International Entrepreneurship Essay
Entrepreneurship activities are tremendously increasing not only at local levels but also across international boundaries (Cavusgil, Ghauri & Agarwal, 2002). Entrepreneurship is associated with economic development and wealth creation through production of novel products that meet present and latent needs of consumers. International entrepreneurship is an emerging area of business that has accelerated the growth of SMEs and merged various cultural, political and social aspects (Acs, Dana & Jones, 2003).
In the study of international entrepreneurship, this essay explores the entrepreneurial activities taking place across boundaries with a particular focus on Proteome Systems Limited (PSL) currently renamed Tyrian Diagnostics (Tyrian Diagnostics Limited). The contextual framework of the essay includes the evaluation of the theoretical underpinning of international entrepreneurship in comparison to the reality in PSL.
The internationalization process, roles and characteristics of the entrepreneur are discussed as well as factors affecting the entrepreneurs in the target country and the current state of PSL in relation to international entrepreneurship. Literature Review Internationalization or International entrepreneurship (IE) concept entails to discover, enact, evaluate and exploit venture opportunities in international boundaries for the purpose of creating latent products for the consumers (Deakins, & Freel, 2006).
IE entails new venture creation in foreign untapped markets which has been made possible by technological advancement and aspects of cultural awareness (Acs, Dana & Jones, 2003). The entrepreneurial internalization process is occurring at a fast pace and this is influenced by various processes including globalization. Environmental forces that have enabled the growth of international entrepreneurship include technology advancement (Loane, 2006), enthusiasm of competition, knowledge’s moderating forces, entrepreneurs’ mediating perceptions, and ability to network (Deakins, & Freel, 2006).
Entrepreneurial Characteristics Successful entrepreneurs free themselves from industry dogma, industry rules, latest management tools, and a limited mindset (Lowe & Marriott, 2006). There are five basic entrepreneurial features and these include innovativeness, competitive aggressiveness, risk-taking, proactiveness, and autonomy. PSL, an Australian based biotechnology firm can be said to possess most of the above named features. First of all, it was risk-taking to venture in biotechnological products, a market segment that had long been overshadowed by conventional production.
Risk-taking involves decision-making and action-taking without knowledge of the outcome, and this can involve commitment of substantial resources. By venturing into a less-known pharmaco-production area, the founders of PSL took risks but fortunately the business picked up well in both Australia and the other world markets and PLS is among the leading proteomic diagnostic companies in the world. The company was started by a group of friends who studied together and had knowledge on proteomics dealings but lacked financial and legal resources to pull through.
The risk is observed when through networking investor agree to sponsor the project that has created the world’s top and recognized biotech producer of diagnostic and drug products. PSL is also entrepreneurial through its innovative activities as the firm is an innovative technology developer in proteomics and biotechnology (Proteome Systems Ltd). GlycoSuite, the world’s first protein glycosylation database was invented by PSL.
There are also other innovative products formed in the current Tyrian Diagnostics Limited and this includes WheatRiteI which is used for measuring wheat’s quality and the DiagnostIQI for the diagnosis of active tuberculosis. PSL shows proactiveness through looking forward into being a market leader in the proteomics production and seizing opportunities that will enable the firm to meet the future needs of consumers. For instance the drug products are aimed at increasing compliance and provide cures to diseases that had not been imagined before.
The competitive aggressiveness of the firm is shown through its ability to create unique products to become the leader among the competitors. Autonomy is observed when a group of individuals with knowledge team up to bring forth a business concept and carry the vision through completion. PSL achieved rapid internationalization, has good networking capabilities, participants have in-depth knowledge about the field and the company collaborates with investors and leading companies that can assist in driving the success of the company. Role of the Entrepreneur The entrepreneur basically leads in innovation of new products.
PSL is doing this through innovation of improved biotechnological drugs and agricultural products. At the international scale, the firm has the responsibility of ensuring that the produced invention will suit well with the cultural context of the country. A product can be good but its usefulness cannot be homogeneous in all the world markets. For instance, wheat variations produced for drought resistant areas are likely to gain a larger market share inn areas that require such a product as compared to areas that not prone to drought or don’t support wheat production.
This therefore implies that the entrepreneur’s role is to act as a strategic thinker. The entrepreneur does this by creating products that can meet the future needs of the customers after analysing the nature of each markets and deciding on the kinds of products that the various markets will need. Internationalization process The internationalization process involves increasing participation of enterprises-small, medium and large-in the international markets (Lowe & Marriott, 2006).
The process begins by the recognition of an opportunity just like the founders of PSL discovered that they can use their biotechnological knowledge in production of products that will offer improved solutions for human diseases and agricultural production. The next step is to determine the strategies that the firm will use to penetrate the world market. At IE level this can be determined considered form the angle of novelty, culture, or price. This is also the opportunity to determine the structure of the firm and how it will be positioned against the rivals in the market.
Competition at the international scale is very stiff and this warrants that appropriate strategic thinking should be applied in coming up with competitive tactics. Demand and factor conditions should be analyzed in establishing the market preferences and networking with related or supporting industries should also be considered as a way to attain a competitive advantage in the industry (Loane, 2006). PSL networking is spectacular especially at the initial internationalization process.
