Networks is the new main challenge in startup’s internationalization process

Summary

Innovation Skåne presents insights on the changing landscape of internationalization for startups, focusing on the pivotal role of networks. As businesses increasingly engage in global markets, the ability to integrate into multinational networks becomes critical. Traditional views emphasized overcoming cultural and geographical barriers, but now the primary challenge is becoming a part of global networks. The video highlights how small firms can leverage existing networks, such as IKEA, to achieve global reach. Examples include how a consortium called Sustainable Sweden Southeast successfully pooled resources to enter new markets. The overarching lesson is that collaboration, rather than isolation, enables sustainable international success.

Highlights

• The role of networks is crucial in the internationalization of small firms. 🌐
• Traditional barriers like cultural and institutional distances are less of a focus now. 📉
• New strategies involve integrating into multinational company networks for easier global reach. 🌍
• The shift in focus is how small firms can leverage existing large networks for international success. 🔄
• Successful examples include IKEA's network and Sustainable Sweden Southeast. 🎯

Key Takeaways

• Internationalization is shifting from focusing on geographical boundaries to integrating into global networks. 🌐
• Networks are pivotal for startups to achieve international success, more so than overcoming cultural barriers. 🤝
• Collaboration and joining existing networks can offer small firms global reach without extensive resources. 📈
• The liability of being a foreigner is less challenging than becoming part of international networks. 🌍
• Innovative strategies, such as replacing existing networks or adding new competencies, are essential for successful network integration. 🧠

Overview

In a world that's rapidly globalizing, the art of internationalization has taken a pivotal turn. Traditionally, startups were preoccupied with overcoming geographical and cultural barriers, viewing these as the main hurdles to international markets. However, the narrative is shifting. The real magic lies in network integration. The ability to piggyback off existing multinational networks like IKEA can make the difference between local stagnation and global success.

Let’s dive into the essence of networking in internationalization. It's not just about crossing borders anymore—it's about penetrating the maze of established networks. Imagine this: IKEA hoops onto the global stage, pulling small Swedish firms with it. Playing the network game allows startups to tap into markets that were previously out of reach, without the heavy lifting of going alone. The strategic alliances and collaborations have indeed become the modern passports to worldwide markets.

A case in point: Sustainable Sweden Southeast. Here’s a tale of small firms with grand aspirations. When they realized they couldn't conquer new markets solo, they formed a consortium. Together, they bid for international tenders and won. This example underlines a powerful lesson: going far means going together. Thus, while internationalization once meant brushing up on languages and cultures, it now calls for sharpening your networking prowess.

Chapters

• 00:00 - 01:00: Introduction and Speaker Background In the "Introduction and Speaker Background" chapter, Becky introduces herself as an evaluator for a project with an investment of $40. She mentions her professional role as an associate professor at Gothenburg University, where she conducts research on the internationalization of Swedish joint firms. Becky completed her PhD in 2011 and has been focusing on these issues in her studies since then.
• 01:00 - 03:30: Traditional View on Internationalization Challenges This chapter explores the challenges of internationalization with a focus on small and young firms. It underscores the critical role and importance of networks and networking in the process of internationalization. The chapter is a condensed overview of findings from 15 years of study, encapsulated within a short ten-minute summary. The discussion aims to provide insights into how networking assists these firms in navigating the complexities of expanding internationally.
• 03:30 - 06:00: Shift in Focus: Network Importance This chapter discusses the challenges and considerations associated with entering new geographical markets. The focus is on the differences in culture and the concept of cultural distances, which require strategic overcoming to achieve successful market entry. The Swedish ecosystem and international meetings play a supportive role, along with the activities of Business Sweden in France, to address these challenges. Network importance is highlighted as a key factor in navigating these new markets.
• 06:00 - 08:30: Global Networks and Value Chains The chapter titled 'Global Networks and Value Chains' explores the significance of both geographical and institutional distances in global industries. It emphasizes how institutional distances, which may include regulations and other formal structures, play a critical role in business operations and entry strategies. The discussion highlights that traditionally, research and support systems have considered these differences between the home and host markets as challenges that contribute to the 'liability of foreignness,' a concept where entering foreign markets entails certain challenges due to these differences.
• 08:30 - 11:30: Case Study: IKEA's Global Network This chapter discusses the challenges a foreign company like IKEA might face when entering a new market, specifically focusing on the concept of 'liability of foreigners.' It highlights the competitive disadvantage due to lack of familiarity with local culture and traditions when compared to local competitors. The chapter uses the German market as an example, explaining that a Swedish company like IKEA would need to invest time to learn and reach the same competency levels as local businesses.
• 11:30 - 14:30: Challenges of Network Integration The chapter discusses the challenges of network integration, particularly for Italy. It emphasizes the need for firms to redevelop specific advantages to overcome barriers in new markets. The focus is on creating a unique edge to compensate for the lack of local contacts, experience, and knowledge. It also highlights the importance of market selection procedures in internationalization.
• 14:30 - 18:00: Case Study: Sustainable Sweden Southeast The chapter discusses the challenges in selecting promoters for international expansion, specifically in the context of entering new markets. It highlights key decisions about setting up operations in a new country and determining distribution laws. It mentions the traditional view of internationalization as a significant event marked by crossing country borders, requiring careful planning and consideration of these aspects.
• 18:00 - 20:30: Conclusion: Collaboration Over Speed The chapter discusses a significant shift in internationalization research and support systems over the past decade. Initially, the focus was on deniability alertness, but new insights from sophisticated research and real-world changes have redirected this focus. Collaboration among firms has become increasingly crucial.

