Faculty of Economics and Business Administration MASTER THESIS Graduate student , Flavius Popa Supervisor, Conf. Univ. Dr. Ovidiu Bordean 2019 BABEȘ… [615184]

BABEȘ -BOLYAI UNIVERSITY

Faculty of Economics and Business Administration

MASTER THESIS

Graduate student: [anonimizat],
Conf. Univ. Dr. Ovidiu Bordean

2019

BABEȘ -BOLYAI UNIVERSITY

Faculty of Economics and Business Administration

MASTER THESIS
INTERNATIONALIZATION OF COMPANIES
THREATS AND OPPORTUNITIES

Graduate student: [anonimizat],
Conf. Univ. Dr. Ovidiu Bordean

2019

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Contents

Introduction ………………………….. ………………………….. …………… 5
CHAPTER 1 : FUNDAMENTALS OF INTERNATIONALIZATION …………………… 9
1.1 What is internationalization? ………………………….. ………………………….. ………………………. 9
1.2 The evolution of the internationalization process …………………………………….. 11
1.3 OLI Paradigm ………………………….. ………………………….. ….. 12
1.4. Uppsala Model ………………………….. ………………………….. .. 16
1.4.1 Revised Uppsala Mode l ………………………….. ……………………. 21
1.5. Internationalization in business networks ……………………. 23
1.5.1 Early Starter……………………………………………….26
1.5.2 Lonely International………………………………………..28
1.5.3 Late Starter………………………………………………….29
1.5.4 International Among Others……………………………..31
1.6. Born Global ………………………….. ………………………….. ……. 30
CHAPTER 2 : BLOCKBUSTER …………………………… …………………………… 34
2.1 Introduction ………………………….. ………………………….. …….. 34
2.2 How it all began……………………………………….34
2.3 How it extended………………………………………..35
CHAPTER 3 : NETFLIX ………………………….. …………………… …………………………… 37
3.1 Introduction ………………………….. ………………………….. …….. 37
3.2 Establishment…………………………………………..38
CHAPTER 4 : NETFLIX VS BLOCKBUSTER…………………………………..39
Conclusions ………………………….. ………………………….. ………………… 46
References ………………………….. ………………………….. ………………….. 48

List of figures
Figure 1.0 International Expansion Motivation….11
Figure 2.0 OLI Paradigm….13
Figure 3.0 Internationalization of the firm……………………………………17
Figure 4.0 Basic Internationalization – State and Change Aspects…………….18
Figure 5.0 Business network internationalization process model…19
Fig 6.0 Situations of the internationalization in business networks……26
Figure 7.0 Degree of Internationalization…32

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Introduction

Opening your own business is pretty challenging. With all the foreign companies that are in
different countries, already having their own suppliers, being part of a complex network, each
subsidiary being backed -up by the headquarters capital, you would think that it is impossible
to open a business in w hich you will not have such a big disadvantage.
But what if there could be a way in which you can go international in a couple of months or
years, with little costs? What if you can have an internal advantage that could help you face
the companies today?
This is the case of Netflix vs Blockbuster. A case between a brick -and-mortar shop
(Blockbuster) of video renting, against a company that changed its model of renting video
through mail to a company that manages to “rent" its videos to its clients using j ust a few
clicks.

Why is this case so intriguing is the fact that Blockbuster in its peak moment in 2004 had
9.000 stores worldwide and around 85.000 employees managed to go bankrupt and Netflix
with around 8.500 managed to be in 190 countries in 7 years! Not only that but Blockbuster
in 1994 was evaluated to 8.4 billion dollars and in 2010 to 24 million dollars, whereas in
2000 Netflix was evaluated at around 50 million dollars but in 2017 was evaluated at 65$
billion. So , the question is, what happened? When Netflix was founded it was clear that is
was a fight pretty much like David and Goliath. Blockbuster was too big, known worldwide,
whereas Netflix operated only in USA.

Continuing with the introduction, I will present you the framework after which I made an
analysed description of the business model used by Blockbuster and Netflix. Then in chapter
1, I will present the fundamentals of internationalization which includes d iscussions such as:
Oli paradigm, Uppsala Model, Internationalization in business networks and Born Globals.
After which , in chapter 2 I will discuss about Blockbuster, in chapter 3 about Netflix and in
chapter 4 I will make, based on the framework a compa rison between the two companies . The
paper finishes with a conclusion and references to the articles, books and websites used to
make an idea of what happened to this two companies.
The base idea of the framework was inspired from the scientific article ca lled
“Internationalization, innovation and entrepreneurship: business models for new technology –
based firms" (2010) . The articles focus on young companies operating in industries where the
business environment is characterized by growing complexity, triggered by hyper –
competition and globalization.
One such firm that fits the description is Netflix. It was a young company, that operated i n an
industry very complex, very hard to internationalized using the idea of an old framework of
internationalization (like for example the Uppsala Model) , needing the process of
entrepreneurship to leverage the company’s ability to manage uncertainty in a proactive way.

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Which they managed to do so, by developing a new technological platform, commercializing
that technology for potentially new markets, and developing internationalization capabilities
to enable them to compete in what essentially is a global industry.
In the global industry, companies need to be original, have a strategic vision, and find new
ways of defining the value proposition and delivering it to the customers, through the
innovative development of business models, pretty much what Netfl ix has done when
implementing its video -on-demand streaming website. They also showed strong
Entrepreneurship skills when they explored and exploited global opportunities (seeing what
Amazon has created and in 2000 what YouTube was providing), leveraging b oth local and
international relationships, regarding inward and outward business activities. Also, while
extending to other countries, Netflix created relationships thus giving the company access to
new knowledge, about what kind of videos do those custome rs prefer, thus enabling the
company to focus on core activities where they have distinctive knowledge.
Now, as the article mentioned (see Alberto Onett et al., 2010) , traditionally, innovation and
internationalization tended to be considered as alternative growth options, occurring
occasionally in the case of innovation and incrementally in internationalization. Blockbuster
did internationalize, but where it failed wa s to innovate. To have entrepreneurship skills to
explore and exploit global opportunities through technology. Their business model better
resembles what it is described in the Uppsala Model. Trying to find countries that resemble
their culture and languag e, and afterwards to move to countries that are farer and farer away
from their culture.
Therefore, according to Alberto Onetti et al. approach (2010) taking and entrepreneurial
strategic management approach, they suggest that for such firms, current cruci al decisions are
about: the location of activities (locus), the relationships with other players ( modus), and the
selection of activities on which the company’s efforts are concentrated, since “successful
business focus on creating advantage through a sma ll numbers of core activities" (Netflix
giving at first free access to streaming to those customers that already where subscribed to
DVD deliveries, changing from delivering DVD's rented to providing its customers
subscription only, making the customers not think about giving the DVD back late, or late
fees).
These three strategic decisions are required to be integrated into a systemic approach of
management which shows the growth processes that characterize young new technology –
based firms, whereby entrepreneurship, innovation and internationalization are deeply inter –
connected (see Alberto Onett et al., 2010) .
A business strategy design is required according the mainstream doctrin e. But for having a
successful implementation, this design requires a business model that would support the
comprehensive set of decisions that jointly determines the focus, modus and locus of a
company’s business activities (see Alberto Onett et al., 2010 ).

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The main aim of the comparison of the two companies is to present the entrepreneurial
approaches for managing complexity in new technology based industries and to show their
growth process with appropriate decision -making and control tools.
The growing interest of this business model, that Netflix implemented, seems to have
coincided with the advent of e -business in the mid 90’s, when Amazon created its e -business
company of selling books. Rapid technological changes in this new business era, has had
dramatic changes to competitive approaches in many industries. Viscio and Pasternack (1996)
argued that traditional business models were unable to adapt to the internet era
(Internationalization article), an argument proved by Blockbuster, as they were not ab le to
adapt by creating their own online streaming business model.
There are many definitions of the business model, but one seems to fit the business model
that Netflix has, namely the defi nition made by T immers (1998). He defined the business
model of a company as being a description of the product, services and information flows, the
potential benefits, and the sources of revenue. I will explain more about why this definition
also fits the Netflix business mode l in the next chapter.
Alberto Onett et al. (2010) introduce a definitional framework for the business model, more
specifically it uses “focus", “modus" and “locus" as analytical building blocks of the business
model concept , where:
• Focus are the activities which provides the basis of the firm’s value
proposition
• Locus is the location or locations across which the firm's resources and/or
value adding activities are spread
• Modus is the business modes with regards to the internal organization and the
network design

Focus decisions concern the allocation of company resources to different activities (see
Alberto Onett et al., 2010) . The questions that a company should ask itself is where to invest
additional resources, or from where to divest? Netflix invested in the streaming website and
gave free access to people that already had a subscription for DVD’s. Afterwards if we look
at the income N etflix had comparing the 2 business models, we will see that Netflix divested
money from DVD’s and invested more into the streaming website.
Therefore, by identifying what activities the company is focused on, the business model
defines the rel evance of the different activities and consequently determines the span of the
value chain. The primary business model decision refers to the broadness of the activities the
company carries out.

Locus decisions refer to where the different activities of t he company are located (see Alberto
Onett et al., 2010) . In the case of both companies, their location could not be better for their
industry, America. The country where Hollywood is king. And they have extended at first to

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countries close to their culture . That is why at the business model level it has to be decided in
which geographical areas or industrial clusters individual activities are carried out. This
decision has to be made for each activity the company has chosen to focus.

