ABSTRACT

This thesis aims to conduct a review of the literature and investigate how INVs approach risk management in
the early stages of internationalization. The goal of this thesis is to close the knowledge gap regarding INVs'
or BGs' early internationalization. This thesis fills the knowledge gap on how INVs should manage risk
during the early stages of internationalization, as there aren't enough studies in this area.

INTRODUCTION

This thesis seeks to investigate the risk management strategies used by International New Ventures (INV)
and Born Global (BG) in connection with early internationalization. In order to accomplish this, I will study
the literature and the research done by academics on the risk of early internationalization of BG and INV. A
wide range of factors are said to influence risk and early internationalization, and each of these factors has
the potential to affect how the internationalization turns out. Although the topic of how INVs/BGs manage
specific risk situations is vast, many scholars focus on particular types of firms or cases and argue how they
address various challenges, including risk. Thus, there is a dearth of research on the particular subject of risk
management during the early stages of internationalization. This is a knowledge gap in the literature and
calls for additional research on the subject. Thus, the following query is posed: What risk management
strategies do International New Ventures and Born Global employ when it comes to early
internationalization?
Theories have been employed by academics to explain how managers and CEOs handle risky situations and
perceive risk. However, there are a number of additional factors to consider when internationalizing a
business, such as environmental and economic factors that could influence management behavior or expose
the company to unidentified risks brought on by the environment, which could also affect the
internationalization's outcome. All of the studies have looked into various research goals, and by putting out
various research questions, they have finally arrived at either distinct or comparable conclusions.
The theoretical foundation and research results from two years of studying international entrepreneurship
will be the main topics of this thesis, along with a chapter that compares and discusses the study's similarities
and differences. Finding out how academics employ risk management in their research is the aim of the
literature review, which will be compared to a risk management theoretical framework later in the thesis.
By highlighting the risk management sections of the INV and BG literature, I will contribute to the body of
academic literature. Some of these sections may require more research on risk management, and I will
conclude by mentioning crucial risk management decisions that businesses should be aware of when they go
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global. Because it uses a review of the literature to identify any potential gaps, this thesis is exploratory in
nature.

The writers of the literature on international new ventures concentrate on the various difficulties that these
fledgling companies might encounter; nevertheless, a crucial element—and the subject of this paper—is the
risk associated with internationalization. Risk is the probability of a bad outcome; it can be defined as either
the unpredictability of an event or the unfavorableness of the outcome. Thus, the likelihood and impact of a
risk are its defining characteristics. To put it simply, this is simply the odds. While we may be able to
calculate the odds and know the main parameters, likelihood and impact are not always quantifiable, which
is inherent to the concept of risk. Because we are ignorant of what we do not know.The writers of the
literature on international new ventures concentrate on the various difficulties that these fledgling companies
might encounter; nevertheless, a crucial element—and the subject of this paper—is the risk associated with
internationalization.

As a result, we are aware that INVs and BGs can prevent or lessen specific risk events, but we are unaware
of the decision-making process or the steps that are done in response to particular risks. Merely asserting that
leveraging network connections can reduce risk is insufficient; it is also necessary to take into account the
likelihood and nature of the loss, as well as the way in which this information influenced the firm's decision
to pursue a partnership in order to achieve the best possible outcome.

It is also vital to take into account small business performance, which can be evaluated in a variety of ways.
While some people define it as complex and multifaceted, others believe it to be quite straightforward.
Three viewpoints have been used in previous research to examine small firms' performance: human,
sustainable, and economic. Given that prior research will be the primary source of data for this study and
that most researchers concentrate on a firm's financial growth, it stands to reason that financial performance
will be given the greatest weight. (Raymond, Stpierre, Cadieux, Marchand, & Labelle, 2013)

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 NEED OF THE STUDY

 With a chapter devoted to comparison and discussion of the studies' commonalities and differences,
this thesis will primarily concentrate on the theoretical underpinnings and empirical results of a few
years of research on international entrepreneurship.
 Finding out how risk management is used in the studies and contrasting it with a risk management
theoretical framework later in the thesis are the aims of the literature review.
 Question to be studied: What risk management strategies do international New Ventures and Born
Global employ when it comes to early internationalization?

RESEARCH METHODOLOGY

With a focus on two years of research in the International Entrepreneurship Database (http://ie-scholars.net),
this thesis is exploratory in nature. In order to investigate how international entrepreneurship researchers (the
domain of INVs) choose to investigate risk, I have decided to restrict the scope of my thesis to the years
2012–2013. The international entrepreneurship database should be a comprehensive database with regard to
INV/BG literature. To maintain the exploratory nature of the study, the research question is formulated as an
open-ended question.

I looked for published articles on either Born Global companies or International New ventures in order to
review the various studies. Since these terms are used loosely and Born Global and International New
Venture are frequently used interchangeably in the literature to refer to the same kind of business, I did not
make a distinction between the two names for this particular type of organization. I concentrated on looking
for articles, mostly in the study summary or title, that discussed the early, quick, or rapid internationalization
of BGs and INVs.

The selection criteria involved searching few years' worth of research articles with the terms "risk
management" or simply "risk," eliminating any that did not yield any hits on the term. I also used the search
parameters rapid, quick, or early internationalization. I gathered all the articles that would carry any kind of
risk when they were internationalized and placed them in a folder. This was dubbed the initial pick-phase.

I'll follow this design when conducting my literature review. The theoretical framework of the authors and
the conclusions they might draw from their research will be covered in the literature review. In addition, I
will go over the various topics and theories and emphasize how risk was managed.

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 LITERATURE REVIEW

The main theories covered in this thesis are governance structure, resource- and knowledge-based views,
entrepreneurial orientation, and culture-strategic orientation. It is crucial to remember that, in the context of
this thesis, what matters most is not how the papers interpret internationalization theories, but rather how the
study authors evaluate risk management, or whether the publication even includes a risk assessment at all.

1.Entrepreneurial Orientation:
Entrepreneurial orientation is a framework that includes the degree of risk-taking that is acceptable as well
as the proactive and innovative nature of the company, which is typically led by the founder. The literature's
authors have addressed the need of a high EO for businesses that are just beginning to internationalize. This
implies that some risk-taking is required, and it is crucial for the survival of the business how the risks are
managed. As a result, the literature frequently compares founders who may be less proactive but who yet
possess strong invention abilities and a greater willingness to take risks, with those who are highly proactive
but lack risk-taking drive.
With an emphasis on decision-making logic, Gabrielsson & Gabrielsson (2013) created a dynamic model to
explain the growth phases in B2B INVs. This makes the study slightly different from other studies that
explain how INVs take advantage of opportunities in their early years to survive using the framework of
entrepreneurial orientation. The Gabrielsson & Gabrielsson (2013) model challenges the conventional
wisdom that an entrepreneurial orientation is primarily advantageous while still emphasizing the value of
seizing opportunities. They developed the new model in response to criticism of earlier organizational
models that put an emphasis on features, linearity, and stages. These models were descriptive rather than
analytical with regard to the growth factors , and the authors feel that the earlier models did not account for
companies’ growth and expansion.

With an emphasis on decision-making logic, Gabrielsson & Gabrielsson (2013) created a dynamic model to
explain the growth phases in B2B INVs. This makes the study slightly different from other studies that
describe how INVs take advantage of possibilities in their early years to survive using the framework of
entrepreneurial orientation. The Gabrielsson & Gabrielsson (2013) model challenges the conventional notion
that an entrepreneurial attitude is primarily advantageous while still emphasizing the value of seizing
chances. They developed the new model in response to criticism of earlier organizational models that put an
emphasis on features, linearity, and stages. These models were descriptive rather than analytical with
relation to the growth variables, and the authors feel that the earlier models did not account for companies
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expansion, and not only in terms of magnitude but also in a worldwide sense. The new model was created to
show a dynamic perspective of INVs across time, which includes their growth and survival but also allows
for retrenchment, in light of the previous lifespan model.

The discussion between Gabrielsson & Gabrielsson (2013) centers on which of the two different logics
employed by entrepreneurs—causation theory or effectuation theory—is more beneficial. Effectuation
theory is particularly significant when discussing the reasoning used by decision-makers when addressing
unpredictable methods. Additionally, by better understanding resource integration, competences, and
entrepreneurial attitude, organizations can ultimately increase their chances of surviving. This is made
possible by the effectuation theory. Entrepreneurs who include effectuation theory rationale into their
decision-making process utilize their partners' strengths more than their own resources. According to
Gabrielsson & Gabrielsson's (2013) study, it's critical for INVs to obtain funding and other resources from a
variety of external sources. If INVs had the requisite skills and resources, they could promote growth and
survival. By leveraging networks, INVs can expand internationally without having to make significant
financial commitments or take unwarranted risks, which boosts growth and builds confidence. It was
discovered that when INVs prospered, the companies with a high EO in the early phases of
internationalization gradually decreased in EO. Overexposure to EO may jeopardize the INV's survivability
during the entire internationalization process. Rapid growth and foreign expansion have been proven to
require risk-taking; nevertheless, excessive equity orientation (EO) may result in unchecked risk-taking
during this period.

Employing networks to create possibilities and reduce risk is a major component of the internationalization
process for INVs, as previous research has previously disputed. Gabrielsson & Gabrielsson (2013)
demonstrated how INVs can prepare for uncertain tactics and decrease risk by employing outside resources.
Expansion requires risk-taking, and INVs must be aware of the level of risk they are exposed to. However,
Gabrielsson & Gabrielsson (2013) talked about leveraging the strengths of firm network partners to reduce
risk. Naturally, nevertheless, it's also critical to observe the kind of internationalization the INVs employ
when talking about utilizing partner resources. Although exporting should be quite safe, there is a chance
that some agreements, particularly in high-tech industries, could result in knowledge spillover and the
network partner receiving critical knowledge. Therefore, it's critical to consider the kind of product being
marketed and whether a possible partner could learn anything from it when it comes to risk management.

Transferring the hazardous aspects of a firm is not, however, the sole way to achieve internationalization.
Boso, Cadogan, and Story (2013) investigated how market orientation and entrepreneurial orientation affect

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the success of product innovation among Ghanaian exporters. This enables the businesses to have an export-
oriented exploratory capability that is driven by the market. This implies that the company gains the capacity
to take chances and behave pro-actively and creatively in export markets. The exporters' intangible
resources, export entrepreneurial-oriented behavior (EOB) and market-oriented behavior (MOB), may be
crucial in determining the success of the product. When feasible, it is best to pursue both EOB and MOB
since they are complimentary strategic philosophies that complement one another well.
Export EOB goes beyond the more conventional EO by incorporating competitive aggression, autonomous
export behavior, risk-taking, and inventiveness. Though, based on the chance, each of EOB's features may
change. According to the findings of Boso, Cadogan, and Story's (2013) study, companies who implement
both an EOB and MOB are likely to benefit in markets that are competitive, particularly if the two
orientations are intended to enhance one another. Both exploratory and exploitative business activities are
necessary for a business to succeed, and as export EOB and MOB levels rise, so does the success of the
creative export product. However, the report also notes that companies focused on technology are urged to
be proactive, take chances, and be receptive to fresh perspectives. Taking risks
Taking risks is the readiness to invest money and resources in commercial ventures that, ideally, carry a
negligible chance of failing. Therefore, it has been recommended that businesses use cost minimization to
lower the possibility of losing any money. INVs should safeguard their financial resources because they are
frequently linked to little or no financial resources. The study recommends EOB and MOB, but businesses
must also weigh risk against profitability. Moreover, setting unachievable goals can still be disastrous for a
startup, regardless of the tactics used.
Ganotakis & Love (2012) examined the traits and background of the entrepreneurial founding team in BGs,
as well as the relationship between these factors and export orientation and performance. The goal of the
study was to determine which components of human capital were pertinent to the various export-based
stages of internationalization. The perception of risk and the cost of exporting are the main elements that
influence strategic decisions on exporting. The study examined the relationship between performance and
human capital effect by utilizing a generic construct of entrepreneurial internationalization (External and
Internal environment (resources), entrepreneurial team, and firm performance).
The talents and expertise of the entrepreneurial team, or entrepreneur, are referred to as human capital, and
the process of internationalization greatly benefits from the knowledge and experience that have been
collected. More input does not always translate into more output in terms of human capital, and the
entrepreneurial team might not always have enough human capital to meet all the demands of
internationalization. This means that the information that an entrepreneurial team has amassed may not

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necessarily include the abilities required to enter and flourish because they may differ. While experience is
helpful when evaluating new and hazardous businesses, previous studies have revealed that exporters have a
lower risk perception than non-exporters. A considerably more realistic expectation for expansion and
international markets is provided by experiential learning when exporting.
A higher degree of general knowledge and improved risk perception are two benefits of experiential learning
that help entrepreneurs assess and respond to international market possibilities faster. Previous studies have
indicated that having expertise in the same sector improves a firm's success since it gives the company
access to a wealth of pre-existing information and comprehension of the products and related technologies.
According to a 2012 study by Ganotakis & Love, entrepreneurs with managerial and commercial expertise
may be able to acquire the knowledge and abilities needed to assess opportunities and reduce perceived risk
in foreign markets. Despite the fact that older and more seasoned business owners may believe that their
cumulative experience is sufficient to make decisions, overall experience was found to have no discernible
impact on export prosperity.
Previous studies have suggested that senior business owners are less at ease with uncertainty and more risk
averse. The study came to the conclusion that because the human capital skills needed to enter and thrive in
export markets varies significantly, maintaining export performance might be challenging. The study's
conclusions indicated that education, not experience, is the key to developing the human capital skills
required to compete in export markets, and that businesses may need to engage in technical and business
education in order to succeed in these markets.
Although investing in the company's human capital is not without financial costs for education staff, it might
be viewed as less dangerous than venturing into an uncharted overseas market without the

the necessary abilities to be successful. Over time, human capital skills could help discover better prospects,
and they are more likely to be a wise internal investment when it comes to boosting business performance
and lowering total risk when pursuing opportunities. According to Chandra, Styles, and Wilkinson's (2012)
study, a firm's willingness to enhance its commitment and interest in overseas markets is not always
correlated with higher levels of risk and entrance commitment.
If companies are going to increase their entry commitment, it makes sense for them to do so gradually as
their capabilities and human capital grow. Additionally, as the Ganotakis & Love (2012) study showed,
experiential learning improves general knowledge and risk perception, which benefits the company even
more when it decides to increase its market commitment.

