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In this conceptual paper, we add to the discourse on the Uppsala model’s (in)ability to explain a firm’s internationalization through non-linear dynamics and discontinuities by highlighting individuals’ behaviors. We include (more) realistic assumptions about cognitive, emotional, and social triggers as well as biases that affect managers’ decision-making. Distinguishing between the process and outcome of resource commitment decisions, we conclude that, though discontinuous internationalization processes are rare, disruptive outcomes can occur through incremental commitment processes.

Economists and researchers of decision-making and business behavior increasingly rely on findings from the field of economic psychology. We argue that, by following a similar route, knowledge of firms’ internationalization is considerably enriched. The aim of this commentary is to point to the potential of including insights from research on human cognition and judgment in explaining internationalization behavior. We offer some examples relying upon commitments and knowledge development as outlined in the Uppsala model and thereby propose a conceptualization linking the nano- and micro-levels within the model.

In this paper, we extend the existing understanding of the Uppsala model to explain a dynamic evolution. We adapt Teece’s distinction between operational and dynamic capabilities to build a theory that explains the characteristics of emerging multinational enterprises’ (EMBEs) internationalization process. Arguing both theoretically and empirically from the study of the Chinese electrical appliance company Gree, Ltd., we submit that the two sub-processes of dynamic capabilities—knowledge development and commitment—create continuous opportunity discoveries and development. Through these processes, we can garner a deeper understanding of EMBEs’ leading to dynamic capabilities that allow for the development of firm-specific advantages from which a radical internationalization process is achieved.

While much of the literature on complex global environments builds on studies of multinationals from mature markets, little is known about how firms from emerging markets understand and cope with complexity. This paper builds on a longitudinal case study of Zhejiang Geely Holding Group (ZGH) in the post-acquisition process of Volvo Car Group (VCG) and its efforts to learn how to learn in order to catch up with the internationalization process as means for developing capabilities and compete in the global automotive industry. Building on the Uppsala model, we contribute with insights how an emerging market multinational understands complexity and organize the post-acquisition process to explicitly emphasize the importance of mutual learning to develop and exploit opportunities to improve the business. Managerial Summary: A key finding is that ZGH does not understand complexity only as a risk that should be coped with, managed and controlled—following the western idea of risk management—but also as an opportunity for learning. While the importance of knowledge management and organizational learning is often emphasized as a means to achieve competitive advantage, it is seldom as easily managed in practice. Building on insights from ZGH we illustrate that to enable knowledge development and mutual learning, top-management from the acquiring firm needs to emphasize learning and trust the acquired firm rather than controlling it. It is equally important that the acquired firm trust the intentions of the new owner and reflect on the interest in learning—not least to improve and remain valuable.

When it was developed in 1977, the Uppsala internationalization process model (Uppsala model for short) had three basic premises: process ontology, behavioral assumptions, and the presence of uncertainty. Multinational business enterprises (MBEs), among all actors, were in their infancy, and their future could not be known. Later on, the model was extended to cover the evolution of the MBEs, with factors such as internationalization, globalization, and the development of characteristics prompting changes and making them possible. Likewise, the knowledge concept was substituted for by capabilities, operational and dynamic, fitting well the other concepts of the model. The neoclassical view of the firm as an independent unit on the market is considered unrealistic. Instead, firms, MBEs, and small and medium enterprises are seen as embedded in networks with other cooperating and competing actors. The mechanisms of the 2017 version, though, are the same as in the original version. Hopefully, the latest version can be used as a tool within the scope of the “theory of the firm” research and as a platform for more studies on causal mechanisms, later to be applied in normative conclusions. It follows that static cross-sectional statistical methods are not fully satisfactory. Application of dynamic analytical methods requires investment in longitudinal data collection, which is costly, and has to be performed by institutions rather than individuals. A dream is that the Uppsala model can be used as a stepping stone in the construction of realistic macro-level studies of the economy.

In our award-winning 2009 article, we further developed the model that we originally presented in 1977. We observed that firms form relationships and that those relationships become networks, and thus in the end the business macro environment consists of networks of relationships between firms. Those relationships have far-reaching consequences, especially in terms of opportunity recognition and development. Since 2009, we have applied the Uppsala model to a number of different IB issues, most notably the process of globalization, which we believe is best understood as a driver of the evolution of the multinational business enterprise (MBE). We suggest that our model can still be improved further by recognizing the general psychological characteristics of managers, for instance, what makes them tend to shy away from radical change and to prefer instead an incremental approach? What does this mean for internationalization? Generally, we think that the closer our assumptions are to reality, the better the resulting model.

