BORN GLOBAL
International Business Strategy (G2)
Supervisor: Marcelo Pereira Duarte
Davide Biasetton - 2024163979
Antonella Galiero - 2024163968
Ilaria Fortunato - 2024152800
Jelto Nils Janssen - 2024170335
Leonie Lehnert - 2024186509
Neeltje Isabel Hagenah - 2024177653
Philipp Wiesner - 2024188110
Riccardo Calvi - 2024161779
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Table of Content
1. Introduction
1
1.1 Definition of Born Global Firms
1
1.2 Review of the Current Economic Context
3
1.3 Key Factors Driving the Emergence of Born Global Firms
4
1.3.1 Technological Advancements and Digital Transformations
5
1.3.2 Identification of Global Market Opportunities and Niche Specialization 5
1.3.3. Entrepreneurial Mindset and International Experience of Founders
6
1.3.4. Bypassing the Traditional Internationalization Process
6
2. Topic Development
2.1 Characteristics of Born Global Firms
7
7
2.3 Speed of Internationalization, Entrepreneurial Orientation and Niche Markets9
2.3.1 Speed of Internationalization
9
2.3.2 Degree of Internationalization
10
2.3.3 Entrepreneurial Orientation
10
2.3.4 Niche Markets
11
3. AIRBNB as a Born Global Firm
11
3.1. Economic and Market Context
11
3.2. Characteristics of Airbnb as a Born Global Firm
12
3.3 Challenges Faced by Airbnb as a Born Global Firm
13
4. Conclusion and Future Research
14
References
16
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1.
Introduction
In an increasingly globalized world, companies expanding beyond their domestic markets
have become a critical study area in international business strategy. Traditionally,
multinational companies like BT, Microsoft, and Siemens grew by establishing a solid
presence in their home markets before expanding abroad. This gradual approach to
international expansion was considered the norm, allowing firms to build robust foundations
before navigating the complexities of foreign markets.
However, a new kind of firm has emerged in recent decades, called born-global firms. These
companies pursue international markets within just a few years of their formation, although
they are still relatively small and not widely recognized in their domestic markets. They often
achieve a significant portion of their revenues from international sales right from the start,
sometimes reaching as much as 100% of their total revenues from foreign markets. This
contrasts with most firms struggling to achieve high levels of internationalization. For
example, among the 300 largest publicly listed companies in the UK, less than 30%
generate more than half of their total revenues from international sales. This shift in business
strategy challenges the conventional models of international growth, making born-global
firms a compelling subject in modern international business strategy.
In the following sections, we will define born-global firms and look at the current economic
context, along with the key factors driving their emergence. We will then dive into their
characteristics, challenges, and rapid internationalization strategies, before summarizing our
findings and conclusions.
1.1 Definition of Born Global Firms
The concept of a born-global firm refers to a company seeking to achieve substantial
international revenue shortly after its formation. Unlike traditional firms that typically take
years or even decades to expand globally, born-global firms target international markets
within their first few years of operation. These firms are characterized by a proactive global
mindset, leveraging resources and strategies to gain competitive advantages across multiple
countries right from the start.
Knight and Cavusgil (2004, p. 124) define born-global firms as “business organizations that,
from or near their founding, seek superior international business performance from the
application of knowledge-based resources to the sale of outputs in multiple countries.”
This definition emphasizes the critical role of knowledge, innovation, and a global outlook in
driving the success of these firms.
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Additionally, born-global firms are often referred to as international new ventures (INVs),
which focus on rapidly establishing a presence in international markets to gain strategic
advantages. Oviatt and McDougall (1994, p. 49) define INVs as “[…] a business organization
that, from inception, seeks to derive significant competitive advantage from the use of
resources and the sale of outputs in multiple countries. The distinguishing feature of these
start-ups is that their origins are international, as demonstrated by observable and significant
commitments of resources (e.g., material, people, financing, time) in more than one nation.
The focus here is on the age of firms when they become international, not on their size.”
Cavusgil and Knight (2015) reference Oviatt & McDougall’s widely established definition of
INVs, which describes them as similar to born-global firms, but also explain the distinctive
characteristics that differentiate them from each other.
A more quantitative definition describes born-global firms as companies that achieve at least
25% of their total sales from foreign markets within two to three years of their founding
(London Business School Review, 2008).
