International Business: The New Realities, 5th Edition

Why and How Do Firms Internationalize?

1. 5.3 Understand why and how firms internationalize.

Earlier theories of international trade focused on why and how cross-national business occurs. Beginning in the 1960s, scholars turned their attention to why and how individual firms pursue internationalization. Let’s examine these views.

Internationalization Process of the Firm

Scholars developed the internationalization process model in the 1970s to describe how companies expand abroad. According to this model, internationalization takes place in incremental stages over a long period.9 Initially and without much analysis or planning, firms begin exporting, the simplest foreign market entry strategy. As they become more knowledgeable, firms gradually ...