Internationalization of firms and the Indian context: an adapted Uppsala model

Abstract

This is a study undertaken with an objective to understand the relevance of Uppsala model while explaining the route pursued by various Indian firms in their drive for internationalization. Uppsala model proposes that the firms will take a stage wise growth model in their path to internationalize, where by they acquire knowledge by initially entering in to markets which have less psychic distance and then move to more distant markets based on the knowledge acquired. For conducting this study, a sample of 12 Indian firms which have internationalized have been selected and their patterns of movements to various countries have been studied with respect to the time and form of market entry. The study comprised of two sets of evaluation; first being the market selection by Indian firms during the initial years of internationalization and second, the pattern of market commitment seen in the countries over a period of time to which the firms have moved in to. The authors developed a Learning based frame work to study both the trends. According to this framework, the market selection pattern was evaluated using a combination of cultural and geographical distance factors termed as psychic distance factor while the market commitment changes in a market was evaluated seeing the pattern of commitment changes According to the study, it was found that 1 company out of 12 companies studied closely followed Uppsala pattern with respect to choice of market for internationalization. However not a single company showed Uppsala trends with respect to their changes in market commitments. The authors intend to attribute these aberrations in the internationalization patterns to the factors like industry structure, country of origin, target market conditions and firm specific reasons