Forging the Link between Business Model and Value Chain Constructs in the Context of an Internationalizing Entrepreneurial Firm — A Case Study

Abstract

Expansion to international markets requires changes in company strategy in order for it to fit into the novel environment (Calof and Beamish, 1995; Lam and White, 1999; McDougall and Oviatt, 1996). However, prior research on international entrepreneurship (IE) provides only a limited understanding of how companies change during internationalization (Nummela et al., 2006), and how this internal change is reflected in their value chain. The concept of the value chain seems to be central in IE research, which emphasizes that successful internationalization is based on controlling, not necessarily owning, value-creating assets and knowledge located in different parts of the globe (Oviatt and McDougall, 1994). Internationally entrepreneurial firms move their assets globally in order to stay competitive. Consequently, the value chain of these companies is often disintegrated and globally dispersed, and the company itself resembles a ‘global factory’ that reflects the combination of the innovation, distribution and production of goods and services worldwide (Buckley, 2009; Buckley and Ghauri, 2004). We do not assert, however, that all the value chain activities of entrepreneurial firms need to spread globally. For example, due to a global specialization in many industries, such as information and communications technology (ICT), some value chain activities never diffuse to all the continents of the ‘triad’, but locate more on a regional basis (e.g. sourcing and production in China and India). Therefore it might also be more efficient for a company to pursue regional rather than global strategy (Rugman and Verbeke, 2004).