St. Petersburg University
Graduate School of Management
Master in Management Program
INTERNATIONALIZATION STRATEGY OF INTERNET
TRANSPORTATION NETWORK COMPANIES (ITNCS):
CROSS-COUNTRY CASE STUDY OF UBER TECHNOLOGIES INC.
Master’s Thesis by the 2
nd
year student
Yulia Troyslit
Research advisor:
Associate professor,
Sergey A. Yablonsky
St. Petersburg
2016
ЗАЯВЛЕНИЕ О САМОСТОЯТЕЛЬНОМ ХАРАКТЕРЕ ВЫПОЛНЕНИЯ
ВЫПУСКНОЙ КВАЛИФИКАЦИОННОЙ РАБОТЫ
Я, Тройслит Юлия Геннадьевна, студент второго курса магистратуры направления
«Менеджмент», заявляю, что в моей магистерской диссертации на тему «Стратегия
интернационализации сетевых транспортных интернет-компаний (на примере Uber
Technologies Inc.)», представленной в службу обеспечения программ магистратуры для
последующей передачи в государственную аттестационную комиссию для публичной
защиты, не содержится элементов плагиата.
Все прямые заимствования из печатных и электронных источников, а также из
защищенных ранее выпускных квалификационных работ, кандидатских и докторских
диссертаций имеют соответствующие ссылки.
Мне известно содержание п. 9.7.1 Правил обучения по основным образовательным
программам высшего и среднего профессионального образования в СПбГУ о том, что
«ВКР выполняется индивидуально каждым студентом под руководством назначенного ему
научного руководителя», и п. 51 Устава федерального государственного бюджетного
образовательного учреждения высшего образования «Санкт-Петербургский
государственный университет» о том, что «студент подлежит отчислению из СанктПетербургского университета за представление курсовой или выпускной
квалификационной работы, выполненной другим лицом (лицами)».
25.05.2016
STATEMENT ABOUT THE INDEPENDENT CHARACTER OF
THE MASTER THESIS
I, Yulia G. Troyslit, second year master student, program «Management», state that my
master thesis on the topic «Internationalization strategy of Internet transportation network
companies (iTNCs): cross-country case study of Uber Technologies Inc.», which is presented to
the Master Office to be submitted to the Official Defense Committee for the public defense, does
not contain any elements of plagiarism.
All direct borrowings from printed and electronic sources, as well as from master theses,
PhD and doctorate theses which were defended earlier, have appropriate references.
I am aware that according to paragraph 9.7.1. of Guidelines for instruction in major
curriculum programs of higher and secondary professional education at St.Petersburg University
«A master thesis must be completed by each of the degree candidates individually under the
supervision of his or her advisor», and according to paragraph 51 of Charter of the Federal State
Institution of Higher Education Saint-Petersburg State University «a student can be expelled
from St.Petersburg University for submitting of the course or graduation qualification work
developed by other person (persons)».
25.05.2016
2
ABSTRACT
Master Student's
Name
Master Thesis
Title
Faculty
Main field of
study
Year
Academic
Advisor's Name
Description of
the goal, tasks
and main results
Keywords
Yulia G. Troyslit
Internationalization strategy of Internet transportation network companies
(iTNCs): cross-country case study of Uber Technologies Inc.
Graduate School of Management
International Management
2016
Associate professor, Sergey A. Yablonsky
In recent years the world has witnessed the emergence of the new type of
transportation companies that used the technology, a mobile application,
to connect clients with drivers without owning the fleet of cars or
employing drivers. These companies not only challenged the traditional
taxi industry but also stretched previously local taxi markets to the
international level by the rapid internationalization of operations almost
from their inception. The goal of the present master’s thesis is therefore to
explore the drivers of internationalization as well peculiarities and
patterns of international expansion of Born Global Internet transportation
network companies (iTNCs). To achieve the goal the following objectives
were set: 1) identify the competitive advantage of iTNCs; 2) identify the
motives of iTNCs to internalize; 3) analyze the process of
internationalization of iTNCs; and 4) analyze the choice of entry modes
and the business strategy.
The study based on the case of Uber has identified that the characteristics
of the business model, unique technology, strong brand and experience of
TMT were among the internal drivers of successful internationalization,
while niche domestic market, high competition, domestic industry
regulation as well as attractiveness of foreign markets and the availability
of the grey zone of regulation in these markets were the external drivers
to expand internationally. As for the patterns, iNTCs tend to first move to
geographically and culturally close markets to accumulate knowledge and
experience and then expand to other locations fuelling growth by
profitable markets and investments. Finally, iTNCs choose FDIs and
strategic partnerships to enter the market as well as cost leadership
strategy with significant level of localization to develop the market.
I n t e r n e t t r a n s p o r t a t i o n n e t w o r k c o m p a n y, B o r n G l o b a l s ,
internationalization, global expansion, strategy, Uber
АННОТАЦИЯ
3
Автор
Название
магистерской
диссертации
Факультет
Направление
подготовки
Год
Научный
руководитель
Описание
цели, задач и
основных
результатов
Тройслит Юлия Геннадьевна
Стратегия интернационализации сетевых транспортных интернеткомпаний (на примере Uber Technologies Inc.)
Высшая Школа Менеджмента
Международный Менеджмент
2016
Кандидат технических наук, доцент Яблонский Сергей Александрович
В последние годы получил развитие новый тип транспортных
компаний, которые используют технологии для оказания услуг такси,
соединяя клиентов с водителями через мобильное приложение, в то же
самое время не владея парком автомобилей и не нанимая водителей.
Эти компании не только бросили вызов традиционному рынку такси,
но и позволили расширить границы ранее локальных такси рынков до
международного уровня, благодаря быстрой интернационализации
своих операций сразу после основания. Цель данной магистерской
д и с с е р т а ц и и – и з у ч и т ь факторы, спо собствующие
интернационализации, а также особенности международной экспансии
«рожденных глобальными» сетевых транспортных интернет-компаний
(iTNCs). Для достижения цели были поставлены следующие задачи: 1)
определить конкурентные преимущества iTNC; 2) определить мотивы
iTNC для интернационализации; 3) проанализировать процесс
интернационализации iTNC; и 4) проанализировать выбор стратегии
выхода на новые рынки и бизнес-стратегии на этих рынках.
Исследование, основанное на кейсе компании Uber, определило, что
характеристики бизнес-модели, уникальные технологии, бренд и опыт
команды топ-менеджеров являются внутренними драйверами успешной
интернационализации, в то время как нишевый домашний рынок,
высокая конкуренция, государственное регулирование отрасли, а также
привлекательность зарубежных рынков и наличие серой зоны
регулирования на этих рынках – внешние факторы международной
экспансии iTNC. Что касается процесса, как правило, iNTCs
изначально выходят на географически и культурно близкие рынки,
чтобы накопить знания и опыт, а затем расширить присутствие на
других рынках, обеспечивая экспансию за счет прибыльных рынков и
инвестиций. Наконец, iTNC выбирают прямые иностранные
инвестиции и стратегические партнерства для выхода на рынок, а
также стратегии лидерства по затратам и значительный уровень
локализации для развития рынка.
Ключевые
Сетевые транспортные интернет-компании, компании «рожденные
слова
глобальными», интернационализация, глобальная экспансия, стратегия,
Убер
TABLE OF CONTENTS
4
1.
INTRODUCTION.......................................................................................................................................... 6
1.1 RESEARCH BACKGROUND............................................................................................................................................... 6
1.2 RESEARCH QUESTION, AIMS AND OBJECTIVES OF RESEARCH......................................................................................7
1.3 RESEARCH STRATEGY AND STRUCTURE OF THE PAPER................................................................................................8
2. THEORETICAL BACKGROUND: TOWARDS THE THEORY OF BORN GLOBAL
TRANSPORTATION COMPANIES..................................................................................................................... 8
2.1 TAXI INDUSTRY BACKGROUND: PREREQUISITES OF THE GLOBAL TAXI MARKET......................................................8
2.2 INTERNATIONAL ENTREPRENEURSHIP: THEORETICAL DEVELOPMENT OF THE FIELD.........................................11
2.3 BORN GLOBALS: MAIN CHARACTERISTICS, TYPES, COMPETITIVE ADVANTAGE......................................................18
2.4 BORN GLOBALS INTERNATIONALIZATION PROCESS...................................................................................................24
2.5 SUMMARY...........................................................................................................................................................................
32
3.
EMPIRICAL STUDY: INTERNATIONALIZATION STRATEGY OF BORN GLOBAL ITNCS..........35
3.1 CASE STUDY METHODOLOGY JUSTIFICATION..............................................................................................................35
3.2 DATA COLLECTION PROCESS AND ANALYSIS.................................................................................................................37
3.3 OVERVIEW OF UBER TECHNOLOGIES INC....................................................................................................................38
3.4 UBER’S INTERNATIONAL EXPANSION: DRIVERS OF INTERNATIONALIZATION.........................................................43
3.4.1 ANALYSIS OF FIRM-SPECIFIC FACTORS...............................................................................................................43
3.4.2 ANALYSIS OF EXTERNAL FACTORS OF DOMESTIC ENVIRONMENT..................................................................45
3.4.3 SUMMARY................................................................................................................................................................
47
3.5 UBER’S INTERNATIONAL EXPANSION: LOCATION-SPECIFIC ADVANTAGES AND THE BUSINESS STRATEGY.........48
3.5.1 INTERNATIONALIZATION TO CHINA...................................................................................................................50
3.5.2 INTERNATIONALIZATION TO INDIA.....................................................................................................................53
3.5.3 INTERNATIONALIZATION TO RUSSIA..................................................................................................................55
3.5.4 SUMMARY............................................................................................................................................................ 59
4.
DISCUSSION AND CONCLUSION........................................................................................................... 61
4.1 DISCUSSION OF THE FINDINGS.......................................................................................................................................61
4.2 THEORETICAL IMPLICATIONS.........................................................................................................................................63
4.3 MANAGERIAL IMPLICATIONS..........................................................................................................................................64
4.4 LIMITATIONS OF THE STUDY...........................................................................................................................................65
LIST OF REFERENCES..................................................................................................................................... 66
APPENDICES..................................................................................................................................................... 78
5
1.
INTRODUCTION
1.1 Research Background
In recent years the world has witnessed the emergence of new companies that changed or
transformed the traditional industries and the way people consume goods and services with their
disruptive technologies and business models. The increased pace of globalization, rapidly
changing business environment and proliferation of information technologies created an
opportunity for these new ventures to rapidly internalize their operations, sometimes from their
inception, in the search of new business opportunities. The traditional internationalization
theories that were mainly focused on MNEs and their strategies are now being reconsidered to
enable the research on the new type of internalized companies – Born Globals or international
new ventures (INVs) (McKinsey & Company, 1993; McDougall and Oviatt, 1994).
There are different labels attached to these kinds of firms such as international new
ventures, born globals, international start-ups etc. However, the two most acknowledged terms
are International New Ventures and Born Globals. Oviatt and McDougall introduced the term of
“International New Venture” in 1994 and defined it as “a firm that, from its inception, seeks to
derive significant competitive advantage from the combination of resources and sale of outputs
in multiple countries”. The term Born Global was used by McKinsey & Company (1993) and
later in 2004 Knight and Cavusgil defined Born Globals as “entrepreneurial start-ups that, from
or near their founding, seek to derive a substantial proportion of their revenue from the sale of
products in international markets”. In this master’s thesis the term Born Globals is used.
One of the most prominent examples of today's Born Globals are rapidly growing
Internet transportation network companies (iTNCs). The term iTNC was introduced by
California Public Utilities Commission in 2013 to address the growing neccessity of regulating
such companies as Uber, Lyft, Sidecar and others (CPUC, 2013). The disruptive technology that
connects drivers with prospective riders is transforming the traditional taxi industry since 2009
when Uber Technologies Inc. started its operations in San Francisco Bay area. As of May 2016
the company valued at $68 billion surpassing automotive giants like General Motors, Ford Motor
and Honda Motor (Chen, 2015). The company’s disruptive technology and innovative business
model is so successful that it was replicated by numerous competitors: US-based Lyft, Chinese
Didi Kuaidi, Indian Ola, as well as Hailo, Gett, EasyTaxi and many others (Crunchbase, 2016).
However, Uber still manages to keep the highest valuation among all as well as the broadest
geographic scope of operations: 68 countries and 407 cities across the world (Uber, 2016).
6
The internationalization pace of Uber is phenomenal: the company became international
in 2011 with the launch in Paris, France (Uber, 2011) and only in seven years of operations it
managed to enter 406 cities in 68 countries on each continent except for Antarctica
(Uber,
2016). The strategy seems to be approved by investors as Uber achieves to raise significant funds
from acknowledged venture capitalists totaling to $10,61 bln in 15 rounds (CrunchBase, 2016).
To date there exists almost no literature on the topic of iTNCs, especially on its
internationalization process, due to the newness of the phenomenon. However, the literature
focused on the research of Born Globals and INVs is growing since 1990s when the number of
such firms started to increase. Still, the field needs further research on various aspects as drivers
of internationalization, speed, scope, and intensity. Moen (2002) in his work gave the following
reasons on why is it important to study Born Global firms. First, it is the increasing number of
such companies, and especially those like Uber that disrupt the traditional industries and change
the way people consume goods and services. Second, the limited ability of existing frameworks
and models to analyse the process and patterns of internationalization of Born Global firms as
they were developed in the times when MNEs dominated the international arena. Therefore, it is
important to develop new theories by closer researching this new phenomenon. A case of iTNCs,
and Uber in particular, promises to make a considerable contribution into the understanding of
internationalization of modern Born Globals as well as build a base for the further research on
this new type of companies.
1.2 Research question, aims and objectives of research
The goal of the present master’s thesis is, thus, to explore the drivers of
internationalization as well peculiarities and patterns of international expansion of Internet
transportation network companies (iTNCs).
The research question of the study is, thus, formulated as follows: How born global
Internet transportation network companies internalize their operations?
The research question deserves attention for a number of reasons. First of all, at the
moment we witness the significant changes in the global transportation industry due to the
emergence of iTNCs and the changes are very rapid because iTNCs quickly internalize their
operations and enter more and more markets. Second, the pace and scope of internationalization
of Born Global iTNCs challenge the established the theories that were designed to explain the
foreign expansion of MNEs.
To answer the research question the following goals were set:
7
-
Identify the competitive advantage of iTNCs that allows them to expand
successfully to foreign markets;
Identify the motives of iTNCs to expand their operations internationally;
Analyze the process of internationalization of iTNCs;
Analyze the choice of entry modes and the business strategy.
The present work contribute not only to the development of theory on Born Globals, but
also generate managerial implications for managers and entrepreneurs of new technological
ventures on when to internalize and how to successfully expand operations to foreign markets.
1.3 Research strategy and structure of the paper
The present study uses abductive research approach and starts with the taxi industry
background as well as the review of state of the art on the topic of Born Globals. The study is
explorative in its nature and uses a single case study as a research strategy. The object of the
study is Uber Technologies Inc. and its expansion to China, India, and Russia.
The master’s thesis consists of 4 chapters. The first, present chapter, represented the
introduction to the study. Second chapter will be devoted to the taxi industry and theoretical
background of Born Globals. The third chapter will provide the research methodology and the
results of the empirical study including the description of the case and the comparison of
regional strategies employed by Uber. The final, fourth part, will discuss the main results and
outcomes of the study, theoretical and practical contribution, and limitations of the research.
2.
THEORETICAL BACKGROUND: TOWARDS THE THEORY OF BORN
GLOBAL TRANSPORTATION COMPANIES
2.1 Taxi industry background: prerequisites of the global taxi market
Before the mass adoption of smartphones and modern communication technologies the
taxi industry was geographically limited – the companies were either operating only in one city
to serve its citizens or encompassing other cities within the same country. However, the
emergence of the so called Internet transportation network companies (iTNC) allowed for the
development of international taxi firms operating at the same time in different countries across
the world by application of the same technology and the business model. The first country where
such firms emerged was the USA, where in 2009 Uber, a taxi-hailing app, became available.
Later, companies with the similar business model and technology were established in other parts
8
of the world. The following part, thus, will focus on the history and the peculiarities of the taxi
industry, the USA one in particular, and how it was changed with the emergence of iTNCs.
The first taxi company using electric battery-powered taxi vehicles appeared in New York
in 1987 – Samuel's Electric Carriage and Wagon Company with the fleet of 12 cars (The
Telegraph, 2011). However, the regulation of the US taxi industry was developed only after the
Great Depression of 1929. In 1937 the mayor of New York city introduced the taxi medallion
system to constrain the number of vehicles and assure more safety to the passengers through the
background checks of drivers (Harding et al., 2015). The system became the standard practice
for other US cities. The medallion system represented the efficient mechanism that limited the
number of licensed taxis in the country. As the supply of medallions was limited the price for the
one to acquire could reach $250'000 by the year 2013 (Stone, 2014).
Harding et al. (2015) emphasize two sectors of the modern taxi markets: cruising and
dispatch markets. The first sector consists of taxis that pick up passengers from the streets
without booking in advance. This type often refers to the taxicabs or yellow cab services. The
second sector involves taxis that provide pre-arranged transportation services and are booked
through the dispatch office. These taxis are also called livery vehicles and usually they are not
allowed for street hailing. Livery companies generally operate black cars or limousines. The two
sectors are also subject to different regulations.
The taxi industry as of 2009, in its pre-Uber state, was characterized by low competition
due to the medallion system. As a consequence low quality of the service, high prices and low
accountability was the major concerns of the customers. At the same time the smartphone
adoption was on the rise (EMarketer, 2010) what created the possibility for the emergence of
new technology-based solutions for the existing problems. Smartphones allowed companies to
change the way traditional business works and at the same time provided customers with the
convenient way to consume services.
