‘born-again global’ firms

‘Born-again global’ firms

An extension to the ‘born global’ phenomenon

Jim Bella,*, Rod McNaughtonb, Stephen Youngc

aSchool of International Management, Magee Campus, Room ML 206, University of Ulster,

Londonderry BT48 7JL, IrelandbUniversity of Waterloo, Waterloo, CanadacUniversity of Strathclyde, Glasgow, UK

Abstract

Firm internationalisation has for long been regarded as an incremental process, wherein firms

gravitate towards ‘psychologically close’ markets and increase commitment to international markets in

a gradual, stepwise manner through a series of evolutionary ‘stages.’ However, much of the recent

literature provides clear evidence of rapid and dedicated internationalisation by ‘born global’ firms.

Typically, these are smaller entrepreneurial firms that internationalise from inception or begin shortly

thereafter. Their main source of competitive advantage is often related to a more sophisticated

knowledge base that they use to exploit the dynamics of an increasingly global market environment.

This contribution posits that there is growing evidence of another phenomenon, that of the emergence

of ‘born-again’ global firms. These are firms that have been well established in their domestic markets,

with apparently no great motivation to internationalise, but which have suddenly embraced rapid and

dedicated internationalisation. The underlying motivations and triggers leading to such a strategy are

explored and illustrated through a number of case studies. Research and public policy implications of

the ‘born-again’ global phenomenon are discussed. D 2001 Elsevier Science Inc. All rights reserved.

1. Introduction

The emergence of a new stream of literature on ‘born global firms in the early 1990s

presents a significant challenge to traditional views on the internationalisation of the firm.

1075-4253/01/$ – see front matter D 2001 Elsevier Science Inc. All rights reserved.

PII: S1075 -4253 (01 )00043 -6

* Corresponding author. Tel.: +44-028-71-37-5336; fax: +44-028-71-37-5323.

E-mail address: [email protected] (J. Bell).

Journal of International Management

7 (2001) 173–189

These smaller entrepreneurial firms tend to adopt a global focus from the outset and embark

on rapid and dedicated internationalisation (McKinsey & Co., 1993). Their evolution has

been influenced by an inexorable trend towards globalization and the pervasive impact of

new technologies (Knight and Cavusgil, 1996). In addition, ‘born global’ firms often possess

a knowledge-based competitive advantage that enables them to offer value-added products

and services (McKinsey & Co., 1993).

To add to this debate, evidence of another phenomenon, that of ‘born-again’ global firms,

is also starting to emerge. Typically, these are well-established firms that have previously

focused on their domestic markets, but which suddenly embrace rapid and dedicated

internationalisation. To extend the biblical analogy, their Pauline conversion and subsequent

zeal is often a result of a critical incident on the road to Damascus.

Following a review and synthesis of the extant literature, the present contribution explores

the ‘born-again’ global phenomenon and identifies a number of key triggers that encourage

such firms to radically alter their strategic direction and market foci. Case studies are used to

illustrate the circumstances that precipitated rapid and dedicated internationalisation strat-

egies. Finally, the implications for research and public policy in support of firm internation-

alisation are discussed.

2. Review and literature synthesis

Many of the extant models posit that firms gradually internationalise in an incremental

manner through a series of evolutionary ‘stages’ (see Fig. 1). As they do so, they commit

greater resources to overseas markets and tend to target countries that are increasingly

culturally and ‘psychically’ distant. An underlying assumption of all these models is that

firms are well established in the domestic market before venturing abroad (for comprehensive

reviews of the literature, see Leonidou and Katsikeas, 1996; Ellis and Pecotich, 1998).

Criticisms that such conceptualizations wrongly assume stepwise progression and forward

motion emanated as long ago as the late 1970s (Buckley et al., 1979; Cannon and Willis,

1981; Rosson, 1984; Turnbull, 1987). These authors also conclude that ‘stage’ models pay

insufficient attention to industry, company or people contexts and are generally ‘much too

deterministic’ (Reid, 1983). Moreover, Buckley et al. (1979) posit that firms do not

necessarily adopt consistent organizational approaches to internationalisation. Turnbull

(1987) also found little empirical support for incremental internationalisation as firms often

omitted stages in order to accelerate the process.

