Elaborating Case-Studies On Internationalization Of Russian Innovative Medium-Size Companies

Abstract

The article describes methodology of elaborating case-studies on internationalization of Russian innovative small and medium-size companies, allowing through rigidly given structure to form and further analyze the array data in the case-studies, by identifying patterns and factors, influencing the success and failure of companies in foreign markets. The methodology is presented on the case-study of the company «Natura Siberica», which shows an example of rapid multidirectional internationalization. The methodology of the company analysis includes the following stages: main internationalization facts, goal, factors and potential for success of the company’s international business, strategies of penetrating new markets, country expansion, determining configurations of company’s international business, international marketing, description of product, pricing and sales, communication policies, organization and coordination practices, internationalization results. The study of the stories of success in internationalization of innovative enterprise was approbated on the research seminars on the master degree program «International economy» at UNECON (Saint-Petersburg State University of Economics). Master students provided primary work, collecting, systematizing and formalizing companies' data from the open sources. Within the framework of three-day scientific-practical seminars the methodology of elaborating cases on internationalization of selected companies in teams was tested and showed great potential for the application in the practice of master-degree studies.

Keywords: Case-studyinnovative companyinternationalization strategy

Introduction

The strategic task for Russian economy aimed at increasing volumes and raising effectiveness of non-primary high-tech exports, and, broadly, widening the scope of internationalization of enterprises requires the survey of the stories of success (and failure) of internationalizing innovative small and medium enterprises (ISMEs) abroad and comparable Russian peers. For this purpose, the methodology of describing these stories of success/failure should be developed, including the process of decision-making on internationalization strategies: selecting priority markets for ISMEs, patterns of penetration and operating activities on chosen markets. There are examples of case-studies of foreign companies acting in Russia in business literature (Medvedev, 2015), there are descriptions of the stories of success of Russian companies, as well, but mostly these are journal articles or interviews, not case-studies in full sense.

Business-cases are of dualistic nature. On one hand, they serve as model templates for similar companies (similar by product, scale and market conjuncture parameters); on the other hand, case-studies are carrying the mission of practical orientation for students encouraging them to simulate the behavior of the case company in changing market situation, suggesting alternatives and acquire competences on the variety of decisions and activities of companies in different situations. The problem for this kind of studying is connected with fragmented, often doubtful information. It is dispersed in journal articles, analytical, commercial publications, hidden in interviews of companies’ founders and CEOs. Partly this information barrier may be reduced by the collection, selection and systematization of all the information from the open sources, interviewing company management (reluctantly), its clients, market experts, that take a lot of labor and financial costs, and terns to the separate specific survey of, for example, companies – “hidden champions” (Simon, 2012) or companies, “born global” (Pock, 2010). As you accumulate the number of cases constructed according to a certain scheme, there appears an opportunity for the quantitative research. For this cases, are transformed into the questionnaire with the conversion of qualitative information into the quantitative data. Thus, there appears an opportunity for economic and mathematical modeling and identification of interconnections of factors, influencing strategic decision-making of ISMEs in terms of internationalization.

The study of the stories of success in internationalization of ISMEs may be associated with the elaboration of case-studies for the master degree program “International economy”. Master students may provide primary work, collecting, systematizing and formalizing companies' data from the open sources.

Within the framework of three-day scientific-practical seminars the methodology of elaborating cases on internationalization of selected companies in teams was tested.

Problem Statement

Program participants should actualize the data from companies chosen for writing the case-study; provide the analysis of those markets where companies are currently operating or those which they could potentially penetrate; write and defend publicly the case-study “Strategies of internationalization for Russian ISME”.

Research task: to create a methodology of elaborating practically-oriented case studies of successful internationalization strategies of Russian innovative small and medium enterprises.

Research Questions

The task of the case study is to systematize information sources which should allow students to answer the questions which strategies from the whole range of alternatives the company followed in the internationalization process, and why.

During the elaboration of case-studies participants should provide including the information (data) for the opportunity to answer the following main questions:

• Which internal and external factors (reasons, motives) launched the process of internationalization for this ISME?

• Which factors determined for the ISME the choice of the overseas market?

• Which factors determined the choice of internationalization strategies (penetration and business development) on the selected markets?

• What results the company has achieved in the process of its business internationalization?

• On what pattern industrialization process could develop further?

• Which theoretical approaches to the issue of internationalization are underlying decisions made by the ISME?

