The objective of this dissertation is to examine the efficacy of the Uppsala model in a small-scale manufacturing enterprise, and evaluate if integrating the Porterian approach enhances comprehension of the company's international expansion process. The study predominantly concentrates on a one-on-one interview with the CEO of Bukowski Design, who is crucial to this investigation.
Introduction
This portion of the thesis introduces and clarifies the research issue under examination. It commences with a concise contextual discussion to aid in understanding for readers. Subsequently, it focuses the debate on the matter to refine the investigation towards specific questions, thereby outlining this dissertation's objective.
In recent years, a significant change has occurred worldwide, uncovering unprecedented trends and patterns.
In the 1970s, companies started to understand the profound impact of the informa
...tion boom (Drucker, 1998). However, more consequential shifts were on the horizon. Regular international leisure trips became normal, offering opportunities for individuals to immerse themselves in diverse cultures. The possibility to stream television programs globally came into existence. Wide-ranging internet usage linked people worldwide, ensuring constant connection and awareness of global happenings even with infrequent slight lags. Today, getting current updates from virtually everywhere around the world has become effortless.
There has been a notable transformation in the business environment over time. The trend towards internationalisation and globalisation across various industries is attributed to initiatives by global organisations, governments and corporations (Vahlne & Nordstrom, 1993). In order to enhance free trade within its territory, the European Union made a decision in 1987 to abolish non-tariff obstacles such as borders and value-added taxes.
The North American Free Trade Agreement (NAFTA),
founded in 1994, is one of many global free trade organizations aiming to strengthen economic influence within their specific regions (Husted & Melvin, 1998). Husted and Melvin (1998) highlight that the creation of such bodies underscores the significant role regionalism plays in contemporary society. This perspective is endorsed by Drucker (1998), who asserts that internationalization has evolved from a simple idealistic notion to an outcome of the early growth of regionalism.
According to Ibid, a world that is structured by regions brings together different countries and sees each region as a local market. Drucker (1998) states that during the start of industrialization, labor and capital were scarce resources. However, society has evolved and knowledge has become the scarce resource in organizations today. This shift towards a knowledge-oriented world allows companies with limited capital to effectively compete not just domestically but also globally.
Drucker (1998) noted that while it's crucial not to overlook both small and large businesses, they are dissimilar in various aspects. He stated that smaller companies have the potential to be competitive globally, however, their capacity for competition isn't equivalent as with larger enterprises.
Problem discussion
A business must make crucial choices that could affect future earnings and continuity when deciding to grow on a global scale. The internationalization process's success can differ based on the theorist's theoretical viewpoint, leading to uncertain implications. Discrepancies are often found between theoretical forecasts and the actual strategies implemented by companies for their international expansion, resulting in inconsistencies. Over time, theories of internationalization have progressed and been modified by different authors, each contributing their unique perspective to enhance the fundamental concepts.
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Although these expansions all have the same core, the additions completely transform the significance and explanatory worth. One of the theories that this master thesis will concentrate on is the original depiction of the Uppsala model. Consequently, the thesis will primarily focus on the key contributions of this theory. Furthermore, Porter's notions concerning internationalisation will supplement this viewpoint. The Uppsala model, referred to as the Scandinavian School of Management in this thesis, represents the most widely accepted paradigm of internationalisation and was derived from studies conducted in relatively large manufacturing firms.
Another way of thinking about this is the Eclectic paradigm, which merges economic theories with factors like monopolistic competition, location, and transaction costs (Johanson ; Vahlne, 1990). The Eclectic paradigm is based on the organizational structure of companies. A third perspective is the Industrialization model, which sits between the Uppsala model and the Eclectic paradigm. In this thesis, we will also consider the Porterian framework. The thesis writer will refer to Porter's theories as the Porterian framework.
This research, grounded on the works of Porter (1986) and Porter (1998), concentrates on large-scale corporations in Sweden during the time it was undertaken. It should be noted that these firms have since expanded in size, hence leading to their categorization as quite large by the author of this thesis. The objective is to establish a connection between the Eclectic paradigm and Uppsala model through the introduction of an industrialisation framework. The hypothesis put forth suggests a significant difference in behavior between resource-limited firms and bigger ones.