The year 2009 became the starting point for the emergence of numerous companies
offering taxi or car hailing applications. The application represents the two-sided platform that
connects smartphone users with the car owners or taxi drivers based on the location criteria
(Harding et al., 2015). The supplier of the transportation service operates in the manner similar to
traditional taxi drivers: locate clients using the application instead of dispatch service, drive them
to their destination and set the fee based on the distance and time of the trip calculated by the
application, similar to the mechanism of taximeter. These companies were later called Internet
transportation network companies or iTNCs (CPUC, 2013) as they were similar to the traditional
taxi companies however still related to the tech companies providing the technological solution
to drivers. The success of the iTNC business model, as with any internet-based platform, is
9
derived by the critical mass of consumers whose benefits rise exponentially as suppliers of
transportation services join the platform and vice versa for suppliers (Olson and Kemp, 2015).
For the riders it is beneficial to have enough drivers connected to the platform as the average
waiting time for the taxi lowers significantly. For the drivers, on the other hand, enough demand
on the platform is necessary to make the provision of transportation service worthwhile.
By 2016 numerous iTNCs operated in different countries across the world: international
iTNCs such as Uber, Gett, EasyTaxi and Hailo; US based Lyft; Chinese Didi Kuaidi; Indian
OlaCabs and TaxiForSure; Russian YandexTaxi. All of them operate as two-sided platforms,
however matching, different parties (Harding et al., 2015). The service may work on the P2P
basis, or matching independent car owners with riders, and on the B2C basis, or representing the
aggregator of a number of taxi companies whose drivers use the application for locating the
clients – users of the application. Uber, Lyft and Didi Kuaidi, for example, refer to the P2P type
of iTNCs, while Gett, YandexTaxi and OlaCabs to the B2C type. The Figure 1 shows the graphic
representation of the iTNC’s platform.
Figure 1. iTNC as a two-sided platform (Companies websites: Uber, Gett, YandexTaxi, 2016)
One of the major impacts of this new type of companies on the taxi industry is that
iTNCs lowered entry barriers into the market as they operate as the traditional taxi companies
but at the same time do not incur costs of buying the medallion or license, fleet of cars, hiring
drivers and maintaining the vehicles (Harding et al., 2015). Olson and Connor (2013) identify the
following aspects of iTNCs, or ride-sharing companies, that allow these new transportation
providers to compete successfully with incumbents: asset-light business model, social
interaction, network effects, regulatory grey areas and community driven cultures. Indeed, assetlight model as well as grey area of regulation lowers significantly the entry barriers into the taxi
market, allowing technology-driven start-up to enter the market previously dominated by
traditional incumbents and gain the market share. As for 2014 Olson and Kemp (2015) estimate
10
the global taxi market to be approximately $90 billion whereas Uber and other taxi-hailing
companies account for $5,2 billion.
iTNCs; 5.2
Incumbents; 85.0
Figure 2. Global taxi market 2014 (total bookings, $B), (Olson and Kemp, 2015).
Low entry barriers as a consequence allow iTNCs to expand their operations beyond the
jurisdiction of one city or even one country as the asset-light business model can be applicable
with low costs in different locations. This significant innovation created the possibility for
expanding the borders of local taxi market to the international level. Such companies as Uber,
Gett, Hailo and EasyTaxi already operate in numerous markets in US, Latin America, Asia and
Africa what makes them Born Global firms defined by early internationalization and rapid
expansion. The following part 2.2, thus, will be devoted to the phenomenon of Born Globals,
how the research field was developed, what are the peculiarities and drivers of
internationalization of these companies.
2.2 International Entrepreneurship: theoretical development of the field
Born Globals are considered as an expression of International Entrepreneurship (IE) that
describes the process of creating, searching and exploiting opportunities that are located outside
of a company’s home market (McDougall and Oviatt, 2000). Thus, the theoretical part will, first,
discuss the field of International Entrepreneurship. Then the focus will be devoted to the
phenomenon of Born Globals, its definition, main characteristics, and types. Finally
internationalization theory as well as entry mode choice in application to Born Globals will be
discussed.
The domain of IE has interested scholars since 1990s that was witnessed by the growing
number of papers and articles on the topic (Zucchella and Scabini, 2007). Even though the field
11
got a considerable attention from researchers, it still lacks the unified and widely accepted
definition of the subject. Moreover the field needs a robust theoretical frameworks (Oviatt and
McDougall, 2000), methodologies (Jones and Coviello, 2005), and interdisciplinary and holistic
approach to research (Dana et al., 1999).
McDougall (1989) in her empirical work on new ventures’ international sales defines IE
“as the development of new ventures and start-ups that, from its inception, engage in
international business, thus viewing their operating domain as international from the initial
stages of the firm’s operation.” In 2000 McDougall and Oviatt further developed the definition of
IE by broadening its boundaries to the study of established firms and the recognition of
comparative or cross-national analysis. IE, thus, was defined as “a combination of innovative,
proactive, and risk-seeking behavior that cross or is compared across national borders and is
intended to create value in business organizations”.
Different research fields contributed to the development of the IE theory as scholars seek
to analyze the phenomenon from different perspectives. The Figure 3 shows the most influential
fields contributed to the theory of International Entrepreneurship (Zucchella and Scabini, 2007).
Figure 3. Theoretical foundations of International Entrepreneurship (Zucchella and Scabini,
2007)
International Business frameworks were mainly used to analyze and provide the
explanation to the process of internationalization of new ventures. IB and entrepreneurship
studies are closely interrelated as entering new foreign markets are considered an entrepreneurial
activity for both new ventures and established firms (Zahra and George, 2002). Even though
internationalization theories were introduced before the development of IE, they provide a valid
frame of reference to understand the internationalization processes of new ventures. There are
two main streams in the IB studies: economic-based approach, developed since 1960s when
scholars attempted to explain the motives of domestic corporations to expand to foreign markets,
12
and behavioral theories emerged in 1970s that tend to explain internationalization in terms of
learning and decision-making.
Economic-based approaches to internationalization focus mainly on cost-related factors
and include the following theoretical models: market power approach (Hymer, 1976), the
Product Life Cycle approach (Vernon, 1966), the Internationalization and Transaction cost
theory, and the Eclectic paradigm (Dunning, 1988), explained in more details further.
Hymer (1976), who is considered as the pioneer in the field of international business,
stated that the internationalization of companies is influenced by the search of new opportunities
in order to maximize profits through efficient resource allocation and utilization. The drivers of
expansion according to Hymer are limited exchange opportunities, strong competition in
domestic markets, firm-specific advantages (FSAs) and maturity of the industry. As soon as the
firm developed its FSAs in the domestic market, it tends to exploit them abroad, however the
firm also faces several limits such as unfavorable foreign market conditions and
governmental/consumer discrimination. The limitation of this theory in term of entrepreneurship
is that the company internalizes once it reaches the significant size, so it explains the
internationalization process of MNEs exclusively.
The international Product Life Cycle model suggested by Vernon (1966) assumes that
there are four stages of the product life: introduction, growth stage, maturity, and decline.
Internationalization, according to Vernon, starts on the second stage mainly through exports and
then on maturity phase firm may decide to move production closer to the foreign market.
Transaction cost approach is focused on the explaining how transaction costs affect the
decision to internalize, specifically through exports and FDI. The theory suggests that the
company internalizes a transaction when the costs of using markets (exporting) are higher than
costs of direct investment.
Finally, the Eclectic paradigm of Dunning (1988) combines all the theoretical
frameworks developed before to propose the model explaining the internationalization of firms
and FDI decisions. In order to internalize successfully a firm should rely on the following
conditions (OLI-framework): ownership-specific advantages (O), location-specific advantages
(L) or internationalization incentive advantages (I). O-advantages encompass intangible and
tangible assets of the firm that can generate income and that competitors do not possess. Ladvantages are the assets specific to a certain location that a firm considers beneficial to exploit
such as cheap labour. I-advantages consider the benefits of transferring some of the Oadvantages beyond the borders of domestic market in order to create more value for the
company.
13
Behavioral approaches to internationalization refer to two general models: stage theories
and network approach. Both models emphasize the importance of market knowledge for
internationalization. The stage theories are based on progressive experiential knowledge, while
network theory suggests that the network of partners, suppliers and customers may drive
internationalization of the firm. The most acknowledged stage theories are the Uppsala theory
developed in 1970s and Innovation model.
Uppsala model (Johanson and Vahlne, 1977) is based on the issue of risk avoidance
related to uncertainty of physical distance and lack of foreign experience. In order to mitigate the
risk the company should gradually internalize in two dimensions: widening (the company moves
from geographically and culturally close markets to more distant ones) and deepening (from
exports to direct investments). The Uppsala model gained a significant recognition in the works
on internationalizations, however its modern applicability is arguable since the problem of the
lack of the market knowledge is not crucial anymore thanks to developments in ICT. Moreover,
the phenomenon of Born Globals also questions the relevance of the model since these
companies show the almost instant internationalization skipping the stages of the Uppsala model
(Zucchella and Scabini, 2007). The Uppsala model and its limitations considering Born Globals
will be discussed in more details further.
Another stage model – Innovation model – is formulated in accordance with Uppsala
model and is based on the adoption process concept proposed by Cavusgil (1980). According to
the model the internationalization stages can be determined by the ratio of export sales to total
sales showing the extent the firm is being involved in the foreign trade. Each stage represents an
innovation and the process of internationalization is determined by the reconsideration of the
company’s strategy. As Uppsala model, Innovation model also suggests the gradual
internationalization of the company and, thus, shares the same limitation when applying it to the
Born Gloabls. Finally, the second stream of behavioral models – the Network model (Johanson
and Mattsson, 1988), that explains the firm’s internationalization process in respect to its position
in a network of companies and their relationships. The model assumes that firms need to share
market knowledge they accumulated in order to expand their business internationally, thus the
internationalization is supported by the network rather than FSAs. According to scholars the
internationalization process of the firm is determined by the level of internationalization of its
network.
International Business studies that consider mainly the established firms and MNEs rather
than new ventures provide a robust frame of reference even though lack the capability to explain
the processes of internationalization of Born Globals. Zucchella and Scabini (2007) state that the
economic-based approaches are not coherent to explain the development of Born Globals as their
14
formation process differs significantly from that of MNEs. The latter process implies that first
companies develop a significant position in the domestic market and then expand their FSAs to
foreign markets. However, some concepts are relevant to the study of IE such as the role of
resources and capabilities, the process view of internationalization and the organizational
capabilities and possession of unique assets. On the contrary, the behavioral models represent the
fundamental framework for IE studies since they enable a more profound understanding of the
internationalization process and decision making (Zucchella and Scabini, 2007).
Some of the streams of Strategic Management studies also contribute to the IE as
entrepreneurial entities also deal with setting goals and objectives according to their available
resources, competitive advantage and conditions of external environment. Zucchella and Scabini
(2007) highlight Dynamic Capabilities theory in the context of resource-based view (RBV).
According to resource-based view a firm possesses idiosyncratic (or unique) and
heterogeneous resources that shape their strategy. A firm achieves a competitive advantage when
its strategy leverages the available resources. Hitt et al. (2001) states that intangible resources
such as reputation, brand name, know-how are more difficult to imitate and, thus, contribute to
the firm’s sustainable competitive advantage. However, only the possession of such resources
may not lead by itself to the favorable position on the market. What is also important is how the
firm manages to reconfigure and adapt its resources to the changing economic environment.
Dynamic capabilities (Teece et al., 1997) represent that ability of firms to integrate and
reconfigure the existing competencies to address rapidly changing external environment. They
are, thus, the company’s organizational and strategic routines that allow a firm to get a new
resource combination in order to exploit new market opportunities. To determine the dynamic
capabilities of a company business processes, market position and growth path are considered.
While processes refer to the organizational level where routines are determined, market position
combines firm’s knowledge of market and customers, technological or intellectual assets,
supplier relationships. Paths are the growth alternatives opened to the firm. Referring to
entrepreneurship, Smart and Conant (1994) stated that the firm’s entrepreneurial orientation
meaning the readiness to take risk, innovate and identify opportunities allows achieving a variety
of distinctive competencies and higher performance. These entrepreneurial capabilities can be
referred to as the routines and processes, thus, they are linked to the dynamic capabilities theory.
Strategic Management perspective, thus, emphasizes the unique, valuable and inimitable
capabilities and resources that represent the core of the firm’s performance. Company’s specific
knowledge, access to knowledge of other actors through the network, innovative solutions and
ways to conduct business are the drivers for the company’s performance as well as
internationalization. However, in order to be successful on domestic and global arena companies
15
should be able to mobilize, combine and dynamically reconfigure these capabilities and
resources in order to adapt to the changing environment and tap into opportunities opening by
this change. New ventures due to their small size and more flexible organization are more
successful to adapt and develop new routines and processes. Dynamic capabilities theory is, thus,
a suitable approach to study the internationalization of Born Globals.
To summarize, different fields of studies contributed to the development of the IE theory,
namely strategic management and international business. However, there is still a need for a
robust theoretical framework that can be applied to the context of international entrepreneurship
and specifically to Born Globals.
Recently, alternative approaches emerged to explain international entrepreneurship
phenomenon, such as integrated model proposed by Zahra and George (2002) and interpretative
model by Zucchella and Scabini (2007), that, however, mainly focus on the firm’s internal
capabilities, specifically dynamic capabilities, and the primary role of entrepreneur/TMT in
internationalization process.
Zahra and George (2002) offered a model of international entrepreneurship that
emphasizes the three main factors affecting the internationalization of firms: organizational,
strategic and environmental.
To the organizational factors authors refer resources of the firm, top-management team
(TMT), and firm-related variables (size, age, financial strength, location, origin). Environmental
factors are those referred to competition (number of competitors, bargaining power),
opportunities for growth (rate of market growth, countries with open markets), institutional
environment, regulatory environment, economies of scale. In the model these factors act as
moderators between organisational factors and IE. Finally strategic factors represent the specific
competencies of the firm, such as production or innovations that can be transferred to foreign
markets in order to get advantages of their international expansion. These factors are also
considered as moderators.
Next, International Entrepreneurship is studied in three dimensions: speed, scope, and
extent. Extent considers the number of countries the firm enters or the dependency on
international revenues. Speed represents the rate at which the firm enters new markets. Finally,
scope measures the breadth of the internationalization process. Scope can be of two type:
geographic one, if countries are the unit of analysis, or economic/product scope, if the product
mix is considered. The level of success of the frim’s internationalization is represented by
financial and non-financial performance indicators.
16
The Figure 4 graphically represents the relationship between three groups of factors on
international entrepreneurship and consequently the firm’s internationalization and
competitiveness.
Figure 4. An Integrated model of International Entrepreneurship (Zahra and George, 2002).
The second framework was suggested by Zucchella and Scabini (2007). They focus on
dynamic capabilities of the firm that help to adapt and benefit from identified opportunities such
as new markets or new goods and services. As the value-creating strategy they emphasize the
role of innovation that is considered critical for a firm to compete on the international scope (Hitt
and Ireland, 2000).
Figure 5. Interpretative model for International Entrepreneurial Organization (Zucchella and
Scabini, 2007)
The Figure 5 shows that the entrepreneurial process starts from International Opportunity
Scanning and Evaluating. Scholars place entrepreneur or TMT central on this stage as their
skills, knowledge, background and network affect the decision to internalize to other countries.
On the next stage they have to mobilize and reconfigure resources they possess in order to
17
develop new combinations for the new markets. This can be done through internal development
or by external acquisition. The capability to effectively leverage and acquire resources leads to
dynamic capabilities. The ability to recombine the activities and processes are the central issues
in the Entrepreneurship agenda. As Hitt et al. (2001) mention IE is the mix of entrepreneurial,
strategic and opportunity-seeking activities that creates superior value and reduces the threats of
competition. New ventures successfully perform when other firms are unable to imitate their
specific advantages.
To summarize the part 2.2 on the theoretical antecedents of the Born Global theory,
namely the field of IE, International Entrepreneurship is a rather new field of study that received
a significant focus beginning from 1990s when the growing number of researchers identified
new motives and patterns of internationalization expressed by small and medium entrepreneurial
firms. These firms showed different internationalization processes compared to established
MNEs that internalized gradually and once having established a considerable capabilities and
size in their domestic markets. To research and explain these new trends researchers used
theories and frameworks adopted from the fields of strategic management and international
business, such as economic based approach, behavioral theory and resource-based view. These
approaches, however, lacked the capability to explain the process of internationalization of Born
Globals as were tailored to explain the foreign expansion of MNEs. Some of the elements, on the
other hand, provide a robust and valuable framework for researchers, such as the importance of
company’s unique and inimitable resources and internal capabilities, especially dynamic
capabilities that allow the company to reconfigure its resources addressing the changes in
environment; the process view of internationalization, that on the one hand was long dominated
by the stage theory, but can also be useful in explaining the internationalization of SMEs.
Part 2.3 will address in more details the phenomenon of Born Globals, how the definition
was developed, what is the difference between Born Globals and International New Ventures,
and what are the characteristics attributed to Born Globals.
2.3 Born Globals: main characteristics, types, competitive advantage
Zucchella and Scabini (2007) identify two main streams in the IE literature: one is
focused on international new ventures (INVs) or Born Globals, another on the
internationalization of established firms. In this chapter the antecedents of the emergence of Born
Globals, the development of the Born Globals definition as well as the difference between Born
Globals and INVs will be discussed.
18
The phenomenon of new ventures that started to internalize their activities in the first
years from their inception received a significant attention of scholars due to the fact that these
firms challenged the established theories of gradual internationalization process, mainly Uppsala
stage theory and Innovation-related export-developing model (Zucchella and Scabini, 2007). The
early and fast internationalization showed by INVs shift the focus of scholars from established
MNEs applying a logic of rents, efficiency-seeking, and power to a logic of new ventures,
constrained with resources, but seeking profit, new opportunities, and innovativeness (Zander et
al., 2015).
