3

Importance of
International
Entrepreneurship
Profile: Kandahar Treasure
1
Jupiterimages/Photos.com/Thinkstock
4 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
P
erhaps nowhere in the world is the need for entrepreneurship as obvious as in
Afghanistan postSeptember 11, 2001. Nearly three decades of invasion, war,
and terrorist rule have left the people of Afghanistan in a wasteland of economic des-
peration. With few natural resources at its disposal, a fragile economy based mainly
on agriculture and livestock could not support its people, with the rural areas suffer-
ing the most. War destroyed what little infrastructure there was, rendering the move-
ment of goods and resources nearly impossible. The people learned to rely heavily on
foreign aid, a temporary resource that often fails to provide relief to those who need
it most.
Afghan national Rangina Hamidi saw firsthand the devastation in her home
country and felt compelled to do something about it. Born in Kandahar, Afghanistan,
Hamidis family fled to Pakistan three years after the Soviet invasion. For seven years
while in Pakistan, she and her sister were not allowed to go to school or receive any
kind of education, as mandated by the pre-Taliban terrorists who controlled the area
at the time. Fortunately, in 1988 Hamidis family was able to immigrate to the United
States, where she attended high school, and received her undergraduate degree from
the University of Virginia. Understanding the power and necessity of education,
Hamidi further pursued business education through a program with Thunderbird
School of Global Management, created specifically to teach Afghan women how to
run a proprietary business. With the mission statement, We educate global leaders
who create sustainable prosperity worldwide, Thunderbird was the ideal match for
Hamidis goal of starting a company that could improve quality of life for people in
Afghanistan.
Hamidi was granted $55,000 from the nonprofit organization Afghans for Civil
Society, which she used to launch her own business, Kandahar Treasure. The goal of
the company is, in her own words, a way to create an economic base for the province
while supporting the advancement of women in the country. Understanding the lack
of available natural resources, Hamidi identified the fine craftsmanship of the region
as a source of revenue. Starting with just 20 female artisans, Hamidi bought raw mate-
rials for them to create delicately spun embroidery for decorative accessories as well as
clothing. The embroidered goods were then sold in various markets around the world
that would pay far more than the local market price, creating a significant profit. Being
a nonprofit organization, any revenue generated was used to expand the business.
Today, Kandahar Treasure employs 450 people and has considerably improved the lives
of many in Afghanistan.
Hamidi, however, is not stopping there. She has plans to take the business into the
for-profit sector to create a more sustainable change for her employees. The entrepre-
neur has seen firsthand the shortcomings of foreign aid programs, and understands
that those funds may not be around forever. By allowing the company to turn a profit,
the women will be better equipped to prosper independently, which is of utmost
importance for survival in a male-dominated society. Hamidi sees the bigger picture,
saying, I believe in the idea that entrepreneurship can transform lives and help begin
the process of rebuilding societies. . . . By focusing on private business and enhancing
opportunities for ordinary Afghans to fill their days, we will not only help Afghanistan
Importance of International Entrepreneurship 5
with building its economy, but also help the Afghans find jobs so they can depend on
a peaceful and just way of making money for themselves and their families.
SOURCE: Adapted from Perman (2008).
Chapter Objectives
1. To understand the fundamental importance of the global venture in todays changing
world
2. To introduce the concept of entrepreneurship from a global perspective, crossing
national boundaries
3. To learn the key differences in operating a business in a global versus domestic environ-
ment from economic, political, cultural, and technological perspectives
4. To explain the various factors affecting the business plans of entrepreneurs entering dif-
ferent markets
5. To identify the major motivators for taking a business global or of conceiving a new
business with a global focus
6. To become familiar with the positive and negative aspects of the decision to take ones
business global
Introduction
Never before in the history of the world has there been such a variety of exciting
international business opportunities. The movement of the once-controlled econo-
mies to more market-oriented ones, the advancement of the Pacific Rim and the new
markets in the Middle East provide a myriad of possibilities for entrepreneurs want-
ing to start a new enterprise in a foreign market as well as for existing entrepreneurial
firms desiring to expand their businesses globally. The world is truly global.