Networks is the new main challenge in startup’s internationalization process Transcription

• 00:00 - 00:30 my name is Becky hey Michelle I'm ongoing evaluator of further $40 for this project but I'm also by my male professionist I'm working as associate professor under servants at the Gothenburg University and I do research on its naturalization of swollen join firms I've done that I took my PhD 2011 and I've been studying these issues since that try to condense the game and
• 00:30 - 01:00 findings of 15 years of work into ten minutes which is a bit challenging so it will need to be a summary what I would like to highlight the role of role and importance of networks and networking for understanding internationalization especially among small and young firms and of course we talk about internationalization as a way of
• 01:00 - 01:30 entering into new geographical markets and traditionally we have assumed and that's also the kind of support we've had in the Swedish ecosystem and a national meeting as well but but if you look at the activities of business Sweden France all it's very much addressing the challenges of entering a new geographical market and those challenges are often before just differences in culture cultural distances that we need to overcome it's also traditionally described the role
• 01:30 - 02:00 and importance of geographical distances as well as institutional distances institutional distance has been very important in this particularly industry we will have regulations and so forth which we've sort of institutional distances and traditionally in research and in support system and so forth we have assumed that this kind of differences between the whole market and the host market entry entry causes a liability of foreigners the liability
• 02:00 - 02:30 that you will have in the new market because of you first we dish for you will have a liability of foreigners if you aim to the German market for example because you're not as familiar to me ladies ladies should be culture traditions as local competitors are so a Swedish man would have to invest time in order to learn to meet the same competency levels asked local competitors this means that the firm
• 02:30 - 03:00 needs to Italy redevelop what we refer to as firm specific advantages to overcome the liability or focus you need to have some kind of uniqueness that actually compensate for your lack of contacts experience knowledge about the local market and traditionally when we have discussed in virtualization we have done look at the importance of a market selection procedure how do you select the market such edge there was the
• 03:00 - 03:30 problems looking at a promoter selections where you have and when you have decided on which markets to enter how should you set up operations in that country and also how should you decide the distribution law so these are these key questions coming from our traditional view on internationalization as a as an event when you cross country borders you need to have them
• 03:30 - 04:00 deniability alertness this is what what was central in research on internationalization but also in the support system until around ten years ago when there was a shift in focus in the research community because of new insights both of more sophisticated research but also because of changes in the real world in what you are doing in other firms with you where researchers started to understand that the main
• 04:00 - 04:30 challenge of fermenting of foreign markets meets on faces is not necessarily the liability of being of welfare instead research is shifting towards from this geographical picture from the view that foreigners history main problem to networks so we assume that the main challenge is not necessarily how you enter a new culture cross national boundaries but how you could
• 04:30 - 05:00 become an actor in an internationally spread network so what we see now is that you see a lot of multinational companies and have operations in several countries meaning that if you are into that and we describe the research multinational companies as networks a hierarchical networks so if you're in to this network in one country you can what we call piggyback but yet you can follow
• 05:00 - 05:30 within this multinational company in two different geographical locations we also see an increased trending in the appearance of global value chains value chains that crosses boundaries so if you into this value chain into this network the country borders doesn't really matter to the same extent as the three shielded and of course which is very vanity we see a lot of online platforms most of us having an iPhone wishes have
• 05:30 - 06:00 the platforms which are crossing borders they are not really natural or instead they are international so we see changes in the industry when country borders are becoming less important you also see this this change affecting how we view this in research but also the type of policy that sites so just imagine if you I think that you all even though you
• 06:00 - 06:30 don't know it but most of you are have used products which has been really produced by a firm called Heavy Industries located in English comp in Sweden they produce all the baskets for IKEA Swoopes so if you have an wardrobe from Ikea then pretty the basket this is a very small family-owned firm located in village drops one of its winner they are selling
• 06:30 - 07:00 the product to a global markets but I've been traveling a lot at all international what I did was that they managed to sign contracts because yeah so by entry the network of IKEA negotiating becoming a supplying idea they have a global reach of product so they are selling more or less in all countries of the world but I just have contacted actually an industry so what I