Having numerous varying definitions of born-global firms in the research discourse poses
challenges,
as
correctly
classifying
these
companies
relies
heavily
on
precise
characteristics. Vague definitions come with the risk of misclassifying firms.
For instance, a French vineyard with operations in Germany and exports to North America
might be considered a born-global firm if the definition does not clearly specify
characteristics like rapid internationalization, reliance on knowledge-based resources and
innovative technologies, or achieving substantial international revenue within a defined
timeframe.
Bader and Mazzarol (2009) conducted an extensive review of academic literature on
born-global firms to ultimately propose a simplified and commonly usable definition intended
to clarify inconsistencies. They conclude with a definition they describe as “simple and with
no vagaries”: “a new firm that makes at least one international sale to any new market within
two years of formation.” (Bader and Mazzarol, 2009). However, this definition may lack
precision and ultimately misclassify certain companies. For instance, the vineyard example
mentioned above could meet the criteria in this definition despite not embodying the core
characteristics of born-global firms, such as rapid internationalization driven by innovation or
a knowledge-based approach. Therefore, a robust definition ensures that only firms entailing
key aspects such as innovation, agility, and an early global mindset are identified as
born-global.
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1.2 Review of the Current Economic Context
The current economic context for Born Global companies is challenging, formed by factors
including rapid technological advancements, geopolitical tensions, inflationary pressures as
well as shifting consumer expectations. It is elementary for Born Globals to navigate unique
opportunities and constraints as they pursue growth.
Digital technologies, such as AI and cloud computing, are important in supporting the
scalability and agility of Born Globals, enabling them to operate across international borders
with limited physical infrastructure. These tools reduce traditional barriers to entry, allowing
for rapid market access and efficient global customer management. Furthermore, remote
work has opened access to a diverse global talent pool. This not only expands their
recruitment base but also provides valuable localized insights, which are essential for
adapting products and services to meet varied market demands across regions. However,
Born Globals also face the pressure on keeping up with fast-thriving technologies, often
requiring continuous investment despite limited resources. (Guo & Gil-Lafuente, 2019;
Knight & Cavusgil, 2004; Shi & Tang, 2020)
Persistent disruptions in global supply chains, intensified by geopolitical issues such as the
Ukraine conflict, are causing significant operational challenges for Born Globals. These
companies must address vulnerabilities in their sourcing and distribution networks, often by
diversifying suppliers or exploring local sourcing options to reduce dependencies. Such
strategies help to build resilience but also add complexity and costs to their operations,
impacting profitability and requiring risk management. Born Globals must balance the
benefits of supply chain diversification with the added financial burden. (Guo & Gil-Lafuente,
2019; Knight & Cavusgil, 2004; Shi & Tang, 2020)
The high inflation and rising interest rates is further constraining Born Globals, especially in
terms of financing and investment capacity. Rising costs of capital restrict these firms' ability
to invest in necessary infrastructure, technology as well as human resources, slowing down
expansion plans. Born Globals face tighter financial conditions, which can impact their
innovation and market growth strategies, as they prioritize lean operations to manage limited
funds effectively. The increasing focus on sustainability, including strict regulations, also
influences the strategic direction of Born Globals. These firms are under pressure to adopt
green technologies and sustainable practices, which can be related to high costs but are
essential for long-term competitiveness. Aligning with global sustainability standards not only
helps Born Globals meet regulatory requirements but also enhances their brand image
among environmentally conscious consumers. However, this shift can divert resources from
other areas critical to growth, further highlighting the need for strategic prioritization. (Guo &
Gil-Lafuente, 2019; Knight & Cavusgil, 2004; Shi & Tang, 2020)
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Born Globals operate in an increasingly competitive labor market, where the demand for
skilled professionals- especially in knowledge-intensive sectors- is driving up wages. The
global competition for talent presents an opportunity and a challenge. While remote work
options enable access to international talent pools, the high cost of attracting and retaining
skilled workers puts additional financial strain on these companies. Furthermore, as Born
Globals seek expertise for localized market insights, they must often navigate varying wage
standards and employment conditions, adding to operational complexity. The shift toward
online consumption was hastened by the COVID-19 pandemic. E-commerce allows these
firms to access global markets more efficiently, however it also requires investment in
technology and logistics to keep up with shifting consumer expectations. Staying competitive
in digital markets demands adaptability and responsiveness, especially as consumer
behaviors evolve with economic pressures like inflation and fluctuating purchasing power.