The interplay between knowledge development and commitments is the driving force in the Uppsala internationalization process model. We perform a qualitative thematic analysis of longitudinal data, exploring how relationship knowledge development in supplier-customer relationships leads to commitments through opportunity identification. The results validate our claim that relationship knowledge development as a dynamic capability can influence the focal organization’s ability to over time, under changing needs and contexts, harness operational capabilities that lead to at least satisfactory performance. Judging from results, the relationship knowledge development process produces a change in commitments, thereby constituting a critical micro-foundation for the internationalization and evolution process as explained in the Uppsala model.

Purpose This paper aims to contribute to the debate concerning the asserted end of the globalization process. Design/methodology/approach This paper is a description of the evolution of all Swedish MNEs, the 50 largest companies and the ten truly global MNEs, building on data compiled by the authors, mainly from annual reports. Findings The largest Swedish MNEs have continued to globalize and have at the same time improved their financial performance during the period of study, 2010-2016. Practical implications The proposition that multinationals are heading home cannot be confirmed in the Swedish case. There is therefore a need to compare Swedish experiences with other national examples to better generalize the findings. Social implications The political decisions regarding external trade and foreign direct investment should support continuous liberalization and facilitation of cross-border economic interaction. Originality/value As Swedish MNEs are more globalized than the average in advanced economies, this study offers insight into the contemporary internationalization process.

The original Uppsala model that was published in 1977 explains the internationalization process of firms. We have further developed the model several times in the intervening years. The present article is our latest effort: a general model of the evolution of the multinational business enterprise (MBE), from early steps abroad to being a global firm. The updated, augmented model explains MBE evolution in general, not only characteristics of the internationalization process in a narrow sense. We believe that the newest iteration, anchored in process ontology, will be useful in conducting longitudinal empirical studies.

Purpose Accentuating the concept of management under uncertainty in the Uppsala internationalization process model, the purpose of this paper is to develop a model for describing how managers act while keeping uncertainty at an acceptable level. Design/methodology/approach The authors perform two empirical studies to underpin the model they construct. First, a survey of 309 chief executive officers and chief financial officers in large, publicly listed international firms in the Nordic region on managerial risk perceptions and, second, a case study of Volvo Car Corporation and its endeavors when developing new car models for the Chinese market on a new platform – a process characterized by unprecedented uncertainty. Findings The proposed model describing managers’ behavior under uncertainty contains elements such as adjusting/proceeding in small steps, reducing uncertainty via learning, building relationships with important parties in the environment to avoid unforeseen changes and re-dos (i.e. starting all over again) and, perhaps most important, acting despite uncertainty. Originality/value The paper highlights a central, though forgotten, concept of the Uppsala internationalization process model, i.e. management under uncertainty, and, thereby, opens a new path for research on how manager behave under the sway of uncertainty.

Most current research argues that globalization of companies is a myth. In spite of this Swedish firms have managed to globalize successfully according to a study by Vahlne and Ivarsson (2014). On a general level this is because they managed to build strong advantages and learned to overcome barriers constituted by cultural, institutional and geographic distance. We elaborate on the expectation that organizational ambidexterity has explanatory power for profitable globalization. We perform case studies of IKEA and AB Volvo to motivate our expectation and illustrate how these firms have been able, or not able, to balance and manage the simultaneous processes of exploration and exploitation. Ambidexterity is included in the package of dynamic capabilities affecting the globalization process positively. We find that being proactive in exploration and improving on the effectiveness in exploitation may lead to successful globalization performance.

Multinational business enterprises (MBEs) have created and/or discovered opportunities to improve on their businesses, by engaging in technological change and establishing presence by ownership or cooperation with local parties on foreign markets. This development has increased the level of complexity to managers dramatically. Accordingly, the MBEs have developed governance and coordination means to cope with that growing complexity, mainly by inventing governing modes in between the market and the hierarchy and delegating coordination to network or value-chain parties. To be able to explain this development, the internalization approach has been modernized with assumptions more similar to those of the Uppsala model. Micro-foundational findings support a process approach to trust building and exploitation, making trust an essential ingredient in research on exchange behavior.

