those of classic MNEs and that scholars who doubt the applicability of traditional theories are categorically incorrect. This discourse addresses the special features of Born Global firms, considering how technology entrepreneurship and certain skills can make them occur. Although this article acknowledges the value of traditional theories in certain contexts, it is promoted that a more comprehensive understanding might be required relating to both classical views and contemporary ones to adapt better to global commercial settings.
Similarities between Born Global Multinational Enterprises and Traditional Multinationals
Market differentiation and specific techniques can help Born Global and traditional MNEs gain a competitive advantage (Knight & Cavusgil, 2004). Born Global businesses may specialize in narrow markets to avoid direct competition with MNEs.
Born Global and traditional MNEs may build strategic alliances or networks to expand globally. Firms can access external resources and expertise through collaborative partnerships.
Both Born Global and traditional MNEs recognize how ICT facilitates international trade. Through digital media, both interact, market, and reach a worldwide audience.
Born Global and traditional MNEs prioritize international marketing due to global market diversity and client preferences.
Relevance of Traditional Theories
Uppsala Model
The Uppsala model argues that firms grow their involvement in foreign markets according to their acquired experiential knowledge (Johanson & Vahlne, 2015). However, Born Global firms challenge this sequential development by selling their products in many foreign markets almost from the start. The Uppsala model may misinterpret why Born Global firms internationalize so quickly. For instance, companies like Zoom or Spotify rapidly got an international scope without the step-by-step process of establishing themselves in other countries as the Uppsala model forecasted.
Eclectic Paradigm
According to Dunning (2015), the eclectic paradigm erects three factors: ownership advantages, location advantages, and internalization advantages as determiners of internationalization. On many occasions, Born Global firms use their ownership advantages, such as unique technologies or innovations, and internationalize quickly. 5 The eclectic paradigm might not wholly represent the fast and concurrent growth of the Born Global MNEs. Tesla illustrates how ownership advantages are instrumental in the astronomical speed at which Born Global companies can succeed worldwide.
Other Established Frameworks
Further international business insights are provided by transaction cost economics (TCE) and the resource-based view (RBV) (McIvor, 2009). TCE outlines why Born Global businesses use digital platforms and technologies to reduce international transaction costs and entry barriers. RBV’s emphasis on valuable and rare minerals aligns with Born Global’s focus on innovation and intangible assets for global competitive advantage.
Traditional theories provide excellent notions but do not explain why Born Global MNEs are unique. Classical values are supported by Born Global firms’ preference for innovation, digital technologies, and entrepreneurial leadership. Technological advancements have boosted economic globalization and interconnectedness, bringing conventional notions of gradual internationalization into question.
Critique of Academics Questioning Relevancy
Asserting that those academics questioning the relevancy of traditional theories to explain why so many MNEs are now going Born Global is all wrong is a very strong claim and should be carefully analyzed. Critically assessing both sides of this argument includes questioning the truthfulness of that statement and investigating whether there may be traditional theories, too, which are unrelated or if they offer good features under different circumstances.
Validity of the Assertion
Supposing these theories persist as feasible explanations of how and why Born Global MNEs emerged, developing so rapidly on the international stage suggests that anyone questioning their relevancy is “wrong.” However, the dynamic and changing global business environment, often transforming due to new technologies and paradigm shifts, questions the universal applicability of conventional theories.
Arguments in Favor of Traditional Theories
In some cases, these theories are still insightful, especially those related to more mundane multinational enterprises. For instance, TCE may still be useful in looking at the costs and risks associated with international transactions, while an intake of RBV may help us look into how firms tap into unique resources for global competitive advantage (McIvor, 2009).
Limitations of Traditional Theories
Born Global businesses challenge the assumptions of traditional ideas. Born Global MNEs employ rapid internationalization and may disregard the gradual and pragmatic Uppsala model. The eclectic paradigm’s emphasis on possession, location, and internalization may not fully reflect the distinctive characteristics and motivations of Born Global firms’ international locations. The reliance of Born Global firms on innovation, entrepreneurship, and digital technologies may conflict with traditional theories of resource accumulation and experience practices.
The Evolving Business Landscape
The global business environment underwent unparalleled changes concerning technological progress, processes of the worldwide interconnection and integration markets. Born Global MNEs are leading this change, and existing frameworks must be reconsidered. The statement that traditional theories are completely inapplicable may miss the fact of their contingent validity.
Conclusion
The assertion that academics who dispute established ideas are incorrect in explaining the expansion of Born Global Multinational Enterprises simplifies a complicated academic topic. Finally, this argument facilitates the debate. Even though Born Worldwide companies have some characteristics with traditional multinational enterprises (MNEs), such as market distinctiveness, worldwide alliances, and a concentration on unique resources, the global business landscape is dynamic and diverse. This is true even though Born Global companies have some characteristics. Finally, the academic community’s debate over whether traditional ideas apply to Born Global MNEs is beneficial. This discussion contributes to the development of existing frameworks for adjustment and enhancement. Academics who challenge conventional wisdom help to advance global economic understanding. This is done because context is critical, and a one-size-fits-all approach would fail to reflect the complexity of Born Global events.
References
Dunning, J. H. (2015). The eclectic paradigm as an envelope for economic and business theories of MNE activity. In International business strategy (pp. 60–84). Routledge. https://www.exeter.ac.uk/media/universityofexeter/internationalexeter/documents/iss/Dunning_IBR_2000.pdf
Johanson, J., & Vahlne, J. E. (2015). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsiders. In International business strategy (pp. 33-59). Routledge. https://www.academia.edu/3110860/The_Uppsala_internationalization_process_model_revisited_From_liability_of_foreignness_to_liability_of_outsidership
Knight, G. A., & Cavusgil, S. T. (2004). Innovation, organizational capabilities, and the born-global firm. Journal of International Business Studies, 35, 124-141. https://link.springer.com/article/10.1057/palgrave.jibs.8400071#:~:text=Born%20globals%20are%20young%20businesses,of%20early%20adoption%20of%20internationalization.
McIvor, R. (2009). How the transaction cost and resource-based theories of the firm inform outsourcing evaluation. Journal of Operations Management, 27(1), 45–63. https://doi.org/10.1016/j.jom.2008.03.004
Oviatt, B. M., & McDougall, P. P. (2018). Toward a theory of international new ventures. International Entrepreneurship: The Pursuit of Opportunities across National Borders, pp. 31–57. https://link.springer.com/content/pdf/10.1057/palgrave.jibs.8490193.pdf
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