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Theories of Internationalization - Essay Example
Author : heidenreichkyli
Pages 12 (3012 words)
Institution Date Theories of Internationalization Introduction Internationalization refers to the process of identifying international markets and entering them. This process is implemented by either firms acting on their own or by firms creating alliances with other local or international firms (Conklin, 2010 p…
This paper takes a comprehensive look at three of these theories: The Uppsala Model, The Eclectic Theory of International Production and Michael Porter Diamond Model. The definitions, assumptions, strengths and weaknesses relating to the above mentioned theories are discussed in this paper. The Uppsala Model The Uppsala Model was developed by Johanson and Vahlne in 1977 from their studies which focused on manufacturing firms of Sweden (Buckley & Ghauri, 1998 p.63). The empirical observations from their studies made them formulate the Uppsala Model. This model is based on the behavioural theory which uses behavioural actions to explain the nature of firms. Internationalization has been described as a process of experiential learning and incremental commitments which leads to an evolutionary development in a foreign market. The model has focused more on acquisition of knowledge and learning. In this regard, the lack of knowledge is seen as a barrier to the development of foreign operations. Four core concepts can be extracted from the Uppsala Model. These are market knowledge, market commitment, current activities and commitment decisions (Buckley & Ghauri, 1998 p.66). ...