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The role that BG's network plays in the expansion of the company's internal resources (resource-based view)
and entrepreneurial orientation (EO) was examined by Sepulveda & Gabrielsson (2013). Smallness, novelty,
and foreignness are BGs' liabilities, thus in order to compete, they must maximize their resource use and
market their products internationally. BGs rely on their network connections to help them overcome these
obstacles. The relationships that make up the BG's network include customers, business intermediaries,
social acquaintances, and everyone else who might be able to exchange resources with the company. Thus,
network connections give BGs the assistance they need to survive, expand internationally, and mature
beyond the initial phases.
But BGs also amass their own resources and gradually gain the ability to behave more independently. The
relationship between the growth of the BG's internal resources and the development of their networks has
not been sufficiently explored in the majority of earlier study on BG networks. For example, Ganotakis &
Love (2012) talked about the growth of human capital, which is not network development but rather an
internal resource when it comes to export activities.

According to Sepulveda and Gabrielsson's (2013) research, resource accumulation causes changes in
network content, which implies that INVs' and BGs' network content develops concurrently with resource
accumulation. Network management is also linked to INVs' and BGs' typically strong entrepreneurial
orientation. The writers also pointed out that while networks can offer opportunities, competitive
advantages, and risk/uncertainty management, they do not always benefit the company. Only proactiveness,
out of the three components used to evaluate EO, was significantly impacted by network management;
innovativeness and risk-taking were only somewhat so.
Internal resource development and network management have a strong relationship, but interestingly, only
proactiveness had a significant impact on network management. This can be understood as BG's directing
their networks to proactively find new opportunities and less about how risky or creative these opportunities
need to be in order to be realized. Perhaps this is because the companies in Sepulveda & Gabrielsson's
(2013) case study shared a tendency to share business risks; as a result, the firm attempted to be proactive
with this "safety net."
Having a safety net in your network is generally a good idea, but businesses must take care to avoid
becoming overly complacent and beginning to minimize or cease taking hazards seriously. The study by
Sepulveda & Gabrielsson (2013) did not overlook dangers; rather, the analyzed organizations were less
focused on risk. Having a complete EO at the outset of the internationalization process should thus be
preferred. rather, being predominantly proactive in network growth is not always adequate. According to
Gabrielsson & Gabrielsson's (2013) decision-maker logic, a small firm can benefit from having the right
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network connections as they build their own capabilities and accumulate resources to handle future
challenges. Additionally, some of these challenges can be overcome by relying on partners to reduce the
danger as much as possible. The sense of risk varies widely among entrepreneurs. The entrepreneur's past
frequently has a significant impact on how the internationalization process is managed and how risks are
viewed.

2.Cultural Practices:

The founding team's cultural background particularly influences their entrepreneurial business, risk and
opportunity perception, and desire to explore foreign markets. These factors all have an impact, albeit a little
one, on the INV's capacity to conduct business and, eventually, the firm's success.
By analyzing the knowledge gap between culture and individual entrepreneurial behavior, Autio, Pathak,
and Wennberg (2013) investigated how national culture can affect entrepreneurship. investigating the impact
of cultural practices on entrepreneurship in this way, as opposed to earlier research that frequently looked at
how individuals perceive their culture in relation to their entrepreneurial behavior. Autio, Pathak, and
Wennberg (2013) employed predictors at the national level in their study to forecast behavioral groups of
individuals.

Through economic institutions, behaviors, practices, and resource distribution, national culture may have an
impact on economic risk and opportunity. National culture was also thought to have an impact on how
people respond to new entrepreneurs, both successful and unsuccessful. The individual entrepreneurial
attributes of proactiveness, competitive orientation, innovativeness, and risk-taking were expected to
resonate with cultural influences and behaviors such as institutional collectivism, performance orientation,
and uncertainty avoidance. Entrepreneurs innovate their products and take on risk as they enter new
economic systems. When an entrepreneurial venture is invested with time and energy, the elements of
creativity and taking risks will usually align closely with the "uncertainty avoidance” dimension of cultural
practices theory. Evidence of the application of entrepreneurial traits in wide cultural contexts was found,
indicating that the traits of innovation, proactivity, and risk-taking—that is, the perception of EO traits—are
shared across cultural boundaries. Entry into the market and the subsequent pursuit of expansion can have a
profound impact on an entrepreneur's relationship with the community. The way the community responds to
entrepreneurial behavior, which is itself influenced by cultural norms, regulates both economic and social
risks. Government grants for enterprises can be made available by a society, and by providing such
resources, post-entry entrepreneurs may consider risk-taking chances as more realistic. High individualistic
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societies might not provide the risk-sharing structures necessary to motivate business owners to take
chances, which could lead to business owners being more circumspect when seeking growth.

This kind of behavior could possibly prevent admission. Autio, Pathak, and Wennberg (2013) discovered in
their research that while growth ambitions are not negatively correlated with entrepreneurial entry, cultural
practices of uncertainty avoidance are. However, performance orientation is linked to entrepreneurial entry
more so than growth objectives. Essentially, what this means is that, unless an entrepreneur's culture makes
him performance oriented, which increases his likelihood of being able to take risks and, consequently,
lowers his uncertainty avoidance, culture may have an impact on his desire to take risks and avoid
uncertainty, but it will not have an impact on his wish for growth after entry.
Numerous cultural customs and characteristics can influence entrepreneurial behavior in a variety of ways
and common for them all, is that they affect how the entrepreneur internationalizes to foreign markets.
According to Autio, Pathak, and Wennberg (2013), cultures ought to support entrepreneurial role models as
a norm, as this would stimulate

entrepreneurs to travel overseas and so encourage a reduced avoidance of uncertainty, which may help
entrepreneurs get beyond the initial hurdle of traveling overseas, but it doesn't address how the risks
associated with doing so are handled.
Though there are a number of ways to get past the initial obstacle of internationalization. Freeman,
Hutchings, and Chetty (2012) argued that in order to lower the perceived risk of a foreign entry by an
inexperienced firm, BG's are more likely to select target markets that are culturally close. However, opinions
in the research appear to differ on whether this is a proactive or reactive strategy used by novice enterprises
to lower risk. The study by Freeman, Hutchings, and Chetty (2012) examined if technological know-how,
global awareness, and cultural proximity are more significant to BGs than to older enterprises, as well as
whether selecting markets that are close to one's culture is a proactive or reactive move. There is a paucity of
research on how BGs bridge their pre-entry knowledge gap regarding overseas markets.
However, picking a market that is close to your culture can help close the knowledge gap. Although a
previous study noted in the article revealed that once the internationalization process has started, the BGs
continue to more culturally distant areas, it may be more important to start in a culturally proximate market
initially. Though the significance of culture may differ depending on the industry, not all sectors require the
same level of cultural proximity. For example, the software industry may depend more on network
connections than cultural similarities when it comes to internationalization, and the software itself plays a
major role in determining how quickly software is internationalized. The study recommended that
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technology knowledge be a driving force behind internationalizing businesses' ability to recognize, adapt,
and use new knowledge. Freeman , Hutchings & Chetty (2012) found that both older companies and BG
managers thought a presence in a culturally proximate provided credibility for links into more culturally
distant markets.
The benefit of "shared language culture," according to the BG managers, is that it makes entry into the
market smoother and more comfortable. According to the survey, having access to a sizable and well-known
market and being able to hire locally are crucial. In order to manage the risks associated with innovative
products, the BGs in the survey also emphasized the importance of having a healthy market. When thinking
about risk reduction in the early phases of internationalization, it makes sense to minimize risk by expanding
into markets that are similar to your own. Thus, there's a greater chance that BGs actively look for culturally
close marketplaces, to compensate for a lack of foreign expertise; also, BGs rely more on technological
know-how than on foreign experience (Freeman, Hutchings & Chetty, 2012).
According to Autio, Pathak, and Wennberg (2013), an entrepreneur's cultural background can help them
overcome any initial obstacles that may arise from globalization and reduce the likelihood that they will
need a close-knit culture market in order to flourish. Although having similar cultural backgrounds could
make the early hurdles to internationalization less daunting for the entrepreneur because they would already
be familiar with the entrance market's customs and habits. However, since the research were not seen from
that perspective, it is difficult to discuss the kind of risk that must be addressed based on a culturally
prepared perspective as opposed to a proximate culture perspective. But according to Autio, Pathak, and
Wennberg (2013), Freeman, Hutchings & Chetty (2012) can both be described as studies that explain how
an entrepreneur may start off a venture with a sense for risk ‐taking and initiative to go abroad. The exact
risks faced by these entrepreneurs are not described in the literature.
Efrat and Shoham (2013) investigated the choices made before to the BG's entry mode. how the BG's choice
of entrance mode is influenced by the interplay between market, nation, and strategic orientation elements.
Being in a dynamic climate where their EO pushes them to face greater risk and uncertainty, stray from the
traditional model of internationalization, and grow quickly is one of the reasons behind BG's early and quick
internationalization. A key component of international operations is the choice of entrance method, and BGs
are frequently highlighted as having few resources and a short window of opportunity to take advantage of
global prospects. As a result, the entry mode selection directly affects the BG's performance and survival.
Previous research has measured the parameters influencing the choice of entrance mode using internal
characteristics of BG, such as age, size, and capabilities. The decision of commitment through entry method
is a representation of the relationship between external (country/market) factors and the strategic orientation

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of the BG, as explored by the study's authors. Entry modes can be classified as export, contractual, or equity,
and they fall into two groups: minimal commitment and high commitment.

Businesses should evaluate external risk and their willingness to commit before deciding on their entry
strategy. The BG's worldwide success and survival depend heavily on the choice of entrance method, which
is a difficult decision that should be based on both internal and external considerations. The two papers
above have already demonstrated to us that

By providing a proximate culture or a background culture that first prepares the entrepreneur to travel
overseas, varied cultural backgrounds can help with external risk. Rather than using calculated risk analysis
and strategic planning, previous research have examined the choice of entrance mode as an outcome based
on assumptions of financial and knowledge constraints along with company and product characteristics.
The particular internal components that impact the choice of entry style are somewhat obscure as a result of
these assumptions. Since external environmental elements shape BG's environment, it is important to
recognize how they affect the company's foreign activities.
There are two categories of risk that affect a firm's environment: country-level risk and market-level risk.
Market potential and competition intensity are the two primary factors that might impact foreign business
and constitute market-level risk. These two elements are important in determining how desirable the market
is. The political, economic, and cultural milieu within the market include country-level risk. The final
component is the distance between the home nation and the target country. The first two factors are
measured using a stable/instable measurement. The perception of risk may lead companies to choose a
lower-commitment entrance strategy because of market volatility in the intended country. According to the
report, BGs will select a high commitment entrance option in a big or stable market. High commitment
entails more risk, but it also helps the company by giving it a presence in lucrative markets. When it comes
to selecting a high-commitment entry mode, BGs prefer larger gain to risk. Prior to selecting an appropriate
entrance mode, managers must to analyze potential risks. The BG must make this decision carefully since
the entry method is a vital instrument for mitigating target-market risks and making up for resource
deficiencies. The majority of BGs in the study appeared encouraged to select a high commitment entry style
in spite of the increased danger.

