Review, Uppsala and Culture

1. International Business Week Four

2. Review

3. CwF

4. Insourcing

5. Fukiyama

6. Indian OutsourcingAdvantages

7. Y2K

8. Human Development Index

9. F1

10. Netscape Going Public

11. Islamic Banking

12. Paris Accord

13. GAAP

14. IBM / Linux

15. British Telcom

16. Another View

17. Explaining Internationalization Early contribution of ‘Uppsala model’: Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977 Key insight: internationalization is an incremental commitment, in terms of (a) geographical sequence and (b) entry mode choice, due to the gradual accumulation of experiential knowledge of foreign markets reducing the uncertainty effect interplay between knowledge and commitment the key driver

18. Distinctiveness of Uppsala model ‘We do not believe that [internationalization] is the result of a strategy for optimum allocation of resources to different countries where alternative ways of exploiting foreign markets are compared and evaluated. We see it rather as the consequence of a process of incremental adjustments to changing conditions of the firm and its environment.’ (Johanson and Vahlne 1977, p. 35)

19. Empirical basis for model: e.g. PHARMACIA: 9 overseas affiliates at the time. In the case of 8, the firm had received orders from foreign market, then signed an agency/licensing agreement. After a few years, established sales subsidiary (or made an acquisition in 1 case). In two countries began manufacturing, but only less complicated production at first. In case 9, started a sales subsidiary almost immediately, but company decision-maker had prior country experience. (Johanson & Vahlne 1977)

20. Incremental pattern (1): ‘Establishment chain’ No regular export Direct exporting, via independent agent/distributor Establishing foreign sales subsidiary Foreign production/ manufacturing Johanson & Wiedersheim-Paul 1975; Johanson & Vahlne 1977; cf Bilkey & Tesar 1977, Cavusgil 1980, Czinkota 1982

21. Psychic distance

22. Why these patterns? A process explanation ‘the firm develops knowledge when it operates in the market, this knowledge enables the firm to better see and evaluate business opportunities, consequently, to make new market commitments. In their turn, these commitments lead to learning and the ability to identify new market opportunities, and so on.’ (Johanson and Vahlne 2003, p. 9)

23. The Uppsala model STATE ASPECTS CHANGE ASPECTS Market (Experiential) Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37

25. Can only be acquired through first-hand experience

26. Includes i.e. getting to know customers, suppliers, government agencies

27. Includes firm’s internationalization knowledge: firm’s own resources and ability to develop international operations

28. Reduces uncertainty associated with foreign market commitment

29. Provides framework for perceiving and formulating business opportunitiesJohanson & Vahlne 2003, p. 10 STATE ASPECTS CHANGE ASPECTS Market (Experiential) Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37

30. The Uppsala model STATE ASPECTS CHANGE ASPECTS Market Knowledge Commitment Decisions Result of the conception of business opportunities, which in turn are a result of market (experiential) knowledge. Johanson and Vahlne 2003, p. 12 Current Activities Market Commitment Johanson & Vahlne 1977, p. 37

32. ‘current activities evidently have a continuous impact on internationalisation, occasionally being interrupted by discontinuities…’

33. By interacting with other firms in a market, the firm learns about their needs and situation

34. Interaction builds trust, which is an important element in commitment building(Johanson and Vahlne 2003:11) STATE ASPECTS CHANGE ASPECTS Market Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37

36. Amount of commitment: i.e. level of investment

37. Degree of commitment: extent to which commitment cannot easily be withdrawn, and is defended by the firm

38. Degree of commitment dependent on firm’s resources and capabilities at homeJohanson and Vahlne 2003, p. 12 STATE ASPECTS CHANGE ASPECTS Market (Experiential) Knowledge Commitment Decisions Current Activities Market Commitment Johanson & Vahlne 1977, p. 37

39. Culture

40. Is ice cream affected by culture? In what way? What cultural effects does unilever face when selling ice cream How does is the presentation, flavor and name of a prodct depend on culture?

42. Hall

43. McDonalds McDonalds Japan McDonalds Russia

45. Dimensions of National Culture

46. Multiple of Cultureor ‘interfaces’ (Saner)

47. The Contexts ofInternational Negotiations

49. Influence of Culture on Negotiation: Managerial Perspectives Definitions of negotiation Negotiation opportunity Selection of negotiators Protocol Communication Time sensitivity Risk propensity Groups versus individuals emphasis Nature of agreements Emotionalism

51. Cultural Categories

52. National Communication Patterns Finland USA Germany

53. USA Germany Japanese Arabic