In this study we analyze the role of colocation between research and development (R&D) and manufacturing for global technology development by multinational enterprises (MNEs). The extant literature suggests that the main strategic role of colocated R&D units is to locally adapt existing products and processes. However, data from 146 foreign R&D units of Sweden’s 17 largest manufacturing MNEs in 2013 show that they instead mainly develop new technology, not only for the local and regional markets, but to a large extent for the global market. A likely explanation is that colocation positively contributes to joint problem-solving and transfer of tacit knowledge between production and R&D personnel, all of which is necessary in new product development, especially in industries characterized by complex products and systems and rapid technological change. A theoretical implication is that depending on industry characteristics, internal cross-functional linkages between R&D and manufacturing can be more critical than external supply- and demand-side factors when it comes to influence where R&D units are located globally.

We define globalization as the geographical dispersion of multinational enterprises (MNEs)’ value chain, in combination with increased inter-regional coordination, and use detailed firm-level data to show that 12 of Sweden’s 17 largest manufacturing companies indeed are global. By developing a Globalization Process Model we theoretically argue, in contrast to much of the existing literature, that globalization may evolve to a more general phenomenon. The globalization process is tortuous as MNEs have to develop dynamic capabilities which make them gradually more competitive and able to cope with varying institutional contexts. Empirical testing on globalization of MNEs originating from other home countries is suggested.

Purpose – This paper seeks to offer a model on the evolution of the multinational business enterprise (MBE). It is meant to be an alternative to the eclectic paradigm, the preeminent theoretical tool applied in studies of the multinational enterprise (MNE) and foreign direct investment. The label MBE aims at moving focus from structure of production to change processes in business relations and entrepreneurship. Design/methodology/approach – While the eclectic paradigm is grounded in neo-classical economics meant primarily to be applied in studies of macroeconomic interest and is based on assumptions not applicable in studies of individual firms, the model of the MBE is meant to be used in studies at the micro-level. It is rooted in assumptions consistent with behavioural theory consequently being more realistic. The model is based on the Uppsala model with input from studies on dynamic capabilities, entrepreneurship research and research on management under uncertainty. Findings – The realistic assumptions of the model imply that it is relevant for understanding the dynamics of strategy and management of the MBE. Research limitations/implications – As the model aims at enriching our understanding of the dynamics of the MBE the paper recommends empirical longitudinal studies of firms. Originality/value – Realistic and relevant assumptions imply that the model differs in critical respects from received theory in international business.

We conceptualize the global firm as being a loosely coupled network of far-flung subsidiaries with hierarchically acting headquarters (HQ) that design a global organization to ensure support of its global strategic agenda. We argue that the process of HQ management in the global firm is a process characterized by uncertainty. Drawing on the Uppsala model for managing under uncertainty, we suggest that the source of uncertainty is a liability of outsidership derived from the fact that HQ is often not knowledgeable about the networks and actions of its subsidiaries. We then offer various actions that need to be taken by HQs to resolve that liability to improve on the efficiency of the coordination and management of the global firm.

This paper analytically and graphically examines the Uppsala model's risk formula (Johanson & Vahlne, 1977) in its two variables: commitment and uncertainty. The graphical treatment of the variables demonstrates the internationalization mechanism's consistency with the risk formula. In particular, commitment manipulation develops a risk management perspective to the model, wherein contingent uncertainty is a central concept. The main contribution consists in the composition of a set of hypotheses on the effects of risk contingencies on a firm's commitment behavior in different internationalization phases. A pertinent remark that emerges from this analytical exercise is the Uppsala model's contingent nature, which explains the differences in the pattern and pace of the internationalization process, as well as potential leapfrogging and market-exit moves.

The globalization of a firm is a time-consuming and incremental process similar in nature to the internationalization process. We adapt the Uppsala Internationalization Process Model ([Johanson and Vahlne, 1977] and [Johanson and Vahlne, 2009]) to explain the globalization process. We define globalization as an effort to optimize a business in terms of its configuration and coordination systems. Hence the globalization process is about making changes in these two aspects of firms. Globalization, like the internationalization process, is characterized by the management of complexities and uncertainties and that requires learning and commitment building. We “test” a globalization process variant of the Uppsala model on the globalization of Volvo's heavy truck business. We find support for our model, and find that the globalization process is indeed tortuous, and certainly not as easily managed as sometimes suggested by economists and management gurus.

