Re-internationalization is defined as firms’ re-entry into international operations after they have abandoned all their previous internationalization efforts. In this paper, we report findings from a survey administered among senior-level managers of re-internationalized Indian firms where we studied the differences in firms’ choices in modes of operations during re-internationalization phase as compared to initial internationalization phase. The results from the survey indicated that firms tended to go for high involvement modes of operations during re-internationalization as compared to the relatively low involvement modes of operations undertaken during initial internationalization. This trend of going for higher involvement modes of operations was more visible in firms that had a presence in a relatively higher number of countries during the re-internationalization stage. This incremental nature of internationalization, i.e. going from initial low involvement modes of operations toward high involvement modes of operations as firms gained experience in both time and space from their initial through re-internationalization attempts, found support for the Uppsala model of internationalization. Being among the first studies on the topic, we expect this study to serve as a foundation for researchers to explore deeper related queries. This study also has meaningful practical and policy implications.
Re-internationalization, or firms’ re-entry into international markets after they have withdrawn from all their previous internationalization activities [
One-fifth of all firms that internationalize exit internationalization [
We shortlisted Indian firms that had undergone re-internationalization from the early 1990s till mid-2010s based on financial details available in CMIE-Prowess database. Post-1990s was significant in the Indian context, as it was during that period that economic activity thrived in the Indian markets due to the liberalization policies adopted by the union government [
Firms’ initial international experiences leave them with an international heritage [
Being among the pioneer studies that discuss and compare modes of operations during various stages of internationalization, we expect the findings from this research would be a valuable contribution toward international business management theory, apart from having meaningful implications to practice and policy.
The rest of this paper is structured as follows. We first discuss and locate the phenomenon of re-internationalization in the context of previous scholarship, then discuss the methods adopted for the study to collect data, and subsequently present the results and analysis, and finally conclude the study by delineating implications and limitations.
Internationalization is defined as firms’ activities that stretch beyond national boundaries in factor and/or product markets [
Re-internationalization is defined as re-entry to internationalization after a firm has abandoned all its previous internationalization activities [
De-internationalized firms intend to re-internationalize due to several internal and external factors, such as assets and liabilities flowing from initial internationalization, new international influences occurring after de-internationalization, and firm experiences during the time-out stage [
Re-internationalization has received limited attention in extant literature [
Another study [
A study on re-internationalization paths of French SMEs identified the major elements aiding successful re-internationalization as learning, resilience, and the internationalization orientation of the entrepreneurs [
Internationalization and/or re-internationalization can be an outcome of several external or internal factors. For instance, it could be triggered by fortuitous foreign orders, a decline in domestic demand, government policy implications, exchange rate fluctuations, changes in competitive scenarios, changes in top management, changes in strategic orientation, developments in R&D, etc. [
Firms re-entering international operations would already possess experiences in terms of knowledge, skills, familiarity acquired from such operations [
A prolonged time-out from internationalization is expected to diminish the usefulness of firms’ learning and experiences [
Firms’ learning and experiences from their initial internationalization phases(s) through de-internationalization and time-out periods could be capitalized by firms during their re-internationalization phase [
The above argument is indirectly followed from the Uppsala school of thought on the process model of internationalization [
In our study, we tried to understand whether this was indeed the case or not by comparing the modes of operations during initial internationalization and that during re-internationalization periods.
In order to generate an initial shortlist of firms for the study, firstly we downloaded financial data of firms for the period from the 1990s till mid-2010s from CMIE-Prowess database, and this was supplemented with data from Capitaline database. With the help of STATA software we used the following criteria on the downloaded financial data to shortlist the firms: minimum two years of recorded data of forex (foreign exchange) revenue during initial internationalization period, followed by an exit period of minimum two years with zero forex revenue, followed by minimum two years of forex revenue during the final re-internationalization stage.
The criterion of two years is widely used and accepted in internationalization research [
The basic assumption used in this exercise was forex revenue could be an indicator for firms’ internationalization activities. However, in order to avoid discrepancies in data we later cross-verified the financial data of the shortlisted firms with annual reports available at Thomson-Reuters Eikon, Insight-DION and EMIS-Emerging Markets Information Science databases to ensure that these firms had actually undergone re-internationalization. This cross-verification exercise, along with direct interactions with executives of the initially shortlisted firms helped us to identify a final list of 73 re-internationalized firms across India.
