Skip to content
BUSI1764Study Hub

Search the study hub

Weeks, sections, frameworks, cases, key terms and course files

Week 1Part 1 · Foundations≈ 75 min

Entrepreneurship, Innovation and the Main Theories of International Business

Handbook topic · Main Theories of Global Business and Entrepreneurship — an introduction to global business, entrepreneurship theories and innovation

Week 1 builds the vocabulary for the whole module. You learn what an entrepreneur is, how the module tells social entrepreneurship, ecopreneurship, intrapreneurship and international entrepreneurship apart, and how to name the type and level of an innovation. You then meet the main theories that explain why and how firms go international, from transaction costs and Dunning’s OLI paradigm to the Uppsala model, network theory and born-global firms.

The big question

What makes a venture entrepreneurial and innovative, and which theories explain how it can cross borders?

By the end of this week you can

  • Explain how definitions of the entrepreneur developed from Smith and Say to Schumpeter and Drucker.
  • Classify a venture as social entrepreneurship, ecopreneurship, intrapreneurship or international entrepreneurship, and argue why it is not the other types.
  • Identify an innovation as process, product or business model innovation and place it on the three levels of innovation.
  • Use the elements of a business model and the PESTEL framework to find where innovation creates opportunities.
  • Define international entrepreneurship and the international new venture (INV).
  • Summarise and apply transaction cost theory, the product life cycle, monopolistic advantage, oligopolistic reaction, the OLI paradigm, the Uppsala model, network theory and born-global theory.

What is an entrepreneur? Definitions and four types of entrepreneurship

Mini-Lectures 1.1 and 1.2Open the slides

The idea of the entrepreneur changed over two centuries: from a go-between in markets to the innovator who drives the economy forward. The module then splits entrepreneurship into four variations you must be able to tell apart.

How thinkers defined the entrepreneur

  1. 1776Adam Smith

    The entrepreneur is an agent who transforms demand into supply: someone who notices what people want and organises its production.

  2. 1803Jean-Baptiste Say

    The entrepreneur shifts resources from an area of low productivity to higher productivity. The focus moves from trading to using resources better.

  3. 1848John Stuart Mill

    The entrepreneur is the prime mover in private enterprise and the fourth factor of production, alongside land, labour and capital.

  4. 1911Joseph A. Schumpeter

    The entrepreneur is an innovator. The economy moves forward because of entrepreneurs’ innovations, a process Schumpeter called creative destruction.

  5. 1985Peter Drucker (with Schumpeter, 1947)

    Entrepreneurship is the practice of identifying, capturing and exploiting the opportunities that change creates through innovative activity.

Entrepreneurship (module working definition)Drucker (1985); Schumpeter (1947)

The practice of identifying, capturing and exploiting the opportunities that change creates through innovative activity. Entrepreneurs are agents of change who do things themselves, rather than leaving them to others, and do them in innovative ways.

What entrepreneurs draw on in the entrepreneurial process

  • Human capital — the founder’s own skills and experience.
  • Emotional support — family and friends who back the founder.
  • Expert knowledge — specialist advice the founder does not have.
  • Ideas and feedback — people who test and improve the concept.
  • Networks — contacts who open doors to customers, suppliers and partners.
  • Funding — the money needed to start and grow.

The module recognises four variations of entrepreneurship. Each has its own definition and a different centre of gravity: social value, the natural environment, an existing organisation, or national borders. The Learning Diary asks you to place your Ashoka venture in one of these and to explain why it does not fit the other three, so learn the defining feature of each.

Four types of entrepreneurship

Social entrepreneurship
  • “Innovative and effective activities that focus strategically on resolving social market failures and creating new opportunities to add social value systematically by using a range of resources and organizational formats to maximize social impact and bring about change” (Nicholls, 2006, p. 43).
  • Distinguishing feature: the pursuit of social improvement over profit (Dees, 1998).
  • Test question: is the main purpose to solve a social problem, with profit serving that purpose?
Ecopreneurship
  • “Entrepreneurship through an environmental lens… entrepreneurial activities that are oriented less towards management systems or technical procedures and focused more on the personal initiative and skills of the entrepreneurial person or team to realise market success with environmental innovations” (Schaltegger, 2002).
  • Entrepreneurship based on the principles of sustainability (Kirkwood and Walton, 2010).
  • Test question: is the venture built on an environmental innovation that must succeed in the market?
Intrapreneurship
  • “Entrepreneurship within an existing organization” (Antoncic and Hisrich, 2003).
  • An individual employee’s agentic and anticipatory behaviours aimed at creating new businesses for the organisation (venture behaviour) and enhancing the organisation’s ability to react to internal and external advancements (strategic renewal behaviour) (Gawke et al., 2017).
  • Test question: was the innovation created by people inside an established organisation, for that organisation?
International entrepreneurship
  • “The discovery, enactment, evaluation, and exploitation of opportunities — across national borders — to create future goods and services” (Oviatt and McDougall, 2005).
  • Test question: is the opportunity itself found and exploited across national borders, not just at home?
Common pitfall
The types overlap — argue for the dominant one