For example, this may imply that a high-tech Belgian INV would first decide to expand to Germany because
of the market's close vicinity; a Belgian company could profit from the market's size and cultural diversity.
The Belgian entrepreneur may have been more ready to travel overseas more quickly and take greater risks
because of his cultural background. Gaining traction in a central European region might lead to endless
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network linkages, giving a company with a strong European heritage access to the global market. By
leveraging its network connections, the small business may be able to take advantage of opportunities in
China or the Middle East, which have very different cultures from those of central Europe. Nevertheless, the
research mentioned above shows that BG's may decide to enter the market if it is sufficiently appealing,
despite its cultural distance, the company may decide to make a low-commitment entry to reduce risks until
it has a better grasp of the local way of life.

It is not a person's cultural background that equips them to manage risk; rather, it is a person's cultural
tendency to travel. Some entrepreneurs may be discouraged by their culture to venture overseas and instead
decide to stay in their home market. Consequently, culture plays a crucial role in risk perception and teaches
us that risk-taking is not only taken into account by entrepreneurial attitude, but also by the degree to which
an entrepreneur is willing to take risks. But rather than teaching us how to manage particular risks, the idea
of cultural practices teaches us how susceptible an entrepreneur may be to risk because of their background
and how different cultural backgrounds produce different kinds of entrepreneurs , which in turn gives them a
different method of dealing with risk.

3. Strategic Orientation:
More than only the EO stated above is included in strategic orientation (SO). For example, EO is included in
the technological orientation dimension of SO.
Deshpande et al. (2013) investigated the most feasible strategy orientation for start-up companies,
particularly when the founders can effectively strike a balance between market/customer, technology, and
cost-minimization orientation. The relationship between strategic direction and business success has been
extensively studied, although few of these research focus on entrepreneurial enterprises or are conducted in
cross-national contexts. The authors examined the effect of strategic orientation using American and
Japanese entrepreneurial enterprises as a base. The capacity to comprehend the needs of the client and
prioritize those needs is known as a customer orientation. Market orientation is a key element of consumer
orientation.
The technological orientation promotes the risk-taking, inventiveness, and proactive attitude that have been
identified as essential elements of the entrepreneurship orientation. Since entrepreneurial businesses are
frequently perceived as creative, risk-takers, and resource-constrained, their founders are likely to take a
customer/market and technological orientation. As a result, these businesses need to be proactive in order to
thrive. There are three components to a strategic orientation, and each provides advantages that can help the
company achieve better business results. Still, the research revealed, surprise, a technical orientation had a
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negative effect on the firm's profitability, and that the only orientation that was beneficial to an
entrepreneurial firm was a customer/market orientation.
They discovered that while cost-orientation had no effect in either location, customer orientation was found
to be favorably correlated with profitability in both the US and Japan, and technology orientation to be
adversely correlated with profitability. This result supports the idea that innovative businesses shouldn't
become so fixated on their newest product that they lose sight of their target market. In entrepreneurial
businesses, differentiation, identifying a specialized market, and customer attention are the keys to
profitability. Possessing the technology to make money is not the same as being successful. This study
showed us that focusing on the consumer and market promotes overall growth and survival, and that having
the most cutting-edge technology is less significant if there is no attention paid to who to sell it to.
According to Deshpané et al. (2013), the study shows that while a pure technology orientation might
produce the most cutting-edge product and then search for a customer base to direct it towards, the study
shows that by shaping the product to the customer and markets available by segmenting to an already
existing customer base. It seems less dangerous to "satisfy a customer need" as opposed to "build it, and they
will buy it."
Surprisingly, the EO review mentioned above places a lot of emphasis on risk-taking, innovation, and
proactiveness, but Deshpandé et al. (2013) says that a market focus is more crucial. Thus, it stands to reason
that a strong emphasis on the market and the customer, along with a high EO, would be an expansion plan,
given that a customer-oriented approach is the most lucrative and that a high EO is frequently associated
with INV success (Deshpande´, Grinstein, Kim, & Ofek, 2013). The study by Boso, Cadogan, and Story
(2013) on market orientation and EO as performance drivers supports this idea.

There's more to INV's and BG's success than following a set of rules that, if followed, will lead to immediate
prosperity. Nothing is certain, though, and the following study will go into more detail on the reasons why
certain managers are more inclined to have a market-oriented mindset.
Odorici & Presutti (2013) investigated how varying experience levels affect new and seasoned business
owners' strategic orientations and their BG start-ups. According to international entrepreneurship theory,
BGs are greatly impacted by the entrepreneur who founded them, and the entrepreneur's strategic orientation
may help to explain how BGs function and expand. Though not much research has been done on the
relationship between BG start-ups and strategic approach.There's more to INV's and BG's success than
following a set of rules that, if followed, will lead to immediate prosperity. Nothing is certain, though, and
the following study will go into more detail on the reasons why certain managers are more inclined to have a
market-oriented mindset. The authors gauged the degree of strategic orientation using a range of
14
entrepreneurial experience levels determined by previous company ownership. Odorici & Presutti (2013)
used Italian internet-based BGs to compare several aspects of strategic orientation, such as learning, market,
and entrepreneurial orientation, by identifying both inexperienced and seasoned entrepreneurs. According to
studies on fast internationalization, having an entrepreneurial mindset is essential to becoming a BG.
Although BG managers are thought to take on higher degrees of risk, business management is inherently
linked to dangers. BGs should adopt a learning attitude by actively seeking out fresh information about their
target market. This will help them determine which dynamic capacities to build and what kinds of
specialized knowledge and skills are needed for the process of learning.

Market orientations are typically viewed through the lens of organizational culture, with an emphasis on
creating the most effective corporate culture possible (rather than a culture at the national level) in order to
satisfy consumers. While different levels of entrepreneurial experience do present themselves in varying
degrees in the strategic direction of BGs, entrepreneurial experience is determined to be significant, however
the most influential factor for BG's success is not universally agreed upon in international entrepreneurship
theory. The study discovered that while risk-taking and innovativeness are different for inexperienced and
seasoned entrepreneurs, proactiveness is the same, and all BGs should demonstrate strong EO when
conducting business internationally. Inexperienced business owners view their innovativeness as their
business model and their innovative technology as a prerequisite for offering their clients value.
Instead, seasoned business owners view technology as an enabler for their international venture, rather than
as a necessary prerequisite for competitive success abroad. It is more crucial that the consumer's
requirements come first, that technology serves the customer, and that the customer follows the entrepreneur
rather than the other way around. In contrast, the study's inexperienced entrepreneurs thought that if they
built it, they would come when it came to technology items. To be clear, the inexperienced business owners
who were interviewed did not believe that the market was changing; rather, they believed that technology
would advance and that consumers would eventually catch up.
While seasoned businesspeople took a more balanced approach while still emphasizing innovation, novices
concentrated primarily on innovation in their products or markets.
When it comes to taking risks, new business owners are more cautious and unlikely to go for hazardous
chances; however, they attempted to have a lower risk-profile and sought out safer alternative
internationalization routes; their lack of experience
Because they had less of a planned strategic plan for a lucrative and sustainable market growth, their
knowledge of the international markets forced them to take more chances. Although the inexperienced
business owners stated that they preferred to avoid taking risks, they actually took and accepted a lot of risks
15
—though they did it unconsciously. Unlike the inexperienced business owners, the seasoned business
owners assumed far greater risk, but by making deliberate choices, they thought they could control it by
creating precise management strategies for expansion. As risk was viewed as an inherent and implicit feature
of international operations, seasoned businesspeople sought out the most effective ways to mitigate it. The
study's conclusion points out that seasoned business owners are probably going to approach
internationalization less gradually and might also be more proactive in seizing chances in international
markets. The volume of overseas operations implies that regular business owners perform better abroad.

Furthermore, it appears that experienced business owners are more likely to choose a rapid
internationalization path because their cumulative experience has better prepared them for the risks they may
encounter in foreign markets. Experienced business owners also seem to be more in tune with market needs
and have a tendency to build toward what the customer demands. The literature that has been studied thus far
appears to agree that an entrepreneur's history—whether it be prior experience or culture—plays a
significant part in the success of their international venture. Many facets of an entrepreneur's background
serve as preparation for their overseas growth.

4.Resource-‐based view:
The literature frequently uses RBV, and some authors in this thesis have already combined it with other
ideas like EO. Keeping track of resources, including information in its tangible or intangible forms, is crucial
to RBV. The resources and capabilities must remain with the company in order to maintain stability and
prevent any kind of spillover that rivals might exploit.
Cunningham, Loane, and Ibbotson (2012) examined up-and-coming game development companies in Poland
and Hungary, emphasizing the knowledge-based view (KBV) and RBV, as well as how first-time business
owners might launch profitable ventures with little funding. The international orientation of a corporation is
generally driven by its key decision makers, whose inventive and proactive risk-taking behavior is often
affected by their prior experiences, such as foreign language skills, access to global networks, or previous
overseas travel. Businesses are seen as a collection of resources with ever-creating, ever-developing, ever-
better assets. Small businesses can be impacted by several factors at once, and the RBV offers a
comprehensive picture of the business, demonstrating that choices about product strategy and entry mode are
not made independently but rather within the framework of coordinated resources and skills. However, RBV
does not address how small businesses obtain these resources. Previous research examines knowledge as the
primary resource for INVs, since they are primarily found in high-tech sectors. Since it places more
emphasis on how skills change over time and views learning as a crucial component of performance and
16
long-term competitive advantage, the KBV gives a more dynamic perspective to RBV. In the study, the
authors talked about how entrepreneurial teams may accelerate internationalization by introducing resources,
networks, expertise, and other implicit resources. Console game creators are more dependent on the
publisher's resources for game distribution than are game developers with online distributes. This means that
certain game developers may have a delayed internationalization process due to unforeseen risk arising from
their network partners or distribution methods.

The games sector is high risk/high cost since it requires a large initial capital expenditure and new
technology may disadvantage the company during the development stage. It is also vulnerable to shorter
product lifecycles and technology shocks. These tiny businesses are frequently in the early stages of
development before formally incorporating, which means the founder is actively working on the product
before launching the business. Some video game companies are even founded as hobbies. Although the
KBV has limitations, researchers have frequently concentrated on how to renew its basic competences,
routines, resources, and abilities. The entrepreneurial team (ET) is frequently credited with being the key to
the company's success, as it is their collective expertise and experience that propels the ET into international
markets. The ET's tacit knowledge may be crucial to INV's performance, but in high-tech sectors like
gaming, the risk may not be contingent on the ET's tacit knowledge but rather on whether or not any firm
knowledge is compromised and leaks to a rival, giving them an advantage. The success of the company may
be aided by experience and routines, so it is important to protect implicit knowledge. Though tangible
knowledge is more easily transferred outside of the company's control than tacit knowledge, internal
resources are equally vulnerable.

The research does demonstrate to us how resources and capabilities are linked to entrance method, and how
important the ET is to quick internationalization because of their network and capabilities, which may
account for a significant portion of intangible knowledge. Additionally, the gaming and high-tech industries
are places where skills and information develop in an unpredictable environment, and manipulating
knowledge might be considered a vital dynamic skill. The aforementioned study shows us that while the
intangible knowledge that ETs offer to the organization makes them indispensable, knowledge itself must
develop and be refreshed to be competitive. Businesses in high-tech sectors are vulnerable to technological
shocks, therefore it's critical that the company's skills and expertise change over time to be competitive. The
gaming industry is perceived as a high-risk, high-cost venture with short life cycles, and successful
companies should protect their proprietary information. Although the article discusses the fragility of
information and the need for skills to be dynamic, it does offer further insights into risk-taking behavior than
the EO studies that were previously covered.
17
5.Marketing capabilities: Resource based view
Scholars can use the RBV in a variety of ways. As we just discussed, capabilities play a key role in the RBV
since they are a central resource, and the RBV is primarily concerned with creating, growing, and renewing
resources. In their 2012 study, Ripolles & Blesa examined the ways in which marketing competencies aided
in the globalization of international new ventures (INVs) and the entry modes that required greater resource
commitment. The entry mode plan must be in place to facilitate rapid internationalization. Riskier entry
options require greater resource commitments, and one important consideration when selecting an entry
mode is marketing capabilities.
The marketing capabilities are one of the factors that the RBV would take into account when determining the
entry mode. The firm's problem is to determine which marketing capabilities can result in improved
performance. According to the study, having strong marketing skills both influences people to choose higher
commitment entry strategies and improves one's success globally. Therefore, INVs should concentrate on
building marketing capabilities, particularly those related to knowledge and information about the market
and how to apply this knowledge and information in subsequent operations. All things considered, this ought
to raise company performance and lower the risk of a new endeavor. Businesses that rely heavily on tacit
knowledge for their products may be vulnerable to the obsolescence of technology assets or other types of
tacit knowledge. However, this risk can be mitigated by boosting learning in order to generate new products.
As was previously indicated, INVs that choose a high commitment entry option in a joint venture or network
partner may be vulnerable to information spillover, in which case even implicit knowledge could be given to
a rival. Although these risk factors should be taken into account, INVs shouldn't be discouraged from
internationalizing early.

