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The purpose of this paper is to utilize key insights from social network theory (SNT) to enhance understanding of overcoming the liability of outsidership as a prerequisite for firm internationalization. Specifically, it examines the influence of structural attributes of networks on the motivational stance of both network insiders and outsiders in relation to overcoming the liability of outsidership. A related aim is to explore the role of network positions of insider actors in terms of its impact on the speed of market entry.

The paper draws on the extant literatures on firm internationalization, particularly the liability of outsidership, and SNT to identify to what extent SNT can be utilized to deeply understand the process of overcoming the liability of outsidership. The authors put forward eight propositions linking structural and positioning attributes of networks with overcoming the liability of outsidership.

SNT provides strong potential for a more comprehensive understanding of the internationalization phenomena through shedding light on the relationship between the liability of foreignness and the liability of outsidership. The paper demonstrates that while the cost of overcoming the liability of outsidership is higher in closed target network as compared to open networks, the expected benefits of an insidership position in closed or open networks are affected by the outsider firm’s perception of the liability of foreignness in the market it wishes to enter. Considering the differential enabling characteristics of closed and open networks in terms of facilitating tacit knowledge sharing as opposed to explicit information flows, the authors reveal that liability of foreignness operates as a negative moderator for the relationship between network structure and the willingness of the outsider to invest in gaining insidership. The analysis of the paper also shows that the positional attributes of the network insider are relevant in outsiders’ motivation in terms of the speed of market entry that they seek to achieve.

This study theoretically contributes to the internationalization research through integrating SNT with the liability of outsidership understanding of firm internationalization. This is a timely attempt as no systematic application of the conceptual apparatus of SNT in the internationalization research context has been studied. It adds a more coherent inside-out perspective into the overcoming the liability of outsidership discussion which has been extensively dominated by an outside-in perspective.

This study aims to use analogical reasoning to draw a conceptual link between liabilities in International Business (IB) and export barriers.

Following a review of 130 articles on export barriers, the study develops and applies a “liabilities” metonymy to connect the source construct (liabilities in the IB) and target subject (export barriers).

Liabilities in the IB map to export barriers, and the concepts of liability of foreignness, liability of outsidership, liability of newness and liability of smallness can substitute export barriers.

Adoption of metonymy creates new opportunities for enhancing theory development while offering alternative perspectives regarding coping mechanisms for overcoming export barriers.

This, to the author’s best knowledge, is the first study in the IB to theorize based on metonymy.

The chapter provides an economic explanation and perspectivation of strategic asset seeking of multinational enterprises from emerging economies (EMNEs) as a prominent feature of today’s global economy.

The authors apply and extend the “springboard perspective.” This perspective submits that EMNEs acquire strategic assets in developed markets primarily for use in their home markets.

The authors succumb that the springboard perspective is alluring theoretically as well as empirically as it suggests that when EMNEs acquire strategic assets, they experience liabilities of foreignness (LOF) that are low relative to those of MNEs from developed markets. The authors concede to this LOF asymmetry but also point out that liabilities of outsidership (LOO) can offset or weaken the home-market advantage of some EMNEs when competing with MNEs.

LOO appears as the more relevant concept to use when explaining strategic asset seeking of EMNEs. A set of propositions are formulated to guide empirical testing.

The insights gained from using the springboard perspective and the LOO concept are non-trivial: They basically predict future dominance of ‘insider’ EMNEs at the expense of MNEs from developed markets.

The purpose of this paper is to address the topic of business network dynamics and identify different relational paths, as forms of change in business relationships and related types of network change. The paper contributes to the literature on business network dynamics by providing an understanding of relational paths in the context of firms’ internationalization and shading light on different forms of change in business relationships and types of network change. The paper also contributes to the understanding of liabilities in internationalization that has to do with business networks, namely the liability of outsidership.