A social enterprise can operate internationally, and an eco-venture can also create social value. The marker is not looking for a perfect fit but for a reasoned choice: name the primary purpose, support it with the definition, then use the other definitions to explain why they describe only a secondary feature of the venture.

Use it in your assessment
Learning Diary: classification criterion

Structure the classification paragraph as: definition of the chosen type (with author and year) → evidence from the venture → one sentence per rejected type, each using that type’s defining feature. For example: “It is not intrapreneurship because it was not created inside an existing organisation (Antoncic and Hisrich, 2003).”

Innovation: Schumpeter, creative destruction, types and levels

Mini-Lectures 1.1 and 1.3; Tutorial recapOpen the slides

For Schumpeter, innovation is what makes someone an entrepreneur. To analyse an innovation you need two labels: its type (what is new) and its level (how new, and with what effect on the market).

InnovationSchumpeter (1911)

The re-combination of existing elements, such as resources, processes, knowledge, products, services and methods. Innovation represents the various ways of gaining a competitive advantage.

“The defining characteristic is simply the doing of things that are already being done in a new way (innovation).”
— Schumpeter (1947, p. 151)
Creative destructionSchumpeter (1942, p. 83)

A process which “incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Entrepreneurs’ innovations replace older products and ways of working, and this is how the economy moves forward.

Insight
Innovation is not invention

Schumpeter separates the two roles: “The inventor produces ideas, the entrepreneur ‘gets things done’, which may but need not embody anything that is scientifically new” (Schumpeter, 1947, p. 152). A venture can be highly innovative without inventing any new technology — for example by recombining existing elements in a new way.

Types of innovationWeek 1 tutorial recap of the mini-lectures

The type answers the question “what exactly is new?” The tutorial defines three types.

P
Process innovation

Improving or redesigning how a company creates or delivers its products or services. Focuses on enhancing efficiency, reducing costs or improving quality in internal operations.

P
Product innovation

Developing new products or significantly improving existing ones to meet market needs or create new markets. Can involve changes in functionality, design or features.

B
Business model innovation (revenue model innovation)

Fundamentally changing how a company creates, delivers and captures value. Involves altering revenue streams, customer relationships or key activities.

How to use it · Name one type for the innovative element, quote its definition, and then show why the other definitions fit less well. If the customer receives something new, think product; if only the way it is made or delivered changed, think process; if the way the firm earns money or relates to customers changed, think business model.
Tip
What about service innovation?

The Learning Diary brief also lists service innovation. The Week 1 decks do not give it a separate definition; the tutorial definitions treat services alongside products and processes (for example, incremental innovation improves “existing products, services, or processes”). If your venture’s offer is a service, argue that the new element is the service itself (what the customer experiences), and use the process and business model definitions to explain why it is not those.

Levels of innovationMini-Lectures 1.1 and 1.3; Week 1 tutorial

The lectures describe three separate scales. An innovation gets a position on each, so one innovation can be, for example, incremental, new to the region and sustaining at the same time.

I
Incremental ↔ Radical (size of change)

Incremental: small, gradual improvements to existing products, services or processes that enhance efficiency, functionality or quality without fundamentally altering the core offering. Radical: significant, transformative changes that introduce entirely new products, services or ways of doing business, often through breakthrough technologies or novel approaches that create new markets or dramatically reshape existing ones.

N
New to a firm / region ↔ New to the world (novelty)

Asks for whom the innovation is new. An idea can be new only to the firm or to a region — for example a proven concept introduced to a country where it did not exist — or it can be new to the world, with no precedent anywhere.

S
Sustaining ↔ Disruptive (market effect)

Sustaining: improvements that enhance the performance of established products or services along dimensions historically valued by mainstream customers; can be incremental or more significant. Disruptive (“game change”): initially serves a niche with something simpler, cheaper or more convenient than existing offerings, then improves and moves upmarket, eventually displacing established competitors.