Modus decisions designs the way a company operates in selecting the management methods
for each activity (see Alberto Onett et al., 2010) . More specifically, the business model
defines which activities to manage in -house and which ones to outsource. For activiti es
performed in -house, the business model defines how the company should approach these
activities from among the different options available. An activity can be alternatively
performed in terms of intensive capital technology or labour , and in the latter case, the quality
and skills of th e work force is another key decision . Because Netflix created a streaming
website, they started having a work force that was of higher quality and skill. From a
company that was trying to get the best price for movies to r ent as DVD's or to stream them,
they started to produce their own content. They started promoting production in other
countries as well, in order to satisfy customer needs of having movies appreciated in their
culture.

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CHAPTER 1 : FUNDAMENTALS OF INTERNATIONALIZATION

1.1 What is internalization?

There are many definitions to what internationalization is . One such definition tell us that :
“Internationalization describes the process of designing products to meet the needs of users
in many countries or designing them so they can be easily modified, to achieve this goal…..
In the context of economics, internationalization can refer to a company that takes steps to
increase its footprint or capture greater market share outside of its country of domicile by
branching out into international markets ."
Another definition tells us that “ In economics, internationalization or internationalization is
the process of increasing involvement of enterprises in i nternational markets, although there
is no agreed definition of internationalization. "

Regardless of the definition of internationalization, one thing its clear. It is a crucial strategy
not only for firms or companies that seek to expand globally but als o for countries that want
to bridge the gap between different cultures and countries.

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There are four main types of foreign based MNE activity, divided in to two types of
motivations. These motivations are the traditional motivations and the emerging motivations.
The traditional motivation describes what did a firm seek when it wanted to internationalize
its business. In this case, the firm was seeking: market, resource and efficiency.

Market seeking is when a company aims to protect its presence in the export markets or aim
to explore new markets that offer strong demand for their products/services. These companies
aim to:
• Overcome tariff and non -tariff barriers
• Accompany the international expansion of important customers
• Adapt products to local markets/adapt production process to local resources
• Use the foreign subsidiary to access other foreign markets

This is pretty much what Blockbuster did in the 80’s -90’s, when they started to expand into
different markets from different countries. They were seeking for markets in order to obtain a
stronger presence in foreign markets, by purchasing an already existing company. For
example, Blockbuster entered the UK market in 1989, b y acquiring the 875 -store Ritz Video
chain for $135 million, from parent company CityVision . Ritz Video was one of Europe’s
biggest video rental chain, with 20% market share in UK.
Resource seeking companies have the desire to access resources (like raw ma terials), thus
they aim to:
• Secure access to natural resources that were not available in the home country
or were cheaper in foreign countries
• Access low -cost factors of production

Efficiency seeking are foreign direct investment (FDI) that are designed to promote a more
efficient division of labour . It aims to rationalize the production and distribution structure of
the MNE. In this case, companies aim to:
• Explore the international differences that go be yond factored endowments,
such as different cultures, institutions, economic and political systems
• Reduce transport costs, communication and coordination costs
• Benefit from scale and scope economies
The second motivation for FDI is the emerging one (also k nown as strategic asset seeking)
which is divided in two strategies:
• Competitive positioning (or global chess) is when a firm needs global
operations to pre -empt other, to secure profits, exchange hostages, etc.
• Global scanning is when a firms tries to access or to find emerging trends,
new technologies and best skills worldwide

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Fig. 1.0 International Expansion Motivation

In the past decades, there has been a growing amount of research about the
internationalization of firms. Obviously that this exp anding research shows us an increase in
internationalization of firms and industries. This internationalization process can happen in a
number of different ways. You can notice a firm trying to internationalize by the
establishment of foreign subsidiaries, international joint ventures, licensing agreements,
international advertising campaigns, international trade, and a multitude of other events and
actions.

Although the eclectic theory combining other economic theories that focus on monopolistic
competiti on, location and transaction costs has been the dominant line in this research, a
number of studies have been based on more behavioural approaches. One such theoretical
line has focused on the process of internationalization of the firm, also known as the Uppsala
Internationalization Model or just Uppsala Model.

1.2 The evolution of the internationalization process

The theories of the internationalization encompass a wide variety of explanatory
elements that follow the firms responses to distorted, imperfect markets. While the
traditional theories were focused on FDI (foreign direct investment) and on how
multination als enlarged their involvement in international markets, recent theories
have focused their attention on small to medium business following either a staged
model or a networked approach.

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There have been many different approaches in explaining the internati onalization of
business activities. They normally concentrate to distinct aspects of the reasons for,
and results of, enterprises operating in more than one environment and have changed
dramatically throughout the last decades.
Whereas traditional theories have focused their attention on the internationalization
of the production and foreign direct investment (FDI) where the multinational
enterprise (MNE) played a central role, recent theories have approached
internationalization as a process in which firms increase their involvement in
international operations adapting their strategies, resources and structure to new
investments. The focus of recent theories has centered on small and medium -sized
firms (SMEs).
The internationalization of firms, the liberali zation of the world economy and the
globalization of business have brought about new interdependencies among firms
along the value chain as well as among countries. With the pervasive changes
imposed by this new international environment, the literature ab out
internationalization has remained partially scattered focusing different non -related
topics. Clearly there is almost no general theory of internationalization of a firm. As
a consequence, the main objective of this presentation is to assess the evoluti on of
the main theories of internationalization in order to pave the way for a new theory of
internationalization that takes into account SMEs, MNEs, a process view of the
internationalization and the eclectic paradigm.
1.3. OLI Paradigm

According to John H. Dunning (2000), f or many decades, this analytical framework had
remained the dominant one for accommodating a variety of testable economic theories of FDI
and foreign activities of multinational enterprises.

The paradigm states that the extent, geography and industrial composition of foreign
production undertaken by multinational enterprises (MNE) is determined by three sets o f
interdependent variables.

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Fig. 2.0 OLI Paradigm
The first variable is the competitive advantage of the firms that seek to engage in FDI, which is
specific to the ownership (O) of the investing company (see John H. Dunning, 2000 ). The greater
the competitive advantage of the firm relative to other firms, and in particular to those domiciled
in the country in which they are seeking to make investments, the more likely are they to engage
and increase their foreign production. Dunning (2000), who publ ished the eclectic paradigm,
distinguishes three main kinds of ownership advantages:
• Those related to the possession and exploitation of monopoly power
• Those relating to the possession of bundle of scarce, unique and sustainable
resources and capabilities
• Those relating to the competencies of the managers of firms to identify, evaluate
and harness resources and capabilities from through the world, and to coordinate
these with the existing resources and capabilities under their jurisdiction
According to John H. Dunning (2000), ownership advantages can also be organized in two
groups, which tend to be context specific with respect to the industry or country and related to
the kinds of competitive advantages which firms seek to attain or sustain:

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• Static ownersh ip advantages are income generating resources and capabilities
possessed by a firm at a given moment of time
• Dynamic ownership advantages are the ability of a firm to sustain and increase its
income generating assets over time
Some examples of ownership ad vantages are:
• Proprietary technology or trademarks (protected by patent) : Blockbuster, Netflix
• Ability to obtain inputs on favoured terms: Blockbuster, Netflix
• Exclusive or favoured access to product markets: Blockbuster, Netflix
• Government protection

Both Blockbuster and Netflix have competitive advantage. Back in the 80’s, Blockbuster had
strong contracts with movie makers, providing Blockbuster with movies that were not yet on th e
market. Making Blockbuster the first company to have the newly produced movies for rent. Of
course, this happened when they rented VHSs, because when DVD’s came into the market, the
same proposal was offered by the Hollywood movie producers. An offer tha t was rejected by
Blockbuster because they already were offering 40% of the rental income to the producers for
renting VHS. Walmart did not refuse the proposal, and managed to become in a quick period a
strong competitor for Blockbuster.
Back in the ‘90s, Netflix did not have a strong competitive advantage. At least it was not as
strong as it is now. They not only managed to take advantage of the technology to provide
movies to customers in over 190 countries, but they now produce high quality content, tha t are
trademarked as Netflix production. Also, now Netflix has contracts with video producers in
different countries, in order to obtain access to country specific content, thus having a strong
competitive advantage in other markets, not only in the domest ic market.
According to John H. Dunning (2000), the second set of interdependence variable is the location
(L) attraction of alternative countries or regions, by undertaking the value adding activities of
MNE’s. This step shows us that the more resources a firm finds to jointly use together with its
competitive advantage, the more likely will that firm be to invest more in that country.
Some examples of localization advantages are:
• Spatial distribution of natural and created resources endowments and markets
• Input prices, quality and productivity ( labour , energy, materials, components,
semi -finished goods)
• International transport and communication costs
• Investment incentives and disincentives (including performance requirements,
etc.)

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• Artificial barrie rs (import controls) to trade in goods and services
• Cross -country ideological, language, cultural, business, political differences:
Blockbuster, Netflix
• Economic system and politics of government (like the institutional framework for
resources allocation)
• Economics of centralization of R&D, production and marketing

As stated above, one of the localization advantages is cross -country ideological, language,
cultural, business. And advantage that both Netflix and Blockbuster took advantage off.
Blockbuster to ok advantage being an American company, of their language. Thus , they bought
Ritz Video on UK. Because UK is a language speaking country , and some of the ideology and
culture is similar to that of USA, at least from the movie's perspective, Blockbuster mad e a smart
move to choose as the first country to internationalize, United Kingdom. From that point on, they
could internationalize to other countries from Europe, and also could focus its attention to other
continents, where UK had influence. For example , Asia, more precisely Hong Kong, China.
Hong Kong was a colony that belonged to the United Kingdom. In 1998, after 9 years when
Blockbuster entered UK, they saw an opportunity to expand to Hong Kong.
But Blockbuster also expanded to Canada. A country very similar to USA, english speaking
country, that were also their neighbours . Blockbuster expanded to Canada after 1 year that hey
expanded to UK, in 1990.
Canada was also the first choice to expand for Netflix. The company expanded internationally in
2010 with streaming available in Canada.
The third set or condition (I) offers a framework for evaluating alternative ways in which firms
may organize their creation and exploitation of their core competencies, given the location
attractions of different countries or regions. The ways that a firm can exploit its core
competencies can range from buying and selling goods and services in the open market, through
a variety of intern -firm non -equity agreements, to the integration of intermediate product markets
and a purchase of a foreign corporation.

