Recent research has shown that new multinationals increase their international performance when they expose to developed countries during the early years of the firm or the beginning of the international expansion. The benefits of this early exposure will outweigh the costs when there is a learning orientation and it is limited to just a few countries, according to an article co-authored by Esteban García-Canal (Universidad de Oviedo), Mauro F. Guillén (University of Pennsylvania), Paloma Fernández (Universitat de Barcelona), and Nuria Puig (Universidad Complutense de Madrid). The study has been published in Business Research Quarterly under the title “Imprinting and early exposure to developed international markets: The case of the new multinationals”.
Despite the short term possible negative consequences in performance, early exposure to developed countries can be considered an investment to reinforce the firm competitiveness. These markets are more demanding in terms of product design, technology and service. Therefore, the feedback and learning that new multinationals receive can increase the international competitiveness of their products. On the other hand, expansion at a later stage would imply that inertia and resistance to change could hamper the assimilation and dissemination of the resources and knowledge acquired in the developed countries. In any case, markets have to be carefully selected. These do not necessarily need to be the most developed countries, but those with the most sophisticated competitors and customers.
Exposure to the right countries at the right time is not enough, as it needs to be complemented with the right attitude. It needs to be oriented to gain access to new knowledge and capabilities with the aim of transferring them to the entire organization and limiting the exposure in terms of financial commitment and economic risk. Finally, firms also need to have a learning strategy to gain and exploit knowledge and capabilities to improve their international competitiveness.
The case of the Chinese appliance manufacturer Haier clearly illustrates the conclusions of the article. The company’s first foreign destination was the U.S. because it wanted to try itself in a demanding market and was eager to make the required adjustments to succeed there. The logic behind this exposure was that if Haier could effectively compete in the mature markets, it could surely take the markets in the developing countries without much effort.
Also, the example of the Grifols group in the health care industries, in which Paloma Fernández has contributed original research in the article, demonstrates that early contacts of the Grifols family, first with German laboratories between 1909 and 1936, then with North American corporations between the 1940s and 1980s, and finally with Japanese global groups after the 1980s, were extremely significant to set values, actions, strategies, and relationships in the expansion and globalisation of the group. “In short, the article provides an important lesson for our entrepreneurs in our times of uncertainties and relative decline: that despite shortcomings derived from backwardness of the economy new multinationals can successfully use intensive knowledge transfer from leaders, to speed up the process of overcoming technological and financial gaps with global leaders”, Paloma Fernández stated.