How to use it · In the Learning Diary, state the level on the scale that best fits and justify it with the definition. “New to the region” is often the most defensible label for a venture that adapts an existing idea to a local problem; reserve “new to the world” and “disruptive” for cases where you can show there was no precedent or that incumbents are being displaced.
Common pitfall
Radical is not the same as disruptive

Radical describes the size of the change; disruptive describes the path into the market (a simpler, cheaper offer for a niche that later displaces incumbents). A disruptive innovation can start as a modest, low-tech product, and a radical breakthrough can still be sustaining if it serves mainstream customers better on the dimensions they already value.

Use it in your assessment
Learning Diary: innovation analysis (25 marks)

Answer three questions in order: (1) What is the one innovative element? (2) Which type is it, and why not the other types? (3) Where does it sit on the levels of innovation, and why? Use the tutorial definitions word for word where possible and cite the module material.

Where to look for innovation: the business model, PESTEL and Lammsbräu

Mini-Lecture 1.3Open the slides

Innovation can happen anywhere in the business model, and the opportunities for it usually come from changes outside the firm. Mini-Lecture 1.3 gives you a map of the business model, a scan of the external environment, and a case showing how an entrepreneur turned a losing situation into a positive-sum one.

The elements of a business modelMini-Lecture 1.3 (slides 4–5)

The lecture divides a business model into a value proposition, a value architecture and a revenue model. The diagram on slide 5 (“What business are we in? Our business model”) adds culture and values and breaks each element into questions.

V
Value proposition / customer

Customers: who are our customers and what job do we solve for them? Value proposition: what value do we create for our customers, and for our partners?

V
Value architecture

Offer: what is our offering? Distribution architecture: how do we reach our customers? Value chain: what are our value-creating steps? Core capabilities: what capabilities do we need? Partners: which partners do we need?

R
Revenue model

Cost structure: defined by the value architecture. Sources of revenue: with what do we earn money?

C
Culture / values

Leadership style: what leadership style do we have? Relationship style: how do we interact with each other and the customer? Values: what values do we pursue?

How to use it · Use the elements to locate an innovation precisely. A new offer points to product innovation; a redesigned value chain or distribution points to process innovation; a new source of revenue or new way of capturing value points to business model innovation. The tutorial question “What is (are) their income stream(s)?” is a revenue-model question.

If innovation is a strategic way of solving new problems, the entrepreneur has to look outwards: where are new market opportunities, and threats, emerging? Which ones demand attention, and where can innovation capture an opportunity or reduce a threat? External trends are commonly analysed with the PESTEL framework.

PESTEL frameworkMini-Lecture 1.3

PESTEL scans six independent dimensions of the external (macro) environment to find trends that create opportunities or threats for innovation. The examples below come from the lecture and its speaker notes.

P
Political

Government commitments and policy direction.

Example — The UK’s policy commitment to net zero by 2050, with an interim target to cut emissions by at least 68% by 2030 (lecture notes link this to the Political and Environmental dimensions and to the SDGs).

E
Economic

Costs, prices and the flow of goods that shape demand and supply.

Example — A steep climb in energy costs; global supply-chain blockages.

S
Social

Changing values, lifestyles and behaviour of customers and employees.

Example — More working from home; customers, especially in B2C markets, increasingly seek socially and environmentally responsible values; younger employees seek meaningful work.

T
Technological

New technologies that change how products are bought, made or delivered.

Example — Mobile payments; the swing towards online retail.

E
Environmental

Ecological pressures and sustainability targets.

Example — Net zero targets for 2030/2050; the drive to reduce single-use plastics.

L
Legal

Laws and rights that apply in a given market.

Example — Intellectual property is territorial: UK patents only give the holder rights in the UK and the right to stop others importing the patented products into the UK (Week 1 tutorial notes).

How to use it · For the Individual Report, run PESTEL on your target country, not on your home market, and end each dimension with a “so what” for your venture: an opportunity to exploit or a threat your innovation must handle. The lecture notes suggest doing PESTEL as a team exercise that involves a wide range of people to spot macro trends.

Mini-Lecture 1.3 closes with the organic brewery Neumarkter Lammsbräu, analysed by Beckmann (2009). Its leader, Dr Franz Ehrnsperger, summed up his view as “Ecology is long-term economy”. The goal was to create high-quality beer, reduce emissions, secure local jobs and source organic raw materials, and the idea was to create a positive-sum situation for all Lammsbräu stakeholders. Two social dilemmas stood in the way.