Born Globals’ broader economic impact, especially in job creation, may be more limited than
often assumed. Lean operational models and reliance on economies of scale allow these
firms to increase revenue without a proportional rise in employment, challenging the notion
that they are significant drivers of job growth. While Born Globals stimulate cross-border
trade and bring innovative products to international markets, their impact on sustained
economic growth and employment is nuanced. Policymakers should consider targeted
support strategies that recognize the unique strengths of Born Globals, such as fostering
innovation and internationalization, without overestimating their role in employment creation.
(Guo & Gil-Lafuente, 2019; Knight & Cavusgil, 2004; Shi & Tang, 2020)
Overall, while Born Globals benefit from current digital and talent trends, their economic
contributions, particularly in employment and sustained growth, may be limited.
Policymakers should recognize both the strengths and constraints of Born Globals, focusing
on realistic support strategies that align with their unique capabilities in the global economy.
1.3 Key Factors Driving the Emergence of Born Global Firms
The emergence of born global firms outlines a significant shift in how companies approach
international markets, due to several key factors that challenge traditional business
practices.
While historically firms would first establish themselves domestically and then expand
internationally in a gradual way, on the other side, born global firms tend to expand
internationally from the beginning. This phenomenon represents the changing in
international business dynamics: this is a demonstration of the changing dynamics of
international business in the digital age, since the combination of technological leverage,
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niche market focus, and a globally oriented entrepreneurial mindset allows born global firms
to build a sustainable competitive advantage right from day one.
As the world becomes more interconnected, the trend of born global firms is likely to persist
and evolve, creating new standards for international business practices and inspiring the
next generation of entrepreneurs to think globally from the start.
1.3.1 Technological Advancements and Digital Transformations
One of the primary drivers of the emergence of born global firms is the rapid technological
advancement, particularly for what concerns information and communication technologies
(ICT).
The advancement of high speed internet and mobile connectivity linked to the increasing use
of digital tools has created several opportunities, without precedents, in order for businesses
to engage with international markets swiftly and at lower costs.
Furthermore, platforms, e-commerce, and social media enable companies to reach a global
audience directly, reducing the need for extensive physical infrastructure: as a result,
physical entry barriers are lowered. Consequently, firms can easily enter and operate in
international markets without the high costs usually related to international expansion, such
as setting up overseas branches or establishing extensive distribution networks.
Furthermore, digital analytics and market research tools have become more accessible,
allowing even small and newborn firms to gather information on global consumer
preferences and demand. This enables born global firms to make informed decisions, tailor
their offerings to diverse markets, and strategically allocate resources for maximum impact.
1.3.2 Identification of Global Market Opportunities and Niche Specialization
Another critical aspect that contributes to the emergence of born global firms, is their ability
to identify and capitalize on specific niche opportunities in the global market.
Rather than directly competing within saturated domestic markets, these firms often
specialize in a unique product or service offering that addresses unmet needs on an
international scale.
By focusing on specialized niches, born global firms can avoid head-to-head competition
with larger, established companies and instead cater to targeted segments that have been
overlooked or underserved.
For instance, many born global firms are highly innovative, leveraging high technology or
unique intellectual property to develop products that solve specific problems for niche
customers worldwide. This approach enables them to scale quickly, gain loyal customers,
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and establish a strong competitive edge before larger competitors have a chance to
respond.
1.3.3. Entrepreneurial Mindset and International Experience of Founders
The entrepreneurial mindset and the international experience of founders represent a crucial
factor in differentiating born global firms from traditional businesses.
Founders of born global firms usually have a global vision since the beginning, due to
previous experiences in international markets. This kind of perspective influences their
strategic decisions, making them more inclined to seek opportunities beyond national
borders during the early stage of a company's life. Founders’ ability to leverage their global
connections provides access to important resources, such as international partnerships,
distribution channels and funding opportunities. Their understanding of diverse market
dynamics also helps them navigate cultural, economic, and regulatory challenges that may
occur when entering foreign markets. The willingness to embrace global complexity gives
born global firms a strategic advantage, so that they can respond promptly to changes and
capitalize on new trends.
1.3.4. Bypassing the Traditional Internationalization Process
Traditionally, firms have followed a gradual approach to internationalization, often expanding
first to neighboring countries or regions with similar cultural and economic environments.
However, born global firms tend to bypass this incremental process, entering multiple
international markets almost simultaneously. This shift is largely enabled by the digital
landscape, which allows firms to test and scale their products globally with minimal upfront
investment.
