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Going Beyond Borders: Introducing the Born Global Entrepreneur

In 1993 consulting firm McKinsey & Company identified and defined a new type of SME: The Born Global. Even though most small businesses typically operate at the local level and develop a strong home market before going international, some choose to be “born global.”

The concept of born global was first used by McKinsey while doing a survey for the Australian Manufacturing Council. In this study, a born-global firm was defined as “one which views the world as their marketplace from the outset; they do not see foreign markets as useful adjuncts to the domestic market.” Born Global firms operate in knowledge-intensive environments and give little or no attention to their home market; they do not consider building a substantial home market advantage a part of their strategy. All resources are devoted to the international marketplace.

Two main factors facilitate the growing expansion of born-global firms. First, the increasing role of niche markets and greater demand for specialized or customized products. Born-global firms minimize direct competition with larger rivals by developing a differentiated product or service and targeting niche markets overseas. This strategy allows them to maximize market share while avoiding direct competition with larger, more established firms. Second, rapid changes in technology that have shortened product life cycle, hence companies respond more easily to the changing environment. This newly gained flexibility has diffused some of the risk involved with expanding abroad and has made international markets even more tempting for entrepreneurs.

Researchers identify seven characteristic of successful born-global SMEs: First, a born-global firm must think global by creating a global vision and communicating it to everyone involved. The firm’s employees must have prior international knowledge and experience and strong international business networks. Therefore, they can learn about new opportunities and threats in the marketplace and respond quickly and intelligently. Furthermore, the organization’s top management has to make sure be that all business operations are closely coordinated worldwide. As far as the product or service goes, born-global firms have to use advanced technology and marketing tools to offer distinctively better products or services. This can be attained by sustaining the uniqueness of the product through special knowledge and constant innovation.

The born-global phenomenon points toward the rise of an international ecosystem in which any firm—regardless of age, experience, and tangible resources—can be an active international business participant. Even though large resource-endowed corporations have a greater foothold in international markets, this expanding phenomenon proves that the unique characteristics of smaller firms can help them win in the international arena.

Based on: Persinger, Elig S., Emin Civi, and Suzanne Walsh Vostina. “The Born Global Entrepreneur in Emerging Economies.” International Business & Economics Research Journal 6.3 (2007). 73-82. Web. 16 Sep. 2012.

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