Orientation, Environment and Strategy
- The McGill International Entrepreneurship series
Chapter 12: Conclusion: The Evolutionary Patterns of Change, the Emerging Trends and Implications for Internationalizing Small Firms
Hamid Etemad INTRODUCTION Although slow and evolutionary change has been with us for a long time, systematic change in the business environment started some time in the 1950s. International trade introduced comparatively advantageous goods and services, through exports, from one nation to another and inevitably introduced change, but the rate of diffusion of the change due to trade was comparatively low. International investment followed trade and foreign direct investment (FDI) gradually replaced the initial imports of traded goods.1 International investment introduced a qualitatively different change with a potentially higher diffusion rate than international trade (that is, exports and imports) because of higher involvement of investors than of traders. Inadvertently the subsidiaries of multinational enterprises (MNEs) became the systematic and consistent change agents as they introduced an innovative portfolio not only of goods and services but also of corporate practices and procedures which originated in their parent company environments (or headquarters). The early parent companies were mainly based in the United States and European countries. Their corporate research and development (R&D) laboratories created a continual stream of new products and services centrally, mainly in response to competition in their own markets in industrialized countries, and their modern marketing departments commercialized them with a vengeance to keep the competition at home at bay. When they expanded beyond their shores, naturally they took their innovations to other countries as well. This in turn enabled them to enlarge their sales and benefit from the associated scale economies worldwide. As a result the health...
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