i

SAMINT-MILI-21025

Master’s Thesis 30 credits

Green and Global: Internationalization

of eco-innovated Born Global firms

Case Study of biocomposite plastic industry

Muhammad Ardi Kurniadi

Hamid Mohamed

Master’s Programme in Industrial Management and Innovation

Master program i industriell ledning och innovation

June 2021

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Abstract

Green and Global: Internationalization of eco-

innovated Born Global firms

Case Study of biocomposite plastic industry

Muhammad Ardi Kurniadi and Hamid Mohamed

Sustainability and eco-innovation trends in business are increasingly diffused globally. The

quest for sustainable materials to overcome the alarming global tendency of plastic ubiquity is one of the main reasons for such trends. It draws the attention of international actors in

the business ranging from a big incumbent multinational company to a small but international firm. The phenomenon of a small firm that quickly becomes global is pervasive and

contributes crucially to the global economy. Due to the born global (BG) novelty,

internationalization in BG firms has been elaborated primarily in a general context, excluding the firms and industry-particular characteristics. The study aims to understand the

internationalization process of a BG firm equipped with an eco-innovation context at the early stage in the biocomposite industry, using an effectual approach as conceptual lenses. The conceptual lens creates interplay among the combined international business area,

international entrepreneurship, and emerging eco-innovation field through the embedded

effectuation principles. The study embraces an inductive case study approach which involves 12 participants from international actors and members of BG firms in semi-structured

interviews. Furthermore, the industrial context of the study revolves around the biocomposite industry and its network to view eco-innovation nuance. The research found

that Eco-innovation technology competence becomes the available means to internationalize for BG firm. Moreover, it is concluded that the effectuation theory is reliable both to be used by researchers in analyzing the phenomenon and dominantly used

by the entrepreneur in internationalizing their business in uncertain time such as the early stage of internationalization. BG firm utilizes the contingencies through a learning process

iteratively but at a quick pace due to their alliance with the network, but the business form is more effectually transformed instead of incrementally changing and well-planned. The use of a formal causation approach was present yet limited during the process. The findings

of this study add to the existing literature of internationalization by incorporating eco-innovation, as well as bridging the gap between eco-innovation, international business, and

entrepreneurship literature.

Keywords: Born Global, Effectuation, Internationalization, Bioplastic, Biocomposite, Sustainability, Eco-innovation

Subject reader: Daniel Tolstoy Supervisor: Hongxia Li Karlsson Examiner: David Sköld SAMINT-MILI-21025 Printed by: Uppsala University

Faculty of Technology

Visiting address: Ångströmlaboratoriet

Lägerhyddsvägen 1 Postal address: Box 536 751 21 Uppsala

Telephone: +46 (0)18 – 471 30 03 Telefax:

+46 (0)18 – 471 30 00 Web page: http://www.teknik.uu.se/education/

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Popular science summary

It has always been said that necessity is the mother of innovation. This statement entails the

importance of solving a problem as the primary trigger to new innovations. If we took a look at

our world nowadays, it is clear that one of the most pressing issues is the way we treat our planet.

The way we overconsume natural resources and pollute the environment is a clear indication of

such an issue. One clear example of this is plastic materials; during the 1930s until World War II,

plastics witnessed a great boom as an industry. Since then, we can see plastic in our everyday life

as it has become an integral part of our lives. However, soon we have realized that these materials

are not sufficiently good for our planet as they became a significant source of landfills and ocean

pollution. In this study, we aim to investigate these types of sustainable innovations that address

the issue of plastic, specifically in the bio composite market, where there is an excellent

development in producing plastic-like material from wood fiber.

Traditionally, big corporates have been leading gradual innovations as they possess the necessary

resources and R&D abilities. On the other hand, smaller size companies have been very good at

producing groundbreaking innovations as they are more flexible, nimble, and autonomous,

increasing their level of creativity. Usually, when a big or small firm has an innovation, it tries to

expand and expose the innovation as much as possible to gain acceptance from the market. This is

seldom going gradually, starting from town to city to nationwide, then neighboring country, etc.

This process is called “Internationalization” and describes how a company goes from operating on

a local level to an international one. It is also similar to building a house where one starts by

building the base and foundations and moving up from there. Another type of firm called” Born

Global” does the same process but differently; these firms are usually small in size, have a

significant part of their income from international market, and they are fast in their

internationalization; usually, it takes less than three years for them to internationalized. An

example of these companies are Skype, ZARA, and HTC.

Basically, in this study, we combine the several aspects of sustainable innovation, born global

firms, international entrepreneurship, and internationalization. We aim to investigate how a born

global company with sustainable innovation would expand to the international market of

bioplastics, especially when they do not engage directly with the end customer. In our study, we

interview several employees within the born global firms and external actors in the forest and

plastic industry. The study highlights the entrepreneurial aspect of the born global as a key factor

in their globalization and the perspective of the forest industry, plastic industry, and brand owners

and how they perceive such innovations.

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Acknowledgement

This master thesis has been written during our master’s study time at Uppsala University, which

was independently forged by Muhammad Ardi Kurniadi and Hamid Mohamed with the

considerable assistance of interviewees from many actors in bio composite and bioplastic business

in Sweden, Finland, and Denmark.

First, we would like to express our sincere gratitude to our subject rider Doc. Daniel Tolstoy, for

his constructive insights, encouragements, and direction for the thesis, has been exceptionally

valuable. Daniel still shares his positive enthusiasm and helps us during uncertain times and

guiding us till the end to be more structured and let us deliver our reflection into words in this

thesis independently and freely. Second, we would like to acknowledge our supervisor, Hongxia

Li Karlsson from Biofiber Tech AB, for her valuable time to guide and motivate us to leave the

comfort zone during her unsettled time.

We would like to thank all the participants in the study who have been accommodative and willing

to participate in this study. It is a crucial contribution to the empirical aspect of the study and

extends our intellection on this subject. Our appreciation also goes to our scholarship grantor

(Indonesia Endowment Fund for Education LPDP and Swedish Institute SI) for all the supports

and opening a gate for us to the new horizon of abundance knowledge and make us able to study

at Uppsala University. Furthermore, we would like to praise the lecturers and staff of the Industrial

Engineering and management department for their proficiency in delivering a learning experience

in the last two years.

Finally, we would like to express our gratefulness to our family and friends for their unconditional

and perpetual support mentally and emotionally during the hard times of the Covid-19 pandemic.

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Contents

Popular science summary ............................................................................................................. iii

Acknowledgement ......................................................................................................................... iv

Abbreviations ............................................................................................................................... viii

1. Introduction ............................................................................................................................ 1

1.1 Problem statement ............................................................................................................................. 2

1.2 Aim and purpose ............................................................................................................................... 3

1.3 Contribution....................................................................................................................................... 3

2. Literature review ..................................................................................................................... 4

2.1 Theoretical Framework .................................................................................................................... 4 2.1.1 Uppsala Internationalization Model ........................................................................................................ 4 2.1.2 Born Global Firm ...................................................................................................................................... 6 2.1.3 Reasons for Internationalization ............................................................................................................ 10 2.1.4 Entry modes of Born Global Firms ....................................................................................................... 10 2.1.5 Challenges of Born Global Firms ........................................................................................................... 11 2.1.6 Networks in Born Global Firms ............................................................................................................. 11 2.1.7 Locational Dimension ............................................................................................................................. 13

2.2 Effectuation Theory ........................................................................................................................ 13 2.2.1 Principles of Effectuation ........................................................................................................................ 15 2.2.2 Effectuation and Internationalization ................................................................................................... 15

2.3 Conceptual Framework .................................................................................................................. 16 2.3.1 Internationalization of Eco-innovative Born Global ............................................................................ 16 2.3.2 Effectuation theory, BG Firms internationalization, and Eco-Innovation ........................................ 18

3. Methodology ......................................................................................................................... 21

3.1 Research Context and Approach ................................................................................................... 21

3.2 Research Design ............................................................................................................................... 22

3.3 Data collection.................................................................................................................................. 24

3.4 Data analysis .................................................................................................................................... 26

3.5 Research Quality ............................................................................................................................. 30

3.6 Ethical Considerations .................................................................................................................... 30

4. Empirical Data Results ........................................................................................................ 31

4.1 Industry Description ....................................................................................................................... 31 4.1.1 Bioplastic Users ........................................................................................................................................ 31 4.1.2 Bio Composites......................................................................................................................................... 32 4.1.3 Plastic Industry ........................................................................................................................................ 32

4.2 Description of primary data interview ......................................................................................... 33

4.3 Early establishment ........................................................................................................................ 34

4.4 Locational Advantage ..................................................................................................................... 35

4.5 Business Model ................................................................................................................................ 36

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4.6 Resource Importance ...................................................................................................................... 38

4.7 International Networks Collaboration .......................................................................................... 39

4.8 Risk and Challenge .......................................................................................................................... 43

4.9 Industry characteristics .................................................................................................................. 44

4.10 Sustainability and drivers ............................................................................................................. 45

4.11 Innovation ...................................................................................................................................... 46

5. Discussion............................................................................................................................. 48

5.1 Discussion on main findings ........................................................................................................... 48 5.1.1 Effectuation in internationalization process ......................................................................................... 48 5.1.2 Eco-Innovation orientation ..................................................................................................................... 56 5.1.3 Technological orientation ....................................................................................................................... 57

5.2 Theoretical Implications ................................................................................................................. 58

5.3 Practical Implications ..................................................................................................................... 59

5.4 Sustainability implications.............................................................................................................. 60

6. Conclusions .......................................................................................................................... 61

7. Limitations and further research........................................................................................................ 63

References .................................................................................................................................... 64

Appendices .................................................................................................................................... 74

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List of tables

Table 1: Table 1 Definition of Born global firm by scholars ......................................................... 7

Table 2: Data collection interviews of Bioplastic Eco-innovated BG firm and external partners 25

Table 3: External partner firm profile for data collection ............................................................. 26

Table 4: Data Supporting Interpretations and quotes ................................................................... 28

Table 5: Structure of data coding .................................................................................................. 29

List of figures

Figure 1:BG conceptual framework of constructs and linkages by Knight and Cavusgil (2004) .. 8

Figure 2:Conceptual framework of the research related to internationalization........................... 19

Figure 3: Simplistic wood based Bioplastic value chain (own construction) ............................... 23

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Abbreviations

BG Born Global

BGF Born global focal firm in this study

B2B Business to Business

B2C Business to consumer

CEO Chief executive officer

CO2 Carbon dioxide

FDI Foreign Direct Investment

FSC Forest Stewardship Council

GDP Gross domestic product

GHG Greenhouse gas

HDPE High-density polyethylene

INV International new ventures

IPR Intellectual property rights

ISO International Organization for Standardization

JV Joint venture

LDPE Low-density polyethylene

LLDPE Liner low-density polyethylene

MNEs Multinational enterprises

MVP Minimum viable product

NAFTA North American Free Trade Agreement

NDA Non-disclosure Agreement

OECD Organization for Economic Co-operation and Development

PE Polyethylene

PET Polyethylene terephthalate

PP Polypropylene

PhD Doctor of Philosophy

PLA Polylactic acid

PS Polystyrene

PUR Polyurethane

PVC Polyvinyl chloride

R&D Research and development

SMEs Small and mid-size enterprises

TQM Total quality management

UV Ultraviolet

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1. Introduction This chapter will briefly introduce the concepts of eco-innovation, internationalization, and born

global. Furthermore, it will discuss the problem statement with relevant research as well it will

introduce the aim and purpose of the study. Finally, this chapter will intrude on the research

question along with the expected contribution of the study.

Over the years, the environmental challenges have become one of the most eminent issues to

disrupt Business, manufacturing, and product development; hence innovations that deal with and

handles such issues are becoming directly related to economic growth (Bossle et al., 2016).

Furthermore, the increasing regulations from governmental bodies along with rising consumer

awareness are important factors for addressing environmental issues (Dai and Zhang, 2017). As a

result, these factors constitute pressure on firms to adopt sustainable behavior and enhance internal

capabilities in relation to eco-innovation (Bossle et al., 2016). For instance, one of the most

pressing problems is manifested in plastic materials and the way we use them (Rahman and Bhoi,

2021). Plastic production is considered a major source of greenhouse gas (GHG) and carbon

emissions (Kosior and Mitchell, 2020). Not only that but almost 80% of all plastic end up in

landfills and natural environments while actually less than 10% is recycled (Geyer et al., 2017).

In order to handle such a global issue, we need the help of novel sustainable innovations. Those

are the innovations we refer to in our study as “Eco-innovations”. According to OECD (2009), the

definition of eco-innovation is regarded as” any innovation which would result in reduced

environmental impact, even if such an outcome was not intended initially”. Moreover, Europeia

(2007) defines eco-innovation as “any form of innovation aiming at significant and demonstrable

progress towards the goal of sustainable development, through reducing impacts on the

environment or achieving a more efficient and responsible use of natural resources, including

energy”. Regarding the differentiation between incremental and radical eco-innovation, there is a

unanimity that only radical eco-innovations could replace existing unsustainable processes, thus

achieving environmental sustainability (Carrillo-hermosilla et al., 2010).

The environmental issues we face as a society today are global; the plastic materials problem is a

clear example of that. In this sense, in order to address such issues, eco-innovations need to be

global as well. Henceforth, we introduce the term “Internationalization of Eco-innovation”.

Corresponding to the Uppsala Model, firm internationalization emerges as an incremental, gradual,

and sequential process (Johanson and Vahlne, 1977). The firms initially increase their resource

commitment from a closer geographical place or more similar to their domestic market. This effort

may include export activities, hiring of independent agents, sales subsidiaries, and the launch of

overseas production units. On the other hand, the network model particularizes network

relationship as a function within the firm's internationalization effort by exploiting market

knowledge which offers growth outside their borders incrementally (Johanson and Mattsson,

1988). Unlike traditional internationalization theories such as the Uppsala model, the concept of

born global has a distinctly different view (Huhta and Huhta, 2014). Companies that follow the

born global approach start their internationalization efforts at an early stage, just after the business

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entry or soon subsequently. In such a sense, born global companies tend to leap forward and skip

stages in the traditional internationalization process and enjoy the benefits of the internationalized

market. Henceforth, the phenomenon of born global is difficult to explain or to understand using

traditional internationalization theories (Huhta and Huhta, 2014).

The phenomenon of born global is somewhat intriguing. Traditionally, theories tended to put

prominence on the need to build the home base before considering operating internationally abroad

(Chetty and Campbell-Hunt, 2004; Moen and Servais, 2002). However, the concept of born global

has disrupted the traditional view of internationalization. According to the European Commission

(2003), born global are firms that initially target markets that are international or niche markets

that cannot be satisfied on a local level. Moreover, born global is defined as a small size company

(less than 500 employees), annual sales (less US$100 million), and relies upon advanced

technology in crafting unique innovations (Knight and Cavusgil, 1996). Additionally, the

traditional theoretical view links internationalization to the establishment of a home base which

can take a number of years. Born global are categorized as companies that internationalize within

three years of their inception (Cavusgil et al., 2014).

1.1 Problem statement

The increasing ongoing attention towards environmental, social, and economic sustainability has

gained growing momentum throughout the past decades. Such momentum is represented in the

United Nations 2030 agenda sustainable development goals (UNDP, 2017). The Growth of the

bioplastic market is the quickest compared to other bio-industry, and the industrial trend shows an

alteration into more sustainable business practices (OECD, 2013). Regardless of the amount and

geographical context of plastic used, as one of the significant highly polluting industrial sectors,

the plastic industry contributes to a problematic discourse in its Business's overall sustainable

operation (Henderson and Green, 2020). According to the global risk report published by the world

economic forum, environmental risks such as climate change action failure are categorized as

catastrophic and of high impact (World Economic Forum, 2021). These forces manifested as

threats and opportunities have driven companies to adopt a sustainable green approach in their

business practices. Nidumolu et al. (2009) argue that companies do not adopt sustainability

practices just to view themselves as socially responsible, but rather they do that because it enables

them to capitalize on future opportunities in terms of innovations, growth, and new business

models (Nidumolu et al., 2009). However, this may sound straightforward for big companies

where they can manage and control their supply chains accordingly to accommodate eco-

innovation. On the other hand, this could be quite difficult for a smaller size or a startup company

as it lacks the necessary resources, market power, and capabilities to operate on an international

level (Knight, 2001). Hence, this would make the international operation for such companies much

harder in comparison to (MNEs), as they need to deal with cultural, political, and economic

systems challenges (ibid). Moreover, a small size company may need to prove itself first and gain

the trust of partners to be able to enjoy access to international supply chains and business networks.

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1.2 Aim and purpose

The current research on the internationalization of multinational companies (MNEs) and small and

medium-sized companies (SMEs) mainly focuses on manufacturing industries in a general manner

rather than specific environmentally-friendly industries, such as sustainable bioplastics products.

However, the industrial situation showed a shifting trend to more sustainable business practices at

the global economic level (Filho et al., 2011). In this sense and from the aforementioned problem

statement, the aim of this research would be to study how would a born global small size company

(startup) equipped with eco-innovation undergo internationalization efforts into international

supply chains and business networks. The research would investigate how BGs with eco-

innovative technologies would internationalize in a B2B market setting. Furthermore, to capture

the internationalization process at an early stage to view how would BGs leverage their eco-

innovation and value proposition to navigate business networks and supply chains and gain trust

in partnerships and collaborations. The research will focus on answering questions:

How does an Eco-innovative BG internationalize in the early stage?

In order to address the research question, a conceptual model will be formed to analyze the data

and capture the internationalization process through the lens of effectuation theory. This study will

utilize a case study approach through qualitative semi-structured interviews to collect data.

1.3 Contribution

On the empirical side, this study will contribute to the understanding of the BGs

internationalization concept with regard to eco-innovation. While the vast majority of research on

internationalization focuses on ordinary Business and innovations (Hughes et al.,2019; San

Emeterio, M.C et al., 2020), and the literature on eco-innovation mainly centers around the view

of big companies (Arranz et al., 2021; Bossle et al., 2016). This study incorporates the concept of

eco-innovation of BGs in the internationalization process. The research will highlight how would

BGs utilize the current trend of sustainability and leverage their eco-innovations to facilitate access

to international networks and supply chains.

On the theoretical side, the study will contribute to the existing internationalization theories and

literature by fusing the eco-innovation concept in the internationalization process. Furthermore,

the research will contribute to the understanding of effectuation theory in relation to

internationalization and eco-innovative born global aspects. In addition, the research will help

bridge the gap and fuse together between eco- innovation, international Business, and

entrepreneurship literature.

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2. Literature review This section elaborates the theoretical framework as the center of the study. The theoretical

framework will elaborate the Uppsala Internationalization model as historical background.

Subsequently, the chapter describes the Internationalization, Born Global theory, and Effectuation

theory as analytical lenses of the study. Eventually, the interplay between the theories and

backgrounds is presented as a conceptual framework.

2.1 Theoretical Framework

The Internationalization topic is indisputably profoundly researched in the topic of international

Business. However, globalization and the industrial trend showed a shifting trend to more

sustainable business practices at the global economic level (Filho et al., 2021). Moreover, the

internationalization process in the globalization era is not only represented by the mature and big

multinational company, but also in the young smaller entrepreneurial start-up (Knight and

Cavusgil, 2004). The micro-firm in the research refers to the European Commission definition of

a micro-enterprise firm, a firm that consists of less than ten persons and a turnover of less than

EUR 2 million per annum on their balance sheet (European Commission, 2020). In other words,

the firm is in the early stage of development and internationalization. Hojnik et al. (2018) elaborate

that there are relationships between eco-innovation or sustainable products, firm performance, and

internationalization of firms. However, the research that focuses on the interplay of those factors

is still insufficient (Hojnik et al., 2018). Referring to the background mentioned earlier, the

research will incorporate the micro firm that uses eco-innovation in their product or service, their

early internationalization process, and relate it to the available theories.

The theoretical framework adopted for this research includes a variety of models and theories

aimed to investigate the situation of the firm both internally and externally, which therefore plays

a vital role in highlighting the internationalization process of the firm. The historical point of view

of internationalization will be seen by elaborating Uppsala Internationalization Model and the

revisited version (Johanson and Vahlne, 1977; Johanson and Vahlne, 2009; Vahlne and Johanson,

2017). Hence, the Uppsala model will be scrutinized merely as the theoretical background instead

of using it as the quintessence of the study. The focus in the Uppsala model will be on highlighting

knowledge accumulation. Subsequently, the conceptual framework will be constructed by

incorporating the components of born-global (Knight and Cavusgil, 2004; Cavusgil and Knight,

2015) and effectuation theory (Sarasvathy, 2001;2008; Dew et al., 2009a). Those factors will serve

as the analytical lens of the study, which network theories will complement to see the

interdependence and process of internationalization (Johanson and Mattsson, 1988; Freeman et al.,

2006; Melen and Nordman, 2007). The model will create an interplay between the theories to help

the research finds the right path in researching the phenomenon.

2.1.1 Uppsala Internationalization Model

In the Uppsala Model, firm internationalization emerges as an incremental, gradual, and sequential

process (Johanson and Vahlne, 1977). Rather than making a single massive decision at the outset

to establish a foreign production, Multinational Enterprise (MNE) stipulated their international

operation in a stepwise manner to reduce risk and uncertainty (ibid). The firms initially increase

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their resource commitment gradually from an origin to a closer psychic distance destination that

is more similar to their domestic market. “The psychic distance is defined as the sum of factors

preventing the flow of information from and to the market” (ibid). For instance, languages,

cultures, business practices, technology (ibid), etc. Hence, after receiving orders from the foreign

market, internationalizing the Business may include export activities, hiring of independent agents,

establishing sales subsidiaries, and the launch of overseas production units. Commence from a

simple one to more complex ways of executing the Business, from the most uncomplicated

knowledge to discern (ibid).

The Uppsala Model has experienced revisions since its establishment in 1977. The later version

has included the ‘capability-creating process’ in the internationalization of Multinational Business

Enterprise (ibid). Further, they introduce modern companies’ concept into the model that relies on

process-oriented, utilizing network, business exchange, active and entrepreneurial behavior, and

decentralized organization form (ibid). It is revisited to give a continuous dynamic nuance in two

interrelated factors: knowledge development and resource commitment (See Appendix A).

The revisited Uppsala model elaborates that the decision-making process of deciding resource

commitment will affect the firm’s capability and performance as a result (Vahlne and Johanson,

2017). At the same time, the routines, capabilities, and current performance will impact the

incremental knowledge development process as the vital element in Uppsala Model. Knowledge

is essential in the decision-making or commitment process that also involves the network

participants (ibid). Further, Vahlne and Johanson (2017) elaborate that increasing knowledge

opens the possibility for increasing the market and resource commitment.