The research by Ripolles & Blesa (2012) demonstrates a market-focused approach once more, but
surprisingly, they also suggest a greater presence in the market and a greater commitment of resources to the
market. Market knowledge is a requirement for a high commitment entrance mode, and if crucial tacit
knowledge is needed but cannot be transferred to the new market, a high commitment mode (such as joint
venture) must be selected. It is consequently stated that marketing capabilities should be established and
maintained, together with future uses for the market knowledge, in order to reduce the risk of selecting a
high commitment method. Although Ripolles & Blesa (2012) contended, Cunningham, Loane & Ibbotson
(2012) and Ripolles & Blesa (2012) both focused on enhancing knowledge and capabilities.
Both studies, however, address the importance of preventing knowledge spillover and how sustaining and
growing capacities are critical to a firm's existence. RBV appears to be centered on preserving all resources
in order to minimize risks (material, expertise, and financial) under the company's management. However,
18
one criticism of the RBV is that it solely addresses environmental resources, some of which may be acquired
and others of which may be found in rival businesses. RBV and the effectuation theory, which were
previously discussed by Gabrielsson & Gabrielsson (2013), are similar in that they both emphasize "working
with what you've got" and that decisions made using a company's internal resources shouldn't include taking
on more risk than is reasonable. In this sense, RBV and effectuation theory are a form of risk management;
yet, they have not addressed cultural variations; Ripolles & Blesa (2012), however, placed a great deal of
focus on the market, which mitigates certain risks. According to Cunningham, Loane, and Ibbotson's (2012)
study, the RBV is unable to explain how INVs obtain their resources. Although the RBV is a useful theory
for managing resources—which are crucial and can reduce some hazards—it is not a comprehensive
approach to managing all the dangers associated with traveling overseas.

The market has been the focus of most of the reviewed studies for this thesis thus far. However, foreign
markets differ from domestic markets in terms of culture, competitors, governance structures, growth
opportunities, availability of resources, and financial stability, among other factors. As a result, it's critical
for the company to understand both the home and international market conditions. Yamakawa et al. (2013)
focused their research on emerging economies (EE) startups that are expanding internationally into
developed economies (DE). while it comes to internationalization, these two market categories are highly
distinct from one another. There are unique obstacles to face while internationalizing towards or away from
a market. The study looked at why some new enterprises from EE markets chose to enter the DE market,
which is riskier but possibly more rewarding than the EE market, and why other new initiatives from EE
markets choose to enter the EE market. Previous research has frequently examined new initiatives entering
EE markets; however, EE new ventures entering DE markets have received less attention. It is suggested that
EE expand internationally by taking advantage of two opportunities: first, to improve their standing; second,
to build on their existing knowledge base and acquire new insights. The aim of EE new businesses to go
global is driven by their study, which concentrated on resources and competencies with control over
reputation and expertise as intangible resources.

Since they lack the necessary resources, startups from EE markets must rely on intangible resources when
they expand internationally in order to overcome their competitive disadvantages. As an intangible resource,
reputation is best understood as the stakeholders' conviction that the company can provide long-term value.
As such, the company's reputation should be based on its achievements, actions, and signals, and it should be
maintained by the promises it makes to its stakeholders. A company's reputation can only be as strong as the
perceptions of its stakeholders. Although the risks are frequently equated with those of entering another EE

19
market, internationalizing into a DE market offers an EE new venture access to a larger market, more useful
information, and better reputation benefits.
Entering a DE market, however, may put ventures at a lower risk level because of the decreased degrees of
corruption and danger of expropriation that it offers. When new ventures internationalize to a DE market,
they are looking for new sources of knowledge flows since DE markets provide more advanced technology
and higher learning possibilities than EE markets. According to the survey, companies with a weak domestic
image are more inclined to venture into outside DE markets, as do companies whose founders have studied
overseas. In fact, the likelihood that the company will enter a DE increases with the number of years the
founder lived overseas.
International expertise is therefore proposed as a powerful predictor that can lead a corporation to choose to
enter a DE over an EE. Additionally, the study discovered that CEOs with management or financial
experience have a higher chance of joining an EE than CEOs with a technological expertise. Therefore,
unless the CEO comes from a technological background, proprietary technology at start-up is proposed as a
predictor that the firm will enter an EE over a DE. The results are a little unclear, and the CEO's background
may not always indicate where the company will internationalize. However, it was discovered that a
technologically literate CEO is more likely to select a DE, and that the CEO's background can predict where
the company will internationalize.
The choice of a company to enter EE or DE is heavily influenced by its reputation at home. The study comes
to the conclusion that internationalization from EE to DE can be difficult and risky, but it can also benefit
from new or improved intangible resources.
One criticism of Yamakawa, et al. (2013) is that neither the risk detected in the study nor the manner in
which a new business acquires its capabilities are indicated. What should a new enterprise from an EE
market that is expanding internationally take into account before entering a DE market? Is the project
financially feasible? Since the EE lacks developed resources, a new start-up would likely have less access to
knowledge and less financial resources unless the founder brought with him all the knowledge required for
the start-up to succeed, which previous studies have suggested is the case with many start-ups. The entry
mode, whether the product can be exported, if the entry mode offers an acceptable return on financial value,
as well as other intangible resources like reputation, must all be taken into account when assessing the
financial risk of a new enterprise. A number of questions about how risk is managed by new businesses and
whether or not the challenges change are brought up by the Yamakawa et al. (2013) study.

6. Opportunity-‐based view:

20
Chandra, Styles, and Wilkinson (2012) examined born global enterprises using an opportunity-based
perspective on rapid internationalization. Owing to the disparate descriptions of BGs, the writers looked into
small businesses that had a quick internationalization process. The authors adopted an opportunity-based
perspective and concentrated on the behavioral process of small businesses searching for chances to exploit
outside of national borders. According to the authors' perspective, opportunity development is the process
that determines the path-dependent process regardless of how quickly internationalization happens. This is
especially true when considering an opportunity-based perspective. The foundation for this school of thought
is found in earlier research, the majority of which solely address the firms' internationalization journeys
without accounting for the firm's origin.
The study by Chandra, Styles, and Wilkinson (2012) showed that the features of BGs depend on the
particular context in which they function. In other words, the business environment in which a born global
finds itself, along with its network relationships and past knowledge, serve as the foundation for determining
the internationalization process's nature. Previous research has also verified that BG has a natural global
internationalization path since they bring networks, opportunities, knowledge, and expertise from their past
endeavors to their current endeavor. As with previous research in this thesis, the authors' consideration of
risk quantities is restricted to the various forms of risk and commitment associated with the entry mode that
the firms have selected. Chandra, Styles, and Wilkinson's (2012) study revealed a rise in interest and
dedication to foreign markets also increases the amount of risk and exposure. Previous research has
validated that high commitment entry modes put INVs at greater risk. This is because, in comparison to
export routes, establishing a subsidiary or joint venture entails a larger financial investment and a greater
potential for financial loss. However, it also gives a larger presence in the foreign market. In addition to
having more control over their market presence, INVs have access to new information and capabilities, are
exposed to new opportunities, and may be able to build partnerships and networks in addition to finding new
opportunities. Nonetheless, our study suggests that INVs should think about a higher commitment mode in
order to become more visible in the market and, consequently, be exposed to more chances of risk and loss.

7.Organizational Capabilities: Performance drivers

Most of the research that have been evaluated thus far have discussed risk of some kind and suggested that
improved performance is a secondary goal. However, in their analysis of 107 Israeli BGs, Efrat & Shoham
(2012) distinguished between short-term and long-term performance determinants. Rapid
internationalization results in lower market knowledge accumulation and more operational risk. To name a
few of the hazards, BGs would face greater unpredictability in the foreign target market and have a restricted
quantity of collected knowledge and resources required for the internationalization. Using the Organizational
21
Capabilities (OC) paradigm, the study by Efrat & Shoham aims to explain how internal and external
influences might affect the short-term and long-term performance. The OC paradigm, like the RBV,
acknowledges that a company can gain a competitive advantage by utilizing its core competencies. Even
though BGs often expand to multiple nations in its early years, the firm's strategic performance might be
significantly impacted by its first market. The short-term foreign performance of the BG was influenced by
the strategic outcome of its initial international activity, as stated by Efrat & Shoham (2012). The mid- to
long-term performance of the business is impacted by the early internationalization's success as it enters the
post-entry phase. In addition to risk and uncertainty, the target market elements include environmental
drivers for performance. The nation's political, economic, and social environments could all have an effect
on how well a firm does.

Efrat and Shoham's (2012) study provided evidence in favor of the hypothesis that the dynamics of a firm's
surroundings influence how adaptable its capabilities are. External factors such as market growth, technical
turbulence, and target nation risk influenced the short-term strategic performance, but in the long run, the
competencies of BG became essential for survival. Shoham & Efrat (2012)
predicted that nation-risk would have a detrimental effect on the strategic performance, and their research
confirmed this by demonstrating that BGs are more susceptible to unfavorable country circumstances. In
order to be less vulnerable, especially prior to market entry, this emphasizes the necessity for businesses to
recognize the external elements that could influence them before entering a foreign market and to have the
organizational knowledge to handle the unfavorable influence. Market knowledge was the only internal
element proven to have a short-term influence. The study conducted by Efrat and Shoham concentrated on
the short- and long-term performance and the elements that could negatively impact it, such as risk.
According to the findings of their study, in order to lower risk, BG managers need gain a deeper
comprehension of each target market. Using the acquired knowledge and comprehension of the target
markets, risk-profiles should be established in order to proactively lower risk and enhance performance. The
authors observed that as more market knowledge is accumulated over time, the impact of that knowledge on
BG's performance and importance decreases, and that other markets with comparable features can be served
without requiring the same time-consuming study.

It's interesting to note that the Efrat and Shoham (2012) study varies from the previous RBV studies in that it
also discusses the external environment and performance, with an emphasis on market characteristics that
actively encourage enterprises to lower risk and boost performance. The research unequivocally states that
BGs in technology-intensive industries must do well in their early internationalization phase. Li, Qian, and
Qian (2012) investigated this point. According to the conventional literature on the subject, the target
22
market's economic, political, legal, and cultural aspects, which may diverge greatly from the home market,
present additional hurdles for BG in addition to the dangers associated with their limited resources. When a
company expands internationally, it may find it difficult to outperform larger companies in terms of actual
resources and must safeguard its assets (such as intangible knowledge) at a reasonable cost.
The founder's traits, propensity for taking chances, and aptitude for finding new technologies have
frequently been credited with much of the BG's success. BGs can have an organizational advantage over
multinational companies because of their more flexible and straightforward organizational structure, which
allows for direct communication between managers and front-line staff to generate radical innovations and
increase risk-taking strategies that have a big impact on early internationalization. First movers in their
industry typically enjoy the benefit of first mover advantage, which gives them greater chances to
commercialize their inventions abroad because governments in the receiving nations typically welcome new
technology and reduce entry barriers to get this.

This implies that other firms that follow suit may face difficulties in the same markets since the market
already has the innovative technology from the leading company. tiny technology-based businesses need to
be active in a variety of global markets in order to manage risk and uncertainty. However, being tiny can
have a double-edged effect as it reduces resources but also enhances flexibility. According to the authors, the
relationship between early internationalization and foreign experience is shaped like an inverted U; that is,
knowledge about rivals and markets is restricted in the early phases of internationalization, but it will
gradually develop to a point before beginning to decline again. In their pursuit of global potential,
inexperienced managers are more inclined to take unknowing risks in foreign markets. On the other hand,
with less experienced new businesses, there is a greater inclination for the management to internationalize
early; in contrast, knowledgeable and experienced managers are better able to recognize hazards and, as a
result, are less likely to attempt breaking into foreign markets. The study's results validated the inverse U-
shaped correlation between business size and worldwide experience during the initial stages of
internationalization. Additionally, a positive and significant relationship was discovered between early
internationalization and success for businesses, indicating that there are major advantages to early
internationalization that outweigh the expenses. While it is true that early internationalization exposes
businesses to high costs and risks, early internationalization has also been shown to enhance performance,
suggesting that, with proper management, the high costs and risks are worthwhile.

A company's small size and limited resources don't have to be a barrier; but, in order to enhance
performance - particularly in the early stages of internationalization -firms need make significant
investments. in research and development. So, in order to keep ahead of the competition, businesses should
23
concentrate on lowering risks and improving performance by understanding the elements that influence the
market and creating innovative technologies.

Although the firm's skills have been extensively researched, they are just one of many variables that might
affect how well a company performs. Fernhaber (2013) investigated, using a dynamic capacities approach,
the relationship between INV's internationalization and performance. arguing that in order to be successful in
internationalization, a company's capabilities and routines must be reconfigured, with survival peaking at the
point where risk and resources are evenly distributed between domestic and international markets. The
liability of foreignness is primarily responsible for the added risk and expense associated with
internationalization. It is crucial to ascertain whether there is any correlation at all between the performance
of the firm and the internationalization process, or if there is a positive or negative relationship. The
development of both internationalization and dynamic capabilities occurs simultaneously, and Previous
studies have suggested that INVs' early pursuit of foreign markets correlates with the development of critical
dynamic capacities, which significantly impacts the INV's survival.

