Internationalization Of Asian Multinational Enterprises

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INTRODUCTION

Background

Internationalization can be defined as the desire to be a member of the international society by satisfying a certain standard, or strengthening the influence of a nation on other nations. It becomes the process where multinational enterprise (MNE) engaging, it is very important for these companies to penetrate international market if they want to be accepted and remain successful. (Sreenivasan Jayashree and Sahal Ali Al-Marwai). The internationalization process helps MNEs in maturate their operation in foreign market and enhance their competitive position abroad.

According to Hedman (1993), three main alternatives for distributing the enterprise’s product exist, that is, indirect export, direct export and alternatives to export. When distributing indirectly, the different distribution activities are assigned to one or several intermediaries in the home market. When distributing directly, the producer itself conducts the distribution activities, such as distribution to a foreign importer, which in his turn forward the products to another intermediary or the end customer. (Molnar, 1990) the third alternative, alternatives to export, can take place through, for instance, own production in the target country, or licensing (Hedman, 1993).

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The rapid changes in today’s business world call for new models of internationalization (Fillis, 2001; Meyer and Gelbuda, 2006), especially to be able to capture the early phase of internationalization in a better manner than the traditional models (Johanson and Vahlne, 2003). In contemporary research, Coviello and McAuley (1999), in line with Leonidou and Katsikeas (1996), have pointed at three theory directions that are preferable for studying internationalization, namely Foreign Direct Investment (FDI)-theories (a.k.a., the theory of the Multinational Firm), Stage models and Network theory. Even though these are different theory directions, they are seen to be complementary views where a combination of views is preferred since it is difficult to capture the internationalization concept using only one theoretical framework (Bell et al., 2003; Björkman and Forsgren, 2000; Coviello and Munro, 1997; Meyer and Skak, 2002). Network theory is increasingly being combined with stage theory in order to understand and explain the rapid internationalization of the firm (in Bell et al., 2003; Johanson and Vahlne, 1990, 2003; Meyer and Skak, 2002).

The process of internationalization has been the subject of widespread theoretical and empirical research (for example, Johanson and Wiedersheim-Paul 1975; Johanson and Vahlne 1977; Bilkey 1978; Cavusgil 1980; Turnbull 1987; Welch and Loustarinen 1988) and finds a general acceptance in the literature (Bradley 1991; Buckley and Ghauri 1993; Leonidou and Katsikeas 1996). The internationalization process is described as a gradual development taking place in distinct stages (Melin 1992).

Internationalization processes in emerging markets, as in international markets in general, take place in a stepwise manner (Jansson, 2007). Companies commit themselves through a gradual learning process. Learning is incremental and takes place by doing. Firms learn about doing business abroad,

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