The knowledge becomes a prerequisite for making commitment decisions, while partners can open

the gate to access the knowledge (Hohenthal et al., 2014). The knowledge can be acquired after

experiencing a relationship-building process with the network actors (Vahlne and Johanson, 2017)

or by experiencing its foreign operation (Johanson and Vahlne, 1977). One of the reasons why the

firm commences operation by working together with a third party in a foreign market is the

untransferable experiential knowledge – that can be learned only by experience - and lack of

market-specific knowledge (ibid). Examples of experiential knowledge are managerial work and

marketing knowledge (ibid). The knowledge and experience will determine the perspective of the

firm on perceiving the problem and opportunity.

The original version of the Uppsala Model has been criticized by many researchers. The Uppsala

model is perceived as of limited relevance to explain internationalization in a rapidly changing

environment (Gabrielsson and Kirpalani, 2012). Due to globalization with the advancement of

technology and interconnected Business in the modern era that information can disseminate

effortlessly and reduce the psychic distance (Knight and Cavusgil, 1996). Currently, researchers

believe that even the new phenomenon of born global firms with limited resources and limited

experience can make a quantum leap in the early establishment phase of their international

operation (Knight and Cavusgil, 2004). In addition, the Uppsala model stated that experience could

be acquired immediately by recruiting firm members or hiring consultants with excellent

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experience and networks. Where in BG, mostly the firms have inadequate resources to do so.

Lastly, as stated in the Uppsala model, “additional commitments will be made in small steps unless

the firm has very large resources and/or market conditions are stable and homogeneous, or the firm

has much experience from other markets with similar conditions”.

2.1.2 Born Global Firm

Consumers inevitably become more homogenous in the globalization era, notwithstanding the

different cultures and geographical areas, showing the commonality by the impact of technology

(Levitt, 1983). The globalization with the characteristic of rapid progress into an advanced state of

the art technology such as the internet and advancement of efficient worldwide logistics, give a

result in lower overall transaction cost (Knight and Cavusgil, 2004), increase international trade,

and allow expansion in global Business (Cavusgil and Knight, 2015). The phenomenon is

prevalent not merely in the big multinational company, but also including the smaller firm that has

the aspirations to reach the foreign markets since the establishment stage with a more

entrepreneurial and innovative drive (Taylor and Jack, 2013; Knight and Cavusgil, 2004).

Information technology enables the young firm to obtain information of foreign partners and create

product propositions that fit the niche market with their uniqueness (Samiee, 1998; Cavusgil and

Knight, 2015).

The research in this field is growing since 1980, such as the Born global firm (Knight and Cavusgil,

2004; 2015; Coviello and Munro, 1995; Rennie, 1993) and international new ventures (Oviatt and

McDougall 1994; 2000). The phenomenon provides a novel nuance and different trajectories

compared to the traditional incremental internationalization. It is difficult to explain, and the novel

Born global challenges the Uppsala model with the gradual process of internationalization

(Andersson, 2011; Cavusgil and Knight, 2015). Researchers have different definitions of the

aforementioned rapid and internationalized firm phenomenon. In order to give a comprehensive

understanding, table 1 gives a description of the so-called born global firm definition based on

different scholars.

7

Scholar(s) Description

Cavusgil et al.,

2014, p. 96.

“[…] born globals usually internationalize within three years of their founding and

may export to twenty countries, generating over 25 percent of their sales from

abroad”.

European

Commission, 2003,

p. 24.

“Born globals are defined as companies that set up their activity targeting a market

that is either global by nature or within a niche field that has a very limited potential

on the domestic market. They often begin exports within the first five years of

existence”.

Andersson &

Wictor, 2003, p.

254.

“A Born Global is a company that has achieved a foreign sales volume of at least

25% within 3 years of its inception and that seeks to derive significant competitive

advantage from the use of resources and the sales of outputs in multiple countries”.

Rasmussen, et al.,

2001, p. 77.

“[…] Born Globals was defined as firms […] [that] have reached a share of foreign

sales of at least 25% after having started export activities within three years after

their birth […]”.

Harveston et al.,

2000.

“The emergence of “born global” companies (firms with substantial international

activities at or near inception) […]”.

Knight &

Cavusgil, 1996, p.

12.

“[…] Small size typically less than 500 employees and annual sales under $100

million-and reliance on cutting edge technology in the development of relatively

unique product or process innovations. […] entrepreneurial visionaries who view the

world as a single, borderless marketplace from the time of the firm´s founding”.

Oviatt &

McDougall, 1994,

p. 49.

“[…] a business organization that, from inception, seeks to derive significant

competitive advantage from the use of resources and the sale of outputs in multiple

countries”.

Table 1: Table 1 Definition of Born global firm by scholars

Cavusgil and Knight (2015) stated that the born global concept is similar to some extent with the

concept of international new ventures (INV) by Oviatt and McDougall but has some differentiation

(McDougall and Oviatt, 2000). The born global is defined as “entrepreneurial start-ups that, from

or near their founding, seek to derive a substantial proportion of their revenue from the sale of

products in international markets” (Knight and Cavusgil, 2004). Further, Cavusgil and Knight

(2015) highlight that the BG has some different characteristics; that is a young firm that has limited

tangible resources such as financial resources and performs the international activity through

exporting due to the lower transaction cost. In spite of merely commencing the internationalization

from a minuscule domestic market country as a reason to internationalize, it is equally important

to understand that the trend shows BG penetrates from a sizable domestic market (ibid). The BG

firms perceive the international market as their lucrative source of opportunities (Madsen and

Servais, 1997). On the other hand, the INV is possible to be established in an older and mature

multinational company (MNE) and use different entry strategies inclusive of Foreign Direct

Investment (FDI) and foreign-based manufacturing (Cavusgil and Knight, 2015; Oviatt and

McDougall, 2005). Hence, the writer has more inclination toward the entrepreneurial BG rather

than INV; indeed both have similarities, such as the innovative exploration and utilization of

opportunities abroad as a source of competitive advantage (Oviatt and McDougall, 2000).

Scholars believe that the concept works in most industries and countries (Eurofound, 2012;

Cavusgil and Knight, 2015), albeit many researchers argue that the firm tends to be more in the

high technology industry (Jolly et al., 1992). The underline is that the BG mostly uses the

knowledge to create their offerings and as a competitive advantage source that could relate to

8

knowledge-based and knowledge-intensive firms (Bell et al., 2003). As a result, the firms rely on

their innovative products and innovative process to expedite their internationalization (Chetty and

Campbell-Hunt, 2004). Based on the knowledge, the BG also creates their unique offerings that

serve a niche market with specialized products or services (Cavusgil and Knight, 2015) and agile

to adapt to customer needs (Sharma and Blomstermo, 2003). As shown in Figure 1, it relates to

the innate focus of BG on quality by leveraging their knowledge and innovative capabilities

(Knight and Cavusgil, 2004). However, the possession of technology and innovativeness bolster

their internationalization (Freeman et al., 2012). In addition, The BG also leverage their partner

competencies to instantly gain the knowledge (Cavusgil and Knight, 2015). Where their

technology, flexibility, and adaptability become interesting points for bigger partners to embrace

them in their international supply chain (Freeman et al., 2012). In conclusion, Knight and Cavusgil

(2004) elucidate that the performance of BG firms are related to their business strategies that

consist of their global technological competence, unique product development, quality focus, and

their capability to leverage foreign distributor competencies.

Figure 1:BG conceptual framework of constructs and linkages by Knight and Cavusgil (2004)

Even though BG has limited insufficient tangible resources and inexperience (Knight and

Cavusgil, 2004), they can operate internationally under asset parsimony – leapfrogging such

inadequacy by combining existent resources with their intangible assets, dynamic capability (Rialp

et al., 2005), innovative culture (Knight and Cavusgil, 2004), learning capability (Weerawardana

et al., 2007), proactive and entrepreneurial orientation (Jones and Coviello, 2005), and leveraging

foreign distributors (Cavusgil and Knight, 2015; Coviello, 2006).

9

Comparing the Uppsala model with the born global phenomenon, researchers follow a different

stream of research. Ones reinforce the incremental and stage-wise such as accumulation of

knowledge, commitment, and investment (Coviello and Munro, 1997); others challenge it

(Cavusgil and Knight, 2015). Firstly, the researchers envision the different fundamentals of

internationalization between born global and stage-wise approach Uppsala model. Secondly, the

research tries to integrate stage-wise internationalization with Born global firm.

The first stream of research elaborates that the BG differs fundamentally and sharply contrast the

traditional Uppsala model. Cavusgil and Knight (2015) argued that the Uppsala model is related

to the big and resource-sufficient firms, while the BG is related to the small firm with asset

parsimony and instantly pursues international markets since the inception of the firm. The BG in

this stream is perceived to use diverse internationalization models (Andersson and Wictor, 2003;

Sharma and Blomstermo, 2003) rather than incremental development (Johanson and

Vahlne,1977). It is also complemented by entrepreneurial orientation, international relationships,

and unique offerings (Cavusgil and Knight, 2015). However, the focus of differentiation in the

argument is the firms' characteristics rather than the dynamic process of knowledge accumulation.

The international entrepreneurship research focused on the parturition and early

internationalization process of BG, not the continuation process (Melen and Nordman, 2009).

The second stream, such as Coviello and Munro (1997), tried to integrate the “stage” perspective

as elaborated in the early version of the Uppsala model with the “network” perspective that is

embedded in Born global. In the specific case of software firms, the stages are divided by the

timing. The firms also internationalize stage-wise with faster steps to internationalize help by the

networks and the actors with some minor differentiation. The stage-wise is divided into three steps:

foreign market intention, active involvement and evaluation, and committed involvement (ibid). It

shows an increased evaluation and involvement of potential markets, also using the international

market as their dominant growth source. It is not an experimental action; instead, they have a clear

perception of internationalizing their Business since inception (ibid). The internationalization

process includes the role of partners that can be the driver, guidance, and accelerator for the firm

to “piggybacking” and gain knowledge. Frequently, researchers support the idea of piggybacking

by working together with a big partner (Knight and Cavusgil, 2004; Coviello and Munro, 1997).

The BG relies on the network partners in accelerating their internationalization speed. The

network, knowledge, and experience are developed incrementally over time. Hence, the

researchers support the idea of Johanson and Vahlne (1977) by stating that “managerial learning

occurred, whereby market experience and success over time led to increased knowledge about both

markets and managing relationships. This in turn, led to increased commitment to foreign market

development, and further learning” (Coviello and Munro, 1997).

Melen and Nordman (2009) also support the Uppsala Model on BG internationalization. They

further explain that the incremental committers Born Global internationalization rely on the BG’s

experiential knowledge of their foreign market that is incrementally increasing. Commenced by

low commitments, they increase the commitment incrementally to a particular market after gaining

knowledge and change modes of internationalization throughout the process. The knowledge

10

changes the perspective of the firm on risks and opportunities. It is in the same vein as the Uppsala

model or knowledge-based internationalization process theory (ibid). The difference is the velocity

of resource commitment on their international operation is varied among the BG.

2.1.3 Reasons for Internationalization

BG firms have different triggers and motivations to perform activities at the international level;

Cavusgil et al. (2014) categorize the factors as proactive and reactive motives. Eventually, the

impetus will become the reasons for BG to overcome the changes in the environment. However,

proactive and reactive motives can be interpreted differently from different perspectives depending

on the situation. Rather than classify and differentiate it, the research will conceive the factors as

intertwined that corroborate the internationalization in this research.

Cavusgil et al. (2014) elucidate that the reason for the firm to go abroad can be related to the

absence of domestic market demand for the product. Therefore, the firm tried to find a better

opportunity to gain a higher benefit in other niche markets that increase specialization (Madsen

and Servais, 1997). On the other hand, it is possible that the firm already has the aspiration and

culture for approaching the international market since its inception to finding undiscovered

opportunities (Andersson and Wictor, 2003; Knight, 1997) that can be classified as a proactive

motive. It can happen by utilizing their technological advancement and resources in the network

(Freeman et al., 2012). The firm with international target aspiration and the small local market

tends to start their international presence earlier (European Commission, 2003). Subsequently,

another reason for internationalization is a step to prolong the life cycle of product existence

through investing and building a better relationship with customers, suppliers, and other actors in

the network (Huhta and Huhta, 2014). BG also has the willingness to relate to their weak ties

network to be successful (Moen and Servais, 2002).

2.1.4 Entry modes of Born Global Firms

BG firms partake in different alternative strategies such as licensing, franchising, and networking,

allowing them to operate and control internationally without possessing the asset (Oviatt and

McDougall, 1994). Gabrielsson and Kirpalani (2012) elaborate that BGs familiar with alliancing

in their entry modes such as licensing, partnering in distribution, franchising, establish foreign

sales subsidiaries, or incrementally involve internationally through agents or distributors. In

addition, Karlsen et al. (2003) stated the form of strategic alliances, JVs, and wholly own

subsidiaries as alternatives. However, Blank (2013) explains a different kind of market entry

modes by stating that firms exhibit the learning and adaptation of their business model perpetually

by creating prototypes, minimum viable products (MVPs), and accumulating evaluation from

customer collaboration.

Bell et al. (2003) argue that collaboration with agents or foreign distributors gives a less integrated

relationship than alliances or licensing agreements. The entry modes hint at the importance of

being competitive efficiently in time and resources horizon (Burman and Stjernström, 2017). All

in all, Freeman et al. (2012) argue that Born global pursues heterogenous entrance strategies

concurrently, through “collaborative partnerships” and tail their customers as their network

11

development attempt. The multiple strategies assist them in rapid internationalization and create

economies of scale. The various strategies in return will minimize the risk as spread the risk with

more actors (ibid). On the other hand, Knight and Cavusgil (2004) argue that BG firms tend to

utilize exporting strategies as their major market entry mode in order to gain flexibility, efficiency,

and leverage market knowledge of their partners due to ownership of partner knowledge.

2.1.5 Challenges of Born Global Firms

Rennie (1993) elucidates the BG firms face myriad challenges in executing their

internationalization. Firstly, BG is unfortunate by lack of resources and causes overbalance in its

resource allocation challenge (Rennie, 1993; Madsen and Servais, 1997; Luostarinen and

Gabrielsson, 2006). The second challenge is financial access (Rennie, 1993). Rather than incapable

of financial asset availability, BG could encounter adversity in finding access to financial resources

in the network. Third, management capability or transitions consists of human resource immaturity

in managing the potential of crisis (Luostarinen and Gabrielsson, 2006). Fourth, limited market

knowledge and innovation could be the root cause of the lack of overall network knowledge

(Rennie, 1993; Oviatt and McDougall, 1994) as an obstacle in the international business operation

(Johanson and Vahlne, 1977). Another factor that impedes BG from internationalizing is the lack

of dynamic capabilities to adapt to the business environment's perpetual flux (Rialp, 2005). All the

challenges are attributed to their novel character: the small size, lack of resources, and lack of

experience (Oviatt and McDougall, 1994; Moen, 2002). Besides, less brand recognition can

impede building relationships with partners in the network (Rennie, 1993; Moen, 2002). Hence,

BG firms need to be more selective in asset allocation and entry mode (Hamza and Zulfiqar, 2011).

2.1.6 Networks in Born Global Firms

Internationalization processes of industrial firms have a long-interconnected history with network

interaction between firms or network approach (Johanson and Mattson, 1988). The network model

specifies network relationships as a function within the firm's internationalization effort by

exploiting market knowledge, which offers growth outside their borders (ibid). It is generally

including complex interactions - that can take time to be developed, which require in-depth

knowledge between the actors (Johanson and Mattsson, 1988; Levitt, 1983). The network might

comprise partners, customers, competitors, distributors, suppliers, regulators, or other stakeholders

in the market network that can influence the internationalization process (Freeman et al., 2006).

Ellis and Mayer (2001) propose that firms need to develop partnerships with vertical and horizontal

partners, including competitors, for further strategic collaboration. The purpose of being present

and developing a position in the network is to acquire access to resources that own by other parties

through a relationship (Johanson and Mattson, 1988), building a better position in the network

(Karlsen et al., 2003), gain access to market knowledge, obtain business opportunities, increase

the advancement of operation quality and efficiency, and decrease the risk (Freeman et al., 2006).

Johanson and Mattsson (1988) argue that in the era when the company and market are well-

internationalized, the internationalization model is less valid than the network model due to the

various indirect international relations and diverse entry modes of the firm. In the network

approach, the interdependencies between international firms are increasing and hold an important

12

impact on their international operation development (ibid). Further, Johanson and Mattsson (1988)

argue that both the network approach and Uppsala Model emphasize the “cumulative nature of

activities” in developing a long-term relationship, meaning that the network relationships are

continuously reformed in order to guarantee the long-lasting viability of the firm.

Leek et al. (2003) proclaim that due to the advancement of technology and increasing economic

efficiency, the relationship in the network becomes more intricate. It creates friction in the

internationalization theory that makes the traditional theory is reviewed, leading to the

phenomenon of BG firms. In BG, firms use their network with their collaborative partner to

overcome their deficiency in tangible resources and adapt to the rapidly changing international

market needs (Andersson and Wictor, 2003). For instance, the personal network is crucial in

finding financial resources and creating a partnership to operate abroad (Andersson, 2011), which

is believed to take time to develop (Freeman et al., 2006). The previous networks of managers

impact the velocity of internationalization of the firm that enables the firm to make a quantum leap

instead of experiencing a stage-wise process (Chetty and Campbell-Hunt; 2004; Bell et al., 2003).

The relationships with clients or suppliers can reduce the risk and tail the customers for a rapid

internationalization (Bell et al., 2003; Freeman et al., 2006). The customer also manifests a

function of referrals to BG firms to rapidly establish relationships in a new foreign network (ibid).

Melén and Nordman (2007) categorized the networks into personal networks and business

networks. The former correlates to the entrepreneur's personal contacts and networks, which the

latter correlates to the firm. They further elaborate that personal networks are pivotal in the early

step of internationalization, and the business networks will have more role in the later stage. In the

same vein, the informal and formal relationship is coexisting to help the BG firms internationalize

(Kaur and Sandhu, 2014). Rather than focusing on classification, Havnes and Senneseth (2001)

found the relationship between the network and performance, that the firms with the extensive

network have a better performance than firms with the less comprehensive network. However,

even though the role is significant, the network is not the sole source of internationalization in BG

firms (Andersson and Wictor, 2003). An ample amount of BG firms without a pre-existing network

are inclined to depend on their business idea and previous experience (Rasmussen et al., 2001).

Because the relationship relies on personal networks, BG firms can also lose an opportunity if their

members no longer work for the firm (Prashantham and Dhanaraj, 2010). Therefore, the network

can accelerate or deter the effectuation process (Kerr and Coviello, 2020).

The network will minimize the uncertainties that, at the same time, establish a relationship and

develop trust between the actors in the networks (Kaur and Sandhu, 2014). Moreover, BG Firms

exploit the network to find opportunities and help them gain knowledge (Mort and Weerawardena,

2006), realizing the rapid internationalization and being more profitable in the present and future

internationalization (Zhou et al., 2007; Freeman et al., 2006). Sharma and Blostermo (2003)

emphasize that the success of BG also depends on the capability of leveraging their network. In

other words, the synergy with partners and leverage their competencies will solve the ‘liability of

foreignness and newness’ (Cavusgil and Knight, 2015). In the other research, the liability of

outsidership instead of liability of foreignness becomes an impediment of internationalization as

13

they are not a member of the network (Schweizer et al., 2010). Hence, the exploitation of the

existing network and the establishment of the new networks assist them in avoiding the impact of

“psychic distance” (Freeman et al., 2006). Further, they summarized the conceptual BG framework

that consists of its environments, constraints, and strategies (See Appendix B).

The use of robust international networks is also related to its founders' or managers’

entrepreneurial proficiency and experience, showing a high contribution of entrepreneurial

knowledge and orientation in the BG firm (Cavusgil and Knight, 2015), as elaborated in the

previous part. Personal networks and collaborative partnerships from the managers or

entrepreneurs will help the firm face the firm’s internationalization constraints, such as minimizing

risk by sharing it with partners, access to economies of scale, access to financial and knowledge

resources (Freeman et al., 2006). It is stated that “network structure itself tends to control the risk”

(Oviatt and McDougall, 1994) and also related to the effectuation theory where the entrepreneur

will control the risk rather than predict it (Sarasvathy, 2001). Oviatt and McDougall (1994)

elaborate it as the substantial dependence on “close network alliance in multiple countries” or

“proprietary network” that empowers them with a competitive advantage.

The previous experience in the network, knowledge, proactiveness, innovativeness, and risk-

seeking behavior of entrepreneurs or managers in the BG influences the early stage of

internationalization (Zhou, 2007; Weerawardena, 2006). Freeman et al. (2006) stated that

establishing a robust and adjustable relationship in the network and adopting superior quality with

big large global suppliers will minimize the risk of customer shifting. The commitment and

adaptation with big partners can narrow the risk and increase internationalization speed.

2.1.7 Locational Dimension

Sweden is an appropriate country to organized research on the internationalization of eco-

innovative BG firms. As Hojnik et al. (2018) stated, the study about the relationship of

internationalization and eco-innovation is fit in the “relatively open and well-developed economies

… The focus should be directed more on the developed markets, where both the companies and

the consumers are more eco-oriented and concerned about sustainability”. Sweden is a well-

developed country with innovation-based BG and green eco-innovation. In 2020, Sweden was

number eight in environmental performance Global Innovation Index and number two in Overall

Global Innovation Index out of 131 countries (The World Bank, 2021). The economy is also

export-oriented, with 47% of its 2019 gross domestic product (GDP) based on export, while the

world’s average score is 30% (ibid). Hence, Sweden is also an ideal place to conduct research

based on Hojnik et al. (2018). The export-oriented country is needed because to grow profitably

in internationalization, an adequate “scale of operations” is needed. Also, to see BG firm's

relevance that relies on export (Knight and Cavusgil, 2004; Cavusgil and Knight 2015), or multiple

market entry modes (Freeman et al., 2012).

2.2 Effectuation Theory

The utilization of effectuation theory in the BG internationalization phenomenon is prevalent.

Harms and Schiele (2012) elaborates that BG firms tend to use effectuation theory in their early

14

establishment by paying smaller concern in creating meticulous predetermined entry mode at the

outset. In other words, the experienced entrepreneurs at BG firms utilized the effectuation

approach in internationalizing their Business rather than embrace well-planned formal activities

(ibid). It is due to the nature of the uncertain condition and unpredictable future (Sarasvathy, 2008).

Based on the Effectuation theory, entrepreneurs start the business activities with only something

general goal that she called ‘aspirations,’ such as willingness to make a profit or long-lasting

business firm without deciding the strictly specific predefined end goal (Sarasvathy, 2001;

Sarasvathy, 2008). Further, the entrepreneur will choose among the available means and resources

to develop a particular or few possible effects that can be different from the end goal at the outset

(See Appendix C). The effectuation process enables the possibility of changing the end goal over

time by utilizing the emerging contingencies along the way due to the coincidental occurrence.

The effectuation logic is more compatible when the entrepreneur has the general aspiration to

establish a business with finite resources, rather than the causation logic with intricate detail

planning and sufficient resources to achieve the particular goals. The attractiveness of effectuation,

if successful, the likelihood of something new happening is very high, but if it fails, the process

will make the failure cost somewhat acceptable (Sarasvathy, 2001).