By
leveraging
digital
marketing,
online
sales
platforms, and virtual
communication tools, born global firms can build brand recognition and customer
relationships across multiple countries without establishing a physical presence in each
market. This rapid international expansion not only accelerates their growth but also helps
them build a diversified customer base, reducing dependence on any single market and
increasing resilience against local economic downturns.
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2. Topic Development
2.1 Characteristics of Born Global Firms
The characteristics of Born Global Firms are:
Rapid Internationalization: Born global firms are young start-ups that initiate international
business shortly after their founding, driven by strong international focus from the start and
influenced by important external factors such as globalization, technological development or
the rise of a global middle class. This rapid internalization can also be credited to their
access to non-traditional assets, like a proactive mindset, adaptable skills, and smart
strategies.
Resource Constraints: The resource constraints are partly due to being new emerging
companies, and partly due to the domestic market being too small and concentrated.
Expanding internationally, using network connections, allows them to have access to various
resources and other cheap factors, for example labor.
Entrepreneurial Orientation: Entrepreneurial orientation is crucial for born global firms,
highlighting the importance of managers’ ability to conceive, recognize and exploit
opportunities in international markets. Equally essential are their capacity of taking risk, their
tolerance for ambiguity and their proactivity. This mindset is also vital for building a network
of connections that provides resources and knowledge.
Networking and Collaboration: Networks of relationship both personal and professional,
are essential for the international success of the born global firms. These types of
connections can offer access to resources and knowledge, reducing the cost and risks linked
to expansion. For small companies with limited resources, such networks offer a way to
overcome constraints; they can benefit from connections not only with other businesses, but
also directly with customers.
Focus on Niche Markets: Many companies adopt niche strategies, focusing on specific and
poorly served markets to provide innovative and differentiated solutions, thereby gaining a
competitive advantage in highly specialized global markets. They often adopt differentiation
strategies by developing innovative and unique designs and by creating distinct products.
Due to the need to stand out from everyone else, born global firms frequently focus on
delivering superior quality products and emphasizing this distinction to meet their target.
Innovative and Technology-Driven: A strong innovative nature not only allows them to
adapt more effectively to changes in foreign markets, but also supports the development of
unique products and services. By creating distinctive offerings, these firms gain a
competitive advantage. Another important factor for born global firms is the use of
technology not only in production but also for connectivity; in particular information and
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communications technologies help them to elaborate better information and communicate
with partners and customers worldwide at practically zero cost.
2.2 Challenges of Born Global Firms
1.
Limited Financial Resources
Since Born Global are often small startups, they usually deal with limited resources. To
operate on an international scale, firms are required to cover significant costs for exporting,
marketing and product adaptation.
2.
Low Market Knowledge
These firms operate in complex markets that are very different between each other.
Differences may be found in many different aspects, such as cultural factors, legal
frameworks or peculiarities of the local economies. These conditions can force the firm to
face challenges in the tailoring of the products, in marketing strategies or to define the
business model. Another factor strictly linked with this challenge is the total lack of network
that these firms have at the beginning of their journey.
3.
Logistics and Supply Chain Management
To become profitable as a Born Global Firm, the business must have a well-organized
logistics system, together with an efficient supply chain. A challenge for these firms is to
create a Supply Chain capable of keeping up with the fast innovations of the markets, while
also maintaining relatively low shipping costs and acceptable delivery times.
4.
Global Competitiveness
Born Global Firms, by definition, operate in a global market. This exposes them to a wider
range of competitors from all around the world, which, connecting to point one, could have
bigger resources than the Born Global Firm.
5.
Cultural and Language Barriers
Entering a new international market means competing in an environment different from
where the firm is based. Challenges could be found in the cultural and language differences,
impacting communication, negotiations and understanding customer needs.
6.
Sustaining Continuous Innovation
Born Global often competes in very innovative markets. To maintain a competitive
advantage, these firms need to invest in research and development, which means investing
a significant number of resources that often Born Global do not have.
7.
Foreign Exchange Risk
Operating in many countries means dealing with various currencies. Born Global may
encounter some risk with exchange rates fluctuation, especially if the firms operate in
emerging countries, where instability of various kinds may be a bigger threat.
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8.