As more countries become market oriented and economically developed, the dis-
tinction between foreign and domestic markets is becoming less pronounced. What
was once only produced domestically is now produced internationally. For example,
Yamaha pianos are now manufactured in the United States, and Nestl chocolate
(started in Europe) is made all over the world. Invacares wheelchairs, once produced
only in the United States, are now made in Germany and China. This blurring of
national identities will continue to accelerate as more products are introduced outside
domestic boundaries earlier in the life of entrepreneurial firms.
Since the mid-1990s, organizations have been attempting to redefine themselves
to be truly global. The pressure to internationalize is being felt in every type of organi-
zation: nonprofit and for-profit, public and private, large and small. This need to
internationalize is accelerating because of the self-interest of these organizations as
well as the effect of a variety of external events. Today, more than seven eighths of the
worlds economic states have some form of market economy. A few large trading blocs
6 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
such as the European Union and NAFTA (the North American Free Trade Agreement
between Canada, Mexico, and the United States) have emerged and are growing. Once-
developing countries, like China, are economic powers.
These changes are well recognized by organizations that are investing trillions of
dollars in a world economy that includes emerging markets as some of the vehicles
of future growth. About 85% of the worlds population lives in developing countries,
most of which are in need of major investment in infrastructure development. Just ask
the potato farmers in the Chuvash Republic of Russia, who saw 26% of their crop rot
because of inadequate distribution and warehousing, whether there is a need for this
investment in infrastructure. Or, ask the economics professor in the Czech Republic,
who had to leave the university to find other employment due to the low university
wages, whether massive investment in education is needed. The professor, like many
human resources in these developing countries, needs training and education to pro-
vide the manpower required in the next century.
The need for physical and technological infrastructure is no more apparent than
in one of the fastest-growing markets in the 2000s and early 2010sthe Pacific Rim.
This area offers economically viable locations for manufacturing and trade. Over
half of the worlds population lives in Asia, with China containing 20% of the worlds
population. India alone is twice the size in population of Latin America. And then
there is Japan, with its world economy, ranking high in the world in exporting and
importing.
There are also new market opportunities in South America, Africa, Ukraine,
Vietnam, Iraq, and other countries in transition throughout the world. These areas
are becoming highly attractive to globally oriented companies that want to grow their
business internationally and develop a strong market position as the economies of
countries change through privatization and deregulation.
The globalization of entrepreneurship creates wealth and employment that benefit
individuals and nations throughout the world. International entrepreneurship is excit-
ing because it combines the many aspects of domestic entrepreneurship with other
disciplines such as anthropology, economics, geography, history, jurisprudence, and
language. In todays hypercompetitive world with rapidly changing technology, it is
essential for an entrepreneur to at least consider entering the global market.
Many entrepreneurs find it difficult to manage and expand the venture they have
created, especially into the global marketplace. They tend to forget a basic axiom in
business: The only constant is change. Entrepreneurs who understand this axiom will
effectively manage change by continually adapting their organizational culture, struc-
ture, procedures, and strategic direction, as well as their products and services in both
a domestic and an international orientation. Entrepreneurs in developed countries like
the United States, Japan, the United Kingdom, and Germany must sell their products
in a variety of new and different market areas as early as possible to further the growth
of their firms.
Global markets offer entrepreneurial companies new market opportunities. Since
1950, the growth of international trade and investment has often been larger than
the growth of domestic economies, even than those of the United States and China.
Importance of International Entrepreneurship 7
A combination of domestic and international sales offers the entrepreneur an oppor-
tunity for expansion and growth that is not available solely in a domestic market.
The Nature of International Entrepreneurship
Simply stated, international entrepreneurship is the process of an entrepreneur
conducting business activities across national boundaries. It may consist of exporting,
licensing, opening a sales office in another country, or something as simple as plac-
ing a classified advertisement in the Paris edition of the International Herald Tribune .
The activities necessary for ascertaining and satisfying the needs and wants of target
consumers often take place in more than one country. When an entrepreneur executes
his or her business model in more than one country, international entrepreneurship
is occurring.
The term international entrepreneurship was introduced around 1988 to describe
the many untapped foreign markets that were open to new ventures reflecting a new
technological and cultural environment (Morrow, 1988).