Sarasvathy (2001) elaborates the effectuation theory that the entrepreneurship business nature is

best described as risky and uncertain. In comparison to causation logic, Sarasvathy (2001) stated

that “Causation processes take a particular effect as given and focus on selecting between means

to create that effect,” and in the opposite “Effectuation processes take a set of means as given and

focus on selecting between possible effects that can be created with that set of means.” The

effectuation relies on the logic of control rather than rely on the logic of prediction, such as in the

causation (See Appendix D for comparison). In the effectuation processes, the entrepreneur

chooses among available means to make a certain effect, instead choose among possible effects

using a particular set of means (Sarasvathy, 2001; 2008). For instance, the entrepreneur using

effectuation commence by asking, “What can I do with these means?” or “What else can I do with

these means?” (Sarasvathy, 2008). On the contrary, the person or firm using causation questioning,

“What should I do to achieve this particular effect?” (ibid).

Sarasvathy (2001) emphasizes that effectuation and causation coexist and are mutually used in the

decision-making process. The causation and effectuation are “overlapping and intertwining over

different contexts of decisions and actions” (ibid). The implication is that when there are

significant uncertainties and no pre-exist goals, effectuation logic is likely to be used, and

causation is less useful in terms of information exchange among the stakeholders in the process.

The effectuation process is more prevalent in human decisions, actor dependent, and well-used to

utilize contingencies (Sarasvathy, 2001; Sarasvathy, 2008). On the contrary, the causation

processes are effect-dependent and excellent at capitalizing knowledge. In solving the problem,

the decision-maker rely on their characteristics and commences with the three means that are who

they are, what they know, and whom they know (Sarasvathy, 2001, p.250), and integrate it with

emerging contingencies to construct an effect that is not pre-existent—implementing the

entrepreneurial process in the establishment of the opportunity. It involves the trait, vision, and

15

character of the decision-maker and the capability to identify contingencies by interacting with

other business actors. As a practical example in the marketing decisions making process, the

decision-makers with the effectuation process employ more feel or experience-based marketing

selling and alliances activities. Trusting their judgment rather than utilize in-depth market research

and adhering to their sophisticated initial marketing strategy. In order to understand the theory

comprehensively, the principles of effectuation will be elaborated.

2.2.1 Principles of Effectuation

Five principles set up effectuation theory and help entrepreneurs control and shape rather than

predict the future in their decision-making process (Sarasvathy, 2001; Sarasvathy, 2008; Dew et

al., 2009a). First, the bird in hand principle is the means-driven action principle. The entrepreneur

starts with the available means who am I? what I know? And Whom I know? And thinking about

the possible effect that can be created by the available means. Second, the affordable loss principle

is the entrepreneur committing at the outset to the acceptable level of loss or willingness to lose

rather than focusing on the expected returns (Dew et al., 2009b). Third, the patchwork or crazy

quilt principle accentuates the entrepreneur build strategic alliances and precommitments with

potential partners to reduce risk, uncertainty and build entry barriers rather than creating

competitive analysis. Meanwhile, the partners can participate actively in directing the goals of the

firm. Entrepreneurs establish resources gradually, undergone experiments with alternatives, co-

creation processes by engaging the stakeholders through an iteration process. Fourth, lemonade

principle. Because the entrepreneur is less likely to work with the predictive logic, they exploit

and adjust to the inevitable contingencies from the unpredicted future that emerge during the

process and leverage them to create opportunities rather than avoiding them. Lastly, the pilot-in-

the-plane principle emphasizes entrepreneurs relying on the controllable aspect and activities,

control the unpredictable future rather than predict it.

2.2.2 Effectuation and Internationalization

The logic of effectuation theory has been internalized in some profound international business

literature, such as the revisited version of the Uppsala internationalization model. Johanson and

Vahlne (2009) stated that the effectuation theory “including similar environmental characteristics,

a limited number of available options, incremental development, and an emphasis on cooperative

strategies … we, therefore, consider the effectuation process as developed by Sarasvathy to be

fully consistent with our model” and “it can be integrated into the Uppsala Model” (Vahlne and

Johanson, 2017). Furthermore, in the born global firm theory research by Harms and Schiele

(2012) reveal entrepreneurs in the born global firms incline to utilize effectuation rather than

causation in the initial step of their internationalization endeavor, using available knowledge and

networks of the entrepreneurs are crucial in the early rapid international expansion (Andersson,

2011). Hence, the effectuation process can be integrated into the process of knowledge

accumulation where the entrepreneurs use their available means in the network to gather

information and increase their capability to accelerate the internationalization process. The

effectuation theory, network relations, and the revised Uppsala Model become an integrated part

of entrepreneurship and international business research (Galkina and Chetty, 2015). However, the

early Uppsala model does not relevant to the born global concept (Gabrielson and Kirpalani, 2012).

16

The similarity between the revisited Uppsala model and Effectuation theory is in utilizing

knowledge as the available means (Chetty and Leppäaho, 2015). Both theories contemplate

relationships as the main concentration, factor to start with, and available means to gain knowledge

and opportunity (Johanson and Vahlne, 2009; Sarasvathy, 2001). The relationship and knowledge

can be used as the commencement to eliminate the psychic distance by acquiring knowledge,

resources, and network dynamics from the available means in the networks through the actors.

Hence, the simultaneous learning in the novel version of the Uppsala model and effectuation theory

gave valuable meaning to the entrepreneurial firm’s internationalization decision-making process

and established the process-based perception (Galkina and Chetty, 2015). It also gives the innate

entrepreneurial features and nuance to internationalization process theory. Consistent with

Schweizer et al. (2010) and Jones and Coviello (2005) that internationalization manifests the

entrepreneurial process. For instance, Entrepreneurs start their networking by the “who I know”

and “what I know” to develop opportunities.

Despite the similarities, there are some differences between the Uppsala model and the effectuation

viewpoint related to the relationship concept in internationalization. The relationship in the

Uppsala internationalization model focuses more on the company level, while effectuation also

emphasizes the personal relationship of the entrepreneur (Chetty and Leppäaho, 2015). The

contrast can give a difference in analyzing their network position. However, both theories

acknowledge the significant role of the network in its internationalization process. Subsequently,

the Uppsala model views that the opportunity rather can be developed and discovered in order to

be exploited at the firm level. On the contrary, the effectuation theory perceives the opportunity as

an object that can be created at the individual entrepreneur's level through a development process

by all the stakeholders (Galkina and Chetty, 2015).

There is another difference in the response on uncertainty between the effectuation theory and the

Uppsala model. Effectuator perceives the uncertainty as an opportunity and not as an impediment

to their internationalization process (Galkina and Chetty, 2015). The firm uses its networks to

enhance its means to control the future rather than having the intention to outdo the competitor

and predicting the uncertain future. On the other hand, the Uppsala model emphasizing the firm

internationalized after acquiring the knowledge of the international operation, thereafter the firm

gradually internationalized. Frishammar and Andersson (2009) refer to the process as an

inclination to the causation logic.

2.3 Conceptual Framework

2.3.1 Internationalization of Eco-innovative Born Global

The environmentally sustainable trends of products and processes increase due to the market

demand and stringent regulations to combat the environmental issue (Doranova et al., 2013). As

we previously mentioned, eco-innovation can be one of the pivotal solutions to the issue. Eco-

innovation is interpreted as “Eco-innovation is the production, assimilation or exploitation of a

product, production process, service or management or business method that is novel to the

organization (developing or adopting it) and which results, throughout its life cycle, in a reduction

of environmental risk, pollution and other negative impacts of resources use (including energy use)

17

compared to relevant alternatives” (Kemp and Pearson, 2007). However, “the existing literature

has not explored the relationship between internationalization and eco-innovation” (Hojnik et al.,

2018), since not much extant literature investigates the relationship between eco-innovation and

internationalization (ibid).

Hojnik et al. (2018) researched the association between internationalization and eco-innovation

impacting the firm’s economic performance, emphasizing that eco-innovation is an idea of whether

to adopt or not in the extant international operation. The eco-innovation adoption is vital for a firm

to gain a competitive advantage (Adalikwu, 2011), particularly for the firms from an “innovation-

driven stage of development” countries (Hojnik et al., 2018). Further, Hojnik et al. (2018) elaborate

that internationalization is the primary driver of eco-innovation, while this research will focus on

the inverse approach. Different logic to the approach means, for this research, that one of the

possibilities of significant internationalization drivers is eco-innovation. As the research object,

the firm is a BG firm with an eco-innovation, product, process, and mastering the knowledge since

their inception. Subsequently, the research will focus on the factor that becomes an accelerator or

impediment in the internationalization process and scrutinize its relationship.

Eco-innovation is believed to be the partial mediator for the firm to reach an excellent economic

performance at the international level, so “internationalization is positively related to the adoption

of eco-innovation” (Hojnik et al., 2018). In other words, internationalization supports the firm with

learning opportunities and leads to eco-innovation (ibid). However, it works for the firm that

already operates at the international level and tries to adopt eco-innovation in its product or process

later. It is adopted in order to be sustainable, maximizes the economic performance by using novel

technology and establishing a relationship with a knowledgeable partner, increase brand image,

improve cost efficiency, fulfilling regulatory compliance (ibid), and retain its short-term and long-

term competitiveness (Sarkar, 2013).

The adoption of eco-innovation is believed to positively impact the firm performance, at least on

a long-term basis (Hojnik et al., 2018). Eco-innovation can be related to differentiation strategy

and related to a niche market. Embracing greener innovation in general leads to resource efficiency

(Rexhäuser and Rammer, 2014), or mainly adopt greener supply chains induce cost efficiency,

boost sales, gain market share, and exploit new opportunities will offer a better firm’s performance

(Rao and Holt, 2005). However, the short-term effect resulting in two research streams that argue

the adoption of eco-innovation could be negative (Ramanathan et al., 2010) and positive

(Horváthová, 2012; Ar, 2012). Hence, because the short-term effect on economic performance is

still debatable, it will be more beneficial to focus on the firm overall knowledge development than

economic performance in the early stage of firm establishment. The research will see the mediation

of internationalization between embedded eco-innovation in the firm and its overall development.

In Hojnik et al. (2018), the firm in focus needs to be internationalized first and adopt eco-

innovation later, giving a more remarkable result in B2C than in the B2B market. The more

internationalized the firm, the more possibility the firm to employ green strategies (Luan et al.,

2016). It leads to the question of the opposite fact; the focus will be on the ubiquitous BG micro

18

firm, knowledge-based, focus on B2B market, and own the technology since their inception but

internationalizing themselves even though they are young and in the early stage of firm operation.

2.3.2 Effectuation theory, BG Firms internationalization, and Eco-Innovation

Sarasvathy (2001) proclaims that effectuation logic works better when the future is unpredictable

and uncertain, such as in the early internationalization of the firm. It is analogous to the elaboration

of Anderson (2011) and Paweta (2015) that it is difficult to predict the rapid internationalization

and rapidly changing environment in the new international firm, particularly in the early

establishment. The identical association between Born global and effectuation theory is also

related to the entrepreneur’s lower risk perception level in conducting Business internationally

(Acedo and Jones, 2007; Cavusgil and Knight, 2015). The internationalization is related to the

entrepreneur’s behavior (Jones and Coviello, 2005). Hence, the effectuation process as one of the

comprehensive theories can be applied in this situation (ibid). The effectuation logic means

contemplating the available means, the potential of loss affordably, and pursuing a partnership to

utilize contingencies and control the unforeseeable future (Sarasvathy, 2001). It is triggered by the

firm’s possession of inadequate market knowledge, and that makes the firm employ a means-

driven strategy in their early internationalization (Chetty and Leppäaho, 2015). However, it is

essential to realize that effectuation and causation are coexisting and present in a perpetual

existence relate to the decision-making contextual (ibid; Sarasvathy, 2001). Chetty and Leppäaho

(2015) stated that stronger possibility for the firm to tie the effectuation and causation logics

alternatively rather than perceive both logics as different objects.

The utilization of available knowledge and networks of entrepreneurs are crucial in the early rapid

international expansion (Andersson, 2011). The reason for BG’s ability to internationalize rapidly

in different markets is the cooperation with their partners in the network (ibid). However, the

network is related to the entrepreneur’s previous networks and knowledge as available means used

in the effectuation process. Hence, the effectuation process emphasizes entrepreneurs’ capability

to generate opportunities in collaboration with actors in the network (Sarasvathy, 2001; Dew et

al., 2009), rather than merely emphasizing on causation process by planning activities (ibid). The

international networks evolve continuously along with their international experience. In

conclusion, “entrepreneur’s possession of relevant skills, prior knowledge, and networks are

important factors influencing the opportunity discovery process” (Andersson, 2011). The research

would like to analyze the internationalization process through the effectuation lens.

Interactions of the entrepreneur and the firm in the network, commitments, means, and goals

evolve continuously and iteratively (Kerr and Coviello, 2020). The network in the effectuation

process is dynamic because it is not solely given and shaped by the previous network of actors but

also experiences transformation along the entrepreneurial process with the emergence of new

contingencies, new networks, reconstruction of the network, and losing networks. It can be stated

that the nature of effectuation circumstances is dynamic (Sarasvathy et al., 2014), network-driving,

and network-dependent based on the collective cognition of myriad actors and not solely by a

single entrepreneur (Kerr and Coviello, 2020). The notion is unidirectional with their conceptual

statement that there is no exact starting point of effectuation (ibid). It is an iterative process and

19

evolving the available interdependent means in the effectuation process that consists of identity,

knowledge, social capital, and cognition. As elaborated previously, the negotiation of goals or

aspirations continually occurs in the effectuation process with the actors’ involvement. Both the

negotiation and pre-existing networks can support or obstruct the effectuation process (ibid).

Therefore, the orientation is reshaped iteratively and affect their orientation and background, as a

fundamental resources to do effectuation resources. Hence, the new means also transformed

iteratively during the effectual internationalization process.

Figure 2:Conceptual framework of the research related to internationalization

The background of the entrepreneur in the BG, which consists of its international network can

decrease the psychic distance (Madsen and Servais, 1997). In addition, the background of

entrepreneurs is related to their previous entrepreneurial knowledge, eco-innovation orientation,

and technology orientation. The entrepreneurial or managerial knowledge is the entrepreneurs'

knowledge and experience in a particular industry and international market that determine the

velocity and strategy of their internationalization. Subsequently, as Cavusgil and Knight (2004)

elaborated, BG has global technological competence and unique product development, albeit

lacking in other asset parsimony. For instance, the uniqueness and access to innovative technology

or processes relate to the eco-innovation and driver to the entrepreneur in approaching a niche but

global market. As a result, BG perceives the international market as its growth source.

The market behavior is related to the effectuation logic that depicts the way of decision-making of

the entrepreneur (Paweta, 2015). The effectuation logic covers various concepts also such as the

firm’s strategic routines to utilize resources, such as relocating, reconfiguring, and integrating

resources to make a new source of competitive advantage that can induce transformation in the

20

market (ibid; Eisenhardt and Martin, 2000). The factors show the proactiveness of entrepreneurs

to explore and exploit the opportunities in order to control and discover resources and

opportunities, respectively (Prange and Verdier, 2011). Early internationalization gives the firm

competencies to adapt in an uncertain and continuously change ecosystem (Sapienza et al., 2006).

Subsequently, rapid internationalization will increase the firm’s entrepreneurial knowledge,

technological knowledge and enhance their network simultaneously (ibid). In other words, the

external factors have a significant impact on the development of the BG knowledge and networks

that determine the rapid internationalization.

The previously elaborated entrepreneurial effectuation theory, born global theory, and network

relationship in the earlier chapter, the phenomenon of the eco-innovated born global micro firm

(i.e., bio composite technology owner) can be elaborated as depicted in Figure 2. A specific

bioplastic industry is chosen based on Hojnik et al. (2018) that state the firm performance also

depends on the specific type of eco-innovation. Also, their suggestion to investigate more about

the mechanism that internationalization encourages eco-innovation, which includes the modes of

internationalization (ibid). It leads to the opposite question, which is necessary to investigate the

mechanism of whether eco-innovation encourages internationalization.

21

3. Methodology This section delivers the elaboration of the methodology standpoint as the foundation of the study.

First, the research context, approach, and research design are presented with the reasoning of its

application. Second, the iterative process of data collection and analysis is discussed. Lastly, the

section also presents the research quality and ethical considerations.

3.1 Research Context and Approach

The research aim is to answer the research question “How does an Eco-innovative BG

internationalize in the early stage?”. The aim is to explore new insights and an in-depth

understanding of the eco-innovation based BG firms internationalization. Hence, the study will

follow an inductive research approach to precisely answer the question. The inductive research

approach is identically related to the use of collected data to compose and establish novel theories

(Bell et al., 2019). The reason behind the utilization of an inductive research approach is the gap

and the limited number of available well-constructed theories of eco-innovation BG that rely on

contemporary theories. Furthermore, the internationalization of BG theories requires an expansion

to the eco-innovation-based industry rather than tested in quantitative methods. Moreover, the

researchers use an inductive approach that tends to uncover the relationship between theory and

research (Bell et al., 2019). In building the theory, the research has the flexibility to rearrange the

study during data collection to deeply comprehend the particular case (Eisenhardt, 1989). Besides,

the objective of the research is not to exhibit the causal relationships among variables or to create

a generalizable finding that generally utilizes a deductive research approach (Saunders et al.,

2016).

The objective of the research is to explore and exploit the theories to analyze the associations of

the data within the theoretical frame in a specialized context rather than examine the theory. Hence,

qualitative research is applied in this research, which fits the research aim that addresses the “how”

manifested in the research questions (Pratt, 2009). Related to the exploratory character of the

research, the flexibility embedded in the qualitative research enables the utilization of open

questions to investigate the response of participants further. The qualitative approach enables the

study to grasp the phenomenon in a real-life situation and apprehend the related contextual

situation, such as environmental, institutional, and social circumstances (Yin, 2011). It includes

the possibility to consider the subjective perspective of participants on the research question and

investigate the research problem deeply by utilizing words, images, video clips, or other non-

quantified data (Saunders et al., 2016; Bell et al., 2019). Conversely, quantitative research

generally focuses on the relationship between variables that involve statistical analysis and

measurement of well-structured numerical data (Saunders et al., 2016). Lastly, incorporating

qualitative research design and the inductive approach empowers the research to a higher level of

comprehension of the phenomenon to answer the “how” question (Ghauri and Grønhaug, 2010).

In conclusion, the research context applied is the interaction between various theories and

phenomena in the international business and entrepreneurship study field. Internationalization

exemplifies international business, effectuation represents entrepreneurship, eco-innovation

22

related to the technological aspects, and BG networks embodies entrepreneurship and international

business. Hence, the research is expected to give valuable results to the aforementioned fields.

3.2 Research Design

The research design is constructed in several different elements in order to answer the research

questions. First, the research question manifests the “how” explanatory question that leads to

utilizing case study research design appropriately to give a thorough analysis (Yin, 1994). Yin

(1994) further explains that the case study is required when there is a need to create profound

comprehension in the real-life phenomenon, particularly when the limitation between the

phenomenon and context is obscured. It also enables researchers to grasp the dynamics and

complexity of the settings in a particular case to generate theory (Eisenhardt, 1989). Therefore, it

is unidirectional with the aim of the research to gain a deep understanding of Eco-innovation based

Born Global firm's internationalization. Second, internationalization in eco-innovated BG firm is

the case study, particularly the bio composite plastic industry as a limitation. Referring to the

research question and the case study, the unit analyses are people who are involved in the eco-

innovation of bio-composite and bioplastic business. The unit analysis needs to be a part of and

possess a role in the related bio-composite plastic industry such as technology owner, bio-

composite manufacturer, technology and machinery suppliers, pulp and paper industry, brand

owners, or plastic molding firms. Hence, purposive sampling is utilized and will be elaborated

further in the sampling part. The primary data collected between March and May 2021 from the

related BG firm and relevant networks in the industry.

Eco innovation-based BG firms possess a particular narrow characteristic. The unique

characteristic leads to the notion of concentrating on the sample that can contribute to the relevant

research (Etikan et al., 2016). Therefore, purposive sampling as a non-random sampling technique

is relevant to be utilized in identifying the participants of the study. The sampling technique

intentionally designates participants to refer to their qualities, experience, and knowledge that can

unveil the phenomenon (ibid). The non-random technique also helps the research evolve during

the process because it is unnecessary to commence by setting underlining theories and a well-

defined quantity of participants (ibid). The sample size depends on the aim of generalizing the

results to a broader population (Saunders et al., 2016). The purposive sampling applies because

the research goal is not to produce statistically generalizable results for the whole population or to

test the theory. The research goal is to explore, dig deep, and exploit the relationship of the theories

on the internationalization of eco-innovation BG firms in a real-life phenomenon and context.

The knowledge about the participants’ business was obtained from snowballing process and also

from intentional searching on their firms’ website, publication, LinkedIn, and exploit university

connection. Corporate website, LinkedIn, external and corporate reports were used to obtain

information and profiling their business. Also, convenience sampling is utilized in the selection of

interview participants based on reachability (Bell et al., 2019), compliance, and willingness to

contribute to the research (Etikan et al., 2016). Due to the unavailability of all samples list in the

population as sampling frame (Bell et al., 2019), that is the list of the eco-innovation BG firms

encompasses the entire population, the non-probability sample can be applied by utilizing

23

subjective knowledge, judgment (Palinkas et al., 2015; Saunders et al., 2016), and also networks

of the researchers. Bell et al. (2019) suggested focusing on sampling that valuable to the theory.

Those factors are essentials in view of the fact that bioplastic is a specific, niche industry, and the

eco-innovation BG internationalization is a novel phenomenon. It is arduous to find eager and

proficient interviewees in the industry to contribute to the research. The research follows the

following Figure 3 simplistic value chain of Bioplastic industries in guiding the data collection.

Figure 3: Simplistic wood based Bioplastic value chain (own construction)

The firm as the focus (BGF) in the research is the micro-enterprise firm in the early stage of

development and internationalization that, according to the European Commission, is a firm with

less than ten employees and a turnover of less than EUR 2 million per annum (European

Commission, 2020). The micro-firm needs to have current contact with an international partner to

exhibit the process of internationalization. Subsequently, the firms possess knowledge of

bioplastic-related eco-innovation or possess plastic business knowledge. Because BG

internationalizes close or within three years to its inception (Andersson and Wictor 2003; Cavusgil

et al., 2014), and the focus is their early internationalization, the age of the BG needs to be less

than three years. Therefore, the related big companies in the data collection also need to be in this

micro-firm network. The geographical proximity with researchers makes Sweden the preferable

location that makes it easier to obtain the data. Sweden is an export-oriented country with 47% of

its GDP based on export, higher than the 30% world's average (The World Bank, 2021). The

country is the second in overall global innovation index and the eighth in environmental

performance (ibid). Lastly, the relatively small domestic market enables in revealing BG firm's

reliance on export (Knight and Cavusgil, 2004) or multiple market entry modes (Freeman et al.,

2012).