More recently, Andersen’s (1993) conceptual critique focused on the weak theoretical

underpinning of most models and the lack of congruence between theory and practice. He

concludes that their ability to delineate boundaries between stages, or adequately explain the

processes that lead to movement between them, is rather limited. Thus, apart from suggesting

that the behaviour of key decision-makers becomes more proactive in respect to international

opportunities, they offer few insights into change mechanisms. Furthermore, they assume the

process is unidirectional and do not address the pace of internationalisation in any meaningful

way. Nevertheless, many firms have internationalized in incremental stages and others

J. Bell et al. / Journal of International Management 7 (2001) 173–189174

continue to do so (Petersen and Pedersen, 1997). Arguably, this ‘pathway’ is particularly

prevalent among traditional firms gravitating outwards from large economies.

However, various emerging streams of research in the 1990s have served to seriously

challenge incremental ‘stage’ models. First, a growing literature on the globalisation of

services (for a comprehensive review, see Knight, 1999) argues that there are substantial

differences between the internationalisation pace, patterns and strategies of service and

manufacturing firms (Erramilli and Rao, 1991, 1994; Chadee and Mattsson, 1998; O’Farrell

et al., 1988). This is especially evident in the strategies of on-line service providers, as many

dot.com firms routinely ignore or transcend national boundaries and internationalise rapidly.

In these circumstances, the explanatory power of ‘stage’ theories for service sector firms is

extremely questionable. Moreover, boundaries between ‘products’ and ‘services’ are becom-

ing increasingly blurred. Augmented offerings are incorporating higher levels of pre- or after-

sales service, particularly where complex and/or sophisticated products are involved. At the

same time, service providers are attempting to include tangible dimensions in order to

differentiate their offerings. Higher levels of service intensity, even among traditional

manufacturers, casts further doubts on the robustness of the models (Rao and Naidu, 1992).

Second, recent research into ‘born global’ firms (McKinsey & Co., 1993; Knight and

Cavusgil, 1996), ‘international new ventures’ (McDougall et al., 1994; Oviatt and McDou-

gall, 1994) and ‘committed internationalists’ (Bonaccorsi, 1992; Jolly et al., 1992) demon-

Fig. 1. Comparison of various export/internationalization ‘stage’ models.

J. Bell et al. / Journal of International Management 7 (2001) 173–189 175

strates early and rapid internationalisation by smaller, highly committed, technology-intensive

firms. According to Oviatt and McDougall (1994), these firms are global from inception, or

internationalise within 2 years of establishment (other authors use between 3 and 5 years from

start-up as a classification criterion). Such internationalisation behaviour is commonplace

among firms that target small, highly specialized global ‘niches’ and is particularly prevalent

among SMEs located in small, open economies that face the double jeopardy of targeting

narrow ‘niches’ in small domestic markets.

Third, inquiries conducted among smaller ‘knowledge-intensive’ firms also find that some

enter domestic and international markets concurrently, or actually ignore the home market

altogether and target ‘lead’ markets for their offerings (Coviello 1994; Bell, 1995; Boter and

Holmquist, 1996; Coviello and Munro, 1997; Madsen and Servais, 1997). According to Bell

(1995), where firms have a presence in the home market, they tend to follow domestic clients

abroad, regardless of the ‘psychic proximity’ of the market. Again, this behaviour is

particularly prevalent among firms operating in small open economies and in emerging

nations, where domestic demand may be limited.

Coviello and McAuley (1999) provide a comprehensive review of contemporary contri-

butions on the internationalisation of the smaller firm. Their meta-analysis encompasses 16

empirical studies undertaken between 1989 and 1998 in 11 European countries (including the

Denmark, Finland, Ireland, Italy, the Netherlands, Norway and Sweden) and Canada, Hong

Kong, New Zealand and Pakistan. Significantly, no US studies are identified or included.