McDougall (1989, p. 389) defined international entrepreneurship as the develop-
ment of international new ventures or start-ups that, from their inception, engage in
international business, thus viewing their operating domain as international from the
initial stages of the firms operation.
In 1997, McDougall and Oviatt introduced a broader definition of international
entrepreneurship to include the study of established companies and the recognition of
comparative (cross-national) analysis. They defined this field as a combination of inno-
vative, proactive, and risk-seeking behavior that crosses or is compared across national
borders and is intended to create value in business organizations (McDougall &
Oviatt, 2000, p. 903). This definition takes into account at the organizational level
the notions of innovation, risk taking, and proactive behavior. It also focuses on
the entrepreneurial behavior of these firms rather than only the characteristics and
intentions of the individual entrepreneurs. The key dimensions of entrepreneurship
innovativeness, proactiveness, and risk propensitycan be found and developed at
the organizational level.
A good definition and understanding was presented in the introduction to an
issue devoted to the topic in Entrepreneurship Theory and Practice (Honig-Haftel,
Hisrich, McDougall, & Oviatt, 1996). The authors broadly defined international entre-
preneurship as any activity of an entrepreneur that crossed a national border. This
understanding was further developed in a review article (Ruzzier, Antoncic, & Hisrich,
2006). Numerous research studies and definitions have emerged focusing on a wide
variety of areas, such as the international sales of new ventures (McDougall, 1989),
born-global ventures (McDougall & Oviatt, 2000), role of national culture (McGrath,
McMillan, & Scheinberg, 1992), and the internationalization of small and medium
enterprises (Lu & Beamish, 2001). It has also been applied in many geographic con-
texts, such as Eastern Europe (Hisrich, 1994; Hisrich & OCinneide, 1991), Germany
(Grichnik & Hisrich, 2004), Hungary (Hisrich & Fulop, 1993, 1995; Hisrich & Szirmai,
1993; Hisrich & Vecsenyi, 1994), Ireland (Hisrich & OCinneide, 1989), Israel (Lerner,
8 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
Brush, & Hisrich, 1997), Northern Ireland (Hisrich, 1988), Slovenia (Hisrich, Vahcic,
Glas, & Bucar, 1998), Soviet Union (Ageev, Grachev, & Hisrich, 1995), Ukraine
(Hisrich, Bowser, & Smarsh, 2006), and developing economies (Antoncic & Hisrich,
1999, 2000; Hisrich & ztrk, 1999).
Finally, according to McDougall, Oviatt, and Shraders definition (2003, p. 61),
international entrepreneurship is a combination of innovative, proactive, and risk-
seeking behavior that crosses national borders and is intended to create value in
organizations.
With a commercial history of only 300 years, the United States is a relative new-
comer to the international business arena. As soon as settlements were established in
the New World, American businesses began an active international trade with Europe.
Foreign investors helped build much of the early industrial trade with Europe as
well as much of the early industrial base of the United States. The future commercial
strength of the United States, as well as the rest of the world, will depend on the ability
of both entrepreneurs and established companies to be involved in markets outside
their borders.
International Versus Domestic Entrepreneurship
Although both international and domestic entrepreneurs are concerned with sales,
costs, and profits, what differentiates domestic from international entrepreneur-
ship is the variation in the relative importance of the factors affecting each decision.
International entrepreneurial decisions are more complex due to such uncontrollable
factors as economics, politics, culture, and technology (see Table 1.1 ).
Economics
In a domestic business strategy, a single country at a specified level of economic
development is the focus of entrepreneurial efforts. The entire country is almost always
organized under a single economic system with the same currency. Creating a business
strategy for a multicountry area means dealing with differences in levels of economic
development; currency valuations; government regulations; and banking, venture
capital, marketing, and distribution systems. These differences manifest themselves in
each aspect of the entrepreneurs international business plan and methods of doing
business.
Table 1.1 International Versus Domestic Business: Factors That Are Different
Economics
Language stage of economic development
Type of economic system
Political-legal environment
Language
SOURCE: Adapted from Hisrich, R. D., Peters, M. A., & Shepherd, D. A. (2010). Entrepreneurship (8th ed.).
Burr Ridge, IL: McGraw-Hill/Irwin, p. 134.