24

3.3 Data collection

Data collection employs semi-structured interviews. The semi-structured interview is related to

the exploratory approach of the research and to gain detailed information (Bell et al., 2019). The

interview questions will be created based on the theoretical framework developed from the

discussed theories. The application of multiple data collection apparatuses and multi-data sources

to provide result confidence (ibid), such as from multiple actors in the networks to gain empirical

data, peer review, and multiple literature sources. The data collection approach for this research is

developed in a two-stage process before going further to data analysis; the first stage is focused on

extracting insights from eco-innovative BGs as technology owners. The second stage of data

collection will be tailored towards the external network with which innovative BGs would interact.

In the case of bioplastic, this will include gathering insights from the plastic compounding

industry, pulp industry, and brand owners.

Semi-structured interviews will be utilized in the first stage to derive data; an interview guide was

developed for this stage, covering various themes regarding the internationalization of eco-

innovative BGs and the theoretical model. The interview guide for this stage includes topics such

as Entrepreneurial Knowledge, International Networks, Eco-Innovation and Technology

orientation, and Effectuation logic. The interview guide is developed in a way to ensure the

coverage of the topic, whereby the researcher can pose and ask follow-up questions to acquire the

maximum value in terms of insights and interoperations. The interview guide is to be revisited and

edited throughout the data collection process to ensure fit with research objectives. The complete

interview guide is shown in Appendix E.

Since the subject of this research is the internationalization of BGs eco-innovation and, in

particular, the bioplastic industry. The inclusion criteria for this stage shall include small

companies that possess or utilize technology (eco-innovation) in the bioplastic industry. While this

research is performed in collaboration with the BG focal firm (BGF), the interviewee's pool shall

include their members. All interviews are to be recorded, transcribed, and coded with regard to

relevant categories upon the consent agreement with the participants. A list of all interviews is

illustrated in table 2.

In the second stage of data collection, semi-structured interviews will also be utilized to extract

data. The interview guide for this stage mainly covers themes regarding how external parties

collaborate with BGs and perceive eco-innovation. The interview guide will include themes such

as motivation, supply chains, and working with BGs. However, these themes are developed in

accordance with the theoretical model used in this research. Similar to the first stage, the interview

guide is developed in a way to ensure flexibility and coverage of the topic, whereby the researcher

can pose and ask follow-up questions to acquire the maximum value in terms of insights and

interoperations. The interview guide is to be revisited and edited throughout the data collection

process to ensure fit with research objectives (see appendix F).

As the subject of this research is the internationalization of BGs eco-innovation, the authors felt

the importance of including external actors in order to visualize the complete picture of how eco-

25

innovative BGs should internationalize. The inclusion criteria for this stage will include companies

that are working in the plastic compounding industry, pulp and paper industry, and bioplastic brand

owners (a brand that utilizes bioplastic in its products). As in the previous stage, all interviews are

to be recorded, transcribed, and coded with regard to relevant categories upon the consent

agreement with the participants. A list of all interviews is illustrated in table 2. The description of

the external parties of the BG is elaborated in Table 3.

No. Company Sector Index Profession Date Duration

(Minutes)

Method

1 BGs (BGF) B Marketing 30/Mar/2021 114 Virtual

2 BGs (BGF) C End-use development 31/Mar/2021 77 Virtual

3 BGs (BGF) A Process

development/investor

6/Apr/2021 74 Virtual

4 BGs (BGF) D Investor/ board member 16/Apr/2021 63 Virtual

5 BGs (BGF) K Co-founder/ sales 14/Apr/2021 64 Virtual

9 Machinery and technology

suppliers (C2)

F Senior Account Manager 13/Apr/2021 82 Virtual

10 Machinery and technology

suppliers (C2)

E VP Marketing & External

Communications

15/Apr/2021 76 Virtual

6 Pulp and paper (C3) H Material development 14/Apr/2021 54 Virtual

8 Pulp and paper (C3) G Head of Business 19/Apr/2021 73 Virtual

7 Pulp and paper (C4) I Sustainability Manager 13/Apr/2021 78 Virtual

11 Plastic compounding (C5) J Business controller 29/Mar/2021 37 Virtual

12 Brand Owner (C6) L Founder & CEO 19/May/2021 56 Virtual

Table 2: Data collection interviews of Bioplastic Eco-innovated BG firm and external partners

26

Firm

Code

Number of

interviewee(s)

Profile Operational area

C2 2 Finnish big incumbent machinery and technology suppliers.

Global developer and supplier for technologies and

machinery, automation, and services to the pulp, paper and

energy industries. 14,000 employees with EUR 3.7 billion net

sales in 2020.

Global (Head Office

in Finland)

C3 2 Multinational company operating worldwide with around

26000 employees, considered as one of the biggest companies

in the forest industry

Global (Head Office

in Finland,

Substantial facility in

Sweden)

C4 1 One of the biggest companies in the forest industry from

Sweden. The business areas are within Forest, Renewable

Energy, Wood Products, Paperboard and Paper with 3,300

employees and SEK 16 billion in sales

Global (Head Office

in Sweden)

C5 1 A firm from plastic compounding industry in Sweden. The

company has been in the industry for 50 years and has

manufacturing facilities in Sweden, United states, Czech

Republic, Denmark, and China. The firm alsohas subsidiaries.

Global (Head Office

in Sweden)

C6 1 Danish brand owner with multi lines of businesses that

operates in the area of jewellery, fashion, restauration, F&B,

and private investment capital across Latin and Northern

America, Asia, and Europe

Global (Head Office

in Denmark)

Table 3: External partner firm profile for data collection

3.4 Data analysis

The data approach in the research methodology, as elaborated in the previous part, is an inductive

approach to see the association of the theoretical frameworks in the eco-innovative BG

internationalization. Therefore, the data analysis needs to be strongly related to the nature of the

inductive approach. In this case, the thematic analysis will be applied. Thematic analysis is

common to be utilized in qualitative data analysis (Bell et al., 2019), denoting an underlying basis

or qualitative analysis principle to identify, investigate, and outline themes within data (Braun and

Clarke, 2006). The theme is recognized as a code or group of codes by researchers with multi-

order concepts. It includes the process of coding various themes and analyzing the patterns. The

pattern is identified and analyzed by connected to the research questions that can support the

researchers with the basis of theoretical comprehension (Bell et al., 2019) and theoretical material

by employing social scientific concepts as steppingstones for themes (Ryan and Bernard, 2003). It

can lead to a comprehensive elucidation of the data, accommodating the participant’s subjective

interpretation to understand the socially constructed understandings (Saunders et al., 2016). The

interpretation and analysis are aided by conceptual frameworks in mind to guide the analysis.

Lastly, one of the pivotal presumptions is the researchers well-equipped with the relevant

knowledge that enables the identification, analysis, and outlining of pertinent theories (Gioia et al.,

2012).

27

Aggregate dimension 1: Effectuation Logic

2nd order theme 1st order concepts Sample quotes

Exploit

contingencies

External accelerator “The legislations like the one EU is having the Green Deal and EU is putting

bans on plastic bags and things like this. So, there is a driving force coming

from there.” Interview F

Opportunity

consciousness &

realization

“So that’s maybe one of the overview things I can see but there is a lot of

discussions going, how to replace plastics how to make better packaging,

especially around food contact material.” Interview F

Risk control

Risk knowledge “I guess, maybe just it could be a risk of spreading too thin. If it's, if we go

for different countries, and rather than just focusing on making an impact in

one market, and maybe that's” Interview D

Risk prevention “I think to be a bit careful in the beginning that’s why we choose to work

with Nordic forest producers.” Interview C

Asset parsimony

Pilot project

dependence

“The first important is to have new samples or [product X] that we can test

to find collaboration partners compounders, that can test material with

different material for that” Interview C

Selective optimal

strategies

“unfortunately, even maybe have time to meet everybody, because we have

also limited resources” Interview E

New resource

configuration

Resource acquisition “we have a history of the last 30 years have been buying companies, clever

companies with about one or 200 people employed that is making something

that we don't make today.” Interview F

Partner resource

integration

“I mean this strategy is not to build our own pulp mill. It is to cooperate or

use [partner's] existing infrastructure” Interview A

Autonomy

Agility “if we would buy a small startup company with five clever guys, one year

from today, they would hate us and they would leave because we are too

rigid, we are we're too old fashioned, they will never like it.” Interview F

Iterative reaction to

change

“we can have this sort of we can do sort of tests, we can do some lignin

samples, we can we can do this, we actually even have a container size.”

Interview E

Aggregate dimension 2: Eco-innovation orientation

2nd order theme 1st order concepts Sample quotes

Sustainability

aspirations

Sustainability &

circular economy

” we are working on this circular loop, with the brand customers or like with

the company customers, not end customers, when it's easy to get the material

back after it has been used” Interview H

Shared vision “So, we also having these targets of sort of improving energy efficiency by

30%. And then, making it so that if our customers use our technology, and if

they then sort of use co2 free electricity, also they production can be co2

free.” Interview E

Incumbent

sustainable

drivers

Utilize market

opportunity

“So, this is always this is what all forest industries are looking into, where

shall we use the raw material in order to create the biggest value? And let's

just say it again, today, climate value and financial value goes hand in

hand.” Interview I

Knowledge

generation

“we are trying to take advantage … that we have to stay in business when it

comes to our communication and ... selling our products. But also, we're

trying to use that knowledge when we are developing new products.”

Interview I

Aggregate dimension 3: Technological innovation orientation

2nd order theme 1st order concepts Sample quotes

Technological

innovation

capability

Technology

aspirations

” now we are back to finding smart suppliers with good technology. And we

don't really care where they come from, we buy and work from all over the

world if we find something clever” Interview F

Incumbent

incremental

improvements

“So, it's not one big, big thing. It's many, many small, small steps from

traveling from the company cars, electricity use on our machines. You

know, all those small things that you could impact in your daily business.

This is what we're trying to work with.” Interview J

28

Incumbent

innovation

challenges

Communication

/distribution of

information

“So, there are lots of competence within this industry, I think any industry

challenge is to combine all this knowledge to make people talk to each other

to see possibilities to look outside of your own responsibility area.”

Interview I

IPR “So, the question is always, how much we can say without getting problems

with our legal department, things like that. Also, you always have to have a

look how far you have come compared to competitors, maybe. And you

don't want to give too much information about how far you've come.”

Interview H

Aggregate dimension 4: Entrepreneurial knowledge

2nd order theme 1st order concepts Sample quotes

International

market

orientation

Scalability

orientation

“Because we need to produce 100 million of tons of this, save the world

from it's no use to, to produce 1000 tons and then make a lot of commercials

around it. Because it needs to be in everybody's house. So, price is one thing

cost is one thing.” Interview F

Small domestic

market

“the market in Sweden would be a certain size and I think for some markets

I guess only staying in one country would be huge impact but then for this

market I think it's probably good to be also present internationally to build

their size.” Interview D

Incumbent

inertia

Conservative

industry

“It's very undiversified, when it comes to who works within the firm. I

mean, so it's mostly white Swedish people who work in the Swedish force

industry.” Interview I

High control “at our company we are owning a large part of the supply chain, so we are of

course supplying our own wood” Interview H

Aggregate dimension 5: International networks

2nd order theme 1st order concepts Sample quotes

Exploit

partnership &

network

Strategic fit ” but then it's about looking at the strategy, and evaluating, in what face their

possible partner is. And we don't have dozens and dozens of partners all the

time.” Interview E

International

personal network

“I have contacts within different brands. on a bigger level, like European,

that's one thing that you have connection.” Interview C

Exploring and

forging

partnerships

Cold contact “sometimes actively reaching out to international companies that seemed

they had the right competencies or could be a good partner, either just cold

calling them then not knowing us.” Interview D

Events participation “We're active in how to say participation in different events, like if we

participate events for Stockholm tech is some kind of event, they have every

year that you pay for the exhibition. And you know, like, you have to stand.

And then you meet the people to from companies, private people, company

people come organization, company and government organization to.”

Interview B

Table 4: Data Supporting Interpretations and quotes

The data analysis is done by qualitative data analysis software MAXQDA2020 to organize, code,

and analyze the data and the transcription helped by otter.ai software. It creates textual documents

that easy to analyze. The flow of data analysis follows Braun and Clark (2006) with six phases

such as data familiarization, initial code generation, themes seeking, themes reviews, defining and

naming themes, and report production. The transcriptions were reviewed multiple times, which

involved researchers’ judgment that relates to the conceptual framework to interpret the data into

accurate meaning. The data underwent multi-stage analysis from the first-order concepts, second-

order themes, and eventually into aggregate dimensions as depicted in table 3 (more sample quotes

see appendix G). Accordingly, components of aggregated dimensions were established through an

iterative process. The entire analysis was encapsulated in a data structure as portrayed in Table 4.

29

Table 5: Structure of data coding

Aggregated dimension 2nd order themes 1st order concepts

Risk Control Risk Knowledge, Risk Prevention, Risk Reduction

Internal resource use Personal resource relocation, Team member's Patchy resource

Autonomy Agility, Iterative reaction to change, less complex analysis

Sustainability aspiration Sustainability & circular economy goals, Share vision

Industry KnowledgePersonal Knowledge intensity in the industry, Personal Business Expereience,

Utilize industry's trend

Managerial Knowledge International Managerial Experience, Resource identification capability

Partner's resource integration, Reconfigure & Flexibility of resources, Dynamic

relationship cycle, Resource acquisition

Partner's resource improvement, Unique products development, Locational resource

advantage, Experience of advance technology, Incumbent reliance on Existing

resource

Pilot project dependence, Selective optimal strategies, Loss estimation &

willingness

Non Long-term global exclusive contract, Multiple target contacts, Business

model adaptation, Leverage foreign distributor competences

Opportunity consciousness & relaization, leverage surprise & experimentation,

External accelerator, Demand differentiation

Collaborator criteria & procedure, Partnerships with large international Partners,

Inter industry collaboration, Cold contact, Personal Network, Events participation,

Utilize incumbent longterm customer relationship

Utilize market opportunity, Access to partner's sustainability resources, Knowledge

generation, thinking new strategy

New Technology Exploitation and Exploration, Relevant Technology Experience,

Incumbent incremental improvements, Technology aspiration

Comunication/distribution of information, Cost acceptance, Managing

expectations of customers, IPR, R&D

Internal long-last informal connection, Cooperation & Network dependence,

Leveraging partner competences, Partner followership, Complementation, Strategic

fit, Cooperation openess, Close proximity with client, International business

network, International personal network

international opportunity aspirations, Scalability orientation, Small domestic

market

Incumbent high control, Incumbent's investment, Utilize international partner's

network & presence, Conservative industry

Effectuation logic

Available means Focus

Incumbent innertia

Technological innovation

capability

Incumbent sustainable drivers

Incumbent Innovation

challenges

Exploit contingencies

Multiple modes of entry

Asset parsimony

International Market

Orientation

New resource configuration

Exploit partnership &

Network

Exploring & Forging

Partnership

Eco-Innovation orientation

Technology-innovative

orientation

Entrepreneurial Knowledge

International Networks

30

3.5 Research Quality

According to Bell et al. (2019), trustworthiness is a key aspect in qualitative studies evaluation.

Mainly trustworthiness has four aspects: credibility, transferability, dependability, and

confirmability (Guba, 1981). To ensure credibility in research results, the use of multiple resources

(triangulation) and peer review is recommended (ibid). In this research, triangulation is achieved

through the combination of primary and comparison with previous literature, while recurring

feedback sessions are held in seminars. To achieve transferability (external validity), purposive

sampling is to be utilized (Guba ,1981). Which means the results could be transferred to similar

settings. In this research, the selection criteria include participants who do utilize eco-innovations

and actors in their business network; this will ensure the maximization of information and

enhanced understanding of the phenomena.

Dependability is related to reliability with regard to the data gathering and research process (Guba,

1981). According to Bell et al. (2019), a researcher should always keep records on the research

starting from problem formulation, sampling, interviews, analysis, and results. In this research, an

adequate record is maintained; the record encompasses early drafts, interview guides,

transcriptions, and recordings which are kept confidential. Finally, conformability relates to

objectivity, voidance of bias, manipulation of theoretical findings (Guba,1981). One way to ensure

conformability is through triangulation (ibid). In this research, the previous literature was studied

and categorized in the formation of the theoretical model. Also, peer review sessions seminars

were also important in ensuring the objectivity of the theoretical model.

3.6 Ethical Considerations

According to Bell et al. (2019), ethical considerations in research can take the following forms:

harm to participants, lack of informed consent, invasion of privacy, and deception. Since the

research subject relates to technology innovation, a series of measures were taken to ensure the

ethical point of view in terms of data collection, data analysis, and writing the report. In order to

avoid deception, the researchers are to present themselves, the research topic, and purpose. In

terms of privacy protection, participants are to be offered options whether they would like to be

identified or anonymized. In the data collection phase, the researchers would ask for verbal consent

from participants to record the interviews. In addition, the researchers will explain how they are

going to handle those sensitive materials. In the analysis phase, the researchers would avoid any

kind of manipulation of the data and present the results accordingly. The researchers would give

extra importance to quotes used in the analysis, making sure it does not reveal the identity of the

participants.

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4. Empirical Data Results This section presents the results and empirical findings of the research. The chapter reports the

primary data from interviews with the BG firm (BGF) and relevant actors in the bio composite and

bioplastic business such as pulp and forest industry firms, machinery and technology suppliers to

the pulp and paper industry, brand owners, and also plastic compounder firms.

4.1 Industry Description

The unique mechanical properties of plastic, alongside its relatively low cost, have made it an

important part of a vast number of industries and global economies (Rahman and Bhoi, 2021).

Ever since the introduction of plastic production in 1964, it has witnessed a great increase in the

amount of plastic produced annually, from 15 million tons in the same year to the staggering

number of 360 million tons in 2018 (Neufeld et al. ,2016 ; Plastics Europe, 2019). However, the

increasing production of plastic comes with adverse side effects; by 2018, the accumulative

worldwide production of plastic was thought to have reached 8660 million tons which led to the

emergence of vast amounts of plastic waste (Rahman and Bhoi, 2021). It was estimated in 2015

that the amount of plastic waste reached 6300 million tons, of which %79 were occupying landfills

and natural environment, %12 were incinerated, and just %9 were recycled (Geyer et al., 2017).

The fact that plastic materials can persist to exist for a long period of time, i.e., a hundred thousand

years, which have added to the concern of the increasing amount of plastic waste (Wang et al.,

2016). This concern triggered policymakers and researchers to advocate against the

overconsumption of plastic in many countries and encourage the utilization of single-use plastic

instead (Xanthos and Walker, 2017).

The infamous issue of plastic waste has prompted the effort to search for alternative materials to

substitute plastic. One of the prominent materials to fulfill such criteria was bioplastic. Bioplastic

is defined as” is a polymer family whose carbon is usually sourced from biological resources such

as biomass” (Narayan, 2011). The term biodegradable plastic can be attributed to bio-based or

fossil-based. However, 50% of bio-based bioplastic is considered to be non-biodegradable (de

Vargas Mores et al., 2018; Rahman and Bhoi, 2021). Often non-biodegradable bioplastics are

formed from natural resources such as corn, sugarcane, and biomass (European Bioplastics, 2020).

The production usually entails a series of organic reactions, including but not limited to pre-

treatment, hydrolysis, and fermentation (Rahman and Bhoi, 2021). The idea of converging plants

to plastic was very appealing to the general population; in turn, it has led companies like

McDonald’s to use bioplastic for food packaging (Arikan et al., 2015). The appealing idea of

bioplastics was supported by the misconception that bioplastics are completely biodegradable,

compostable, and environment-friendly (Reddy et al., 2013). This misapprehension was refuted

and regarded as misleading for limitations (Iwata, 2015).

4.1.1 Bioplastic Users

Compared to the traditional plastic industry market, the bioplastic market can be regarded as rather

small in size. According to European bioplastics (2020), bioplastic production is expected to reach

2.42 million tons in 2024. In terms of market size Global biodegradable plastics market report in

2018 estimates the market at $3.02 bn in 2018 and expectancy to reach $6.12 bn by 2023 (Research

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and Markets, 2018). However, Chemical Weekly (2020) estimates the bioplastic market to reach

$4.4 bn in 2026 with a growth rate of 7.1%. Although the market size information is varying from

one source to another, they seem to confirm that the market is still relatively new and growing. In

terms of geographical markets, Asia seems to possess the largest share with 45% of the global

market, followed by Europe, North America, and South America with 25%, 18%, and 12%,

respectively (European bioplastic, 2020). Currently, the main application of bioplastic remains

within the packaging industry representing approximately 53% worldwide, while other sectors

such as automotive, transportation, and constructions are witnessing an increasing use of bioplastic

(European Bioplastic, 2020).

4.1.2 Bio Composites

Bio composites are becoming a feasible replacement for the glass-fiber reinforced plastics, as they

could mix natural fibers, i.e. (flax, hemp, jute, and wood) with fossil polymers such as PP, PE, PS,

and PVC or bioplastic such as PLA (Soroudi and Jakubowicz, 2013). Bio composites are

considered to be the future of green composites, especially if they contain biopolymers and natural

fibers (Le Duigou, Davies, and Baley, 2010). In this sense, bio composites offer great advantages

in terms of mechanical properties, environmental aspects, product weight, and most importantly,

cost reductions (John and Thomas, 2008; Mukherjee and Kao, 2011). Bio composites are primarily

used in construction, packaging, furniture, and automotive industries; whereby they produce value

in facing the increasing demand for sustainability in such industries (Fowler et al., 2007).

4.1.3 Plastic Industry

The plastic industry is characterized as a fast-growing industry with an estimated workforce of 1.5

million people and a recorded turnover reaching €355 billion in 2017 (Kosior and Mitchell, 2020).

The highest demand for plastic is witnessed in the packaging sector with 39.7% of the whole plastic

industry (ibid), followed by the construction sector with 19.8% (Sendra et al., 2021). The

remaining demand is exhibited within the automotive industry, electrical and electronics,

household and leisure, and agriculture with 9.9%, 6.2%, 4.1%, and 3.4% respectively (Sendra et

al., 2021). The greatest demand in terms of polymer type is Polypropylene (PP) representing 19.3%

and 10 million tons in 2017 (Kosior and Mitchell, 2020), followed by liner low-density

polyethylene (LLDPE) and low-density polyethylene (LDPE) both at 17.5% (Sendra et al., 2021).

The rest of the demand is spread across high-density polyethylene (HDPE), polyvinyl chloride

(PVC), polyurethane (PUR), polyethylene terephthalate (PET), and polystyrene (PS) with 12.2%,

10%, 7.9%, 7.7%, and 6.4% respectively (Sendra et al., 2021). The vast majority of plastic is

produced out of fossil fuel, with worldwide consumption of 9% of oil. In 2012 it was estimated

that plastic production was responsible for 390 million tons of CO2 emissions, highlighting plastic

production as a main resource for greenhouse gas (GHG) (Kosior and Mitchell, 2020).

