Strategic Entrepreneurship - Research Proposal Example

Research Proposal on Strategic Entrepreneurship Contents Introduction 3 Rational 3 Research Objectives 4 Methodology 4 Literature Review 5 Case StudyAnalysis 8 Recommendations 12 Conclusion 12 Reference List 14 Introduction This research proposal tries to focus on new strategic methods of business internationalization that would help companies and their domestic economies to grow in the long run through efficiency and market seeking activities. The dissertation associated with this proposal would accomplish the research and analysis based on Chinese economy. This is because China is now considered to be a booming economy on the global forum. Scholars have claimed that the country seems to buy the whole world with its currency reserves that is being accumulated with the essence of growing commercial internationalization. The success stories of certain well-known multinational companies in China (facilitating growth in the nation) would serve as empirical evidences, whereby appropriate recommendations for the purpose of the desired research can be formulated (Bigler, 2001). Rational The nations in the contemporary world always seek ways to experience growth in the long run. In early years, several economies had substantially progressed with the essence of capitalistic principles in business world, which primarily focused on various managerial methods that could help to enhance trade and commerce. However, since globalization, the degree of market competition has significantly increased in most of the nations. Without strategic management tools, companies in the current era will not be able to experience high level of business internationalization. This proves rationality of the dissertation as the primary focus is on the most required skills of strategic entrepreneurship in business, which if implemented, would surely enable companies to expand their businesses across the world. The important determinants that would help to better the open innovation, strategic assets and resource seeking activities in a firm would also be analyzed in the context of the paper. The worth of the paper is enhanced with incorporation of relevant case studies of certain multinational companies in China that empirically focus on the concerned research themes. Thus, information and analysis provided in the dissertation would help any modern corporation to successfully expand its business across the domestic boundaries. The entire research work would be accomplished on the basis of qualitative analysis. It is highly rational to utilize this method of research analysis as it is a highly flexible, superior and dynamic research approach. Unlike the case of quantitative research, qualitative research comprises a wider scope and scale of research work. Research Objectives The objectives of the dissertation, on the basis of which research questions would be formulated, are: To analyze the causes for success of internationalization activities of the Chinese MNEs. To estimate the extent to which growth of Chinese economy has been generated through internationalization activities of the MNEs. To accumulate the generalized determinants of strategic entrepreneurship. To analyze ways through which strategic entrepreneurship would help firms initiate activities relating to open innovation, strategic assets and resource seeking activities. To comment on contribution of entrepreneurial capitalism in a nation’s economic growth. Methodology The entire research work for the dissertation would be accomplished on the basis of quantitative analysis and case studies. For the purpose of qualitative analysis, the researcher will include a theoretical framework and literature review. The theoretical framework will include several types of scholarly theories, which are relevant to the topic of research. All information and data that would be included in context of the paper will be collected from authentic secondary sources. The entire research work will be executed on grounds of inductive research method. Through this research method, the researcher will accumulate relevant information on the desired topic of discussion and based on that, certain recommendations and conclusions would be formulated. The key theories on the basis of which analysis would be made are: Theory of entrepreneurial capitalism, Penrose’s Theory of strategic entrepreneurship, Theory of transaction cost in economics and resource based view of internationalization. The associated key terms are: market seeking, resource seeking, open innovation, resource seeking investment, and strategic assets. The literature review of the dissertation will look back on peer-reviewed scholarly sources that would help to assess the extent of business internationalization in modern days (Huse, 2003). It will also review articles explaining how the rapid economic growth of China and few other budding economies is caused due to increased business internationalization activities of the MNEs (Multinational Enterprises) in these economies. Theoretical concepts justifying activities of MNEs in the recent times are also revised in the context of the literature review. The context of literature analysis will show that scope of business internationalization have significantly increased in all emerging nations, especially China. Even so, case study analysis of the dissertation will focus on business internationalization strategies employed by three popular multinational companies located in the busiest cities of China such as, Qingdao, Shanghai, Beijing and Guangzhou. The selected companies are Lenovo Plc Ltd, TCL Corporation and Haier Group. This context will refer to several market and resource