Importance of International Entrepreneurship 9
Stage of Economic Development
The United States is an industrially developed nation with regional variances of
relative income. While needing to adjust the business plan according to regional dif-
ferences, an entrepreneur doing business only in the United States does not have to
worry about a significant lack of such fundamental infrastructures as roads, electricity,
communication systems, banking facilities and systems, adequate educational systems,
a well-developed legal system, and established business ethics and norms. These factors
vary greatly in other countries and significantly affect the ability to successfully engage
in international business.
Balance of Payments
With the present system of flexible exchange rates, a countrys balance of payments
(the difference between the value of a countrys imports and exports over time) affects
the valuation of its currency, and this valuation of one countrys currency affects busi-
ness transactions between countries. At one time, Italys chronic balance of payments
deficit led to a radical depreciation in the value of the lira, Italys currency. Fiat Group
Automobiles S.p.A. responded by offering significant rebates on cars sold in the United
States. These rebates cost Fiat very little because fewer dollars purchased many more
liras due to the decreased value of the lira. Similar exchange rate divergences have
occurred for Japanese automobile manufacturers and many products made in other
countries. The shrinking value of the U.S. dollar has helped U.S. firms export more due
to lower prices of U.S. goods in foreign currencies.
Type of Economic System
Pepsi-Cola began considering the possibility of marketing in the former U.S.S.R. as
early as 1959, following the visit of U.S. Vice President Richard Nixon. When Premier
Nikita Khrushchev expressed his approval of Pepsis taste, EastWest trade really began
moving, with Pepsi entering the former U.S.S.R. Instead of using its traditional type of
franchise bottler in their entry strategy, Pepsi used a barter-type arrangement that sat-
isfied both the socialized system of the former U.S.S.R. and the U.S. capitalist system.
In return for receiving technology and syrup from Pepsi, the former U.S.S.R. provided
the company with Soviet vodka and distribution rights in the United States. Many such
barter or third-party arrangements have been used to increase the amount of business
activity in countries in various stages of development and transition. Having to come
up with appropriate bartering arrangements is just one of the many difficulties in
doing business in developing and transition economies.
Political-Legal Environment
The multiplicity of political and legal environments in the international mar-
ket creates vastly different business problems, opening some market opportunities
for entrepreneurs and eliminating others. For example, U.S. environmental stand-
ards have eliminated the possibility of importing several models of European cars.
10 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
Another significant event in the political-legal environment involves price fluctua-
tions and significant increases in the last few years in oil, other energy products,
and food.
Each element of the business strategy of an international entrepreneur has the
potential to be affected by the multiplicity of legal environments. Pricing decisions
in a country that has a value-added tax are different from those decisions made by
the same entrepreneur in a country with no value-added tax. Advertising strategy is
affected by the variations in what can be said in the copy or in the support needed
for advertising claims in different countries. Product decisions are affected by legal
requirements with respect to labeling, ingredients, and packaging. Types of owner-
ship and organizational forms vary widely throughout the world. The laws governing
business arrangements also vary greatly with over 150 different legal systems and
national laws.

CULTURAL STORIES
Story 1
My wife and I were in Argentina having
dinner at a fancy restaurant when it was
time for dessert. The waiter asked my wife
if she had decided and she said, Could you
bring me a portion of cajeta? In Mexico,
this is like candy-caramel made of milk. In
Argentina, however, cajeta means vagina.
I will never forget the waiters
expression.
Often, in different countries that offi-
cially speak the same language, the same
word has an entirely different meaning. In
this couples case, it would have spared them
embarrassment to know beforehand how the
word for caramel, or dulce de leche, differs
within Spanish-speaking countries:
Argentina, Costa Rica, Spain, El
Salvador, Guatemala, Paraguay, Uruguay,
The Dominican Republic, and Puerto Rico:
Dulce de leche
Mexico: Dulce de cajeta
Chile and Ecuador: Manjar
Venezuela and Colombia: Arequipe
Peru, Bolivia and Panam: Manjar
blanco
Cuba: Fanguito
Story 2
While studying in Shanghai in the sum-
mer of 1995, I would routinely drive
around the city in a taxi to get to know the
area and to chat with the taxi drivers (who
were always very knowledgeable about the
city).