In the process of manufacturing plastic products, raw plastic polymers are not used independently.

Instead, polymers would be mixed with other additives to ensure desirable characteristics of the

end product (Sendra et al., 2021). The additives that make the plastic compound are identified by

category, including UV stabilizers, antioxidants, plasticizers, fillers, organic and inorganic

pigments, heat stabilizers, flame retardants, and others (Sendra et al., 2021). The plastic additive

33

is a huge and growing industry with a market size estimate of $43.82 billion in 2018 and $50.86

billion in 2021, and future growth is expected to reach $61.25 billion in 2025 (MarketsandMarkets,

2016; Zion Market Research, 2019). According to market studies from Zion Market Research

(2019) and MarketsandMarkets (2016), plasticizers lead the way in market share and are expected

to do so in the foreseeable future. Both studies emphasize Asia pacific region as the biggest and

leading market for plastic additives, while Zion Market Research highest in North America and

Europe as subsequent trailers (MarketsandMarkets, 2016; Zion Market Research, 2019).

The plastic industry supply chain spans from early stages in raw materials extraction phase to

polymer production phase, use phase and finally end of life. First, the raw materials are mainly

extracted from petroleum sources, i.e. (crude oil and natural gas), with the exception of 0.5% that

are derived from bio-based sources (Ryberg et al., 2018). The second phase is the production of

plastic polymers, whereby the raw petroleum materials (Monomers), i.e. (ethylene or propylene),

undergo a polymerization process, which produces plastic polymers ready to be used in plastic

machines to create end products (Geyer et al., 2017). According to Plastic Europe (2020), the

majority of plastic productions occurs in Asia with China possessing the biggest share of 31% of

world production, followed by the NAFTA region (U.S, Canada, Mexico) with 19% and Europe

with 16%. Third, the use phase, where plastic products are widely used in day-to-day life.

According to recent research and reports, packaging is the greatest use application of plastic

comprising 30% of global use, trailed by construction and transportation sectors with 17% and

14% respectively (Ryberg et al., 2018; Geyer et al. 2017; Plastic Europe 2020). The fourth and

final phase end of life. According to (Geyer et al., 2017), the end of life for plastic can be either

one or the combination of three alternatives: 1. Recycling, which entails prolonging the end of life

of plastic products until the displacement of original plastic materials. 2. Thermal destruction, this

could be either in the form of pyrolysis (extracting fuel from plastic waste) or incarnation; which

could be either with or without energy generation. 3. Containment system, which refers to either

controlled and managed systems such as landfills or uncontrolled systems were plastic waste could

leak out in the environment, e.g. oceans.

4.2 Description of primary data interview The primary data from the interview will begin with presenting empirical findings from the BG as

the main actor in the research and continued by other actors. The section is significant to show

how BGF in the context-specific internationalizes, also provide further information on the related

actors and their knowledge in the network of a particular industry.

BGF is a Swedish micro-firm that is established by an expert in wood chemistry and pulp

technology who has a Ph.D. in the relevant studies and experience of over ten years in the Swedish

pulp, paper, and forestry industry (interviewee A, 2021). However, the founder was originally from

China with an international background and found that plastic had a huge problematic impact on

the environment when he came back to his homeland. Hence, the founder saw it as an opportunity

and motivates the founder to establish the firm in Sweden and applied for a patented novel

technology that was founded during the Ph.D. time; it is in making the wood fibers hydrophobic

and “more plastic-like” in 2016 (interviewee B, 2021). Currently, the firm, as a technology owner

34

has a collaboration with multinational partners domestically in Sweden and internationally with

several partners, at least from Finland, Germany, China, and India (Interviewee B, 2021). The

vision of the company is to make “all products to be made from renewable resources,” and their

mission is “to accelerate that transition”. BGF is not owned solely by the founder but also by

stakeholders inside and outside the firm. For instance, one of them is one of Sweden's most active

investors in start-up companies. However, the CEO acts as one of the lead entrepreneurs. Four

people from the firms were interviewed with multiple roles. Currently, the firm has less than 12

active employees, with many other relationships also established with the forms of consultant-

client relationship, internship, research partner, and part-time work (interviewee B, 2021).

From the external of the BGF, two people are interviewed from a Finnish big incumbent machinery

and technology suppliers with long 200 years history in their development (C2). C2 is a global

developer and supplier for technologies and machinery, automation, and services to the pulp,

paper, and energy industries. The firm has 14,000 employees around the world with EUR 3.7

billion net sales in 2020. C2 contributes to BGF development, according to interviewee A.

Furthermore, three interviewees contributed to the results from two major players in the world

pulp paper industry and renewable material producer (C3 and C4) with their respective position as

material development, sustainability manager, and head of business. Company C3 is a

multinational company operating worldwide with around 26000 employees, and it is considered

one of the biggest companies in the forest industry. At the same time, company C4 is one of the

biggies companies in the forest industry within Sweden. Additionally, the interviewee from

company C5 represents a company that works in the field of plastic compounding industry in

Sweden. The company has been in the industry for 40 years and has manufacturing facilities in

Sweden, the United States, and China, and has subsidiaries. The interviewee works in a

management position at the group level and has experience in the industry of 10 years (interview

J, 2021). Lastly, a Founder and CEO of Danish brand owner with multi-lines of businesses that

operate across Latin and Northern America, Asia, and Europe in the area of jewelry, fashion,

restauration, F&B, and private investment capital is interviewed.

4.3 Early establishment

The member of BGF have various backgrounds with the founder, and interviewee A has both

experiences in the academic and practice side of related technology and in the pulp and forestry

industry as main resources for the production. “I started work with research and development in

[C4] which is a Swedish paper producer … work parallel on the university and at C4 … I quit at

the university and only worked with C4 … The CEO and I worked together in C4 15 years ago.”

The technology competence in BGF is owned by the founder and interviewee A since the

establishment of the firm. Subsequently, BGF recruited additional two capable members in the

technology as a product development engineer and material development into the team. Both of

them have the same alma mater as the CEO. However, not all the members have experience of the

technology; some of the new recruits are also new to the technology. But they have their own

specialty in the other areas. The firm is maximizing its background on the technology and

experience of the CEO and interviewee A to commercialize the technology and produce the

35

material (interviewee A). The CEO develops the unique technology internally at the outset before

advancing it with external collaboration. “the concept to modify the fibers and how to compact

them is internal from the beginning ... the way to do that has been done in cooperation with fiber

producing or actually these pilot plants are owned by companies making process equipment for

private producers [in Finland and Germany] ... there's only two in the world (interviewee A).”

All the interviewees from BGF mentioned that they have a willingness to make breakthrough

sustainable innovation and impact as the reasons to be involved in the company. The sustainability

aspiration is also related to the experience of the CEO, particularly in the anxiety in solving plastic

environmental issues in the hometown (interviewee B). Although some of the members do not

have specific experience in the bio composite business, some have experience in general business

development and sustainability-focused international firm. (interviewee C).

The entrepreneurs have international business experience in the same industry. Two of them have

practical industry experiences in an international company and also on the research side in two

prominent universities in Sweden. Hence, the international market has become an aspiration since

the inception as an important factor to have a global mindset (interviewee B). “since the beginning

because material and technology company is not really locally customized. We decided in the

beginning [to internationalize] because of the market, besides the value chain is international.

Plastic and the problem is international, so the product has to be international (interviewee B)”.

The international mindset includes their willingness to create global impact since the inception

(interviewee B). To be able to realize it, the firm has the orientation of scalability to create a big

impact while the small domestic market cannot assist the aspirations to reach the realization. “If

you want to use the possibility to scale up, … you need to find a large market. The domestic market

in Sweden can't absorb that. To be able to take advantage of the scalability (interviewee A).”

Other than the aforementioned reasons, there are other motivations for their innovation and

internationalization. First, the decreasing trend of the Pulp paper industry (interviewee B). Second,

the increasing of market awareness towards sustainability issues (Interviewee F). Third, the trend

also comes from the top of the shareholders and stakeholder’s sustainability consciousness to the

incumbent big firm, not only triggered by the consumer market as it is more aware to the

sustainability issue (interviewee F). “as we are a stock listed company, also the investors and

analysts and investment community is expecting us to act in a sustainable way in this sustainable

businesses, there are several sorts of these institutional investors who even they have left out from

their portfolio companies that are in a non-sustainable business … it's about valuation, that the

investors see that, that companies that insist the sustainable business have a better future, they

will be valued higher than companies that are working in a non-sustainable way. (Interviewee E)”

4.4 Locational Advantage

BGF elaborates that being in Sweden gives several available benefits for the firm. First, the firm

has close access to sustainable natural resources in the Nordic area, such as sustainably managed

forests (interviewee B). Second, the access to the incumbent big business player in the pulp and

36

forestry industry as customers and suppliers (interviewee A). It is also stated by interviewee B that

two of the biggest pulp and forestry companies are located in Nordics, and the machinery suppliers

are also located in the Nordics area. Third, close proximity to the technology. Interviewee D

confirms it by stating that it is beneficial to be in Sweden as resourcing and exporting the

technology and its infrastructure is ready to help them. “it's easy to start talking to the brands that

are on a national and Nordic or European level. But they usually exist on a global level. But they

have the product development innovation centers [in Nordics], close by then we'll get started doing

the tests. But then, of course, they exist on a global level (Interviewee C).”

Last, being in Sweden with a relatively small domestic market and adequate export infrastructure

synergize with their international market aspiration (interviewee K). Moreover, the interview with

the brand owner described the open culture and honesty in working in the Nordic countries as a

way for future opportunities and opens doors to collaborations (interviewee L)

4.5 Business Model

BGF, as the technology company, has focused on licensing its technology to large-scale customers

in the early establishment of the firm (interviewee A). Initially, they want to bring the technology

to a massive market without having any investment in the production tools, such as by purely

licensing technology before the product was developed, even before the final product is sold

widely in the market. They were executing the production by out-source or collaboration with

another partner. However, the management was not able to push the license of their technology in

a massive level of production in the first year because of the difficulties in finding a big scale

customer. BGF found that they were over-optimistic, and the expansion took a longer time.

“I think the basic idea and basic strategies are still the same, the interest in licensing the

technology and start producing. [But] that's an old industry. We have moved a bit from a bit over-

optimistic view that someone is super interested and ready to start using this technology

immediately ... we need to do some small-scale production to build the market. The idea of not

being a producer is still there; we need to be able to deliver, to show that there is a market that

works. The focus might shift a bit, but the basic idea is still the same (interviewee A).”

Demand differentiation is one of the factors that makes innovation slower to a certain point; it is

complicated also by the interdependence of innovation to the customer production facility. The

problem relies on the difficulties of the old forestry industries in moving to a new innovation

(interviewee F). However, It is the founder and other members who identify to create the new

opportunities and exploit the contingencies as the pellet producer in collaboration with their

partner. BGF looks at it as a different available way that can be turned into an opportunity with

selective strategy, niche market, and focus internationally (interviewee B; interviewee L).

Subsequently, BGF changed its goals and trying to control the controllable aspect, as they cannot

control the acceptance of big-scale customers to their technology without a proof end product.

BGF open themselves to a new goal to minimize loss and adapt their business model into a more

realistic plan (interviewee A). BGF turns the focus into creating pilot product material as their

37

project to convince the market that there is a demand and need to pursue the opportunity and

change the customer mindset. It is found that the incumbent big firm in the machinery and pulp

and paper industry also focuses on the same strategy. “We can do sort of tests … samples we

actually even have a container size, this small lignin plant that can be sent somewhere and do

some tests, pilot plant size that we have delivered to [a firm in Brazil] and they can do their R&D

work on that one” (interviewee E). Important to note, BGF does not sell the end product by itself.

The brand owner, as their customer, will create the end product and sell it to consumers instead.

Furthermore, the brand owner in this study indicated the changes in business model from just

selling products to building a brand and telling a story on their products, and now they are trying

to stay in business and survive by adopting sustainable practices such as changing the packaging

from plastic to paper (interviewee L). Although two members of BGF have a long experience in

the industry, they know that they are the provider of technology and focus on eco-innovative

technology since the early development or as a material producer rather than a final product

producer (interviewee A). All the members define the firm as a knowledge-intensive firm rather

than a biocomposite manufacturer due to the unique technology offerings to worldwide customers.

Currently, the licensing model, the production of pellets, and collaboration with the brand owner

still go simultaneously. Interviewee C stressed the importance of prioritizing the business model

correctly to focus and obtain the first business and partnership. The interest of the brand owner is

not reciprocal with their respective knowledge of the material. Hence, the product sample is vital

to test the product and find collaboration partners such as with compounder. However, the

sustainability, technology dependence, unique innovations, and international market aspirations

and scalability have never been changed, albeit the business model, technical perspective, thought

of product benefits somewhat changed from the inception (interviewee D).

BGF uses multiple modes of entry and only limits the exclusive licensing into a specific context

and non-eternal agreements. Conversely, the big firm wants to make a long-term agreement so that

the technology remains relevant in the long term to ensure the control of scalability and

profitability, at least six years (interviewee F). “For a specific client, they might want exclusivity

… [they] can have exclusivity for a certain time or geographical area…within a certain field. So

if you make pens, don't tell that I can't sell the material to automotive makers” (Interviewee K).

In terms of working structure, BGF worked in a less stiff structure, non-hierarchical, and made a

considerably less complex analysis in doing their planning and analysis.

“we’ve tried balance ... But we don't have that many resources; we can't do a very careful deep

investigation and evaluate all possible alternatives, we have to make good decisions, based on

limited information and find a good enough, but reasonably fast. Not stuck on too much

development, analysis, then we will run out of money. Time is critical” (Interviewee A).

BGF also works with ample autonomy and flexibility in each firm member, while the members

can adjust the work without needing multi-level management approval (interviewee C). The

autonomy and agility in BGF work closely together with the decentralized R&D structure of the

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customer and suppliers in the pulp and forestry big incumbent firms (interviewee E). Interviewees

A and B stated that the ability of BGF in reconfiguring internal and external resources is the key

to success. BGF works in an agile manner that the CEO, product development material expert, and

marketing team work together quickly and comprehensively in acquiring and disseminating

customer knowledge and needs. Interviewee F express that “for competitors to us that is slimmer

and faster and more agile. They have an easier way of taking the new business. And if it works, or

if it doesn’t work, then they jump to something else” (Interviewee F).

4.6 Resource Importance

At the beginning of their inception, the CEO does not have a team member who deeply

knowledgeable in marketing and mainly focus on product development. One year after inception,

a member joined as a business developer in general, and one other new member poses marketing

knowledge in a specific china market (interviewee B). Subsequently, another marketing or end-

use development join the firm (interviewee C). Obviously, they need more resources in

complementing some other aspects such as business development and financing to build a global

firm. The CEO tried to find another capable individual with related technology and business

development, such as strategic business development, process, and Ph.D. student or expert in

material development, by asking his personal network (interviewee A).

In terms of financial resource, BGF obtains the financial resources by using many different sources

such as from personal resources of the founder, resources from the other member, a Swedish

government organization that focuses on venture capital activities in assisting new firms, and also

from joining many different events such as competition and related fairs (Interviewee B). It is

discovered that the people who work in the firm invest their funds in the company. BGF acquired

all available financial resources in a heterogeneous way to reach the goal.

In terms of production resources, BGF needs to work with the existing current production

infrastructure of big incumbents in the pulp and forestry industry to reach scalable production

(interviewee A). The incumbent partner in the industry relies on their main existing resource and

infrastructure in full-scale production and the needs of their resource improvement. Partner

resource integration could be an integration of suppliers’ production system with internal systems

of BGF, or the eco-innovation needs to be integrated into the existing production line of customers.

In order to make sure that the innovation is affordable, quick pace adoption, and also scalable. In

the same vein, the existing machinery and technology supplier confirms that the BG help them to

achieve their eco-innovation and implement it to their system “yes, the BG helping to implement

it, rather than affecting our strategy” (interviewee E).

BGF combines the tendency of using the internal resources of the firm in every different post

outside their original job, and it is normal for an employee to have a multirole on a temporary or

long-term basis. “The work is a mix from rather strategic issues to more extreme hands on hard

and work … [including] to handle the material to handle samples” (interviewee A). Moreover,

BGF includes the utilization of personal resources in helping their company activities. “I have

some space [at my home] to be used by BGF, and the space here is cheaper compared to

39

Stockholm” (interviewee A). Utilizing resources on a patchy basis also involves the maximum

utilization of other non-long term resources such as interns. Furthermore, BGF also employs

workers part-time at the more strategic level to fulfill their needs of human resources. For instance,

employment of a consultant on a part-time basis (interviewee B).

In addition, to solve asset parsimony in many different resource needs, the member mentioned the

importance of choosing optimal selective strategies from what they have. “We have investors.

Only at the moment, we need to focus … to be able produce the resources in the best way … It’s

also important to say no to be able to focus on the right one” (interviewee C).

The development of BGF has examined the CEO’s and the member’s capability and consciousness

to identify resources and opportunities. It is elaborated that the CEO asked interviewee A to find

a resource Ph.D. student in bridging the technology (interviewee A), and also asking interviewee

D to help in building the business strategy (interviewee D). The firm employs many different

strategies in acquiring resources for the company, such as through partnership, deliberately hiring

resources, and contractual agreement (Interviewee B). Interviewee A further elaborates that in

finding resources, they need to be conscious of a surrounding opportunity. They conduct iterative

reactions to change. Something unexpected could happen that becomes the resources to the

company. “there are coincidences that might appear or to some extent our latest industrial

connection ... that’s a bit random so to say. it seems rather promising … it’s a matter of

luck” (interviewee A). On the other side, interviewee B similarly emphasizes the openness to

contingencies “likely very clear [about] the destination, but on the way towards the destination

things happen. And I think it’s a lot of faith, you understand in China, that thing in the right timing

and meet the right people and things happen” (interviewee B).

4.7 International Networks Collaboration

4.7.1 Exploitation of Networks

BGF depends on collaboration in developing its product and in its various activities in the business.

BGF leveraging their partner competencies in terms of collaboration in general and product

development, “we partnering up with more different compounders, we know more about how to

optimize when mixed into different plastics. And then we can optimize” (interviewee C). in terms

of sales, BG leveraging foreign distributor competences in selling and focus in certain

geographical areas. “So the international offices, I would say, are distributors. So it’s basically

sales channels” (interviewee F). It reduces their risk and solves their limitation of specific market

knowledge (interviewee F). One of the strategies is utilizing their previous personal and business

network as a factor to accelerate. “You can probably grow without a previous network, but it takes

a longer time … previous network could make it a bit easier” (interviewee A). Rather than seeing

the incumbent as their competitor, BGF ignores the competition and emphasizes the importance

of collaboration and partnership (interviewee C).

In this case, BG follows their partner, their suppliers, and customers in their product development,

business development, market development, and joining works into specific geographical areas

(interviewee C). The cooperation dependence provides room for the customer to influence their

40

business development process. BGF understands that the suppliers and customers believe that the

decentralized structure of the R&D organization can give a better result of their innovation

(interviewee E; interviewee I). For instance, the incumbent pulp and paper firm emphasizes that

innovation will not emerge in isolation (interviewee G). Having collaboration with them gives

BGF a different direction and speed of their development and strategy. “I can contact a lot of

brand owners, and I get to work with one … and collaborate with their compounder. If they are

successful … we can talk [to] the compounder, you sell to this brand owner, which other brand

owners do you have that we can offer the material” (interviewee C).

For example, one of BGF’s external partner in machinery suppliers in the pulp paper industry is

C2, “C2 has presence in over 100 sales offices, and present in 33 countries, and delivering to all

other continents except for Antarctic” (interviewee E). C2 is also the biggest supplier to C3, one

of the biggest pulp and paper firms, and calls themselves “leading global provider of renewable

solutions in packaging, biomaterials, wooden construction and paper with sales in more than 50

countries” (Interviewee G). One actor can give a multiplier effect to the other. BGF understands

that the incumbent has an openness for collaboration, and it confirms by the C2 and C3 that they

have a program to find a BG or general start-up firm with innovation to work together with

them. “I can see that from our biggest customers C3 … have what they call intrapreneurs. They

have people searching for good ideas constantly. They won some award in Finland last year for

being the big company working with the most start-up companies in Finland” (interviewee F).

The pulp and paper industry network and its international setting have a great impact on BGs

internationalization, as it related to existing partnerships and collaborations in such networks.

Moreover, it spans on how such organizations forge new collaborations and the criteria of potential

partners. The interviewee from company C3 places great importance on collaborations and

considers them an opportunity to generate novel ideas and learn from these collaborations and the

expertise of partners. On the other hand, the interviewee from company C4 views the

collaborations with customers to develop new sustainable innovations and shift from fossil-based

resources. According to the interview with company C5, traditionally, the most important aspects

to look for in a potential partner were price and quality, added to that recently were the

sustainability attributes of the potential partner, which has gained increasing importance.

Moreover, the interviewee argues that the ordinary way for the company to find potential partners

is through the utilization of their network in addition to their contacts as well.

“This like thinking outside the box is, of course, very important when you’re doing your research

and development. So I think, as a researcher, it’s very important to collaborate with many different

companies. it’s not our home, field. It’s not paper or wood products. There’s a lot to learn, and

we learn we use this opportunity from collaborations and outside contexts” (interviewee H).

“we really need to cooperate and work with our clients and also find new innovation for our own

products so that we can support other customers in using our renewable recyclable combustible

resources, instead of using fossil resources, that that’s really where we need to say we need to

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move our focus into that direct that area. Stop looking at our own industries, because we’ve done

so much there when it was ready” (interviewee I).

On the subject of working with smaller-sized companies, company C4 stated that they do not have

much experience dealing with such companies and stated they ought to try such collaborations

more often, as smaller-sized companies are more dynamic than big companies. On the other hand,

company C3 did not place great importance on the size of the company but instead focused more

on the technology and how they could test and verify it to see if it is compatible before engaging

in partnerships.

In leveraging partner competence, BGF does not merely depend on the external partner. BGF also

leverages the internal stakeholders’ competence, such as the investor or board of BGF, to

contribute to the strategy (interviewee B). The internal connection with former members of BGF

also tends to last long. For instance, two investors who previously worked more actively in the

firm do not involve actively, they still have connections and help the firms at least to be an advisor

or network facilitator, and they remain the available means for networking for BGF (interviewee

D). The investors also help the firm to select the strategy and do the risk assessment as they have

experiences. “other investors. If this not right in the direction of the company, they will guide and

propose solutions and directions … they have opinion and experience” (interviewee B).

Even though in some collaboration it was started without any personal networks, in order to be

successful during the development of the collaboration, BGF and their collaborators need to build

a good personal connection throughout the partnership “there are also many partnerships that did

not start through personal networks and still have like, there has been good personal relationship

building throughout the partnership” (interviewee D).

