GPHR practice question 3 of 25

Organizations established expressly for an international market are known as:

Full set: 130 questions
Answer options
A: Transnationals
B: Joint ventures
C: Born globals Correct answer
D: Multinationals
Correct Answer:
C. Born globals
Explanation

"Born globals," also known as International New Ventures (INVs), are companies that adopt a global vision and internationalize rapidly from or near their founding. Unlike traditional multinational corporations that expand abroad gradually after establishing a strong domestic base, born globals pursue international markets from the outset to gain a significant competitive advantage. This business model is often associated with technology-intensive industries where globalization allows for immediate access to a worldwide market.

Why Incorrect

A. Transnationals: A transnational is a complex, mature multinational that treats the world as one market; it does not describe a company's status at its inception.
B. Joint ventures: A joint venture is a specific type of business partnership or market entry strategy, not a classification for an entire organization based on its founding principles.
D. Multinationals: A multinational corporation (MNC) is a general term for a company operating in multiple countries, typically implying a more traditional, phased international expansion.

References

1. Oviatt, B. M., & McDougall, P. P. (1994). Toward a theory of international new ventures. Journal of International Business Studies, 25(1), 45-64. This is the seminal academic paper that defines and conceptualizes the "international new venture" or "born global" firm as one that seeks to derive significant competitive advantage from the use of resources and sale of outputs in multiple countries from inception. (DOI: https://doi.org/10.1057/palgrave.jibs.8490193).

2. Knight, G. A., & Cavusgil, S. T. (2004). Innovation, organizational capabilities, and the born-global firm. Journal of International Business Studies, 35(2), 124-141. This article builds on the concept, defining born globals as "business organizations that, from or near their founding, seek superior performance from the application of knowledge-based resources to the sale of outputs in multiple countries." (p. 124).

3. Rasmussen, E. S., & Madsen, T. K. (2002). The born global concept. Paper presented at the 7th McGill Conference on International Entrepreneurship, Montreal, Canada. This paper, often cited in university courseware, reviews the literature and solidifies the definition of born globals as firms that begin international activities very early in their evolution.

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