Thanks to technological advancements and a growing demand for a wider range of products, INVs can now
compete with huge multinational firms by customizing their products for a global niche market. An INV
may decide to expand internationally in order to take advantage of its own innovation before rivals copy it,
provided that product is unique. Both the level of skill development and the extent to which advantages are
realized impact an INV's ability to survive. The study discovered that performance and internationalization
are strongly supported for growth and survival. It was discovered that while the odds of survival are higher
with lower levels of internationalization, INVs were not able to achieve significant sales growth. High levels
of internationalization boost sales growth, but they also expose businesses to higher dangers. INV's survival
benefited from internationalization up to the point when 45% of sales came from foreign markets. That is to
say, businesses that sold up to 45% or less of their total sales outside of the country were more likely to
survive and have higher rates of sales growth. Businesses with more than 45% of their sales coming from
outside the country generally underperformed in terms of sales growth and, thus, had a worse chance of
surviving.

This study suggests that there is a threshold for too much worldwide sales before performance starts to drop.
The amount of international sales and level performance growth are interwoven. This implies that, at least in
theory and during the initial phases of internationalization, it is possible to control international risk by
generating the majority of sales in the home market. It is possible that at some point, foreign sales may

24
become too profitable to ignore the home market and will surpass the 45% ceiling discovered by Fernhaber
(2013). At this latter stage, the decreased sales growth and performance may be acceptable. Additionally,
Efrat & Shoham (2012) argue that as foreign markets get more familiar, internationalizing a business
becomes safer over time.

8.Governance structure:

Aspelund & Moen (2012) investigated the use of entrepreneurial hybrid structures by BGs to manage their
global operations in order to get around resource constraints. A joint venture with a foreign partner could
have a hybrid governance structure; in essence, a hybrid governance structure is the blending of two or more
organizations. BGs typically serve a broad geographic area while focusing on a certain consumer niche, and
earlier research has shown that BGs' governance structure plays a major role in their performance. In their
distribution networks, BGs frequently rely on complementary resources from other businesses. The company
may profit from having a partner, joint venture, or close relationship, but a hybrid structure may also be
dangerous if the power dynamics are unbalanced. Successful collaborations require the BG to establish
confidence quickly because diverse partners may have complementary talents. Previous studies have shown
that BGs typically select minimal commitment entry options to reduce risk and get around resource
constraints.

Aspelund og Moen's (2012) study was unable to determine the effects of various governance systems on
various business types and their foreign marketing endeavors. The sample met the recognized criteria for a
Born Global sample, as demonstrated by earlier studies. The study revealed that all organizations eventually
have a governance structure that is quite similar, and earlier studies have demonstrated that hybrid
governance structures can be an effective remedy for newly established firms. Although it is extremely
dangerous for any long-term foreign market management, it can even be a necessary answer in the early
phases of internationalization. While joint ventures and partnerships have frequently been mentioned as
beneficial, networking contacts as an important governance structure , to global market expansion, it's
noteworthy that Aspelund & Moen (2012) found no evidence linking it to this effect. Aspelund & Moen
(2012) argue that all BGs are headed toward the same governance structure, regardless of how they began.
25
While having a partner or starting a joint venture may be beneficial at first to reduce costs and risks, over
time this benefit may not be advantageous. However, when this critical point of independent governing
structure happens has not been discussed. This basically indicates that the company will eventually be
prepared to stand alone and be able to control its risks, cut costs, and seize new chances.

Fernhaber & Li (2013) investigated the effects of geographically close enterprises and alliance partners on
the firm's internationalization as well as how network ties expose new ventures to a global audience.
However, network relationships can positively influence new ventures internationalization by helping them
find new opportunities in foreign markets, share resources, and even replace each other. New ventures are
exposed to the liability of foreignness as they pursue internationalization. Fernhaber & Li (2013) outline
three advantages of global exposure through network connections. First, fresh chances for international
expansion are identified and taken advantage of by entrepreneurs through their network connections. This
can lower expenses and lower risk when entering an unknown international market. Second, networks may
result in the development of an exchange relationship that gives new businesses access to resources and
legitimacy, which may boost growth and performance on a global scale. In order to enable a new company
to compete with local firms, crucial information about international markets, including the resources
required for entry, rivals, and consumer categories, can be obtained through network connections.
Businesses that combine their resources and skills can complete activities that might otherwise be more
expensive or dangerous. According to the survey, networking and exposure to other countries continue to be
important drivers of internationalization.

An alliance partner might mean the difference between a new company's success and failure since they
provide additional resources that a single enterprise might not have had access to. An alliance partner might,
for example, offer economies of scale or crucial market knowledge. Thus, by using their network
connections, new businesses can lower risk and expense. The study by Fernhaber & Li (2013) is based on
the fundamental ideas that risk may be reduced by employing network partners to find new partners in
overseas markets that are interested in conducting business and to explore new opportunities. This follows
the same line of reasoning as the Gabrielsson & Gabrielsson (2013) study; both studies contend that network
linkages should assist in mitigating risks and opportunities and cost.
The study conducted by Freeman, Deligonul, and Cavusgil (2013) examined the use of restructuring by BGs
as a market entry and exit strategy. De- and re-internationalization are thus key components of BG's
internationalization process and strategy when entering a foreign market. The purpose of the study was to
determine how the management of the BG apply the de- and re-internationalization process.

26
tactically and the manner in which this internationalization pattern is selected. Partial market withdrawal is
another option; for example, maintaining local import operations while leaving the export market.
Additionally, companies operating in multiple markets have the option to internationalize to a new foreign
market, de-internationalize from another, and re-enter a third market. The authors aimed to provide a
comprehensive understanding of the swift internationalization of BGs, emphasizing both the inward and
outward oriented activity.
Reducing international exposure is known as de-internationalization, and the degree of reduction varies
based on the entrance technique (IE). A subsidiary may continue to import goods but cease exporting them
to the area, or the business may entirely remove itself from the area (i.e., cease all overseas sales and
services). This is a crucial theoretical perspective for the thesis since internationalization and de-
internationalization can alter the degree of risk-taking and, to some extent, the proactive nature of
entrepreneurship. In response to changes in the global market, BGs restructure their overseas assets to
maintain growth and continue operating internationally. It was discovered that the BGs collaborated closely
with its international suppliers for new in order to accomplish this inward-outward activities.
The BGs shifted from their short-term predatory behavior to long-term strategic alliances with closer
coordination by emphasizing long-term connections. A shift from exporting to strategic alliances was
necessary for the strategic reorganization. Strategic reorganization is seen as a relational management
technique to preserve international ties, rather than necessarily implying a lowering of commitment, such as
moving from export to import (or vice versa). Through strategic reorganization, a company can improve its
ability to form relationships and progressively build its social and business networks, which increases its
experience and understanding of other countries. Through strategic alliances, BGs can enter and re-enter
markets more quickly than they might through exporting alone, which quickens the pace of
internationalization.
The existence of a company depends on its overseas business contacts, therefore a BG's proactive decision to
cut sales to its current foreign clients often aims to lower both the company's and the customer's expenses.
This indicates that maintaining relationships and improving the firm's overall relational qualities are
advantageous. The strategic reorganization gives companies greater flexibility to follow rivals and customers
into overseas markets, respond faster, seize the opportunity of being first movers, or establish a new
relationship with a former market. By keeping in touch with foreign buyers and sellers through an ongoing
shift between inward- and outward-oriented activity, the BG managers are able to acquire new competences.
What does this signify in terms of managing risks? The hazards could potentially be reduced by the constant
transition between de- and re-internationalization. De-internationalization restricts the company to a market

27
that might no longer be lucrative or involve too much risk. De-internationalization, while not necessarily a
total withdrawal from the market, does reduce the firm's exposure. When the market is judged profitable
once more, the firm can re-internationalize to reconnect with past contacts and forge new relationships
through expanding its network, which enables quicker and more convenient access to new markets. All
things considered, the theory offers a fresh perspective on fast internationalization and explains how BGs
can control their hazardous behavior to reduce exposure before it causes financial harm to the organization.

9.Discussion of literature review:

A number of subjects and theories were covered in the literature review, and several of the authors' methods
were comparable. First and foremost, it appears that not enough risk management theory was applied in the
literature review to definitively address the research topic. The literature review has not revealed a clear
pattern of how INVs/BGs manage risk because there doesn't seem to be a pertinent approach for INVs to do
so. To shed light on the theoretical elements—at least according to the authors of the research in the
literature review—would best establish an INV's general risk management, I will, nevertheless, give a
discussion of the aforementioned literature study. The most significant and practical ideas raised by the
writers in the literature review will be summed up in this framework, which I have termed the three phases
to risk management.

Market emphasis must be the first step toward a broad risk management framework based on the literature
evaluation. The authors of Cunningham, Loane & Ibbotson (2012), Deshpandé, et al. (2013), Odorici &
Presutti (2013), Efrat & Shoham (2012), and Boso, Cadogan & Story (2013) appear to agree that businesses
should concentrate on the market in order to boost their capacity for expansion and survival. Businesses that
gain market knowledge have experienced faster growth as a result of their improved comprehension of
consumer demands, cultural norms, market trends, rivals, accessible absorbable resources, and overall
market service strategies that minimize company risk.
Risk profiles that are applicable to several markets were covered by Efrat & Shoham (2012). Over time,
these profiles will assist the company in entering new markets without requiring it to learn a lot of new
information. The cultural norms and commercial demands will shift as the company expands its reach
beyond its native market. Because of this, a company's strategy and product should be flexible, and acquiring
market research will help the business introduce its services, goods, or brand to the public. Thus, "Market
Adaptability" is the first item in my basic risk management methodology. According to Deshpané et al.
(2013), habitual entrepreneurs designed their products to meet client and market demands, which is a crucial
aspect of market adaptation in the three steps to risk management.

28
The most widely agreed-upon topic among the authors in the literature review is market adaptation, which is
prioritized in order to ensure the firm's growth and properity. Additionally, by adapting to the market, the
firm will not be surprised by cultural differences. It entails lowering risk by guaranteeing expansion and
durability. Understanding the dynamics of the market also makes it safe to select a bigger commitment
mode, and risk should be minimized by expanding and learning about the industry. Additionally, the
company ought to perform better.
A network partner, or partners, should be found to share the financial risk and increase the likelihood of
discovering new information, resources, and capabilities, ensuring the company can handle the challenges of
the new market. It is sometimes stated that getting assistance in the early phases of internationalization is
essential to assisting INVs in overcoming obstacles and navigating market hurdles. The writers of
Gabrielsson & Gabrielsson (2013), Aspelund & Moen (2012), Fernhaber & Li (2013), and Sepulveda &
Gabrielsson (2013) all contributed to a theoretical framework that utilized network connections to aid a
corporation in gaining exposure abroad or in obtaining resources and skills. Thus, Network Partners is the
second of the three phases to risk management, helping the company reduce risk by sharing financial risk
and looking for new opportunities, gain reputation, find new resources, knowledge or capabilities needed for
growth and survivability.
The third point is significant, even though just one study was examined that used the re-structuring technique
proposed by Freeman, Deligonul, and Cavusgil (2013). The last argument is based on this strategy.

It makes sense to incorporate a safety net into a risk management framework when using strategic
restructuring as risk management. It is necessary to think about a strategic restructuring by de-
internationalizing or re-structuring the current corporate presence in the market if the market changes and it
is unable to adapt to it or if it is becoming more difficult to locate network partners and the firm's future is at
risk. Thus, these are the three steps of risk management.

1) Market Adaptability (Serve the right demographic with the right product in each market)

2) Network Partners (transfer risky part of business and import new resources/capabilities)

3) Re-‐structuring (Evaluate if the market commitment should be increased or decreased (de-‐

internationalization))
In order to avoid having a rigid business structure, these three steps should be ongoing processes. By
adhering to the model, the company remains adaptable, changing to meet the needs of the market and
customers. It also constantly seeks out new opportunities to seize and partners to strengthen the company.

29
 Finally, by regularly assessing whether a restructuring is necessary, the company will be better prepared
should a crisis arise.

The Risk management model is as follows :

Based on the literature review that is a part of the thesis, the model that was previously discussed may be
seen as an overview of the most prudent steps that one can take to avoid taking risks. Prioritize finding
network partners who can assist you. Next, ascertain whether the organization and dedication of the
company are optimal for expansion and longevity. Lastly, ascertain whether the company can once more
adjust to the market in the event that possibilities or adjustments arise. This process of evaluating the past,
present, and future is continuous. To synthesize the theories into a theoretical structure, the model (figure 1)
was created.
It is imperative that the outcome of the literature review be juxtaposed with a theoretical framework for risk
management and that the literature review's risk management theories and the model that is derived from it
be evaluated in light of field-tested risk management.
A closer look into field-tested risk management theory will yield further insights into how risk impacts the
company, what kinds of risks have the biggest effects, and how to control them. Additionally, different
circumstances call for different judgments to be made; not all issues have the same answers, and not all risks
are handled in the same manner. That's why the following chapter - which offers insight into risk
management- is crucial.