Since 1990s empirical studies on the export behavior have shown that many small
regional companies are able to “leapfrog” internationalization stages and access foreign markets
early due to the advancements in technology, transportation, and the reduction of trade barriers.
Due to the newness and the small size such companies, that also possess some unique
capabilities or resources, seek to exploit them in the best possible way by adopting a global
strategy that enables to increase their customer base by horizontally segmenting the market,
sometimes entering multiple countries at once.
Madsen and Servais (1997) explain the growth of this new kind of companies by the
following factors: new market conditions, particularly the development of new market niches;
technological developments in production, communication and logistics; international experience
of founders through education and work. Knight and Cavusgil (1996) state that the increasing
importance of global niche markets facilitated the emergence of Born Globals. Due to the small
size of the niche markets Born Globals tend to adopt a global strategy right from their inception
in order to be competitive. In addition, Moen and Servais (2002) argue that these new ventures
are internalizing rapidly due to the management with international orientation as well as
attractiveness of foreign markets in comparison to the domestic ones. All in all, the rapid
increase of Born Globals is facilitated by globalization, the Internet, and innovations in
communication technologies that have dramatically reduced the cost of foreign expansion of
smaller companies with limited resources (Knight and Cavusgil, 2004). Some scholars call for
the development of the new theory in order to explain the internationalization patterns expressed
by Born Globals (Knight and Cavusgil, 1996; Oviatt and McDougall, 1994), whereas others
(Bell et al. 2003) believe that these firms are not different from others with respect to
fundamental processes, and, thus, the phenomenon may not require building a new theory, but
rather can be explained by established frameworks.
These new kind of internalizing firms were labeled by different terms in the academic
articles published over the years. Zucchella and Scabini (2007) list “Global start-ups”, “High
Technology Start-ups”, “Instant Internationals”, “Born-Globals” and “International New
19
Ventures”. The latter two received higher recognition among scholars. In recent literature the two
terms are also attributed to two different types of ventures, possessing different characteristics
and internationalization patterns. As for the Born Globals, the definition by Knight and Cavusgil
(2004) is mostly used in the literature, while the definition of INVs offered by Oviatt and
McDougall (1994) is the most acknowledged one.
The label “Born Global” firms was first proposed by McKinsey and Rennie in 1993.
Having studied Australian exporters they defined Born Global firm as the one, that from its
inception, views the world as its market. Knight and Cavusgil (2004) later define Born Globals
as “entrepreneurial start-ups that, from or near their founding, seek to derive a substantial
proportion of their revenue from the sale of products in international markets”. Knight and
Cavusgil (2004) agree that despite limited resources these firms achieve international sales in the
first years of their operations.
Later in 1994 Oviatt and McDougall introduced the term of “International New Ventures”
defined as “a firm that, from its inception, seeks to derive significant competitive advantage from
the combination of resources and sale of outputs in multiple countries”. Scholars emphasize that
the specific characteristics of these companies is that “their origins are international” that is
demonstrated “by observable and significant commitment of resources in more than one nation”.
This definition focuses not on the size of the firm, but on its age. Further, they propose
that in order to identify the INV researchers should determine whether there is an observable
resource commitment to sell the output in a number of countries in the first years of a company’s
operations. They also propose a typology for INVs based on two dimensions: the number of
foreign markets where the firm operates and the number of activities along the value chain that
are coordinated internationally.
Coordination
of value chain
activities
across
countries
New international market makers
Few
Many
Export/import start-up
Multinational trader
Geographically focused start-up
Global start-up
Few countries involved
Many countries involved
Table 1. Types of International New Ventures (Oviatt and McDougall, 1994)
“International market makers” are an age-old type firms that are mainly involved in
export/import activities that are focusing on few countries or a large number of countries.
“Geographically focused start-up” are the companies that serve the needs of a specific region by
using the resources of that region and by combining multiple value chain activities. The latter
20
type – “Global start-up” is the brightest example of the INV because it gains a significant
competitive advantage by controlling many different organizational activities in unlimited
geographical locations. These firms act proactively and acquire resources and sell the output in
the locations where they can capture the greatest value. Global start-ups is the most challenging
INV type as they demand significant skills of geographic and activity coordination for the
sustainable development. But, as Oviatt and McDougall (1994) state, once they are successfully
established, these companies gain the most sustainable competitive advantage.
Oviatt and McDougall in their further works recognised that the terms INVs and Born
Globals were used interchangeably across publications. International New Ventures are, thus,
similar to Born Globals in the way that they internalize right after their inception. However,
comparing the definition of Born Global by Knight and Cavusgil with the definition on INVs by
Oviatt and McDougall’s, it is clear that the first includes only the young firms as the unit of
analysis, while the second takes into account different types of new ventures, even those that
were launched in older established corporations. Moreover, Oviatt and McDougall on purpose
use the term international in their definition as the companies they examine sometimes compete
in their regional markets or in a limited number of markets, rather than being truly “global”.
The further distinction between different types of small international firms was suggested
by Aspelund and Moen (2005) who distinguished three types of companies: Born Globals, Early
Internationals, and Late Internationals. According to authors the Born Global firms are “defined
by their rapid and extensive internationalization” and “are often forced into internationalization
due to an insufficient domestic market and apparent opportunities for growth and profits on the
foreign markets.” Early Internationals in this typology are similar to INVs as these are the
companies that express the limited internationalization. Finally, Late Internationals are older
established firms and in this way are more close to MNEs. Lopez (2009) also distinguished Born
Globals and Born Regionals. The latter are the firms that internalize their operations regionally,
rather than globally. The empirical evidence from Costa Rican software firms showed that there
were a few truly Born Global firms.
The Table 2 below shows the development of the definitions of International New
Ventures and Born Globals. While the two acknowledged definitions by Knight and Cavusgil
(2004) and Oviatt and McDougall (1994) give a more broad and abstract view on these types of
firms, many other scholars made attempts to identify particular criteria in terms of speed, scope
and extent of internationalization to define a firm as a BG or INV.
Authors
Definition
Time before % of international Term
expansion
sales
21
McKinsey and
Born globals are companies that conduct
2 years after 76% of total sales
Rennie, 1993
international business at or near the foundation
during 14 years
Oviatt and
founding of the firm.
A firm that, from its inception, seeks to -
-
McDougall,
derive significant competitive advantage
1994
from the combination of resources and
Knight and
sale of outputs in multiple countries
Small, technology-oriented companies 2 years from 2 5 % o f t o t a l
Cavusgil,
that operate in international markets establishmen
1996
from the earliest days of their t
BG
INV
BG
production
establishment
Servais and
-
Rasmussen,
3 years after 25% of foreign BG
the birth
2000
Knight and
Entrepreneurial start-ups that, from or -
Cavusgil,
near their founding, seek to derive a
2004
substantial proportion of their revenue
sales
-
BG
-
BG
-
INV
BG
from the sale of products in international
Aspelund and
markets
Companies that are defined by their -
Moen, 2005
rapid and extensive internationalization
and that are often forced into
internationalization due to an
insufficient domestic market and
apparent opportunities for growth and
Aspelund and
profits on the foreign markets.
Early Internationals are defined by their -
Moen, 2005
early but limited internationalization,
seeking internationalization to reduce
Luostarinen
the dependency on domestic markets.
Global vision and/or at a global growth
Entered
Over 50% of their
and
path.
global
sales outside home
Gabrielsson,
market from country
2006
Weerawarden
Business organizations that from
et al., 2007
inception, seek to derive significant
the outset
-
-
INV
competitive advantages from the use of
resources and the sale of outputs in
Kuivalainen et
multiple countries
-
3 years after Sell more than 25% BG
22
al. (2012)
inception
to five or more
countries
Table 2. Definitions of Born Globals/International New Ventures
As of the sources of competitive advantage possessed by Born Globals there is also no
unified agreement among different researchers. Madsen and Servais (1997) offered a model that
considers the characteristics of the organization, environment, and the founder as fundamentals.
Coviello and Munro (1995) adopted a network theory perspective to explain the role of
international relationship of the founder. Knight and Cavusgil (1996) emphasized the role of
knowledge-based resources: innovativeness and organizational capabilities. Empirical study by
Oystein (2002) revealed that a global orientation of TMT/entrepreneur and market conditions are
core factors affecting whether the firm will move early to international markets.
Born Globals were observed to possess a significant competitive advantage in the sphere
of technologies. McDougall, Oviatt and Shrader (2003) state that Born Globals are focused more
on innovative differentiation, quality and service in comparison to traditional firms. New
technologies are also considered to enable Born Globals to sell products or services to
international customers with minimum adjustments.
Rialp et al. (2005) prepared a list of characteristics of Born Globals that includes
international experience and a global vision of TMT, personal and business network, market
knowledge, value creation through product differentiation, unique asset base, narrowly defined
customers, niche markets and flexibility.
The most widely used by Born Globals business strategies are unique global
development, focus on quality, global technological competence, and leveraging competences of
distributors. An empirical study of independent and corporate new ventures by Zahra et al.
(2000) showed that the diversity of national environments where the firm operates corresponds
to the increased technological learning opportunities, even for young companies whose
internationalization was thought to be limited. Moreover they showed that speed, depth and
breadth of technological learning is considerably enhanced by organizational processes that
integrate knowledge through cross-functional teams and analysis of successful and failed
projects. They also showed the positive effect of technological learning gained from international
environment on the firm’s performance.
All in all, Born Globals are the companies that begin to internalize from their inception in
order to tap into international market niches opportunities and sustain their competitive
advantage. These companies view the whole world as their market without distinct borders
(Cavusgil and Knight, 2015). And for the purpose of this master’s thesis the definition by Knight
23
and Cavusgil (2004) is chosen: “Born Globals are entrepreneurial start-ups that, from or near
their founding, seek to derive a substantial proportion of their revenue from the sale of products
in international markets” as it allows to distinguish Born Globals from INVs and MNEs and at
the same time does not fall into the problem of defining the scope, speed and extent of
internationalization. Moreover, from the observation most iTNCs that internalized their
operations and fall into the Born Global category refer to entrepreneurial start-ups, rather than
projects of established companies.
The part 2.4 will focus on the process of internationalization and how Born Globals
challenge the established stage theories, namely the Uppsala model. The issue of entry mode
selection will be covered as well.
2.4 Born Globals Internationalization Process
In the academic studies of past decades the international involvement of a company was
mostly described as a gradual process. The model of internationalization proposed by Johanson
and Vahlne (1977) – Uppsala model – is one of the most acknowledged internationalization
frameworks. The model suggests that international expansion is a stage process, that is
determined by the relation of potential benefits of exploiting firm’s specific advantages in
foreign markets to the risk of operating in a vague foreign environment and the costs of
gathering knowledge about these markets. Thus, the firm internalizes gradually making higher
commitment into overseas market in the form of logical stages based on the knowledge gathered
from these overseas markets and operations. The central issue in this model is the learning
process of a firm and how it influences the internationalization.
The Figure 6 shows the internationalization process according to the Uppsala model.
24
Market Knowledge
Leads
to
Market Commitment
Leads to
more
Market Knowledge
Leads
to
Market Commitment
and so
on
Figure 6. Uppsala model (Vahlne and Johanson, 1977)
The model analyses, on the one hand, the internationalization as the consequent steps
through experience and knowledge about foreign markets that is assumed to be the major
obstacle, whereas, on the other hand, how the increased commitment is invested to the foreign
market. Commitment reflects the amount of resources a firm invests into the market, meaning
the export is the lowest commitment and FDI is the highest. Market commitment is composed of
two factors: the amount and the degree of commitment. The amount of commitment refers to the
actual volume of investment into particular market, whereas degree reflects the difficulty of
identifying an alternative use for the resources. Uppsala model proposes that gaining more
knowledge and experience in the foreign markets, the firm reduces the risk of working in foreign
environment and consequently increases the resource commitment into the market. This in turn
increases firm’s knowledge and leads to further commitment into more distinct markets. In
summary, the model shows the internationalization process of the firm that refers to two
dimensions: widening and deepening. Widening means that a company moves from
geographically and culturally close markets to more distant ones. Deepening implies that the
company commits more to the market or the operations become more demanding. Johanson and
Wiedersheim-Paul (1975) listed four consequent steps: non-regular export activities, export via
representatives, sales subsidiary, and production subsidiary. They called this process – “the
establishment chain”. The figure below shows the deepening dimension of the firm’s
international expansion.
25
Figure 7. The establishment chain and stages of Uppsala model (Johanson and WiedersheimPaul, 1975)
Even though Uppsala model found a considerable acknowledgement in the number of
academic studies, it was also criticized to be too deterministic (Zucchella and Scabini, 2007).
First, the model is thought to be valid only in the initial stages of international expansion when
the experience and market knowledge are not significant. Second, it is argued that the companies
today can enter any market that is now exactly similar or close to the home one thanks to the
development of information technologies. Finally, Uppsala model is criticized for not being able
to explain the phenomenon of Born Globals. These firms “leapfrog” the establishment chain of
the model and start operations at earlier stages of their lives. McDougall, Shane and Oviatt
(1994) as well as Knight and Cavusgil (1996) demonstrated that there are firms that do not
follow the traditional internationalization process. Moen (2002) also showed on a sample of
Norwegian firms that 74% of them started to sell their products in countries that are not
geographically or culturally close to Nordics.
Gabrielsson et al. (2008) proposed their model of internationalization consisting of 3
distinct stages. In the phase 1 the company is established and the initial launch of operations
happens. At this stage the companies have constrained resources and immature organisational
structure. The advantage may be in the tacit know-how of the firm and founder/TMT skills and
experience. The crucial role of the following internationalization step of the company is in the
firm’s ability to accumulate financial resources and develop international business expertise. The
phase 2 in the company’s internationalization process is characterized by growth and resource
accumulation. The key here is the ability of the company to learn from its partners, investors and
channels and/or network members. Finally, the phase 3 is the break-out phase dependent on the
company’s ability to leverage the organisational learning and experience it gained from partners.
26
In this phase the firm starts to develop its own global strategy independently of its partners and
customers. Gabrielsson et al. (2008) emphasizes the global vision of founders and the effective
commitment for a successful internationalization. The latter condition ties this model with the
Uppsala model (Johanson and Vahlne, 1977) that views commitment as a core variable in the
internationalization process. However, the principle difference is in the trigger of the
commitment: in Uppsala model commitment decision is triggered by economies of scale or by
unsolicited order while in the Born Global model the commitment is triggered by the global view
of the founder and the potential opportunities. Thus, the model proposed by Gabrielsson et al.
(2008) emphasizes significant differences in the internationalization process of Born Globals
compared to MNEs, namely the different conditions that trigger a Born Global company to
commit in the global expansion. Below the Figure 8 represents the difference between traditional
internationalization model and the Born Global model.
Commitment in traditional internationalisation.
Commitment in Born Global internationalisation.
Figure 8. Commitment in traditional internationalization model and Born Global
internationalization model. (Gabrielsson et al., 2008)
Oviatt and McDougall (2005) proposed their theoretical model of internationalization of
Born Globals based on the factors that influence the speed of the internationalization process.
Researchers state that the speed is determined by technology, it is competition-driven, and
moderated by the knowledge of the opportunity and a company’s networks. Cannone and
Ughetto (2012) further developed the model by Oviatt and McDougall (2005) to investigate the
motives that drive the early internationalization of the firm. The figure below shows their
theoretical model.
27
Figure 9. Factors influencing the degree of born globalness (Oviatt and McDougall, 2005)
The process of internationalization according to them begins with the potential
international entrepreneurial opportunity. This opportunity may be identified depending in the
number of factors grouped into the five categories: technology, entrepreneur characteristics,
home country environment, firm attributes and network relationship. Rapid technological
changes push the tech-based companies to internalize early in order to avoid the obsolescence of
their product or imitation processes (Andersson et al., 2004). Home country environment,
especially competition can be a driving force for the born global firm to internalize (Oviatt and
McDougall, 2005). Cannone and Ughetto (2012) add the market size as well as industrial and
innovation systems. As for the entrepreneur related factors Cannone and Ughetto (2012) identify
the following groups that affect the early internationalization of the firm: human capital,
experiential knowledge, international commitment, and entrepreneur’s network relationship.
Finally, the firm attributes, such as the nature of the firm’s product, its internal capabilities, and
the experience of the TMT. These firm-specific factors also correlate with the ownership
advantage of Dunning (1988). To sum up, all these factors taken together finally affect the degree
of “born globalness” or the number of markets the company entered. The model, offered by
Cannone and Ughetto (2012), thus, explains the motives behind the internationalization decision
and how they influence the scope of internationalization.
Gerschewski et al. (2014) examined the drivers of international performance of Born
Global firms. They emphasize that the following factors: firm and managerial characteristics
such as international entrepreneurial orientation, learning orientation, market orientation, and
product/service quality; network relationship; business strategy; and external environment of the
foreign market influence the firm’s international performance. The figure shows the graphic
representation of the model.
28
Figure 10. Model of drivers of international performance (Gerschewski et al., 2014)
The choice of the entry mode is one of the key decisions in the internationalization
process. Internationalization theory suggests several ways for a firm to internalize such as
exports, licensing or foreign direct investments (Dunning, 1988). The choice of entry mode is
one of the crucial decisions in internationalization process (Terpstra and Sarathy, 1991) and one
of the most difficult ones for a number of reasons. First, the multidimensional nature of each
entry mode choice encompassing varying levels of control, commitment of resources,
dissemination risk, and flexibility (Root, 1987; Argarwal and Rawaswami, 1992). Second,
situational factors such as country risk, government policies and regulations, socio-cultural
distance, firm specific factors, product differentiation and international experience of
TMT/entrepreneur (Dunning, 1988; Argarwal and Rawaswami, 1992). Thirdly, the rapid
globalization, increased international competition, advancements in technologies (Driscoll and
Paliwoda, 1997).
