Born global startups

What are born global startups?

Attention to born global startups comes from a stream of theory and research that examines how startups rapidly internationalize their new ventures (Knight and Cavusgil, 2004). Older incremental or capability-building theories viewed the entrepreneur as layering on experience by stretching farther out geographically over time as they develop the requisite skills through trial and error.

Abomination or reality check?

Born global startups make their first transactions across national boundaries and are thus a kind of counter-evidence to the older theories. If startups are capable of being born global, then the whole notion of incremental experience-based learning seems wrong. Maybe there is something that can be learned from the cases that we see in the wild (e.g., Google is born global, as are many other tech firms).

Enabled by advances in communication technologies

Observers of "born globals" suggest that advances in communication technologies have made it possible for startups to address global markets from the very beginning of their existence.

For example, a tax software startup might decide to address the Australian market rather than the over-saturated U.S. market, even if it is based in the U.S., or in Europe. Since all of the interactions are mediated by the internet there is less need for physical proximity of production and sales.

Global mindset

Managers in startups that are born global do not fear internationalization, they do not think that internationalization is hard, and they have a global mindset. Thus, it is not just about the technology, the people need to adopt a different way of thinking too. This has led to studies of the born global entrepreneurs themselves (Andersson and Evangelista, 2006). For instance, entrepreneurs can use their international experiences, visionary ambition and leverage networks competently while expanding internationally.

One area that seems ripe for future research is to look at the moderators of the tendency to start global. We would expect total national market size to be a factor, as well as the amount of bilingualism or biculturalism in the population. Thus, we might expect to see more of this type of entrepreneurship among individuals from diverse backgrounds or with access to diversity. For instance, 1/3 of people living in Toronto were born outside Canada.  

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Other theories that might interest you:

Emancipation theory and entrepreneurship
Withdrawal of status respect theory of entrepreneurship
Social capital theory of entrepreneurship
Population ecology of entrepreneurship
Social network theory of entrepreneurship

Comments

Unknown said…
Not sure I'd agree that this is a theory but BGs have certainly received a lot of research attention. Early use of the term was popularized by Knight and Cavusgil (1996) also Madsen and Servais (1997). However, the strongest arguments (albeit not theory) came from Oviatt and McDougall (1994 in JIBS and 1994 in JBV). They distinguish four types of international new venture, one of which is the 'global start-up'. Of note, Knight and Cavusgil typically look at exports to categorize firms while Oviatt and McDougall consider two dimensions: coordination of value chain activities; number of countries served. Other work (e.g. Coviello 2015) suggests that many of us use the term born global too casually (because it sounds good) when in fact we typically study early internationalizers, born regionals, or born internationalizers (all these are different). This is consistent with various arguments from Alan Rugman that born globals are very rare. My personal view is that it is only now (2019) that we have digital technologies are firms technically able to be born globals. I have tried very hard to NOT use the term BG through my career unless it was specifically appropriate (e.g. in a critique).