What is a global start-up?

What is a global start-up? PAXIS Workshop Presentation, Thursday, June 23rd, 2005

Introduction • Background • Definitions from the literature • Propositions as to what constitutes a global start-up (Wakkee et al. 2005) • Definition

Background • GlobalStart focus: firms which are internationally active from or near inception • Young Field – not older than 20 years • A variety of names used to describe these firms: • Born Globals (e.g. Aspelund & Moen, 2001) • International New Ventures (e.g. McDougall et al., 2003) • New High Potential Ventures (e.g. Almeida & Bloodgood, 1996) • Technology Based New Firms (e.g. Yli-Renko et al., 2002) • Knowledge Intensive SMEs (e.g. Almor & Hashai, 2002) • Global Start-ups (e.g. Jolly et al., 1992)

Definitions from the Literature • Born Global • firms are classified as being born global when they begin international activities within three years and reach an export sales level of at least 25% (at the time of investigation) • Many operational variations of this exist • If a start-up in Switzerland exports more than 25% of of its goods to its neighbours then it is a born global by definition!?

Definitions from the Literature • International New Venture (INV) • a firm that from inception seek to derive a significant competitive advantage from the combination of resources and sale of outputs around the world • Definition necessitates that a decision has to be made concerning the time of inception • A global start-up is the most radical manifestation of the INV

Definitions from the Literature • New High Potential Ventures, Technology Based New Firms & Knowledge Intensive SMEs • are typically described as being active in a high tech industry or engaging in R&D activities and selling part of their produce internationally • Research has also shown that the phenomenon also occurs in industries such as the wine industry or footwear

Propositions • P1: The start-up process and the globalisation process of a global start-up firm are highly integrated and cannot be seen in isolation • P2: Global Start-ups begin in international activities even before the start of their opportunity exploitation

Propositions • P3: Global Start-ups engage in international activities in pursuit of opportunities instead of achieving a competitive advantage directly • P4: Global Start-ups are involved in a wide range of formal and informal value-added activities across national borders

Propositions • P5: Global Start-ups use a variety of network entry modes • P6: Global Start-ups are active in a wide number of regions of the world • P7: Global Start-ups internationalise their activities following the presence of opportunities

Propositions • P8: Global Start-up firms are not necessarily high growth companies in terms of number of employees • P9: Global Start-up firms are characterised by relatively high levels of entrepreneurial orientation

Propositions • P10: Global start-up firms are typically founded by internationally skilled and confident entrepreneurs • P11: Global start-ups often rely on the relationship with strong partners; this may be commercial partners or research institutes • P12: Global start-ups are embedded in international networks from the start

Definition • A Global Start-up (GS) is a new venture in which the start-up and internationalisation processes are intertwined. • GS begin international activities even before the start of the actual exploitation process and they are driven by the global pursuit of opportunities. • GS are embedded in international networks and engage in a wide range of formal and informal value-added activities across national borders.

Definition • A Global Start-up is a new venture that from its inception (“opportunity recognition”) seeks to pursue opportunities wherever they arise (i.e. global or in an unlimited number of countries around the world), it coordinates multiple activities in the value chain through the interaction with network actors around the world

What is a global start-up?