The thesis writer is intrigued by how well the Uppsala model can explain the internationalisation process of
small firms. The case company for this master thesis is Bukowski design. Unlike big firms, small firms often have one person responsible for multiple managing tasks. Numerous authors (such as Menguzatto, 1995) have attempted to connect the decision-making process with the interpretation of information.
A small firm with limited resources may be hindered in their ability to interpret and analyze incoming information, potentially impeding their internationalization process. The internationalization of a firm is influenced by its capabilities and extends beyond the factors presented in the Uppsala model. Porter (1986) explores how firms internationalize based on their structure and the industry they operate in. The thesis writer seeks to determine if the Uppsala model can be enhanced by incorporating the Porterian framework to establish a more robust framework for internationalization.
Research questions
The discourse on the issue brings up several fascinating research queries for this dissertation, setting the direction of the investigation. These queries encompass: What is the extent to which the Uppsala model can shed light on small businesses' internationalisation process? How can we utilise the Porterian framework to enhance and simplify a company's process of internationalising? What are some elements that limit global growth in smaller firms?
Purpose
This thesis aims to examine the applicability of the Uppsala model to a small manufacturing firm and explore whether combining the theory with the Porterian framework can offer a stronger framework for describing the firm's internationalization process.
Prerequisites
The thesis reader should possess a fundamental understanding of Porter's theories as only certain portions will be explained and applied in this thesis. However, it is crucial to
comprehend these sections in relation to their context. 5- Introduction 1. 6 Study object The subject of this master thesis is Bukowski design, a Swedish small company with five employees that also engages in significant operations internationally.
Engaged in the sales, design, and quality assurance of its products including teddy bears, the company operates globally. It largely employs agents for product distribution across various countries.
Method
The aim of this section is to elucidate the author's perspective on knowledge and its relevance in the context of the present research. It's vital for readers to grasp this view as it facilitates comprehension of the used methodology and how the author's standpoint impacts the study. According to Arbnor and Bjerke (1998), diverse opinions on methodologies yield different presumptions about reality and intelligence. The author underscores the significance of recognizing how personal viewpoints can shape a study.
Arbnor and Bjerke (1998) emphasize the importance of researchers considering their viewpoint. This introspection aids in gaining a deeper understanding of the constraints that must be recognized in the investigation and its results.
The author of the thesis posits that various interpretations of reality coexist, generating an illusion of several interlinked realities. This can be perceived as a conviction that both social setting and personal conditions shape one's understanding or perception of reality.
Essentially, the actuality isn't wholly detached from personal cognition, even though it can occasionally be perceived as such. Even with a common knowledge of how the world operates, people might interpret identical terms differently. The thesis's author supports the concept of an authentic reality but accepts that humans are
incapable of entirely understanding it due to our constraints in observing and interpreting several stimuli at once. Solso (1998) further deliberates on these restrictions.
The limitation of human perception requires individuals to select which stimuli to interpret and observe, a process influenced by factors like interests, social class, and age. The stimuli chosen unconsciously shape a person's perception of reality (Ibid). Arbnor and Bjerke (1998) distinguish between a perspective that views reality as independent of individuals (analytical view) and one that sees it as a social construct (actors view).
The thesis author takes on a systems approach, aligned with the perspective of Arbnor and Bjerke (1998). They propose that the "actual" world can be viewed as a system made up of various perspectives about reality. The connection between these differing perspectives and their interpretation of reality is illustrated in the following diagram.
Reality could possibly be understood as an observable, rule-governed entity that functions independently from us. Alternatively, it could be perceived as a set deterministic procedure. Moreover, it might be seen as an interconnected storehouse of knowledge or a platform for symbolic communication. Reality can also be construed as a social construct or a manifestation of human intention.
The writer suggests that minor observations can significantly influence how people perceive reality. This theory aligns with the systemic perspective of Arbnor and Bjerke (1998), which states that different elements can be combined to form a cohesive whole. However, they emphasize the importance of carefully piecing together these components so their collective impact corresponds with personal values. While many may not get the chance to see air currents swirling around airplane wings,
under certain circumstances, this spectacle becomes observable and can be absorbed into many individuals' realities.
