Abstract

We investigate the role of high distance in trust erosion between small partners. High distance is known to hinder the formation of trust between potential partners, but its role in trust erosion in established partnerships is less understood by international business scholars. Through a qualitative longitudinal study, we extend current theory of how high distance affects the trust dynamics between cross-border partners. Specifically, we unearth three interrelated mechanisms that together explain how and why trust can erode due to high distance. We show that, before a partnership is formed, high distance can lead partners to erroneously attribute cues to a potential partner's high quality, leading to over-expectations of partner performance. Once the partnership is operational, high distance hinders actors' ability to understand situational factors associated with disappointing outcomes, and so they are attributed to failings of the partner. At the same time, distance-related challenges of bounded reliability render partners reluctant to discuss partnership outcomes. This can result in a vicious cycle of inertia as partners strive to protect goodwill while abandoning efforts to produce partnership outcomes because of doubts of the other's quality. Thus, our theoretical model illustrates the limitations of trust and explains how, paradoxically, high distance can facilitate both trust formation and trust erosion.

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Case theoretic approaches ;  China ;  Longitudinal ;  Process model ;  Small and medium-sized enterprises ;  Trust ;  Trust erosion

Abstract

This case deals with the choice of growth strategy for a Chinese IoT (Internet of Things) start-up, Ace Company (Ace). Ace was founded in February 2015 by Ren (CEO), Zhang (CTO), and Jin (CMO), with the initial purpose of solving the pain points of the IoT industry by providing an unprecedented universal IoT operating system. Since its core product, Ace OS 1.0, was officially released in May 2016, more than 10,000 developers have joined Ace’s platform, and dozens of companies have applied Ace’s IoT technologies and solutions. Having proven the technical viability and market acceptability of its offering, Ace has to decide how to scale up, especially as it has received Series A investment of ￥21 million. However, there is a dispute between the CTO and the CEO: Zhang insists on extending Ace’s business to as many industrial scenarios and companies as possible, while Ren insists that Ace should focus on and penetrate deeply into a few industries. Jin is stuck in the middle and wants to know which path they should choose. The dilemma faced by Ace is typical for a start-up that has succeeded in the entrepreneurial stage and needs to develop a growth strategy. The co-founders have different perspectives and it is hard to reach a consensus. The case also reflects the features of an emerging market (China) and the challenges and opportunities within.

Keyword

growth strategy ;  Internet of Things (IoT) ;  New Startup

Abstract

Prior research describes international expansion as a series of discrete steps and notes that taking them threatens new ventures' survival, especially due to unexpected setbacks. Seen through the lens of social science, the source of such threat becomes clearer. In this paper, we argue that internationalization in new ventures involves what social anthropologists call a liminal transition – a betwixt-and-between period lying between the intent to internationalize and the realization of a stable internationalized state. The ambiguous and transitory nature of this liminal transition has the potential to increase the odds of overreach (e.g. a high-cost market entry without sufficient resources). Avoiding the negative influence of liminality – and instead harnessing its positive effect – relies on three sources of support that we refer to as opportunity scaffolding: self-reflective learning, peer learning and consultative learning. We argue that entrepreneurs with personality profiles high in levels of core self-evaluation (CSE) are more likely to utilize the scaffolding like that available in business incubators effectively. This leads to the development of a more reflective mindset, making capability learning more likely, preventing decisions that lead to overreach and reducing the threat to INV survival. However we also strike a note of caution in that at excessive (hyper) levels of CSE, the internationalizing new venture could become the victim of hubris. Emboldened with unrealistically high self-confidence, hubristic entrepreneurs are more likely to rebuff use of scaffolding, leading to a more reactive mindset, increasing the probability of liminal overreach and threatening INV survival.

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Abstract

Although international business scholars have begun to recognize the division of entrepreneurial labor between MNEs and SMEs, there is a fragmented understanding of the different forms MNE–SME cooperation can take. We develop a typology that takes into account not only complementarity of capabilities but also, crucially, the compatibility of intent between MNEs (exploration vs. exploitation) and SMEs (international vs. domestic orientation). The framework offers a novel way to understand the forms and dynamics of MNE–SME cooperation. We also show how it can be applied more broadly, by considering its application to societal challenges, such as achieving the United Nations’ Sustainable Development Goals.