30
 RISK MANAGEMENT THEORY

This section will first go over the many hazards and how to prevent them, then it will explain the risk that is
most pertinent. A more thorough discussion of the risk framework will be included later in the thesis to shed
light on the risk and risk management literature from this chapter and the literature review. In contrast to the
phrases used haphazardly in the literature study, the idea of risk is examined in greater detail in the literature
on risk management. This indicates that the risk's dimensions and categories, likelihood of occurrence, and
severity (impact) will all be covered in this section. Walker (2013)
While risk type and chance of occurrence are key ideas in risk management, it's also vital to weigh the
opportunity vs the risk's impact (severity) while weighing the risks involved in a project. An asset need not
be characterized by its worth; the sort of risk reveals what can be lost. Most people would assess this to be a
financial loss. Though most studies consider export to be the safest type of internationalization, exporting
commodities still carries some risk. The probability of occurrence describes how probable the uncertain
event is to occur. Certain organizations can also rely on past data. Walker (2013)
A shipping company will probably figure out how much it would cost to lose a ship in a storm, but since
ships are large and can navigate using radar, the likelihood of losing one is minimal. Customers also lose out
on the value of the cargo when a ship is lost, in addition to the shipping industry suffering a significant loss.
This gets us to the risk's impact, which indicates how disastrous a loss would be for the company. In contrast
to a major maritime corporation with hundreds of vessels, which would be better able to withstand the
financial loss of a single vessel, a single ship owner would lose everything if the ship sank. The risk event's
gain or loss determines how serious it is; not all risk events result in a total loss. Not every investment for
investors is profitable, and not every unsuccessful investment results in a complete loss. Before a whole
collapse occurs, some investments offer the option to remove your money and accept your losses.
If the risk event materializes and a loss is about to happen, it should be minimized or controlled for the
optimal result. Not all risk occurrences can be controlled or minimized, but if they can't, at least they should
be acknowledged so that future investments can be made with more efficiency. Walker (2013)
A single deal has the power to decide the company's destiny for INVs with little funding, so it must be
carefully chosen. Not every opportunity is a surefire way to become financially secure, therefore before
jumping at the first possibility, one should weigh the potential reward against the potential danger.

31
1.Types of risks:
The risk dimensions are comprised of two categories: finite risk and persistent risk. Explicit risk and implicit
risk have varying scopes and impacts. The following describes the four aspects of risk; later in the chapter,
we'll talk about how they might be mixed. Walker (2013)

When a business choice or investment is directly related to the risk being assumed, it is known as explicit
risk. when the decision maker is not surprised or kept in the dark about the risk that is obviously present.
There is no increase in predictability or ease of handling associated with this risk. Walker (2013)

When a risk is acknowledged as a component of a larger business decision even though it is not immediately
apparent, this is known as implicit risk. The risk can be based on multiple linkages and is frequently
unknown beforehand. Walker (2013)

Purchasing and selling maize, for example, entails the explicit risk of choosing the best crop, which is priced
subsequent to market volatility. Before agreeing to a delivery, the vendor or the buyer can determine how
much risk is involved. The distribution of maize has an implied risk in the event that bad weather prevents it
from arriving on time or if something goes wrong with the transportation that damages the corn. While a
corn merchant can monitor the market and determine the optimal times to buy and sell, the latter is
unpredictable but inherent in the company as a potential outcome of a delivery. The next two dimensions
outline the various impact kinds that risk might manifest itself in. Walker (2013)

Most of the time, finite risk stays inside the established bound. In certain situations, such as an investment
loan where the creditor cannot control more than the money borrowed and where the loss is defined and
known to the loan amount once the risk materializes, the maximum loss is restricted to a known sum.
Although it can be challenging to determine, the chance of occurrence is at least finitely described. Walker
(2013) Because persistent dangers have long-term effects, they should be taken more seriously. Therefore,
the expense associated with persistent risk is not a one-time thing; rather, it may increase and endure over
time. For example, there is a constant risk of losing oil drilling or brand reputation because of events that
occur over time. The risk of environmental harm from oil drilling is constant, and cleaning up oil spills may
cost money. Reputation for a brand can be compared to a rollercoaster, always rising or falling. Liability
hazards are a common example of persistent risk. (Walker (2013).

32
2.Combinations of risks:
Depending on the business choice, the four aforementioned dimensions can be merged in different ways.
The most typical pairings are.

Absolute risk - It is an explicit, finite kind of risk that is considered in the majority of business choices.
Absolute risk in business decisions is quantifiable, measurable, and restricted in scope. Market-traded assets
are common instances of business decisions that come with explicit and finite risks. Purchasing a bond and
making a wager are two examples of explicit decisions that come with finite losses. A business that makes
an explicit, limited-size choice to buy inventory or an asset does so. As was already established, not every
business transaction carries an explicit risk, and not every decision has a limited potential for profit or loss.
Walker (2013)

Embedded risk- Implicit risk with a limited or finite outcome is what it is. Consider a joint venture in an
overseas market. There are dangers associated with being in a partnership that can be measured and
quantified (explicit risk decision), but there are other risks that are difficult to measure, identify, or even
envision (implicit risk). Managing risks that are not under the control of the organization is the greatest
challenge. Walker (2013).

Industry/strategic risk- Because of the choice of and approach to staying in the sector, it is explicit in
nature. Every business has its own set of risks. For instance, the technological advancements and ubiquitous
nature of digital media expose printed media to risk. The media industry is changing due to technology, and
those involved face risks to their future ability to produce media as well as to the enterprise as a whole. As a
result, the risk to the media industry is ongoing but made clear when choosing which industry to participate
in. Walker (2013)

Infinite risk- It is both persistent and implicit in nature since certain risks could change over time and
eventually materialize. The example of the oil leak above, for instance, is implicit and persistent in nature.
Because an oil spill is a chronic risk event rather than a one-time occurrence, it poses an implicit and
persistent risk to the enterprise. This is because it is a non-selective risk. Walker (2013)

These categories outline the various risk dimensions, each of which represents a different kind of risk to the
company. Within these dimensions, market, credit, operational, reputational, and regulatory risks are the
most prevalent types of hazards. Certain industries are more vulnerable to certain forms of risk than others

33
since not all businesses operate in areas where these risk types are present. Below is a description of a
number of typical risk types that will be covered in more detail later in the chapter. Walker (2013)

Common risk types consist of the following:

• Regulatory Risk: Modifications to laws, tariffs, taxes, and other politically motivated policies that may
have an impact on the enterprise's profitability and capacity to conduct business.
• Reputational Risk: The effect that news, rumors, or tales have on a company's brand and image. Usually
motivated by commercial contacts, products, or procedures.
• Operational Risk: This type of risk is the possibility of suffering a loss as a result of either external
occurrences or insufficient or unsuccessful internal processes, people, or systems.
• Credit Risk: The likelihood that accounts receivable will not be paid. This is typically a major function for
banks. It's a function that's expanding as more people give credit subtly.
• Market Risk: The danger brought about by the state of the market as it affects how assets are valued and
priced. Think about real estate and things that are difficult to sell, like art and collectibles.

Due to their deliberate choice to internationalize into that market, many businesses are primarily exposed to
market risk. This is favorable because the risk is understood ahead of time and is directly related to the
investment. In contrast to market risk, operational risk is inherent to the business and implicit in nature
because it is uncertain when the operation's risk event will transpire. Regulatory and reputational risk are in
the same category of implicit hazards as they may have an unknown source. Due to changing trade laws and
regulations, exporters in particular may find themselves faced with trade barriers and will need to find a
means to minimize or eliminate losses. Walker (2013)
The table below summarizes the dimensions and categories of risk and provides instances of the various
risks to the firm. The table, which was assembled from R. Walker (2013), provides an excellent overview of
the ways in which the dimensions and typical risk categories are combined.

34
Recognizing the different types of risks is crucial because it allows you to reduce exposure to risk or
mitigate it. This is a basic idea of risk management: most authors concur that some hazards are best avoided,
and knowing when to reduce or eliminate risk can have a significant impact on an organization's entire
trajectory.
Businesses that enter new markets and experience uncertainty typically deal with a variety of
obstacles (entry method, rivals, financial stability, etc.) and would rather go the route with established
results. The ability to change or control risk factors to lessen unfavorable outcomes is essential to the
survival of the company.
A company must learn more about the connections between implicit and explicit risks and take steps to
disentangle them if it want to transition from an implicit risk scenario to an explicit risk one. If the company
is experiencing ongoing risk, it may be able to reduce asset exposure and even turn the risk into a limited
risk by changing the way assets are affected. Absolute risk is the best kind of risk for businesses, as the

35
above table demonstrates; all losses are recognized and acknowledged as a part of the business decision and
are restricted to a single, discrete event.
Strategic or industrial risk is a little more concerning since, while losses are still predictable, they can happen
more than once. If the risk is not controlled or reduced to a finite event, it could result in significant and
possibly irreversible financial losses for the company. Due to the fact that implicit risk is unmanageable in
its implicit state and has no known probability of occurrence or connection to the business decision, it is
significantly more serious than explicit risk. Risks associated with choosing one country or technology over
another are examples of business decisions that are clear in nature but endure over an extended length of
time. These risks include those related to technology and country selection. Within the table's implied
column, the infinite risk is the least desirable of all because it has no known connection to the business and
can happen repeatedly over an extended length of time.

Attacks on the company's reputation or compliance with regulations may constitute infinite risk. Depending
on the industry, nation of origin, and specific changes to corporate laws or regulations, a company may find
itself in the infinite risk category. The same is true for losing a positive reputation; some businesses never
fully bounce back from such setbacks and either fail financially or are bought out. It should be remembered
that the company's actions could lead to changes in business regulations, so it's important to manage them
appropriately. Generally speaking, businesses should always look for the least of two evils. In other words, it
should aim to restrict exposure to a limited occurrence if the risk is persistent, and if the risk is implicit, it
should try to understand how the risk is linked to the operation. (Walker 2013)

The figure shows risk reduction improvements moving across risk types.

36
The chart indicates which way businesses should aim to change their risk: if they are exposed to infinite risk,
they should try to change it to industry risk or embedded risk. Although the risk remains exposed to
recurrent occurrences when it is transformed from an infinite risk dimension to a strategic or industry risk, at
least it would be apparent and hence known, making it easier to avoid. The firm would at least go from
persistent exposure to a finite event by moving along the implicit column from infinite risk to embedded
risk, which would maintain the exposure in the implicit column. A business might research the risk exposure
and identify a way to make it into a less exposed risk dimension. (Walker 2013)
However, as was indicated at the beginning of the chapter, the likelihood and impact of the risk are also
significant factors. This is also the reason I've included a brief severity and frequency structure. High
frequency and high severity risks should always be avoided as they leave the firm most vulnerable; low
frequency and low severity risks, on the other hand, might go unnoticed. Depending on the kind of risk
involved, yes. Walker (2013)

Low frequency and low severity. (LFLS)

Low severity and low frequency risk is often not even acknowledged by the firm, but they can be a learning
opportunity to the firm to enhance the operation. Perhaps the risk can even be shared with a business partner
that may have better capabilities to handle the investigation. (Walker 2013)

High frequency and low severity. (HFLS)

This type of risk happens often, yet are not material nor does it have to be critical, but another opportunity
for learning and improving. However, the high frequency of this risk makes it a nuisance and inconvenience
and should be investigated to ensure it doesn’t grow in severity. (Walker 2013)

Low frequency and high severity. (LFHS)

These kinds of hazards are frequently fatal to a company because they don't occur frequently enough to be
understood or to allow for a reliable prediction of occurrence. With the possible exception of natural hazard
risks like fire, these hazards are difficult to transmit and may result from administrative choices. Because of
this, a company should see risk as a chance to spend, not just to lower the company's risk but also to
safeguard the company's profit-making process. Since this kind of risk is uncommon, it's possible that few
CEOs will encounter one, and some may choose to ignore the LFHS risk over an extended period of time
(let's say 15 years) because of its low likelihood. Nevertheless, given the fate of the firm in peril, this
approach is similar to gambling, and the firm may lose everything. (Walker 2013)

37
 Figure 2.2

High frequency and high severity. (HFHS)

This type of risk is the most hazardous and has the greatest potential to bring the company to an abrupt end.
This kind of risk needs to be avoided at all costs; the company needs to be proactive, creative, and
resourceful when it comes to identifying potential risk situations. Walker (2013)
The following page's figure illustrates the firm's susceptibility to varying risk intensity and frequency. This is
done in order to provide a summary of escape routes from these kinds of situations. While it is not possible
to completely eliminate all hazards, as was previously mentioned, the company may be able to reduce the
risk to a lower level. Walker (2013)
The figure also show the different strategies connected with the different impacts and severity dimensions
and how the firms act to manage the risk. How vulnerable the frequency and severity of the risk impact
leaves the firm is also shown in this figure, which is very important when choosing if a strategy.

