The motivation behind this phenomenon has been the increasing ease in conducting international trade and the globalisation concept that is being embraced the world over where the globe is one big market. This paper shall seek to look at why some firms are born global and look into the risks that they face in international markets.
Firms that are born global have various characteristics in common that are both internal and external and they have similar market strategies they use to approach the international market. The born global concept therefore circles around internationalisation of firms and thus their ultimate expansion strategy (Fillis 2001, pp. 767-83). As mentioned earlier these firms enter into the export market when they are relatively small and young and the drive to do this emanates from their perception of the world being a market place. They take advantage of this and venture into markets abroad. These firms have been a subject of intense research for many years and particularly for the last two decades. They were first labelled as innate exporters but these were more characterised by high level management skills as well as a broader and in-depth international business outlook. Some firms were also taken for study and they were the high technology ones. These firms were seen to sprout to the international business arena right from their start. The basic reason for this was the nature of their products where they needed to venture into new market so as to have a wider market base for their exotic products. All these firms that were characterised by their speed to enter into the international market were later termed as International New Ventures (Child and Rita 2001, pp. 1135-48). The following diagram illustrates this concept better:
Although it was mentioned earlier that born global firms have been under research for a number of years now, the various challenges they