Purpose of the Study

The ultimate goal of the study is to form and update the database of case-studies describing the internationalization processes of Russian ISMEs, allowing, as data are accumulated, to construct multi-factor models and determine mathematically interconnections of factors that influence the choice of internationalization strategies by ISMEs in specific conditions of companies and markets behavior.

Research Methods

On the initial stage of the case-studies databank formation the main method of investigation is search and analysis of texts, systematization and representation of data by a predetermined structure. Subsequently as case-studies in the databank of will be accumulated, data should be scaled and processed using economic-mathematical methods.

The methodology of developing case-studies is given below:

A small working group if formed (3-4 people). The group receives files with the sources of information about the company (articles in media and special publications, analytical reviews, research results). After that the group should use the following sequence of actions:

• Search for additional relevant information about the company;

• Formulation of a short company’s resume;

• Putting on the time axis key events from the company’s life, related with its development and internationalization processes: transfer to the next stage of the life-cycle, change of strategic potential, turn to the new business model, entering new markets, using new strategies of penetration and international marketing, as it is represented in one of the cases (Zentes, Swoboda & Morschet, 2008);

• Precise collecting of data by facts and opinions from information sources using the structure of a strategic plan (Kutschker & Schmid, 2010) and/or “Canvas” business-model (Debelak, 2009):

• Goals, factors and potential of international business for success,

• Penetration strategies,

• Country expansion,

• Configuration of international business, business model,

• International marketing,

• Organization and coordination of international business,

• Results of internationalization.

• Explanation of facts and strategic decisions made in the company through theoretic approaches, concepts, methodologies, answering the following questions for the case-study:

• How the value chain of the company looks like and in which way its international business may configure in the terminology of Porter (Porter, 2018);

• What should be the internationalization strategy of the company according to the criteria “firm experience – industry globality” (Hollensen, 2001);

• Which strategic orientation – direct or reverse internationalization – company follows (Kutschker & Schmid, 2010);

• Which internationalization strategy by the criteria «advantages of globalization – localization» follows the company according to the Bartlett & Ghoshal’s Matrix (Bartlett, Ghoshal, 2000, 2003).

• Which advantages does the company has and which strategies it follows in the framework of J. Dunning Eclectic Paradigm (Dunning, 1995).

Findings

The methodology of elaboration of the case-study was partly implemented within the Master program “International Economy” at Saint-Petersburg State University of Economics. The case-study on internationalization of the company “Natura Siberica”, created on the basis of collected articles and interview from the mass media and other information sources (Didkovskaya, 2017; Ivanova, 2017, 2018; Yakoreva & Levinskaya, 2016; Krasnova, 2013, 2015; Lyasnikov & Lyasnikova, 2016) is represented below.

Natura Siberica (NS) — Russian private cosmetic company, specializing on the production of natural and organic cosmetics. Part of the “Pervoe reshenie” (2017) group of companies producing cosmetic products and household chemicals.

Conclusion

Integration of research and educational tasks in the development of the case-studies on internationalization of Russian innovative companies allows obtaining both educational and scientific results.

Educational result: students acquire necessary competences of research work in groups on the real materials of companies. To assess strategic decisions and actions of companies students should learn and use theoretical concepts of international trade and internationalization and tools of international business (SWOT-analysis, portfolio analysis, types of business models).

Scientific result: creation of the case-study database, transfer of qualitative indicators into quantitative, scaling create an opportunity of constructing a model of internationalization, of better understanding motives and actions of the company in the process of internationalization, depending on internal and external factors. Current survey shows the vital importance of project-oriented learning and building collaboration networks in the hyper-connected world, especially in the field of international economy.

It is important to formulate the main principles of the project-oriented learning and teaching within student collaboration teams:

• Interdisciplinary approach – meaning "holistic networks" rather than determinism in case of Master students’ research.

• Awareness of the global context for the particular business network – which is extremely important in the process of growing transparency and openness.

• Future orientation of any research – a “Foresight push” that should be given to students by tutor selecting an appropriate toolkit.

