Understanding incubation during foreign market entry: lessons learnt from an illustrative Danish case study

Abstract

Purpose This paper aims to discuss business incubation to enter foreign markets in Brazil, Russia, India and China (BRIC) countries through the lens of an “international business incubator” (IBI). International market expansion offers huge opportunities for companies to increase their revenue, but there are also challenging tasks such as the establishment of a business company and the occupation of a strategic position abroad. Practitioners consider this process as the act of incubation, but the theoretical discussion lags behind the practice-led debate. Design/methodology/approach An illustrative, and theory-led, case study is presented that describes market expansion to BRIC countries through a network-based IBI. The empirical case is an illustrative Danish company with international operations in BRIC countries both with and without an IBI. Findings International business incubation represents a process, which can be influenced through an IBI, and business networking during foreign market entry is shaped by IBI brokerage (bridging, bonding and protecting) in different phases. IBI activities that are embedded in business networking support a company’s endeavours in getting a foothold and acquiring a strategic position in BRIC markets and facilitates the market penetration. Research limitations/implications The IBI’s activities to enter foreign markets should be thoroughly managed. Further studies should be conducted with cross-case comparisons and larger samples to reflect on the propositions established. Originality/value By linking the business networking theory with the practice-led understanding of business incubation, the study explores an under-conceptualised topic for international business and entrepreneurship scholars. The paper offers an initial understanding of how brokerage interacts with incubation during the entry of new markets.

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“…Blackburne and Buckley also briefly referred to the institutional aspects of the IBI, asserting that it represents a mediating approach during international market entry that can compensate for institutional voids surrounding risk, knowledge, and commitment by providing information, learning, and gradual surmounting of the challenges of foreignness, newness 39 , and outsidership 40 . The institutional aspects were then one of the main subjects of an in-depth analysis performed by Gretzinger et al 41 While Blackburne and Buckley considered the IBI as only an organization, Gretzinger et al 42 regarded it as both an organization and an institution organized around the integration of new enterprises into foreign markets. Applying both network perspective and institutional theory, the authors defined IBI as "an actor with an own organizational structure in a specific institutional setting that takes over various activities to support the company's market entry" 43 .…”