The eclectic paradigm demonstrates us that the greater the net benefits of internationalizing
across border intermediate product, the more likely a firm will prefer to engage in foreign
product itself, rather than license the right to do so (for example like a franchise agreement to a
foreign firm) (see John H. Dunning, 2000) .

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As a conclusion to the eclectic paradigm, according to John H. Dunning (2000), a firm will
engage in FDI if three conditions are satisfied. If it possesses the net ownership advant ages vis a
vis firms of other nationalities in serving particular markets. If it must be more beneficial to the
enterprise possessing these advantages to use them itself rather than to see or lease them to
foreign firms (internationalization advantages). A nd the third condition, if it will be profitable for
the enterprise to utilize these advantages in conjunction with at least some factor inputs
(including natural resources) outside its home country (location advantages).
If a firm possesses ownership adva ntages and internalization advantages bu t there are no
localization advantages, then the foreign markets would be served entirely by exports.
If a firm possesses ownership advantages and localization advantages but no internalization
advantages, the firm w ill externalize the ownership advantages though licensing or similar
contracts with independent firms.

1.4. Uppsala Model
The Uppsala Model has been one of the most discussed dynamic theories in Nordic
School and International Business Studies and has affected many researches in the way
to explain the process of internationalization of companies.
In this model, according to Jan Johanson and Ian -Erik Vahlne (2008), the
internationalization of the firm, which has its theoretical base in the behavioral the ory of
the firm (Cyert and Aharoni) and Penrose’s (1959) theory of the growth of the firm, is
seen as a process in which the enterprise gradually increases its international
involvement. This process implies a repetitive process between the development of
knowledge about foreign markets and operations on one hand and an increasing
commitment of resources to foreign markets on the other.
Swedish researchers (Johanson and Wiedersheim -Paul, 1975; Johanson and Vahlne,
1977) from Uppsala University had vast crit icisms of the theories at the time, which
explained international involvement. They believed most existing theorizes at that time
toned down the problems of cultural differences and ignored the internal foundations
needed so that companies could handle int ernational activities. As a result, Swedish
researchers developed their own model as a more independent model to explain the
sequential steps in the direction
of increased foreign dedication.

The Uppsala Internationalization Model distinguishes four diffe rent steps of entering an
international market, which cannot be viewed independently of a company’s situation,

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market and the market knowledge (see Jan Johanson and Ian -Erik Vahlne, 2008) .

From the observation, Jan Johanson and Ian -Erik Vahlne (2008) find out that companies
normally start their expansion in a psychic nearby market. There, they have enhanced
knowledge of the market and more control of resources, thereafter gradually when the
companies have become more experienced and acquired better res ources, they expand to
the more distance market. The same approach had Blockbuster. The first country they
expanded was UK and then Canada. Netflix did not start expanding, only after they
managed to start their streaming web site. And the first country th ey provided their
streaming service, was Canada. (By distance market, they refer both to the cultural
distance; as well the differences in language, politics, geographical and the difficulty to
acquire knowledge and information from the market).

Fig. 3.0 Internationalization of the firm
• Step1 : No regular export activities (sporadic export)
• Step2 : Export via independent representative, like agents (export mode)
• Step3 : Establishment of a foreign sales subsidiary
• Step4 : Foreign production/manufacturing

Secondly, most often companies entered a new market through export before

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establishment of foreign sales subsidiary or foreign production (see Jan Johanson and
Ian-Erik Vahlne, 2008) . Blockbuster had a different strategy. Because of their capital,
they managed to buy chains of video rental business. They wanted to expand as fast as
possible.
In their study, they refer to (Aharoni, 1966) the interdependence of market knowledge
and market commitment and they develop a matrix model to illustrate the positive
correlation between market knowledge and the commitment decisions, as well to
emphasize the sequential development of market activities and its positive correlation to
market commitment. The core explanation of the model is that increased market
knowledge will lead to increased market commitment, and vice versa.

Source: Johanson & Vahlne 2009
Fig. 4.0 Basic of Internationalization -State and Change Aspects

Following Penrose, we can find that there are two kinds of knowledg e: objective knowledge
which can be taught, and experiential knowledge, which can only be acquired through personal
experience. A critical assumption is that market knowledge, including perceptions of market
opportunities and problems is acquired primarily through experience from current business
activities in the market.

But since the publication of the Uppsala Model in 1977, because of changes in business practices
and theoretical advances that have been made, the model has been revisited. Now the busin ess
environment is seen as a web of relationships, or a network, rather than a neoclassical market
that has independent suppliers and customers. The change mechanisms in the revised model are
essentially the same as those from the original version, althoug h the two authors add trus –
building and knowledge creation, in order to recognize the fact that the new knowledge is

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developed in relationships.

As said, much has changed since their model was published in 1977. In fact, the economic and
regulatory enviro nments have changed dramatically. The Uppsala Model explains the
characteristics of the internationalization process of the firm, however back then there was only a
rudimentary understanding of market complexities, that could explain certain internationali zation
difficulties, but some subsequent research on international marketing and purchasing in business
markets provides us with a business network view of the environment faced by an
internationalizing firm.

There are two sides for the business network. The first is that markets are a network of
relationships in which firms are connected to each other in various and complex ways. The
second aspect tells us that relationships offer potential for learning and for building trust and
commitment, both of which are preconditions for internationalization.

Fig. 5.0 Business network internationalization process model

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In the original Uppsala Model, we find out that companies frequently began
internationalizing with ad hoc exporting. They would subsequently formalize their
entries through deals with intermediaries, often agents who represented the local
companies in the foreign market. But as sales grew, they would replace their agents with
their own sales organization and as growth continued, they began manufacturing in the
foreign market in order to overcome trade barriers. This pattern of events that would
occur during the process of internationalization is known as establishment chain.

We can observe that the establishment chain has 5 steps (or chains). The first chain is
the Domestic firm which does not export. The firm has no involvement with foreign
markets. Theref ore, it does not have a vehicle of regular information about those
markets.
The second chain is sporadic exports which is the step in which the firm starts exporting
some of its products every now and then. This step however does not impact the
structure and strategy of the firm. It is the first vehicle of information about foreign
markets.
The third chain is exports through an independent representative (agent) . In this case
the firm has an information channel from and to the market which provides regula r
information about local demand. It also follows a principle of commitment to the
market.
The fourth step is exports though sales subsidiary . In this case, the firm directly controls
the source of information. It constitutes a first experience of managem ent of resources in
different countries. But the downside of this is that it increases costs and risks.
The fifth and final step is the establishment of production subsidiary(foreign
production). This step constitutes the highest degree of involvement, res ource
commitment, in foreign markets.

An important idea of this pattern is that internationalization had often started in foreign
markets that were close (or neighbor) to the domestic market in terms of psychic
distance. The companies would gradually ente r other markets that were further away in
psychic distance. Blockbuster went to UK, then Canada and Hong Kong. Regarding
South America, Blockbuster went to Mexico and then to Brazil. The difficulty of
obtaining information about foreign markets is proporti onal to the psychic distance
between the countries. Psychological proximity allows the reduction of costs and risks,
meaning that firms tend to expand first to psychologically near markets, gradually
increasing their action to psychological more distant ar eas.

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In sum, the internationalization process is managed in small steps, except when the firm
is resourceful (meaning has a large size), when the market conditions are stable and
homogeneous and when the firm has experience in other markets with similar
conditions.

The model has two change processes. The first one states that firms change by learning
from their experience of operations in foreign markets. The second one tells us that
firms change through the commitment decisions that they make to strength en their
position in foreign markets. Commitment is defined as the product of the size of the
investment times its degree of inflexibility.

Experience builds a firm’s knowledge of a market and that knowledge influences
decisions about the level of commitment and the activities that subsequently grow out of
them.
This will lead to the next level of commitment, which will result in more learnin g.
Indeed , commitment may decline or even case, if performance and prospects are not
sufficiently promising. We could assume that if the prospects and performance are
favorable, the process of internationalization will continue.

Also the market size of th e foreign country as an important role to play, because the size
of the marlet is another element that may influence the decisions of the firm. This means
that the larger the market, the higher is the probability of a production in a subsidiary.
However if the parent country is small, the firm may prefer small markets initially due
to more familiarity and lower requirement of financial/human resources.