Keyword

global innovation ;  global value chain ;  interorganizational relationships ;  MNE-SME cooperation ;  SME internationalization ;  Sustainable Development Goals

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Abstract

This case describes the process of entering the Chinese market undertaken by Zotter Chocolate, an Austrian chocolate producer. There are several things that make this company stand out: it is a small, family-run entrepreneurial firm from Austria which makes a wide range of unconventional flavours of chocolate. It prides itself on being organic and fair trade, and has attracted a number of loyal customers and visitors to its “chocolate factory” in its headquarters located in Bergl, Austria. After successfully entering the German market, an “obvious” target for a firm from Austria, the founder, Josef Zotter, and his family considered where to go next in 2010. After comparing the US and Chinese chocolate markets, Zotter Chocolate selected China as its first major non-European market. The case introduces how Zotter sought out a local partner in Shanghai, and decided to enter the market with an “experience” offering in its first chocolate factory outside its home market, overseen by the founder's daughter Julia. Their innovations and learning process are also presented in this case. The case ends with Julia's key concerns about Zotter China's next step when she had to leave China for the headquarters of Zotter Chocolate in Austria in August 2017.

Keyword

China Market ;  Family Business ;  Globalization ;  Innovation ;  International Entrepreneurship ;  Market Access

Abstract

This case deals with a Chinese startup, Testin, forging partnerships with multiple large multinational corporations (“MNCs” in short, e.g., Microsoft, IBM, ARM, Intel). In order to help developers economize the time spent on quality assurance (QA), Testin was founded by Jun Wang with six of his former colleagues working at Pica Corporation in June 2011. In the past years, Testin had served over 800,000 app developers by conducting more than 150 million quality and security tests on over 2.5 million mobile apps through its automated Cloud Testin (云测) service supported by its testing labs and its Crowd Testin service for solving further problems by part-time qualified testers. It had received several rounds of financing totaling over USD 80 million. Many Chinese Internet companies tried to acquire Testin, and a well-known multinational company asked Testin to sign an exclusive service contract. Wang and his partners resisted such offers and were determined that Testin should maintain neutrality. Thinking about the five-year old enterprise, Wang wondered how to ensure Testin could “stay hungry and stay foolish”. A striking feature of these relationships discussed in this case is that the venture is based in an emerging market context (China) whereas several of the key large corporate partners are headquartered in advanced markets. Thus the partnerships being forged are arguably between non-traditional allies.

Keyword

China ;  Emerging/Developing Market ;  multinational corporations (MNCs) ;  New Startup ;  partnership ;  Technology-Based Entrepreneurship

Abstract

In this conceptual paper, we ask: How does the larger cultural context influence the way that groups of managers deal with paradoxical tensions in strategy episodes? We focus on three sources of tension in the conduct and design of strategy episodes – inclusion, formality and coordination/communication. We argue that in each case, cultural influences affect the extent to which these facets of strategy episodes are dealt with using a paradox lens. Specifically, in Western cultural contexts, managers tend to have a lower proclivity for adopting a paradoxical frame resulting in a separation of tensions in strategy episodes; by contrast, managers in Eastern cultural contexts such as China more readily adopt a paradoxical frame, and embrace tensions in strategy episodes. We suggest that, over time, non-paradoxical thinking likely promotes inter-episode plurality and planned emergence, while paradoxical thinking tends to foster intra-episode plurality and emergent planning. We contribute to a deeper understanding of strategy episodes as culturally embedded practices.

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Abstract

Startups　in　developing　economies　are　addressing　local　problems　through　creative　technologies　and　solutions.　For　large　global　companies,　the　prospect　of　working　with　such　startups　is　appealing　—　and　complicated.

Keyword

CHINA ;  INNOVATION

Abstract

The tech giant’s partnership model shows how large companies can work with new ventures to drive innovation.

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