The Uppsala Internationalisation Model
Swedish manufacturing companies begin their internationalisation process by establishing in the Nordic countries.
According to the stage model the Swedish researchers stressed that Swedish manufacturing companies began to operate abroad in a nearby market and then slowly penetrated markets far away. This model was developed in the 1970s and has lately been criticised for no longer being relevant. Our intention was to find out if this assumption was valid for our population.
Companies establish in the region of Western European industrialised countries when the Nordic region is covered.
As earlier mentioned the Uppsala model was developed in the 1970s when the East of Europe was still under the Communistic regime, and was not an open and available market for the Western companies. The Eastern Europe market has opened up since then, so we wanted to find out if this hypothesis still was valid.
Small companies have a higher propensity than large companies to follow the traditional establishment pattern when going abroad.
Since small companies have fewer resources than large and have less developed knowledge and experience of psychic distance, they are more likely to follow the traditional establishment pattern when going abroad.
Companies 'leap-frog' stages in the traditional 'establishment chain' of the Uppsala internationalisation model. (No regular export, independent representatives, sales subsidiary, manufacturing subsidiary).
One of the strongest arguments against the Uppsala internationalisation model's validity is the leap-frogging tendency. This do not only concern entering distant markets, a company can also leap-frog some intermediate entry modes in order to move away from the sequentialist pattern and more directly to some kind of foreign investment.