Internationalization Theories

Internationalization theories

Nicolas Mejia Ospina

According Calof and Beamish (1995), internationalization is "the method of adapting the operations of organizations to foreign environments." This process is characterized by the depth and the internalization of markets introduced; the quantity and depth of products and foreign direct investment. Companies move to internationalization as a result of migration of its customers and its competitors in the globalization process, while some companies go at it as a symbol of success and progress.

Among the theories and different characteristics that should be discussed because they are internationalization; Uppsala Model, the theory of transaction costs and the network model.

The Uppsala internationalization model is the theory that is based on learning, research and development. This theory stems from the changes and customer trends and explains how consumers and other companies to gradually intensify their activities in foreign markets.

Companies using this theory tend to enter a new market successfully across geographical and psychological distance; these include differences in language, education, business practices, culture and industrial development. This means that the company has to plan different strategies to use as a pattern using two or three languages, the base language and organizational strategies to adapt to the religion of the country and other sensitive factors in order to be able to penetrate faster than it would have taken.

There are two types of knowledge that are involved in this theory; general knowledge that can be taught, or experimental knowledge can only be learned through personal experience (tacit knowledge).

To conclude this theory, it is quite clear that this theory has the competitive advantage of opportunities based on the amount of resources and research being conducted in the foreign country before entering.

The main features of Uppsala theory are:

* Business first achieve their knowledge to migrate to different places.

* Enterprises initiated its overseas operations "from culturally / geographically and religiously from nearby nations and progress slowly culturally and geographically more distant countries.

Cost Theory Transaction cost is incurred in the development stage of an economic negotiation (the cost of participating in a market, economies of scale and transport costs). This involves costs d a signature from the start of a particular transaction to the end, that is, includes many implicit and explicit costs as it involves overseas market and affecting both the service provider and the customer. Normally, it is advantageous to have the external transaction cheaply than domestic because or else take the company to a poor quality of outsourcing.