Recruiting and Managing International Staff
It is difficult for Born Global to find qualified workers that have the knowledge and experience
to work in a global framework. Other challenges regarding these topics might be the
integration of the culturally diverse workers, as well as the cost of maintaining an adequate
workforce.
2.3 Speed of Internationalization, Entrepreneurial Orientation and Niche Markets
2.3.1 Speed of Internationalization
For born global firms, speed is a critical differentiating factor compared to traditional firms,
which often follow a staged, gradual approach to internationalization—expanding first to
culturally or geographically proximate countries. Born globals, however, bypass or accelerate
these stages, entering foreign markets rapidly due to several drivers:
1. Global Mindset: Founders of born globals often possess a global mindset,
perceiving foreign markets as essential rather than optional for their business model
(Knight & Cavusgil, 2004).
2. Technological Advancements: Digital marketing, e-commerce, and logistics
advancements enable small firms to access global markets easily, particularly in
technology-intensive sectors.
3. Market Conditions: Many born globals operate in specialized industries where
domestic markets are insufficient for growth, necessitating early entry into
international markets.
4. Competitive Advantage: Born globals often offer unique products or services, giving
them a short-lived edge that drives swift international expansion before competitors
replicate their offerings (Autio, 2005).
While rapid internationalization maximizes market opportunities and reduces competitive
risks, it also poses significant resource and operational challenges for firms with limited
capacity.
2.3.2 Degree of Internationalization
Born global firms typically achieve a high degree of internationalization early in their lifecycle,
which is integral to their competitive strategy. Several dimensions of DOI align with the
characteristics of these firms (Knight & Cavusgil, 2004):
1. Revenue Dependence on International Markets: Born global firms often derive a
significant portion of their revenue from foreign markets, contrasting with traditional
firms, which remain more domestically focused in their initial stages.
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2. Geographical Spread: Unlike traditional firms that expand into culturally or
geographically proximate regions first, born globals often exhibit a geographically
dispersed presence, targeting multiple, diverse markets simultaneously.
3. Network Development: A high DOI often reflects strong international networks. Born
globals leverage global partnerships, supply chains, and distribution networks to
overcome resource constraints and tap into opportunities.
4. Cultural Adaptation and Learning: Rapid expansion into diverse markets
necessitates a strong capacity for cross-cultural learning and adaptation. A high DOI
requires navigating varied regulatory, cultural, and competitive landscapes effectively.
A high DOI reinforces speed, entrepreneurial orientation, and niche strategies but also
increases operational complexity and risk.
2.3.3 Entrepreneurial Orientation
Entrepreneurial orientation (EO) is fundamental for born global firms. EO refers to a firm's
strategy that emphasizes innovation, proactiveness, and risk-taking—qualities. Born global
firms tend to score highly on all three dimensions of EO (Knight & Cavusgil, 2004):
Innovation: Born globals often develop unique, niche products that address unmet needs in
international markets. This differentiation fosters rapid internationalization and competitive
positioning.
Proactiveness: Proactiveness in born global firms is evident in their strategies, as they seek
to enter markets before competitors and actively create opportunities rather than waiting to
react to market changes. This orientation enables born globals to capitalize on first-mover
advantages and build brand recognition across borders.
Risk-Taking: Unlike traditional companies, born globals are typically willing to accept higher
levels of risk associated with rapid internationalization. This risk tolerance allows them to
venture into foreign markets early, often despite limited information about potential
challenges. Risk-taking is essential for entering niche markets abroad, where demand may
be uncertain but the potential for high returns exists.
EO not only facilitates born global firms' internationalization speed but also supports their
resilience in navigating the complex and uncertain international landscape.
2.3.4 Niche Markets
Niche market focus is a core strategic element for many born global firms. By targeting
specific, underserved, or highly specialized market segments internationally, born globals
can avoid direct competition with larger multinational corporations and build strong customer
loyalty (Knight & Cavusgil, 2004). Key factors that make niche markets suitable for born
globals include:
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1. Market Differentiation: By offering unique or highly specialized products, born global
firms can create strong differentiation that appeals to a narrow customer segment
across multiple countries. This differentiation often enables them to charge premium
prices and sustain profitability, even with a smaller market size.
2. Customer Loyalty: Focusing on niche markets allows born globals to build deep
customer relationships and brand loyalty, which can be leveraged for word-of-mouth
marketing and organic growth in new regions. Niche customers often appreciate the
specialized knowledge and expertise that born global firms bring to their offerings.