A survey was administered among top-level managers of the identified 73 Indian firms that have undergone re-internationalization. Our persistent follow-up over email, telephone, and direct visits, helped us to gather responses from almost the entire population of firms identified for the study, as we collected 71 responses of a maximum possible 73.
Managers were asked to mark their responses on the different modes of operations they undertook and the No. of countries they were present in each of the stages.
Modes of operations (same question repeated for initial internationalization as well as re-internationalization periods) |
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What all were/are the kind of international operations your organization were/are exposed to: (please tick one or more in each column, as applicable): Exports Agency Franchisee Branch office FDI (foreign direct investment) as shares/investment in other firms Joint venture Strategic alliances Green-field expansion (expanding own firms’ outlets to foreign countries) Acquisition of foreign firm Other―kindly explain … (descriptive answer) |
No. of countries (same question repeated for initial internationalization as well as re-internationalization periods) |
Number of countries you were/are present: (please tick the appropriate tab) Objective question: 1, 2, 3, 4, 5, 6, 7 or more |
Major observations from these responses are:
・ During both the periods of internationalization majority of the firms engaged in direct exports as well as trading via agencies as their main modes of international operations.
・ There is a notable increase in firms operating own branches during re-internationalization period (15 firms) as compared to initial internationalization period (5 firms), i.e. 21.1% firms during re-internationalization period as compared to only 7% firms during initial internationalization period.
・ Joint ventures as a mode of operation also had a relatively substantial rise from 3 firms (during initial internationalization period) to 8 firms (during re-internationalization period), or 4.2% of firms to 11.3%.
・ Green-field ventures as a mode of operation has risen from 0 firms (during initial internationalization period) to 4 firms (during re-internationalization period), or 0% to 5.6%.
・ All other modes of operations were relatively similar during both the periods (with the difference being less than 5%).
We reckon that the substantial rise in No. of firms having modes of operations such as branches, joint ventures, and green-field ventures during re-internationalization stage when compared to initial internationalization period can be attributed to firms’ learning and experiences from initial international operations. The learning from initial internationalization helped firms to step into higher involvement modes of operations when they re-entered internationalization. This observation supports the Uppsala model of internationalization [
Major observations from this tabulation are:
・ Relatively higher No. of firms had a presence in four or more countries during re-internationalization (56 of 71 firms) as compared to during initial internationalization (just 30 of 71 firms).
・ During initial internationalization period, most firms concentrated on direct exports (63 firms of 71) and trading via agencies (32 of 71 firms) as the primary modes of operations, with other modes of operations being very less in numbers.
・ Although during re-internationalization period firms continued in modes of operations such as direct exports (63 firms of 71) and trading via agencies (33 of 71 firms), high involvement modes of operations became prominent especially for those firms which had a presence in more No. of countries. For instance, during re-internationalization, most firms that had a presence in four or more countries were engaged in higher involvement modes of operations such as own branches (14 among 15 firms that had branches were present in four or more countries), joint ventures (6 among 8), green-field ventures (4 among 4), and even acquisitions (3 among 3).
Initial internationalization modes―frequencies | |||
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Modes of operations | Responses | Percentage of cases | |
Number | Percentage | ||
Exports | 63 | 55.3% | 88.7% |
Agency | 32 | 28.1% | 45.1% |
Franchisee | 3 | 2.6% | 4.2% |
Branch office | 5 | 4.4% | 7.0% |
FDI | 0 | 0.0% | 0.0% |
Joint venture | 3 | 2.6% | 4.2% |
Strategic alliances | 6 | 5.3% | 8.5% |
Green-field expansion | 0 | 0.0% | 0.0% |
Acquisition | 0 | 0.0% | 0.0% |
Other modes | 2 | 1.8% | 2.8% |
Total | 114 | 100.0% | 160.6% |
Re-internationalization modes―frequencies | |||
---|---|---|---|
Modes of operations | Responses | Percentage of cases | |
Number | Percentage | ||
Exports | 63 | 44.4% | 88.7% |
Agency | 33 | 23.2% | 46.5% |
Franchisee | 4 | 2.8% | 5.6% |
Branch office | 15 | 10.6% | 21.1% |
FDI | 3 | 2.1% | 4.2% |
