Growth through Internationalisation among Entrepreneurial Firms Essay

Growth through Internationalisation among Entrepreneurial Firms - Essay Example . The study of internationalization and its effects on growth of entrepreneurial firms have been studied using secondary data from relevant articles. These articles are chosen based on its topic and content, which is relevant in the study of internationalization and its effect on the growth of entrepreneurial companies. Each of the articles is thoroughly analyzed and the information recovered from them is used to discuss its implications on entrepreneurial activities. The journal article by Buckley and Hashai is chosen for its analysis. Their article â€Å"Formalizing internationalization in the eclectic paradigm† is based on an equilibrium model which describes internationalization in the light of competitive advantage. It explains why firms adopt overseas expansion strategies and how it acts on behalf of their growth. The aim and objective of this article are to establish a formalized theory on internationalization in the light of eclectic paradigm by reconfiguring certain ne o-classical economic theories. A set of inequalities has been formulated to establish the role of eclectic paradigm in overseas expansion. The equilibrium is based on the concept of ownership advantage, location advantage, and internalization advantage which has been incorporated into the general equilibrium model, mostly preferred by economists. Foreign Direct Investment (FDI) is explained as an operation model which maximized the utility of workers and entrepreneurs simultaneously. A firm adopts an overseas operation only when the total utility received from FDI activities in a host country is more than the total utility received from the exports, domestic consumption and inward FDI. The three elements of the eclectic paradigm are ownership, location and internalization advantages. These are continuous in nature and often tend to support each other. The decrease in one advantage can be compensated by the other two. These competitive advantages are leveraged by the entrepreneurial firms to enhance their growth overseas and gain an edge over its competitors.