seeking activities undertaken by these firms for the purpose of business internationalization, which is accomplished by these firms through the method of strategic entrepreneurship. In context of the analysis, the dissertation will analyze entrepreneurial behaviours, internationalization activities and degree of innovation made by the Chinese multinational corporations included in the case study. The context of recommendations will include ways through which any modern business firm can significantly enhance its business internationalization, thereby facilitating productive economic growth. Literature Review Transaction Cost in Economics explains expenditure that is incurred by a buyer or seller in a market for an economic dealing. However, it was claimed that firms undertake the decision to operate in an open market on basis of the transaction costs (Kor and Mahoney, 2004). The theory of Resource Based View claims that firms in the contemporary world would gain high competencies in business by utilizing non-substitutable resources in business. The Penrose’s Theory of Strategic Entrepreneurship elaborates a special method of entrepreneurship that helps to manage resources of the firms. The managers in contemporary organizations play a proactive role in business through possession of correct vision for perceiving and pursuing productive commercial opportunities, whereby their scope for business internationalization can be expanded (Kor and Mahoney, 2004). Penrose’s Theory stated that sustainable competitive advantage of a firm can be created through the essence of five important factors. These are: Generating resource development methods. Company specific as well as specialized knowledge possessed by managers in organizations. Large number of manager-team knowledge sharing sessions. Good entrepreneurial vision possessed by the managers. Adequate idiosyncratic capacity of a firm with which the power to learn and diversify can be gained (Kor and Mahoney, 2004). In the present scenario, it seems that giant firms of emerging nations like, China, have turned out to be prospective multinational companies by incorporating theories like, transaction cost economics, resource based view and strategic entrepreneurship (as referred by Penrose’s) in business. These multinational companies of emerging or booming economies of the world are known as the emerging multinational corporations (EMNCs). Nowadays, cross-border flow of foreign direct investments (FDIs) has substantially increased on the global forum with rise in the degree of commercialization of the MNCs. As developing nations like, China, Brazil and India, have joined hands with new Information and Communication Technologies and World Trade Organization, the extent of competitiveness of EMNCs based in these economies have notably intensified. The EMNCs in the modern era are found to expand their scope of business internationalization through incorporation of growing market and resource seeking activities. Open innovation have turned out to be a pivotal business concern for these economies. By augmenting the pool of strategic assets, these firms are responsible for great contribution of economic prosperities in their native nations. In 2005, it was claimed by Sauvant that scope of Outward FDIs (OFDIs) made by multinational firms in global marketplaces have significantly increased (Sauvant, 2005). Figure 1: Rising OFDIs in Emerging Nations (Source: Goldstein and Pusterla, 2010) The above figure portrays summary of the report on business internationalization produced by the institute of UNCTAD. It proves that these emerging nations are earning maximum amount of foreign exchange reserves through increased domestic business internationalization activities. Since the last 15 years, it is found that the emerging nation of China is occupying the highest position, when measured in terms of global FDI destinations. Furthermore, it is also noted that one-third of the FDIs, which is collectively invested by all developing nations, is channelized from the economy of China. The primary reasons, for which the scope of business internationalization of the EMNCs in China is highest, are: Trade liberalization in the country Informal and formal regional integration Privatization and disinvestment of the nation Saturated domestic market Figure 2: China and Brazil OFDIs (Source: Goldstein and Pusterla, 2010) The above graph shows the extent of OFDIs that have flowed out across different regions of the world from China and Brazil. Moreover, in 2009, it was claimed by Williamson and Zeng that unlike multinational companies of Brazil, the companies of China generally possess greater potentiality for accumulating new technologies and ideas in business at a relatively lower cost (Williamson and Zeng, 2009). It is also true that the FDIs in a nation should flow from low or medium knowledge based industries to relatively high technology industries (Gitsham, 2012). Most of the multinational firms of China have significantly and successfully extended their business branches in the external world due to the shift from domestic medium knowledgeable industry to high technology industries in developed nations of the world. The rise in profitability of these multinational companies has facilitated the same in foreign exchange reserves of China. The remarkable growth of national income of the nation is, thus, attributed to the internationalization or outward FDI activities of its MNEs (Simic, 1998). Case Study Analysis Case 1: Lenovo Group Ltd. It is a famous multinational company that is headquartered in Beijing, China. The company was founded in 1984 and at present, operates in all the countries of the world. The company is an electronics