References

1. Bartlett, C., & Ghoshal, S. (2000). Transnational management (Vol. 4). New York: McGraw Hill.
2. Bartlett, C., & Ghoshal, S. (2003). Managing Across Borders. British Journal of Administrative Management, 35, 24.
3. Debelak, D. (2009). Bisnes-modeli. Printsipy sozdaniya protsvetayuschey organizatsii. [Business Models: Principles of creating a prosperous organization]. Moscow: Grebennikov Publishing house. [in Rus.]
4. Didkovskaya, A. (2017, August, 30) Natura Siberica reshila proizvodit' associiruyuschiesya s Sibir'yu parfumy [Natura Siberica decided to produce perfumes associated with Siberia]. Vedomosti, 4396, . Retrieved from https://www.vedomosti.ru/business/articles/2017/08/30/731546-natura-siberica-parfyumi. [in Rus.]
5. Dunning, J. H. (1995). Reappraising the Eclectic Paradigm in the Age of Alliance Capitalism. Journal of International Business Studies, 26(3), 461-491.
6. Hollensen, S. (2001). Global Marketing: A market-responsive approach (2nd ed.). Harlow, England, Financial Times Prentice Hall.
7. Ivanova, A. (2017, November 23) «Natura Siberica» sozdast spa-zony v zagorodnykh domakh Olega [«Natura Siberica» will open spa areas in Oleg Tinkoff's country houses]. Vedomosti, . Retrieved from https://www.vedomosti.ru/business/articles/2017/11/23/742787-natura-siberica-tinkova [in Rus.]
8. Ivanova, A. (2018, June 13). Pokupatel' budet sobirat' bambuk na blago brenda [Consumers will be collecting bamboo for the benefit of the brand]. Vedomosti, Retrieved from https://www.vedomosti.ru/business/characters/2018/06/13/772540-pokupatel-budet-sobirat-bambuk. PP. 8-9. [in Rus.]
9. Krasnova, V. (2013, March 22). Kreizy «Natura Siberica» [Crazy «Natura Siberica»]. Expert Magazine , 12. [in Rus.]
10. Krasnova, V. (2015, March 25). Mirovaya saga o Sibiri [World saga about Siberia]. Expert Magazine, 13 (939). [in Rus.]
11. Krasnova, V. (2015, November 16). Ravnenie na Gertrudu [Eyes on Gertruda]. Expert Magazine, 46-47.
12. Kutschker, M., & Schmid, S. (2010). Internationales Management. Muenchen; Wien; Oldenbourg Wissenschaftsverlag. [in Rus.]
13. Lyasnikov, N., & Lyasnikova, Y. (2016). Mezhdunarodnaya marketingovaya deyatelnost' mnogonatsionalnykh companiy v usloviyakh nestabil'nosty [International marketing activity of multi-national companies in conditions of instability]. MIR Journal (Modernization. Innovation. Development), Vol. 7, № 4, 161-166 [in Rus.]
14. Medvedev, A. (2015). Strategii i delovye operatsii mirovykh proizvoditeley shin v Rossii - Ucheniy keis [Strategies and business operations of world tires producers. - Case-study]. Vestnik of Saint-Petersburg State University. Management series, Vol. 3, 116-153 [in Rus.]
15. Pervoe reshenie [First decision] (2017). LLC. Study of strategies of Russian companies to enter foreign markets: tools, methodologies. insights from chief executives. RMAA OpenAsia. [in Rus.]
16. Pock, M. (2010). Born Globals: Internationale Wachstumsstrategien junger Unternehmen (Strategisches Kompetenz-Management) [Born Globals: international growth strategies of young companies (strategic competence-management)]. Wiesbaden, Germany: Gabler Verlag / Springer Fachmedien GmbH. [in Germ.]
17. Porter, M. (2018). Mezhdunarodnaya konkurenciya. [International competition]. Moscow: Alpina Publisher. [in Rus.]
18. Simon, H. (2012). Hidden Champions Aufbruch nach Globalia: Die Erfolgsstrategien unbekannter Weltmarktführer. [Hidden champions' breakthrough to Globalia: success strategies of the unknown leaders of the world market]. Frankfurt am Main, Germany: Campus Verlag GmbH. [in Germ.]
19. Yakoreva, A., & Levinskaya, A. (2016, Febrary). «Sila Siberica»: kak Andrey Trubnikov zakhvatil pynok deshevoy kosmetiki [«The Power of Siberica»: how Andrey Trubnikov captured the market of cheap cosmetics]. RBK Journal. Vol. 2. Retrieved from: https://www.rbc.ru/magazine/2016/02/56c7357e9a794718cce68974 [in Rus.]
20. Zentes, J., Swoboda, B., & Morschet, D. (2008). Fallstudien zum Internationalen Management 3., überarbeitete und erweitere Auflage [Case Studies on International Management 3., revised and extended edition]. Wiesbaden, Germany: Gabler Verlag [in Germ.]