Dilemma 1 (single-sided): will farmers go organic? Pay-offs shown as (Farmers, Lammsbräu)
Farmers’ choiceLammsbräu does not exploitLammsbräu exploits
Go organic2, 2−2, 4
Do not go organic0, 00, 0

In the 1980s organic hops, grain, yeast and water meant higher cost and lower yield, a very high risk for farmers. Once farmers have converted, the brewery could exploit them (pay-off 4 instead of 2), leaving farmers worse off (−2). Anticipating this, farmers stay conventional (0, 0) and the mutually better outcome (2, 2) is lost.

Solution to dilemma 1: Lammsbräu self-commits

  1. 1
    Guarantee the price

    Lammsbräu initiates a long-term contract guaranteeing the purchase of organic brewing material at an above-market rate.

  2. 2
    Lower the farmers’ cost

    Lammsbräu contracts an agricultural engineer to help farmers transform production at lower cost to the farmers.

Dilemma 2 (multi-sided): will farmers cooperate with each other?
OutcomePay-off
Both farmers cooperate4 each
One undercuts, the other cooperates5 for the one who undercuts, 2 for the one who cooperates
Neither cooperates2 each

Traditional competition between farmers undermines individually committed pricing agreements, creates uncertainty and keeps eroding Lammsbräu’s ecological goal: each farmer is tempted to undercut, although both are better off cooperating.

Solution to dilemma 2: collective commitment

  1. 1
    Encourage cooperation

    Lammsbräu encourages cooperation for collective commitment among farmers.

  2. 2
    Create a growers’ association

    Lammsbräu initiates the “Growers Association for Organic Brewing Raw Materials”.

  3. 3
    Contract only with members

    Lammsbräu initiates the “Association of Organic Food Producers” and only contracts with members of this co-operative.

Insight
Frames of reference can be changed

Zero-sum perceptions come from particular frames of understanding, often socially constructed. Because they are socially constructed, they can be changed to create positive-sum perceptions. The entrepreneurial move at Lammsbräu was not a new beer recipe but new rules for the relationships around it.

International entrepreneurship and the international new venture

Mini-Lecture 1.2Open the slides

Globalisation makes it possible for small, young firms to exploit opportunities across borders. The international new venture (INV) is the name for firms that do this from the start.

Three views of globalisation

Robertson (1992)
  • Globalisation is both the compression of the world and the intensification of consciousness of the world as a whole: concrete global interdependence plus awareness of the global whole.
Giddens (1990)
  • The intensification of worldwide social relations that link distant localities, so that local happenings are shaped by events many miles away and vice versa.
  • Local transformation is as much a part of globalisation as the spread of social connections across time and space.
Waters (2013)
  • A social process in which the constraints of geography on economic, political, social and cultural arrangements recede, people become aware that they are receding, and act accordingly.
International entrepreneurshipOviatt and McDougall (2005)

“The discovery, enactment, evaluation, and exploitation of opportunities — across national borders — to create future goods and services.”

International new venture (INV)Oviatt and McDougall (1994)

A firm that from its inception seeks to gain significant competitive advantage by using its resources effectively and selling its outputs in multiple countries. The lecture adds an operational test: INVs internationalise within six years of inception and earn 25% to 30% of total revenue from foreign operations.

Four elements of a sustainable INVOviatt and McDougall (2018)

Four conditions that together make an international new venture sustainable.

I
Internalisation of transactions

The firm internalises some transactions and uses hierarchical authority as its mechanism of governance.

A
Alternative governance structures

Scarce resources push INVs to use alternative approaches, rather than owning everything, to plan for and manage crucial assets.

F
Foreign location advantage

INVs develop competitive advantage by synthesising resources across national borders.

U
Unique resources

Proprietary knowledge matters most, especially in knowledge-based INVs.

How to use it · When you argue that a venture is an INV, check each element: what does it keep in-house, what does it access through partners, which foreign resources does it combine, and what knowledge is hard to copy?

Why founders and networks matter for INVs

  • INVs are strongly associated with their founders, who identify and exploit international opportunities and have personal contacts in foreign markets (McDougall et al., 1994).
  • Founders build international relationships while studying abroad and through previous international work experience (e.g. Reuber and Fischer, 1997; Crick and Jones, 2000).
  • Networks facilitate internationalisation (Coviello and Munro, 1995; Oviatt and McDougall, 2018; Costales and Zeyen, 2022).
Use it in your assessment
Using the INV idea in your assignments

In the Learning Diary, the INV definition helps you judge whether an Ashoka venture is genuinely international entrepreneurship or a domestic venture that could internationalise later. In the Individual Report, the founder-and-network points justify why your personal or partner contacts make a particular target market realistic.

