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

Case F: Internationalizing with partners

This U.S. firm was established in 1998 and employs around 50 people. It has innovative technology for electronic file delivery and provides a quick, safe, and accurate method of delivering important business files over the Internet. It can send any type or size of file in real time, with immediate delivery confirmation. The built-in copyright protection technology allows the sender to prevent the recipient from copying, editing, printing, saving, or forwarding the file. These files are automatically encrypted when sent and decrypted upon receipt, making the method secure and easy to use. Its principal target customers are from the financial services and automotive industries. Influential clients include Toyota, Deutsche Bank, and Fujitsu. case F has expanded rapidly internationally through a variety of partnerships, for example, IBM promotes the file protection system alongside its PC server solutions. Another partner, NEC, is engaged with the firm at many levels as a franchise partner, selling the service to many Japanese clients and using the technology internally in its B2B operations. This firm also works with Compaq as a technology partner in order to enhance the robustness of its service solution. Its export ratio currently sits at 20% and is growing each year. The CEO attributed much of its success to date to a strong management team and to synergy created by its various partnering arrangements.

It must be noted that some of the case firms were using multiple modes of market entry. case F was using direct sales but also had a franchise agreement with NEC and a marketing agreement with IBM. Consider case Bthe oldest firm in the sample, it did not have Internet technologies from inception. Since their introduction in 1994, it has integrated them successfully to extend global reach. It uses a mix of online, direct exporting via agents, and franchise agreements to reach multiple markets worldwide. Its CEO states that location is irrelevant and the ratio of online sales is increasing yearly. It forecasts that by 2005 over 80% of all sales will be made online.

From these particular cases it would appear that each of the studied firms internationalized rapidly, used various modes to internationalize, and that industry and sectoral differences have influenced these choices (Boter & Holmquist, 1996). Although it would appear that firms engaged in the ICT sector would readily adopt the Internet technology, perhaps due to higher skill levels, several of the firms in this study are not ICT firms, but have also embraced Internet technologies to their advantage.

Founder/Management Team Background

All case firms displayed clear evidence of a global orientation. The entrepreneur/management teams were willing to capitalize on any international opportunities and were predisposed to taking risks in order to build relationships across national boundaries. As the firms were relatively young, they did not possess any great degree of organizational experience (Cooper & Dunkelberg, 1986). However, it would appear that a knowledgeable founding team could compensate for this fact.