1.1.1 Revised Uppsala Model
A number of studies have demonstrated the role of networks in the internationalization of
firms. For example Coviello and Munro conducted empirical studies of the
internationalization of small software firms. They found that network relationships have
an impact on foreign market selection as well as on th e mode of entry in the context of
ongoing network processes. Their findings let them to develop a model that combines the
process model and the network approach. Studies have found that the inter -organizational
relationships of suppliers, especially those with buyers, affected their patter of
international expansion. Other researchers have looked at networks in studies of
internationalization strategy, the localization of foreign direct investment, SME

22
internationalization, internationalization of firms fro m emerging markets, and many more.
The studies on which the 1977 model was based indicated that the received theories of
markets and marketing were not useful in trying to understand the market situation of
individual firms. An international business -to-business marketing research program
started in Uppsala in the mid 1970s in order to develop a better understanding of
business markets and marketing. Early observations that firms develop lasting
relationships with important customers were an important inpu t into this research
program. An interaction approach that focused on the adaptation and exchange between
suppliers and customers was used as a theoretical framework for studies of business
relationships.
It takes time and managerial effort to create worki ng relationships, and many attempts
fail. Thus, a working relationship is the result of considerable investment, and is an
important firm resource. While there may be some formal aspects, developing
relationships is essentially an informal process. Intenti ons, expectations, and
interpretations are important. Relationships are basically socially constructed. The
informal and subtle nature of relationships ma rkets it almost impossible for anyone who
is not personally involved to judge the scope of the investm ent that has gone into building
it, or its value. The larger the psychic distance, other things being equal, the more difficult
it is to build new relationships. This is the effect of the liability of foreignness. Two firms
that are parties to a relationsh ip are tied to each other to some extent: they share in their
mutual future development, and many exercises some degree of power over one another
(see Jan Johanson and Ian -Erik Vahlne, 2008) .

The firm may create new knowledge through exchanged on its network of interconnected
relationships. Knowledge creation is an outcome of the confrontation between producer
knowledge and user knowledge. The process of creating knowledge is not separate from
the other activities in business relationships; rather it is embedded in them. Knowledge
does not accrue only from the firm’s own activities, but also from the activities of its
partners, and since those partners also have other relationship partners with whom their
activities are coordinated, the focal firm is indirectly engaged in a knowledge creation
process that extends far beyond its own horizon. Thus a network of business relationships
provides a firm with an extended knowledge base.

According to Jan Johanson and Ian -Erik Vahlne (2008), a firm’s success requires that it
be well established in one or more networks. Anything that happens, happens within the
context of a relationship , and a firm that is well established in a relevant network or

23
networks is an insider. It is to a large extent via relationships that firms learn, and build
trust and commitment, which are the essential elements of the internationalization
process. We argue that insider ship is a necessary but insufficient condition for succes sful
business development.

A firm that does not have a position in a relevant network is an outsider (Jan Johanson
and Ian -Erik Vahlne, 2008) . If a firm attempts to enter a foreign market where it has no
relevant network position, it will suffer from the liability of outsider ship and foreignness,
and foreignness presumably complicates the process of becoming an insider. Outsider
ship markets it impossible to develop a business, and yet somehow the
internationalization process begins. It might happen that a potential partner inside the
target market requests a service from the focal firm, thus crea ting an initial insider
opportunity. The learning process, and trust and commitment building, may then begin. It
could also happen that another firm in the focal firm’s home country would need to have
products delivered to its own customer’s new facility in a foreign market, and so might
ask the focal firm to do that. In that case the focal firm’s existing insider ship in a relevant
network may help it enter a fore ign market. Evidently, the process may start through
efforts by local firms.
The original model is based on the assumption that developing knowledge is fundamental
to a firm’s internationalization, and in particular that knowledge that grows out of
experie nce in current activities is crucial to the learning process. We also assumed that
learning by experience results in a gradually more differentiated view of foreign markets,
and of the firm’s own capabilities. It is such learning that makes developing fore ign
operations possible. In recent decades there has been a growing in interest in
organizational learning in general, as well as in the context of internationalization. In this
section we examine some implications of the research that has grown out of thi s interest
for the business network view of the internationalization process.

In a study based on the network view, it was examined how three firms entered foreign
markets. They showed that foreign market entry should not be studied as a decision about
modes of entry, but should instead be studied as a position -building process in a foreign
market network. Their cases revealed the complexities associated with learning when a
firm enters a foreign market network . For example, firms have to identify the relevant
market actors in order to determine how they are connected in often invisible complex
patterns. These patterns can be identified only by the actions of the entering firm, which
causes other market actors to reveal their ties to each other. The liability of outsider ship

24
must be overcome.

In a study of experiential learning in the internationalization process it was found that
lack of insti tutional market knowledge and lack of business knowledge require different
amounts of time to overcome, and have dissimilar effects on the perceived cost of
internationalization. A lack of institutional market knowledge that is, lack of knowledge
about lan guage, laws, and rules, has to do with factors related to psychic distance, and to
the liability of foreignness . Lack of business environment that, according to the business
network view, consists of the firms with which it is doing business, or trying to do
business, and the relationships between firms in this environment. The lack of such
market -specific business knowledge constitutes the liability of outsider ship .

1.5. Internationalization in business networks

What are the reasons explaining why firms internationalize their activities? Let's us assume that
the driving forces for increased internationalization are that the firm wants to utilize and develop
its resources in such a way that its long -run economic ob jectives are served. According to J.
Johanson and L. -G. Mattson (1988), firms then internationalize if that strategy increases the
probability of reaching the general objectives. According to the network model, the firm’s
development is to an important extent dependent on its positions. For example it can use its
market assets in its further development. Thus, the internationalization characteristics of both the
firm and of the market influence the process. The firm’s market assets have a different structure
if the firm is highly internationalized. Furthermore, the market assets of the other firms in the
network have a different structure if the market has a high or low degree of internationalization.

25

Fig 6.0 Situations of the internationalization in business networks

The analysis of the four situations thus concerns internationalization processes in the three
dimensions, extension, penetration and integration; and how these processes can at least partially
be explained by reference to the network model.
Extension refers to the establishment of positions in national ne tworks which are new to the firm.
Penetration is the development of positions in national networks in which the firm was already
present. And integration is the coordination of positions in different national networks.

1.5.1 Early Starter

The firm has few and rather unimportant relationships with firms abroad. The same hold true for
other firms in the production net. Competitors, suppliers and other firms in the domestic market,
as well in the foreign markets, have few important international relati onships (see J. Johanson
and L. -G. Mattson, 1988) . Given the current situation, a firm will have little knowledge about
foreign markets and it cannot count upon utilizing its relationships in the domestic market to gain
such knowledge. This is what happene d to Netflix. It did not have any knowledge of the foreign
markets, because did not have any relationships with firms that were involved in foreign markets.
For example, when they started their business, they mailed the DVD’s to their customers. They
used USA Post for delivering the DVDs. They could not extend to other markets, because USA
Post was not used in other continents . Nor did it have any knowledge about foreign markets

26
regarding the video rental industry. The company that did have a rich experienc e in other
markets other than that of USA was Blockbuster.
As expanding abroad demands resources for knowledge development and for quantitative and
qualitative adjustments to counterparts in the foreign markets, the size and resourcefulness of the
firm ca n be assumed to play an important role.

The strategy to internationalize (J. Johanson and L. -G. Mattson, 1988) , in nearby markets, using
agents rather than subsidiaries can be interpreted as:
• Minimization of the need for knowledge development
• Minimization of the demands for adjustments
• Utilization of the positions in the market occupied by already -established firms

The firm can make the most of the market instruments that the agent in the foreign market has
made earlier, by reducing the need for its own investment and risk taking. As the volume so ld in
the foreign market increases, the increase in the market assets may justify the investment in
production facilities in the foreign market.

The alternative strategy, either to start with a greenfield investment or an acquisition, would
require a grea ter investment in the short run, but on the long run it could enhance possibilities for
knowledge development and market penetration. This strategy is usually applied by firms which
have already become large and resourceful in the home market before intern ationalization .

The importance of agents and other middle men is reinforced by the presumptive buyers’ lack of
experience of international operations. If those buyers happened to be at all conscious of foreign
supply alternatives, they would probably be s omewhat reluctant. This means that the supplier
must let some third party (for example an agent) guarantee the firm’s delivery capability, or itself
invest in confidence -creating activities (like keeping local stock, building service organizations ,
etc.)

According to J. Johanson and L. -G. Mattson (1988), i nitiatives in the early internationalization of
the firm are often taken by counterparts (distributors or users in foreign markets). This, the
foreign counterpart uses its own market assets to establish a new firm within its own network.
Whether the firm, with this introduction as base, can develop its position in the market is very
uncertain, and may depend on the degree of structuring of the network and on the positions of the
“introducer". If the “introducer" is a leading distributor in a tightly structured network, the

27
conditions are favorable for rapid penetration by the firm, given that the adjustments to the
network are made. An obstacle may be that the demands for quantities become so high that the
production capacity of the firm is too small. This may require increased engagement in the
marke t through the establishment of production units. To reduce the risk of overcapacity, the
parties may have to enter into long -term supply contracts, a process which is quite consistent
with a tightly structured network.

As underlined, the need for resourc e adjustment may become quite heavy in connection with a
first step abroad. Such adjustments can be assumed to imply investments and it must be
important to minimize the resource adjustment requirement in connection with early steps
abroad. It may be possi ble to complement the resources though external sources. To the extent
that such resource completions are made in the domestic market, they probably imply the same
type of problem. It is however not likely that a firm which has no experience of foreign
operations would have qualifications for organizing resource completions in the foreign market,
that is to establish positions in relation to local suppliers (see J. Johanson and L. -G. Mattson,
1988) .

As the firm because more internationalized , it changes from an Early Starter situation to
becoming a Lonely International.

1.5.2 Lonely International

What will the situation be if a firm that is highly internationalized enters a market environment
that is not? Well in this situation the firm has a competitive advantage in the new market given
its experience of relationships within foreign markets (see J. Johanson and L. -G. Mattson, 1988) .
Blockbuster already had a highly international experience when they entered Brazil, thus making
Blockbuster the biggest video rental chain store. It has acquired knowledge and means to handle
environments which differ with respect to culture, institutions, and so on, and failures are less
likely therefore. As a result, the knowledge situation is more favorable when establishing the
firm in a new national market.