In conclusion, the dissertation author contends that an individual's grasp of reality is influenced by their social environment and personal perceptual limitations. This selective perception played a significant role in the writer's choice to use a tape recorder because it allowed for repeated replays, focusing on different elements for improved understanding. The author further explores this viewpoint on reality via conversations about knowledge.
Understanding of what is considered knowledge differs among individuals. The concept of reality implies that knowledge is personal; each person's interpretation of reality adds to a broader system, frequently seen as the "actual" reality. Hence, according to the author of this thesis, individuals shape their own comprehension by interpreting their distinct sense of reality.
The thesis writer aims to convey their interpretation of the internationalisation process of the firm to the reader using empirical data and existing theories. According to Arbnor and Bjerke (1998), although reality is seen as a subject of symbolic debate, it is possible to argue that a similar pattern can be identified in different cases as long as the context remains constant. The thesis writer asserts that knowledge is an abstract representation of reality, enabling humans to comprehend intricate patterns through key concepts.
Scientists in the natural sciences construct abstractions to describe observable processes. The truth of knowledge can be relative and dependent on the context. For instance, Newton's theories are an approximation to Einstein's relativity theory, and their predictions are valid only for relatively low speeds (Wolfson ; Pasachoff, 1999).
The persistence of Newton's theories, despite not
being discarded, is attributed to their relative accuracy and practicality compared to relativity theory. Some theories can remain beneficial even if they are proven wrong, providing they give explanations for certain undisproved processes. Contrarily, those theories lacking explanatory value should be replaced with different ones. The author of the thesis does not promote the immediate abandonment of discredited theories.
It's generally recognized that a theory consists of multiple parts, each playing a vital role in forming the overall system. A fault or absence in any component can render the theory invalid. The author of the thesis, however, proposes modifying flawed theories rather than rejecting them outrightly. The primary aim of the thesis writer is to identify what can be practically applied and result in clear understanding, instead of theoretical knowledge that might provide more profound understanding but is challenging to put into action.
The individual penning the thesis recognizes the constraints of making certain concepts functional but nevertheless appreciates the generation of valuable insights via abstraction. They aim to reduce some risks linked with their own interpretation and comprehension of reality by adopting a critical viewpoint on knowledge and humanity itself. In doing so, they have rigorously reviewed the interview recording multiple times to guarantee that no data is left out.
The writer of the thesis has decided to concentrate on what they deem significant for their research. Their choice to utilize the Uppsala model was shaped by their viewpoint on knowledge. Criticisms have been directed at the Uppsala model for its insufficient elucidation of a company's process of internationalization. Had the author subscribed to the belief that theories should be discarded
once proven false, they might not have opted for the Uppsala model due to its flawed interpretative worth in specific circumstances.
Arbnor and Bjerke (1998) propose that scholars utilizing a systems perspective can reference the results of inquiries exploring similar scenarios. This aspect renders the Uppsala model appealing to the thesis author, with the presumption that this study's context is relatively distinct. The concept that comprehension is shaped by an individual's perception of reality indicates subjective knowledge influenced by personal viewpoints. However, it conflicts with the assumption that knowledge truthfulness stands independently from one's beliefs.
The thesis writer suggests that even if others interpret reality slightly differently, if they reach the same conclusion, then the truth-value of the knowledge is separate from individual beliefs.
The viewpoint of the dissertation author regarding the methodological strategy suggests that researchers will employ diverse tactics based on their worldview and understanding of knowledge. Specifically in this instance, adopting a systemic perspective necessitated introspection about the study subject and its potential to be examined separately from the overall system. Furthermore, as further insight was acquired, there were alterations in problem framing.
Deductive approach
This study is based on a theoretical perspective, with research questions formulated at a more general theoretical level rather than being specific to a particular company. According to Arbnor and Bjerke (1998), the deductive approach is used when applying general rules to a specific case. The writer of the thesis does not attempt to determine the extent of interaction between deduction and induction, as they believe this interaction always exists. Instead, the focus is on identifying the main approach used.
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The first stage of this study involved creating a framework and collecting empirical material. From the beginning, the assumption was made that there are disparities in theoretical knowledge within the field being studied, which warranted further investigation. Taking a deductive approach required the thesis writer to determine the specific area of study relatively early on. The thesis writer deemed it necessary to gather extensive theoretical information on a firm's internationalization process.