One day, the driver asked me my
English name. I told him it was Phillip,
and he looked puzzled. I asked him what
Phillip meant to him and he replied,
good reception with many channels.
So, I have that going for me which
is nice.
SOURCE: http://www.culturalconfusions.com (Story 1 by Bernardo Alanis; Story 2 by Philip Graham).
Importance of International Entrepreneurship 11
Cultural Environment
The effect of culture on entrepreneurs and strategies is also significant.
Entrepreneurs must make sure that each element in the business plan has some degree
of congruence with the local culture. For example, in some countries point-of-pur-
chase displays are not allowed in retail stores, while they are in the United States. An
increasingly important aspect of the cultural environment in some countries concerns
bribes and corruption. How should an entrepreneur deal with these situations? What
is the best course of action to take and still maintain the needed high ethical standards?
Sometimes, one of the biggest problems is finding a translator. To avoid errors, entre-
preneurs should hire a translator whose native tongue is the target language.
Technological Environment
Technology, like culture, varies significantly across countries. The variations
and availability of technology are often surprising, particularly to an entrepre-
neur from a developed country. While U.S. firms produce mostly standardized,
relatively uniform products that meet industry standards, this is not the case in
many countries, making it more difficult to achieve a consistent level of quality.
New products in a country are created based on the conditions and infrastructure
operating in that country. For example, U.S. car designers can assume wider roads
and less expensive gasoline than European designers. When these designers work
on transportation vehicles for other parts of the world, their assumptions need to
be significantly altered.
Local Foreign Competition
When entering a foreign market, the international entrepreneur needs to be aware
of the strength of local competitors who are already established in the market. These
competitive companies can often be a formidable force against foreign entry, as they
are known companies with known products and services. This can be particularly dif-
ficult when there is a buy national attitude in the country. A sustained effort stressing
the unique selling propositions of the entering product or service is necessary, includ-
ing a guarantee to ensure customer satisfaction, in order to compete.
Subsidies Offered by Foreign Governments
Some governments offer subsidies to attract particular types of foreign companies
and investments to help further the development of the countrys economy. These
subsidies can take different forms, such as cash or a tax holiday for a period of time,
and usually involve infrastructure development. This occurred for U.S. oil companies
that built the oil fields and delivery system in the Middle East and for foreign banks
that assisted in developing the banking system in China. Foreign governments can also
offer subsidies to local firms to help them compete against foreign products. This is
often called an infant industry protection policy .
12 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
Motivations to Go Global
Unless you are born global, most entrepreneurs will only pursue international activities
when stimulated to do so. A variety of proactive and reactive motivations can cause an
entrepreneur to become involved in international business, as is indicated in Table 1.2 .
Profits are, of course, one of the most significant reasons for going global. Often, the
profitability expected from going global is not easily obtained. In fact, profitability can
be adversely affected by the costs of getting ready to go global, underestimating the
costs involved, and mistakes. The difference between the planned and actual results
may be particularly large in the first attempt to go global. Anything you think wont
happen, probably will, like having significant shifts in foreign exchange rates.
The allure of profits is reflected in the motive to sell to other markets. For a
U.S.-based entrepreneurial firm, the 95% of the worlds population living outside the
United States offers a very large market opportunity. These sales can cover any signifi-
cant research and development and start-up manufacturing costs that were incurred
in the domestic market. Without sales to these international markets, these costs would
have to be spread just over domestic sales, resulting in fewer sales and smaller profits.
Another reason for going globalthe home domestic market is leveling or even
declining in sales or sales potential. This is occurring in several markets in the United
States with its aging demographics.
Sometimes an entrepreneur moves to international markets to avoid increased regu-
lations or governmental or societal concerns about their products or services. Cigarette
companies such as Philip Morris aggressively pursued sales outside the United States,
particularly in developing economies, when confronted with increased government
regulations and antismoking attitudes of consumers. Sometimes this took the form of
purchasing existing cigarette companies in foreign markets, as occurred in Russia.