PSL joined hands with high-tech firms that had already established in the area of biotechnology and proteomics like Sigma-Aldrich, Alpha-Innotech, Shimadzu, and Millipore Corporation (Proteomes Systems Limited). Drivers of internationalization for the firm Generally, internationalization has been driven by the current business environment that is characterized by globalization, cultural emergence, increased competition and market preferences or the opportunity to provide latent needs by the enterprising firms (Parker, 2005). PSL is driven in the internalization process because of the nature of the industry in which it belongs.
The hi-tech biotechnological industry requires a lot of capital investment and technological capabilities that can enable the firm to come up with the unique but scarce products (Cavusgil, Ghauri, & Agarwal, 2002). In order to benefit from the input, the sale of the products needs to be high and it is uncertain that this can be obtained through local enterprising alone. The biotechnological market is well spread all over the world as certain niche of customers prefer the green technology. Internationalization was a way to reach these dispersed but available markets as well as introduce the novel products to newer customer segments.
PSL factors to IE were caused by the firm’s ability to attract a pull of investors at the initial developmental stage and this provided capital investment into newer global markets. Moreover, the founders were research scientists and this shows that they had a networking capability to contact other firms involving in similar business. This also enhances the support and motivation to IE. Description of intended target country High-tech firms face higher risks in enterprising and are therefore likely to benefit more form private equity funding rather than easily accessible loans from commercial banks and government loans (Parker, 2005).
PSL has developed its market not only in Australia where it is based, but also in US and Japan. U. S. and Japan can be described as countries with higher legality indices and stronger conditions of economy. PSL is likely to attract venture capitalist in these countries with the United States having a supportive culture for enterprises and Japan a favourable market for production of high-tech machinery. Factors affecting entrepreneurs in target country Cross cultural differences is a major factor that influences entrepreneurs in the target country (Lowe & Marriott, 2006).
This is also accompanied by legal and market conditions of the country. For instance, PSL could not succeed to establish in its own in the US market because of market conditions in which the environment is highly competitive. The solution was to with a bio-tech firm in Boston and the sale of PSL’s products through the Boston firm increased PSL’s market share in the US market. Context of the consultancy report (Firms current situation) PSL had a fruitful beginning in the 1999 but currently there are challenges that the firm faces.
There was a drastic fall in the company’s revenue and profit in the year 2007-2008 despite the market conditions being tolerant. Nevertheless, the firm has established various collaborations that have sustained the business. For instance, the collaboration with Dow Agro Sciences (DAS) increased the reliability of PSL and still placed the firm in a position capable to deliver efficient services at the international level. DAS relieved PSL from financial constraints and introduced the firm to other networks of people that could support the firm and help it revive (Proteome Systems Limited).
Methodology Theoretical underpinning to PSL Initial theoretical models for internationalization were based on the fact that new ventures seek to derive a competitive advantage through the utilization of resources and sale of the outputs in many countries (Lowe & Marriott, 2006). These traditional approaches include the eclectic paradigm, foreign direct investment and monopolistic advantage theory. IE is an emerging way of thinking business across national borders and the concept builds on extant international business theories.
There are various paradigm developments that try to explain the complexities of international enterprising in a global environment. The paradigms are based on ownership and geographical boundaries of the firm, strategic application of international and cyber-networks, market boundaries within a globalizing economy, and nature of competition within the environment (Jones & Dimitratos, 2004). The internationalization process can be underpinned in the traditional eclectic model that explains the ownership, location, and internalization advantages of the firm in the innovation process and the takeover of international markets.
Ownership advantages explain the autonomy of PSL to independently come up with strategies and a business model that has established its unique competitive advantage. Location advantages can be used to explain the cross-boundary market venture in which PSL is located in various world locations. This not only expands the firm’s market and enables its growth but also provides the opportunity for the firm to meet varying cultural needs. Internalization advantages involve the firm-specific advantages that enable it to compete effectively in the outside, and this includes knowledge and asset-based resources.
PSL has been able to utilize its internal advantage of knowledge in which the founders are familiar and have skills to carry out the proteomic diagnostics production. Specialization advantages can also be added to this model in which the firm has taken a unique production and supply-line. The firm involves in agricultural biotechnology as well as invention of novel products for the treatment of human diseases. However, the specialization in production of these products is in ensuring that they produced using biotechnological methods with specificity to proteomic systems.
PSL’s IE can also be explained through the new venture internationalization theory which explains the firm’s process of establishing in other nations. Other than Australia, PSL is also located in USA where it joined with a Boston firm and also in Japan where it allied with Itochu. PSL also formed alliances with various Malaysian firms. This process can also be explained through financial cross-listing and institutional theory which explains that high-tech entrepreneurial firms like PSL need the assistance of resource enabled countries or firms which can act as venture capitalists to sponsor development of the products.
University/College: University of Chicago
Type of paper: Thesis/Dissertation Chapter
Date: 30 September 2016
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