Many of these recent studies involve ‘knowledge-intensive’ firms, with inquiry into

computer software, service or technology-based firms prevalent (Bell, 1995; Coviello and

Munro, 1997; Bjorkmann and Kock, 1997; Fontes and Coombs, 1997; O’Farrell et al., 1998;

Jones, 1999; Crick and Jones, 2000). Their synthesis provides evidence of increasing

integration in the literature, the use of more pluralistic methodological approaches, the

importance of network perspectives (as posited by Johanson and Mattson, 1988; Nordstrom,

1990; Axelsson and Johanson, 1992; Welch and Welch, 1996) and a decreasing reliance on

the explanatory power of ‘stage’ theories.

In many cases, ‘born global’ and ‘knowledge-intensive’ firms are formed by active

entrepreneurs, often due to a significant breakthrough in process or technology, and their

offerings commonly involve substantial value adding (McKinsey & Co., 1993). A common

characteristic is that management adopts a global focus from the outset and embarks on rapid

and dedicated internationalisation. Their accelerated pace to international markets is driven by

a desire to gain ‘first mover advantage’ and to ‘lock-in’ new customers. A strong motivating

factor is the need to swiftly exploit proprietary knowledge as the main source of competitive

advantage, particularly in sectors where rapid technological change, coupled with the

difficulty of protecting intellectual capital and patents, contribute to narrow ‘windows’ of

commercial opportunity.

According to Knight and Cavusgil (1996), a number of recent trends have led to the

emergence of born global firms. These include:

� the increasing role of niche markets and greater demand for specialized or

customized products;


� significant advances in process technologies, which enable firms to engage in profitable

small-scale production of complex components;� advances in communications technology, such as fax, e-mail and the world wide web

(WWW), which means that small firms can manage international operations more

efficiently and have greater access to information;� the inherent advantage of small firms in terms of quicker response time, flexibility

and adaptability;� the internationalisation of knowledge, tools, technology and facilitating institutions,

which provide opportunities for technology transfer and access to funding; and� trends towards global networks, which are facilitating the development of mutually

beneficial relationships with international partners.

There is little doubt that these global trends will increasingly exert a strong influence on

the internationalisation of smaller firms generally, and not just on the behaviour of ‘born

global’ firms which often have an ‘‘international vision . . .from inception’’ or shortly

thereafter (Oviatt and McDougall, 1994, 1997).

However, there is also evidence in the literature that firm internationalisation may be

precipitated by particular ‘episodes’ that can lead to rapid international expansion or

deinternationalisation (Oesterle, 1997). Specific events, such as new opportunities in

international markets, favourable exchange rates or adverse economic conditions in the

domestic market many encourage firms to internationalise rapidly. Conversely, difficult

trading conditions abroad or the strength of the exporters currency may also encourage firms

to focus on domestic markets. Accordingly, firms may experience ‘epochs’ of rapid

internationalisation, followed by periods of consolidation or retrenchment. Critical incidents

and ‘epochs’ may be triggered the impact of similar forces on the internationalisation

strategies of domestic and overseas clients or other network partners, as well as those that

directly influence the focal firm (Bell et al., 1998). As discussed hereafter, evidence suggests

that such ‘episodes’ or critical incidents feature prominently in the internationalisation

behaviour of ‘born-again’ global firms.

3. Research focus and method

The findings emerge from a series of recent small-firm internationalisation studies

conducted by the authors in several UK regions (England, Northern Ireland and Scotland),

Australia andNewZealand. These adopted an exploratory case study approach and involved 50

in-depth semistructured interviews with CEOs or export managers of internationalising SMEs.

The sample was drawn from various regional SME directories of firms known to have an

international involvement (such as databases provided by Scottish Enterprise, Northern

Ireland Local Enterprise Development Unit, Dunedin City Council and the Victoria Chamber

of Commerce). In addition, other published information (company brochures, press reports,

trade association listings, etc.) and the researchers’ preexisting knowledge of firms within

their own locale were used to select judgement samples in which ‘knowledge-intensive’ and


‘traditional firms’ were equally represented in each location. Based on evidence from the

recent literature on SME internationalisation, it was assumed at the outset that the former

were likely to follow a ‘born global’ internationalisation trajectory and the latter would tend

to follow an incremental pathway.