The individual writing the thesis pondered over various theories, contemplating their application in a field different from what they were initially designed for. There was ambiguity regarding whether the Uppsala model could accurately depict the process of internationalisation for a small enterprise, or if an industry-based model could sufficiently explain certain facets of said process. The research laid emphasis on the intricate interplay between the environment and the business entity, thus necessitating a preliminary analysis of diverse theories to grasp how these two systems correlate.
To allow for the systems perspective, ongoing enhancements in grasping the process of internationalisation were crucial and required appropriate modifications to the thesis content. As the author's viewpoint on internationalisation sharpened, there was a need to reshape the inquiries made, leading to a subtly modified methodology for the research.
Combining a positivistic with a hermeneutic view
The writer of the thesis believes that two different views can be merged to elucidate his relationship with science.
According to Alvesson and Skoldberg (1998), the positivistic perspective emphasizes the need for systematic data collection and organization for researchers. It also emphasizes the search for universal laws that are applicable in all contexts. The thesis writer acknowledges
the importance of constructing such theories but also believes it is almost impossible to find patterns within the social sciences that can be generalized to this extent.
According to Arbnor and Bjerke (1998), adopting a system view in research often prevents generalization of results as the knowledge is specific to the system being studied. However, the thesis writer prefers a hermeneutic view, which distinguishes social science from traditional science (Alvesson & Skoldberg, 1998). The hermeneutic view acknowledges that individuals interpret the world in diverse ways.
The author of the thesis agrees with the idea that it is important to consider this when studying social phenomena. Arbnor and Bjerke (1998) state that hermeneutic researchers aim for a holistic view and when using a systems approach, they strive to understand how the different parts are connected to the entire system. This belief is based on the notion that the value of the parts is not equivalent to their sum (Ibid). By combining the positivistic and hermeneutic perspectives, it is possible to refer to it as critical hermeneutic (Alvesson ; Skoldberg, 1998).
The study is based on the critical hermeneutic perspective, which allows the interpretation of data from a hermeneutic point of view while maintaining falsifiability (Alvesson & Skoldberg, 1998). Both the thesis writer and Chalmers (2002) emphasize the importance of theories being falsifiable and strongly falsifiable, meaning that they should be constructed in a way that easily allows them to be proven false.
The crucial interpretive understanding of reality can be seamlessly integrated with the viewpoint on reality and knowledge of the individual writing a thesis. Arbnor and Bjerke (1998) suggest that an investigator adopting
a systems perspective has the choice between an explanatory or interpretive view. The method adopted by the thesis author towards science significantly impacts this study. Acknowledging the difficulty in achieving absolute objectivity given multiple interpretations of reality, it is inevitable that the writer's personal opinions will influence the research. Nonetheless, distinguishing this from deliberate bias is key.
The thesis writer has attempted to approach the empirical material in an objective manner, but it is apparent that some subjective thinking has been incorporated during data analysis. It can be argued that in a world where interpretations vary among individuals, the investigator can only strive for limited objectivity (Eriksson & Wiedersheim-Paul, 2001), which is the situation in this study. In essence, the thesis writer has made efforts to maintain objectivity, but completely excluding subjective thinking proves to be challenging.
Formulating an interview guide involves multiple steps that are primarily guided by subjective reasoning. These steps comprise of deciding on the questions and their delivery manner, influenced by one's understanding of what constitutes as important. Nonetheless, employing a critical hermeneutic viewpoint presents obstacles for the thesis author when it comes to extrapolating the study's results to different circumstances. In Alvesson and Skoldberg's view (1998), the significance of this perspective is its capability to scrutinize existing theories. They state that scientists who adopt this viewpoint are indispensable as there is no solid proof indicating complete impartiality among current scientists.
The author of the thesis aimed to dispute the Uppsala model, contending that its representation of the internationalisation process is limited and can be improved by including other globalisation theories. Though holding this viewpoint, the author aspired
to stay unbiased and heavily used the Uppsala model before embedding the Porterian framework. Furthermore, section 2.4 will detail out both methodology chosen and decisions taken during their research.