firm that designs and manufactures different types of electronic gadgets like, tablets, smart phones and computers. In terms of units of sales, it is the largest vendor of computer in the global market. The scope of business internationalization of the company is huge as it operates in 60 nations across the world and markets products in 160 nations. The company has acquired the individual computer business of IMB in 2005. It has also purchased Motorola Mobility from Google. In 2013, the company has decided to expand its business of Smartphone in the markets of Nigeria, Egypt and South Africa. The company’s marketing campaign named "For Those Who Do" is very famous in United States and focuses on young customers of the nation. As noted in 2012, the net operating income of the company was US$ 584 (Lenovo, 2014). So, it clearly foregrounds the extensive business internationalization activities of the company by the virtue of which it is able to generate large employment opportunities for China, thereby facilitating its economic growth (Lenovo, 2014). Case 2: TCL Corporation It is a world famous Chinese electronics multinational firm that is located in Huizhou, Guangdong. The company engages in the trading of various consumer use electronic products like, washer machines, refrigerators and various other electric appliances. The company was founded in 1985 and at present, operates in almost all countries of the world. As recorded in 2013, revenue of the company was US $ 13.92 billion (TCL, 2014). In 2010, it was found to be the 6th largest television producer in the world. Before 1998, it was involved in export-based processing business. Nonetheless, since 1998, the company has started to establish both overseas production and sales operations by first entering in the market of Vietnam and then in other developing nations like, Russia and South Africa. Finally, from 2004, the company has started to implement the strategy of acquisition in its business as well as to tap prosperous market demands of the developed nations. In 2004, the company acquired a famous French electronics company named Thomson. The company had also become the seventh largest mobile manufacturer in the world, since its joint venture with Alcatel. Thus, with the essence of business internationalization, the company has expanded its branches and commerce across nations and has brought in higher prosperity for China (TCL, 2014). Case 3: Haier Group Haier Group is another famous Chinese consumer electronics multinational company with its headquarters in Qingdao, Shandong (Haier, 2014). The company trades in the same products as that of TCL Corporation. It was founded in 1984 and at present, operates worldwide, generating revenue of 180.3 billion (Haier, 2014). The company experiences the largest share of white goods in the market. It could not compete with its domestic competitors efficiently and hence, had actively begun to expand its business branches in other nations of the world. The company claimed that it could serve a better competition to its competitors in the foreign market (GE, Whirlpool, Frigidaire, and Maytag) than in its domestic market. In 2008, Haier surpassed Whirlpool in terms of sales of refrigerators in the global market. In 2012, the company had acquired a famous electronics company in New Zealand named Fisher & Paykel (Haier, 2014). Analysis From context of the literature review and case studies, it can be understood that the current prosperity in economic growth of China is primarily dedicated to rise in the scope of business internationalization of its domestic EMNCs. However, it should be noted that business internationalization of these EMNCs has become feasible only because they have followed the norms of strategic entrepreneurship in their business. Through the principle of transaction cost economics and resource based view, these companies have successfully conducted business internationalization. Under this regime, these firms have acquired high competencies in business by utilizing the following: Open Innovation: Under the influence of open innovation, these firms have utilized productive external ideas in facilitating organizational growth and innovation. Since boundaries existing between external environment and internal affairs of business have become more permeable nowadays, such innovations in the contemporary business world can be transmitted in or out of a business firm easily. Strategic Assets: These assets help to enhance the competencies of organizations in the long run. Such competencies enable organizations to gain competitive advantages in both domestic and international business world. Resource Seeking Investment: These are the FDIs made by the firms in scarce raw materials, skilled and unskilled labourers, physical infrastructure and special technological assets. According to the views of United Nations Conference on Trade and Development (UNCTAD), business internationalization of nearly all modern multinational firms is made on the basis of resource seeking investments. Market seeking activity: These are activities through which the firms seek new emerging markets, where they can sell their products. Such activities are only undertaken by firms when their domestic markets get saturated. Resource seeking process: This process is a special one by virtue of which these firms outsource factors or inputs in business and over which they do not possess competitive advantage. All the above activities executed by the selected firms are primarily based on the Theory of Entrepreneurial Capitalism, which elaborates on the ways through which modern corporate leaders can significantly contribute in enhancing the level of innovation and opportunities in