The basic selection criteria were that case firms should be current exporters (a minimum

export ratio/sales turnover was not specified in order to obtain a range of firms exhibiting

various degrees of internationalisation). They should employ less than 250 staff (in line with

the UK government’s criteria for defining SMEs, although in practice the vast majority of

firms had less than 100 employees). They should also be independent and indigenous (i.e.,

not subsidiaries of larger domestic or international companies, to avoid potential resource and

cultural influences on decision-making).

In each locale, firms were contacted by telephone and an interview was arranged with the

CEO or a member of the management team. In all, some 60 firms were approached and with

three exceptions agreed to take part. However, in a further seven cases, mutually suitable

dates could not be arranged due to work pressures or overseas travel.

The overall objective of these investigations was to obtain a deeper understanding of the

internationalisation processes of SMEs. In particular, they sought to explore and explain any

variations in the patterns and pace of internationalisation among different groups of firms.

The research was essentially exploratory and data was captured using a predesigned

electronic template to ensure consistency between the researchers.

4. Findings

Findings in respect to the UK sample have been previously reported elsewhere (Bell et al.,

1998). In summary, they revealed significant differences in the patterns and pace of

internationalisation. ‘Knowledge-intensive’ firms adopted much more proactive and struc-

tured approaches to internationalisation and were more flexible in relation to their choice of

entry modes. As suggested by the ‘born global’ literature, they also internationalized more

rapidly, with domestic and international expansion often occurring concurrently. In some

cases, international involvement preceded domestic expansion or the home market was

ignored altogether as firms target ‘lead’ markets. In contrast, ‘traditional’ firms tended to

adopt a more ad hoc, reactive and opportunistic approach to internationalisation. This was

likely to occur in an incremental manner over a longer period of time, with firms often

focusing on ‘psychically’ and/or geographically ‘close’ markets.

The case studies subsequently undertaken in Australia and New Zealand corroborated the

UK findings in virtually every respect, although not surprisingly, ‘psychically’ and/or

geographically ‘close’ markets were often different. There was also evidence that, while

the knowledge intensive firms tended to focus on ‘lead’ markets for their offerings (such as

the USA, Europe or Japan), many of the traditional firms targeted ‘lag’ markets which were

less technologically advanced or not as sophisticated.

These overall results support the main themes emerging from the recent SME internation-

alisation literature, with 19 firms (38%) demonstrating rapid and dedicated internationalisa-


tion. Nevertheless, in common with Coviello and McAuley (1999), they also provide

evidence of incremental internationalisation among 15 cases (30%) that support more

conventional perspectives on the subject.

However, as is often the case when conducting exploratory research, the interviews

resulted in further discovery. Strong evidence emerged during the inquiry that a significant

proportion of focal firms had suddenly internationalised rapidly, having previously shown

little or no enthusiasm for the task. As these firms accounted for over 30% of those

interviewed (16 cases) but did not conform to either the incremental ‘stage’ models or the

‘born global’ conceptualisations, they were subsequently reclassified as ‘born-again’ globals.

A summary of the salient characteristics of the ‘born-again’ cases, in terms of age, size,

international experience and export ratio, is shown in Table 1. However, with the exception of

being older firms, their demographic profiles were essentially very similar to those of the

larger sample.

These ‘born-again’ global firms had internationalised very rapidly, typically within 2–5

years of their first international involvement. As can be seen, nearly two-thirds had export

ratios of over 50% of total sales and almost one-third had international sales of between 20%

and 49%. Indeed, in only one case was the export ratio below 20%. They were predom-

inantly, but not exclusively, ‘traditional’ firms as identified in our original classification. In

Table 1

Salient characteristics of born-again sample

Characteristics N= 16

Age of firm (years) Less than 10 3

10–20 6

More than 20 7

Size of firm (no. of employees) Less than 20 4

21–49 5

50–99 4

More than 100 3

Size of firm (turnover US$) Less than 1 million 2

1.0–1.9 million 3

2.0–4.9 million 3

5.0–9.9 million 4

More than 10 million 4

International experience (years) Less than 5 4

5–10 5

More than 10 7

Speed of internationalisation (no. of years after start-up) Less than 2

2–5 5

5–10 5

Over 10 6

Export ratio (percent of turnover) Less than 20 1

20–49 5

50–69 6

Over 70 4


virtually every case, their dramatic change in strategic focus was precipitated by a ‘critical

incident.’ Especially noteworthy was that these ‘episodes’ were common to a number of the

firms under investigation.