The process of choosing what to study and the reasons behind it was the most critical and difficult part of this research. The decisions made could have potentially impacted the findings. As such, this portion is designed to empower readers with the ability to evaluate the reliability of the research independently.
Choice of firm
In comparison to the Uppsala model of internationalisation that focuses on large firms, this research investigates small companies. Consequently, it's reasonable to presume that the explanatory capacity of the theory might be lessened.
The reduced interpretive ability of the theory is a result of its usage in scenarios it was not initially designed for. This opens up the possibility for new elements to compromise the theory's credibility. The purposeful choice of concentration was aimed at assessing if the Uppsala model could be effectively generalized or not. Nonetheless, it's crucial to highlight that the Uppsala model's ineffectiveness in small companies does not make it irrelevant in other situations.
The significance of mentioning that this study builds on Porter's work (1986,1998) to enhance the Uppsala model should be highlighted. There are countless other authors and ideas available for use. The decision to incorporate Porter's theories is driven by the thesis author's fascination with his work and its straightforward application. The researcher's desire to apply the Uppsala model in a distinct context might be associated with a system perspective. Arbnor and Bjerke (1998) suggest that researchers using a system
view generally look for commonalities among cases sharing similar structures.
This thesis is centered around an individual case study exploring the internationalization process of a small company. As per Arbnor and Bjerke (1998), due to the large quantity of data that needs handling, the systems approach often requires limiting the number of objects under study. They posit that focusing on a single specific object for study can be suitable in certain scenarios. The author of this thesis contends that taking into account more subjects for investigation would have hindered a comprehensive understanding of the internationalization process, considering the restricted time available to complete the thesis.
The thesis writer had the option to select firms that were vastly dissimilar to the firm ultimately chosen. This suggests that the study may not offer sufficient evidence to illuminate the internationalisation process of all small firms. Arbnor and Bjerke (1998) state that the systems view researcher aims to find cases that represent a particular type of system. The thesis writer asserts that this holds true for this study.
The author of the thesis proposes that initial conclusions applicable to companies with like characteristics can be inferred. It's important to note that the choice of a particular company for this research influences how far-reaching these conclusions might be. The study's limitation to a single firm makes it harder to apply the results more broadly. Nonetheless, similarities could potentially exist in other businesses with comparable qualities as identified by the thesis author in their patterns.
The thesis author acknowledges the potential for limited generalizability due to the distinct nature of the study subject, but they chose it
believing its similarities with other small businesses sharing common characteristics. Despite each company possessing unique aspects, the author hypothesizes that companies with similar size and product offerings might face similar, if not exactly same, difficulties.
The thesis writer initially contacted several other firms before choosing Bukowski design for this study. However, due to the small size of the firms contacted, it was challenging for them to allocate sufficient time for such a study. Nevertheless, the writer believes that Bukowski design is an ideal example of a small firm that has successfully expanded beyond its domestic boundaries.
The thesis writer took into account two important considerations when contacting firms. Firstly, the firm should have recently started its internationalisation in order for the interviewee to easily recall decision processes. Secondly, the firm should somewhat resemble a small Swedish firm. These limitations influenced the choice of firm. Initially, the thesis writer considered using Bjorn Borg as a case company, but it is reasonable to assume that it has different capital provision compared to a small firm.
While a single company cannot epitomize all businesses, it is plausible to suggest that an aptly selected small Swedish firm could act as a fitting substitute for other enterprises with analogous traits. This supposition relies on the concept that corporations of similar kind function in comparable conditions and consequently face similar challenges and make equivalent choices. Nevertheless, it's critical to acknowledge that choosing this specific company might have swayed the outcome of the study.
The internationalisation process of another small firm may have brought to light other significant factors. Thus, the thesis author has merely deduced preliminary
findings within the constraints of the research. According to Arbnor and Bjerke (1998), a systems view suggests that these results are not universally applicable beyond their specific context. Bukowski's design complies with the aforementioned traits and offers more intriguing features pertinent to this study. The company has a presence in almost all worldwide markets, manufacturing its products outside Sweden.
Another interesting characteristic of this study is that it allows for the examination of the decision process, as it involves only one individual. However, this is also the biggest limitation of the firm - it lacks diversity in decision-making.
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