BGF envisages the size issue of their small firm when developing collaboration with big incumbent

companies. The issue of resource ownership equality can be minimized with the connectedness of

their mutual interest in developing innovation and the shared vision about the importance of start-

up firms to the big company. “Because, for huge company, start-ups are very important … it’s

nothing in terms of size” (interviewee D). The importance for BGF is the willingness of the big

firm to work together and share knowledge of related development and generating growth to BGF.

They mentioned the importance of integration and leveraging the infrastructure of current partners

due to the conventional pulp industry downtrend and scalable production potential. “mutual

interest in making change, development, optimization and sharing knowledge. I think that’s

fundamental … we have looked into suppliers that could have commercial interest, who have ...

spare production capacity, that’s in good technical condition” (Interviewee A).

BGF Utilizes big customer willingness and needs for innovation in improving their current

business. One of the help is the access to niche markets that they are focusing on (interviewee K).

BG believes that the significant influence of adopting their innovation comes from the different

demand and willingness to purchase. They focus on the niche product with multiple modes of

partnership (interviewee K), with the scalability of producing by integrating the innovation to the

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existing partners' infrastructure (interviewee F). Hence, other than licensing their technology, they

collaborate in making a product or material (interviewee C). Also, the network dependence was

not merely between BG and existing big players as their customers or suppliers, but also between

the incumbent machinery technology suppliers and pulp and paper firms as their customers. "C3

is our biggest customers, so they have a huge impact on our [innovation] decisions "(Interviewee

F). BGF exploits partnership by making relationships in various manners. Besides the business

network, the personal network from the entrepreneur and members inside the firm provides an

opportunity for acquiring financial and internal human resources and collaborating with external

parties. "I just ran into my old classmate. [She asked] Do you want to meet the company? So I did

quite randomly met … They needed work with the help financing with a certain process ... then I

was working [and invest but] not working full time" (interviewee D).

4.7.2 Network Exploration

Because they are open to the new goals, they are not merely exploiting the relationship they have

established previously by the CEO and other experienced members. They are also exploring the

new relationship with more extended contacts from their personal contacts and business relations.

Openness to a new collaboration and let the customer also influence the development. BGF makes

cold contact with customers and suppliers through social media such as LinkedIn and direct meet

(interviewee C). Moreover, BG participated in related events such as start-up pitch events,

technology, and innovation competitions. "we are the runner-up of a competition, the winner they

invest in us … And one of the investors brings another that is very good in the strategy. And she

invests in the company too. This is not expected" (interviewee B). BG also involves in different

kinds of conferences to explore a new network, such as R&D conferences with different

organizations, innovation and sustainability conferences (interviewee E). BGF also explores their

investors and stakeholders connection to find another connection and resources. "as with many

start-ups, as well, it's a lot about the network of the investors or people somehow involved in the

team or network of the team members" (interviewee D).

The interviewee stated that whether the collaboration is built with the domestic or international

partner is not an obstacle (interviewee D). If they have the same language and culture, it is an

accelerator rather than a must-have factor, and the most important is the strategic fit (interviewee

G). C2 and C3 filter the strategic fit on a "case by case" basis. C2 gives examples of the strategic

fit. For instance, the need to work and own strategic fit on the same raw materials, product, or

technologies that they use or produce makes them innovative and willing to give solutions

(interviewee E). The BG also needs to fulfill its specific sustainability criteria and act responsibly.

It is quicker to start the collaboration with partners or customers at the Nordic or European level

(interviewee C). However, their regional partners usually exist on a global level. The collaboration

with international partners is usually with the global brands where their technology home or

innovation centers are located within the Nordic area (interviewee D). Interviewee F (C2) asserted

that the geographical factor is not an issue in the eco-innovation "we are back to finding smart

suppliers with good technology. And we don't really care where they come from, we buy from all

43

over the world if we find something clever, we work with them". The international size and present

can open the possibility of working with more international partners and "finding the right

strategic fit" (Interviewee D). Using their extensive networks to establish other ties with other

networks, such as exploring their partner's network in finding technology collaborators and

customers. Moreover, "in pulp and paper and bio industry, everybody knows everybody, even

globally" (interviewee E). The network partner in the big incumbent forestry company generally

has a long record of career experience in the related industry such as pulp and paper, related to

interviewee A experience that he knows mostly the actors in the industry that is categorized as

their personal industry knowledge. "The companies in Europe I think I have reasonably good

knowledge about [them] without deeper investigation. I think it's easy to identify because that's

quite a few actors" (Interviewee A).

BGF supply chain also follows the current industry, resulting in a challenge as the industry is a

slow-mover with many big players and a high cost to move from the current infrastructures

(interviewee B). Interviewee F stated that the game-changer innovation could come from outside

or inside the firm. Furthermore, the incumbent actors in the industry have a rigid experience and

need innovation from outside. Interviewee F elaborated that the C2 has an exceptional incremental

innovation and rigid market control, while at the same time, they realize the necessity of innovation

and collaboration with BG firm or research institute. Because the BG can possess resources that

the incumbent does not own. "The risk of having them [innovation] in house is that they get too

influenced by the traditional way of thinking (interviewee F)." For instance, "C2 purchased the

RISE technology over 10 years ago, so at least a decade, this has been going on" (Interviewee E).

4.8 Risk and Challenge

The members of BGF mostly have the general risk knowledge of their innovation and

internationalization (interviewee A). The main risk is the issue of intellectual property. All the

interviewees from BGF mentioned the reliance on a non-disclosure agreement (NDA), the

importance of intellectual property rights (IPR) protection, selective information dissemination,

and a good relationship with partners as their means to reduce risk. The highlight is also the risk

of spreading too thin because of not focusing intensely on a specific market (interviewee D). The

firm focuses on reducing the risk throughout the process rather than preparing detailed plans in the

risk issue, ignoring the risk of a dispute with the partner, and depends on a win-win relationship

that can maximize the available opportunities. "As a start-up, you don't have much downside if

something goes wrong. It's more for the big company" (interviewee D). The firm focuses on

available risk reduction possibilities as a risk control with the big incumbent. Interviewee A has

not identified the risk of expansion because, in the early establishment, they work in the EU with

similar IPR, legal system, and regulations. Although they have NDA, they have less power to take

bureaucracy to a further level. "the purpose is to prevent conflicts and avoid the problems but it's

all always to make it work. Find people … good partner that has business culture

knowledge" (interviewee A).

Another side of IPR can generate values and revenues because the customer sees that BGF owns

the technology, and the customer will feel safe to collaborate without worrying their competitor

44

will copy it beyond their knowledge (interviewee B). The customers know that BGF will keep

their value, that is, the eco-innovation technology. However, interviewee C does not consider there

is a risk in expanding to a market abroad. None of the BGF interviewees mention their possible

specific expected return in the future, rather than their invested money and possible loss such as

mortgages (interviewee F). Interviewee A also emphasizes it “that [production] capacity to

deliver is the major drawback that holds us back … but we can’t [lose much”] (interviewee A).

BGF also realized from the beginning that the old industry characteristic that is slow-moving could

slow their innovation, even though they are not directly seizing the current consumer and keep the

focus on maximizing the current industry infrastructure (interviewee A). They have difficulties

moving the incumbent into a new eco-innovation quickly in the beginning due to the resources and

coordination needed to move them into more sustainable innovation.

Moreover, brand owners have their perception of risk in general regarding sustainable practices.

One of the fears of the brand owner that they don’t adapt or make the transition fast enough and

risk losing business. At the same time, the brand owner expressed the challenges in adopting

sustainable certificates as it would entail hard work and usually entail extra investments that small

businesses cannot afford. In addition, the brand owner expressed concerns regarding other actors

in their supply chain as they may not be willing to sustainable manufacturing/production processes.

The main reason is that the brand owner believes they do not possess enough bargaining power to

sway other actors, especially in developing countries where there the market for unsustainable

goods outweigh the sustainable ones (interviewee L).

4.9 Industry characteristics

The industry characteristics refer to the knowledge that would help BGs firms to navigate and deal

with possible international partners. The topic covers several aspects, including industry

knowledge, international market orientation, and incumbent inertia. The interview with the person

from company C3 revealed that the company enjoys a high level of control of the supply chain as

it actually retains ownership for a sizeable part of the supply chain "at our company we are owning

a large part of the supply chain, so we are of course supplying our own wood" (Interviewee H).

On the other hand, company C5 describes the current state of the supply chain as international,

price-sensitive, and part of the international market. As a result, the company's has a low level of

control over the supply chain. "since it's a very international markets, it's we're very sensitive to

prices in the raw material market. or sensitive when we cannot, it's not in our hands to control so

to say, this is the big thing" (Interviewee J). According to the interview with the person from

company C4, a clear emphasis was given to the international operation of the company and its

international presence. The company mainly exports the majority of its paperboard products with

some wood products as well. "our customers are international. we're exporting everything…when

it comes to paper and paperboard, we're exporting mostly everything" (Interviewee I).

The interviewee from company C3 stated the nature of the industry and the company in making

investments as always making significant investments that last for a long period. An example of

such investment is illustrated in buying paper machines of an immense size that last for more than

45

40 years “When these people from the pulp and paper industry are thinking about investment,

they’re thinking about buying a paper machine, and that is big” (Interviewee H). The interviewee

from company C4 corroborates the statement on handling investment from the interviewee from

company C3. Furthermore, the interviewee distinguishes between the IT and forestry industry in

terms of investments, as in IT, the investment is usually in Millions while in the forest industry,

the conversation is usually in billions. “the investments you do in the in the industry are huge,

investment in an IT software, so maybe a couple of million. In an [forest pulp paper] industry,

you’re speaking billions” (Interviewee I).

The interviewee from company C3 describes the status of the industry and company as being

somewhat rigid in nature, with old-age personnel who are difficult to convince. As a result, changes

tend to take a lot more time than usual “They always say that it’s a very rigid department, and

very old people that are slow-minded, and things take time to change” (Interviewee H). The

interviewee from company C4 confirms the previous statement from company C3 interview.

Moreover, the interviewee describes the industry as undiversified, primarily Swedish males

working in the industry. The presence of females is relatively small compared to male, who share

the same interest of forest with males. The interviewee concludes that the undiversified nature of

the company and industry is reflected in they perform business. “The Swedish forest industry is

very [undiversified], I mean, so it’s mostly white Swedish people. And there are some women, but

they are mostly also born in the forest, they are hunters, they have the same in the share the same

interests as the man do. So, and that also reflects in how we do business” (Interviewee I).

4.10 Sustainability and drivers

Sustainability refers to the awareness, knowledge, and drivers behind an innovation that addresses

sustainability concerns and provides a solution to such problems. According to the interview with

company C4, great importance was given to industry circularity, and they feel that such an aspect

needs to be appropriately communicated ”within our own company, we have like in a circular

industry. We have a circularity internally. And that’s when we started to communicate that the

first is the foundation” (Interviewee I). Company C3 views on the circularity of the industry were

similar to company C4. However, company C3 also expressed willingness to pursue circular

efforts and to close the loop in their new material development “we are working on this circular

loop, closing the loop with the brand does not end customers, when it’s easy to get the material

back after it has been used then we can create a whole new product out of it” (Interviewee H).

According to the interview with company C5, sustainability aspirations are manifested in

addressing and reducing the carbon footprint as it has become an essential aspect for their

customers. Efforts in this area include implementing a new tool to calculate CO2 footprint for

products while engaging in recycling methods for CO2 reduction.” to reduce our co2, carbon

footprint, this is what we’re working with. we are working to set up a tool for calculating the

[carbon] footprint of each product. because our customers do not only look at price nowadays,

it’s also the co2 footprint... we’re working in different ways [of] recycling and reducing co2

footprint” (Interviewee J).

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The sustainability drivers refer to the number of reasons and motives that would entail the company

to engage in sustainability practices. The interviewee from company C4 discussed and described

how the company engages in a new way of thinking and exploring options that constitute a

sustainable way of revenue. Furthermore, the interviewee describes the need to look for outside

opportunities where they can make an impact regarding climate change “we want to make sure

that industries with that capacity are still running and we want to find new solutions, new products

that they can produce. But we’re looking into other options of course… seeing how we can be

more sustainable, we’re now shifting, we need to shift and look outwards. Because that is where

we make the greatest benefit” (Interviewee I). The interviewee from company C3 corroborates the

conclusions from company C4 Moreover, and the interviewee stresses the need to allocate more

efforts and resources in exploring new fields and new applications for the forest industry.

Company C3 and C5 interviewees also shed light on the increasing demand from the customer in

terms of sustainable materials, and this represents a big driver for company C3 to pursue further

and adopt such innovations. The interviewee from company C4 also places high importance on

customer demands and illustrates the inability to conduct business with clients if they do not have

specific sustainability certifications. Company C5 sees Such sustainability practices representing

a huge market opportunity for the company. According to the interview, one of the leading

sustainability drivers is to build and enhance the brand of the company, to portrait an attractive

image to appeal to customers. “very big opportunities, [the] automotive industry is really working

[with this a lot] ... And we are a big part of this. We have been working with recycled materials

for 40 years ….to strengthen our brand and to be to a better choice for our customers, I would

say, this is the main driver” (Interviewee J).

4.11 Innovation

The term of innovation refers to experience, knowledge, challenges, and capabilities in producing

or acquiring technological innovations for the companies. Also, with regards to the ability and

nature of the company to adopt and built technological innovation. The interview with company

C3 highlights the importance of such innovations in providing a diversified product portfolio in a

sustainable way “I think a very big part is to of course, broaden the application of the currently

products by going even more sustainable” (interviewee H). Furthermore, company C3 and C5

interview emphasized the nature of innovation as incremental (step by step) rather than radical “I

think we are working rather and take making small steps, improving the product a little bit better.

So, the bio composite becomes a little bit better” (Interviewee H).

One of the essential aspects that were mentioned throughout the interviews with companies was

innovation challenges. One of the main issues that hinder innovation for companies was the lack

of communications within the companies as well as the distribution of knowledge. Companies C3

and C4 confirmed that the innovation could witness significant development if the issues of

communication were to be addressed “But if we can manage to increase the communication and

looking outside your own box and use all this extremely valuable knowledge that we have, it could

be a good way to find new solutions” (Interviewee I). The interview with company C3 also

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highlighted an additional issue that can hinder innovation which is the intellectual property rights

(IPR). As problems could arise over the ownership of idea as well as time consumption in such

legal matters. “the question is always, how much can we say without getting problems with our

legal department. Also, you always have to have a look how far you have come compared to

competitors, maybe. you don’t want to give too [much] information about how far you’ve come

and [and be] transparent” (Interviewee H).

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5. Discussion This section aims to discuss the main findings in each conceptual framework lenses related to the

research question and divided into three parts. First, this chapter will elaborate on the main findings

and weave the relationships between the effectuation principles, followed by other main aggregate

dimensions such as technology perspective and eco-innovation perspective. Subsequently, the

chapter will elucidate the implications for theory and research and implications for practice.

5.1 Discussion on main findings

5.1.1 Effectuation in internationalization process

This subchapter intends to discuss the findings from the theoretical lenses of bird in hand principle,

affordable loss, crazy quilt, lemonade, and pilot in the plane from effectuation principles.

Bird in hand principle

The principle relies on the argument that the actors in BG firm rely on their identity (who I am),

knowledge (what I know), and networks (whom I know) through a process of “What can I do?”

from those three backgrounds in evoking opportunity, instead of predicting “What should I do?”

in their journey (Sarasvathy, 2014). Our result strongly unveils that BGF cognizant of their

backgrounds, such as experience, knowledge, and networks, as their available means to help them

in internationalizing the business (Galkina and Chetty, 2015). Their strategy of licensing the

technology to an incumbent is a precise example of bird in hand principle. In establishing the firm,

the founders commenced with a given technology that has been found previously as their

innovation source. The study proposes that the entrepreneur and early member of the firm’s

internationalization possess specific knowledge, network, and experience before

internationalization. We agree with Bell et al. (2003) that the firm positions itself as a knowledge-

intensive firm and possesses the technology to internationalize quickly (Jolly et al., 1992). For

instance, although the international managerial experience of the founder and early member is

unclear, the cofounder has experience in establishing a small forestry business.

According to the results, the CEO and one of the early members have Ph.D. study experiences in

related areas and working experience with a Swedish big incumbent forestry and pulp firm. It

supports Cannone and Ughetto (2012) that the founders are prone to possess high credentials, so

prior knowledge increases their capability to absorb new knowledge in their internationalization

(Cohen and Levinthal, 1990). For instance, the firm owns the patented technology as their available

means because the CEO has been developed it before the firm establishment.

The actors stated that they realized if their connection to their previous work is a source of growth.

The effectual reasoning helps them connect with the big incumbent and new suppliers – customers

in the industry and access to different resources such as human, financial, and natural resources. It

gives iterative refinements to the business process through a learning process. Hence, the available

means change over time (Sarasvathy, 2008). The preceding knowledge, network, and experience

are not necessarily in the international marketing area, rather a various area including technology,

international firms relationship in product development, or having knowledge in supplier-buyer

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relationships for a speedy internationalization. We consider their international experience working

with the technology in their previous company to lead the orientation of BGF on the international

market. Those factors accelerate their international market aspiration as their main field since the

early inception of the firm (Madsen and Servais, 1997).

Hiring a new resource has a causation nature in the activity. In order to be internationalized, BGF

tried to complement its lack of experience in the international downstream business by hiring new

members. It indicates a mix of effectuation and causation process and reasoning of the entrepreneur

(Chetty and Leppäaho, 2015; Sarasvathy, 2008), particularly in hiring people (Fischer and Reuber,

2011). However, in the recruitment process of a material expert and a product engineer, the

entrepreneur uses their available means such as university connection, a connection from the

previous workplace, and personal connection from the same home country. Therefore, the study

shows the use of focus on means instead of end goals (Sarasvathy, 2001), open and conscious to

new contingencies, and as the CEO stated that the firm needs to attract the resources since early

stage.

The identity of the entrepreneur and firm disclose the emergence of the business (Sarasvathy,

2001). The case considers that the identity or question “Who am I?” becomes one of the reasons

for accelerated internationalization. The identity of becoming a Swedish firm relates to their

internationalization available means. Sarasvathy (2008) stated that while the result and preference

of a decision making are uncertain, their identity can shape their decision-making process rather

than their causal analysis (Sarasvathy, 2008). Located in Sweden gives several available means

for the firm. For example, close access to the resources (Benito, 2015), such as sustainable wood

resources in the Nordic area, access to the Nordic incumbent in the pulp and forestry industry as

customers and suppliers, and close proximity to the technology as Nordic become technology

home to some brands (Wise and Høgenhaven, 2008). Unidirectional with Clercq et al. (2005), a

relatively small domestic market gives the firm an attractive proposition in internationalizing its

business. Since inception, the adequate export infrastructure synergizes with their international

market aspiration since inception as their available means in their internationalization.

Affordable loss principle

The affordable loss principle relies on the entrepreneur's commitment to the acceptable level of

loss or willingness to lose rather than focusing on expected returns by making a complex and

meticulous analysis at the outset (Sarasvathy, 2008). The entrepreneur in BGF using more of their

available potential loss information rather than expectation of profit and allowing it to propel their

decision. Even though the entrepreneur starts the process by contemplating the disadvantage or

drawback, it does not mean BGF tried to predict the goals. It means the firm actors let the decision-

making process focus on what they can control in losing, relying on the affordable loss rather than

on future profit prediction (ibid). It was also motivated by the CEO to become an entrepreneur is

more psychological in solving the environmental issue rather than solely economical (Dew et al.,

2009b). However, It does not ignore the importance of the profit aspect in their strategy. Instead,

it shows the reliance on affordable loss is relevant and impacts the early internationalization stage.

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BGF assesses their psychological commitment about the probable dismal condition of loss and

puts it at risk. BGF also did not try to gather a specific amount of information and fund to achieve

their particular goal (ibid). It uses any means to obtain more resources and combine them to find

a more obvious goal throughout the process instead. It relates to the finding that the firm does not

fabricate a deep, complex analysis of its future goals and strategy (Andersson, 2011; Harms and

Schiele, 2012). For instance, BGF cannot perform a deep casual analysis due to the need for

resources and time-consuming to establish the analysis. On the contrary, the information of

affordable loss is easier to obtain, such as their personal financial resources (Dew et al., 2009b).

Accordingly, the time dimension and available resources are prominent in the early stage (ibid).

Overoptimism and overconfidence manifest one reason why the entrepreneur has less focus on the

exact future potential benefit (Cassar, 2010; Casson, 2005). The over-optimism at the outset

belittles the need for complex and comprehensive initial investment analysis (Dew et al., 2009b).

For instance, BGF were over-optimistic that big incumbent willing to use their technology

immediately in massive scale, make them complacent and forget about the importance of creating

a pilot product to show the existence of market demand and analyze the future profit potential.

BGF utilizes a formal agreement to reduce the risk but explicitly knowing that they have little

power if the dispute occurs in the future. Therefore, they focus on the soft power to collaborate

(Chinomona et al., 2010), utilizing it as a tool to control risks. At the outset, the firm relied on their

licensing strategy and positioned themselves as consultants to their customers. They tried to ignore

the risk of a dispute with the partner and reliance on the collaboration, even trying to bring the

product before the end product is ready (Sarasvathy, 2008). So the necessity of investing in a

production facility is absent before realizing there is a need to create or show demand. Hence, BGF

relies on the pilot project and testing together with partners to minimize loss. BGF knows if

through collaboration the losable resources are less than building own factory. Scrutinizing the

worst-case scenario and reducing potential loss instead of establishing an initial outlay to produce

the product (ibid).

A practical example from the research shows a tendency for the firm to be more risk-averse and

cost-conscious (ibid). BGF own asset parsimony, insufficient tangible resources, and inexperience

in creating the particular business in the early development (Sarasvathy et al., 2014). There is an

overlap of effectuation and causation logic of affordable loss in leveraging distributor competence.

BGF focus on small risk in the future with less investment in the international market by

cooperating with distributor rather than triggered by the escalated bigger profit of own subsidiary

creation. At the individual level, the business activities are carried when the loss is affordable, such

as some of the members still have another income source. The decision to carry business is

influenced by their risk perception of opportunity cost (Astebro et al., 2011; Kahneman and

Lovallo, 1993).

The affordable loss varies from time to time and differences between different business actors

(Sarasvathy, 2008). The research discloses that even the vanguard founder and investor of the firm

has a different point of view of the affordable loss over time. Eventually, the firm transforms and

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possesses more resources and knowledge, making them hold different perspectives of willingness

to lose. It includes a big idea of losing their personal resources, firm resources, tangible and

intangible resources, and their stakeholders' resources (ibid).

Lemonade principle

The lemonade principle in the effectuation logic related to how BGF encounters the uncertainty

by managing the unpredicted occasion as a possibility to exert their control of the occurred

circumstances, such as an aphorism “when life gives you lemons, make lemonade” (Sarasvathy,

2008). It shows a creative manner in escorting ideas and combines the limited resources into a

great result (ibid). It shows the ability to transform and leverage serendipity to a powerful means

as an opportunity instead of an obstacle in their internationalization (Galkina and Chetty, 2015).