Driscoll (1995) introduced a framework facilitating the decision on the mode of entry to a
foreign market that she based on the Dunning’s Eclectic paradigm (1988). The OLI (ownership,
location and internationalization advantages) factors of the Eclectic paradigm help to understand
the foreign market entry mode. Ownership, or firm specific advantage, and locational advantage
are the two situational variables that influence a firm’s entry mode choice according to Driscoll.
The author identifies three basic entry modes: export, contractual mode, and investment. Later
Cateora et al. (2009) developed the framework by emphasizing four entry modes: export,
contracts, strategic alliances, and ownership. Finally, greenfield investment are the start-up
investments in new facility and can be wholly-owned or jointly owned by the firm, but at the
same time are costly and time consuming to initiate.
29
Driscoll (1995) based her entry mode choice framework on four dimensions: control,
dissemination risk, resource commitment, and flexibility. Control is understood as the
operational management and strategic decision making that enables the management to
coordinate all the stages of the supply chain in the target markets. Different entry modes, thus,
imply varying levels of control. The second dimension, dissemination risk, refers to the level of
the risk that the firm’s specific advantages will be expropriated by the partner company (Hill et
al., 1990). The protection of the firm’s specific knowledge, know-how or technology and
transferring it to the host markets forms the basis for a company’s competitive advantage.
Dissemination of these FSAs can affect significantly the firm’s position and, thus, leakages
should be prevented. The next dimension, resource commitment. The highest commitment of
resources leads to the higher exposure to the risk of foreign environment. Finally, flexibility is
the firm’s ability to change entry modes quickly and with minimum costs, inversely relating to
the resource commitment. Heavy resource commitment can create exit barriers for a company in
the view of unfavorable market conditions and thus making the firm strategically inflexible. The
Table 3 provides the characteristics of different entry modes according to the four dimensions.
Entry mode
Control
Dissemination
risk
Resource
commitment
Flexibility
Investments
High
Low
High
Low
Contracts
Medium
Med-high
Med-high
Medium
Export
Low
Low
Low
High
Table 3. Characteristics of foreign market entry modes (Driscoll, 1995)
Driscoll (1995) also identifies two groups of situational factors influencing the selection
of the entry mode: they are Dunning’s firm-specific and locational advantages. Here FSAa take
the form of capabilities of product differentiation, firm’s knowhow and the international
experience. The first FSA becomes a crucial capability of firm to gain competitive advantage in
the overseas market where incumbents already have the significant position. Second. Dunning’s
Eclectic theory states that knowhow is a significant ownership advantage since it determines the
institutional mode of transfer possible to exist. If the knowhow is difficult to transfer or articulate
(it is tacit) it is more efficient to transfer it within a firm than in the market. Finally, another FSA
is the international experience of an entrepreneur or TMT. As for the location advantages, they
describe the country attributes that make it attractive for the foreign company to enter. According
to Dunning (1988) a firm will engage in FDI if it perceives the endowments of another country
more beneficial than costs of commitment. Government regulations and policies, market
30
attractiveness, socio-cultural distance and country risk are, thus, the important factors in the
location advantages subgroup to consider.
The Figure 11 shows the Driscoll’s market entry mode choice framework considering all
the endogenous and exogenous factors.
Figure 11. Foreign market entry mode choice framework (Driscoll, 1995).
As for the Born Globals, it is considered that once such firms are relatively small in size
and are limited in resources they tend to use non-equity entry modes like exporting (Lu and
Beamish, 2001). However, the choice of such modes due to the size of Born Globals can also be
an advantage for a firm that exists in the flexibility and responsiveness to market changes
(Knight, 2000; Lu and Beamish, 2001), in comparison to established MNEs, that possess the
advantage of control over resources (Hennart, 1982; Rugman, 1981). The focal firm exercises
control not through ownership rather through knowledge and information internationalization
(Liesch and Knight, 1999). Here, the international business researchers see the principal
difference between Born Globals and MNEs, stating that the latter are not just the smaller
version of MNEs, rather new type of companies that demand adjusted theoretical frameworks
(Knight and Liesch, 2016). However, there was also evidence that showed some firms
internalizing rapidly by choosing the FDI entry mode and possessing substantial experience and
knowledge of foreign markets (Hedlund and Kverneland, 1985). McDougall (1989) also showed
31
that some INVs showed the aggressive foreign market entry with internationally oriented
founders. Even though there was a significant focus on Born Globals since the beginning of 90s,
the academic literature still lacks a unifying paradigm that includes the perspectives from
different research direction and that would adopt and improve the previously dominated theories
(Jones et al., 2011; Keupp and Gassmann, 2009).
2.5 Summary
To summarize the theoretical part, the emergence of Internet transportation network
companies (iTNCs), using asset-light but technology intensive business model, allowed for the
extension of the traditional taxi industry beyond national borders. Those iTNCs that internalized
their operations are related to the phenomenon of Born Global firms that typically expand
internationally from their inception. Born Globals are challenging the acknowledged theoretical
models of internationalization that became limited to explaining the internationalization patterns
of MNEs. Previously, it was considered that companies internalize gradually by committing
more resources once gaining considerable knowledge of the market in order to minimize the
risks of foreign environment (Uppsala model). However, starting from 1990s researchers
observed companies that seemed to neglect this “rule” by starting international operations almost
from their inception. Born Globals, thus, seek to exploit their competencies in the foreign
markets to gain competitive advantage. As for the market entry strategies, there is no unified
view on whether Born Globals start with non-equity modes due to their small size and limited
resources, or choose more aggressive entry strategies such as greenfield investments in order to
gain control over foreign operations and preserve the firm-specific advantages.
The present study aims at providing the holistic and multidimensional view on the
process of internationalization of iTNCs to identify the peculiarities of internationalization of
these kind of firms. Based on the Born Globals literature review the research framework of the
study was developed as shown on the figure below. The framework specifically focuses on
drivers of internationalization or what motivates the iTNC to go global and what enables it to do
that. The choice of business strategy and entry mode, on the one hand, is dependent on the firm’s
internal capabilities and external factors of foreign environment, and on the other hand enables
the firm to exploit its capabilities in the foreign location with maximum possible efficiency.
These choices finally, affect the firm’s international performance.
32
Figure 12. Research Framework of the study.
Drivers of internationalization consist of two sub-groups: external drivers and internal
drivers. The first sub-group involves the home market environment that influence the firm’s
internationalization as well as the environment of foreign market or the international opportunity
that they offer to the internalizing firm. As for the second sub-group, it encompassses all the
factors specific to the focal firm such as its competitive advantage, characteristics of the product
and the entrepreneurial experience, in other words, the firm-specific factors that can be exploited
in the foreign market environment. The next block concerns the business strategy and the entry
mode that the company chooses to tap into the advantages of overseas markets with its specific
advantages. Finally, the way the company is able to exploit its advantages through the business
strategy determines its international performance. Below the more specific explanation of the
building blocks is provided.
Firm-specific factors. Dunning (1988) and Driscoll (1995) state that the firm-specific
advantages that can be exploited more beneficially in the foreign environment represent the
firm’s driver to internalize.The factors connected to the focal firm are assumed to affect the
internationalization decision of a firm (Cannone and Ughetto, 2012). Gabrielsson and Kirpalani
(2004) state that in order to succeed in the international expansion Born Globals have to offer
unique and highly specialized product/service or innovative technologies. Dunning define FSAs
as ownership advantages that are “advantages that stem from the exclusive privileged possession
of or access to particular generating income assets” and are, thus, the firm’s tangible and
intangible resources that enable the company to generate future income and which its
competitors do not possess. According to Driscoll, the FSAa can take the form of capabilities of
product differentiation, firm’s knowhow and the international experience. Cannone and Ughetto
(2012) emphasize the niche scalability of the product, team competencies and organizational
flexibility as well as the entrepreneur related factors as factors affecting the internationalization.
Gerschewski et al. (2014) identifies product/service quality, entrepreneurial orientation, market
33
orientation, and learning orientation as the characteristics that affect the firm’s
internationalization.
External drivers of internationalization: home market environment. According to Oviatt
and McDougall (2005), the home country conditions affect the probability of a firm to
internalize. They identify the competition as a motivating force driving the speed of the
international expansion. Cannone and Ughetto (2012) also add the characteristics of the home
market, specifically the size of the market, availability of private equity finance, and the level of
competition. Their proposition is based on the statement that Born Globals tend to internalize
quickly due to the small saturated domestic market or to the niche nature of the market they
operate in (Knight and Cavusgil, 2004; Madsen and Servais, 1997; Oviatt and McDougall,
1995). As for the equity availability, Gabrielsson et al. (2004) state that to sustain the
international expansion of the firm the financing structure should also be global.
External drivers of internationalization: international opportunity. Moen (2002) states
that foreign market attractiveness is significantly high for Born Globals, especially in relation to
unattractiveness of home market. Driscoll (1995) emphasize the market attractiveness,
government regulation, socio-cultural distance and country risk as as factors affecting the firm’s
decision to internalize to a certain location.
Business strategy and entry mode. Porter (1980) identifies three generic strategies: cost
leadership, differentiation, and focus strategy. Cost leadership means that the company tends to
become the lowest-cost player in the market. Firm pursuing a differentiation strategy competes
by emphasizing the uniqueness of the product/service. In a focus strategy a firm tailors its value
proposition to a specific segment and adopts either the differentiation or cost leadership. As for
Born Globals, they tend to adopt the niche strategy or the Porter’s focus strategy with
differentiation, what is positively associated with international performance (Knight and
Cavusgil, 2005). However, Gerschewski et al. (2014) in their research found that the niche
strategy not always the case for Born Globals as some of them may tend to adopt cost reduction.
McDougall and Robinson (1990) also found that initial aggressive growth strategy may generate
better financial results. Gerschewski et al. (2014) also tie the entry mode choice with the firm’s
performance.
The next chapter will provide the details on the methodology and the research strategy
chosen for the analysis of the internationalization of the Born Global iTNCs on the case of Uber
Technologies Inc.
34
3.
EMPIRICAL STUDY: INTERNATIONALIZATION STRATEGY OF BORN
GLOBAL iTNCs
The following chapter will introduce the methodology of the research applied in this
master’s thesis as well as provide the results of the empirical study. The qualitative research
approach is chosen to answer the research question of the paper. As for the research strategy the
single case study with embedded units was chosen. First, the chapter, will provide more details
on this research approach. Second, the case of Uber Technologies Inc. will be analyzed in terms
of external and internal drivers of internationalization, internationalization process, the choice of
entry modes, and host market strategy.
3.1 Case Study Methodology justification
The present study is based on the qualitative research methods. Pratt (2009) states that
“qualitative research is great for understanding the world from the perspective of those studied,
and for examining and articulating processes”. Qualitative research method also allows to get an
in-depth view of the process under study as well as the reasons for the process. Therefore the
approach is suitable to understand the process internationalization from the point of view of
iTNCs.
The qualitative research approach offers different kinds of methods to collect and analyze
data. Data collection methods are generally the case method and the ethnographic one. As for the
data analysis the following methods may be applied: case study method (Yin, 1994; Eisenhardt,
1989), ethnographic methods (Pratt, 2009) or grounded theory (Eisenhardt, 1989; Pratt, 2009).
For the purpose of the following master’s thesis the case study method was chosen as a research
strategy to analyze internationalization strategy of iTNCs.
Case study method can provide an understanding of a complex phenomenon or issue as
well as strengthen what is already known about the phenomenon. Yin (1994) defines the case
study method as a valid research tool and a research strategy. He also states that “A case study is
an empirical inquiry that investigates a contemporary phenomenon within its real-life context”.
From the literature review on the topic of internationalization it was concluded that external
factors play a significant role in the company’s internationalization process. Thus, the case study
method in this study is appropriate as it takes into consideration the contextual conditions and
investigates the phenomenon of internationalization of born global iTNCs.
Moreover, the case study method is appropriate when the research questions are of “why”
and “how” types (Yin, 2009). Since the research question of this study is formulated as “How
35
born global Internet transportation network companies internalize their operations?”, a case
study method is a suitable research approach.
Eisenhardt (1989) states that case study as a research strategy “focuses on understanding
the dynamics within a single setting”. However, cases are not samples and, thus, there is an
important issue of generalization of the results or the applicability of findings on different
situations in time, place and other conditions. Results from the case study cannot be statistically
generalized due to the small number of cases. However, Yin (1994) states that the aim of case
study is to make analytical rather than statistical generalizations.
Case studies can be used for theory building or theory testing (Eisenhardt, 1989). That is
why case studies can use previously developed theory as a template applied on the real-life
situation. Yin (1994) also tells that case studies are appropriate for exploratory, descriptive, and
explanatory studies. The present study is an exploratory one and the ultimate aim is the
development of theory in the field of internationalization of Born Globals.
A case study can investigate any level – a firm, a business unit, or a network. Case study
research can also be both single and multiple case studies (Yin, 1994). While multiple case study
(or comparative) takes data from two or more instances in order to find differences and
similarities, a single case study is a method where the data from one instance is enough to
achieve the goal of research. For the present research the single case study with embedded units
was chosen (Baxter and Jack, 2008). This single case study investigates the unique phenomenon
of internationalization of Uber in different geographical contexts that allows to achieve the indepth understanding of the factors and drivers that influence the internationalization process and
strategy of the company.
Additionally, the research can be deductive, inductive, and abductive. Pratt (2009)
distinguishes two ways for conducting a research: deduction and induction. The main difference
of the two approaches is the way how theory and empirics are linked to each other. In a
deductive approach a researcher, first, studies the existing literature, develops the theoretical
framework for the study and finally conducts the case study analysis (Yin, 1994). The case study,
thus, test the hypotheses and the theory behind. As for the inductive approach, researcher first
collects the empirical data and then on its basis makes theoretical assumptions. In practice it may
be challenging to follow strictly only one approach. Saunders et al. (2009) claim that it is
possible to use both approaches and introduces the abductive one. Researcher may first look into
theory for an initial framework and then collect the data. Then he/she can reconsider the theory
or even change it. Moreover, the abductive approach allows the theory building as it gives an
opportunity for a thorough data analysis and allows to offer propositions for further research. In
36
this master’s thesis the abductive approach was followed as it allows to look at the theory and
practice at the same time and to reconsider the theory.
To summarize the present study takes the qualitative research approach. As it was already
emphasized qualitative research allows to get an in-depth view into the phenomenon or process
under study as well as the understanding of these phenomenon or process from the point of view
of the subject of the analysis, in our case from the point of view of Uber Technologies Inc. on the
international expansion. As for the research strategy, an abductive single case study with
embedded units was chosen. This method allows getting an in-depth understanding of the
phenomenon as well as the context within which this phenomenon develops. The single case
study with embedded units implies that there are sub-units of analysis within a single case. In our
case the embedded units are different geographies where Uber operates. The comparative
analysis of Uber’s strategies in different geographical contexts will provide an opportunity to
generate similarities and differences of its strategy patterns and identify factors of external
environment that affect them.
3.2 Data collection process and analysis
The single case study of the present research will be based on the secondary data thanks
to the availability of comprehensive information about Uber and its international operations from
multiple sources. The methods of data collection for a case study must allow the researcher to
receive substantial informations in order to get the insight into the phenomenon in context.
According to Yin (1994) the multiple data sources include six sources: company documents and
publications, direct observations, participant-observations, archival records, physical artefacts
and interviews (Yin, 1994).
What is important here is that the case study method requires using multiple data
collection methods (Eisenhardt 1989; Yin 1994), which is called data triangulation. “The
triangulation made possible by multiple data collection methods provides stronger substantiation
of constructs and hypotheses” (Eisenhardt, 1989). The data used in the research are gathered
from the following sources: company records from official website, records of interviews with
TMT, blog posts by members of TMT, business articles, databases and Internet.
Secondary data is a useful source of information for the case study research that helps to
better understand and answer the research question of the thesis (Ghauri and Gronhaug, 2005).
Since Uber is a company that has received a considerable attention from media, experts, and
scholars due to its high valuation and rapid expansion there is a plenty of reporting on the
company’s performance and management decisions on international expansion.
37
Moreover, the founder of the company – Travis Kalanick – is a new type of entrepreneur
who is open and ready to share his experience as well as company’s strategic decisions. That’s
why there is a plenty of records of interviews taken with him as well as his own posts in the
Uber’s blog and in social media. Therefore, for the purpose of this research the secondary data is
considered to be substantial to answer the research question about the internationalization of
iTNCs. However, the challenge of such approach remains in the possible subjectivity and biases
of the collected information. That’s why caution must be maintained in the process of data
analysis and interpretation.
Once the data is collected, the process of its analysis starts. The process of case study
analysis in this research consists of two phases. First, the detailed overview of the company, it’s
history, business model, and its internationalization strategies in the following regions: India,
China and Russia is provided. Second, the comparative analysis of these embedded sub-units
(regions) is performed in order to identify the company’s entry strategy and the business strategy
in host markets. In order to guarantee the quality of the research the existing frameworks on
internationalization and entry strategies identified in the literature were applied. The next
chapter, thus, is devoted to the discussion of the case study.
3.3 Overview of Uber Technologies Inc.
Uber’s timeline. The timeline of Uber starts from the year 2008 when its founders, serial
entrepreneurs – Travis Kalanick and Garrett Camp – came up with the idea of the on-demand car
service application while waiting too long for the taxi in the snowy night in Paris (Swisher,
2014). Back in San Francisco, the entrepreneurs founded the company called UberCab in 2009.