Why firms go abroad: transaction costs, product life cycle, monopolistic advantage, oligopolistic reaction and OLI

Mini-Lecture 1.2; TutorialOpen the slides

The first group of international business theories explains why a firm invests or produces abroad (foreign direct investment, FDI), and whether it should do so itself or through the market.

Transaction cost theoryCoase (1937); Hennart (2010)

Transaction costs are the costs of obtaining goods and services through the market rather than producing them within the firm. The theory asks how companies can minimise their per-unit costs, stresses the importance of knowledge, and explains why MNEs form joint ventures with local firms or outsource some operations.

S
Search and information costs

Finding suitable suppliers, partners or customers and learning about them.

B
Bargaining and decision costs

Negotiating and agreeing terms with the other party.

P
Policing and enforcement costs

Checking that the other party keeps the agreement and acting if it does not.

How to use it · Use it to justify a make-or-buy choice in a new market: if searching, negotiating and policing a local partner is costly (for example because knowledge could leak), doing the activity in-house is easier to justify; if those costs are low, outsourcing or a joint venture is cheaper.
International product life cycleVernon

A representation of the relation between profit margin, sales volume and the life cycle of a product. The module presents four stages.

  1. 1
    Introduction (development)

    Characterised by the risk of fit between market need and the product or service.

  2. 2
    Growth

    Potential competitors become involved.

  3. 3
    Maturity

    The market becomes relatively saturated.

  4. 4
    Decline

    Characterised by industry transformation and consumer disconnect.

How to use it · Ask which stage your product is at in the home market and in the target market. A product may face saturation at home while the target market still offers growth, which is one argument for internationalising.
Monopolistic advantage theoryHymer (1960)

Firms with monopolistic advantages undertake FDI, relocating production to unfamiliar and sometimes hostile new countries, because their market-power advantages make it worth their while. The theory presumes that an internationalising firm has some market-capturing advantage.

T
Technology

Technology that local rivals do not have.

S
Social capital

Relationships and networks that give access to opportunities.

H
Human capital

Skills and knowledge of the firm’s people.

E
Economies of scale

Lower unit costs from producing at larger volume.

E
Economies of agglomeration

Benefits from being located in a cluster of related firms.

How to use it · Name the specific advantage that would let your venture overcome the disadvantage of being a foreign newcomer in the target market.
Oligopolistic reaction theoryHead, Mayer and Ries (2002); Ito and Rose (2002)

Explains foreign investment decisions motivated by market competition. The oligopolistic reaction is the decision of one firm to invest overseas raising competing firms’ incentives to invest in the same country.

  1. 1
    Oligopoly

    The market is dominated by a small number of big firms.

  2. 2
    A leader moves

    One firm invests in a foreign country.

  3. 3
    Rivals’ incentives rise

    Competitors now have a stronger incentive to invest in the same country.

  4. 4
    Follow the leader

    Rivals follow, so FDI clusters in the same locations.

How to use it · Mostly explains the behaviour of large firms. For an SME it is useful in the competitor analysis: if major rivals are entering a country, expect competition there to intensify.
OLI model (eclectic paradigm)Dunning (1977, 1980, 1993, 2000, 2001); Dunning and Lundan (2008)

A framework firms use to decide whether or not to undertake FDI in a particular market (Eden and Dai, 2010). A company must satisfy three conditions before engaging in FDI. The model breaks down the choice of optimal locations (L) for conducting the activities behind its competitive advantages (O), considers how it internationalises (I), and differentiates externally and internally induced organisational change.

O
O — Ownership advantage

The firm has the requisite skills and other resources, including technical, scientific and other physical assets, relative to foreign rivals.

L
L — Location advantage

There are compelling advantages in undertaking FDI in the host country.

I
I — Internalisation advantage

It is beneficial or cost-effective to perform value-chain activities itself, rather than keeping them in the home country or outsourcing them (Dunning, 1988).

How to use it · In the Individual Report, answer the three questions in turn for your venture and target country. If O and L are strong but I is weak, a partner-based entry (outsourcing, licensing, a local partner) fits the logic better than owning operations abroad.
Tip
Link the theories instead of listing them

Transaction cost theory and the internalisation (I) part of OLI ask the same basic question: do it yourself or use the market? Monopolistic advantage and the ownership (O) part of OLI both ask what the firm has that foreign rivals lack. Showing these links earns more credit than describing each theory separately.