We now focus on describing, discussing and illustrating the main ‘critical incidents’ or

‘episodes’ identified. These are summarised in Table 2. However, it should be noted that in a

large number of cases, sudden internationalisation occurred due to a combination of ‘critical

incidents’ and not just as a result of a single ‘episode.’

As can be seen in Table 2, the most common ‘episode’ was a change in ownership and/or

management that typically occurred in a number of ways. First, through a management

buyout (MBO), of which there were at least six examples (see Case A).

Second, there were four cases where the focal firm was taken over by another that was either

a competitor or a foreign or domestic customer (see Case B). The acquisition of additional

human and financial resources or access to new networks were contributory factors.

Case A: MBO

Formed in 1983, this Northern Irish firm produces advanced telecommunications

equipment. In 1993, when it was subject to an MBO, it had 20 employees and a turnover

of US$1.5 million obtained from sales in the domestic UK market. The new management

team refocused on international markets. The first export order was obtained in 1994. It

now employs more than 70 staff, has a turnover in excess of US$10 million and exports

over 60% of its capacity to the USA, Germany, Japan and 20+ other countries. Entry

mode is via distributors appointed in each market. The firm has recently been granted a

‘Queens Award to Exporters’ and was Northern Ireland ‘exporter of the year.’

Case B: Takeover

A ‘specialist’ engineering firm in new Zealand established since the early 1970s. Until

1988, it primarily focused on the domestic market, with sporadic contracts in Australia

and had a turnover of less than US$1 million. In 1988, it was acquired by a US company

and expanded rapidly into a number of export markets where the US parent had existing

business (including Argentina, Chile and Ireland). It also obtained significant business in

the US via the parent company. Exports currently account for most of its US$5 million

turnover; these involve individually negotiated turnkey projects. It remains a fairly small

operation with less than 30 permanent staff, but has recently attracted the interest of a

large client. Management is currently considering whether to encourage this interest or

launch an MBO, as the parent company is unable to finance further international

expansion and may be willing to divest.


Third, there were three cases where a firm had actually ceased trading or was in

receivership and was acquired from the administrator either by the existing management or

a third party (see Case C). Perhaps a more apposite term for these firms is ‘reborn’ or

‘resurrected’ globals as, like Lazarus, they have literally returned from the grave (the former

term is now being used in IT trade journals to refer to firms that are adopting e-business

formats in order to try and revitalise their operations).

In all of the buyout scenarios, a change in ownership and/or management introduced

new decision-makers with a greater international orientation. In the case of a takeover, the

international orientation of the new ‘parent’ company was often influential on the

subsequent strategies of the new subsidiary. Moreover, the takeover was often accom-

panied by an infusion of additional finance, improvements in management, better

international market knowledge and access to existing channels and/or networks in

overseas markets.

Another less common ‘episode’ was where the focal company had taken over another firm

that had international operations. In several cases, this had encouraged companies to expand

Table 2

‘Born-again’ globals: critical incidents leading to rapid internationalization

Critical incident Nature of ‘episode’ Cases (N= 16) Percent

Change of ownership MBO 6 38

Takeover by another firm 4 25

Bought from administrator 3 19

Acquisition Acquisition of firm with international connections 3 19

Inward technology transfer 2 13

Distribution rights 2 13

Client followership Domestic client internationalises 6 38

Foreign client enters home market 3 19

Case C: Nearly deceased

Established in 1892, this Scottish family-owned firm was involved in fish processing

for the domestic market. In 1983, it appeared to be in terminal decline due to a

downturn in home market demand and was on the verge of going into liquidation.

