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Chapter 9: Growing and Internationalizing the Entrepreneurial Firm
Chapter 9
Growing and Internationalizing the
Entrepreneurial Firm
Learning Objectives
After studying this chapter, students will be able to accomplish the following objectives:
1. Define entrepreneurship, entrepreneurs, and entrepreneurial firms.
2. Identify the institutions and resources that affect entrepreneurship.
3. Highlight three characteristics of a growing entrepreneurial firm.
4. Describe how international strategies for entering foreign markets are different from those
for staying in domestic markets.
5. Articulate what you should do to strengthen your entrepreneurial ability.
Chapter Overview
Chapter 9, Growing and Internationalizing the Entrepreneurial Firm, begins by defining small
and medium-sized enterprises, entrepreneurship, and entrepreneurial firms in the context of
global business. To the extent that some of today’s small firms may become tomorrow’s
multinational juggernauts, you cannot gain a complete picture of the global business landscape
unless you pay attention to the Davids in addition to the Goliaths. The chapter examines how
institutions constrain or facilitate entrepreneurs, and how entrepreneur-specific resources and
capabilities can determine a firm’s success or failure. It then introduces three major
characteristics associated with a growing entrepreneurial firm—growth, innovation, and
financing—before turning to the process of internationalizing an entrepreneurial firm. This
discussion covers transactional costs and entrepreneurial opportunities, as well as common
strategies for entering foreign markets, including direct exports, licensing, franchising, and
foreign direct investment. Finally, the chapter outlines international strategies for staying in
domestic markets, namely using indirect exports or export intermediaries.
Opening Case Discussion Guide
Sriracha Spices Up American Food
Named after a seaside city in eastern Thailand, Sriracha is a generic name for a hot sauce made
from a paste of chili peppers (jalapeños), garlic, vinegar, sugar, and salt. Founded in 1980 by a
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GLOBAL4 Chapter 9: Growing and Internationalizing the Entrepreneurial Firm
Vietnamese-Chinese immigrant David Tran, the firm was named after the freighter, Huy Fong,
that carried him to the land of opportunity. Tran was born and raised in Vietnam. Already an
entrepreneur back in Vietnam, he had a small business making a similar hot sauce there in the
1970s. But the Vietnam War made growth impossible. After the war, the Vietnamese government
gave ethnic Chinese businessmen like Tran a hard time. In 1979, he left Vietnam. As a serial
entrepreneur, Tran looked for opportunities in his new country. He quickly discovered that (in his
view) there was no decent spicy food in the United States. Having identified this gap, he
endeavored to fill it by making hot sauce again. By 1983, he came up with the winning recipe
that has not changed much since.
While popular in the Asian community, Sriracha remained a niche product hardly noticed by
mainstream America. Over time, the burgeoning Asian population in the United States made
crossover into the mainstream possible. Sriracha created quite a sensation. In 2003, Walmart
started selling it in its stores in Los Angeles and Houston.
Given such strong incumbents and a crowded field, what is Sriracha’s secret? Huy Fong’s
website has provided an official answer: “The secret? Continued high quality ingredients at low
prices and great taste makes it a success in today’s trend toward spicy foods.”
Lesson Plan for Lecture
Brief Outline and Suggested PowerPoint Slides
Learning Objectives PowerPoint Slides
Learning Objectives Overview 2: Learning Objectives
LO1
Define entrepreneurship, entrepreneurs,
and entrepreneurial firms.
3: Small and Medium-Sized Enterprises
4: Entrepreneurship
LO2
Identify the institutions and resources that
affect entrepreneurship.
5: Exhibit 9.1: Institutions, Resources, and
Entrepreneurship
6: Institutions and Entrepreneurship
7: Exhibit 9.2: Average Ranking on the
Ease of Doing Business
8: Resources and Entrepreneurship
LO3
Highlight three characteristics of a growing
entrepreneurial firm.
9: Characteristics of a Growing
Entrepreneurial Firm
10: Exhibit 9.3: Venture Capital Investment
as a Percentage of GDP
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Chapter 9: Growing and Internationalizing the Entrepreneurial Firm
11: Exhibit 9.4: Informal Investment as a
Percentage of GDP
LO4
Describe how international strategies for
entering foreign markets are different from
those for staying in domestic markets.
12: Internationalizing the Entrepreneurial
Firm
13: International Strategies for Entering
Foreign Markets
14: Exhibit 9.6: An Export/Import
Transaction
15–16: International Strategies for Entering
Foreign Markets
17: Stage Model
18: International Strategies for Staying in
Domestic Markets
LO5
Articulate what you should do to
strengthen your entrepreneurial ability.
19: Determinants of Success and Failure of
Entrepreneurial Firms around the Globe
20: Implications for Actions
Key Terms 21–22: Key Terms
Summary 23: Summary