Next year, in 2010 UberCab officially launched in the San Francisco Bay Area as the on-demand
luxury car service targeted mostly at opinion leaders and Silicon Valley executives. Originally,
Uber offered the service called UberBlack, a high-end transportation in premium and luxury cars
for those who wanted to impressively arrive to conferences or business meetings. The main idea
behind the new service was simple and powered by technologies: the riders could hail the cab
through the mobile application that also included the automated payment once the ride was
finished (Olson and Kemp, 2015).
Already in 2010 Uber raised $1,25 mln in Angel investments by First Round capital
followed by $11 mln in Series A raised in 2011 by Benchmark capital. The funding allowed the
company to grow bigger and start its national expansion process with the launch in May, 2011 in
its second city – New York, followed by other US cities such as Boston, Chicago and
Washington (Chokkattu and Crook, 2014). The same year, in December 2011 Uber announces
38
another round of investments – $37 mln in Series B led by Menlo Ventures and including other
investors such as Goldman Sachs and Bezos Expedition. This investment enabled the company
to start its global expansion – in December, 2011 Uber officially started its operations in Paris,
France (Uber, 2011). Thus, only in two years of operations the company managed to start its
rapid expansion on the national as well as international level. At the same time Uber started to
face pressures from the side of the regulatory authorities with the notice from San Francisco
Transit Authority and the Public Utilities Commission of California because of seemingly
operating like a taxi provider without the proper licensing (Chokkattu and Crook, 2014).
Another important milestone for the company was the introduction in July 2012 of the
new business model and the new service – UberX. UberX represented the more affordable
service as it used not the premium cars as UberBlack, but lower-cost hybrid vehicles. In an
attempt to maintain the premium perception of the Uber brand the company noted “It saddens us
to not be able to give it out to everyone, but we want to make sure we can provide an Uber
experience at every price point and as we increase our UberX supply, we’ll roll it out to more
people” (Uber, 2012). In this way, Uber began to increase its customer base stretching its black
car premium service to the more affordable one. This decision was made due to the increasing
competition from an Uber’s competitor – Lyft, a peer-to-peer ride-sharing service building on the
affordability and community experience. The main peculiarity of UberX is that this service
works with independent individual drivers, basically with anyone owning a car, rather than with
licensed chauffeurs as Uber does with its premium UberBlack.
The further astounding funding rounds by major venture capitalists fueled Uber’s national
and international expansion. After the $361.2M of funding round by such investors as Google
Ventures the company were able to expand its presence to Africa with the launch in
Johannesburg and to India starting from Bangalore in the year 2013 (Chokkattu and Crook,
2014).
In 2014 Uber not only expanded its operations to China, considered now as the
strategically important market, fueled by the massive investment of $1.2B, but also introduced
new services such as UberRush, a courier service, that marked the gradual transformation of
Uber from transportation to logistics provider; UberPool, a ridesharing service that allowed
riders to hail drivers commuting in the same direction; and UberEats, a food delivery service
(Chokkattu and Crook, 2014).
Up to 2016 Uber managed to expand to 404 cities in 68 countries on each continent
except for Antarctica (Uber, 2016). The rapid global expansion of the company seems to be
approved by investors as Uber achieves to raise significant funds from acknowledged venture
39
capitalists totaling to $10,61 bln in 15 rounds (CrunchBase, 2016). Appendix A provides a more
detailed timeline of Uber Technologies Inc.
Business model. According to the company – Uber is a technology company and does not
refer itself to taxi or limousine operator (Uber, 2016). The company does not own a fleet of cars,
employ drivers or dispatchers, does not have a maintenance department. The company just use
its technology to connect individuals in the need of a ride with the available driver through
mobile application that delivers a customer service experience and meets the needs of tech-savvy
commuters. Uber’s business model is based on the two-sided platform that connects two parties
– car owners and ride seekers. The communication and payment between them is facilitated
through the mobile application that is offered by Uber. The company, thus, represents the
intermediary. The value is derived from the requests screening that Uber’s technology allows for
the drivers; and the smooth pricing and payment system, that allows riders to choose the level of
service and allows not to worry about payment as the fare is automatically billed from the rider’s
credit card once the service is arranged. The company takes a 20% commission on each ride for
its service of matching riders with drivers, while 80% are kept by the driver (Uber, 2016).
Figure 13. Uber application as a two-sided platform (Uber, 2016)
One of the primary features, and one of the most debatable as well, is the relationship of
the company with drivers. As it was already mentioned Uber does not employ chauffeurs, rather
it works with individual contractors. With its UberX service the company allows anyone with a
car of a required quality to apply for a driver position. Uber then tests the driver’s local
knowledge and conducts the background screening of a candidate. Successful candidates are then
connected to the Uber’s application and trained on how to give service to riders. As contract
workers, the drivers do not receive health benefits, insurance, retirement, disability, vacation
leave or any other compensation. The relationships are limited to the 20% commission fee that
Uber withhold from the driver's gross fare. Thus, the company just provides the drivers the
40
technology to offer the transportation services and make money. In other words, Uber works as a
referral or dispatch system for drivers with their own cars (Uber, 2016).
The service works for riders in the following way. The individual through the mobile
application sees the nearby available vehicles and the ETA (Estimated Time of Arrival – one of
the main Uber’s KPI). Once the client orders the ride the request is sent to the nearby drivers.
Then client can see the real-time movement of his/her driver on the map. Here lies one of the
first value of Uber for riders – convenience of ordering a ride in a couple of “taps”. Next, at the
end of the ride, the client just leaves the car without paying cash as the payment for the ride is
settled automatically with a card that is connected to the client’s Uber account. The price is based
on the time and distance and is automatically determined by the pricing algorithm. Here is the
second value – frictionless payment process. Finally, the two-sided rating and review system
increased the safety and the quality of the service – both drivers and riders with low rating were
disconnected from the service (Uber, 2016).
The figure below shows the graphic representation of Uber’s business model.
Figure 14. Uber’s Business Model Canvas (Uber, 2016).
There are two major services within Uber: UberBlack – a premium chauffeur service and
UberX (or UberPop in European countries). The first relies on the network of established,
licensed limousine companies and only chauffeurs with commercial license and commercial auto
insurance were allowed to work for UberBlack. The vehicles required for the service were also
41
limited to premium and luxury class cars. The requirement for drivers were also less stringent
than for UberBlack: driver had to be at least 21 years old, having a personal license and personal
auto insurance that covered usage if vehicle for commercial purposes. In contrast UberX
represented the cheaper version of Uber that allowed non-licensed drivers to use the dispatch
technology for performing ride services with their own vehicles. UberX is the major service
offered by the company that is also presented in each of the cities where Uber operates. Later
Uber introduced in different markets other services, such as UberSUV, UberXL, and others. The
transportation infrastructure of drivers that Uber was able to build, allowed the company to
expand to new segments, what gradually transforms it into logistics company. In 2014 Uber
expanded its service to courier delivery by introducing UberRush – a service that allowed
delivery of small to medium packages by Uber drivers (Uber, 2014). In 2015 company launched
a new service – UberEats that connected those who wanted to order food with restaurants and
performed the delivery using the same fleet of drivers the company uses for its other services
(Uber, 2015).
Regulatory challenges. However, the Uber’s growth is also accompanied by significant
opposition and challenges from the side of incumbent taxi operators and local governments
protecting taxi drivers and riders. Almost in every country where it started to operate it faced
such accusations as enrolling drivers without licenses, damping, unsafe driving and violations of
foreign exchange rules (Bagga, 2014). Traditional taxi companies protested against Uber because
it threatened the profitability of their business and even survival.
Another significant issue considers safety of the drivers as well as riders. Lawmakers
stated that ride hailing apps were compromising the safety of the passengers due to the lack of
regulation of insurance, driver background checks, and inspections. In California and Oregon
Uber was sued by confusing its clients about the business and safety practices as well as not
complying with the local licensing rules. One of the most controversial episodes happened in
India, when the Uber driver allegedly raped the passenger in the car, what lead to the ban of Uber
in Delhi (Chokkattu and Crook, 2014).
Non-complying to the local licensing rules is also a reason for the ban of Uber in a
number of countries. UberPop (another name for UberX) is banned in Germany as it does not
provide the sufficient safety measures for both drivers and riders, thus violating national as well
as European Union laws. In Netherlands and Spain Uber is banned because it’s drivers doesn’t
have a driving license. The company is also banned in Thailand as an unlawful competitor to taxi
companies; in Toronto accused of non-complying to Canadian laws and compromising the public
safety; in South Korea by offering illegal taxi services (Chokkattu and Crook, 2014). Appendix B
42
shows in more details the locations where Uber is banned or partially banned (e.g. UberX is
banned).
Another significant regulatory challenge for Uber came from the side of the drivers that
work with the company. In autumn 2015 a collective lawsuit was enacted by Uber drivers who
required an official employment and the associated benefits such as medical insurance, social
transfers, repayment of administrative expenses. In April 2016 the lawsuit was settled by the
company’s agreement to repay up to $100 million to its California and Massachusetts drivers.
The company, thus, defended the right to further consider its drivers as independent contractors
(Newcomer, 2016). However, this precedent may trigger the same reaction from Uber drivers
across the world what would entail the considerable settlement expenses for the company if it
does not reconsider its relationship with the drivers.
3.4 Uber’s international expansion: drivers of internationalization
3.4.1 Analysis of firm-specific factors
In the Uber case the firm-specific advantages are of intangible nature as the company
does not own any physical income-generating assets like cars, service stations etc. As Uber is a
technology company the main ownership advantages lie in the sphere of technologies,
innovations and the unique business model. Other advantages relate to the company’s strong
brand and image as well as the experience and competencies of the founders and management
team.
Uber’s innovative business model that connects drivers with potential clients through
online platform was one of the company’s major competitive advantages, especially in the
beginning of its operations when no such product was offered in the US or foreign taxi market.
Since the company does not employ drivers or own the fleet of cars it has the asset-light model.
The main expenses come from platform’s technological maintenance and innovation, marketing
and sales expenses to hire new drivers and attract users, salaries to employees, as well as legal
costs and lobbying due to Uber’s confrontations with regulators. Thus, the model enables Uber to
reinvest the profits and investments into the growth and international expansion. Another
important characteristic of Uber’s business model is its scalability. As long as the taxi services
are the important part of the city’s transportation network, there is a demand for Uber’s service.
Uber is also able to innovate on its business model, modifying it to meet the requirements of
local markets or even expanding its service to other businesses, such as food delivery (UberEats)
or courier and cargo transportation services (UberRush, UberCargo).
43
Another characteristic of Uber service that also distinguishes it from competing iTNCs
are technologies, that allow to generate insights and value from the data as well as set the fair
price for the service. Ryan Graves, Vice President at Uber, states that technologies are the basis
for the business that allow the company to generate significant value for their drivers. “We have
a lot of data about how this or that city "moves", we use this knowledge to ensure that our driver
came to the passenger at the right time. Using a vast array of data and algorithms, we understand
not only how many cars there are on the roads at the moment, but also direct them to the location
where the demand is growing. That's unlike many of our competitors.” ( Sukharevskaya and
Igumenov, 2016). The company also hired data-science team of nuclear physics, computational
biology, and astrophysics PhDs to develop the pricing mechanism that matched supply with
demand. The tool were called «God View» and it offered Uber managers a real-time view of the
locations and routes of all it drivers as well as the location of potential riders. Although the
algorithm was highly debated for its fairness, the management claims that it is an efficient way to
manage and regulate the supply and demand that worked for the benefits of both drivers, who
could earn more and increase their asset utilization, and riders, who were ready to pay more for
the instant ride. Therefore, in order to beat the competition and the «copycats» Uber employed
sophisticated data analysis tools to extract the highest possible efficiency from its operations.
Another ownership advantage of Uber is a strong and well-known brand. The company
invests considerably into the brand building that is reflected in the company’s launch strategy
where marketing and PR are at core. Thanks to the company’s marketing strategy that aims at
gaining the attention of opinion leaders in the cities where it operates, Uber is able to attract the
high media “buzz”, not only in social networks (that are its primary marketing channel), but also
in news media. The interest for the company and its brand is also fueled by the news of its high
growth and massive funding rounds. Uber has many different regalia such as a number one
“unicorn” (a private company that exceeded $1B valuation) (Fortune, 2016), the most valuable
startup (The Wall Street Journal, 2015), and others. The company’s brand is so strong that it even
allows to forecast the demand for the company’s service: when the launch team prepares the start
of the service it not only looks at the demographics of the market, but also on how many times
application was opened in the city before the official launch (Sukharevskaya and Igumenov,
2016).
Another ownership advantage of Uber is the entrepreneurial experience of its founders –
Travis Kalanick and Garrett Camp. Kalanick, “Experienced, successful Serial Entrepreneur” as
he describes himself in his LinkedIn profile, before founding Uber had an experience in two
other entrepreneurial technological projects, one of which was successfully sold for $19 million.
Camp, before Uber, was also involved in technological projects, such as StumbleUpon – a search
44
engine that had over 25 million registered users. Another key people in Uber’s team, like Ryan
Graves, Vice-president and the Board Director, or Thuan Pham, Chief Technology Officer, had a
vast experience in technology and in own entrepreneurial projects.
Taking it all together – asset-light and technology-intensive business model, strong brand
and experienced management team – Uber is able to generate significant return on its operations
not only in its home country – USA, but also on an international scale as the transfer of these
ownership advantages that are of intangible nature is significantly easy given the low entry
barriers.
3.4.2 Analysis of external factors of domestic environment
In the study we assume that incentives to internalize arise from the external environment
of the focal firm’s domestic market that motivates the firm to exploit its ownership advantages in
overseas markets where the benefits are higher compared to staying in the domestic one.
Market size. According to researchers (Madsen and Servais, 1997; Knight and Cavusgil,
1996) the growing number of Born Globals is attributed to the development of niche markets.
Due to the small potential size of such markets new ventures tend to internalize quickly in order
to increase revenues and customer base exploiting opportunities outside of the domestic markets.
In the case of Uber that operated in the US taxi and limousine market back in 2010 prior to its
internationalization to Paris the aspect of limited market potential was one of the most significant
one. Uber’s black car hailing application – UberBlack, was a niche service aiming at tech-savvy
executives wanting a premium ride. Other constraints come from natural reasons. First, to use the
Uber service one must possess a smartphone with Internet access. According to the estimates of
Edison Research and Triton Digital (2016) only 14% of US population used smartphones
(comparing to 76% for the year 2016). The slowing growth trend in new customer acquisition is
also the reason why Uber must have focused on foreign markets where the opportunities of fast
growth were not exploited yet. The figure below shows the slowing trend of Uber’s new
customers acquisition in the US in the period from July 2013 and May 2014.
45
Figure 15. Trend in growth rate of Uber’s distinct new customers. (FutureAdvisor, 2014).
Competition. Another factor for the internationalization of Uber was the increasing
copying of its business model and a competition as a consequence. Uber’s CEO Travis Kalanick
wrote in the company’s blog: “...the advent of a sophisticated “cloning” and copycat industry
means you need to move fast to stake your claim on the global stage” (Uber, 2011). In USA the
major competitor to Uber – Lyft, operated as a peer-to-peer on-demand ridesharing service. The
same technology – GPS-based two-sided platform that connected those in the need of a ride with
available drivers. Lyft positions itself as “anti-Uber” and was gaining a significant pace at the
time Uber decided to internalize its operations. As of 2011 the company attracted $7.5B in
venture capital and started to aggressively expand in the US (CrunchBase, 2016). As of 2016 the
company operated in 200 US cities, a number that is slightly higher than that of Uber. That is
why for a technology company like Uber, which idea and the business model can be easily
copied, internationalization is a crucial strategic decision which aims at exploiting the firstmover advantage in new markets that do not have the same service yet and, thus, outride
potential competitors.
Government pressures. It was already mentioned, that Uber faced significant pressures
from traditional taxi companies and the US government once it started to grow and expand its
operations to other American cities.
Governmental regulators started to question the long-term impact of Uber on the
incumbent companies and society as well (Marchi and Parekh, 2015). Uber tried to avoid the
regulatory pressures by emphasizing that it is the technology company, not the taxi company, and
that it just provides the application-based service for the drivers and prospective riders. However,
as bans in several American cities and negative reputation began to limit the growth of the
business, the internationalization to new markets, where incumbents and the government were
not familiar with the Uber’s business model and its potential threats as well as did not have the
regulations for such companies, was a strategic decision for Uber in order to increase its growth.
The company, thus, sought to exploit the unfamiliarity and gaps in foreign taxi regulations.
46
3.4.3 Summary
Both internal and external drivers contribute to the firm’s decision and ability to
internalize. Internal drivers for Uber were its innovative business model, unique technology,
strong brand and the experience of the founders and TMT. Uber’s low inventory business model
allows the company to invest its revenues into growth both in domestic and overseas markets.
The business model is also scalable, meaning that it is capable to perform with increased or
expanding operations and does not require the significant increase in costs, what allows the
company to apply it to new markets. Finally, the ability of Uber to innovate the business model
by adopting new processes (cashless payments in UberAuto), working with other types of
vehicles (motorbikes in UberMoto) or even providing another type of service (food delivery in
UberEats, courier service in UberRush) allows the company to be flexible and adapt the business
in different contexts tapping into the need of new customers. The unique technology that is the
basis of Uber’s business model differentiate it from competitors and allows drivers to utilize
more efficiently their working time by forecasting locations with higher demand. The
transferability of technology allows Uber to tap into new markets but keeping the same
advantages of its technology. Other intangible ownership advantage of Uber is its strong brand
that is recognizable across the world and facilitates company’s entrance to new locations. Finally,
the international and entrepreneurial experience of TMT as well as the global vision of founders
contribute to the company’s firm-specific advantages. Taken together, the internal firm-specific
factors that Uber has allow the company to internalize its operations to foreign locations.
