People Innovation Excellence

Challenges over The Uppsala Internationalization Process Model (U-model)

Written by: Dony Saputra, S.Kom, M. Kom, MM

The Uppsala Internationalization Process Model was first developed by Johansson and Wiedersheim-Paul (1975) in their study where they observed that when firms internationalize, they move along in a series of incremental steps which they termed as “establishment chain” or “step by step”. In 1977, Johansson and Vahlne refined and established the model. The theory focuses on four aspects that firms should face while going abroad: market knowledge and commitment, and commitment decisions and current activities which are divided into stage and change aspects that interact with each other.

The basic assumption of the Uppsala Model is that market knowledge and market commitment affects both the commitment decisions and the way current decisions are performed—and this, in turn, changes market knowledge and commitment. The amount of knowledge of foreign markets and operations is influenced by the amount of commitments of resources in foreign markets, and vice versa (Johanson & Vahlne, 1977).

From the beginning, the Uppsala-model has been widely criticized on both theoretical and operational levels (Mitgwe, 2006). Some researchers have found it invalid in some cases while some others accepted it with modifications. Researchers have tested the model’s applicability, strengths and weaknesses through different studies. The model has been criticized from different perspectives and its basic assumptions have been challenged by a number of empirical studies (Andersen, 1993). Andersen (1993) argues that the main problem of the model is that there is no explanation on why or how the process starts or the nature of the mechanism whereby knowledge affects commitment.

Some critics focus on the theoretical aspects while others argue against its practical implications. The Uppsala model’s basic argument is that while internationalizing, firms pass through four consecutive stages of increasing commitment to international activities. Andersen (1993) criticizes that the stages mostly lack an explanation of the mechanisms that takes the firm through them. After testing the incremental internationalization hypothesis, Sullivan and Bauerschmidt (1990) concluded that the empirical evidence did not support this hypothesis. Many critics argue against the incremental, step-by-step character of the model since studies have found that it is possible for firms to skip some of the stages and achieve internationalization rapidly rather than doing gradually (Chetty & Campbell, 2003).

INVs are considered to be the biggest challenge for the Uppsala model, since they, from inception, seek to derive significant competitive advantage from the use of their resources and the sale of outputs in multiple countries (McDougall & Oviatt, 1994), therefore they do not exhibit incremental behavior in their internationalization process. “INVs appear to require some highly valuable resource at the least cost possible (often human resources) wherever in the world that resource is, to employ a strategy of serving globalizing niche markets with unique products and services, to be founded by internationally experienced entrepreneurs with very aggressive growth goals, and to have tightly coordinated organizational processes” (McDougall & Oviatt, 1997, p. 89).

Uppsala-model has been challenged by network theorists in recent years, whose fundamental argument is that modern high-technology firms do not exhibit the incremental process; rather they achieve a faster internationalization through the experience and resources of network partners (Mitgwe, 2006).

Reff:

Andersen, O., 1993. “On the Internationalization Process of Firms: A Critical Analysis”, Journal of International Business Studies, Vol. 24, No. 2, pp. 209-231.

Chetty, S., & Campbell, H.C., 2003. “Paths to internationalization among small and medium-sized firms: a global versus regional approach”, European Journal of Marketing, Vol. 37,                                pp. 796-820.

Johansson, J., & Vahlne, J-E., 1977. “The Internationalization Process of the Firm-A Model of Knowledge Development and Increasing Foreign Market Commitments”, Journal of                                      International Business Studies, Vol. 8, No.1, pp .23-32.

Johansson, J., & Wiederscheim-Paul, F., 1975. “The internationalization of the firm – four Swedish cases”, Journal of Management Studies, Vol. 12, No. 3, pp. 305-322.

Mitgwe, B., 2006. “Theoretical Milestones in International Business: The Journey to International Entrepreneurship Theory”, Journal of International                                                           Entrepreneurship, Vol. 4, pp. 5-25.


Published at :
Written By
Dony Saputra, S.Kom, M. Kom, MM
Deputy Head of IBM | SoBM
Leave Your Footprint

    Periksa Browser Anda

    Check Your Browser

    Situs ini tidak lagi mendukung penggunaan browser dengan teknologi tertinggal.

    Apabila Anda melihat pesan ini, berarti Anda masih menggunakan browser Internet Explorer seri 8 / 7 / 6 / ...

    Sebagai informasi, browser yang anda gunakan ini tidaklah aman dan tidak dapat menampilkan teknologi CSS terakhir yang dapat membuat sebuah situs tampil lebih baik. Bahkan Microsoft sebagai pembuatnya, telah merekomendasikan agar menggunakan browser yang lebih modern.

    Untuk tampilan yang lebih baik, gunakan salah satu browser berikut. Download dan Install, seluruhnya gratis untuk digunakan.

    We're Moving Forward.

    This Site Is No Longer Supporting Out-of Date Browser.

    If you are viewing this message, it means that you are currently using Internet Explorer 8 / 7 / 6 / below to access this site. FYI, it is unsafe and unable to render the latest CSS improvements. Even Microsoft, its creator, wants you to install more modern browser.

    Best viewed with one of these browser instead. It is totally free.

    1. Google Chrome
    2. Mozilla Firefox
    3. Opera
    4. Internet Explorer 9
    Close