The Impact of International Resources on Internationalization

Abstract

In the information age, international business is not an option but compulsory, which causes intense global competition. Common sense would suggest that a mature large firm with abundant resources would dominate the international market, but newly launched small international firms can be easily found, especially in a value-added industry. The fashion industry is one of these value-added industries, and this research initiated from the observation of the internationalization phenomenon in the Korean fashion industry. Korean designer fashion firms currently conducting international business seem to be mostly operated by internationally experienced entrepreneurs and become international fairly soon after foundation. Along with this scenario, both stage development theory (Johanson & Vahlne, 1977) and international new venture theory (Oviatt & McDougall, 1994) argue that internationalization occurs based on international resources which are obtained from prior international experience and involvement. Based on an understanding of international resources being the antecedents of internationalization, the Resources-based view explains the process of these resources gained from experience being developed into a firms sustained competitive advantage and eventually promoting international performance. Based on a literature review, the research set three research objectives: The research 1) finds elements of international resources based on further literature review, 2) identifies the current international status of the Korean fashion industry, and 3) empirically examines the relationships between international resources and internationalization. As a result, human and organizational resources were considered important for firms at early stages due to their limited physical resources. The extent of international network, managerial attitude towards internationalization, and a firms capability to internationalize were found to be important human and organizational resources related to internationalization (Barney, 1991). Many firms were import/export start-ups that conduct a couple of activities across few countries, yet there were also a good number of global start-ups which conduct various value-chain activities regardless of borders. The results implicate a great possibility for the Korean fashion industry in the international market. The relationship between international resources and internationalization is found to be significant. Internationally experienced entrepreneurs tend to have more extensive international networks and a positive attitude towards internationalization. And, firms founded by such entrepreneurs are capable of internationalizing their business. These resources create a firms own competitive advantage which can differentiate from other competitors and eventually increase international performance. This study provides an understanding on strategic management of resources and entrepreneurs decision-making approach in internationalization. The importance of entrepreneurs backgrounds can initiate further studies on their personal motivations and a detailed process of resources management. Additionally, firms planning to internationalize should better form a top management with members who have international backgrounds, well-managed international networks, and positive attitudes towards internationalization.