Joint venture | 8 | 5.6% | 11.3% |
Strategic alliances | 6 | 4.2% | 8.5% |
Green-field expansion | 4 | 2.8% | 5.6% |
Acquisition | 3 | 2.1% | 4.2% |
Other modes | 3 | 2.1% | 4.2% |
Total | 142 | 100.0% | 200.0% |
Initial internationalization: cross tabulation of No. of countries v/s modes of operations | |||||||||||
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No. of countries | Initial internationalization modes | Total | |||||||||
Exports | Agency | Franchisee | Branch office | FDI | Joint venture | Strategic alliances | Greenfield | Acquisition | Other modes | ||
1 | 9 | 1 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 2 | 11 |
2 | 17 | 7 | 1 | 2 | 0 | 1 | 2 | 0 | 0 | 0 | 19 |
3 | 10 | 6 | 1 | 1 | 0 | 1 | 2 | 0 | 0 | 0 | 11 |
4 | 8 | 6 | 0 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 9 |
5 | 9 | 3 | 0 | 2 | 0 | 0 | 1 | 0 | 0 | 0 | 9 |
6 | 1 | 1 | 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1 |
7 or more | 9 | 8 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 11 |
Total | 63 | 32 | 3 | 5 | 0 | 3 | 6 | 0 | 0 | 2 | 71 |
Re-internationalization: cross tabulation of No. of countries v/s modes of operations | |||||||||||
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No. of countries | Initial internationalization modes | Total | |||||||||
Exports | Agency | Franchisee | Branch office | FDI | Joint venture | Strategic alliances | Greenfield | Acquisition | Other modes | ||
1 | 4 | 1 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 5 |
2 | 4 | 1 | 0 | 0 | 1 | 1 | 0 | 0 | 0 | 0 | 5 |
3 | 4 | 1 | 0 | 1 | 1 | 1 | 1 | 0 | 0 | 0 | 5 |
4 | 7 | 6 | 1 | 4 | 0 | 1 | 1 | 1 | 0 | 0 | 10 |
5 | 8 | 5 | 0 | 2 | 0 | 0 | 0 | 0 | 0 | 2 | 9 |
6 | 9 | 5 | 0 | 2 | 1 | 1 | 2 | 1 | 0 | 0 | 10 |
7 or more | 27 | 14 | 3 | 6 | 0 | 4 | 2 | 2 | 3 | 1 | 27 |
Total | 63 | 33 | 4 | 15 | 3 | 8 | 6 | 4 | 3 | 3 | 71 |
This observation, i.e. going from low involvement modes of operations to high involvement modes of operations from initial internationalization to re-internationalization period for firms having a presence in more No. of countries, also supports the Uppsala model of internationalization [
As this research is among the very first efforts that compare firms’ choices in modes of operations during re-internationalization as against that during initial internationalization, we expect the outcomes of this study to serve as a foundation for scholars engaging in deeper queries, apart from its contribution toward international business management theory. For instance, case studies to understand the process of re-internationalization on how and why firms undertook various decisions at different stages of their initial through exit through re-entry stages, especially to understand the reasons why which they opted for higher involvement modes of operations during re-internationalization would be an interesting topic for future research. As the study was undertaken in an emerging economy context, i.e. amongst Indian firms, which might have some limitations on generalizability of the findings to a developed economy context, it threw up a noteworthy research agenda for replication of this study in a developed economy context to understand whether the patterns identified in this study were universal or not.
We also expect the findings from this study to be useful for practitioners and policy-makers. From a managerial perspective, the findings that initial internationalization experiences help firms in their subsequent re-internationalization, as it enables them to go for higher involvement modes of operations during re-internationalization, should be motivating for managers, firstly not to be disappointed about initial failure attempts, and secondly and more importantly to invest in facilities such as knowledge management systems that record organizational learning and experiences so as to make it available when required at a later stage. Managers should ideally be exploring and looking forward to future opportunities in international markets rather than being constrained by residual negative mindshare from their initial failed internationalization attempts because learning and experiences even from failed attempts can be helpful during re-internationalization.
From a policy perspective, regulatory authorities should support firms that have retracted from initial internationalization to re-internationalize, as our study provides evidence that learning from initial attempts is indeed helpful for firms when they re-internationalize, which not only helps the firms that re-internationalize, but also in turn will benefit the larger economic prospects of the countries where they’re based at as well.
The author declares no conflicts of interest regarding the publication of this paper.
Ali, S. (2019) Re-Internationalization v/s Initial Internationalization: Comparison of Modes of Operations. Theoretical Economics Letters, 9, 223-233. https://doi.org/10.4236/tel.2019.91017