BGF shows that various unexpected events turn themselves into resources that benefit their

internationalization. In the expansion to India, BGF saw it as an opportunity and leverages the

surprise to experiment with them rather than face it as a peculiar occurrence that deviates from the

plan. BGF also exploits contingencies of becoming a pellet producer due to their slow performance

in licensing the technology to a massive global scale. A negative contingency can lead to a new

prosperous destination. Instead of considering it as a transgression to a current rigid system, BGF

examines it as opportunity by combining it with the current resources, technology, culture,

infrastructure, and networks to achieve readjusted goals. Hence, it relates to how the firm is open

and conscious of opportunities and possesses dynamic capabilities. It justifies the idea of

employing a means-driven and process-based perception rather than a well-established

predetermined plan strategy (ibid; Chetty and Leppäaho, 2015).

The collaboration event in India allows BGF to expand internationally based on the request of their

partner that works in the current plastic industries. The event leads to some findings related to the

previous research. First, it supports Freeman et al. (2012) and Andersson & Wictor (2003) that BG

utilizes diverse-selective entry modes and business model simultaneously, through collaborative

partnerships and jointly shaping their international development. BGF having a business model

adaptation rather than focus only on a step-wise international entry mode in the early development

as proposed by the early Uppsala Model (Johansson and Vahlne, 1977) or merely export

orientation (Knight and Cavusgil, 2004). Second, the technology, flexibility, and adaptability

become interesting points for bigger partners to embrace them in the international supply chain

(Freeman et al., 2012). Early internationalization also provides an opportunity to learn and adapt

to the international market in an uncertain and continuously change ecosystem (Sapienza et al.,

2006) as they tried to accommodate the international business aspiration since inception.

The study shows the difference with the Uppsala Model (1977) in determining the effect of psychic

distance. It shows a subtle presence of psychic distance in exploiting contingencies. The study

proposes it as an accelerator if BG firms own the closeness of psychic distance rather than become

an obstacle if firms have psychic distance. The results attribute to the revisited Uppsala Model that

the effectuation has some similar characteristics: limited available options and the development

and acquisition of knowledge are speedy incremental instead of significant leapfrog (Johanson and

52

Vahlne, 2009). However, the internationalization form is not incremental and diverse (Andersson

and Wictor, 2003). For instance, BGF tried licensing through their networking to outpace their

limited resources (Oviatt and McDougall, 1994). Subsequently, they did not incrementally change

the entry mode to a higher partnership commitment, as suggested by Gabrielsson and Kirpalani

(2012). Instead, they follow Blank (2013) to adapt business models continuously by creating

prototypes and minimum viable products through collaboration. One interviewee stated that they

focus on a niche to increase specialization (Madsen and Servais, 1997). BGF utilizes contingencies

from their network and readjusts goals through a learning process iteratively but rapidly due to

their dynamic capabilities. The difference is the speed, extent, and scope of the acceleration

(Weerawardena et al., 2007).

In internationalizing their business, BG firm needs to have the ability and flexibility to integrate

external resources with their internal resources (Weerawardena et al., 2007), relocate and

reconfigure resources with existing resources of customers and suppliers as their dynamic

capabilities (Ibid; Paweta, 2015). It is strengthened by their ability to utilize their resources in a

fungible manner or patchy manner, where one member can handle various jobs interchangeably.

BGF works iteratively in an agile manner and providing autonomy to their member, showing a

unique development process together with its partner (Knight and Cavusgil., 2004). In order to

tackle the asset parsimony issue, the result discloses that the intangible asset is necessary, and the

other resources can be developed throughout the process and give merit in the internationalization

process (Sapienza et al., 2006). Moreover, proficient resource identification and acquisition

methods in a dynamic relationship cycle and unexpected moments are needed. Because technology

is swift in changing, it affects the dynamic relationship between the actors. The dynamic

relationship cycle refers to the fluctuation of contingencies emergence and how the incumbent firm

in the networks reacts to the relationship temporarily. The incumbents open themselves to BG

firms in every innovation in a decentralized manner without glued to only one BG firm. Hence,

the dynamic capability needs to be connected with the dynamic relationship cycle. It associates

with their wide aspiration and unattachment to an exact goal, the willingness of speedy success,

agility, and openness to collaboration (Dew et al., 2009; Andersson and Wictor, 2003).

Furthermore, the result agrees partially with Ellis and Mayer (2001) that firms need to develop

partnerships vertically and horizontally, including collaboration with competitors to exploit

contingencies. There is no substantial evidence that BGF collaborates with horizontal technology

competitors. Instead, they work together with vertical partners or with different types of

technology owners. There is a challenge for them in selecting partners due to their lack of resources

to spread the net to all players in the industry. Hence, they prioritize the vanguard’s previous

workplace. The willingness of BGF to collaborate with international networks and using emerging

contingencies shows a collective cognition of myriad actors in the firm complemented by their

interactions, commitments, means, and goals that evolve continuously (Kerr and Coviello, 2020).

53

Pilot in the plane principle

The pilot in the plan principle comes from the dynamic nature of expanding process, leveraging

means, and not solely following the market direction (Sarasvathy et al., 2014). In the uncertainty

of early internationalization circumstances, effectuators intervene to convert and remodel through

a learning process in creating an outcome. In short, the actors in the firm have control and

autonomy in reshaping the outcome rather than estimating and following an inexorable movement

in the market and set the BG firm into an autopilot mode.

BGF indicates that the collective stakeholders actors in the firm reshaped the outcome, and not

solely intuitively by the entrepreneur. It shows that the firm decided to produce their own pellet

product by their collective decision together with investors and their members. It Proves that the

effectual actors and other members tried to transform the strategy of the firm and also external

parties (Sarasvathy et al., 2013). For example, BGF worked together in their customer's business

and product development actively and iteratively as a consultant, not solely as a technical solution

advisor. The intervention on new business development of pellet production exhibit the importance

of the actor action through collaboration in controlling the unpredictable future, instead of

predicting (Sarasvathy., 2008; Blume and Covin, 2011).

The aforementioned analysis also related to the tendency of the entrepreneur to focus on the current

term situation with their wide non-specific aspiration of future goal in mind. It supports the notion

that internationalization also depends on the proactiveness of entrepreneurs to explore and exploit

the opportunities to control and discover resources and opportunities (Prange and Verdier, 2011).

In executing it, the entrepreneur handling the situation based on their experience, feasibility, and

worthiness of execution rather than deep analysis (Sarasvathy, 2008). BGF divulges their argument

that they do not possess abundant resources to analyze their business situation deeply, and the big

company can predict it better than them. So it is better to control rather than analyze it due to the

uncertainty of future circumstances. The firm cannot follow just one direction of incumbent,

customers, or suppliers, rather focus on creating opportunities for them as a manifestation of

iterative reaction to change. Due to a lack of resources, BGF did not perceive the structure and

complex planning as deeply urgent in the early establishment. Furthermore, the predictive behavior

can lead to an overoptimistic mindset (Kahneman and Lovallo, 1993), while it happens with BG

in the beginning before they tried to produce a pilot product. BGF generates the idea of opportunity

consciousness, realization, and experimentation in internationalization.

Lastly, BGF works in a new product and new market area where the future is unpredictable or

called the suicide quadrant (Sarasvathy, 2008). BGF stated there is a fuzziness in the early

collaboration with their international customer about the exact final product. The results confirm

that in the area of the suicide quadrant, the pilot in the plant is needed in steering the market (ibid).

Mainly the BGF needs to create its own proposal to create its global partner product. The effectual

approach and collaborations of creating the innovative product are evidence of the principle.

54

Crazy quilt principle

The effectuation process accentuates the significance of making alliances and commitments with

the stakeholders to diminish and share the uncertainty and risk by sharing it with partners

(Sarasvathy, 2014). The approach indicates the BG actors quickly joining a discussion with other

people they knew earlier before the people commit to the firm (ibid). The effectuation approach

uses the network to make a strategic alliance with various other principles to settle some of the

controllable factors for the future and degrade the uncertainty and develop trust (Kaur and Sandhu,

2014). Simultaneously because their network, interactions, and commitment grows, the vision of

their goals become apparent to a certain aspect. It is the opposite of causation that spends resources

to find targeted stakeholders, creates a precommitment goal, and creates risk planning in reaching

the goals from a predetermined vision of goals in the inception. In this research, we found that

internationalization is not the by-product of improvement in a Born global firm (Sarasvathy.,

2014). It is their main aspiration to create an international market as their battlefield to reach

success. However, the process and means to the goals somehow often serendipitous and

unintentional as the results of effectuation efforts (Schweizer et al., 2010).

The effectuators let the goals and strategy of the firm be determined by their stakeholders, which

usually they also do not preselect prior to their alliance (Sarasvathy, 2008). BGF stated that they

obtain influence from their committed stakeholders in actively reshaping their strategies, such as

from Swedish investor organizations and personal investors. We found that external partners such

as incumbents in the forestry industry, research institutions, customers, and suppliers also involve

in their business strategy and product development. It relates to their vagueness of exact goals in

the early inception and openness to collaboration, leaving a space for the stakeholders such as

investors to contribute in establishing the firm’s strategies. Notwithstanding, the big aspiration

remains the same while the means such as business model is changing. It leads to Brinckmann et

al. (2010) that the advantage of planning behavior is reduced by collaboration.

BGF’s initial strategy is licensing, which needs fewer resources and risk compared to its following

strategy. The collaboration gives them the possibility to go to market with minimal investment

(Sarasvathy, 2008). Subsequent strategy to produce the pellets in the Indian market with their

customer indicates the firm exploiting their partner to gain market knowledge and obtain

opportunities (Mort and Weerawardena, 2006) which offers growth outside their borders

(Johanson and Mattson, 1988). The synergy with partners and leveraging their competencies

solves the ‘liability of foreignness and newness’ and helps develop BGF’s position in the network

(Sarasvathy, 2008; Cavusgil and Knight, 2015). Their aspiration of massive scalable production

and strategic fit with the current pulp paper firms become one reason for them to integrate their

technology and product to the system of their current clients and reduce the effect of asset

parsimony as their main supply to disrupt the conventional plastic industry. The access to their

partner facilities makes them realize that their product needs to embrace the current production

facility to bridge their acceleration and using client followership strategy of entry (Freeman et al.,

2006).

55

The research supports the idea of piggybacking by working together with a big partner as one of

the accelerators (Knight and Cavusgil, 2004; Coviello and Munro, 1997). Both followership in the

market development strategy and strengthen the current incumbent business by joining their value

chain. BGF actors try to fine-tune and join their previous working place value chain as a big

incumbent and utilize the competitive advantage of the incumbent in production capability as they

have scalability orientation since the inception. As shown in the result which the pulp and paper

industry has a declining trend in their traditional product (Tunde and James, 2017), BGF tried to

use their expertise in advanced technology as a solution to help the incumbent to regain the

business. The incumbent pulp paper industry also focuses on using their current manufacturing

facility to create innovation with a new method, rather than working together or merging with the

plastic industry. They want to focus on their competitive advantage in forestry products as a

different solution to Plastic. It is different from the incumbent machinery suppliers that tried to

embrace both of plastic and forestry industry into their target market in creating eco-innovation.

Here we can see that all the firms focus on their current competitive advantage in the inter-

industrial collaboration. BGF can use that to be agile in adapting both industries as their main field.

Several other salient examples of crazy quilt principles in the early internationalization are

leveraging its distributor market competence in selling the product (ibid), leveraging market

knowledge (Sharma and Blostermo, 2003), harnessing partner technical operation competence,

and gaining access to partner’s resources and knowledge to create competitive advantage even

though they have limited resources (Freeman et al., 2006). The alliance in internationalization with

a partner solves the deficiency in their tangible resources (Andersson and Wictor, 2003) and

intangible resources. Albeit BGF possess patented technology, the European partner in Germany,

Sweden, and Finland help them to optimize their applied technology.

BGF, with their patented technology, becomes a part of a big multinational company’s supply

chain, and they make an adaptation based on market preference information that the big company

owns. Hence, BGF does not need to gather the knowledge directly in the first place. It is related to

Freeman et al. (2006) that commitment and adaptation with a big partner can narrow the risk and

increase internationalization speed. The big customer, in this case, is the forestry pulp paper

company becomes their patronage and willing to give a large order at the early stage of a

relationship to be ‘reciprocate’ because BG firm carried out adaptation to their large customer

(ibid). However, BGF stated that they did not handcuff themselves to an exclusive “all utilization

agreement” in all markets to make their network grow and scatter. They tried to balance the

dependencies by restricting the exclusive agreement only to a specific context. Therefore, another

future partner can build a partnership to use raw material or technology for another product. It

showed by the incumbent explanation that they tied agreement in the production of luggage but

not in a cup production. There is a dynamic characteristic between BGF and big incumbent

machinery supplier alliances. It is founded that they have a dynamic contractual agreement in their

innovation. It means one innovation with the BG firm can work in one project but change

partnership with another BG in another project. It is as anticipation to Sasi and Arenius (2008) that

the early commitment in the network could give a disadvantage. The firm could lose opportunities

to build a new partnership because they are trapped in the current relationship.

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The result supports that the entrepreneurs’ personal networks help the firm face

internationalization constraints. It helps to gain the trust of forestry companies because they have

worked together as employees, even though they are a new firm at the international level. It

believes that lack of recognition impedes establishing cooperation with partners in the network

(Moen, 2002). In addition, personal networks of the entrepreneur and BGF member helps acquire

financial and human resources abroad (Andersson, 2011), including finding external collaboration

partner. BGF explores the connection of its investors and stakeholders to find other alliances and

resources, while they also tried to find a board of advisors from a high-profile person to reduce the

lack of international recognition. The BGF members believe that personal network is the

accelerator of internationalization and to develop it requires time and effort (Freeman et al., 2006).

The result divulges that the early development and early internationalization is characterized by a

dominant effectual use of networking (Sarasvathy, 2008). However, causal use of networking is

also present (Frishammar and Andersson, 2009). BGF shows an obvious effectuation logic in their

early step of internationalization, while in the big incumbent firms, they use more causation and

plan meticulously. For instance, the incumbent manufacturer of pulp, paper, and other forest

products has their definite program and department outside their decentralized R&D team to seek

innovation outside the company by a meticulous selection process based on specific procedures

and criteria such as sustainable operation. As a result, the incumbent also receives an award for

Finland’s most start-up-friendly firm in 2018.

Exploration of BG network is not always using their well-established personal or business network

in the industry as elaborated previously. BGF also explores partnership by employing multiple

targets by doing cold contact, social media, joining a competition, conference, or start-up pitching

event as a manifestation of overlapping causation approach. However, it takes a longer time than

exploiting the established networks. In this effectuation approach, we can see the attention to the

role of a personal network of the entrepreneur (ibid), entrepreneurs’ social capital in international

entrepreneurship (Coviello and Munro, 1997; Sharma and Blomstermo, 2003), and commitment

to the entrepreneur level rather than solely focuses on company level relationship elaborated in the

Uppsala model (Chetty and Leppäaho, 2015). The strategic fit and technology become one of their

underpinning factors in internationalization without pre-existing network. One of the BGF boards

stated that strategic fit depends on their business idea and experience (Rasmussen et al., 2001).

5.1.2 Eco-Innovation orientation

The aggregate theme ”Eco-Innovation orientation” refers to the awareness, knowledge, and drivers

that lie behind an innovation that addresses sustainability concerns and provides a solution to such

problems. This study shows that the incumbents’ industries (Plastic and forest) are clearly aware

of the environmental trend and aspire to be to some extent, viewed as sustainable businesses as

sustainability demand from consumers is increasing. There are steps taken in this area, including

calculating the CO2 emissions in production and trying and engaging in new recycling methods.

Moreover, the adoption of a circular economy and closing the loop through new materials

developments.

57

The results section also outlines the main factors and drivers of sustainability for the incumbent’s

side. For instance, in the plastic and forest industry, one of the common drivers is the increasing

demand for sustainability and transparency from end consumers, and the same demand is being

pushed further downstream through the supply chain. For this reason, companies in the industry

would prefer to enhance their brand by engaging in more of a sustainable business and acquiring

sustainability certificates to be able to portray an attractive, sustainable image to appeal to

customers. Another important aspect of adopting sustainability is that it could open up new market

opportunities that may be profitable. Furthermore, the adoption of sustainability in business would

lead the companies to look outside the box and generate novel, innovative ideas that could be a

source of competitive advantage.

The findings of this study confirm with the sustainability drivers Bossle et al. (2016). The

normative pressure is exerted by the increasing awareness and demand of sustainability from

customers both on the client level and social level (Kesidou and Demirel, 2012). Further, the aspect

of ensuring market expansion by investing in new sustainable innovations is a method of securing

the company’s future (Green et al., 1994). The adoption of environmental certification, i.e., ISO,

TQM, FSC, is also an important factor behind adopting eco-innovations (Azzone and Noci, 1998).

In this sense, to answer the research question, how would eco-innovative BGs internationalize?

The answer in terms of eco-innovation would be to have an innovation that represents a new market

opportunity for incumbents. Such eco-innovation should also directly address the demand from

consumers in terms of CO2 emissions, circular economy, and recyclability.

5.1.3 Technological orientation

The aggregate theme "Technological orientation" refers to experience, knowledge, challenges, and

capabilities in producing or adopting technological innovations for incumbent companies. This

study indicates the nature of innovation in the forest and plastic industries as incremental and

stepwise innovation. Moreover, such innovation is key in providing well-diversified, sustainable

product portfolios.

The results also highlight the obstacles and challenges that would hinder the emergence and

initiation of technological innovation. One of the main challenges of innovation in the incumbent

companies was the lack of communication in the companies that could hinder the distribution of

information throughout the company, thus hindering innovation capability. Another obstacle

mentioned was the intellectual property rights (IPR) in dealing and collaborating with other parties,

as it could slow down or stop the collaborations, thus impeding the innovation early. Finally,

incumbents' stagnant and undynamic nature is also considered a challenge as it can steer the

company away from grasping new opportunities and innovations.

The findings of the study are conforming to what is mentioned by Schilling (2019). The

incremental nature of innovations in both industries adds minor adjustments to previous

innovations (ibid). This could be regarded that the industries prefer to play safe, especially with

the big investments commonly occurring in the industries. The R&D challenges on the incumbent's

58

side are a result of the decentralized nature, which can result in communication issues, demotivated

employees, and lack of creativity, all of which can directly affect the innovation (Schilling, 2019).

The stagnation and slow-motion nature of the incumbent companies described in the results are

similar to what Schilling (2019) describes as core rigidities, that is when a company is so good at

a certain aspect, it enslaves it and prevents the company from seeing and pursuing outside

opportunities. Finally, the issue of intellectual property rights (IPR) and the protection and

ownership of innovation that worry and might discourage incumbents.

To answer the research question: how would eco-innovative BGs internationalize? In terms of

technological innovation orientation. The BGs should utilize the dynamic nature of a small size

company to overcome the challenges that would be difficult for an incumbent to handle in their

R&D. By assuming this status, BGs would be in an advantageous position that would enable them

not only to overcome the core rigidities and R&D issues but rather facilitate BGs to offer a value

proposition in the form of eco-innovation, thus granting them access to incumbents network and

supply chains. It would also be helpful for BGs to have a plan on how to handle IPR issues from

the early stages.

5.2 Theoretical Implications

The research demonstrates that the effectuation theoretical lens is reliable for analyzing the Born

global firm internationalization phenomenon. Therefore, the jointly executed frameworks able to

analyze the combined Internationalization theory in the International Business field, the

effectuation that represents entrepreneurship and international entrepreneurship field, and

emerging eco-innovation and sustainability issues through the effectuation embedded principle.

The theoretical framework is able to show the presence of effectuation in the early development

of the firm and its early internationalization (Coviello, 2006). However, it is mixed with the

causation approach in executing the strategies (Chetty and Leppäaho, 2015; Sarasvathy, 2008).

The paper also contributes to internationalization theory, which is contextually sensitive, by

presenting the relativity of context in the internationalization of Born Global firm. Extending the

theory into the eco-innovation field shows the technological and sustainability context and specific

criteria gives a powerful influence to the internationalization research.

Based on this research, born global firm as a new concept (Cavusgil and Knight, 2014) has proven

to have a relationship with the entrepreneur level perspective in their internationalization, instead

of only focusing on the firm-level such as elaborated in the Uppsala Internationalization Model by

Johanson and Vahlne (1977). Both the personal network and business network give an intense

nuance in international business. Hence, it gives an exciting input that the development of BG firm

also falls into the background of all members of the BG firm and inter-organizational networks

even into different industry collaboration. The informal development of the BG firm is obscured

and started even before the BG firm formally developed.

59

Furthermore, the study implies that the theoretical research that supports the development of BG

firm with multi-entry modes in this specific context is relevant (Freeman et al., 2006), rather than

the Uppsala Internationalization theory that supports the idea of incremental stage-wise

transformation of the firm, or reliance on export (Knight and Cavusgil, 2004). The intriguing

implication shows the knowledge acquisition is incrementally transforming but at a quick pace

internationally, rather than leapfrog transformation. However, the business form is more

effectually transformed instead of step by step, such in Uppsala Internationalization theory.

Lastly, effectuation theory can work with dynamic circumstances rather than focusing merely on

a linear process as a static model (Sarasvathy, 2008). The study shows the interrelation of

effectuation with many different theoretical concepts in the research, at least such as lemonade

principle with dynamic capabilities, crazy quilt principle with network theories, and a bird in the

hand with resource-based theories. It is dynamic due to the ability of the effectuation approach to

see the evolving and iterative process of the BG firm transformation.

5.3 Practical Implications

The research views the process of internationalization of BGs with eco-innovation in the B2B

market setting. The research result on sustainability aspirations and drivers of incumbents directly

impacts BGs, as it would provide an understanding of how the incumbents have perceived the

sustainability demand from end consumers and how they form strategies to this extent. In this

sense, BGs could utilize this kind of information to shape and market their eco-innovation in a

way that can sound appealing to incumbents, thus accelerating internationalization. Furthermore,

the results highlight the collaboration types that incumbents prefer to engage with potential

partners. This knowledge would prepare BGs to handle negotiations with potential partners. The

results also describe the shortcomings of incumbents with regard to innovation, essentially related

to the size and inflexibility of incumbents. BGs can utilize their ability to overcome these

challenges and be able to offer value to incumbents through eco-innovations.

The research also views practices on the BGs side that is important and could accelerate

internationalization. For instance, great importance was placed on the first pilot case with partners,

as these pilot runs are an effective method to prove BGs technology and address any doubts from

the incumbent side, which would lead to trust-building. Finally, the results indicate the IPR would

be a somewhat problematic subject for incumbents to deal with, as they may want to reveal their

secrets in collaboration and the ownership of the efforts resulting from the collaboration. Overall,

the research touches upon and describes various subjects from both BGs and the incumbent side.

