In spite of a progressing globalization, characterized by improvements in communication technologies, the world faces four billion people who live in poverty, mostly due to underemployment. By building up business activities in these markets, especially multinational corporations, are not only able to supply the local consumers with goods, but also create income potentials, while, at the same time, doing good in an economic sense. But these markets are often coined with problems, like a lack of basic infrastruc-ture, which makes entering these markets a long lasting, expensive and risky process for firms.
Goal of this paper is to illustrate the stages model of internationalization according to Johanson and Vahlne in detail and evaluate its validation limits, 30 years after its first release, by summing up contemporary and recent reviews.
After a short introduction, the basic principles will be identified, before pointing out the two fundamental parts of the stages model. While pointing out these parts, each section of it will be explained. Following the theoretical background, the limitations of the stages model, according to critics, will be presented. To conclude this work, an approach to evaluate the today´s relevance of the model and an overall conclusion will follow.
Table of Contents
- Introduction
- Problem
- Goal
- Structure
- Stages Model of Internationalization according to Johanson and Vahlne
- Introduction
- Basic principles
- Patterns of internationalization
- Establishment chain
- Psychic distance chain
- Model of internationalization
- Market commitment
- Market knowledge
- Current activities
- Commitment decisions
- Limitations of the stages model
- The determinism of the stages model
- The psychic distance aspect
- Today's relevance
- Conclusion
Objectives and Key Themes
The objective of this paper is to thoroughly explain the stages model of internationalization proposed by Johanson and Vahlne and critically evaluate its validity three decades after its initial publication by reviewing contemporary literature. The analysis focuses on identifying the model's limitations in the context of current business environments.
- The incremental and gradual nature of internationalization
- The role of market knowledge and commitment in the internationalization process
- The limitations and criticisms of the stages model
- The relevance of the stages model in the 21st century
- The challenges of entering emerging markets
Chapter Summaries
Introduction: This introductory chapter sets the stage for the paper by highlighting the global disparity between developed and developing nations, emphasizing the significant role multinational corporations (MNCs) can play in addressing this inequality through market expansion. It establishes the goal of the paper as a detailed explanation and critical evaluation of Johanson and Vahlne's stages model of internationalization, assessing its continued relevance in the current global landscape. The chapter outlines the structure of the paper, promising a comprehensive exploration of the model, its limitations, and its contemporary significance.
Stages Model of Internationalization according to Johanson and Vahlne: This chapter delves into the core of the paper's subject, presenting the Johanson and Vahlne stages model, often referred to as the Uppsala model. The chapter details the model's foundational principles, emphasizing its incremental and dynamic nature. It explains the two key components: the patterns of internationalization (establishment and psychic distance chains) and the model of internationalization (market commitment, knowledge, activities, and commitment decisions). The chapter meticulously lays out the different stages of market entry and the factors influencing a firm's progression through these stages, providing the essential theoretical framework for the critical analysis in later sections.
Limitations of the stages model: This chapter critically examines the limitations of the stages model, addressing recurring criticisms. The chapter focuses on the deterministic nature of the model, exploring the potential for alternative internationalization strategies. It analyzes the role of psychic distance, a key element of the model, scrutinizing its effectiveness in predicting market entry behavior in the complex 21st-century business environment. Finally, it considers the overall relevance and applicability of the model in today's globalized world, anticipating the need for adaptation or perhaps even replacement in certain contexts.
Keywords
Internationalization, Uppsala model, Johanson and Vahlne, stages model, market entry, market knowledge, market commitment, psychic distance, incremental internationalization, emerging markets, globalization, limitations, critical evaluation, 21st-century business environment.
Frequently Asked Questions: A Comprehensive Language Preview
What is the main topic of this document?
This document provides a comprehensive overview of Johanson and Vahlne's stages model of internationalization, also known as the Uppsala model. It details the model's components, explores its limitations, and assesses its relevance in contemporary business environments.
What are the key themes explored in this document?
The key themes include the incremental and gradual nature of internationalization, the roles of market knowledge and commitment, the limitations and criticisms of the stages model, its 21st-century relevance, and the challenges of entering emerging markets.
What is the objective of this paper?
The objective is to thoroughly explain the stages model of internationalization and critically evaluate its validity three decades after its initial publication, focusing on its limitations in today's business context.
What are the main components of Johanson and Vahlne's stages model?
The model's core components include: patterns of internationalization (establishment and psychic distance chains) and the model of internationalization itself (market commitment, knowledge, activities, and commitment decisions). The model emphasizes an incremental and dynamic approach to market entry.
What are the limitations of the stages model discussed in this document?
The document highlights the deterministic nature of the model, questioning its applicability to all situations. It also scrutinizes the role of psychic distance and its predictive power in today's complex global environment, ultimately questioning the model's overall relevance and suggesting the need for adaptation or alternatives.
What is the structure of this document?
The document is structured into an introduction, a detailed explanation of the Uppsala model, a critical evaluation of its limitations, and a conclusion. It includes a table of contents, objectives and key themes, chapter summaries, and keywords.
What is the significance of the Uppsala model in the 21st century?
The document explores whether the Uppsala model remains relevant in the modern business landscape. It examines whether its principles still hold true considering the rapid changes in globalization, technology, and market dynamics. The analysis assesses whether the model requires modification or if alternative models are more suitable for contemporary internationalization strategies.
What are the keywords associated with this document?
The keywords include: Internationalization, Uppsala model, Johanson and Vahlne, stages model, market entry, market knowledge, market commitment, psychic distance, incremental internationalization, emerging markets, globalization, limitations, critical evaluation, 21st-century business environment.
What is the overall conclusion of the document?
While the specific conclusions are not explicitly stated in the provided summaries, the document aims to provide a comprehensive analysis of the Uppsala model's strengths and weaknesses, allowing the reader to form their own informed conclusions regarding its relevance and applicability in the modern era of international business.
- Quote paper
- Marvin Brucker (Author), 2014, A Critical Evaluation of the Stages Model of Internationalization according to Johanson and Vahlne, Munich, GRIN Verlag, https://www.grin.com/document/295092