As for external drivers, the niche market orientation as well as the limitations of the
market to grow Uber’s business in the US represent one of the contributing factors for the
company’s decision to internalize. The increased copying of Uber’s business model and the
increasing competition with such companies pushed Uber to internalize in order to exploit the
first mover advantage in foreign markets where its competitors were either small at the moment
or non-existent. Finally, the pressures from the industry regulators imposed significant obstacles
for Uber and limited its US expansion by banning operations, suing or fining the company.
Internal Drivers
External Drivers
47
1.
Innovative business model
Niche domestic market:
- Asset-light business model allowed
- Initial target on tech-savvy
for investment into growth;
executives and entrepreneurs wanting a
- Scalability of the service;
premium ride;
- Ability to innovate the business
- 14% of US population owned
model to tap into new geographic markets
smartphones in 2011, necessary to use
and client segments.
iTNC service.
- Slowing growth rate of distinct
new customers.
2.
Unique technology
- Use of data analysis and unique
pricing mechanism to generate more
revenue for drivers and differentiate from
“copycats”;
- Transferability of technology across
borders.
Competition:
- Competition and pressures from
incumbent traditional taxi companies;
- Easy to copy business model and
the growing number of “copycats” in
the US (Lyft) and globally.
3.
Strong brand
- Considerable investments in
marketing and PR to spread awareness
about the brand;
- Allows to “prepare” the demand for
the service before official launch.
Regulation:
- Pressure from government
regulators
- Bans in several US cities;
- Development of iTNC regulatory
framework.
4.
Founders and TMT
- Entrepreneurial experience of
founders;
- International experience of TMT.
Table 4. Drivers of internationalization
3.5 Uber’s international expansion: location-specific advantages and the business strategy
Uber’s internationalization roadmap shows that company in the first year of its
internationalization chose geographically and culturally close countries. In December 2011 the
company launched the service in its first foreign location – Paris, France, prior to international
Internet conference LeWeb. Next the company expanded to Toronto, Canada in October, 2012
and to London, UK in June, 2012. In November of the same year Uber entered its first city in
Asia Pacific region, geographically distant but culturally close, Sydney, Australia. But beginning
with 2013 the company continued its expansion in Asian region by launch in Singapore, Taipei
and Seoul. At the same time Uber grew its presence in Europe by launching in Milan and Lyon;
in East Asia by launching in Dubai; in Africa by entering Johannesburg and Cape Town. In 2014
the company announced a nationwide roll-outs in China and India as well as a modest entry to
Russia (Uber, 2011; Uber, 2016; Chokkattu and Crook, 2014).
48
Internalizing to foreign countries Uber first launches its operations in major cities, and
then expands its presence to smaller ones. Uber pursues the same launch strategy for the each
city it enters. The small team consisting of three local managers makes a market research,
investigates the peculiarities of government regulations, assesses the demand and hires drivers.
The best practice launch strategy or the “playbook” consists of two key steps: a) recruiting and
training of drivers; b) raising awareness through social media, the opinion leaders and launch
parties (Lagorio-Chafkin, 2013).
Kalanick explains the strategy in the following way: “The good thing though is when you
have profitable cities around the world, those profitable cities can then help us to invest more
deeply in this country so you take ... the top 30 cities that we're in around the world, we're
already generating a billion dollars in profits from those 30 cities a year today, and those cities
are growing by 2x, 3x, 4x per year. And so that is sort of the fuel that allows us to go to places
like China and invest deeply to make the system work, and to work in a big way.” (Cutmore and
Kharpal, 2016). In other words, Uber aspires to become the first global iTNC and to cover as
many locations as it can fuel unprofitable locations with the profitable ones and with the massive
investments that it receives.
According to Travis Kalanick (Uber, 2014) the mission of Uber is to make transportation
“as reliable as running water, everywhere for everyone...”. The company aspires to be present in
each city, not only in the one where the business is profitable. In 2014 Uber opened a new city
almost each day (Sukharevskaya, 2015) and the Uber’s Head of Global Expansion Austin Geidt
states that in the beginning of internationalization process the team considered whether the
demand is sufficient to start operations in the location, later this factor became not so important.
“At this point we go so quickly, I wouldn’t say that it particularly matters,” states Geidt.
When Uber enters a new country or even city it looks closely on the consumers in the
market in order to offer them service the most suitable for their needs. Uber is able to use its
ownership advantage – the technology and the business model, and customize the final product
suitable for the demands of people in a new location. Nevertheless, the company sees the whole
world as its market, it customizes its product and for doing so, it establishes the local subsidiaries
in the location that do the market research, develop consumer profiles, learn about the regulation
environment and other. As Head of Operations at Uber Ryan Graves said: “We have to
understand the nuances – how do people want the service to operate? Of course, the business
model is all the same, but there’s pricing that’s different, there’s regulations that are different,
there’s culture that’s different, and there’s competition that’s different. So we have to be able to
adapt our solution to what the citizens want” (Horwitz, 2014). The service, that is now presented
in 360 cities out of 406 cities where Uber operates, is UberX – an affordable mode of
49
transportation. UberXL – a version of UberX with bigger vehicles for groups of passenger is
presented in 170 cities across the globe, while UberBlack – the premium Uber is presented in
113 location, mainly in major cities where the demand for premium services is higher. As for
localization Uber introduces cheaper version of UberX in some of the locations, such as UberPop
in Europe, UberStart in Russia, UberGo in India, and People’s Uber in China, though the latter
service falls into the car-pooling category.
Next, in order to understand the details of Uber’s internationalization process and how it
enters the new markets the analysis of Uber’s expansion to China, India, and Russia is
conducted.
3.5.1 Internationalization to China
China became the 4th Asian country where Uber started its operations. Uber entered the
Chinese market in the summer of 2013, however did not launch the formal operations for almost
half a year. Instead the company ran test pilots preparing the market for a limited launch in the
spring of 2014 starting from Shanghai, Guangzhou, Beijing, and Shenzen. As the CEO of Uber
noted in the letter to investors in June 2015: “China represents one of the largest untapped
opportunities for Uber, potentially larger than the US”. Kalanick also noted that China was
“number one priority” for the company (Wong and Shakil, 2015). The central part of the Uber’s
2016 growth strategy was to expand into more than 100 cities in China. As of 2016 the estimated
share of Uber in China accounted for 30%, up from 1-2% in the beginning of 2015. However,
Uber also loses $1B in China due to massive expansion, tough competition, and regulatory
challenges (Clover and Hook, 2016).
Market opportunities. By 2015 China became the major competitive market for Uber.
The market was attractive and prospective for Uber for a number of reasons. There were 2.62
million licensed taxi drivers operating in major Chinese cities. In comparison to the US taxi
industry, that accounted for 240 thousand drivers, the figure was 10 times higher (Millward,
2014; Bureau of Labor Statistics, 2014). For example, in 2014 New York accounted for 13’437
licensed taxis (NYC Taxi and Limousine commission, 2014) while Shanghai, Uber’s first
Chinese city, had more than 52 thousand licensed taxis and 93 thousand licensed taxi drivers
(Lin, 2015). The number for unregulated drivers in each Chinese city, town and village was even
more. Thus, the supply side for the Uber company was very promising.
As for the demand side, China had the largest smartphone market in the world with the
estimated number of 3G and 4G unique smartphone users to be over 690 million – more than the
50
population of US, Indonesia, and Brazil combined (Perez, 2015). As for the number of taxi
application users it reached 18 million by 2013 and rose to around 45 million by the end of 2015
according to the Chinese marketing research company iResearch (Reuters, 2015).
Regulation environment advantages. As Uber seeks to exploit the opportunity of gaps in
the government regulation in the sphere of Internet transportation services, the Chinese market
also seemed to give that location advantage as taxi-hailing services was in their mature stage of
development.
The grey zone in transportation regulation provided the company an advantage to enter
China fastly and to develop the business before the government understood the need for the
regulation. Initially, Uber entered China with its UberBlack product that allowed to avoid the
issues of legality by partnering with car-and-driver rental companies that allow users to book
licensed chauffeurs. But when it introduced its People’s Uber service the company stepped into
the grey zone of legality. The incumbent taxi operators accused Uber, as in many other countries,
of unfair competition by enabling its users to evade local taxation and regulations. In April 2015,
after a year of Uber’s presence in China, the Chinese authorities, Office of Industry and
Commerce and the Guangzhou Transportation Commission, announced that Uber was under
investigation as it organized private drivers to provide unlicensed business. The Guangzhou
government later issued a statement that the company was not properly registered, did not have
the official approval for operations in the transportation industry, and was involved in using
private cars for commercial purposes (Wei et al., 2015). In response to this issue municipal
governments of several Chinese cities began to develop the clearer regulations regarding the
status of iTNCs. To summarize, Uber sought to exploit the gap in the Chinese transportation
regulation that gave it the time advantage to penetrate the market while the government struggled
to develop the regulatory framework that could balance the demands of different interests,
consumer safety, and the need for new modes of transportation in the country.
Innovative potential. According to the words of Uber’s CEO, Travis Kalanick, the
Chinese market is also of significant interest to the company due to its innovation potential and
the entrepreneurial culture. He states: “[China] has incredible educational institutions, they have
great engineering here and so I think the surprise that maybe a lot of folks will be seeing in the
next 5-10 years Is the amount of innovation that's gonna be happening in Beijing…” He predicts
that in coming 10 years there will be 3 Bays (similar to Bay Area in Los Angeles): the Bay Area,
Beijing and Bangalore. Beijing seems for Kalanick the most attractive place because
“entrepreneurs want to be where all the action is, and there's a lot of exciting work being done.”
(Cutmore, 2016).
Therefore, the country’s innovative and technological potential is also an
important location advantage that the company will want to exploit in the future.
51
Business strategy. As in any other country, Uber chose the FDI entry mode to enter the
Chinese market. It established the Chinese subsidiary that operated under the parent company,
Uber Technologies Inc. However, with the significant rise of competition from the side of Didi
Kuaidi and the government regulation, in October 2015 Uber decided to increase commitment in
the Chinese market. It was done in the response to Didi Kuaidi receiving the first “certificate” for
an Internet transportation company from Shanghai local government. Uber announced the
establishment of a new company, Shanghai Wubo Information Technology Co., Ltd. with the
registered capital of $150 thousand (later increased to almost $320 million), in the Shanghai Free
Trade Zone. Along with the new independent company, Uber also established China-based data
and operating center in Wuhan (investment of $9.5 mln), the first major operations center outside
of North America. Uber’s Chinese subsidiary, Uber (Hong Kong), Limited, in its turn became the
shareholder of the new company. Subsequently, Uber established two more independent
companies – Wubu Information Technology Co., Ltd., and Wubu Software Technology Co., Ltd.,
both with Liu Zhen as a legal representative. The strengthening of Uber’s corporate presence in
China is intended to battle for the increasing market share and indicate the Chinese market
among the company’s first priorities. As Kalanick noted: “...if you're gonna compete in China
you have to be willing to invest”.
Additionally to FDIs, Uber strengthened its Chinese presence by strategic partnerships
with local companies. The company entered in December 2014 into the strategic partnership with
Baidu, a Beijing-based technology company that provided services similar to Google, that also
became the major Chinese investor for Uber, by committing $600 mln of strategic investment in
2014 and in 2015 – $1.2 bln in private equity (CrunchBase, 2016). The invested money was used
for the development of the Uber’s Chinese presence and also supported the establishment of the
independent Wubu company and the operating center in Wuhan. The partnership also brought the
politically connected and economically powerful Baidu into the Uber’s close circle of investors
that promised to support the company in the face of regulatory pressures. Another important
benefit of the partnership was the improved localization of the service – with the use of Baidu
Maps, localized significantly better than those of Google. Another partnership for Uber in China
was with the Guangzhou Automobile Group in December 2015. In return for the undisclosed
amount of investment from the automobile manufacturer, Uber promoted the Guangzhou Autos
to its drivers (Hook, 2015). Later in January 2016, Kalanick also announced that the tourism,
aviation, and shipping conglomerate HNA Group also launched a strategic partnership with Uber
and invested an undisclosed amount (Carsten, 2016).
As for the business strategy Uber pursues the combination of cost leadership and
differentiation focus strategies with more focus on cost leadership. The services that company
52
launched in China are premium class UberBlack, affordable UberX, and cheap non-profit
People’s Uber, that target different customer segments, from wealthy business travellers to
regular local commuters. The company also strives to drive down the prices for the service by
innovating on its business model and introducing new cheaper products that would particularly
satisfy the needs of the broader Chinese citizens. In order to attract more users in China who got
used to rather low local taxi fares Uber started testing a new service – People’s Uber, a carpooling service that allowed riders to pick up passengers for a set route at a fixed fee using the
existing Uber’s technology for that. It was the first time for the company to launch a new product
outside the US. People's Uber initially was a no-for-profit pilot project to promote safer and
greener transportation for both car owners and riders. The fare was kept to the lowest level and
calculated based on the cost of maintaining and operating a car. The popularity of the service
among Chinese customers was so significant led to the exponential growth of both Uber’s
consumer base and the team of drivers. After the successful pilot Uber introduced ride-sharing
services in other countries such as US, UK, and Canada (Uber, 2015). This is an example of how
a company can exploit its existing ownership advantage – in case of Uber a matching technology
and the pricing algorithm – in the overseas market and create the new advantages and
competences, in that case the new service with new value proposition.
3.5.2 Internationalization to India
Uber entered India in September 2013 with the launch in Bangalore (Uber, 2013). It than
expanded to Delhi, Hyderabad, Chennai, Mumbai, Pune, Ahmedabad, Chandigarh, Jaipur, and
Kolkata. By August 2015 Uber operated in 22 Indian cities, though it was banned or partially
banned in a number of them (see Appendix B for more information). The company’s entrance in
Indian market was being partially fuelled by $258 million investment led by Google Ventures.
Market opportunities. Back in 2014 when Uber decided to enter India, the taxi market in
the country was one of the most attractive in terms of taxi infrastructure. There were three main
types of players: unregulated taxis (also called Kalee Peeli taxis); auto rickshaws (riding a small
car called tuk-tuk); and organized taxi services encompassing car-rental services, tourist taxis,
and radio taxi services. By estimates there were around 550 thousand registered commercial
taxis operating in 10 major Indian cities (Harsimran and Shrivastava, 2014), less than in China
(2.62 mln), but still significantly higher than in the USA (240’000). As for the auto rickshaws,
there were estimated 5 million drivers of tuk tuk providing service to approximately 50 million
people every day (Dutta, 2015). The two biggest radio taxi operators – Meru Cabs and EasyCabs
– worked as a radio dispatch service and had a fleet of more than 12 thousand vehicles in 7 major
53
cities. In terms of smartphone penetration, in India there were more than 123 million smartphone
users in 2014 and that number was estimated to grow up to 382 million users by 2020
(EMarketer, 2016).
Regulation environment advantages. Pursuing the same launch strategy Uber entered
India with the test pilots of its premium service – UberBlack that worked with licensed limousine
and premium chauffeurs (Uber, 2013). However, once Uber introduces its cheaper product –
UberX (and also UberGo – service with low cost, chauffeur-driven hatchbacks for Indian market
specifically) the company enters the gray zone of operations. The Indian taxi market, though
already had the app-based on-demand taxi services, such as Ola and TaxiForSure (TFS), was
regulated by the outdated rules and policies that allowed iTNCs to operate in the grey zone, at
least until 2015, when the Indian government seriously considered the change of policy in
respect to these companies, mirroring the experience of China, that introduced the licensing
procedure for iTNCs mentioned above.
For instance, in Delhi the radio taxi services must have followed the rules under the
Radio Taxi Scheme, 2006 that specified that the provider must be either a company (Parliament
of India, 1956) or a society (Ministry of Corporate Affairs, 1860). The scheme also stated that
the provider must have an adequate parking space for its fleet and office space for the dispatcher
room with radio communication. The fleet size must be of minimum 500 motor cabs and vehicle
equipped with GPS/GPRS devices. The rule also said that the company must be responsible for
the quality of its drivers, conduct background checks and vet for previous criminal records. Since
iTNCs usually does not position themselves as taxi or radio taxi companies, as Uber does
emphasizing that it’s the technology company, not the taxi one, the rules does not applied to
them.
That is why, at least, for the first year of operations, Uber could benefit by operating in
the grey zone of Indian legislation, from time to time disputing with some local transportation
authorities on the issue of its legality.
Business strategy. In the case of Indian market Uber, as well as with the Chinese one, was
able to exploit its ownership advantage in the foreign location, that was beneficial in terms of
markets size and the gap in taxi industry regulation, and also gain the internationalization
advantage of being closer to the market with specific requirements.
For the Indian market Uber as well chose the FDI entry mode, setting a wholly-owned
subsidiary operated under the parent company, Uber Technologies Inc. However, as Uber faced
the increasing competition from the side of other iTNCs, such as Ola and TFS, and the pressures
from the government, that introduced the new regulations for the app-based taxi hailing
applications, the company needed to strengthen its position in the Indian market. That is why
54
Uber entered into the strategic partnership with Times Internet Ltd. in March 2915. The deal with
TIL, the digital business of the Times of India media group – the largest media conglomerate in
the country, was worth nearly $23.63 million and represented the strategic investment and
cooperation partnership, including as well the advertising services for Uber and an undisclosed
equity investment. "The deal is centered around a commercial marketing arrangement
accompanied by a small investment," stated Uber in the company’s blog (Uber, 2015). All that
was in line with the TIL’s strategy to collaborate with technology companies in India. The
agreement between Uber and TIL implied that TIL will work on promotions to increase
awareness about the American iTNC and also help it to localise the service for India. As Uber’s
CEO, Kalanick, said: "India is one of our fastest growing markets ... where we are investing
heavily in continued growth.”