However, one last attempt was made to salvage it. Following a relaunch in the domestic

market, it started exporting in 1991 (almost 100 years after the original company was

founded!). It now has some 40 employees and an annual turnover of US$8 million. It

exports over 60% of its capacity, mainly to France, Germany and the Netherlands, via

export agents and distributors.


international activities by launching their existing products into new markets where they had

gained coverage and distribution agreements (see Case D).

In two of these cases, the acquisition of new production technology ‘forced’ the firms to

internationalise in order to recover the high investment costs. The acquisition of rights to

distribute a product or provide a service in the domestic market also influenced the

subsequent internationalisation of several firms (see Case E).

Finally, acquisition of the rights to distribute a product in the domestic or regional

market or large investments in new process technologies provided the stimuli to inter-

nationalise for several firms (see Case F). For example one firm that manufactures

specialist furniture for disabled children invested more than US$500,000 in new production

Case D: Reborn

This small Scottish manufacturer of handmade carpets and rugs was originally

established in 1961. It started export in very small volumes in 1966, but went into

receivership in 1995. It was purchased from the receivers that year and the new owners

adopted a more aggressive international focus. Although it currently only employs six

people and has sales of less than US$500,000, exports to Austria, Norway and

Switzerland account for more than 40% of revenues. Specialist agents and exclusive

retail outlets are used in these markets The company’s current growth strategy is almost

exclusive focused on developing lucrative niches in overseas markets.

Case E: Acquisition of a subsidiary

Formed in 1986, this Scottish firm manufactures remotely operated underwater

vehicles that are used in the offshore oil exploration industry. Originally, the main

target market was the UK, but orders were also obtained from Norwegian operators

in the North Sea in 1990. Conscious that these oil reserves were finite and that the

fields were already well developed, the firm acquired a foreign company in the early

1990s to enable it to develop alternative products and new markets. It currently

employs 30 staff and exports 55% of its US$5 million turnover using their own

export sales team. Recent new markets resulting from the acquisition include

Singapore and Brazil. Future expansion is planned to other countries with significant

offshore oil industries and the firm is developing also developing new applications

for its underwater technologies.


equipment in the certain knowledge that they would have to internationalise quickly in

order to recoup the investment.

A third, and quite frequently occurring, ‘episode’ (six cases) was the situation in which an

existing domestic customer had suddenly internationalised and the firm had ‘followed’ the

client into new markets (see Case G).

Allied to ‘client followership’ were several cases where a new client already operating

internationally had entered the home market. Having supplied the client in the home market,

they subsequently obtained international business from them as well (see Case H). There was

also one example where an alliance was formed after an international client serving the home

Case F: Acquisition of domestic distribution rights

This small Australian firm employs four staff and was established about 10 years ago

to distribute third-party software in the home market. In 1996, it acquired the

Australian distribution rights for a US firm software solutions. In 1998, the latter

approached the firm to distribute the products throughout the Asia Pacific region. As

a result, it now has significant business in Indonesia, Malaysia, Singapore and New

Zealand and dedicated sales representatives covering the Asia-Pacific region. Revenue

from these activities alone exceeds US$300,000. The company has since reached

agreements with other existing clients to act on their behalf in a number of these

markets. Its ability to do so has led to interest from other software houses seeking

representation in the region.

Case G: Client ‘followership’ (MNC client)

This Northern Irish firm developed a range of card-operated electronic management

systems that are used to monitor usage of multiple-user copiers. Founded in 1983, the

firm obtained domestic orders from large MNC office equipment suppliers such as

Xerox and Fuji. Following an MBO in 1987, it began to pursue more aggressive

international strategies and several of its MNC clients recommended the firm’s offerings

to corporate headquarters or subsidiaries in other countries. It now employs more than

50 staff and exports over 70% of its products to over 40 markets including the

Australia, the Netherlands and the US. Typically, it enters new markets through the

established dealer networks of their MNC clients. This firm is also a recent recipient of

a ‘Queens Award for exporters.’ This firm was recently taken over by a larger US

company. This new development will provide the necessary capital and networks for

future internationalisation strategies.


market used the specialist expertise of a firm in other overseas markets (see Case I). In these

cases, it can be observed that the ‘critical incident’ was triggered by developments within the

firm’s networks.