3. Scalability Across Borders: Many niche products and services cater to a specific
set of needs that are consistent across international markets. This homogeneity
allows born globals to scale their niche offerings effectively by tapping into similar
customer bases globally rather than relying on geographical proximity.
3. AIRBNB as a Born Global Firm
Airbnb, founded in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk in San
Francisco, is a prominent example of a born global firm that disrupted the traditional
hospitality industry with an innovative platform for short-term accommodation rentals. Airbnb
is a global travel community. The community has the aim to offer end-to-end trips. The
service includes where to stay, what to do and which people to meet. Airbnb states about
itself that “Airbnb uniquely leverages technology to economically empower millions of people
around the world to unlock and monetize their spaces, passions and talents to become
hospitality entrepreneurs” (Airbnb, About Us, 2018). The marketplace of Airbnb offers the
possibility to access places and accommodations in more than 200 countries. These places
include villas, castles, apartments, treehouses and B&Bs. Airbnb combined all of this into a
single website and app. Airbnb's strategy highlights how a born-global firm may achieve
considerable global reach by adapting to new locations and establishing a distinct
competitive edge in a complex global market.
3.1. Economic and Market Context
Airbnb’s launch in 2008 coincided with the global financial crisis, a period marked by severe
economic downturn, high unemployment, and financial uncertainty across major economies.
This unique economic context created a fertile environment for Airbnb’s innovative platform,
as it addressed the needs of both financially constrained travelers and homeowners seeking
additional income. As traditional hospitality options became increasingly unaffordable for
many, Airbnb’s model of peer-to-peer accommodation emerged as a timely alternative,
offering affordable lodging options and a flexible source of income for hosts.
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During the crisis, consumers worldwide became more price-sensitive and resourceful, willing
to explore alternatives to traditional hotels. Meanwhile, many property owners, particularly in
urban areas, faced financial pressures, with layoffs and rising living costs driving them to
seek supplemental income.
Airbnb’s business model is built around a peer-to-peer (P2P) platform that connects people who
have spaces to rent (hosts) with people looking for places to stay (guests). The platform provides
tools and services to make communication easy, payments secure, and reviews reliable. For
guests, Airbnb offers a simple search interface with filters for location, price, amenities, and
more, making it easy to find the perfect place to stay. For hosts, Airbnb provides resources to
help them list their properties, set competitive prices, and communicate with guests, helping
them earn as much as possible.
The ability of Airbnb to promote user trust is an important part of its business strategy. On a
peer-to-peer platform such as Airbnb, trust is important, and the company has taken multiple
measures to guarantee security and dependability. One of these strategies is a strong review
system which allows feedback from both hosts and guests following their stay. Users of Airbnb
must also go through identity verification procedures.
The sharing economy also introduced a scalable and asset-light business model. Unlike
traditional hospitality businesses that required extensive investments in real estate and
operations, Airbnb worked as an online marketplace that connected supply (hosts) with
demand (guests) without owning or managing physical properties. This asset-light model
allowed Airbnb to expand rapidly without the capital expenditures typically associated with
global expansion. Instead, it relied on the growing availability of smartphones, internet
access, and secure online payment systems to facilitate transactions and deliver a seamless
user experience.
3.2. Characteristics of Airbnb as a Born Global Firm
a) Rapid Internationalization
Airbnb expanded rapidly, entering European markets by 2011, just three years after its
founding. Its digital platform enabled it to bypass traditional barriers, such as the need for
physical infrastructure or property ownership. By 2012, it had listings in over 192 countries,
achieving global reach faster than most competitors in the hospitality industry.
b) Resource Constraints and Entrepreneurial Orientation
In its early years, Airbnb faced resource constraints, particularly limited capital and a small
workforce. To overcome this, it adopted an entrepreneurial orientation, relying on creative
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problem-solving and risk-taking. The founders raised funds by selling novelty cereal boxes,
showcasing their ability to experiment and navigate financial challenges as they scaled.
c) Networking and Collaboration
Airbnb’s business model depends heavily on networking and collaboration. Through its
platform, Airbnb connects hosts and travelers globally, creating a self-sustaining network
effect. The company has also collaborated with local governments to ensure compliance
with regulatory requirements, such as collecting tourist taxes, which helped it integrate more
smoothly into local markets.
d) Flexibility and Adaptability
Airbnb’s success is partly due to its adaptability. It has modified its platform to comply with
local regulations and cultural expectations in different countries. In Japan, it adjusted its
platform to meet home-sharing laws, while in China, it integrated local payment methods like
Alipay. This flexibility has allowed Airbnb to maintain a competitive edge in diverse markets
with varying regulatory landscapes.