How firms internationalise: Uppsala, networks and born globals

Mini-Lecture 1.2; TutorialOpen the slides

The second group of theories describes the internationalisation process itself — gradual and learning-based, driven by relationships, or international from day one. These are usually the best fit for SMEs and start-ups.

Uppsala modelVahlne and Johanson (2017)

A Swedish model in which internationalisation is an evolutionary process that unfolds over time.

E
Evolutionary and temporal

Internationalisation develops step by step over time rather than in one decision.

K
Knowledge accumulated iteratively

Each move abroad builds knowledge that makes the next move possible.

P
Psychic distance

How different a foreign market feels from home; firms tend to start where this distance is low (Week 3 applies this to family firms).

How to use it · Use it to justify choosing a first market that is close in psychic terms and to plan later, more distant markets as knowledge grows.
Network theory of internationalisationJohanson and Mattsson (1988)

Emphasises establishing and developing long-term relationships with participants in foreign markets. A company’s position in a network, and the nature of its relationships within it, is a prerequisite for success in internationalisation.

Customers

Long-term relationships with buyers in the foreign market.

Suppliers

Relationships that secure inputs and local knowledge.

The internationalising firm

Its network position and relationships determine how easily it can enter and grow in a foreign market.

Distributors

Partners who carry the product to local customers.

Governments

Relationships with public bodies in the foreign environment.

How to use it · In the Individual Report, name the actual partners you would build relationships with in the target country and explain what each brings. Week 8 develops this in detail.
Born-global theoryOviatt and McDougall (1994)

Born-global firms are firms that, from inception, seek to derive competitive advantage from the use of their resources and the sale of their outputs in multiple countries.

G
Global start-ups

Oviatt and McDougall (1994).

I
International new ventures

McDougall et al. (1994).

I
Instant internationals

Preece et al. (1999).

How to use it · The three labels describe the same phenomenon. Use born-global theory when the venture sells across borders from the start; contrast it with the Uppsala model to show you understand the two routes.
The eight theories at a glance
TheoryCore questionKey authorsMost useful for
Transaction cost theoryUse the market or do it in-house?Coase (1937); Hennart (2010)Choosing between outsourcing, joint venture and own operations
Product life cycleAt what stage is the product, and what does that imply?VernonTiming and the case for a new market
Monopolistic advantageWhat advantage justifies operating abroad?Hymer (1960)Stating the venture’s competitive edge
Oligopolistic reactionWhy do rivals invest where a leader has invested?Head, Mayer and Ries (2002); Ito and Rose (2002)Competitor analysis in concentrated markets
OLI paradigmAre there ownership, location and internalisation advantages?Dunning (1977–2001); Dunning and Lundan (2008)Justifying market choice and whether to invest
Uppsala modelHow does learning shape step-by-step expansion?Vahlne and Johanson (2017)Sequencing markets by psychic distance
Network theoryWhich relationships make entry possible?Johanson and Mattsson (1988)Choosing partners in the target market
Born global / INVCan a firm be international from day one?Oviatt and McDougall (1994)Start-ups and digital ventures selling across borders early

Only use theories taught in the module; the assessment briefs do not reward outside frameworks.

Use it in your assessment
Learning Diary: cross-border transfer reflection (25 marks)

Pick one or two theories that genuinely fit the venture and apply them to a named new market. For a resource-poor social venture, network theory (who are the local partners?) and the Uppsala model (is the market psychically close?) usually give sharper arguments than FDI theories written for large multinationals.

Tutorial activities

Work through these before checking the guidance.

Mini-case analysis: four innovative ventures

In the tutorial, groups discuss and analyse four ventures: Andreas Heinecke’s Dialogue Social Enterprise, Kristian Tapaninaho and Darina Garland’s Ooni, Monisha Narke’s RUR Greenlife and Tope Awotona’s Calendly. Each group answers the same eight questions for its case. Keep notes: the Learning Diary asks you to reflect on how your group identified innovation in these mini-cases.

  1. 1.What is the problem?
  2. 2.How did the entrepreneur identify the problem?
  3. 3.What type of entrepreneurship is this?
  4. 4.What is the key idea of this example?
  5. 5.What is the innovation?
  6. 6.Who benefits from their product/service directly and how indirectly?
  7. 7.What is (are) their income stream(s)?
  8. 8.How might you bring this to a new market?