Assuming a company enters the export market and is therefore in the low vulnerability risk category, it
indicates that it is exposed to low frequency and low severity risk because it does not exceed its present
inventory. The severity or frequency of the risk increases as the company enters new markets and nations,
thus it must take steps to reduce or eliminate the risk. It's possible that the company established a subsidiary
38
in a favorable nation only to discover later that the country's regulations had changed. In this case, the
subsidiary might no longer be worthwhile and ought to be closed. To remain in the market, the company
should endeavor to sell, share, or invest .

After identifying the risks, the company must consider its options. There are a number of options available
when dealing with known risks. While it might seem desirable to transfer or avoid the risk, if it falls within
reasonable bounds, it might be accepted without hesitation or lessened in intensity. Most likely, a choice
must be taken to lessen the detrimental effect on the company. Risk is typically accepted once it is
acknowledged as either a component of the company's operations or an inheritance, even if it is frequently
easy to brush it off as a necessary evil of conducting business. Walker (2013)
R. Walker (2013) developed a risk management paradigm that includes five key choices: stay in the firm,
transfer, minimize, accept, or leave. Risk strategies must be in line with those who are making decisions
about capital allocation, which is typically top management in the risk-exposed organization. This is because
a decision cannot be made until a link between management and capital allocation has been created. Risk
contagion, or the spread of risks when they go unchecked, indicates that risks that are motivated by
economic factors are frequently connected. A shock to the company's finances could make it even more
vulnerable and increase risk, which could be implicit or ongoing.
Consider a company that has experienced a shock to its resources, leaving it for an extended length of time
resource-deprived. It might face finance or operating concerns during this time, which affects the company
over time and could make the challenging and resource-poor period last longer. Therefore, the ability of
management to prevent risk from spreading by taking prompt action in response to risk is a critical
component of risk management. In figure 2.3 on the following page, the five primary decisions that
management can make are displayed. Walker (2013)

The 5 major risk decisions:

39
The five primary decisions are depicted in the above graphic and have already been discussed. The first
thing you should do is explore for alternatives in order to reduce the risk. Reducing risk assumes that the risk
is known and express. Transfer risk comes next, indicating once more that the risk is known and that the
alternative is to find a way to move the risk out of the company, or at the very least, sharing the risk should
be taken into consideration. It is crucial to acknowledge the risk occurrence in the event that it materializes
and then concentrate on comprehending the exposure. If the risk is implicit and so unknowable, it is crucial
to identify the exposure source before concentrating on risk mitigation and exposure impact reduction.
Finally, managers have the option to leave the company. When the level of risk endangers the company's
survival, this is the last option. The company is exposed and falls into the high vulnerability area of figure
2.2, meaning that there is very little room for managerial discretion. If options don't work out, the manager
may be left with no other choice than to leave the company. The risk should be avoided, but if it can't be, it
may be difficult to transfer or mitigate.

40
3.Risk Management literature discussion:
The chapter above discusses many risk categories and offers a thorough understanding of the risks that an
organization may encounter when going global. Most businesses would have to deal with explicit risk during
the pre-entry internationalization period as they look for possibilities and assess them to determine which
will be most profitable. It is more likely that an implicit risk event will occur once the firm is founded in the
post-entry period, and it must be addressed appropriately. Given that the firm is aware that absolute risk has
a finite frequency and impact, it makes sense to be in a scenario where it is known to be limited, as Table 1.0
illustrates.

The CEO should consider exiting the business as a last resort among the five major management decisions
(figurer 2.3), as no other option is likely to sufficiently minimize the harm or be available to them. A risk's
frequency and impact should be assessed; even a low-severity risk with frequent occurrences can put the
company at a moderate vulnerability level (figure 2.2). The CEO should then decide which of the five major
options to use to manage the risk and which course of action would adequately remove the company from
danger.

The chapter on risk management theory taught us that not all risk is obvious, and some risks are embedded
in the operation and can be hard to avoid, however, they can be limited to a single event.

The type and frequency of the risk indicate the degree of vulnerability to which the company is exposed.
When these two are coupled with the five management decisions, the risk management framework provides
a framework for managing business risks. A company that decides to go global must assess the risks it may
encounter as well as keep assessing and looking into the risk factors. Once the danger has been located and
its likelihood of occurring ascertained. Depending on the frequency and seriousness of the risk occurrence, a
corporation that is aware of the risk in advance can take appropriate action by avoiding, transferring,
accepting, or mitigating the risk.
It might be a low effect, finite risk occurrence that falls within acceptable bounds (absolute risk), or it might
be a chronic or embedded business risk. Whatever the risk, something needs to be done to keep the company
from getting worse. There are four simple steps that summarize the risk management theory chapter above,
which I have illustrated below.

41
Risk Management Framework

Identify → Evaluate → Decisions → Strategy

Type of risk:
Vulnerability: Avoid Risk Find alternative course
Implicit/Explic
Low/moderate/hig Transfer
it
h Risk
Finite/Persistent Find
Frequency/Impact
counterparties/insurance
Accept risk
(Absolute
Risk) Understand exposure/

(Embedded Risk event/factors + Reserve

Risk) Mitigate capital for risk events
(Strategic Risk
Risk)
Understand and Reduce
(Regulatory
Exposure
risk) Exit
Business
Find company/risk buyer

Table 2.0 ( R. Walker 2013)

42
Once the different forms of risk have been identified, the company can assess its level of susceptibility by
determining if the frequency and impact of the risk event qualify as a low, moderate, or high vulnerability
risk event. Through understanding the nature of the risk, its frequency of occurrence, and its impact,
management may decide on the best course of action and implement a strategy that will yield the best
results.
When a company expands internationally into multiple markets, it may encounter various obstacles. By
being aware of these ahead of time, it can choose to mitigate risk. When market uncertainty becomes too
great, the company's plan of action is to find a different path, which could involve selecting a different
market or entry mode. Transferring the risk to a partner could be the plan because the market might be too
profitable to ignore. These risk classes are essentially defined by the enterprise's clear selection of the least
hazardous project, which lets it know exactly what it is getting into.
Other difficulties could emerge when the company is well-established in the market, and they might be
implicit in nature. An example of an embedded risk in operations is the possibility of equipment
malfunction, but if the equipment is fixed, the risk event is over. Using the risk framework below, the risk
was recognized as a discrete event that was integrated into the process and assessed to put the company at a
low to moderate risk of equipment malfunctions, with varying degrees of severity and frequency. Next, the
management must determine whether to transmit, accept, or minimize the risk. The incident that caused the
equipment malfunction in the production facility might happen again, but it might not be for a long time. In
that case, management might choose to accept the risk as a necessary part of conducting business and then
lessen the impact. By first figuring out what caused the malfunction, the company can install failsafes in the
equipment, reducing the severity of the malfunction.

The decision that contains and restricts exposure to the least amount possible is the one that management
should make in order to determine what is best for the company. It could be necessary to take action to stop
the exposure from spreading. In the aforementioned example, the company understood the risks involved
and the absolute risk to its operations going forward. However, as time passed, the risk transformed into an
embedded risk with a larger degree of severity impact on the operation. If the issue is not addressed, it could
become more persistent and spread, placing the company in figure 2's endless danger zone. Failing to control
the spread of risk has the secondary effect of restricting management's options, and when risk becomes more
difficult to transfer or reduce, the company may be left with no other choice except to close down. To reduce
the exposure, management should, however, attempt to sell off the consistently hazardous assets or move
them between companies.

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4.Comparative analysis: Literature review and risk management theory:
In order to address the research questions, this chapter will analyze the lessons we learned about risk from
the risk management theory and literature review chapters. It should be highlighted that, while applying R.
Walker's (2013) risk dimensions approach, businesses may encounter multiple risk kinds simultaneously.
The three risk categories that are most pertinent to this thesis's research topic are operational, regulatory, and
market/country risks. Since INVs are typically linked to exporters and high-tech industries, businesses in
these sectors will almost certainly encounter risks related to the market and technology. These industries
have the advantage of frequently being able to foresee and understand the risk before deciding to enter a
market; the risk management theory chapter informs us that this is explicit risk, meaning the company
chooses the level of risk to which it is exposed. Additionally, the literature review chapter reminds us that
businesses should concentrate on their target market and clientele. Over time, the company gains market
expertise, which should eventually lower market risk. The company may tailor its product and service to the
needs of its clients by adjusting to the market, which should reduce the likelihood and frequency of risk.

Table 1 suggests that having liquid assets—i.e., easy to convert to cash and easy to exit the market may
reduce market risk. Market risk is a restricted exposure that is solely related to the capital invested. Walker
(2013) It is perfect for INVs to keep their risk exposure low. Additionally, by concentrating primarily on
well-known areas, INVs can gain market expertise and peacefully adjust to customer requests. If the
exposure is limited and does not beyond the investment, exporters are an excellent example of INVs that
profit from small market investments. Examples of such investments include exported items or a warehouse.
It might become even more crucial to understand susceptible business areas while the organization is
manufacturing its own products. Both theoretical chapters concur that businesses should recognize their own
constraints and choose the optimal course of action that carries the least amount of risk. Businesses should
identify the risk associated with opportunities early on and take proactive measures to mitigate it. Compared
to export-only businesses, which could depend more on favorable market circumstances to sell their goods,
production companies are more likely to have embedded hazards related to their country, industry, and
operations. Nonetheless, identifying the firm's limitations and key skills is a typical step for all sorts of
businesses that wish to be proactive in risk prevention and risk spreading.
Network connections are one way that risk is handled, according to several writers in the literature review
(Gabrielsson & Gabrielsson (2013), Sepulveda & Gabrielsson (2013), Aspelund & Moen (2012), Fernhaber
& Li (2013)). However, it's unclear exactly what kind of risk is transferred. Operational risk, according to R.
Walker (2013), is transferable and includes things like production facilities, supply chain losses, and natural
44
hazards like fire. While natural hazards are difficult to transfer, if they occur in a partner's building, at least
your company's losses are lessened.
These risks can be shared with a network partner, lowering the exposure for both businesses. According to
R. Walker (2013), a company should determine its own and its partners' core competences. For tasks outside
of these areas, the company should use best practices and knowledgeable partners. It is also mentioned that
you ought to gauge and monitor your partner's dangers. The idea behind outsourcing business risks aligns
with the literature review, which suggests leveraging network partners to reduce exposure. For example, it's
possible that some aspects of the supply chain would have been better served by working with a local partner
who has more local knowledge. Of course, in order to make a delivery, the supplier would need to be
reliable, but even so, the risk would at least have been as much as possible mitigated by the company.

Making the most of every circumstance is the basic tenet of risk management. Operational embedded risk is
categorized as an implicit risk dimension because it is unpredictable or not directly related to the investment.
Although it should only affect a single event, the consequences could still last for a long time, depending on
the extent of the loss or the likelihood that the risk will spread. While nation risk occurrences can happen
steadily, they differ from market risk in that companies pick which countries to enter. The literature analysis
also revealed a number of difficulties related to cultural variations between the home and overseas markets.
Whether a company is buying another as a subsidiarity or making a greenfield investment, country risk is
particularly prevalent for businesses that make foreign direct investments. If a business fails to adjust to the
new culture, it may have negative effects on performance. The current business model could not be
supported by the market, which could make it more difficult for the subsidiary to operate as efficiently as
possible.