3.3 Challenges Faced by Airbnb as a Born Global Firm
Limited Financial Resources
In its early years, Airbnb operated with limited capital, unlike traditional firms that expand
only after solidifying their financial base. This constraint led the company to focus on
low-cost marketing strategies, such as selling the already mentioned cereal boxes for
funding. Venture capital was crucial, but it also pressured Airbnb to demonstrate rapid
success, increasing the risks associated with its global expansion.
Low Market Knowledge
Airbnb is represented in more than 200 countries, implying a large amount of diversity to
manage. This includes communicating with others who speak a different language or dealing
with differing perspectives from various origins. Airbnb uses the slogan “belong anywhere”
which challenges Airbnb due to doubts from people about Airbnb is doing enough to fight
discrimination. Brian Chesky, CEO of Airbnb, reacted by stating that whether discrimination
nor racism would have any place on Airbnb.
To overcome these challenges, Airbnb invested in local teams and conducted market
research to understand regional differences and regulatory requirements.
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Global Competitiveness
As a born global firm, Airbnb faced competition from both established hotel chains like
Marriott and Hilton and local platforms such as Vrbo, Tujia or Xiaozhu. To differentiate itself,
Airbnb introduced services like Airbnb Experiences, offering locally curated activities.
Despite this, maintaining a competitive edge in diverse markets remains a significant
challenge.
Regulatory Hurdles and Compliance
Airbnb is facing several big challenges that affect how it operates and grows. One of the
main issues is dealing with laws and regulations in different cities worldwide. Many cities
have rules against short-term rentals because they’re worried about not having enough
housing, breaking zoning laws, and how it affects local neighborhoods. To address these
issues, Airbnb collaborates with local governments to enforce these restrictions, such as
limiting the amount of rental days and requiring hosts to register their properties. Airbnb also
advocates for regulations that strike a fair balance between tourism advantages and
neighborhood needs.
4. Conclusion and Future Research
Research on Born Global firms has yielded several significant insights. Born Global
companies are characterized by their rapid internationalization soon after their founding,
often expanding into foreign markets before they have fully established themselves in their
home markets (Knight & Cavusgil, 2004). Innovation capabilities play a crucial role in the
success and sustainability of these companies, while transnational entrepreneurs with
international experience and bicultural backgrounds are vital for their development (Paul &
Rosado-Serrano, 2019). Furthermore, the maturity of a Born Global company has a
moderating effect on certain strategic aspects and their impact on overall business
performance (Kuivalainen et al., 2007). Industry-specific factors, such as global integration,
local competition, and sectoral trends, also strongly influence the internationalization
decisions of Born Global firms.
Practical implications can be drawn from these findings. Established companies and
entrepreneurial firms in developed economies should seek collaboration with transnational
entrepreneurs to leverage their technological expertise, international networks, and bicultural
advantages (Liu, 2017). Born Global firms should focus on enhancing their innovation
capabilities to establish themselves successfully in international markets and build
sustainable competitive advantages . Additionally, acquiring technology abroad may be more
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advantageous than investing in internal R&D, and companies should allocate resources to
learn about the latest technological developments and trends in their international markets.
However, this decision must be regularly evaluated, taking into account risks and
dependency on the supplier; it may be better for resilience to expand the own capacities in
this area (Knight & Cavusgil, 2004). Born Global firms are also advised to carefully analyze
their industry structure, as it significantly influences decisions regarding market selection and
entry strategies.
Future research could delve into several promising areas. One area of interest is the
investigation of how Born Global firms acquire and develop their specific innovation
capabilities (Malodia et al., 2023). Another is the analysis of the long-term effects of various
internationalization strategies on the performance and survival of Born Global companies
(Hagen & Zucchella, 2014). Future studies could also explore the role of digital technologies
and online channels in the internationalization of Born Global firms. Additionally, examining
the interactions between industry factors and firm-specific characteristics in Born Global
companies would provide further insights. Comparative studies across industries and
geographic regions could identify cross-industry patterns and differences, which would
contribute to a more comprehensive understanding of the dynamics and success factors of
Born Global firms, providing valuable insights for entrepreneurs and managers alike.
15
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