PESTEL scan and internationalisation plan

Use the PESTEL framework to identify the external environment of a new market for your mini-case venture, then use the international business tools from this week to examine how you would internationalise the venture.

  1. 1.Which new country would you choose, and why?
  2. 2.What does each PESTEL dimension reveal about that market (opportunities and threats)?
  3. 3.Which international business theory best explains how the venture should enter: transaction cost theory, the product life cycle, monopolistic advantage, oligopolistic reaction, the OLI paradigm, the Uppsala model, network theory or born-global theory?
  4. 4.What would have to change in the business model for the venture to work in the new market?
  5. 5.Would the venture’s intellectual property be protected in the new market?

Cases

Full analysis, questions and takeaways on each case page.

Key terms

Entrepreneurship
The practice of identifying, capturing and exploiting the opportunities that change creates through innovative activity (Drucker, 1985; Schumpeter, 1947).
Innovation
The re-combination of existing elements such as resources, processes, knowledge, products, services and methods (Schumpeter, 1911); a way of gaining competitive advantage.
Creative destruction
The process that incessantly revolutionises the economic structure from within, destroying the old one and creating a new one (Schumpeter, 1942).
Social entrepreneurship
Innovative activities that strategically resolve social market failures and add social value to maximise social impact (Nicholls, 2006); social improvement is pursued over profit (Dees, 1998).
Ecopreneurship
Entrepreneurship through an environmental lens, relying on the entrepreneur’s initiative to achieve market success with environmental innovations (Schaltegger, 2002).
Intrapreneurship
Entrepreneurship within an existing organisation (Antoncic and Hisrich, 2003).
International entrepreneurship
The discovery, enactment, evaluation and exploitation of opportunities across national borders to create future goods and services (Oviatt and McDougall, 2005).
International new venture (INV)
A firm that from inception seeks competitive advantage by using its resources and selling outputs in multiple countries (Oviatt and McDougall, 1994).
Business model innovation
Fundamentally changing how a company creates, delivers and captures value, for example by altering revenue streams, customer relationships or key activities.
Disruptive innovation
An innovation that first serves a niche with a simpler, cheaper or more convenient offer, then improves and moves upmarket, eventually displacing established competitors.
PESTEL
A framework for analysing the Political, Economic, Social, Technological, Environmental and Legal trends in the external environment.
Transaction costs
The costs of obtaining goods and services through the market rather than producing them within the firm: search and information, bargaining and decision, and policing and enforcement costs (Coase, 1937).
OLI paradigm
Dunning’s eclectic paradigm: a firm should have ownership, location and internalisation advantages before undertaking FDI.
Psychic distance
How different a foreign market feels from the home market; central to the Uppsala model of gradual internationalisation.

Check your understanding

10 questions · instant feedback · best score saved on this device
1/10

Which thinker defined the entrepreneur as someone who shifts resources from lower to higher productivity?

Flashcards

Recall first, then flip.
1 / 14

References and sources

As cited in the module materials. Check each against the original before using it in an assignment.