Based on empirical studies of firm exchange activities in business markets, this paper outlines a business network view of the firm-market relationship, which differs fundamentally from the view assumed by neo-classical economic theory. We define business networks as sets of connected business relationships. Thus business relationships and connections between relationships are the critical elements in the business network view. It is assumed, as suggested by the Uppsala internationalization process model, that an interplay between knowledge and commitment development is the mechanism that drives the relationship and network development process. Against this background the paper discusses how strategic change is analyzed in literature on alliances and networks. In conclusion the paper presents a set of propositions about strategy-making in business network settings.

When firms cross-borders it is, by definition, internationalization. We believe that often internationalization should be seen as either a by-product of a firm’s efforts to improve its position within its network or networks, or as the result of an entrepreneurial action. We consider three theoretical approaches as a starting point and breathe life into them with a rich case study. We suggest adjustments to Johanson and Vahlne’s business network internationalization process model, an update of the Uppsala internationalization process model, to emphasize the entrepreneurial aspects of the process.

The Uppsala internationalization process model is revisited in the light of changes in business practices and theoretical advances that have been made since 1977. Now the business environment is viewed as a web of relationships, a network, rather than as a neoclassical market with many independent suppliers and customers. Outsidership, in relation to the relevant network, more than psychic distance, is the root of uncertainty. The change mechanisms in the revised model are essentially the same as those in the original version, although we add trust-building and knowledge creation, the latter to recognize the fact that new knowledge is developed in relationships.

* This paper starts from the observation that the internationalisation process (IP) model frequently is interpreted as a model of risk reduction in the internationalization of the firm. The dominating view of the model seems to be that commitment is the dependent variable and experience is the independent variable. A basic assumption of the original model, however, is that opportunity development is an important outcome of commitment. The purpose of this note is to articulate this relation, which is not stressed enough in earlier writings. Key Results * A causal chain from relationship commitment over relationship knowledge development and network knowledge development to opportunity development is specified. Two propositions are formulated regarding the effects of mutual relationship commitment and of network embeddedness in a country market on opportunity development in the market. Introduction 25 years afterwards, we are surprised. Firstly, we never expected this longevity of the model. Secondly, we are surprised, because after some thinking we have arrived at the conclusion, that we would not have built the model differently today, but with somewhat different underpinning. In a way we were lucky in using concepts such as "knowledge" and "commitment", which later came to be widely used in research on the theory of the firm but also in some functional disciplines. We were left with our inductively produced understanding of these concepts. We are grateful to the organizers of the conference and editors of this issue of MIR for focusing on the IP model and giving us this opportunity to elaborate on it. But, we must point out that the model is not "the establishment chain", going from ad hoc exports to the establishment of manufacturing subsidiaries. This was the empirical phenomenon we observed, giving the impetus to construct the model. The model is on learning and commitment building or, more precisely, on the interplay between knowledge development and increasing foreign market commitments. While the effect of knowledge development on foreign market commitment has been recognized and studied by many researchers the effect of commitment on knowledge development has been less noticed. The purpose of this note is to elaborate on this latter effect. In particular, we are here interested in the effect on opportunity development. Admittedly, this note is written in a way that it presupposes the reader is familiar with the original version of the internationalization model published in 1977 (Johanson/Vahlne 1977). In that article we tried to explain the gradual internationalization process observed by relying on two interdependent sub-processes--experiential learning and commitment building. We related those processes to the focal company only, later realizing that indeed these processes occur as interplay between at least two (potential) partners (Johanson and Vahlne 1990). In Johanson/Vahlne (2003), we tied the mechanisms of our original model closer to the network view of industrial markets by focusing on the critical role of building and changing relationships. One implication is that the concept of a "country market" is no longer seen as a valid unit of analysis. In this note, we focus on network or partner commitment and its role not only for uncertainty reduction, but on a sub-set of issues, notably--opportunity development. We believe we have under-estimated this aspect and the purpose of this note is to make up for that. The paper is structured as follows. After a short introductory review of important applications of the IP model in international business research, we discuss the change from market commitment to relationship commitment. In a following section, we discuss the relations between relationship commitment and knowledge development. Next, we widen the discussion to include network relationships, social capital and knowledge development. …

This paper is based on a case study of an international venture and on the observations reported by a number of researchers that the received models of the internationalization process of the firm do not capture some important phenomena in the modern international business world. As several researchers argue that networks play an important role in the early internationalization the paper outlines a network model of the internationalization process of the firm. It combines the experiential learning–commitment interplay as the driving mechanism from the old internationalization process model with a similar experiential learning–commitment mechanism focusing on business network relationships. In the resulting model we can see firms learning in relationships, which enables them to enter new country markets in which they can develop new relationships which give them a platform for entering other country markets.

