Science

The concept and theories of Internalisation

2.1 Introduction

Concept of Internationalisation

The last two decades has witnessed a growing interest in the area of internationalisation. However, despite the extensive use of the term internationalisation, few real attempts have been made to provide an operational definition of its meaning. Internationalization has been described as the outward movement of a firm’s operations. Piercy (1981), Turnbull (1985); it has also been defined as “…the process of increasing involvement in international operations” (Welch and Luostarinen, 1988, p. 36). Nevertheless, a universally accepted definition of the word "internationalisation" remains elusive with diverse interpretations being found in the literature. For example, one view considers internationalisation to be a pattern of investment in foreign markets based on logical economic analysis of ownership, location advantages and internalisation (Williamson 1975, Dunning 1988). A second view considers internationalisation to be a continuous process of evolution (Melin 1992) whereby a firm’s increase in international operations is a function of improved knowledge and market commitment (Johanson and Vahlne 1977).

A third view, though process-based, argues that internationalisation does not often entail a "smooth, unalterable course of development," and may comprise of both 'outward' and 'inward' patterns of international growth (Welch and Luostarinen 1988, 1993). In addition, though Johanson and Vahlne (1977) imply that internationalisation is apparent for the most part in the markets entered and entry modes, Welch and Luostarinen (1988) argue that internationalisation also reflects in the firm's market offering, organisational competence, workforce and structure.

Beamish (1990, p. 77) offers a fourth view on internationalisation by defining it as "...the process by which firms both increase their awareness of the direct and indirect influence of international transactions on their...