This paper is based on qualitative research following the multiple case study research approach. The authors propose three cases of internationalizing firms in the fashion industry that follows relational paths corresponding to different forms of change in business relationships that imply different types of network change.

Changes to a firm’s business network may be addressed through relational paths, namely creation of new business relationships (activation), maintenance of existing relationships (integration) and ending of existing relationships (substitution). These relational paths can be considered forms of incremental (integration) and radical (activation and substitution) change in business relationships and lead to different types of network change for business network dynamics that coexist and influence each other within the same firm.

This paper contributes to a better understanding of business network dynamics by showing how firms change their business relationships following different relational paths as the best way to respond to the challenges and new opportunities offered especially by international markets. The present paper has relevant managerial implications since coping with change in business relationships is perhaps one of the most critical and difficult tasks for management, even more critical if compared to the increasing complexity of doing business internationally and the liabilities that firms face in their internationalization process, especially the liability of outsidership.

The disruption global digitally based firms are imposing on the positions of established multinational telcos is not just in degree, but also in kind. As such, the telcos are entering a period of VUCA. Although digitally based competitors could suffer from liabilities of “outsidership,” we argue that the physical presence of telcos in local markets will be insufficient to avoid a future as utilities or dumb-pipes. One significant issue as they confront VUCA is therefore whether telcos are able to develop and apply dynamic capabilities.

The purpose of this paper is to identify the defining characteristics of the extreme luxury fashion business model (ELFBM) and the relationship between this business model and the process of firm internationalization. The paper examines the potentially positive outcomes of differences and distances in the internationalization process of extreme luxury fashion companies.

The paper presents and discusses the data collected during a five-year case analysis of an Italian luxury company. The main characteristics of the business model are identified in terms of products, manufacturing and sourcing, distribution channels, marketing communications and overall characteristics of consumers. The internationalization process is described, with a focus on the Russian market as an emblematic case, highlighting the role of distances – geographic, psychic and cultural – and liabilities, namely foreignness and outsidership in the international expansion of the firm.

The findings of this paper highlight the main features and specific traits of the ELFBM characterized by a global and unique approach to the offer. This business model has in its origin the demand from certain foreign markets, and the elements of the country of origin of the firms coexist and are enhanced by the presence of specific characteristics of the destination countries in terms of niche consumers with economic and cultural characteristics and a strong perception of “Made in” and luxury goods.

The paper contributes to previous studies on the relationships between business models and internationalization. It provides a framework for the “ELFBM,” in which internationalization is a constitutive element of a specific business model rather than a strategy for a business model already defined. Examining the positive side of differences and distances in the internationalization process of firms adopting such business model, the paper contributes to the international business theory and practice. It also expands research on luxury fashion defining an international company which is under-investigated, the extreme luxury fashion company, and the elements that constitute its business model.

The case can be used to examine the resources and capabilities of small firms considering entering international markets. It can also be a vehicle for examining typical barriers that such companies may face and must overcome when expanding abroad: liabilities of smallness, liabilities of foreignness, liabilities of emergingness and liabilities of outsidership.

The case is based on several interviews with both entrepreneurs over a one-year period and on secondary information from reports and documents.

This teaching case presents the trajectory of a Brazilian services company operating in the corporate events planning industry. The case explores the potential for the company’s international expansion, and the vision and engagement of the entrepreneurs, despite several barriers the company needs to overcome.

The case can be used in Entrepreneurship and International Marketing courses, both at graduate and undergraduate levels. It can also be used in training seminars for executives of tourism and events planning companies, and for employees of export promotion agencies.

The paper aims to explore how small- and medium-sized enterprises (SMEs) in the health-care sector overcome the liability of being an outsider, instead of gaining a position as an insider in new networks in markets abroad and subsequently internationalizing. The following research questions are posed: How do firms in complex health-care markets build network relationships? How is business market knowledge developed and legitimacy acquired to overcome the liability of outsidership?