In India Uber pursues more of a cost leadership focus strategy. Two major services
operate in the country – affordable UberX and cheaper version UberGo. The company also
introduced UberMoto in Bangalore and New-Delhi – a transportation service by bikes. The
premium UberBlack is also presented in the country, but only in Bangalore city. Thus, the
company aims at cutting the price of the service in India providing a cheaper mode of
transportation in order to meet the local demand and beat competition. As with the case of China,
India provided the playground for the test of new services. In 2015 it launched the auto rickshaw
service and for the first time allowed the cash payments to meet the need of the local customers.
UberAuto worked the same as other Uber products, but with local auto rickshaws riding a small
car – tuk tuk, and allowing clients to pay in cash as an option. Though the service was later
suspended, Uber got the possibility to learn more about the local preferences, about the product
customization to meet the local requirements, and about the new (for the company) payment
method. The company stated in the blog: “At Uber, we continuously experiment with products to
ensure that we can provide the most efficient, affordable, and reliable ride to everyone
everywhere. We are temporarily removing this product to solve specific problems that need to be
resolved to help it scale” (Uber Newsroom, 2015).
3.5.3 Internationalization to Russia
As part of the European expansion after the enormous funding round led Google Ventures
and accounting to $1.2 bln, Uber started its Russian expansion by first launching, as usual, its
premium UberBlack service in November, 2013 (Uber, 2013). As of April 2016 Uber operated in
9 Russian cities: Moscow, Saint Petersburg, Ekaterinburg, Kazan, Krasnodar, Novosibirsk,
Rostov-na-Dony, Sochi, and Nizhny Novgorod. The company also plans to expand to all Russian
55
cities with the population over 1 million people. “In the nearest future we will open all cities
with the population of over 1 million people. At the moment there are 17 cities with populations
above one million people in Russia... We focus that within half a year-year appear in 12 regions,"
– said Irina Rader, a director of regional expansion at Uber (Tass, 2015).
Market opportunities. Russian taxi market was always complex and closed due to the
lack of regulation. In 2014, the year when Uber started its official operations in Russia, the taxi
market was dominated by three categories of players: taxi companies with their own fleet of
vehicles (approximately 1000 for the whole country), taxi aggregators, that operate only online
(e.g. Yandex.Taxi) or as a dispatcher service; and unlicensed taxi drivers (Garant, 2015). Experts
rather reluctantly give the estimates of volume of the taxi market and the number of players.
Recent research based on the expert estimates showed that there are approximately 180 thousand
licensed taxi drivers in the whole Russia – a number lower compared to that for the US taxi
industry (240 thousand drivers). Moscow taxi market, on the other hand, is characterized by the
high competition with over 800 independent taxi companies having their own dispatcher systems
and over 55 thousand licensed taxi drivers (compared to New York: 13,4 thousand taxi
companies with 50 thousand licensed drivers). Moreover, by the estimate of the founder of one
of the taxi companies “Taxilet” there are over 100 thousand unlicensed taxi drivers in Moscow
only (Sokolova, 2016). All this infrastructure data in total made (at least) Moscow one of the
most attractive markets for Uber in Europe.
Paul Faguet, the International Launcher at Uber who set the operations in Moscow, stated
that one of the reasons to launch Uber in Moscow were the favorable demographic
characteristics, high smartphone penetration as well as the fact that many muscovites regularly
opened the application to find Uber Moscow prior to its launch (Burchakov, 2016). According to
the marketing research agency eMarketer, Russia is the 4th largest smartphone market in the
world with approximately 58,2 million smartphone owners, following China, USA, and India. As
for Moscow, the smartphone penetration reached 41% in 2013. By the expert estimates the share
of orders with the use of mobile applications only in Moscow accounted for 65-70% by 2016, in
Saint Petersburg it was – 30%, whereas in regional cities – from 3 to 8 per cent (Kogachigov,
2015).
Regulation environment advantages. The Russian taxi industry is characterized by the
lack of regulation as at the moment only one federal law is providing the basis for the taxi
transportation service – №69-FZ. It is only applied to traditional taxi companies and individual
entrepreneurs who are providing transportation services by means of a passenger car. The law
states that the company or an individual have to get the licence from the authorized local
government body and comply to the following requirements: vehicles should have the
56
identification sign, be of the color determined by the local regulations, and have the checkered
taxi mark; company or an individual must conduct the technical maintenance and repairment of
the vehicle, make the medical checks of drivers leaving for a run. However, there is no special
regulation for the internet-aggregators and dispatcher companies and as of July 2015 no special
frameworks are expected to be developed (basing on law projects in work). That is why iTNCs
have the opportunity to work in the grey zone in Russia and exploit the benefits of not licensing
their drivers, conducting fleet maintenance or paying taxes, by emphasizing the status of Internet
or technology companies.
Even though the traditional taxi companies protested against iTNCs in Russia and
initiated the checks of iTNCs operations by Federal Antimonopoly Service and Prosecutor
General’s Office, the government authorities did not find any violations of federal law. The only
precedent of government pressures against Uber the company had with the Department for
Transport and Road Infrastructure Development of Moscow in the year 2015. The Department
ordered Uber to work only with licensed drivers in the Moscow city, otherwise the company will
be banned in the city. Due to the high significance of Moscow for Uber Russia, the company
signed the agreement with the Department in February 2016 (Frolov, 2016).
However, Uber still has the opportunity to reap benefits of underdeveloped taxi
regulation framework in Russia and continue to operate in the gray zone of legislation at least in
cities other than Moscow.
Business strategy. Following the expansion template, Uber entered the Russian market
with the establishment of the wholly-owned subsidiary of the parent company, Uber
Technologies Inc.
Even though Ryan Graves, Vice-president of Uber, states that Russia is one of the top
priorities for the company as of 2016, Uber does not commit heavily in the Russian market as it
does in China and India. According to the words Ryan Graves, Uber in Russia is rather small
compared to its other markets and the real development and scaling of the business in the
country started only in 2015. “So we are at a very early stage of development. We only have
seven cities, but I think by the end of 2016 we will be in seventeen” (Sukharevskaya and
Igumenov, 2016).
As for strategic partnerships with Russian companies to increase the positions in the
market, there were not many of them as of April 2016. The only major announcement was about
the partnership with the Russian state-owned and the biggest bank – Sberbank. The parties
signed the memorandum of commitment (MOU), that just indicates the more formal agreement
of convergence of will. Uber and Sberbank intend to work together in the sphere of new
technologies in financial sector (Uber, 2015). However partnership does not imply any strategic
57
investment. Another strategic partnership, that somehow relates to Russia, was with the
LetterOne (L1) holding of the Russian businessman Mikhail Friedman. L1 made a $200 million
in strategic investments into the Uber company in the beginning of 2016. According to Uber’s
CEO, Travis Kalanick, the expertise in the emerging markets, that has the L1 holding, is of great
importance for the company (Kantyshev, 2016). However, it was not specified whether the
investment was directed at Uber’s expansion in Russia or not.
In Russia Uber pursues the cost leadership focus strategy with UberX, UberStart as its
major services. UberBlack is represented only in major cities – Moscow and Saint
Petersburg. Russian regional cities that are characterized by lower incomes in comparison to
Moscow or Saint Petersburg provide an opportunity for Uber to test its localized services. In
Ekaterinburg the company launched in 2016 the new service – UberSTART, that the
company plans to expand to Russian regions after the test period. “The environment requires
constant reaction and improvement from us. With it [UberSTART], we plan to increase
customer base among both passengers and drivers”, stated the company in the letter to
citizens of Ekaterinburg. Again, the internationalization to the market allows Uber to increase
its competences in business model adaptation to the needs of particular locations and to
develop new ownership advantages.
58
3.5.4 Summary
International
Opportunity
Strategy
China
India
Russia
Market
attractiveness
Huge taxi market with 2.62 million
licensed taxi drivers;
Biggest smartphone market – 690
million owners.
Rather big tax market with 550 thousand
licensed taxi drivers and 5 million auto
rickshaws.
Sufficient penetration of smartphones – 123
million owners (3nd biggest market).
Significantly big taxi market in major
cities – 55 thousand licensed taxi drivers
in Moscow, but small on a country scale –
180 thousand.
4th biggest smartphone market with 58,2
million smartphone owners.
Regulation
Grey zone of regulation in the
beginning of Uber’s expansion;
Pressures beginning in 2015
Outdated regulation allowed for the grey
zone
Pressures beginning in 2015
No regulation of iTNCs
Favorable attitude of government
regulators
Innovative
potential
Innovation potential of Beijing as a
global innovation hub
-
-
Entry strategy
From wholly-owned Chinese
subsidiary to independent
companies (Shanghai Wubo
Information Technology Co., Ltd;
Wubu Information Technology Co.,
Ltd., and Wubu Software Technology
Co., Ltd.) Establishment of data and
operations centers.
Strategic partnerships with Baidu
and Guangzhou Autos.
-> High market commitment
Wholly-owned subsidiary
Wholly-owned subsidiary
Strategic partnerships with Times Internet
Ltd.
No strategic partnerships
-> Medium market commitment
-> Medium market commitment
Mix of cost leadership and
differentiation focus strategies
Cost leadership focus strategy
Cost leadership focus strategy
Localization of services (People’s
Uber – cheap carpooling)
Localization of services (UberAuto for auto
rickshaws; UberMoto with bikes, UberGo cheap Uber service)
Localization of services
(UberStart - cheap Uber service)
Business
strategy
Table 5. International opportunity for Uber and company’s strategies in China, India, and Russia
Scaling up operations and internalizing to foreign markets is a potential opportunity for
Uber to exploit its firm-specific advantages to generate higher income. The cross-country
analysis of markets significant for Uber (India as the biggest market outside the US in terms of
cities covered, China as the strategic focus of the company, and Russia as biggest European
market) revealed that such factors as market attractiveness, local industry regulation as well as
innovative potential of the countries represent a driving force for Uber to internalize. Even
though Uber considers all countries for internationalization as it wants to be present in as many
cities as it can according to the words of the CEO, Travis Kalanick, the company tends to
commit more in the countries with attractive markets in terms of taxi infrastructure and
smartphone penetration. National regulation of taxi industry, namely the availability of the grey
zone, represents the opportunity for Uber to establish operations and increase its presence before
the government authorities realize the need for the special iTNC regulation as it was in the case
of its Chinese and Indian expansion. Innovativeness and the future potential of the country for
developing the innovative hub, as in the case of China, is another factor that contributes to the
attractiveness of the country according to the words of Kalanick.
The company chooses to enter markets by establishing the wholly-owned subsidiary in
order to maintain the full control over its operations, marketing and sales strategy so that to
determine the unified global strategy and deliver the unified experience for its customers. This
high market commitment also allows Uber to be closer to the national context and tap into the
needs of the local consumers. However, the Chinese case shows that the company is ready to
increase the market commitment in the countries that are both attractive in terms of business
opportunity and where the competition and industry regulation represent significant challenges
for the growth. There Uber is ready to establish independent companies, not a subsidiary, and
relocate the data and operations centers. Uber also enters into strategic partnerships with leading
local companies to strengthen its presence and localize the service as in the case of partnership
with Baidu, leading Chinese technological company, and Times Internet Ltd. The partnerships
aim at both the marketing and advertising to increase awareness of Uber (partnership with TIL)
and technological improvement of the service (integration of Baidu maps). On the other hand,
the case of Russia shows that in locations where competition or government regulation do not
challenge the company significantly, the company tends not to increase commitment or enter into
strategic partnerships.
As for the business strategy Uber tends to pursue the cost leadership and differentiation
focus strategies depending on the market characteristics. In Chinese case Uber pursues both
strategies: cost leadership for the broader customer base that got used to cheap taxi fares and
differentiation to offer different levels of services to attract wealthier category of business
60
travellers and emerging Chinese middle class. In the cases of India and Russia, where Uber
mostly offers affordable versions of its service – UberX and UberGo for India, UberX and
UberStart for Russia, the company seeks to beat its competitors by providing the lowest fares for
a broader audience. Furthermore, in order to make the services of Uber more attractive to local
customers, Uber localize them and offer unique proposition tailored specifically for the needs
and requirements of local clients. The company introduced a China exclusive service such as
People’s Uber, India exclusive UberGo, and Russia exclusive UberStart.
4.
DISCUSSION AND CONCLUSION
4.1 Discussion of the findings
The aim of the present master’s thesis was to explore the drivers of internationalization as
well peculiarities and patterns of international expansion of Internet transportation network
companies (iTNCs). The aim was achieved by investigating the existing literature on the topic of
taxi industry development as well as on the phenomenon of Born Global companies (or
International New Ventures) and by applying the theoretical frameworks to the case of Uber
Technologies Inc. – the first iTNC that changed the taxi industry by lowering barriers to entry
and stretching the local industry to the international level. To achieve the aim of the study the
number of objectives were set.
The first objective was to identify the competitive advantages of iTNCs that allow them to
expand successfully to overseas markets. The case of Uber revealed that the innovative business
model, that is characterized by its asset-light nature (the company does not own the fleet of cars,
not it employes drivers), scalability and capability to innovate is the first competitive advantage
that allows iTNC to expand its operations abroad. Secondly, the unique technology, that allowed
drivers to generate higher results by observing the “heat maps” showing where the higher
demand will be, differentiated the company from its rivals. The technology is also transferable
across borders what allows the company to implement it in foreign locations. The strong brand of
the company also facilitates internationalization as it “prepares” the demand for the iTNC service
in advance, before it actually enters the market. Finally, entrepreneurial experience of founders
as well as international expertise of the management team is another advantage for the iTNC that
allowed it to internalize with such pace. The findings are consistent with the theory on Born
Globals that emphasize that the unique and/or innovative product (Gabrielsson and Kirpalani,
2004; Gerschewski et al., 2014), scalability of the product (Cannone and Ughetto, 2012),
61
entrepreneur experience and knowledge (Oviatt and McDougall, 2005; Cannone and Ughetto,
2012) are significant factors that affect the success of the company’s internationalization.
Second objective was to identify the motives of iTNCs to expand operations
internationally. By analysing the environment of the US taxi industry it was found that the niche
market where Uber operated as well as the slowing growth trend of customer acquisition was one
of the main reasons for the internationalization. This finding corresponds to the assumption that
Born Globals tend to internalize early due to the niche nature of the market where they operate in
order to open more opportunities that global market promises (Gabrielsson et al., 2012; Knight
and Cavusgil, 2004; Madsen and Servais, 1997; Oviatt and McDougall, 1995). Increasing
competition, both from the side of incumbent taxi companies and emerging “copycats” is another
external driver that motivated Uber to internalize rapidly. Oviatt and McDougall (1995) also state
that severe competition can influence the firm’s rapid internationalization. Another factor of the
domestic market environment is the industry regulation. iTNCs operate in the taxi industry, but
they do not consider themselves as taxi companies, rather technology companies or aggregators.
Therefore, they do not fall under the taxi regulation. However government fuelled by protests of
incumbent taxi companies tried to employ existing outdated norms, sued and even banned the
service of Uber. That is why internationalization to foreign markets, that allowed the company to
operate in the grey zone, was drived by the challenges of taxi regulation.
Third objective was to analyze the internationalization process of iTNCs. The case of
Uber showed that the company internalized its operations in two years from its establishment
and started its international expansion from geographically and culturally closed markets. But
only in one year, as the company increased its international and operational experience, Uber
started to quickly expand to more distant locations in South Asia, East Asia and Africa.The pace
became so fast that it was almost non-significant where to launch next. Uber grows its presence
in the overseas countries starting from major cities and then going deeper into the country.
Uber’s CEO states that this strategy allows to exploit the profitability of major cities to fuel the
expansion deeper into the country as well the expansion to other countries.
The fourth objective of the study was to analyze the choice of entry mode and the
strategy in the foreign markets. It was found the Uber enters the new markets by establishing
wholly-owned subsidiaries. This finding contradicts to the statement of Lu and Beamish (2001)
that Born Globals tend to choose non-equity entry modes like exporting. Furthermore, the
company is ready to commit more resources to the country if it has the significant market
potential and the competition is very tough, as it was with the Chinese case where Uber for the
first time established the independent company. As for the business strategy, iTNC pursues
differentiation and cost leadership focus strategy based on the country’s overall economic
62
characteristics, but still focusing more on cost leadership. The evidence of a positive relation of
such aggressive and multi-faceted growth strategy to international performance was found by
McDougall and Robinson (1990) and Gerschewski et al. (2014). The company also shows the
high level of localization of its services to meet the local requirements. The localization appears
not only in the form of different pricing strategies but also in the form of new services tailored
specifically to the local needs.
All in all, the factors and strategies the were found and analyzed in the present study
contribute to understanding of the successful international performance of Uber Technologies
Inc. that is now operating in 406 cities around the world and being valued at extraordinary $62.5
billion.
4.2 Theoretical implications
The study contributes to the theory of Born Globals as well as sheds light on the
internationalization process of Internet transportation network companies that shaked the global
taxi industry in recent time.
The findings of the master’s thesis contribute to theory of Born Globals by analyzing the
case of the company that internalized rapidly to 68 countries in only 7 years of its operations.
The drivers, both internal and external, of such a rapid internationalization were analyzed, what
strengthened the existing models of internationalization of Born Globals, specifically the model
of drivers of internationalization performance developed by Gerschewski et al. (2014) and factor
model of born-globalness by Oviatt and McDougall (2005) as well as added knowledge by
emphasizing the role of industry regulation in domestic market as the driver for
internationalization, what was not. As for the entry mode, even though Born Globals are
considered as being too small to choose more capital-intensive entry modes, the study showed
that FDI may be the right choice as it allows to be closer to market and have better control over
the customer experience what contradicts to the statement of Lu and Beamish (2001).
Considering business strategy of Born Globals the study showed that such companies not always
pursue the niche strategy but also employ aggressive growth strategies to generate better
financial results what proves the findings of Gerschewski et al. (2014).