Another advantage , according to J. Johanson and L. -G. Mattson (1988), that a firm in this
situation could have is that the international firm probably has a wider repertoire of resource
adjustments; thus, the need for some resource adjustments could less likely end up being difficult
to han dle. This holds true for both quantitative and qualitative adjustments. In particular it is
easier for the international firm to make various type of resources completions in the foreign

28
markets. This is a special case of the general advantage of internati onal firms, because of much
greater resource combination possibilities (resource combination can include external resources
to which the positions give access). A firm that is highly internationalized may also use its
market investments to get a quick star t of its now products. This means that the firm will use its
position to control the internationalization moves of its competitors, but it may also involuntarily
stimulate such moves.

With regard to the structuring of national nets, it can be assumed that the international firm will
experience less difficulties than others in entering tightly structured nets. It already possesses
good knowledge about many kinds of national markets. Further extension is not so dependent on
similarities between markets as it is for the Early Starter. Experience and resources give the firm
a repertoire which allows it to make the heavy market investments which are required to enter a
tightly structured production net. It also has better possibilities for taking over firms with
positions in the structured net or establishing relationships with such firms. It can also give its
counterparts access to other national nets. For example the international firm has greater
possibilities than others to engage in barter trade.

Initiative s for furthering internationalization do not come from other parties in the production
nets, since the firm’s suppliers, customers and competitors are not internationalized . On the
contrary, the Lonely International has the qualifications to promote internationalization of its
production net, and consequently of the firms engaged in it. The firm’s relationships both with
and in other national nets may function as bridges to thos e nets for that firm’s suppliers and
customers. Perhaps they have a similar effect on competitors. Firms which are internationalized
before their competitors are forerunners in the internationalization process and may enjoy
advantages for that reason , in p articular in tightly structured nets, because they have developed
network positions before the competitors (see J. Johanson and L. -G. Mattson, 1988) .

To exploit the advantages of being a Lonely International, the firm has to co -ordinate activities in
the different national nets. International integration is therefore an important feature in the
development of the highly internationalized firm. However , the ne ed to co -ordina te is probably
less than for the International Amon Others.

1.5.3 Late Starter

According to J. Johanson and L. -G. Mattson (1988), if the suppliers, customers and competitors
of the firm are international, even the purely domestic firm will get in contact with firms that

29
expanded in foreign markets. Relationships in the domestic market could be the driving forces to
enter foreign marke ts. This kind of relationship triggered Netflix to change its business model,
and think of expanding its roots into other markets. Its competitor, Blockbuster was already in
many markets from different continents, present. Thus, in 2007 Netflix started its streaming
service, in 2010 was first available in Canada, and in 2016 they announced that they will be
present in other 150 countries. The firm could be pulled out by customers or suppliers. Thus,
market investments in the domestic market are assets which can be used when going abroad. In
this case a firm will not have to go from the nearby markets to more distant ones, but the step
abroad can already be rather large from the beginning. In addition, nearby markets may be
tightly structured and already occu pied by competitors. So, the extension pattern will be partly
explained by the international character of indirect relations and the exitance of entry
opportunities.

Is the market penetration process of the firm affected by the degree of internationalizat ion of the
production network where it is operating? Based on the idea proposed by J. Johanson and L. -G.
Mattson (1988), the need for co -ordination is greater in a highly internationalized production net,
which implies that establishment of sales subsidiar ies should be made earlier if the firm is a Late
Starter that if it is an Early one. In this situation, the size of a firm could be important because if
a small firm is going abroad in a mature market, it will need to be highly specialized and
adjusted to problem solutions in specific sections of the production net. Starting production
abroad probably is a matter of what bonds the customers are important. If join planning with
customers is essential it may be necessary to start local produc tion early. Similarly, if technical
development requires close contract with the customers, it may be advantageous to manufacture
locally . On the other hand, it may be better to use relationships with customers in the domestic
market for development purpo ses, especially if these customers are internationalized . However,
such customers also have access to alternative, internationally based counterparts for their own
development processes which might reduce the importance of their domestic suppliers (see J.
Johanson and L. -G. Mattson, 1988) .

The situation is different for large firms, as firms which have become large in the domestic
market often are less specialized than small firms, their situation is often more complex than in
the case of the small firm. One possibility is that of becoming established in a foreign production
net through acquisition of joint ventures. Of course, this is associated with great risks t o a firm
without experience of foreign acquisitions or joint ventures, particularly if other firms in the
production net are internationalized . In general, it is probably more difficult for a firm which has
become large at home to find a niche in highly in ternational ized nets. Unlike the small firm, it

30
cannot adjust in a way which is necessary in such a net, nor has it some ability as the small firm
to react on the initiatives of other firms, which is probably the main road to internationalization
in a net in which other firms are already international.

The Late Starter has a comparative disadvantage in terms of its lesser market knowledge as
compared with its competitors. Furthermore, as suggested above, it is often difficult to establish
new positions in a tightly structured net. The best distributors are, for example, already linked
competitors. More or less legally, the competitors can make the late newcomer unprofitable.

In a highly internationalized world, the firms are probably more specialized . Consequently, a
firm which is a Late Starter has to have a greater customer adaptation ability or a greater ability
to influence the need specifications of the customers. However, the influence ability of a Late
Starter is probably rather limited. The comparison betwee n the Early Starter and the Late Starter
illustrates the importance of timing as a basic issue in the analysis of strategies in networks.

1.5.4 International Among Others

In this case both the firm and its environment are highly internationalized . A further
internationalization of the firm only means , according to J. Johanson and L. -G. Mattson (1988),
marginal changes in extension and penetration, which, on the whole, do not imply any qualitative
changes in the firm. It is probable, however, that international integration of the firm can lead to
radical internationalization changes.

Both with regard t o extension and penetration the firm has possibilities to use positions in one
net for bridging over the other nets. A necessary condition for such a bridging is that the lateral
relations within the firm are quite strong. Some kind of international integr ation is required, not
only in the vertical, but also in the horizontal sense. As extension takes place in a globally
interdependent network, the driving forces and the obstacles to this extension are closely related
to this interdependence. Models of glob al oligopolies fir the argument here. Entries are made in
those sections of the global production net, which the competitors consider their main markets in
order to discourage the competitor from making threatening competitive moves in other markets.
In su ch a situation the entry may meet some resistance, but it is difficult for the competitors to
use predatory pricing (see J. Johanson and L. -G. Mattson, 1988) .

The many positions which International Among Others occupied in internationally linked
networks, give it access to, and some influence over, external resources. This means that the

31
possibility for “ externalization " increases. The international manufacturing firm may thus
increasingly tend to purchase components, sub -assemblies, etc., rather than to do the
manufacturing itself. Such subcontracting is sometimes required by host governments, but may
also be a way to make the multinational enterprise more effective . Since important customers or
joint-venture partners in one country are al so by definition international, the International
Among Others is faced with opportunities for further extension or penetration in “third
countries."

The International Among Others predominantly faces counterparts and competitors who are
themselves intern ationally active and markets that are rather tightly structured (see J. Johanson
and L. -G. Mattson, 1988) . This means that maker position changed in this situation will
increasing take place through joint ventures, acquisitions and mergers, in contrast with the other
three cases that have analyzed . If, finally, we compare with the Early Starter situation,
internationalization for the International Among Others will be much less explicable by reference
to the need for knowledge development and the similarities between the foreign markets and the
home market. Instead, the driving forces and the restrictions are related to the strategic use of
network positions.

Fig. 7.0 Degree of Internationalization

Based on the table that we have above, it is illustrated the fact that International theory, which
assumes a large firm in an inefficient market, is explaining the Lonely International and that the

32
Uppsala Model, that assumes that a s mall firm is in a market with high psychic distance, is
explaining the Early Starter.

1.6 Born Global

Since the late ‘80s, an increasing number of firms (Born Global ) are engaging in
international operations from the first day of their establishment. The international
activities of these international new ventures or born globals have not developed
incrementally, nor do they have a large resource base. But other facto rs such as their
unique intangible assets or specific knowledge have prevailed . Internationalization
was the only opportunity for such ventures to survive, rather than being viewed as
a risky business.
The internationalization process of Born Globals , acc ording D. Deo Sharma, Anders
Blomstermo (2003), deviates from that of firms commonly observed in the past. One
such common observation of the internationalization is the process of increasing the
accumulation of knowledge in markets and institutions abroad . It has been observed that
firms start the internationalization process by exporting products to culturally similar
countries. However, other researchers argue that the longer a firm waits to initiate
international activities, the more difficult it will b e to grow internationally. The current
research on Born Globals is primarily empirical and purely descriptive without a well-
developed theoretical frame of reference. As of now a ‘missing link’ in the research
about Born Globals is the answer to the follow ing question. Which theoretical
framework should be applied in order to understand and explain the phenomena? Born
Globals need more theory driven research (see D. Deo Sharma, Anders Blomstermo,
2003) .

The purpose of this paper is to also explain the int ernationalization process of Born
Globals. I propose that models emphasizing knowledge and (network) ties are suitable
for this purpose (see D. Deo Sharma, Anders Blomstermo, 2003) . This is appropriate
because the ties that firms have may help them to go i nternational by supplying
information about clients and markets. Firms that operate in an international network
may enjoy a ‘‘learning advantage’’ and find it ‘‘easier’’ to go abroad than firms whose
exchange partners are domestic firms. D. Deo Sharma, And ers Blomstermo (2003) also
argue that the internationalization process of Born Globals is a reactive process.