The paper uses a multiple-case methodology in a nested case study of health-care SMEs, which allows for in-depth study of the importance of network relationships, business market knowledge development and legitimacy building to enter a target market; the study maps the activities and different actor roles as the entry process unfolds. The study draws on empirical evidence from 13 companies as well as industry and interest organizations.

The results provide support for process-based explanations of how, but also of why the internationalization of health-care SMEs takes place in distinctive sequential phases, where it is necessary to complete one phase before it is possible to embark on the next. The study answers the calls for more empirical studies capturing how firms actively enter networks to overcome the liability of outsidership, become insiders and subsequently internationalize.

The principal contribution of the authors’ study is to add to the body of research on internationalization and advance the understanding of how to build an insidership position in relevant networks by overcoming the liability of outsidership. By choosing to study firms in the health-care sector, the authors also contribute to the limited research on firms entering markets characterized by a high level of complexity.

International Business, Entrepreneurship.

This case has been used previously in an international business strategy module on MA courses at Kozminski University, Poland.

The case details Audioteka’s (a Polish audiobook company) history between 2007 and 2013, from the perspective of Marcin, one of the co-founders. The company was founded in 2008 by Marcin Beme and Blazej Kukla and internationalized soon after. Marcin was an experienced entrepreneur, while Blazej was a sound engineer. Both sought to combine their complementary skills and experience to start a business aimed at selling audio recordings. The case is divided into Parts (A) and (B) and is designed to teach international entrepreneurship, lying at the intersection of international business and entrepreneurship. Part (A) is set in 2011 and tracks the company’s evolution from the conception of an idea to establishing a start-up and developing a product. Part (B) is set in 2013 and covers early foreign expansion between 2011 and 2013. The case is focused on the challenges that Marcin faces when developing Audioteka and expanding abroad. It allows students to understand the decision-making logic of an international new venture (INV), choices made and execution while internationalizing. Students will be able to explore how a company adapts its product; how it enters foreign markets; how it overcomes the liabilities of foreignness, smallness, newness and outsidership through establishing partnerships with big companies (telecoms, automakers); and how it appreciates the risks involved in this process.

This case is the basis for a class discussion rather than for illustrating either effective or ineffective handling of a managerial situation. From this case, MA students will learn how an entrepreneurial firm makes strategic decisions and becomes international. The first learning outcome is to evaluate the concepts of liability of origin, foreignness, outsidership, smallness and newness, and to explore ways of overcoming them. Second, the expected learning outcome is to assess differences between the Uppsala model of internationalization and born-global/INV phenomenon. Third, students, by examining particular foreign market-entry modes, are expected to evaluate their advantages and disadvantages. Finally, students are expected to understand the concept of “effectuation” and apply it to the decision-making process in early internationalization.

CSS 5: International Business.

The purpose of this study is to examine how business group (BG) affiliation influences the export propensity of new ventures (NVs). To help address the inconsistency of past research on the value of BG affiliation for firms seeking to expand their business abroad, the authors provide a contingency perspective by exploring how organizational characteristics and BG characteristics condition the value of BG affiliation. The authors analyze the impact of BG affiliation on the export propensity of NVs, including the factors that condition this impact, by using a sample of 2,874 European NVs. The primary contribution of this study is to determine the impact of BG affiliation on the export propensity of NVs, including the moderating effects of firm size on the BG affiliation–export propensity relationship. The findings show that the export propensity of NVs affiliated with BGs is significantly higher than for stand-alone NVs. However, the findings demonstrate that the impact of BG affiliation on export propensity depends on the network characteristics of the BG in terms of the geographical dispersion of network ties. Consequently, the findings suggest that BG affiliation provides advantages for NV exporting only if it provides access to international inter-firm networks thus acting as a compensatory mechanism for liability of outsidership and liability of newness in foreign markets. In such cases, BG affiliation is a major resource capital that equipoises the somewhat limited financial resource provision for NV internationalization.