• 07:00 - 07:30 have tried to understand is who are they IKEA state who are the multinational companies or the networks that could help you reach a global market without traveling the world who could take your bring your products to the international market and this is this is what I'm struggling with now we now have some ideas but I'm not going to them now did
• 07:30 - 08:00 you know from your own perspectives but what's important here is that we see a clear shift from foreigners to accounts and but if we traditionally have seen that when you internationalize you need to meet new cultures face different regulations laws and so forth we're now looking at outsiders internet works so the main challenge as we described in the research community today is not how to overcome the liability of worthless
• 08:00 - 08:30 studies how to overcome the liability of network outside Asia or how this actor can become part of the international network so she shifting focus from what what is my challenge so it lateralization we see as a network introduces how do you enter a network and as we know that most networks are actually crossing borders so if you just
• 08:30 - 09:00 enter the Swedish Network did I forget Sweden you might reach me in action work I have students a couple of months ago who worked with with a core chief for elderly care and they were interested in the German market for elderly care and what I realized was but if you should enter the German and elderly care market you might not need to go to Germany most probably should go to Switzerland because most of the owners of elderly care providers and and and Beverly care
• 09:00 - 09:30 institutions in Germany proposed by Swiss companies so if you wanted to reach decision makers for the enjoyment and the nuclear market you should go to Spitzer and if you want to go to the to the global financial market might need to go to Ikea and IC or your animals so it's not necessarily focusing on countries so ways of entering such a
• 09:30 - 10:00 network in research we see three main strategies how the internet first replacing existing that protect additives out completely less competitive solutions second becoming a net new member of an existing network by adding competences to this network or third connecting previously unconnected net with additives this is different from selecting a national
• 10:00 - 10:30 market it's different from selecting an entry mode is how you become part of the network which is the main challenge so first one would be that you end to the neck but I'm questioning what's actually being done today saying that we can actually do this in a more efficient user friendly write it better him second adding value to the actors that are actually operating in the network today
• 10:30 - 11:00 or third that you connect different unconnected networks in the system some of the challenges that you would face in the situation is but of course the liability of being an outsider the lightweight have been small climbing for smallness which is quite well-known in in in research but that the small er of course the hardness to have IKEA
• 11:00 - 11:30 listening to you what was very clear to me when I listened to the joint economy reliability of nearness how do you convince the existing market to use a new type of solution well of course the the the earlier you are industries development he created this challenge with whether the dissolution that you have you need to convince the users and
• 11:30 - 12:00 our customers to use new completely new technologies and so forth and of course in some cases it still matters which to more shorts likes one very interesting case that I will study on how small firms have joined forces in handling
• 12:00 - 12:30 these kind of liabilities and challenges I studied in an outsider that was a project called sustainable Sweden southeast which was an initiative taken when the EU enlargement took place in I think it was 2004 when the Baltic States and Poland became remembers which was a very attractive market for a lot of small firms in the kalmyk her costumer regions of these two
• 12:30 - 13:00 parts of Sweden working with different type of waste water treatment or environmental solutions they realized that in order to act on the tenders that took place funded by ear to to develop the infrastructures of working in in the former Eastern European countries they were too small they couldn't manage it on their own so even though there was a great opportunity just outside the door of these firms they realized that where
• 13:00 - 13:30 juice won't actually win these tenders so what they did was take the joint forces so this company's here I think there were twenty twenty or twenty five firms joint forces had created what they called sustainable Sweden southeast which was to release business developers that were responsible for finding business opportunities for all of its member companies they were very very
• 13:30 - 14:00 successful so they were a few got a lot of tenders they they became part of building and the whole new wastewater treatment investment outside st. Petersburg for example which they would never have been able to on their own one very interesting case of how small firms can compensate for that liberius office by joining forces I would like just to end with this statement which is not
• 14:00 - 14:30 which is very much in line with with research in science on the nationalization of smaller firms that is if you want to go fast go alone but if you want to go far should go with others and I think this is a healthy building is an excellent opportunity for you to take advantage of it and in joining forces to make this so that's my final verse [Applause]