33

CHAPTER 2 : BLOCKBUSTER
2.1 Introduction
For many years, families made a trip to Blockbuster to rent a movie. It was a lot like going
to the library. You’d browse the store, pick up a new release for a couple of bucks, and
have a couple of days to watch a film. If you brought it back late, you got late fees. But
more about what were these late fees will be described later.
Blockbus ter, also known as Blockbuster Video, was an American -based provider of home
movies and video game rentals using a video rental shop, DVD by mail, streaming and
video on demand.
Blockbuster expanded internationally throughout the 1990’s, and at its peak i n 2004, it had
employed over 84.000 people worldwide, with around 58.500 in the US and over 25.000 in
the rest of the world. It had opened over 9.000 stores worldwide, 4.500 of these being
located in America.
Having as competitors Netflix’s mail -order serv ice, Redbox automated kiosks and video
on demand services, as well as a poor leadership, were major factors leading up to the
company’s demise. Blockbuster began to lose significant revenue during the 2000s, and
the company filed for bankruptcy protection in 2010. In the following years it’s remaining
1.700 stores were bought by satellite television provider Dish Network, in 2014 the last
300 stores were closed. As of May 2020, the only remaining physical Blockbuster (which
is a privately owned franchise) s tore in the entire world remains open in Bend, Oregon.
This shop is also known as the Last Blockbuster.

2.2 How it all began
Blockbuster’s early beginnings can be traced back to another company, Cook Data
Services, that was founded by David Cook in 1978. The Cook Data Service’s primary goal
was to supply software services to the oil and gas industries throughout Texas. Using its

34
profits he made from the sale of its company, together with the desire of his wife, Sandy
Cook, to get into the video industry, D avid cook decided to buy a video store franchise in
Dallas known as Video Works. Because the franchise did not let David to redecorate the
shop having a blue and orange design, David opened the first Blockbuster Video in 1985
under his own company Blockbus ter Video Inc.
The first Blockbuster store opened on October 19, 1985, in Dallas Texas, having an
inventory of 8.000 VHS and 2.000 Beta tapes. Because of David had experience in
managing huge databases, he managed to drive innovation within the industry. F ollowing
the early success from the company’s first stores, David built a $6 million warehouse in
Garland, Texas, to help and support future growth that allowed new stores to open quickly.
Blockbuster would often custom -tailor a store’s inventory to its ne ighborhood, based on
local demographics.
In 1987, Waste Management co -founder Wayne Huizenga, who originally had reservations
about entering the video rental industry, agreed to acquire several Blockbuster stores. At
that point, the number of stores were 1 9, and attracted Huizenga’s associate John Melk’s
attention due to its efficiency, family -friendly image and business model, and convinced
Huizenga to have a look at it. Huizenga and Melk used techniques from their waste
business and Ray Kroc’s model of ex pansion to rapidly expand Blockbuster, and soon
they were opening new stores every 24 hours. In the late 1980’s, Huizenga spent much
of the time acquiring several Blockbuster’s rivals, including Major Video.

2.3 How it extented
One of the reasons why Bloc kbuster extended so quickly and became so popular in a short
period of time is because it acquired a lot of companies, from different countries, that had
tens if not hundreds of stores. For example, i n 1990, Blockbuster bought mid -Atlantic rival
Erol's which had more than 250 stores. Then in 1992, Blockbuster acquired the Sound
Warehouse and Music Plus music retail chains and created Blockbuster Music. In October
1993, Blockbuster took a controlling interest in Spelling Entertainment Group, a media
comp any run by television producer Aaron Spelling. Blockbuster purchased Super Club
Retail Entertainment Corp. on November 22, 1993 from Philips Electronics, N.V. for 5.2
million shares of Blockbuster stock. This acquisition brought Blockbuster approximately
270 Record Bar, Tracks, Turtles and Rhythm and Views music stores and approximately

35
160 video retail superstores into the corporation. It also owned 35% of Republic Pictures;
that company merged with Spelling in April 1994.
In a short period of time, Blockb uster became a multibillion -dollar company.
However, Huizenga was worried about how new technology could threaten their business, such
as video on demand and the growth of cable television. In 1991, just three days after Time
Warner had announced it would upgrade its cable system, Blockbuster's shares dropped more
than 10 percent. In 1993 Huizenga made an attempt to expand into other areas, like for example
investing in Viacom, which was an American media conglomerate . Huizenga also considered
buying a cab le company, but this was unknown territory for Blockbuster and he decided not to
take the risk.
Huizenga also had the idea of a 2,500 -acre Blockbuster sports and amusement park in Florida,
something Blockbuster was still considering as late as August 1994 . Unable to come up with a
proper solution about how to face the growing threats to the traditional video store, he made the
decision to sell Blockbuster to Viacom and pull out. Viacom acquired Blockbuster in 1994 for
$8.4 billion to help finance its bid f or Paramount in the bidding war with QVC Network Inc.
Blockbuster's stock trade had been dropping steadily the months before the merger, with a small
rise after the deal was announced, and three years later, in 1997, its worth was estimated to just
$4.6 bi llion.
Because the company was desperate, it tried to attract customers by “improving" or creating
other types of businesses. For example, the Blockbuster Block Party concept was test -marketed
in Albuquerque, New Mexico, and Indianapolis, Indiana , in 1994. It was an "entertainment
complex" aimed at adults, containing eight themed areas housing a restaurant, games, laser tag
arena, and motion simulator rides, and was housed in a windowless building the size of a city
block.
During the 1990s Blockbuster expanded in the United Kingdom, purchasing Ritz Video chain.
The stores were rebranded to Blockbuster, making it the number one UK rental chain.
In 1996, Blockbuster Entertainment Inc. merged into a new Blockbuster Entertainment
Corporation and the retail stores, then called Blockbuster Video, were renamed Blockbuster. The
logo changed slightly, but retained the ITC Machine font . In November 1996 Blockbuster
confirmed that it was moving its headquarters from Fort Lauderdale, Florida to the Renaissance
Tower in downtown Dallas. Most of the workers at the Florida headquarters did not want to
relocate, so Blockbuster planned to hire around 500 to 600 new employees for its Dallas

36
headquarters. The company had offered various relocation packages to all of its Fort Lauderdale
staff. The second Blockbuster Entertainment Corporation was later merged into Blockbuster, Inc.

CHAPTER 3 : NETFLIX

3.1 Introduction
Netflix was founded in 1997 by Reed Hastings and Marc Randolph in Scotts Valley, California.
Its, an American media -service provider and production company which offers subscription –
based online streaming service of a portfolio of films and television prog rams, including those
produced in -house.
As of A pril 2020, Netflix had over 182 million paid subscriptions worldwide, including 69
million in the United States. It is available worldwide except in the following: Mainland China
(Due to local restrictions), Iran, Syria, North Korea, and Crimea (Due to U.S. sanctions). The
company also has offices in Brazil, Netherlands, India, Japan and South Korea. Netflix is a
member of the Motion Picture Association of America (MPAA). Today, the company prod uces
and distributes content from countries all over the globe.

Netflix's initial business model included DVD sales and rental by mail, but Hastings abandoned
the sales about a year after the company's founding to focus on the initial DVD rental business.
Netflix expanded its business in 2007 with the introduction of streaming media while retaining
the DVD and Blu -ray rental business. The company expanded internationally in 2010 with
streaming available in Canada, followed by Latin America and the Caribbea n. Netflix entered the
content -production industry in 2013, debuting its first series House of Cards .

Since 2012, Netflix has taken more of an active role as producer and distributor for both film and
television series, and to that end, it offers a variet y of "Netflix Original" content through its
online library. By January 2016, Netflix released an estimated 126 original series and films in
2016, more than any other network or cable channel. Their efforts to produce new content,
secure the rights for addi tional content, and diversify through 190 countries (because by 2016,
Netflix services operated in more than 190 countries) have resulted in the c ompany racking up

37
billions in debt: $21.9 billion as of September 2017, up from $16.8 billion from the previou s
year. $6.5 billion of this is long -term debt, while the remaining is in long -term obligations.In
October 2018, Netflix announced it would raise another $2 billion in debt to help fund new
content.

3.2 Establishment
Netflix, founded on August 29, 1997, i n Scotts Valley, California, by Marc Randolph and Reed
Hastings. Randolph worked as a marketing director for Hastings' company, Pure Atria. Randolph
was a co -founder of MicroWarehouse, a computer mail order company and was later employed
by Borland Interna tional as vice president of marketing. Hastings, a computer scientist and
mathematician, sold Pure Atria to Rational Software Corporation in 1997 for $700 million in
what was then the biggest acquisition in Silicon Valley history.

Hastings invested $2.5 million in startup cash for Netflix. Randolph admired the idea of the e –
commerce company Amazon and wanted to find a large category of portable items to sell over
the Internet using a similar model. At first, they took into consideration VHS, but shortly a fter,
they rejected VHS tapes as too expensive to stock and too delicate to ship. When they heard
about DVDs, which were first introduced in the United States on March 24, 1997, they tested the
concept of selling or renting DVDs by mail, by mailing a compa ct disc to Hastings' house in
Santa Cruz. When the disc arrived intact, they decided to take on the $16 billion home video
sales and rental industry. Hastings is often quoted saying that he decided to start Netflix after
being fined $40 at a Blockbuster st ore for being late to return a copy of Apollo 13. But this is an
apocryphal story that he and Randolph designed to explain the company's business model and
motivation.