5. Discussion

The preceding short cases serve to illustrate some relatively common ‘episodes’ among

the firms investigated. From them, a number of general observations can be made. First, in

Case H: New client ‘followership’ (international client)

Established in 1983, this Northern Irish bakery firm now has a turnover of over US$10

million and employs more than 120 staff. It began selling in the Republic of Ireland

(technically an export market) in 1985 because of ‘contingent’ proximity and the fact

that management perceived this market to easier to penetrate than the domestic NI and

UK market. However, rapid and dedicated international expansion came in the mid-

1990s, when Subway set up franchise operations in Ireland. Subway was seeking a local

supplier of chilled part-bake bread and the firm obtained the contract to supply the Irish

market. So successful was this relationship that the firm now supplies Subway

franchisees in Egypt, Portugal, the UK and a number of other European countries.

These contracts provided the impetus for the firm to develop other markets on its own

behalf in Sweden and Holland by supplying produce direct to large retail chains.

Currently, almost half its production is destined for export markets.

Case I: Client ‘followership’ (domestic client)

This small Australian firm was originally established in the early 1980s to distribute

imported foreign language films to a large immigrant population from Greece,

Yugoslavia and other Southern European countries. It subsequently began to subtitle

and then ‘dub’ these films into English. In 1992 and at a time when the Australian film

industry was gaining worldwide notoriety (e.g., the Neighbours soap), it was

approached by an Australian film company to dub local film productions into foreign

languages for international distribution. Two years later, on the recommendation of a

local client, it was asked by an overseas production companies to dub foreign films for

international distribution into English. The firm formed a strategic alliance with this

contact and now has direct and indirect export sales of more than US$2 million.


relation to MBOs, internationalisation may result due to a need to increase revenues in order

to cover debt repayments (Case A is a good example). In terms of takeovers or other forms of

acquisition, mezzanine financiers may urge internationalisation as part of the terms and

conditions of any financial injection and/or provide overseas contacts (McNaughton and

Bell, 2000).

An MBO of a subsidiary operation may be freed from its domestic mandate and/or

limitations on its international expansion, thereby having greater scope to develop new

markets. A divested unit may also have fewer products, scarcer resources for new product or

market development than it did as part of a portfolio of units within the parent firm. Thus, it

will need to extend its spatial scope within its ‘new’ niche market. New management may

also provide a stronger international orientation and greater export marketing skills and

competencies. Some of these issues can be linked to traditional FDI literature on organic

growth through acquisition (see, for example, Anderssen et al., 1997).

An interesting subcategory of this phenomenon are firms whose management sees

international opportunities but are prevented from exploiting them due to resource con-

straints. Often, they devise an internationalisation strategy that involves making them

attractive for a takeover by a larger domestic or foreign firm (Cases B and G are good

examples). Once purchased, the firm will use the resources of the acquirer and its

international distribution networks to internationalise rapidly.

Bell (1995) provides evidence of this approach among Finnish and Irish computer software

firms. It is also a common route among their Canadian counterparts, where in some cases,

firms are intentionally incubated from the start for sale to a US interest (McNaughton, in

press). As the valuation of technology firms is normally higher in the US, this route provides

a quick exit for the founders, which is arguably superior to an initial public offering (IPO).

There is also much recent evidence in trade journals and the popular press to suggest that this

is a frequently devised game plan among ‘dot com’ internet firms. Finally, there may be

circumstances where management of the focal firm does not see an internationalisation

opportunity, but the acquirer does (see Case B). In these circumstances, the strategic direction

of the firm may change quite dramatically in a very short space of time.

Among ‘reborn’ firms, the motive for the acquisition or ‘relaunch’ of an established firm, or

of one that is in financial difficulties, may be to gain access to its assets. These might include

property, patents or proprietary knowledge, brand names, administrative capabilities, legal

structure and stock market listing (Cases C and D are good examples). The existing company

may be used as a ‘shell’ from which to launch rapid growth and/or a vehicle for raising capital

to support internationalisation, possibly in sectors outside the original business area of the firm.

