Entering new markets in a high-tech born global company: Utilising dynamic capabilities

Abstract

Digitalisation and globalisation have given rise to a new type of companies that defy the traditional models of internationalisation. Instead of focusing on domestic markets, these born global companies seek rapid growth by entering foreign markets quickly after their inception. While their resources are limited due to their age and size, they successfully internationalise at a rapid pace. This study presents dynamic capabilities as enablers for that expansion. They are different from ordinary capabilities as they are inimitable ways for a company to use its competences and resources to match market needs.

The purpose of this study is to understand how high-tech born global companies enter new markets successfully, even though their resources are scarce. More specifically, this study examines what dynamic capabilities a high-tech born global company uses in its market entries. Those capabilities are not examined on a personal level but on an organisational level. The focus is set on B2B high-tech companies as the existing literature does not provide satisfactory descriptions of their market entries. In order to understand the studied phenomenon, different fields of research are combined. Market entry and dynamic capability theories are combined with born global focused theories to create a theoretical framework. That model describes how three categories of dynamic capabilities affect different stages of a market entry. Two born global specific dynamic capabilities are placed in that framework and further expanded in the empirical section.

To see how born globals enter new markets, six experts from a high-tech born global company were interviewed. They were carefully chosen by looking at their contributions to separate market entries that the company has made. Those semi-structured expert interviews provided deep insights as the interviewees were also leading the entries. That rich data was then analysed by using theory-based content analysis to find dynamic capabilities from it. In the analysis process, the researcher’s role in the studied company was also utilized.

The analysed data revealed six different dynamic capabilities which the company utilises in its market entries. In them, multiple concrete processes and actions were recognized. With all those capabilities, the company gets the most out of its scarce resources by leveraging its unique competences and assets. One dynamic capability, leveraging the level of internationalisation was found not so important for the company. The recognized dynamic capabilities were then placed in the theoretical framework. By doing that, this study shows what dynamic capabilities the company utilises and needs in different parts of its market entries. In particular, this study highlights the importance of partners for high-tech born globals in their market entries. More specifically, born globals need small and large partner companies to provide credibility, scalability and adaptability. In addition to those managerial implications, this study has theoretical contributions. As dynamic capability theories are combined with born global market entry theories, existing theories are enhanced and expanded. This study also provides a way to look at the competitive advantages of high-tech born global companies by focusing on their dynamic capabilities.