Even though their DVD rental store was similar to its brick -and-mortar rival , Blockbuster,
through the pay -per-rent model with rates and due dates, Netflix was in fact the world’s first
online DVD rental store, that back then had 30 employees and 925 titl es available, which were
almost the entire catalogue of DVDs in print at that time.

CHAPTER 4 : NETFLIX VS BLOCKBUSTER

38
The reason why I gave a short introduction about Born Globals and why they are so
important in today’s market, is because at some point in time Netflix changed it business
model into one that made the company a Born Global. From a company that was renting
movies using US Post and DVDs, to a company that is streaming video content on
demand at a price of a subscription fee.
Compared to Blockbuster, Netflix always tried to take advantage of what technology
was providing; even back in the ‘90s. When the company was founded in 1997, it did
not start as Blockbuster did, b eing a brick -and-mortar kind of shop in which people
could come in an rent a movie. They could not have been that kind of company because
Blockbuster at that time was a giant. And not only in a USA, but around the world. As to
remember, Blockbuster was fou nded in in 1985 and in 1994 it was bought for $8.4
billion. So, when Netflix joined the american market, Blockbuster was worth billions
and it had expanded internationally.
But Netflix, did not see this as a problem. They embraced technology and tried the make
the most of it. For example, Blockbuster was not keen in using DVD’s when it appeared
in the ‘90s. Movie producers made the same offer as in the case of VHS to Blockbuster,
to be the first video renting shop to have access to newly seen movies on cine ma to put
for rent. But they refused. Netflix on the other hand found VHS were too old, too costly
to deliver, and could easily be damaged during transport. So, they started directly using
DVDs because they thought (and they were right at that time) that D VD players will be
at each American’s home like VHS players were.
DVDs were not the only “technological” choice made by Netflix. Marc Randolph
admired the idea of the e -commerce business, Amazon had started (also in the ‘90s). So,
they wanted to have an e -com business, a web page, in which a customer that had
internet connection, could browse their website, pick a movie, and order the movie to be
delivered at their home, by renting the movie at a certain price. But renting DVD’s and
not VHS, and having a we bsite were not enough to have a competitive advantage over
their competitors. So then wanted to attract more people by not renting movies anymore,
but paying a monthly subscription for renting a limited number of movies per month (2 –
3 movies per month). Th e advantage for the customer was that it had to pay around $5
per month, could rent a movie and it could give it back whenever it wanted, without
thinking of late fees. Of course, they could not rent more than 1 movie at a time.
Even though they started t o have more and more subscriptions (around 300.000), the
monthly subscription was not enough to cover the cost of transport, the cost of the

39
movie Netflix had to put for rent. So, in 2000, after only 1 year they changed their
business model to subscription , Netflix proposed Blockbuster an offer to acquire Netflix
for only $50 million (why I said only is because now is worth over $ 50 billion, 1.000
times more). And in the offer, Netflix would handle the e -commerce business. But
Blockbuster refused, because they did not see Netflix as a competitor. In the early
2000s, Blockbuster had around 9.000 stores and around 80.000 employees. Now this
was the problem of Blockbuster. They were not paying attention to the needs of their
customers, thus refusing to embrace technology and changing step -by-step their business
model, into a rather Born Global one. Blockbuster was surviving because of the late fees
their customers had to pay. In fact, their whole business model was counting on the fact
that customers will be la te for giving back the movie and will pay a late fee. Those fees
were in fact the money that made Blockbuster a profit. If everyone would have returned
the movies in time, Blockbuster would have not made any profits. So, it is
understandable the reason why they were afraid of at least creating their own e –
commerce business. But this is not more than a lack of vision.
For some time, Netflix had considered offering movies online, rather than delivering
them, but it was only in the mid -2000s that data speeds a nd bandwidth costs had
improved sufficiently to allow customers to download movies from the net. The original
idea was a “Netflix box” that could download movies overnight and be ready to watch
the next day. By 2005, they had acquired movie rights and desi gned the box and service,
and were ready to go public with it. But after discovering YouTube, and witnessing how
popular streaming services were, despite the lack of high -definition content, the concept
of using a hardware device was scrapped and replaced with a streaming concept instead,
a project that was completed in 2007.
Also, in the same year, 2007, Netflix delivered its billionth DVD, and started to move
away from renting dvds to providing video on demand for its customers. Only after
managing to mov e to video streaming, did the company have any chance of going
international. In 2010, after 3 years, the were providing VOD for Canada, and then in
less than a decade they are in 190 countries, having hundreds of millions of subscribers
from all over the world.
An image that Blockbuster would have only dreamed about. The problem with
Blockbuster was the lack of sensing what the customer wants and how technology could
help you, as a company, provide a service that the customer would not refuse to use it, i f
properly managed. When Blockbuster found out about what Netflix will try to do,

40
streaming online movies, they also thought of creating a website in which to stream their
content. The costs of such a project were around $400 million. A cost that the
stock holders were not pleased about. An unfortunately they postponed their VOD
website, letting Netflix gain a huge competitive advantage. If Blockbuster would have
tried, or if it would have accepted Netflix offer back in 2000, and managed to “listen” to
its customers, it would have been in the shoes of Netflix now. They had premium
content, already a world known brand. The costs of their business would have dropped
immensely, because instead of having 9.000 they would have had a website. Instead of
having 80.0 00 employees they would have had 8.000 (like Netflix has now).
Netflix, because it changed its business model, taking advantage of technology,
managed to become a company that looks like a born global. It extended to foreign
markets at a very high speed. I f in 2010, the first country to provide their services was
Canada, in 2016 they announced they will be in another 150 countries.
This paper was about showing the power of technology in every business. How it can
help the company grow, from a very small co mpetitor that nobody cares to pay
attention, to a company that in less than a decade is all over the planet. About the risks
that companies which have the majority of market shares, could go bankrupt because
they refused to use technology to enhance their business, their services.

Now if we were to look at the framework described at the metholody, it talks about
entrepreneuship, innovation and internationalization of firms but also it talks about the
elements that are identified in the business model frame work, namely: focus, locus and
modus. Based on this information I will try and make a comparison between
Blockbuster and Netflix.
One of the times when Blockbuster showed good entrepreneurship skills is when one of
the reasons why Blockbuster extended so q uickly and became so popular in a short
period of time is because it acquired a lot of companies, from different countries, that
had tens if not hundreds of stores. Its focus was on expanding internationally, and their
way of doing do (modus) was to buy bi g renting company's from their domestic
countries. For example, i n 1990, Blockbuster bought mid -Atlantic rival Erol's which had
more than 250 stores.
In a short period of time, Blockbuster became a multibillion -dollar company.

41
However, Huizenga was worri ed about how new technology could threaten their
business, such as video on demand and the growth of cable television. This was the first
sign that compared to Netflix, this Blockbuster was not an innovative company that
would try and use new technology th at had appeared on the market. Unable to come up
with a proper solution about how to face the growing threats to the traditional video
store, he made the decision to sell Blockbuster to Viacom and pull out.
Because the company was desperate, it tried to at tract customers by “improving" or creating
other types of businesses. For example, the Blockbuster Block Party concept was test -marketed
in Albuquerque, New Mexico, and Indianapolis, Indiana , in 1994. It was an "entertainment
complex" aimed at adults, containing eight themed areas housing a restaurant, games, laser tag
arena, and motion simulator rides, and was housed in a windowless building the size of a city
block. This is an example of Blockbuster trying to be innovative, and moving its focu s on
something else, but it did not work.
In 1998, John Antioco together with Dean Wilson and Ed Stead created DEJ Productions , which
acquired 225 films primarily to provide exclusive content to its Blockbuster stores. They tried to
move their focus on having a competitive advantage by having exclusive content.
Also w hen DVDs emerged as the new video medium back in the late ‘90s, Warner Bros. offered
CEO John Antioco, an exclusive rental deal. Blockbuster was to have rights to rent new DVD
releases for a period of time before they went on sale to the general public. The studio asked for
40% of rental revenues in return, which was the same deal already in place for VHS rentals.
Blockbuster turned the offer down, and the studio responded by lowering its DVD wholesale
price in order to compete with the rental industry. Walmart seized the opportunity and, in a few
years, surpassed Blockbuster as the studios' single largest source of revenue. Other mass retailers
soon followed. Many began selling DVDs below who lesale price in hopes of selling more items
with better profit margins as a result of the additional foot traffic in their stores. Unable to match
prices, Blockbuster's business model was severely impacted. They did not change its focus to
DVD’s, showing z ero entrepreneurship and innovation.
A billion -dollar campaign called Total Access was introduced in 2007 as a strategy against
Netflix. Through Blockbuster Online customers could rent a DVD online and receive a new
movie for free when they returned it to a Blockbuster store. While it was a major success every
free movie cost the company two dollars, but the hope was that it would attract enough new
subscribers to cover the loss. Netflix felt threatened, and Reed Hastings (co -founder, chairman,
and CEO of N etflix) approached Antioco with a suggestion to buy Blockbuster's online business.
In return, a new system would be introduced where customers could return their movies to a