A classic example is Compton UK Partners that went public in 1972 through a reverse

takeover of the ‘shell’ company Birmingham Crematorium. In 1975, Saatchi and Saatchi

undertook a partial reverse takeover of Compton, creating a company with access to City of

London finance. This supported subsequent acquisitions that led to the formation of a

worldwide advertising group (Kleinman, 1989). Although comparatively rare, this strategy

may become more popular in future because of the current spate of IPOs, many of which have

performed quite poorly. Some of these might well be taken over by well performing private

companies and used to gain a quick listing.


In an SME context, examples are harder to find, in part because they tend not to be widely

reported in the media and often do not involve a listing. However, a good illustration is that of

a Northern Ireland firm that makes bathroom fixtures and fittings. In 1986, it bought the

assets of a long-established UK company (Adamsez) to relaunch a brand that had very strong

recognition dating back to Victorian England and the days of the British Empire. Sub-

sequently, it has used this vehicle to internationalise its business operations. More recently,

Pringle Knitwear, a small Scottish company with an international reputation, notably among

the worlds golfing fraternity, was taken-over by a relatively unknown third party that intends

to capitalise on the value of the brand by using it to launch a full range of leisure apparel.

What is clear from the present research and the discussion of some of the issues

surrounding ‘born-again’ global firms, is that the rationale behind the ‘born global’

phenomenon need not only apply to start-up ventures. Furthermore, it may be argued that

‘born global’ is not an organisational form per se. Rather, it may be seen as a strategy to

improve firm value through internationalisation. Alternative organisational forms can be used

in an attempt to pursue the same (or a similar) strategy.

It is also evident from most cases that internationalisation is not a linear, incremental,

unidirectional path. Firms can have a domestic focus for many years and then internationalise

very quickly. Conversely, firms may deinternationalise and focus on the domestic market.

Particular ‘episodes’ can lead to an ‘epoch’ of rapid and dedicated internationalisation. In this

context, the importance of top management’s international orientation, commitment and

experience is pivotal and changes in ownership or management are often the catalyst for a

shift in strategic direction leading to internationalisation (Case G is a case in point).

There is also considerable evidence from Cases B, H and I of the synergistic link between

corporate finance and internationalisation. Firms require access to financial resources in order

to internationalise. This may take the form of an infusion of new equity by the acquirer or via

listing (McNaughton and Bell, 2000). Equally, it might involve the acquisition of resources

(such as new product and/or new market knowledge, overseas contact networks and

international channels of distribution) that would otherwise have been costly to develop

(Case F is a good example).

The popular press and trade media report a growing incidence of firms that adopt e-

business formats in order to exploit domestic and/or international markets. While not manifest

among the case firms, although some 25% do have their own WWW sites and use them for

promotional purposes, such strategies require the allocation of significant additional financial

and human resources. For publicly listed and/or highly geared companies, internationalisation

may also be the only (or in the circumstances, most expedient) way to show returns to

investors with high expectations, or meet increased debt repayments.

Finally, from a public policy perspective, current enthusiasm to support internationalising

SMEs in general (Acs et al., 1997; Katsikeas et al., 1998) and knowledge-based ‘born global’

firms in particular (OECD, 1997) should not obscure the potential opportunities presented by

‘born-again’ global firms. Indeed, the authors posit that more holistic approaches to policy

support are required in terms of brokering and supporting mergers, acquisitions and takeovers

within the SME sector, or to provide the stimuli for internationalisation and not just exporting

(see also Fletcher, 2001). These may provide a novel and synergistic approach to stimulating


economic development and further encourage internationalisation. Clearly, these areas also

require additional research in terms of the types of programs and the specific support

required. Evident, too, is the need for further inquiry into the relationship between financing

issues, commitment to internationalisation and the subsequent pace of this process.

6. Conclusion

This paper has identified the existence of ‘born-again’ global firms and explored some of

the circumstances that have led to their rapid and dedicated internationalisation. Although the

research described is essentially exploratory in nature, there is sufficient evidence from the

findings to warrant a much fuller investigation into the internationalisation behaviour of such

firms and into the nature of their support and financing needs.

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