  • Antoncic, B. and Hisrich, R.D. (2003) ‘Clarifying the intrapreneurship concept’, Journal of Small Business and Enterprise Development, 10(1), pp. 7–24.
  • Beckmann (2009) — cited in Mini-Lecture 1.3 and Tutorial 4; full reference not given in the module materials.
  • Coase (1937) — cited in the Week 1 tutorial; full reference not given in the module materials.
  • Costales, E. and Zeyen, A. (2022) ‘Social capital and the morphogenesis of actors: lessons from international social entrepreneurs’, in The International Dimension of Entrepreneurial Decision-Making: Cultures, Contexts, and Behaviours, pp. 193–222.
  • Coviello and Munro (1995) — cited in Mini-Lecture 1.2; full reference not given in the module materials.
  • Crick and Jones (2000) — cited in Mini-Lecture 1.2; full reference not given in the module materials.
  • Dees, J.G. (1998) The meaning of social entrepreneurship. Fuqua School of Business, Duke University, pp. 1–6.
  • Drucker, P. (1985) Innovation and entrepreneurship: practice and principles. Harper & Row.
  • Dunning (1977, 1980, 1988, 1993, 2000, 2001) — cited in the Week 1 tutorial; full references not given in the module materials.
  • Dunning, J.H. and Lundan, S.M. (2008) Multinational enterprises and the global economy. Edward Elgar Publishing.
  • Eden and Dai (2010) — cited in the Week 1 tutorial; full reference not given in the module materials.
  • Gawke, J.C., Gorgievski, M.J. and Bakker, A.B. (2017) ‘Employee intrapreneurship and work engagement: a latent change score approach’, Journal of Vocational Behavior, 100, pp. 88–100.
  • Giddens, A. (1990) The consequences of modernity. Cambridge: Polity.
  • Goodman (2002) — iceberg model, cited in Mini-Lecture 4.2 (used in the Dialogue Social Enterprise and Lammsbräu cases); full reference not given in the module materials.
  • Head, Mayer and Ries (2002) — cited in the Week 1 tutorial; full reference not given in the module materials.
  • Hennart, J.F. (2010) ‘Transaction cost theory and international business’, Journal of Retailing, 86(3), pp. 257–269.
  • Hymer, S.H. (1960) The international operations of national firms, a study of direct foreign investment. Doctoral dissertation. Massachusetts Institute of Technology.
  • Ito, K. and Rose, E.L. (2002) ‘Foreign direct investment location strategies in the tire industry’, Journal of International Business Studies, 33, pp. 593–602.
  • Johanson and Mattsson (1988) — cited in the Week 1 tutorial; full reference not given in the module materials.
  • Kirkwood, J. and Walton, S. (2010) ‘What motivates ecopreneurs to start businesses?’, International Journal of Entrepreneurial Behavior & Research, 16(3), pp. 204–228.
  • McDougall et al. (1994) — cited in Mini-Lecture 1.2 and the Week 1 tutorial; full reference not given in the module materials.
  • Mill, J.S. (1848) Principles of political economy: with some of their applications to social philosophy. Vol. 1.
  • Moulaert, F., MacCallum, D. and Hillier, J. (2013) ‘Social innovation: intuition, precept, concept’, in The International Handbook on Social Innovation: Collective Action, Social Learning and Transdisciplinary Research, p. 13.
  • Mulgan, G. (2007) Social innovation: what it is, why it matters and how it can be accelerated.
  • Nicholls, A. (ed.) (2006) Social entrepreneurship: new models of sustainable social change. Oxford: OUP.
  • Oviatt and McDougall (1994) — cited in Mini-Lecture 1.2 and the Week 1 tutorial; full reference not given in the module materials.
  • Oviatt, B.M. and McDougall, P.P. (2005) ‘Defining international entrepreneurship and modeling the speed of internationalization’, Entrepreneurship Theory and Practice, 29(5), pp. 537–553.
  • Oviatt, B.M. and McDougall, P.P. (2018) ‘Toward a theory of international new ventures’, in International Entrepreneurship: The Pursuit of Opportunities across National Borders, pp. 31–57.
  • Preece et al. (1999) — cited in the Week 1 tutorial; full reference not given in the module materials.
  • Reuber and Fischer (1997) — cited in Mini-Lecture 1.2; full reference not given in the module materials.
  • Robertson, R. (1992) Globalization. London: Sage.
  • Say, J.B. (1846) Traité d’économie politique: ou simple exposition de la manière dont se forment, se distribuent et se consomment les richesses. Vol. 9. Guillaumin.
  • Schaltegger, S. (2002) ‘A framework for ecopreneurship: leading bioneers and environmental managers to ecopreneurship’, Greener Management International, (38), pp. 45–58.
  • Schumpeter, J. (1911) The theory of economic development. Harvard Economic Studies, Vol. XLVI.
  • Schumpeter, J.A. (1939) Business cycles. Vol. 1, pp. 161–174. McGraw-Hill.
  • Schumpeter, J.A. (1942) Capitalism, socialism and democracy. Routledge.
  • Schumpeter, J.A. (1947) ‘The creative response in economic history’, The Journal of Economic History, 7(2), pp. 149–159.
  • Smith, A. (1776) An inquiry into the nature and the causes of the wealth of nations. Reprint, Palgrave Macmillan. doi:10.1057/9780230291652.
  • Vahlne, J.E. and Johanson, J. (2017) ‘From internationalization to evolution: the Uppsala model at 40 years’, Journal of International Business Studies, 48, pp. 1087–1102.
  • Vernon — international product life cycle as presented in Mini-Lecture 1.2, with a link to Harvard Business Review (1965) ‘Exploit the product life cycle’; full reference not given in the module materials.
  • Waters, M. (2013) Globalization. Routledge.

Written from these course files

External pages used