their business as well as optimizing the extent of risk (Guo, Zhao and Tang, 2013). These entrepreneurs act as transformational leaders, whose activities in the corporate organizations are represented on the basis of “Four I s” (Northouse, 2001). These are: Idealized Influence: This characteristic feature claims that modern entrepreneurs are capitalists who are highly confident in all their activities. They are role models who would encourage all other workers in the firm to enhance their productivity and quality of work (Northouse, 2001). Inspirational Motivation: This entrepreneurial characteristic refers to the expertise and capability of making the subordinates accomplish the desired objectives in business. At the same time, this also involves inspiring employees to work beyond their traditional official task boundaries. Intellectual Stimulation: Through this entrepreneurial characteristic, contemporary capitalist leaders are able to catalyze the operations of organizations relating to creativity and innovation in business. Individualized Consideration: With this entrepreneurial characteristic, leaders are able to focus on several internal and external aspects of their business, thereby augmenting the level of competencies of their firms (Gonzalez-Alvarez and Solis-Rodriguez, 2011). These modern transformational leaders are the entrepreneurial capitalists in the market. They not only help in managing the workplaces, but also facilitates in enhancing competencies of the organizations (Northouse, 2001). Recommendations The indispensable factors that must be considered by any firm for extending its business branches in the international market are: Application of strategic management in business Governing affairs of the company through strategic entrepreneurship Increasing the scope of resource seeking investments and open innovation in business Enhancing reserves of strategic assets in business Increasing market and resource seeking activities in business (Glover, 2013). By the virtue of abovementioned initiatives, successful globalization strategy can be implemented by a firm through joint venture, acquisitions and mergers, similar to TCL, Haier and Lenovo. Conclusion The scope and extent of commercialization in most of the economies in global marketplaces have significantly improved since emergence of globalization. Liberalization and open door policies in most of the modern economies have encouraged the scope of business internationalization. The growth of corporate organizations significantly influences progress of an economy in the long run. Hence, countries encourage enhancement of the scope of business internationalization for their domestic companies. Through the policy of internationalization, companies try to exploit their productive resources in foreign markets after attaining competitive advantage within domestic boundaries. In context of the dissertation, it will be correct to conclude that current economic prosperity of China is primarily dedicated to the growth in its business internationalization. The EMNCs of the country like, Haier, Lenovo and TLC, have helped the nation to earn large amount of foreign exchange reserves through increased business internationalization. Nevertheless, such successful scope of international market expansion could not be experienced by these companies without the essence of superior technological knowhow and strategic entrepreneurship, which could be acquired through greater market and resource seeking activities (Ferri, Deakins and Whittam, 2009). Reference List Bigler, W. R., 2001. The new science of strategy execution: how incumbents become fast, sleek wealth creators. Strategy and Leadership, 29(3), pp. 29-34. Ferri, P. J., Deakins, D. and Whittam, G., 2009. The measurement of social capital in the entrepreneurial context. Journal of Enterprising Communities: People and Places in the Global Economy, 3(2), pp.138 – 151. Gitsham, M., 2012. Leadership in a rapidly changing world. [pdf] Ashridge & IBLF. Available at: [Accessed 8 March 2014]. Glover, J. L., 2013. Capital usage in family farm businesses. Journal of Family Business Management, 3(2), pp.136 – 162. Goldstein, A and Pusterla, F., 2010. Emerging economies multinationals. International Journal for Emerging Markets, 5(3), pp. 289-306. Gonzalez-Alvarez, N. and Solis-Rodriguez, V., 2011. Discovery of entrepreneurial opportunities: a gender perspective. Industrial Management & Data Systems, 111(5), pp.755 – 775. Guo, H., Zhao, J. and Tang, J., 2013. The role of top managers human and social capital in business model innovation. Chinese Management Studies, 7(3), pp.447 – 469. Haier, 2014. Haier. [online] Available at: [Accessed 8 March 2014]. Huse, T. D., 2003. Transformational leadership in the era of change. [pdf] SAMS. Available at: < http://www.dtic.mil/get-tr-doc/pdf?AD=ADA416126> [Accessed 8 March 2014] Kor, Yasemin Y. and Mahoney, Joseph T., 2004. Edith Penrose’s (1959) contributions to the resource-based view of strategic management. Journal of Management Studies, 41(1), pp. 22- 2380. Lenovo, 2014. For those who do. [online] Available at: [Accessed 8 March 2014]. Northouse, P. G., 2001. Leadership theory and practice. California: Sage Publications, Inc. Sauvant, K.P., 2005. New sources of FDI: the BRICs. The Journal of World Investment and Trade, 6(5), pp. 639-711. Simic, I., 1998. Transformational leadership-the key to successful management of transformational organizational changes. The Scientific Journal, 1(6), pp. 49-55. TCL, 2014. The creative life. [online] Available at: [Accessed 8 March 2014]. Williamson, P. and Zeng, M., 2009. Chinese multinationals: emerging through new gateways. Cambridge: Cambridge University Press. Read More