Edited by Pietro Mazzola and Franz W. Kellermanns
Chapter 19: Internationalization Process
* Alvaro Cuervo-Cazurra INTRODUCTION The number of multinational companies (MNCs) has increased significantly in recent times. The United Nations Conference on Trade and Development (UNCTAD) World Investment Report indicates that in 1992 there were 35 000 MNCs, or firms with assets abroad, while in 2008 there were 78 817 (UNCTAD, 1992, 2008). This increase in the number of MNCs has been facilitated by technological advances in transportation and information and communication technologies, as well as by the liberalization of investment and trade that accompanied the structural reforms of the last third of the 20th century. Companies have moved out of their national borders in search of new markets, new and better inputs and new sources of knowledge. Theoretical advances explaining the internationalization process of firms, the sequence of events that a firm follows as it expands outside its country of origin, have not kept pace with real world events. More than three decades have passed since the key theoretical models explaining a firm’s internationalization process were developed: the innovationrelated models (Bilkey and Tesar, 1977; Cavusgil, 1980; Czinkota, 1982; Reid, 1981), the incremental internationalization model (Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne, 1977) and the product cycle model (Vernon, 1966). Although these models have been refined and updated over time, they have been challenged by new phenomena, such as the rapid internationalization of small high-tech firms (Knight and Cavusgil, 2004; Oviatt and McDougall, 1994). Additionally, further advancements in the world economy, such as global supply chains and offshoring and the internationalization of...
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