A portion of the literature analysis looked at the impact of culture on entrepreneurial behavior. Although
country risk need not be related to startups, it is crucial to understand how employees behave internationally.
For example, Chinese laborers might find it difficult to adjust to American working circumstances, just as
American and French work environments might be different. For this reason, previously in the research
study, similar language cultures and culturally proximate markets were highlighted as strategies for INVs
and BGs to lower risk during the early stages of internationalization.
Economically risky countries are more vulnerable to changing market conditions. While management can
opt to explore nearby markets in order to prevent significant cultural differences, the country's economic
status is a different story. As an illustration of contemporary affairs, suppose a US New Venture decided to
select a new market to manufacture its goods for a European expansion, and it required simple access to land
or sea transportation routes in addition to inexpensive labor. Would such an expansion even contemplate
45
Greece? In contrast to the safer markets of Denmark, Germany, or even France? The majority of enterprises
would probably avoid entering Greece given the country's dire economic circumstances and impending
insolvency.
Greece's economic circumstances thus provide an ideal illustration of a country risk that is driven by
economic factors and one in which management would probably think about exploring internationalization
options. Would any manager prefer to invest in such an uncertain economic future, where the banks might
not open the following month, even if Greece was the ideal location for expansion, with skilled labor at a
low cost and a strong supply of resources at a cheap price?
The corporation would be left in a highly vulnerable position where the entire investment could be at risk,
hence the answer is no. Even if the Greece example above is speculative and partially grounded on truth, it
serves as a useful example of why investing companies should steer clear of markets in which they find
themselves exposed.
If there are cultural differences, management may decide to outsource some operations to a local partner.
Over time, they may also be able to reduce the risk of having a staff that is culturally diverse by learning
about these differences. Even though there is some uncertainty when working with a partner on an operation,
the partner must be reliable and capable; otherwise, the company may be exposed to both country and
embedded risk. When dealing with economic country risk, like Greece, the best course of action for
internationalization would be to steer clear of Greece and instead select a more favorable market where the
risk can be shifted, minimized, or accepted. The secret to risk management is to recognize your exposure and
develop a plan that provides the safest and best outcome.
Regulatory and reputational risks are implicit in nature and have the potential to be persistent, making the
company extremely vulnerable (infinite risk dimension). Since unquantifiable intangible assets (INVs) and
BGs are frequently mentioned in relation to their business activities, a damaged reputation could have a
significant negative impact on the firm's capacity to exist. The incapacity to function is another illustration of
limitless risk. The literature study discusses various intangible assets as knowledge, with the main worry
being the possibility of knowledge leakage to rivals. Reputational damage or the loss of significant
intangible information can have far-reaching effects.
The strategy for high vulnerability circumstances, as seen in figure 2.2, is to either avoid the risk or sell the
business. Consequently, it is critical to maintain intangible assets, such as reputation and critical information,
if INVs and BG are to survive. Changes in rules are also mentioned as carrying an endless risk; for
exporters, this may mean that exporting to a profitable market becomes more difficult due to trade
regulations. Despite the aforementioned market's implementation of trade barriers, their business does not

46
necessarily have to terminate. Exporters are fortunate in that they can choose to export to different markets
since they can map out a different course for improving the economic condition.
For instance, an exporter have been doing business in the middle east for a while, but new regulatory
changes have made it harder to sell to the middle east, as such, the exporter can choose other markets for
their wares. The situation is more dire for importers in the Middle East; if the same regulations apply to their
imports, they could have to relocate their operations to another nation in order to survive.

Because the risk is linked to the business environment the company operates in, managers in situations with
infinite risk may find that their options are restricted and that they should think about avoiding the risk.
According to the five major decisions, you have two options: either take on the risk or leave the company if
you are unable to transfer, alleviate, or avoid it. Selling the company would allow you to launch in a more
advantageous business climate, but it would require relocating everything to a foreign nation, which might
have advantages and disadvantages of its own.
We have learned from this study that there are many parts of risk management theory that are comparable
across the literature review; the primary distinction is that the scholars employ empirical data regarding the
ways in which INVs and BGs managed various risks and obstacles. In a case-by-case analysis of each risk
dimension, the risk management theory chapter offers more in-depth information about the particular risk or
how the company can address risk events. Nonetheless, the literature study can identify the five key choices
from R. Walker (2013)'s theoretical framework. INV's literature frequently discussed risk sharing as a
strategy to help new ventures more easily manage the early stages of internationalization by giving them
access to partners' greater competencies or resources.
Regardless of the industry, transferring or mitigating risk should be a top focus for new initiatives; the
beneficiary shouldn't bear exclusive responsibility for all financial risk. Transferring risk away from the firm
is something that both the literature review and risk management theory concur on.
In risk management, comprehending the exposure is crucial because, with that knowledge, action can be
taken, and action equals strategy. However, there is a distinction in the perspectives on firm expansion
between the two theoretical chapters that have been examined. Scholars in the literature review argued that
growth and survivability are risk avoidance strategies (growth equals survivability) and that partnerships that
share financial risk or improve capabilities and resources can aid with survival. According to the study by
Aspelund & Moen (2012), INVs and BGs frequently begin with a hybrid governing structure, which means
that a joint venture or partnership is probably the case initially but that the structure eventually changes to
one for a single entity.

47
Meaning that as individuals accumulate the means to become independent, their desire in partnerships
gradually wanes. Because R. Walker addresses specific instances of various risk management scenarios, he
does not approach growth and survivability in the same manner as the INV/'BG researchers. According to R.
Walker, operations risk can be increased by quick development and profits because of the increased
susceptibility to taxes or inadequate oversight. Despite the divergent perspectives on growth, the solution
remains the same: employing partnerships to shift the risk outside the company.
The best strategy to manage risk is to be proactive in preventing risk events. The response to risk should be
to seek alternatives and concentrate on reducing persistence and risk contagion by isolating operation risk
from hurting the greater organization. Regarding the two theories, there is still agreement that using risk
transfer is a crucial component of risk management. However, risk transfer should be implemented if the
technology, operation, or expert practices are outside of your primary competencies, as per R. Walker's
argument.
The three primary areas of agreement between the two theoretical chapters are risk avoidance, risk transfer,
and risk mitigation. The best times to manage risk are when losses can be prevented or when their exposure
and spread can be restricted. The manner that a single risk event might propagate across the operation to
cause worse losses is not covered in the literature review and, as a result, is exclusive to R. Walker's work in
this thesis.
It is a fact of doing business in an international setting that every INV/BG must take absolute risk, also
known as market risk. This means that when businesses expand internationally, they are assuming a certain
level of risk. Nonetheless, there can be other risk factors to be mindful of based on the sector and kind of
business. Production enterprises must be aware of operational inherent hazards, while high-tech firms may
be permanently exposed to technology shocks.
All INVs and BGs, regardless of industry, must prevent risk contagion, which poses a threat to businesses
that overlook concerns. A risk event that was initially manageable may become more chronic and severe
over time.
Both high-commitment and low-commitment entry options provide unique difficulties. High commitment
entrance modes have more pressure and are more deeply ingrained in the market. These difficulties appear in
unanticipated patterns and at an unpredictable rate. Here, I've discussed a risk occurrence and how
management applied risk theory to put the theory of risk management into perspective.
As I indicated in the analysis before, let's say that a high-tech corporation has hired server space in another
nation from a nation that supplies them with gear. The high-tech corporation wishes to introduce their new
software in that region even though the country has an entirely different language and culture. Imagine for a

48
moment that, following two months of flawless operation, the region's servers fail, and the company has to
investigate the cause. This is a quick reactive action in reaction to a risk event.
Their reputation suffers, they receive complaints, and they lose customers every day that their program is
unavailable all of which are financial losses. The issue has now been identified: overheating caused the
servers to shut down. A hardware failsafe was installed so that if one fails, the others also fail. In addition,
the IT company was told that they were responsible for managing their servers and that it would
consequently cost them a reasonable amount to get the servers back online.
We have recognized the risk by examining the risk management framework (table 2, ). The risk was implicit
in nature, and it was a finite event because it shouldn't spread to cause more harm. Because of the hot
summers, the risk event is classified as operational risk and is estimated to occur a few times a year. The
impact was severe because the business had to shut down completely for several days, causing customers to
lose their online data and file complaints, as well as harming the company's reputation.

By consulting table 2 we can evaluate the vulnerability of the firm to be moderate, as the impact were felt
quite severely and even though the frequency may be limited to a few times a year, the cost of the repairs
and loss of clients still puts the firm at moderate vulnerability, with a danger of a high vulnerability if the
risk spreads and becomes permanent. If the company does not react to this risk event and just accepts that
their servers shut down a few times a year, there is an increased chance the risk events return, which could
cause further reputational damage.
Now that the corporation is aware of what transpired, it must determine its course of action. Once more, we
refer to Table 2.0 . Reacting without thinking things through entails taking the risk and paying the
consequences. Since their partner was unable to assist them in preventing the risk event from occurring, the
owner of the high-tech company feels compelled to take proactive measures. After reviewing the five major
decisions in this thesis, he discounts options such as avoiding the risk (since it has already occurred) and
leaving the company (since the risk was not severe enough). The choice of whether to transfer, mitigate, or
accept the risk is then yours. Accepting the risk means that the business should only set aside money for risk
occurrences (figure 2.3),but it should still respond to them reactively when they occur. The management
does not approve of this decision.
The final two choices are to either discover a technique to reduce the risk or transfer the risk to a new partner
who can manage everything. In this instance, management decided to make an investment in reducencies,
which included buying their own machinery and ensuring that the room temperature is controlled. They also
spend money on backup machines so that their servers can save consumer data and remain online at all

49
times. They reduce the danger, the impact's severity, and the likelihood that it will happen by making
redundancy investments.
The aforementioned case study serves as an illustration of the risk management framework's methodology
and might be utilized by a company exploring untapped markets for growth. both the known and potential
outcomes are used to evaluate each market. The market a firm chooses also affects its internal operations and
determines its susceptibility to external variables.

CONCLUSION

Through the literature analysis, we learned that in order to reduce risk and promote growth, INVs and BGs
should be adaptable to the market, client needs, competitors, and market trends. Additionally, a significant
part of internationalization was the contribution to partnerships in overseas markets through the use of
networks to discover new opportunities, acquire skills and information, share risk, and become globally
exposed. Utilizing network connections was explained as a means of managing risk through a partnership
that reduces exposure and of gaining access to capabilities and resources that would not otherwise be
available.
It is believed that INVs and BGs have some flexibility in their corporate structure, making them stronger
than the sum of their parts. A global company's core business and essence should remain consistent, meaning
that the product, competencies, and ability to meet customer needs should not change. However, the firm's
positioning within the market is essentially flexible when it comes to risk management. This means that the
business can be present in several international markets while also de-internationalizing from less lucrative
ones in order to pursue new business prospects. This kind of risk management is more of a generalization of
INV's and BG's approach to managing risk, expansion, and growth than it is a generic risk management
methodology. The risk management strategies used by R. Walker (2013) and the literature review shared
many similarities. They both employed ideas that included finding alternate routes to completely eliminate
risk as well as a means of shifting risk outside of the organization.

In response to the inquiry: How do Born Global and International New Ventures handle the risks involved in
early internationalization.
By being alert to risk events in advance and looking for alternate routes to reduce risk both before and after
internationalization. Discover and make advantage of the choices accessible to the corporation, such as
investing in redundancy and leveraging network connections to shift risk outside the organization. It takes
time and information about the risk to determine the appropriate risk management plan. It is not always

50
feasible to be proactive, and responding to risk demands equal amounts of time and resources in order to
develop a plan that lowers the exposure. The majority of INVs are advised to have a small governance
structure, which means that senior management and entry-level employees are not too far apart. By
eschewing a rigid business structure, the company can respond quickly to risk events that might otherwise
seem difficult and maintain greater flexibility. The collection of information and the firm's response to it
form the basis.

The investigation demonstrated multiple approaches to risk event management. Additionally, the literature
analysis demonstrated a risk-avoidance strategy that centers on market demands to guarantee the enterprise's
growth and success. By having an adaptive corporate structure and market presence, as well as by only
taking on risk that may be accepted or managed through partnerships, the INVs and BGs effectively manage
risk throughout the early stages of internationalization.

RECOMMENDATIONS

The results of this study have implications for practitioners and scholars engaged in theory formation.
This thesis aims to progress the topic of risk management for INVs rather than refute any theories that
already exist. If other researchers would like to carry out similar research, they should think about the ways
in which various risk management frameworks can impact INVs and which choices are best suited for
studying international entrepreneurship. To validate or invalidate the study's conclusions, the outcomes had
to be empirically evaluated on a representative sample. If an empirical investigation could validate the
foundation presented in this thesis, that would be intersecting.

After that, a theoretical framework for risk management tailored to INVs might be created, along with
guidelines on how INVs should structure their business plans based on the type of industry in order to
minimize risk.
This thesis, in my opinion, can help academics who are interested in studying risk in international
entrepreneurship and who wish to expand on the theories covered here, as well as practitioners who want to
learn more about risk and apply the theories covered here to their own work.

LIMITATIONS

51
This paper's primary drawback is its focus on international entrepreneurship and the database . As such, it
does not encompass all available research on risk management in early internationalization during the two-
year period under examination. This suggests that there might have been more insightful studies that were
overlooked and could have provided new insights into the research and, as a result, altered the results. As a
result, the study is predicated on a small number of extremely focused articles in the area of global
entrepreneurship. Additionally, in order to retain the focus on INVs and BGs, SME's and MNCs were
excluded from the selection process. If they had been included, the study might have included more research
articles on internationalization and risk management.

As a result, the analysis's findings might have been different if the sample had been bigger or comprised
different kinds of businesses, such as those from the early stages of SME internationalization. Owing to
temporal limitations, the research paper sample was restricted to a two-year period. Had the literature review
encompassed a longer timeframe, it could have included more studies that could have impacted the study's
conclusion. The direction of the thesis may have changed if a different two-year period had been chosen, or
if a longer period of time had been included in the study. A significant part of the thesis stems from the time
period that was examined, during which the scholars published a wide range of topics and theoretical
discussions.

52
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