Management and Marketing - Theses
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ItemThe internationalisation of Australian firms: how networks help bridge the psychic distance between a firm and a market( 2008)This research explores the internationalisation of Australian firms in Latin America. Latin America attracts seven per cent of worldwide inward foreign direct investment (FDI) stocks but accounts for less than one per cent of Australian FDI stocks abroad. This discrepancy led me to ask why and how some Australian firms have entered the region when most of those that have gone abroad went elsewhere. Drawing on constructs from the Uppsala model and the network perspective of internationalisation I created an integrated research framework that encompassed both the internal and the external drivers of internationalisation. I used a multiple case study research design based on in-depth interviews with ten firms to explore the mechanisms by which Australian firms overcome their perceived psychic distance to Latin America. I conducted interviews with key decision makers at both headquarters and subsidiaries in Australia, Brazil, Chile and Mexico. My findings demonstrate that firms simultaneously draw on internal and external resources to facilitate their internationalisation. By leveraging their networks firms are able to succeed in psychically distant markets despite an initial lack of experiential knowledge. My findings reveal that firms obtain market-specific knowledge vital for internationalisation via their networks. Internationalisation knowledge on the other hand is mainly acquired through first-hand, in-country experience. In this research I systematically document the types of institutional, business and social networks that impact internationalisation and categorise the numerous roles they fulfil. In addition to providing market-specific knowledge, network connections ‘unlock doors’, provide reassurance and comfort, provide credibility and help find employees, agents and local partners. Using networks to facilitate internationalisation accelerates the process in comparison to the traditional ‘trial and error’ method associated with in-country experiential learning. The integrated framework I develop provides a more holistic understanding of how firms internationalise than previous models. My research has implications beyond the Australia-Latin America context as an example of the increasing phenomenon of FDI from and to non-traditional markets.