When the entrepreneurs technology becomes obsolete in the domestic market
or the product or service is near the end of its life cycle, there may be sales opportu-
nities in foreign markets. One entrepreneur found new sales life for the companys
gas-permeable hard contact lenses and solutions when highly competitive soft lenses
Table 1.2 Motivations for Going Global
Profits
Competitive pressures
Unique product(s) or service(s)
Excess production capacity
Declining home-country sales
Unique market opportunity
Economies of scale
Technological advantage
Tax benefits
SOURCE: Adapted from Hisrich, R. D., Peters, M. A., & Shepherd, D. A. (2010). Entrepreneurship (8th ed.).
Burr Ridge, IL: McGraw-Hill/Irwin, p. 142.
Importance of International Entrepreneurship 13
negatively affected the domestic market in the United States. Volkswagen continued to
sell its original VW Beetle in Latin and South America for years after stopping its sales
in the United States.
Entrepreneurs often go global to take advantage of lower costs in foreign coun-
tries for labor, manufacturing overhead, and raw materials. The Flip Watch, made
by HourPower, could not be marketed at its price point in Things Remembered and
JC Penney stores without being produced in China. Waterford Crystal is manufactur-
ing some products in Prague to help offset the higher labor costs in Ireland. This cost
advantage decreases as the Czech Republic develops as a member of the European
Union. There are often some cost advantages by having at least a distribution and
sales office in a foreign market. Graphisoft, a Hungarian software company, found
its sales significantly increased in the United States when it opened a sales office in
California.
Several other motivations can motivate an entrepreneur to go global. One of the
more predominant motivations is to establish and exploit a global presence. When an
entrepreneur truly goes global, many company operations can be internationalized
and leveraged. For example, when going global an entrepreneur will establish a global
distribution system and an integrated manufacturing capability. Establishing these
gives the company a competitive advantage because they not only facilitate the suc-
cessful production and distribution of present products but help keep out competi-
tive products as well. By going global, an entrepreneur can offer a variety of different
products at better price points.
Traits of an International Entrepreneur
Several characteristics and traits are identifiable in international entrepreneurs regard-
less of the country of origin. These include ability to embrace change, desire to achieve,
ability to establish a vision, high tolerance for ambiguity, high level of integrity, and
knowing the importance of individuals.
Embraces Change
A global entrepreneur likes and even embraces differences in people, as well as
situations. He or she constantly seeks new and exciting things and likes to break the
mold and challenge corporate orthodoxies. Living in and learning about different
cultures and ways of doing things is an exciting way to live. New ways of doing things
are encouraged. Employees are taught how to manage change.
Desire to Achieve
A global entrepreneur has good business savvy and a strong desire to achieve. To
succeed, an entrepreneur needs to have profit/loss experience and an ability to create
value in a different culture. A possession of broad business knowledge, such as transfer
pricing, foreign exchange, and international customs and laws, combined with a global
mindset, provides the basis for success.
14 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
Ability to Establish a Vision
A global entrepreneur needs to establish a vision that employees and custom-
ers understand. Employees should feel that they are an important part of the global
organization and essential to its success. A global entrepreneur is very optimistic,
assumes that everything is possible, and establishes a limited number of short-term
goals to obtain the vision. He or she focuses more on outcomes than processes, works
long hours, has a high energy level, and does not fear failure.
High Tolerance for Ambiguity
The passion for learning from a variety of sources and viewing uncertainty as
an opportunity instead of a threat allows a global entrepreneur to develop mental
maps that will lead to achieving a vision. Incrementally moving initiatives in a variety
of areas without completing one regularly is not a problem. This high tolerance for
ambiguity makes utility a key virtue of any practice at the individual or company level.
High Level of Integrity
A global entrepreneur has an extremely high standard for individual and com-
pany integrity. These established standards are used inside and outside the company.
The same high ethical standards are expected from all employees and activities of the
venture.
Individuals are Important
A global entrepreneur focuses on the well-being of his or her employees and acts
as a nurturing coach. He or she focuses on building and inspiring people and works
effectively with others in teams. Spending more time listening than talking, a global
entrepreneur values peopleemployees as well as customersand wants to build a
sustainable enterprise in a particular culture and country.