It is evident that this study would assist BGs in dealing with and navigate business networks and

supply chains by leveraging their eco-innovation and dynamic ability, thus internationalizing

faster.

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5.4 Sustainability implications

The results of the study highlight how different actors in the biocomposite, plastic, and forest

industries, as well as brand owners, perceive sustainability. The results indicate that the forest

industry actors are aware of the sustainability issues and the increasing demand from consumers

of sustainable materials. However, the industry as a whole is considered to stagnate and slow-

moving. The results show how the plastic compounding actors are dealing with sustainability

demand by adopting sustainable practices such as calculating CO2 emissions and recycling

materials. The findings indicate that the brand owners are highly interested in sustainability since

they deal directly with the end-user. However, they are facing difficulties convincing other actors

in their supply chain to adopt sustainable practices, especially when the production takes place in

different geographical regions. The findings of this study contribute significantly to the growth of

sustainable materials, especially in the biocomposites industry. As the existing problem of plastic

materials is global, this study serves as a guide on how Eco-innovations could internationalize and

spread through born global firms and the network. On the other hand, BG firm capitalizes its

sustainability vision and sustainability technology capability as the catalyst to expand and

accelerate the change into a more sustainable world.

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6. Conclusions The study aims to explore new insights and an in-depth understanding of the eco-innovation-based

BG firm’s internationalization. The study aims to answer the research question on “How does an

Eco-innovative BG firm internationalize in the early stage?” following the emerging phenomenon

of a born global firm and eco-innovation. The research follows an inductive qualitative research

approach to precisely answer the question with a case study. The research question is answered by

capturing information from 12 different actors in the bioplastic industry network to gain a

comprehensive understanding internally and externally of the BG firm, particularly in the

biocomposite field. The research utilized the components of born-global and effectuation theory

as analytical lenses, which network theory also embedded in the effectuation theory.

The thesis exhibit that in this particular BG firm industry, eco-innovation technology plays a

significant role as their competitive advantage. Eco-innovation becomes the trigger to

internationalize for BG firm with eco-innovation technology competence. While for incumbents,

internationalization can be the motive of embracing eco-innovation to become a sustainable actor.

With a relatively small domestic market, Sweden, home of innovation to several brands, high

sustainability issue awareness, and adequate export facilities, has become the accelerator to the

internationalization of BG firm and gives international market ambition since its inception.

The findings reveal that the eco-innovated BG firm utilized multiple business modes in its

internationalization. The results attribute to the revisited Uppsala model with some similar

characteristics with the effectuation theory. BG firm utilizes the contingencies through a learning

process iteratively, incrementally, but quickly due to their dynamic capabilities and interaction

with the network. The difference is the speed, extent, and scope of the acceleration (Weerawardena

et al., 2007). Hence, in practical dimension, rather than incrementally changing and well-planned

expansion like in Uppsala Internationalization theory, the business form in their expansion is more

effectually transformed rather than incrementally changed. The BG firm uses the alliance to

leverage the distributor, leverage the partner’s network and capabilities, and following the

customer simultaneously. In addition, exploring newly discovered networks is also promising in

their expansion. In theoretical dimension, the alignment between the effectuation and Uppsala

model in the internationalization is that BG firm has limited available options and the development

of knowledge is speedy incremental rather than a significant leapfrog (Johanson and Vahlne,

2009). In conclusion, the business model is effectually transformed and not incrementally changed,

but the knowledge development is incrementally changed in high speed.

The effectuation approach is dominant to help the early establishment of the eco-innovated BG

firm’s international presence. The research concluded that the effectuation theory could be used to

analyze the phenomenon. The effectuation approach is used by BG firms to internationalize

successfully by applying the effectuation principle. The bird-in-hand principle is related to the use

of personal and firm background, available means, knowledge, and networks that crucial in the

early rapid international expansion, which means that not solely the background of their founder

is affecting their firm. Second, the lemonade principle is related to the BG firm’s resource-based

theory and dynamic capabilities in combining what they have, openness to contingencies, and

62

leverage it into international opportunities. Third, the affordable loss principle shows the firm’s

concern for an acceptable loss level rather than the obscured future expected returns in expansion

decisions. Fourth, the pilot-in-the-plane principle related to autonomy and agility to be flexible,

agile, and have a unique development process instead of a standardized structure. As BG firm does

not have clear and exact goals in the early stage, they hold international aspiration since the early

development and transform the business model over time. Lastly, crazy quilt principle, BG firm

utilized their network in creating alliances with their networks internationally to reduce

uncertainty. The personal network holds a significant role in the early internationalization to gain

financial resources, human resources, handling liability of foreignness and gain trust, building and

leveraging the further network, and solve the problem of limited tangible and intangible resources.

It reveals that the networks were built both on a personal and firm-level as a collective action.

Their strategy and vision are the underlying dimensions for a BG firm to internationalize quickly

and infiltrate the current value chain network. Hence, the network gives benefits since the

beginning and in their expansion phase to reduce psychic distances. The integration with the

current system has a vital role in accelerating the adoption of sustainability at the international

level. Collaboration and reliance on the right partner in the right industry are prominent in their

internationalization, as their success lies in combining this competitive advantage with effective

sustainable technologies. The framework in this study shows that the technology and sustainability

aspect as their available means, competitive advantage, and goals in internationalization, which

iteratively changing rapidly, dynamically, perpetually through alliances with network and at the

same time strengthen their technology and clarify their sustainability goals. Technology and

sustainability orientation can be seen as attached to the entrepreneur and vanguard founder even

before the firm establishment, with refinement vision by the effectual process.

The study highlights how entrepreneurship would impact BGs internationalization. By

emphasizing the role of the effectuator as a change agent in the market, who would realize new

sustainable market opportunities by applying technological innovation. It would require specific

qualities such as risk willingness, attracting and acquiring the right talent, and managing limited

resources. These qualities collective with the right talent and people would serve as an exceptional

tool to navigate the international market with value creation ability through fruitful partnerships.

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7. Limitations and further research

There are limitations from the current study that can be leveraged in future research to reveal more

from the internationalization of the BG firm phenomenon. First, all the principles and vital criteria

of effectuation theory are utilized in this research to see a comprehensive process of the BG firm

in processing their internationalization in the early development moment. Effectuation is a broad

theory that can cover many issues in a specific event of a business case. Hence, another research

can focus on each strong criterion of the effectuation logic to dig deeper into specific contexts in

effectual internationalization with multiple case studies. For instance, focus on the lemonade

principle or affordable loss topic of the different effectual BG firms will be worthwhile in revealing

the effectual BG firm phenomenon.

The current study concern in a specific industry and BG firms from a limited geographical area.

The study is carried in a relatively well-developed economic country with a high-rate adoption of

sustainable alternatives and technology compared to other geographical areas. Another study with

different industry and geographical limitations can give a different nuance to the study. For

example, creating a study in emerging or developing countries with various industries could give

different findings.

Effectual internationalization can be seen as really strong in the early development of firm

internationalization, as shown in this research. However, the study did not reveal the continuation

process of internationalization after the early development phase. Hence, a future study in the

continuation of their internationalization or after the BG reaches a maturity phase could be

rewarding. It is related to the fact that the turnover of the firm will be considerably higher, the

organization and structure of the firm will be bigger, and the position of the firm in the network

will be different. The uncertainty perspective could be different because the firm has more

experience and acquired more knowledge after their early internationalization step, affecting their

effectual mindset after the early step of their internationalization.

The qualitative research in this study gives an inclination to a subjective and replication problem

(Bryman and Bell, 2019). There is a possibility of biased which is affected by the strong

characteristic of the used theoretical frameworks and character of the industry. Hence, multiple

case studies can be beneficial to analyze the broad industry with their uniqueness from each case.

Another way to solve the limitation is by applying quantitative study in proving the used

frameworks and theories in different broad industries. It can create a better possibility for

generalization rather than a generalization from a qualitative study (Yin, 1994).

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Appendices

Appendix A : The basic mechanism of Uppsala Model

The Basic Mechanism of Internationalization–State and Change Aspects (Johanson and Vahlne,

1977)

The Uppsala Model 2017 (Vahlne and Johanson, 2017)

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Appendix B: Key internationalization strategies employed by smaller BG firms (Freeman

et al., 2006)

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Appendix C: Effectuation process (Sarasvathy, 2001)

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Appendix D : Difference between causation and effectuation (Sarasvathy, 2001)

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Appendix E: BGF Interview questions

Introduction

1. Please introduce yourself: who you are and your background (job/work, studies, language)?

2. Can you briefly describe the company and your role? (age, number of employees, etc.)

3. Why did you decide to establish the firm? How did you come up with this business idea?

Entrepreneur Background

Entrepreneurial Knowledge

1. How long have you been active within this industry?

2. What characterizes your company? (e.g., key resources, capabilities, product, international

presence, etc.)

3. Which foreign markets are of most strategic importance to you? (e.g. Abroad/domestic?

Niche/mass? B2B or B2C? existing or new? Or changing?) Since when?

4. Why did your company decide to expand internationally? (e.g. Events, persons, knowledge,

patent, customers, suppliers, firms, other motivations, and/or organizations that played a role

in this decision)

5. To what extent do you think your prior knowledge and experience has helped you to run the

company internationally? How? (e.g. technical, international market knowledge, etc)

International Networks

1. How did your firm find domestic and foreign partners/stakeholders? (e.g., investor, co-founder

and employee, customers, suppliers)

2. Please describe your firm’s position and role in the bioplastic business supply chain in the

domestic and international market?

3. How does the stakeholders (customers, employees, investors, suppliers, competitors) in your

business network influence and shape the international growth of your firm? (e.g. product

development, technology development, through international activities, capital management,

etc.)

4. Does the personal and business networks relationship play an important role for the

international growth of your firm? If so, how? (e.g. give benefit, etc.)

5. Do you find any negative aspects/disadvantages of networks/making partnership? (e.g., give

limitation of choices, etc.)

6. Please describe your efforts to enter local business networks abroad, respectively engage in

local and international relations and gaining trust from them.

Eco-Innovation & Technology orientation

1. How did you come up with this particular technology? What inspired you?

2. Could you explain the evolution of the product you offer in the market since the inception of

the firm? How and Why does it change?

3. How have your international activities and the networks stakeholders/partners contributed to

your eco-innovation product/technology development?

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4. How would you describe the importance of eco-innovation/sustainable technology importance

for your partner or prospective partner?

5. How would you describe the importance of protection of intellectual property on the

development of your company internationally?

Market Behaviour

Entrepreneurial orientation

1. How did your company expand (or plan the expansion) internationally? (e.g., planning, entry

mode, strategy, deciding the timing, important factors, preparation of the organization,

execution). Entry mode: franchise, export, sales subsidiaries, wholly owned, joint ventures,

etc. Did you know anything about specific market prior to the international expansion?

2. How do you deal with changes in the market? (e.g., perception, analysis, develop new

products, changes business model, acquires new partners, etc.)

3. Which criteria are important in choosing chosen collaboration partners (partners/ distributors/

suppliers)?

4. Which barriers and setbacks have you faced and perceived in the internationalization process?

5. What are core competences/factors which help/harm your international expansion?

Dynamic capabilities

1. What do you consider as your resource advantage and lack of resources in the firm?

2. How do you exploit and explore resources? (explore resources: hire people, acquire external

resource, partnering, or strict HQ’s control during the internationalization?) Why?

3. Do you have any standardized ways of working in specific workstreams?

4. How do you communicate and sharing resources with partners (suppliers, customers,

competitor, etc.) internally and externally?

Effectuation logic

1. Has your business model and its goals changed since the company started? Is your business

exactly how you imagine it from the beginning, or it is kind of shifted to some extent? Why?

2. Did you identify any risks with expansion into foreign countries? What risks is acceptable?

3. Can you explain how did/do you handle risks and uncertainties during the international

expansion?

4. Have any unexpected events happened that you turned into resources and see it as new

opportunities?

5. Could you explain the process of making resource commitment in the firm and while doing

your partnership? (e.g., investing, spending resources, commitment, commit only to the

affordable loss)

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Appendix F: Second stage interview guide

Brand owners, plastic compounders, and pulp industry

1. Please introduce yourself: who you are and your background (job/work, studies, language)?

2. Can you briefly describe the company, What characterizes your company? (e.g., key

resources, capabilities, product, international presence, sustainability characteristic, etc.)

3. What is your role in the company?

4. How long have you been active within this industry?

5. What areas are the most relevant for your company when it comes to “sustainability”? What

are the criteria for eco innovation would your company prefer to focus on?

6. Could you describe your company's current sustainability strategy?

7. How did you come up with this particular strategy/technology? What inspired the firm?

8. Why did your company decide to embrace the sustainable strategy/solution internationally?

(e.g. Opportunities, Events, persons, knowledge, patent, customers, suppliers, firms, other

motivations, and/or organizations that played a role in this decision)

9. What problems/issues have you or your company experienced in implementing your

sustainability strategy?

10. Please describe the most important actors, processes, and product flows in your value chain?

(with or without sustainability strategy)

11. Can you generally describe your company's current network and partners? i.e. Please describe

your firm’s position and role in the composite/biocomposite business value chain in the

domestic and international market?

12. Do you develop your own end products/technology inside the firm? Or collaboration? Why?

13. How have your international activities and the networks stakeholders/partners contributed to

your sustainable strategy/technology development?

14. When it comes to eco or sustainable innovation, what are the criteria your company looks for

when collaborating with partners? Does this differ from big companies to small ones? Does

this differ from existing partner and new partner outside your network?

15. How did your firm find domestic and foreign partners/stakeholders in the eco-

innovation/sustainable solution business? (customers, suppliers, technology partners, etc) i.e.

do your company usually search and examine new partners meticulously or it relies on the

current network and previous experience?

16. What is the partnership/collaborations related risks to you see in your industry in embracing

sustainable strategy/solution? What risks is acceptable? How do you mitigate such risks?

17. What are core competences/factors/resource which help (advantage) / harm (lack) your eco-

innovation?

18. How do you exploit and explore resources for eco-innovation? (explore resources: hire people,

acquire external resource, partnering, or strict HQ’s control during the internationalization?)

Why?

19. What would you like to see improved in your eco-innovation?

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Appendix G : Data Supporting Interpretations

Aggregate dimension 1: Effectuation Logic

2nd order theme 1st order concepts Sample quotes

Exploit

contingencies

External accelerator “The legislations like the one EU is having the Green Deal

and EU is putting bans on plastic bags and things like this.

So, there is a driving force coming from there.” Interview

F

Demand

differentiator

” But the speed of adopting those new technologies, it is

slow, it's and of course, it might be both that that there

might there is a cost related often to those technologies,

especially new investments when you first start doing it.

And throughout the value chain, for example, for this lignin

as it could replace chemicals, but then the fact is that, that

the other parts of the chain also need to make the

investments they need to take it in their process. And that's

something that that has been slower than expected.”

Interview C

Opportunity

consciousness &

realization

“So that’s maybe one of the overview things I can see but

there is a lot of discussions going on, how to replace

plastics how to make better packaging, especially around

food, or what we call food contact.” Interview F

Multiple modes

of entry

Multiple targets

contracts

“for example, one a big Furniture Company, then I reached

out to different people within the company, maybe, the

group that's responsible for materials, the group that's

responsible, for sustainability, the group that's responsible,

for innovation” Interview C

Business model

adaptation

“this is why while you on the way and you have a problem

you solve it and you change direction. You don't keep your

original, how to say in the very beginning your business

model. You have to change to adapt to survive.” Interview

B

Leverage foreign

distributer

competencies

“But to work with North America, Canada, to be able to

support locally to the production have been there for Russia,

Asia, so on, of course, partner up with distributors that's

going to sell our material on a global level that can be this

icon sell to everyone.” Interview C

Risk control

Risk knowledge “I guess, maybe just it could be a risk of spreading too thin.

If it's, if we go for different countries, and rather than just

focusing on making an impact in one market, and maybe

that's” Interview D

Risk reduction “And there's different ways around that, of course, you try

to contractually, keep as much as you can in house. But then

you can also just send, you know, maybe some secret sauce

to China, or to whatever, foreign location so that you still

have a little bit of the recipe, the secret sauce.” Interview K

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Risk prevention “I think to be a bit careful in the beginning that’s why we

choose to work with Nordic forest producers.” Interview C

Asset parsimony

Pilot project

dependence

“The first important is to have new samples or [product X]

that we can test to find collaboration partners compounders,

that can test material with different material for that”

Interview C

Selective optimal

strategies

“unfortunately, even maybe have time to meet everybody,

because we have also limited resources” Interview E

Loss estimation &

willingness

“we just took mortgages on our houses to buy the first

production line. So, you know, got to risk it. That's it”

Interview K

Available means

focus

Partners resource

improvement

“well as on the lignin side, I think that it's still that sort of

we are because our process is based on this craft lignin so

we would still be working with these top producers.”

Interview E

Unique product

development

“Yeah, that's the material that we produce, by using the

patented technology. So it's internal stuff, we have fine tune

the recipe of the chemicals that you'd use to treat the wood

fibers.” Interview C

Locational resource

advantage

“we're close to the to the Nordic country, we have the

resource we have the raw material materials, I mean from

this the value chain, we are in the Upper Value chain.”

Interview B

Internal

resources use

Personal resource

relocation

“I started working there as the kind of consultant with the as

a consultant setup and also decided to invest because there

was an upcoming investment round, just a small investment

amount” Interview D

Team member

patchy resource

“And that's why I down prioritize a lot of the things when it

comes to marketing, website launch and all those things.

Because the most important first is to test and find brands

that we can test with.” Interview C

New resource

configuration

Resource

acquisition

“we have a history of the last, the last 30 years we have

been buying companies, clever companies with about one or

200 people employed that is making something that we

don't make today.” Interview F

Dynamic

relationship cycle

“they are constantly changing slowly. So we are not

changing them on on a monthly basis. But maybe on a five

year basis or something. We work when we set up

cooperation.” Interview F

Partner resource

integration

“I mean this strategy is not to build our own pulp mill. It is

to cooperate or use [partner's] existing infrastructure.”

Interview A

Authority

Agility “if we would buy a small startup company with five clever

guys one year from today, they would hate us and they

would leave because we are too rigid, we are we're too old

fashioned, they will never like it.” Interview F

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Iterative reaction to

change

“we can have this sort of we can do sort of tests, we can we

can do some lignin samples, we can we can do this, we

actually even have a container size, ” Interview E

Aggregate dimension 2: Eco-innovation orientation

2nd order theme 1st order concepts Sample quotes

Sustainability

aspirations

Sustainability &

circular economy

” we are it's working on this circular loop, closing the loop

with the brand customers or like with the company

customers, not end customers, when it's easy to get the

material back after it has been used” Interview H

Shared vision “So, we also having these targets of sort of improving

energy efficiency by 30%. And then, making it so that if our

customers use our technology, and if they then sort of use

co2 free electricity, also they production can be co2 free.”

Interview E

Incumbent

sustainable

drivers

Utilize market

opportunity

“So, this is always this is what all forest industries are

looking into, where shall we use the raw material in order to

create the biggest value? And let's just say it again, today,

climate value and financial value goes hand in hand.”

Interview I

Knowledge

generation

“we are trying to take advantage of the fact that we have to

stay in business when it comes to our communication and

when it comes to selling our products. But also, we're also

trying to use that knowledge when we are developing new

products.” Interview I

New strategy “That's also something we're trying to transform our

industries, the mindset we have, because we have over the

last year, we have decreased our fossil fuel by 88% since

2005.” Interview I

Aggregate dimension 3: Technological innovation orientation

2nd order theme 1st order concepts Sample quotes

Technological

innovation

capability

Technology

aspirations

” So now we are back to finding smart suppliers with good

technology. And we don't really care where they come

from, we buy from all over the world if we find something

clever, we work with them.” Interview F

Incumbent

incremental

improvements

“So, it's not one big, big thing. It's many, many small, small

steps from traveling from the company cars, electricity use

on our machines. You know, all those small things that you

could impact in your daily business. This is what we're

trying to work with.” Interview J

Incumbent

innovation

challenges

Communication

/distribution of

information

“So there are lots of competence within this industry, I think

any industry challenge is to combine all this knowledge to

make people talk to each other to see possibilities to look

outside of your own responsibility area.” Interview I

IPR “So, the question is always, how much we can say without

getting problems with our legal department, things like that.

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Also, you always have to have a look how far you have

come compared to competitors, maybe. And you don't want

to give too much information about how far you've come.”

Interview H

Aggregate dimension 4: Entrepreneurial knowledge

2nd order theme 1st order concepts Sample quotes

Industry

knowledge

Personal business

experience

” at least 10 years back over 10 years back, Already I think

that 2009 when I left, there was already cooperation with

startup companies. I joined the company and it was

cooperating with smaller companies.” Interview E

Personal

knowledge in

industry

“actually, the paper for that has been done some way. And

the raw material for the paper has been done somewhere.

And they can be even the different layers and the coating

can come from different places. And so, there are so many

more steps.” Interview E

International

market

orientation

Scalability

orientation

“Because we need to produce 100 million of tons of this,

save the world from it's no use to, to produce 1000 tons and

then make a lot of commercials around it. Because it needs

to be in everybody's house in everybody's home. So, price is

one thing cost is one thing.” Interview F

Small domestic

market

“the market in Sweden would be a certain size and I think

for some markets I guess only staying in one country would

be huge impact but then for this market i think it's it's

probably good to be also present internationally to build

their size.” Interview D

Managerial

knowledge

International

managerial

experience

“working a lot with Production Development, sales and

marketing within the Nordics, but also production and

development in China and Hong Kong.” Interview C

Resource

identification

“It's more like how to use the right resources, always to

have somebody that we can bring in and then be an expert

and even further like, develop and improve their material.”

Interview C

Incumbent

inertia

Conservative

industry

“It's very undiverse, when it comes to who works within the

firm. I mean, so it's mostly white Swedish people who work

in the Swedish force industry.” Interview I

High control “at our company we are owning a large part of the supply

chain, so we are of course supplying our own wood”

Interview H

Aggregate dimension 5 : International networks

2nd order theme 1st order concepts Sample quotes

Exploit

partnership &

network

Strategic fit ” but then it's about looking at the strategy, do we and

evaluating, in what face their possible partner is. And we

don't have dozens and dozens of partners all the time.”

Interview E

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International

personal network

“I have contacts within different brands. Like, on a bigger

level, like European level, that's one thing that you have

connection.” Interview C

Exploring and

forging

partnerships

Cold contact “then also sometimes actively reaching out to international

companies that seemed like they had the right competencies

or could be a good partner, either just cold calling them then

not knowing us.” Interview D

Events participation “We're active in how to say participation in different events,

like if we participate events for Stockholm tech is some

kind of event they have every year that you pay for the

exhibition. And you know, like, you have to stand. And

then you meet the people to from companies, private

people, company people come organization, company and

government organization to.” Interview B