Innovation, Organizational Capabilities and the Born-Global Firm

Title of the Article: Innovation, Organizational Capabilities and the Born-Global Firm.

Authors: S. Tamar Cavusgil and Gary A. Knight

Source: Journal of International Business Studies, vol. 35, no. 2, pp. 124+. (Online publication – January 8, 2004)

Brief Summary: This article is an empirical investigation of ‘born-global firms’ on the concept of innovation, knowledge and capabilities on the strategy and performance of the firm through exploratory case study (formulation of hypotheses) and survey method. It pertains to the linking of innovation to the phenomenon of early adoption of internationalization. ‘Born-global firms’, also known as international new ventures or global start-ups, are companies that operate globally from an early stage of development wherein they adopt the process of internationalization. Results from the firms involved in the study affirmed the role of innovation in the development of various types of knowledge that will lead to development of organizational capabilities that will support early internationalization and performance of the firm. The results are also supported by the evolutionary economics framework (Nelson and Winter, 1982). Since born-global businesses are young and scarce in financial, human, and tangible resources, innovative activities give rise to internationalization. Among the firms involved in the study, youth and lack of experience, as well as scarcity of financial, human, and tangible resources are no longer major impediments to the large-scale internationalization and global success of the firm. This article also provides discussion on technological competence, unique product development, quality focus, logistics management, and superior performance in the international market.

Reflection of Thoughts:

The continuous and dynamic competition in the global business arena has been very stiff and complex in these recent times. In this regard, firms must be able to utilize a strategy and management system that will enhance the performance of the business so as to outgrow its rivals. Innovation is a basic and crucial attribute of international businesses. Most successful global firms hold the ability to innovate and come up with something that is beneficial for the whole setup of the business. The progression of ideas and innovations has been rapidly apparent, whereas different firms have to cultivate ideas that can meet the demands of the market and the target market. In the process of innovation, international business should set objectives, formulate and implement strategies based on the principles of management, and supported by essential factors such as technology and development of intellectual capital. However, innovation in international marketing will not stand alone if not integrated with core competencies, resource-based, and competitive advantages.

Today, various firms – domestic or international in nature, are aiming for competitive advantage and sustainable development among its management and operations. With this, there are numerous actions that are being implemented and directed to the eventual success and growth of the firm’s assets. In competition, there is motivation in every firm to improve and develop generally. For firms to succeed in local or global competition and operations there is a continuous plan to develop management and marketing techniques such as strategy, change and innovation of new products/services with higher quality than its competitors, efficient management of critical success factors, and others.

Reference

Cavusgil, S. T. & Knight, G. A. (2004) Innovation, Organizational Capabilities and the Born-Global Firm. Journal of International Business Studies, 35(2); pp. 124+.