Using unique firm-level data from almost the entire stock of acquired foreign-owned manufacturing affiliates in Sweden in 1993, we analyse the extent to which TNCs are able to tap into foreign sources of technological competence. Far from all TNCs appear to be involved in the coordination and integration of their acquired affiliates’ technology, or to be engaged in the kind of “dynamic technological integration”, that combines firm-specific and country-specific competencies generated by acquired affiliates with technological linkages to local firms, and to TNC units. A logistic regression analysis showed that coordination and integration of technology in TNCs is positively correlated with the length of time the affiliates have been a part of the parent corporation, while dynamic technological integration was positively correlated with affiliates operating in competitive Swedish industry clusters. Case studies suggest that the coordination and integration of technology is developed under external pressure in combination with an “organic” growth of internally gained experience through cross-border learning processes.

The process, or evolution, through which multinational firms have reached their present international position is often referred to as “the internationalization process of the firm.” The most widely accepted theory of this phenomenon explains this slow, and sequential process in terms of organizations’ growth and learning. It is every now and then argued that this approach has lost some of its explanatory value. The purpose of this article is to discuss the validity of this model against the backdrop of assumptions in two key dimensions, namely, firms’ experience of international business and the industry's degree of internationalization.

To view internationalization as a process has been fruitful. The propositions suggested within the stream of research based on this notion have received wide empirical support (Johanson and Vahlne, 1977, Johanson and Vahlne, 1990, Bilkey, 1978; Cavusgil, 1980, Cavusgil,1984; Dichtl et al., 1984; Denis and Depelteau, 1985; Kogut and Singh, 1986). Less effort has been spent on managerial issues of the internationalization process. This chapter has as its objective to explore some of these issues and suggest some thoughts on how they can be dealt with. We confine ourselves to discussing some aspects of entry into a foreign market, which we have cut out as a section of one of the two dimensions of the internationalization process. The entry process is a part of the development of the firm’s engagement in a particular foreign market. The entry is normally preceded and followed by other activities being integral to the internationalization process. The second dimension, the sequential entry into new markets, is not dealt with at all.

This paper reports on the findings from the first phase of a larger longitudinal project that focuses on the establishment process of Swedish multinational corporations in Eastern Europe. The first step of identifying and explaining the establishment mode, type of activities intensity and type of control applied in local operations of five of the firms is reported and commented here. The tentative key conclusions at that stage indicate that (1) entry into the region has been sequential and gradual, (2) old relationships are extremely important, (3) early entries are looked as ≪ learning devices ≫ in several case firms, (4) the attitude to risk varies in size and ownership, (5) there is a difference in how risk is perceived between local managers and the head office, (6) the head office generally closely monitors the operations, and (7) several case firms see the potential for using Eastern and Central Europe as a production base. [This paper was first published in Journal of East-West Business (International Business Press, an imprint of The Haworth Press, Inc) Vol.1, n°4,1996, pp 1–16.]1

The contemporary relevance of the so‐called Uppsala Internationalisation Model is discussed. This is a framework advanced by a number of Swedish colleagues describing the typical process of “going international”. Johanson and Vahlne respond to the criticisms of the model they proposed in the 1970s and relate it to the Eclectic Paradigm Model and the Networking literature. The concepts of the advantage package and the advantage cycle in the internationalisation context are also introduced.

On the basis of empirical research, a model of the internationalization process of the firm is developed. The model focuses on the gradual acquisition, integration and use of knowledge about foreign markets and operations, and on the incrementally increasing commitments to foreign markets. In particular, attention is concentrated on the increasing involvement in the individual foreign country.© 1977 JIBS. Journal of International Business Studies (1977) 8, 23–32

The aim of this study was to examine the growth rates of Swedish multinational corporations. An attempt was made to answer the question of whether the MNCs have grown faster than has the Swedish manufacturing industry and, if so, to investigate the extent to which this can be explained by differences in multinationality. In order to separate the effect of that factor, technology-intensity, size, and profitability were included in the model; according to theory, these factors are correlated with multinationality and possibly with rates of growth.© 1974 JIBS. Journal of International Business Studies (1974) 5, 91–106