Internationalization of Internet-Enabled Entrepreneurial Firms: Evidence from Europe and North America, The

Canadian Journal of Administrative Sciences, Mar 2004 by Loane, Sharon, McNaughton, Rod B, Bell, Jim

The remaining firms, while still chiefly utilizing direct approaches or modes to enter international markets, used their Web sites (Cases B, G, H) to automatically position themselves as actors on the global stage and to interact directly with their clients. These firms are using the Internet and its related technologies as the primary international market entry mode. An interesting case is presented below:

Case H: Internet-based market entry

For generations, Canadians have made shopping trips to the United States, lured by the wider selection of goods available in American stores and the prospects of cheaper prices. However, barriers in the form of taxes, currency differences, security concerns, and difficulties in returning goods have made some Canadian consumers hesitant to order goods from U.S. online sites. For the same reasons, many U.S. online merchants, particularly smaller companies, do not currently ship goods to Canada. Founded in 1999, Firm H's objective was to remove the hurdles for Canadian shoppers looking for bargains south of the border. It guarantees the price, purchases the order, and handles all the cross-border logistics. The Managing Director stated: "We take an international transaction and make it look like a domestic transaction to both the buyer and the seller." "To the U.S. merchant, it feels like they are selling to a domestic customer. To the Canadian buyer, it feels like they are buying from a Canadian store." By providing Canadians with an open door to the U.S. online market it has been riding the crest of the e-commerce wave. A major consumer concern that it had to address was how to share credit information. The design chosen means that consumers only have to enter their credit card information once, this information is never shared with retailers, is stored securely on a server that is inaccessible from the Internet. This company's transactions are 100% with U.S. companies, which are passed on to Canadian customers.

Firm H's strategy was to move quickly rather than wait for a perfect launch on the Internet. As the CEO observed,

The sooner you get up and running, the sooner you will get real feedback and that enables you to design your end game. Using the power of the Internet to iterate our business model as we go forward has been very effective for us. (CEO Firm H, Canada, 2002)

However, he also opined that one of the greatest barriers to the firm's expansion was finding senior technical managers and developers to allow the company to grow to 50 employees in less than a year. he further commented,

Everything that we have is really in the heads of the people we have hired and work with. Retaining them is critical. One thing that I learned is making sure that you communicate multiple times in multiple different ways your key messages, key objectives, key goals. You can't say it often enough to keep everybody on track. (CEO Firm H, Canada, 2002)

All of the case firms, with one exception, had significant incidences of partnerships in place (see Table 2). They placed great emphasis on setting in place the right partnerships (Cases A, F, G, H). They tended to build marketing partnerships or strategic alliances with large global firms such as IBM, Sony, Compaq, and DMR. The larger partner either distributed the products or gave the smaller partner a high profile link on its own Web site. In some cases the Internet could fulfil the dual role of distribution and promotion at once. For many, partnerships provided critical resources (e.g., financial resources, specific skills) as well as more abstract resources (e.g., legitimacy and market power); see case F below.