Management control in born-global firms: a case study/Control de gestion en las empresas born-global: un estudio de caso/Controle de gestao em empresas born global: um estudo de caso. - Vol. 36 Núm. 154, Enero 2020 - Estudios Gerenciales - Libros y Revistas - VLEX 844008716

Management control in born-global firms: a case study/Control de gestion en las empresas born-global: un estudio de caso/Controle de gestao em empresas born global: um estudo de caso.

AutorRoque, Ana Filipa M.
  1. Introduction

    At present, born-global (BG) firms are considered a major source of economic growth, contributing significantly to the development of many countries (Ahlstrom & Ding, 2014). They are "emerging in substantial numbers worldwide, and likely reflect an emergent paradigm, with the potential to become a leading species in the ecosystem of international trade" (Knight & Cavusgil, 2004, p.137).

    Although there have been some studies on BG firms, the research literature remains underdeveloped (Knight & Liesch, 2016), and knowledge about internationalisation process (IP) development is still very limited and fragmented (Gassmann & Keupp, 2007; Melen & Nordman, 2009). Studies on how and why BGs internationalize have been requested (Perenyi & Losoncz, 2018) and some authors have suggested qualitative studies to deepen research (Dzikowski, 2018; Liesch, Weerawardena, Sullivan, Knight, & Kastelle, 2007).

    The relationship between strategy and structure aroused researchers' attention early. For example, Chandler (1962) concluded that changes in corporate strategy precede and lead to changes in organisational structure. "A new strategy required a new or at least refashioned structure if the enlarged enterprise was to be operated efficiently" (Chandler, 1962, p.15). Chandler's definition of structure has two facets; first, the lines of authority and communication between the different administrative offices and officers; and second, the information and data that flow through these lines (Chandler, 1962, p.14). As an information system, the Management Accounting and Control System (MACS) integrates organisational structures and can therefore be defined as a tool that managers use to maintain or alter patterns in organisational activities and to implement strategies (Anthony & Govindarajan, 2007). However, little is known about MACS' effects in strategy implementation (Frigotto, Coller, & Colin, 2013; Roberts, 1990; Skaerbaek & Tryggestad, 2010).

    Henri (2006) presents two distinct lines of enquiry in a study of the relationship between strategy and MACS. The first emphasises strategic effects on MACS; while the second emphasises MACS' effects on strategy. This latter approach recognises and studies MACS' role throughout the strategy implementation process, using a procedural and dynamic approach. This is the approach used in this paper.

    Some authors (Cumming, Filatotchev, Knill, Reeb, & Senbet, 2017; Ismail, 2013; Lin, Chen & Lin, 2017; Puck & Filatotchev, 2018; Roque, Alves, & Raposo, 2019b, 2019c; Tessier & Otley, 2012) have encouraged further study which might aim to understand how MACS can assist firms in strategy implementation. Therefore, this paper presents two questions: (1) how does a company's MACS facilitate (or not) the implementation of a born-global internationalisation model (BGIM); and (2) how has the BGIM implementation involved (or not) changes in the MACS (and, if so, which?). In order to answer these questions, a qualitative research study was developed based on the case study process proposed by Yin (2009, 2014) through an exploratory single-case study in a Portuguese firm in the technology sector.

    Data were collected from key informant through in-depth interviews. The preparation of the interview script allowed us to collect more detailed and more promising information (Dana & Dummez, 2015; Yin, 2009, 2014) for document analysis.

    The case study combines data from different sources, such as in-depth interviews and documents, completed by site visits to generate construct validity and reliability (Eisenhardt, 1989). The advantage of using multiple sources of evidence is having the opportunity to triangulate the gathered information (Yin, 2009).

    In terms of structure, this study begins with a literature review section. In this section, we present the internationalisation model adopted by the studied firm and the BG concept used in this study. Additionally, we characterise the relationship between MACS and the IP. In a subsequent section, we present an empirical study and the results are analysed and discussed. Finally, we present the conclusions, limitations, and some suggested lines for future research.

  2. Literature review

    2.1. Internationalisation models and BG firms

    IP is usually associated with normal growth (Roque, Alves, & Raposo, 2019a) and is almost immediate in sectors of the economy heavily connected to research & development and to technology. Firms in the technological sector, usually named international new ventures, born-globals and global start-ups, appeared in the present globalisation era (Liesch et al., 2007); they follow the BGIM and undertake international business from an early stage in their development, often from the moment of legal incorporation (Gabrielsson & Kirpalani, 2004). Although markets react positively (Gleason & Wiggenhorn, 2007), this early and rapid internationalisation process poses new challenges in terms of limited resources (Bembom & Schwens, 2018). However, some researchers suggest that "resource scarcity can be a driver of, rather than an impediment to, early and rapid internationalization" (Keupp & Gassmann, 2009, p.616). These conflicting views still exist today.