The Importance of Global Business
Global business has become increasingly important to firms of all sizes in todays
hypercompetitive global economy. There can be little doubt that todays entrepreneur
must be able to move in the world of international business. The successful entrepre-
neur will be someone who fully understands how international business differs from
purely domestic business and is able to respond accordingly. An entrepreneur entering
the international market should address the following questions:
1. What are the options available for engaging in international business?
2. What are the strategic issues in successfully going global?
3. How is managing international business different from managing domestic business?
Many factors affect how an entrepreneurial firm can become truly global. Since
the cultural, political and legal environment, economy, and the available distribution
Importance of International Entrepreneurship 15
channels vary significantly from country to country, each of these needs to be taken
into account when deciding to go global as discussed in the following summary.
Change and communication are important aspects of operating in a global environ-
ment, as are market selection and entry.
Summary
At no other time in human history has the potential for great wealth and prosperity
been accessible to so many. This first chapter introduces the concept of international
entrepreneurship, and the process that takes place when an entrepreneur conducts
business activities across national boundaries. More businesses than ever before are
deciding to go global early in their inception. Entrepreneurs today have numerous
opportunities from which to choose. The chapter emphasizes how economics; state
of economic development; balance of payments; economic system; and political-legal,
cultural, and technological environments all play a large role in the establishment of
an international versus domestic company. The motives for launching an interna-
tional enterprise, including a large market opportunity and potential for profit, are
also examined. Finally, the chapter discusses what questions an individual or company
should consider before going global.
Questions for Discussion
1. What are some differences between domestic and international entrepreneurship?
2. What are the key characteristics to understand when moving a business from one coun-
try or region to another?
3. What potential problems might an entrepreneur encounter when entering a new
country?
4. What does an entrepreneur need to be aware of before entering a foreign market?
Chapter Exercises
1. Define international entrepreneurship and describe an example of an international
entrepreneur and his or her business.
2. Explain the differences between domestic and international entrepreneurship and how
these affect a global venture?
3. What are the motivations for taking a business global? What factors influence this
decision?
Note
Portions of this chapter are adapted from Chapter 5 of Hisrich, R. D., Peters, M. A., & Shepherd,
D. A. (2010). Entrepreneurship (8th ed.). Burr Ridge, IL: McGraw-Hill/Irwin.
16 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
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Suggested Readings
Articles/Books
Javidan, M., Steers, R., & Hitt, M. (Eds.). (2007). The global mindset: Advances in interna-
tional management. Greenwich, CT: JAI.
Having a global mindset is fundamental to influencing people from a wide variety of cultures
and heritages. Todays managers need to cultivate a global mindset to remain competitive
themselves and make their businesses more competitive in an international context. The books
contributors show managers how to develop a global mindset. Being able to shape the think-
ing and actions of employees is a fundamental skill that any global manager needs to make the
global company more integrated and responsive to different customer needs.
Prashantham, S. (2008). The internationalization of small firms: A strategic entrepreneurship
perspective. New York: Routledge.
The author provides an in-depth look at how small firms are currently growing internation-
ally through a case study of the software industry in India. Contrary to contemporary opinion,
Prashantham explains how going global is no longer reserved for medium- to large-sized
corporations.
Samli, A. C. (2009). International entrepreneurship: Innovative solutions for a fragile planet.
New York: Springer.
The author of this book makes the case that entrepreneurship may be the only hope for devel-
oping economies to break out of the cycle of poverty and reliance on foreign aid. Samli discusses
the measures developing governments and societies must take to encourage and support entre-
preneurial efforts, in hopes of creating sustainable economic development.
Strong, M. (2009). Be the solution: How entrepreneurs and conscious capitalists can solve all
the worlds problems. Hoboken, NJ: John Wiley.
Strongs manifesto gives an insightful look into the good that can come from conscious capi-
talism in the form of social entrepreneurism. He discusses how capitalism can create global
prosperity regardless of position, industry, or field of work. He gives practical examples of how
social entrepreneurship can create wealth and well-being for people all over the globe.
18 INTERNATIONAL ENTREPRENEURSHIP AND ENTREPRENEURSHIP OPPORTUNITIES
Zucchella, A., & Scabini, P. (2008). International entrepreneurship: Theoretical foundations
and practices. New York: Palgrave Macmillan.
Zucchella lays a foundational framework for the relatively new field of international entrepre-
neurship. Although there has been some recent research done on the topic, this book attempts
to create an academic structure for the field of study.