Toward a Theory of International New Ventures

Introduction

The modern world is characterized by the comprehensive and overall process of globalization that has managed to penetrate all the spheres of human lives, and business is not an exception (Shenkar and Luo, 2008, p. 187). The understanding of the fact that the globalization is the major feature of today’s world is not an instant phenomenon and the scholarly research on business in the age of globalization prove that specialists focused on the topic of business development in the globalized world even 15 years ago. The article by Zahra (2005) examines the work by Oviatt and McDougall (1994) as a milestone work in the history of international entrepreneurship theories’ development.

Work by Oviatt And McDougall

In more detail, Zahra (2005) considers Oviatt and McDougall (1994) to be the so-called fathers of the theory of business in the globalized world and the dominance of the international new ventures in the future business markets (p. 20). As well, Zahra (2005) calls the theory by Oviatt and McDougall (1994) to be seminal for the further development of the international entrepreneurship ideas by other scholars who either follow or utilize the views by Oviatt and McDougall (1994) and adjust them to the modern business reality (pp. 21 – 22). Thus, it can be observed that Zahra’s (2005) argument is actually built on the consideration of Oviatt and McDougall’s (1994) theory and analyzing it in the context of what other scholars, like for example Majumdar (2000), George (2002), and Busenitz and Barney (1997), have develop this theory to.

Accordingly, the argument developed by Zahra (2005) in the article titled A theory of international new ventures: A decade of research can be assessed in two major ways depending upon the assessment perspective. On the one hand, the account that Zahra (2005) provides on the theory of the international entrepreneurship by Oviatt and McDougall (1994) is rather complete and detailed. Zahra (2005) manages to provide the background for the theory, explain the scholarly views by Cannon and Willis (1981), Douglas et al. (1982), and Johanson and Vahlne (1977) that served as the basis for Oviatt and McDougall (1994), and also provides the analysis of the theories developed on the grounds of Oviatt and McDougall’s (1994) views. On the other hand, the article is more a literature review than a scholarly research article as its main focus is the summary of other scholars’ point rather than introducing some new research data.

Competitive Advantage in the Globalized Economy

However, even dispute the literature review nature, the article provides numerous insights into the issue of gaining a competitive advantage in the globalized economy. Zahra (2005) argues that Oviatt and McDougall (1994) saw help in gaining competitive advantages in:

1. International new ventures’ gestation periods;
2. Clarity of mission and vision;
3. Nature of the international new ventures’ activities;
4. International new ventures’ belonging to one of the four groups (“export/important start-ups, multinational trader, geographically focused start-ups, and global start-ups” (Zahra, 2005, p. 24));
5. Spotting, exploring, and utilizing the internal opportunities present in international new ventures;
6. Institutional and business environment of international new ventures;
7. Proper use of resources (Zahra, 2005, pp. 24 – 26).

In fact, the factors that Zahra (2005) enumerates as the one forming the competitive advantage for the international new ventures with the reference to Oviatt and McDougall (1994) are reasonable and grounded ideas. Shenkar and Luo (2008), for instance, argue that the new internationally operating ventures are more adjusted to the globalized economy conditions since they have smaller organizational structures that are easier to control and reform (p. 219). As well, these new ventures can realize and utilize the internal business opportunities of gaining competitive advantages and can adjust fasted to the institutional and business environments of the markets they operate in (Shenkar and Luo, 2008, p. 220). Drawing from this, the factors presented in the article by Zahra (2005) are actual competitive advantage forming factors.

Reasoning

The reasons to consider these factors as effective ones include the specificity of the globalized market and the actual simplicity, if compared to large corporations, in the operation and development of smaller business entities referred to as international new ventures by Oviatt and McDougall (1994) and Zahra (2005). First, the globalized economy, apart from being more attractive to large and developed companies and countries, provides smaller business entities with wide international development opportunities. Accompanied by the simplicity in the operation of the latter, the idea about the international new ventures expressed by Oviatt and McDougall (1994) becomes evident and understandable.

Conclusions

Thus, the conclusion from the above presented discussion is that in the modern world characterized by overall globalization, the future of the business environment is, according to Oviatt and McDougall (1994) and Zahra (2005), in international new ventures, i. e. smaller business entities that can better adjust to the globalized economy and gain competitive advantages from their own organizational structures and internal resources. Being easier in operation than huge international corporations, smaller companies might display faster developmental paces and potentials.

Reference

Shenkar, O. and Luo, Y. (2008) International Business. Sage Publications, Inc.

Zahra, S.A. (2005) A theory of international new ventures: A decade of research. Journal of International Business Studies, 36 (1), 20–28.