    In the literature, the two dominant models are the "U-Model" (Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977), in which internationalisation is presented stepwise and incrementally, and the "I-Model" (Bilkey & Tesar, 1977; Cavusgil, 1980; Reid, 1981; Czinkota, 1982; Andersen, 1993), which perceives internationalisation as an innovation process. However, some authors have highlighted other models such as the BGIM (Knight & Cavusgil, 1996; Bell, 1995). The incremental IP of older multinationals contrasts with the early, rapid IP of BG firms and research is needed "to explain how BGs achieve precocious internationalization and superior international performance" (Knight & Liesch, 2016, p.98).

    BGs' expansion is due to the growth of information and communication technology and to globalisation (Knight & Cavusgil, 2004). Technological progress allows internationalised firms to significantly reduce their transaction costs. Hence, technological evolution improves and facilitates internationalisation, removing barriers (Madsen & Servais, 1997), and this evolution contributes to a shorter products life cycle, allowing small firms to rapidly respond to changes in consumer behaviour (Rennie, 1993). According to Bell, Mcnaughton, Young & Crick (2003), BGs are firms that can be classified as "knowledge-intensive firms" (p.349), using new technologies and scientific knowledge to enhance competitive advantage; and as "knowledge-based firms" (p.349), creating new technologies, which will become the basis for product and service development.

    BG strategy requires an early adjustment of the organisational structure to an increasingly global market, allowing the firm to obtain cross-market information for a good needs' diagnosis and to assist the decision-making process (Dimitratos, Jonson, Slow, & Young, 2003), leading to superior performance.

    There is no universal consensus on the precise definition of "born-global" and many researchers use divergent criteria to operationalise the BG concept (Dzikowski, 2018; Rasmussen & Madsen, 2002; Rialp-Criado, Rialp-Criado, & Knight, 2002). Coviello (2015, p.21) argues that "many so-called BG studies are, in all likelihood, not".

    Moen & Servais (2002) argue that BGs are small, technologically oriented firms, operating in international markets from inception, developing their IP in an accelerated way, with sales to foreign markets reaching 25% of the total in the first three years of the company's life (Bell et al., 2003). For others, BGs are firms that simultaneously adopt a vision and strategy to become international practically from the date of their creation (Bell, 1995; Gabrielsson & Kirpalani, 2004; Knight & Cavusgil, 1996, 2004; Oviatt & McDougall, 1994; Rialp, Rialp, & Knight, 2005a; Rialp, Rialp, Urbano, & Vaillant, 2005b), seeking to obtain significant competitive advantages derived from resource usage and output sales in several countries (Oviatt & McDougall, 1994). Accordingly, the success of this type of firm necessarily lies in a global vision. Firms must "think globally" to become global (Persinger, Civi, & Vostina, 2007).

    The literature emphasises some specific features of BG firms (Liesch et al., 2007). Hence, SMEs that internationalise are usually successful examples; some firms challenge conventional internationalisation theories, since they internationalise directly and with highly innovative products, outlining the internal market, and they contradict the myth that small firms' strategic options are limited by resource scarcity.

    BGs' early and rapid internationalisation has drawn the attention of numerous authors (Andersson, 2000; Andersson & Wictor, 2003; Cavusgil & Knight, 2015; Chetty & Campbell-Hunt, 2003; Crick & Jones, 2000; Coviello, 2015; Etemad, 2004; Freeman & Cavusgil, 2007; Gabrielson & Kirpalani, 2004; Madsen & Servais, 1997; McAuley, 1999; Oviatt & McDougall, 1994; Persinger et al., 2007; Thanh & Chong, 2008), who explain these firms' success through variables such as entrepreneurial personalities, the competitive environment, contact networks, resources and organisational structure.

    However, a rapid IP can bring challenges. Braunerhjelm and Halldin (2019) conclude that BGs' future perspectives depend on their ability to cope with the costs and risks derived from rapid internationalisation. This "coping ability" is supported by MACS.

    The literature on BGs shows two distinct research strands (Gassmann & Keupp, 2007). In the first, internationalisation patterns are analysed over time (Knight & Cavusgil, 2004). In the second, we find studies that analyse internal factors, such as managers' personal traits or organizational characteristics (Jones & Coviello, 2005, Knight & Cavusgil, 1996, Kundu & Katz, 2003, Moen...

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