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Doing business

Doing business at international level offers companies new markets as well as more opportunities for expansion, growth, and income when compared with domestic business. According to McDonald and Burton (2002) by transferring knowledge around the globe, an international firm can build and strengthen its competitive position. Axinn (2001) extended this view. He believed that firms that heavily depend on long production runs can expand their activities far beyond their domestic markets and benefit from reaching many more customers.

Market saturation can be avoided by lengthening or rejuvenating product life cycles in other countries (Kogut, 1988). Production sites once were inflexible, but now plants can be shifted from one country to another and suppliers can be found on every continent (Lindquist, 1991). Sune Carlson (1966) cited in Cavusgil (2000), was one of first researchers that investigated the area of internationalization, his motivation on that particular topic was the difficulty faced by firms when penetrating the foreign market or doing business overseas without any knowledge or guidance.

The study was oriented on how firms could overcome lack of expertise and knowledge by using their advantage of investment behaviour in a changing environment of the international market. His research gave birth to the foreign decision

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process. Along with Carlson, Aharoni (1966) contributed in the building of the internationalization process and his study was focused on the decision process by which firms undertake foreign investment.

The works of these two researchers became inspirational for many other researchers who have constructed models and conceptual framework based on the essence of Carlson and Aharoni. Many of these studies have used cross-sectional data from a large set of firms to analyse the choice of which market to invest, or the choice of investment mode. In other words they have tried to answer the three basic questions of a firm’s decision to go international ‘Why’, ‘How’ and ‘When’.

But not many researchers have focused their study on the process of international expansion by a single firm (Fernandez & Nieto, 2005). This presumes that all that result is based on a survey conducted on a pool of companies and that the end result may be influenced as most firms are unique in their characteristics and in their strategies even if they undertake the same business activities or taking the same path of internationalization. But Fernandez and Nieto (2005) stated that if researchers conduct their research on a single firm perhaps the result would be more effective.

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