42
Blockbuster store. Before the deal could be realized, board member Carl Icahn inte rvened,
refusing to let the company lose more money through Total Access. Antioco was pushed out in
July and replaced with James Keyes, who rejected Hasting's proposal, raised the price of online
DVD rentals and put an end to the free movie deal. As a cons equence, Blockbuster Online's
previously massive growth quickly stopped. Antioco's departure reportedly also involved
continued controversy over his compensation. This prooves very bad entrepreneurship skills at
the highest level, even though they changed their focus and modus of their business model in a
good way by implementing Total Access, now they made it worst by removing it, because they
started to loose and money and more importantly a strong competitive advantage.
On July 2, 2007, the company named James W. Keyes, former president and CEO of 7 -Eleven,
as the new chairman and CEO. He introduced a new business strategy that included
enhancements to existing stores along with a shift to streaming video with the acquisition of
MovieLink in September 200 8. Part of the plan was to de -emphasize the unprofitable Total
Access (DVD -by-mail) service, in favor of online streaming. In December 2008, he still ignored
both Netflix and Redbox, focusing on Apple and Walmart instead; "Neither RedBox nor Netflix
are ev en on the radar screen in terms of competition. It's more Walmart and Apple."Blockbuster
tried to become innovative and to focus to the business model of streaming. This cannot be a
coincidence given the fact that Netflix in the same year launched it strea ming website, even
though they ignored Netflix as being a strong competitor.
Netflix always tried to be innovative in a way or another. One of the first time Netflix tried to be
innovative is when they changed their focus to monthly subscription concept in September 1999,
and then dropped the single -rental model in early 2000. Since that time, the company has built its
reputation on the business model of flat -fee unlimited rentals without due dates, late fees,
shipping and handling fees, or per -title rental fees. Of course, Netflix had its moments of
weakness. In 2000, when Netflix had just about 300,000 subscribers and relied on the U.S. Postal
Service for the delivery of their DVDs, they were losing money and offered to be acquired by
Blockbuster for $50 m illion. It was one of the first times when Netflix has shown a bad
entrepreneurship resulting in the fac that they had problems innovating. But luckly for them,
Blockbuster refused the offer. It was one of the moments when both of them showed they at the
top level, there is bad entrepreneurship because they lack an innovating mind.
Both Netflix and Blockbuster arrived at a moment in time, where both could have innovated. The
question was who will take the risk? Netflix for example for some time, had consid ered offering
movies online, but it was only in the mid -2000s that data speeds and bandwidth costs had
improved sufficiently to allow customers to download movies from the net. But couldn’t

43
Blockbuster take advantage of the data speeds and bandwidth costs? Yes, they could have, but
they did not want to.
The original idea was a "Netflix box" that could download movies overnight, and be ready to
watch the next day. By 2005, they had acquired movie rights and designed the box and service,
and were ready to go public with it. But after discovering YouTube, and witnessing how popular
streaming services were despite the lack of high -definition content, the concept of using a
hardware device was scrapped and replaced with a streaming concept instead, a project that was
completed in 2007. Netflix managed to change its focus on an innovative idea, by implementing
the streaming service before Blockbuster. Their business model changed on the mode it was
implemented, from renting DVD online, to streaming DVD online. And where better place to do
so but in a country that has strong IT clusters and where Hollywood was born, United States.
Most of their employees responsible with the website are from United States. In February 2007,
the company delivered its billionth DVD, an d began to move away from its original core
business model of DVDs, by introducing video on demand via the Internet. Netflix grew as DVD
sales fell from 2006 to 2011. Another contributing factor for the company's online DVD rental
success was that they cou ld offer a much larger selection of movie titles to choose from than
Blockbuster's rental outlets
Netflix developed and maintains an extensive personalized video -recommendation system based
on ratings and reviews by its customers, known as Cinematch. Once again, showing us that they
did not stop thinking of new and better ways to use technology for proving better services to its
clients. This service had not only got viewers to remain attached to the service, by creating a
switching cost, but it also brough t out those movies which were underrated so that customers
could view those movies too from their recommendations. This was an attribute that not only
benefited Netflix but also benefited its viewers and those studios which were minor compared to
others.
Netflix has been one of the most successful dot -com ventures. In September 2002, The New York
Times reported that, at the time, Netflix mailed about 190,000 discs per day to its 670,000
monthly subscribers. The company's published subscriber count increased from one million in
the fourth quarter of 2002 to around 5.6 million at the end of the third quarter of 2006, to 14
million in March 2010. Netflix's early growth was fueled by the fast spread of DVD players in
households; in 2004, nearly two -thirds of Uni ted States homes had a DVD player . Blockbuster,
for example, refused for a limited time to rent DVD’s, even thought they would have been the
first company to put the films for sale/rent because of its relationship with movie producers.
Netflix capitalized on the success of the DVD and its rapid expansion into United States homes,

44
integrating the potential of the Internet and e -commerce to provide services and catalogs that
bricks -and-mortar retailers could not compete with. Netflix also operates an online a ffiliate
program which has helped to build online sales for DVD rentals as well. The company offers
unlimited vacation time for salaried workers and allows employees to take any amount of their
paychecks in stock options.
At the 2016 Consumer Electronics S how, Netflix announced that it would take a major
international expansion, by trying to provide its service into 150 additional countries. Netflix
promoted that with this expansion, it would now operate in nearly all countries that the company
may legally or logistically operate in. The locus, explained in the framework, shows Netflix
trying to provide its streaming service to many more countries, most of them not having the same
language or culture with the USA.
In November 2018, Paramount Pictures signed a multi -picture film deal with Netflix as part of
Viacom's growth strategy, making Paramount the first major film studio to sign a deal with
Netflix. Netflix sought and was approved for membership into the Motion Picture Association of
America (MPAA) on Ja nuary 22, 2019, as the first streaming service to become a member of the
association. The busines model modus once again changes, by doing baby steps in becoming
from just a company that provides VOD, to even produce movies. Becaue of the data that they
got from customers using their streaming service, Netflix knew what kind of movies to create,
proving again how innovative they are. On November 13, 2019, Netflix and Nickelodeon entered
into a multiyear content production agreement to produce several origin al animated feature films
and television series based on Nickelodeon's library of characters, in order to compete with
Disney's new streaming service Disney+, which had launched the day before.

Conclusion

The rise of Netflix has affected the way that audiences watch televised content. Netflix's CPO
Neil Hunt points out that the Internet allows users the freedom to watch shows at their own pace,
so an episode does not need cliffhangers to tease the audience to keep tuning in week after week
because they can just continue into the next episode. Netflix has allowed content creators to
deviate from traditional formats that force 30 -minute or 60 -minute time slots once a week, which

45
it claims gives them an advanta ge over networks. Their model provides a platform which allows
varying run times per episode based on a storyline, eliminates the need for a week to week recap,
and does not have a fixed notion of what constitutes a "season". This flexibility also allows
Netflix to nurture a show until it finds its audience, unlike traditional networks which will
quickly cancel a show if it is unable to maintain steady ratings.
Netflix has strayed from the traditional necessary production of a pilot episode to establish the
characters and create arbitrary cliffhangers to prove to the network that the concept of the show
will be successful. Kevin Spacey spoke at the Edinburgh International Television Festival about
how the new Netflix model was effective for the production of House of Cards : "Netflix was the
only company that said, 'We believe in you. We've run our data, and it tells us our audience
would watch this series.'" Traditional networks are unwilling to risk millions of dollars on shows
without first seeing a pilot, but Spacey points out that 113 pilots were made in 2012; 35 of them
were chosen to go to air, 13 were renewed, and most are gone now. The total cost of this is
somewhere between $300 million and $400 million, which makes Netflix's deal for House of
Cards extremely cost effective, according to Spacey. Netflix's subscription fee also eliminates
the need for commercials, so they do not need to appease advertisers to fund their original
content, a model similar to pay television services such as HBO and Showtim e.
The Netflix model has also affected viewers' expectations. According to a 2013 Nielsen survey,
more than 60 -percent of Americans said that they binge -watch shows, and nearly 8 out of 10
Americans have used technology to watch their favorite shows on the ir own schedule. Netflix
has continued to release its original content by making the whole season available at once,
acknowledging changing viewer habits. This allows audiences to watch episodes at a time of
their choosing rather than having to watch just one episode a week at a specific scheduled time;
this effectively gives its subscribers freedom and control over when to watch the next episode at
their own pace.
It is a company in which, entrepreneurship, innovation and internationalization are deeply
interconnected, and based on the article presenting the framework for internationalization and
innovation, do occur contemporarily and need to find fast execution, according to an
environment dominated by continual and rapid changes. These phenomena are part icularly
evident in technology -based industries and more generally in all the sectors which are affected —
and even created —by the advent of a new technological platform. These changes trigger product
and process innovations and require new strategic approac hes, which can leverage the
opportunities arising from the intersection of early and fast internationalization and innovation.

46
Unfortunately, Blockbuster even though had the customers, the brand, the economical resources
to rebuild itself and its business model, in a company more suitable for today’s generation and
technology, it failed to do so because of its pride, and more importantly a lack of
entrepreneurship. And a company that lacks this kind of skill, will never be focused on
innovation and thus wil l never internationalize at a pace that other companies do. If you, as a
company cannot keep up the pace with your competitors, then will lose ground and one day, file
for bankruptcy.
As one commentator complained, "Blockbuster was once an unstoppable gia nt whose franchises
swept across the country putting mom and pop video stores out of business left and right by
offering a larger selection of new releases, pricing them at a lower point due to the volume they
worked in… Gone were the fragmented, indepen dently owned shops that were often unorganized
treasure troves of VHS discoveries. In their place were walls of new releases: hundreds of copies
of a small handful of films. Everyone watching the same thing, everyone developing the same
limited set of expe ctations… They put focus entirely on what was new rather than on discovering
film history …"

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D. Deo Sharma, Anders Blomstermo (2003) The internationalization process of Born Globals: a
network view
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John H. Dunning (2000), The eclectic paradigm as an envelope for economic and business
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47
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