Over a cup of coffee in Montreal, on a summer day in 1997, Professors Hamid Etemad, Peter Johnson, and Richard Wright of McGill’s Faculty of Management decided to explore a new phenomenon surrounding international entrepreneurship. At first, they didn’t have a definite name or popular acronym at their fingertips, but it struck an exciting note with all three of them.
One observed that smaller European companies had begun to see Europe as their backyard and an extension of their home markets. This was leading them to market their goods and services throughout the continent.
Another, with experience in the Peoples’ Republic of China and other Asian Tigers, noted that the firms in the growing nations of South and East Asia had been acting as original equipment manufacturers (OEM) and selling their products under global brands to large firms all over the world, especially in the industrialized markets of Europe and North America. These small firms had internationalized their sales without leaving home.
The third professor suggested that most of these OEM suppliers remained unknown to their ultimate customers. These small and medium sized enterprises (SMEs) – Canadian and Asian alike – had taken advantage of NAFTA to conquer larger markets, sometimes as OEM, and sometimes as Private Label suppliers.
Soon it was clear that these three were thinking of the phenomena of smaller companies with international scopes. These companies were becoming increasingly active in rapidly internationalizing markets either directly or indirectly through the larger, longer established (and sometimes global) firms. They were offering high levels of quality and value, and had become indispensable to their larger partners and counterparts. More importantly, the worldwide consumers welcomed their goods and services and were not concerned about their size.
Smaller companies seemed to stand up to the competitive test of global markets with an equal chance of winning market share as their larger and, at times, lethargic counterparts, especially through the production and marketing of their advanced, high-tech products. This suggested that smaller companies were poised to march into the global markets that used to be the playgrounds of the multinationals.
With a rapidly developing theme on their hands, these professors needed to coin an appropriate name and establish other activities that would sustain their project, including research and an event for an initial meeting of minds. The most urgent issue – securing funding to support the related activities – seemed especially imposing.
So Etemad, Johnson and Wright gathered over another cup of coffee to confront the issue. The title chosen for the project, “International Entrepreneurship: Researching Frontiers,” was short and factual. It set the three professors to researching and discussing the idea almost daily. Retrospectively, the title has proven to be attractive to many and has endured for over six years.
In particular, Etemad’s readings over the following three months pointed to three converging trends that deserved further examination: • Rapid and Increasing Globalization of the Environment has been facilitating and even forcing smaller companies to enter international markets. Early manifestations of this trend were the formal integration of countries into the Single European Market in 1992 and the development of NAFTA in 1993.
- Rapid and Increasing Globalization of the Environment has been facilitating and even forcing smaller companies to enter international markets. Early manifestations of this trend were the formal integration of countries into the Single European Market in 1992 and the development of NAFTA in 1993.
- Rapid Technological Developments, both in Canada and around the globe, have been influencing firms’ strategies, regardless of size and sector. This trend points to an increasing need for understanding the impact of technology. The economic dynamics of rapid technological change, and the large initial outlays associated with them, make for an increased need for scale companies (especially for technologically-intensive enterprises) to be active in international markets.
- Increasing Collaboration Between Firms and Nations: although firms have been collaborating in one form or another for a long time – mainly in the form of buyer-supplier relations – collaboration between firms, and even nations, allowing for division of labour and specialization, started in earnest in the 1980s.
These trends pointed to two new research streams. The first stream relates to issues and aspects of “rapid internationalization phenomena” in response to the rapid globalization of markets. It used to be that large firms took a long time to internationalize and small firms didn’t even attempt it. As a result, smaller firms competed domestically and the larger firms expanded internationally. Their markets remained largely segregated.
The second addresses the adverse impact of size and resource limitations on the internationalization of smaller companies when markets internationalize rapidly. The Canada- US Free Trade Agreement (FTA) made it abundantly clear that smaller enterprises had to become competitive, regardless of size, in order to survive. With the transformation of both the US and the Canadian markets under the FTA, smaller Canadian enterprises, for example, were forced to become competitive in the NAFTA Trading Bloc in order to survive the onslaught from the European, South-East Asian and other more competitive markets.
The term “International Entrepreneurship” conveyed the innovative and entrepreneurial processes suggested by the trends in internationalization, and effectively captured the commonality of the new research streams. The term served not only as the common theme, providing a general framework for further research, but it also provided a title to attract other scholars. Etemad, Johnson and Wright began to contact colleagues and other scholars to determine their interest in pursuing the topic. They found that there was no shortage of interest. Etemad reformulated his research plans to find published scholarly support for the topic. Drawing on previous discussions, he and his doctoral student, Yender Lee, decided to search for what they later called the “knowledge network of International Entrepreneurship” and discovered that internationalization and entrepreneurship, as constituent fields, were in fact very old scholarly fields in their own rights (publications stretched back as far as the Eighteenth Century*). The initial research convinced Etemad and Lee that the makings of a multidisciplinary field had existed quietly for some time, and that it was time to organize and acknowledge it. A conference on the subject seemed to be the appropriate tool.
After some six years, the three original professors (of whom Johnson and Etemad are still at McGill) are known as the “Fathers of International Entrepreneurship,”and many scholars have re-focused their research and are building expertise in this emerging field. A new academic journal, entitled the Journal of International Entrepreneurship, is being published by Kluwer Publishing and a strong community of international scholars in more than thirty countries have joined the research and publication in this field.