The more significant theoretical implication of the master’s thesis lies in the attempt to
shed light on the internationalization process of iTNCs. At present the literature on the
international expansion of iTNCs is almost non-existent and, thus, the study provides the basis
for future research in the direction of internationalization strategy of iTNCs. The study not only
describes such companies, but also identifies the drivers of the internationalization of iTNCs,
63
both internal with the emphasize on the firm specific advantages, such as asset-light and
technology intensive business model, and external drivers; explores the internationalization
patterns as well as describes the strategic choices iTNC uses to enter (FDIs) and develop foreign
markets (cost leadership and localization). All in all, the results provide the basis for the future
research on the drivers and patterns as well as strategies that Born Global iTNCs employ in the
internationalization process.
4.3 Managerial implications
The study not only contributes to the theory with the results, but also provides valuable
managerial implications. As Moen (2002) stated the research on INV is important for managers
of newly established firms that not only face the issues related to the management of a startup
but also have to deal with issues when starting to internalize.
The managerial implications of the following study are aimed at the following groups of
managers: 1) management of internalizing iTNCs; 2) management of iTNC that is going to
internalize; 3) management of the domestic iTNC that competes with international one. The
findings of the study show which ownership advantages шnternalizing iTNCs should develop
such as light-asset and scalable business model; innovative technology that will differentiate
them from rivalry; and strong brand. Internalizing iTNCs should also pay specific attention to
industry regulation in order to leverage the opportunities of either grey zone or collaboration
with governments. As for the international opportunity, the study shows that managers of iTNCs
should not only consider the market attractiveness of the foreign location, but also consider the
regulatory environment, and the innovative potential of the country, what can be important in the
long-term perspective. Expansion of iTNCs should be started from geographically and culturally
close markets to gain experience and knowledge and then aimed at more attractive markets.
Finally, the results of the study may help managers of iTNCs to choose the entry and business
strategy for their overseas expansion, namely pursue the FDIs and strategic partnerships with
local major companies, higher commitments are expected in the case of strategically important
markets. Cost leadership is an appropriate business strategy for rapid market expansion; and the
localization of services creates additional advantages for the company to tap into the
opportunities of local specifics.
4.4 Limitations of the study
64
The following study has certain limitations that are mostly attributed to the selection of
the case company and the industry.
First limitation is that the company chosen for the case study is US based and from the
beginning has different prerequisites for the international expansion comparing to those iTNCs
based in Latin America or Asia. To build a broader view on the iTNC internationalization it is
important to analyze the expansion of iTNCs from emerging countries such as Didi Kuaidi, Ola,
and EasyTaxi.
Second, the type of companies chosen for the study – iTNCs, is rather new and started to
develop only seven years ago, internalizing just 5 years ago, and, thus, the period of the study is
rather short. Studying such companies in the longer period, when the industry will get its rigid
regulatory framework and distinct players, will definitely generate more insights to the
internationalization theory.
65
LIST OF REFERENCES
Agarwal, S. Internationalization of US Equipment Leasing Firms: An Empirical Study
Using Covariance Structure Modelling, unpublished Doctoral Dissertation, The Ohio State
University, 1986
Agarwal, S., Ramaswami, S. Choice of Foreign Market Entry Mode: Impact of
Ownership, Location and Internalization Factors, Journal of International Business Studies,
1992
Andersson, S., Gabrielsson, J., and Wictor, I. International activities in small firms:
Examining factors influencing the internationalization and export growth of small firms.
Canadian Journal of Administrative Sciences, 2004
Aspelund, Arild, and Moen, Ø., Small international firms: typology, performance and
implications. Management International Review 45 (Special Issue 3), 2005
Austine, S., Canipe, C., and Slobin S. The Billion Dollar Startup Club. Wall Street
Journal. February 18, 2015. Accessed April 15, 2016. http://graphics.wsj.com/billion-dollarclub/.
Bagga, A. 10 Little-known Facts about Uber. Times of India. September 4, 2014.
Accessed April 11, 2016. http://timesofindia.indiatimes.com/tech/slideshow/10-little-knownfacts-about-uber/itslideshowviewall/41601794.cms.
Baxter, P., and Jack, S. Qualitative Case Study Methodology: Study Design and
Implementation for Novice Researchers. The Qualitative Report 13, 2008
Bell, J., McNaughton, R., Young, S., and Crick, D. Towards an integrative model of
small firm internationalization. Journal of International Entrepreneurship, 2003
Burchakov A. What Prevents Yandex.Taxi, Uber and Gettaxi to Develop in Russian
Regions. VC.ru. February 3, 2016. Accessed April 16, 2016. https://vc.ru/p/taxi-regions.
Bureau of Labor Statistics, U.S. Department of Labor. Occupational Outlook
Handbook, 2016-17 Edition, Taxi Drivers and Chauffeurs. Accessed April 15, 2016.
http://www.bls.gov/ooh/transportation-and-material-moving/taxi-drivers-and-chauffeurs.htm
66
California Public Utilities Commission. Decision adopting rules and regulations to
protect public safety while allowing new entrants to the transportation industry, 2013
Carsten, P. Uber Drives into China Tourism Industry with HNA Group Tie-up.
Reuters. January 11, 2016. Accessed April 19, 2016. http://www.reuters.com/article/us-uberchina-idUSKCN0UP0SP20160111.
Cateora, P., Gilly, M., Graham, J. International marketing. Boston. Mass: McGrawHill/Irwin, 2009
Cavusgil, S. On the internationalization process of firms. European Research, 1980
Cavusgil, S. T., and Knight, G. A.
The born-global firm: An entrepreneurial and
capabilities perspective on early and rapid internationalization. Journal of International
Business Studies,
2015
Chen, L. At $68 Billion Valuation, Uber Will Be Bigger Than GM, Ford, And Honda.
Forbes.
December
4,
2015.
Accessed
April
9,
2016.
http://www.forbes.com/sites/liyanchen/2015/12/04/at-68-billion-valuation-uber-will-bebigger-than-gm-ford-and-honda/#3f08e14c5858.
Chokkattu, J., and Crook, J. A Brief History Of Uber. TechCrunch. August 24, 2014.
Accessed April 10, 2016. http://techcrunch.com/gallery/a-brief-history-of-uber/slide/16/
Clover, C., and Hook, L. Uber Losing More than $1bn a Year in China. Financial
Times. February 18, 2016. Accessed April 17, 2016. http://www.ft.com/cms/s/0/f889f812d664-11e5-829b-8564e7528e54.html#axzz49VNtPces.
Coviello, N., and Munro, H. Growing the entrepreneurial firm. European Journal of
Marketing, 1995
CrunchBase. Uber Competitors. Accessed April 15, 2016.
https://www.crunchbase.com/organization/uber/competitors.
CrunchBase. Uber Profile. Accessed April 9, 2016.
https://www.crunchbase.com/organization/uber#/entity.
Cutmore, G. CNBC Transcript: Interview with Travis Kalanick, CEO and Co-Founder
o f Ub e r. C NB C . Ma r c h 2 9 , 2 0 1 6 . Ac c e sse d Ap r i l 1 9 , 2 0 1 6 .
67
http://www.cnbc.com/2016/03/28/cnbc-transcript-interview-with-travis-kalanick-ceo-and-cofounder-of-uber.html.
Cutmore, G., and Kharpal, A. Uber CEO Sees Profits in China in 2 Years' Time.
CNBC. March 29, 2016. Accessed April 12, 2016. http://www.cnbc.com/2016/03/24/uberceo-sees-profits-in-china-in-2-yearss-time.html.
Dana, L., Etemad, H., and Wright., R. The impact of globalisation on SMEs. Global
Focus, 1999
Driscoll, A. Foreign market entry methods: a mode choice framework. In Paliwoda, S.,
Ryans, K. (eds.), International marketing reader, Routledge, Londin, New Yourk, 1995
Driscoll, A., and Paliwoda, J. Dimensionalizing international market entry mode
choice. Journal of Marketing Management, 1997
Dunning, J., The eclectic paradigm of international production: A restatement and
some possible extension. Journal of International Business Studies, 1988
Dutta V. 3-wheelers on a 4-wheel Drive as Auto Startups Rise. Economic Times. June
19,
2015.
Accessed
April
18,
2016.
http://auto.economictimes.indiatimes.com/news/commercial-vehicle/lcv/3-wheelers-on-a-4wheel-drive-as-auto-startups-rise/47594499.
Edison Research, Triton Digital. Smartphone usage in the US 2009 – 2016. Accessed
April 12, 2016. http://totalaccess.emarketer.com/Chart.aspx?R=168621&dsNav=Ntk:basic
%7csmartphone+2010%7c1%7c,Ro:15,N:406,Nr:NOT(Type
%3aComparative+Estimate)&kwredirect=n
Eisenhardt, K. Building Theories from Case Study Research. The Academy of
Management Review 14, 1989
EMarketer. India smartphone users 2009-2016. Accessed April 16, 2016.
http://totalaccess.emarketer.com/Chart.aspx?R=188772&dsNav=Ntk:relevance
%7cindia+smartphone+users%7c1%7c,Ro:-1,Nr:NOT(Type%3aComparative+Estimate
Frolov, A. Uber Has Promised to Suspend Unlicensed Drivers in 90 Days. VC.ru.
March 14, 2016. Accessed April 17, 2016. https://vc.ru/n/uber-moscow-deal.
68
FutureAdvisor. Trend in growth rates of distinct new customer of Uber and Lyft 2014.
Accessed April 10, 2016.
Gabrielsson, M., Kirpalani, V.H.M., Dimitratos, P., Solberg, and C.A., Zucchella, A.
Born globals: Propositions to help advance the theory. International Business Review, 2008
Garant. The Legal Status of Dispatching Services and the Internet Services of Taxi
Should Be Fixed in Legislation. Garant.ru. July 29, 2015. Accessed April 19, 2016.
http://www.garant.ru/news/639996/#sdendnote1sym.
Harding S., Kandlikar M., and Gulati S. Taxi apps, regulation, and the market for taxi
journeys. Transportation Research Part A, 2015
Harsimran, J., and Shrivastava, A. Indian Taxi Companies like Meru Cabs, Ola,
TaxiForSure Take on Uber by Imitating Its Payment Processes. The Economic Times. August
19, 2014. Accessed April 18, 2016. http://articles.economictimes.indiatimes.com/2014-0819/news/52983576_1_matrix-partners-india-payu-india-payment-gateway.
Hedlund, G., and Kverneland, A. Are strategies for foreign markets changing? The
case of Swedish investment in Japan. International Studies of Management and Organization,
1985
Hennart, J. A theory of multinational enterprise. Ann Arbor, MI: University of
Michigan Press, 1982
Hill, C., Hwang, P, and Chan Kim, W. An Eclectic Theory of the Choice of
International Entry Mode, Strategic Management Joumal, 1990
Hitt, M., and Ireland, R. The intersection of entrepreneurship and strategic
management research. In Sexton, D., Landstrom, H., The Blackwell Handbook of
Entrepreneurship, Oxford: Blackwell, 2000
Hitt, M., Ireland, R., Camp, S., and Sexton, D. Strategic entrepreneurship:
Entrepreneurial strategies for wealth creation. Strategic Management Journal, 2001
Hook, L. Uber Takes on New Partner in China with Guangzhou Auto Tie-up. Financial
Times.
December
22,
2015.
Accessed
April
19,
2016.
69
http://www.ft.com/intl/cms/s/0/4433ff9e-a837-11e5-955c1e1d6de94879.html#axzz49VNtPces.
Horwitz J. Uber’s Growing Pains: Head of Operations Ryan Graves on the Challenges
of Building a Global Startup. The Next Web. May 2014. Accessed April 18, 2016.
http://thenextweb.com/asia/2013/07/30/ryan-graves-head-of-operations-at-uber-talks-asiaexpansion-and-strategy/#gref.
Hymer, S. The international operations of national firms: A study of
direct foreign investment. Cambridge, MA: MIT Press, 1976
Johanson, J., and Vahlne, J. The internationalization process of the firm—A model of
knowledge development and increasing foreign commitments. Journal of International
Business Studies, 1977
Johanson, J., and Mattsson, L., Internationalization in industrial systems – a network
approach. In Hood, N., Vahlne, J., Strategies in Global Competition, New York: Croom Helm,
1988
Johanson, J., and Wiedersheim-Paul, F. The internationalization of the firm: Four
Swedish cases. Journal of Management Studies, 1975
Jones, M. V., Coviello, N., and Tang, Y. K. International Entrepreneurship research
(1989–2009): A domain ontology and thematic analysis. Journal of Business Venturing, 26,
2011
Jones, M., and Coviello, N. Internationalization: Conceptualizing an entrepreneurial
process of behavior in time. Journal of International Business Studies, 2005
Kantyshev, P. LetterOne of Mikhail Fridman Has Invested $200 Million in Taxi
Service Uber. Vedomosti. February 14, 2016. Accessed April 17, 2016.
https://www.vedomosti.ru/technology/articles/2016/02/15/629367-letterone-uber.
Keupp, M. M., and Gassmann, O. The past and the future of international
entrepreneurship: A review and suggestions for developing the field. Journal of Management,
2009
70
Knight P., and Liesch P. Internationalization: from incremental to born global. Journal
of World Business, 2016
Knight, G. Entrepreneurship and marketing strategy: The SME under globalization.
Journal of International Marketing, 2000
Knight, G., and Cavusgil, S. T. The born global firm: A challenge to traditional
internationalization theory. In S. T. Cavusgil, T. Madsen (Eds.), Advances in international
marketing, Greenwich, CT: JAI Press, 1996
Knight, G., and Cavusgil, S. Innovation, organizational capabilities and the bornglobal firm. Journal of International Business Studies, 2004
Kogachigov V. In Moscow, smartphones are already more than half of mobile
subscribers. Vedomosti. March 20, 2015. Accessed April 18, 2016.
Kuivalainen O, Saarenketo S, and Puumalainen K. Start-up patterns of
internationalization: a framework and its application in the context of knowledge intensive
SMEs. European Management Journal, 2012
Lagorio-Chafkin C. Resistance Is Futile. Inc. July/August 2013. Accessed April 17,
2016. http://www.inc.com/magazine/201307/christine-lagorio/uber-the-car-service-explosivegrowth.html.
Liesch, P., and Knight, G. A. Information internalization and hurdle rates in small and
medium enterprise Internationalization. Journal of International Business Studies, 1999
Lin, W. A letter from China: taxinomics. Open Door Capital Group. December 18,
2015.
Accessed
April,
17,
2016
http://www.odfund.com/uploads/homepage/20151223101912120.pdf
Lopez, L.E., Kundu, S.K., and Ciravegna, L., Born global or born regional? Evidence
from an exploratory study in the Costa Rican software industry. Journal of International
Business Studies 40 (7), 2009
Lu, J., Beamish, P. The internationalization and performance of SMEs. Strategic
Management Journal, 2001
71
Madsen, T., and Servais, P. The internationalization of born globals: An evolutionary
process. International Business Review, 1997
Marchi, A., and Parekh E-J. How the Sharing Economy Can Make Its Case. McKinsey
Quarterly, December 2015. Accessed April 16, 2016. http://www.mckinsey.com/businessfunctions/strategy-and-corporate-finance/our-insights/how-the-sharing-economy-can-makeits-case.
McDougall, P. International versus domestic entrepreneurship: New venture strategic
behavior and industry structure. Journal of Business Venturing, 1989
McDougall, P., and Oviatt, B. International entrepreneurship: The intersection of two
research paths. Academy of Management Journal, 2000
McDougall, P., Oviatt, B., and Shrader, R. A comparison of international and domestic
new ventures. Journal of International Entrepreneurship, 2003
McKinsey & Company. Emerging exporters: Australia’s high value-added
manufacturing exporters. Melbourne: Australian Manufacturing Council, 1993
Millward, S. 21 Million Taxi Rides Have Been Booked on WeChat in the past Month.
Te c h i n A s i a . F e b r u a r y 1 2 , 2 0 1 4 . A c c e s s e d A p r i l 1 7 , 2 0 1 6 .
https://www.techinasia.com/wechat-21-million-taxi-rides-booked.
Ministry of Corporate Affairs of India. The Societies Registration Act. 1860. Accessed
April,
17,
2016.
http://www.mca.gov.in/Ministry/actsbills/pdf/Societies_Registration_Act_1860.pdf
Moen, O. The Born Globals. A new generation of small European exporters.
International Marketing Review, 2002
Moen, O., and Servais, P. Born global or gradual global? Examining the export
behavior of small and medium-sized enterprises. Journal of International Marketing, 2002
Morrow, J. International entrepreneurship: a new growth opportunity. New
Management, 1988
New York City Taxi and Limousine Commission. Taxicab Factbook 2014. Accessed
April 15, 2016. http://www.nyc.gov/html/tlc/downloads/pdf/2014_taxicab_fact_book.pdf
72
Newcomer E. Uber Owes Up to $100 Million Settlement. Drivers Say, ‘Uber Basically
Wo n ’ . B l o o m b e r g . A p r i l 2 6 , 2 0 1 6 . A c c e s s e d A p r i l 3 0 , 2 0 1 6 .
http://www.bloomberg.com/news/articles/2016-04-26/uber-owes-up-to-100-million-in-classaction-settlement-drivers-say-uber-basically-won.
Olson, M., and Coonor, A. The disruption of sharing: an overview of the new peer-topeer “sharing economy” and the impact on established internet companies. Piper Jaffray
Investment Research, 2013
Olson, M., and Kemp, S. Sharing Economy: an in-depth look at its evolution and
trajectory across industries. Piper Jaffray Investment Research, 2015.
Oviatt, B., and McDougall P. Toward a theory o international new ventures. Journal of
International Business Studies, 1994
Oystein, M. The Born Globals: a new generation of small European
exporters? International Marketing Review, 2002
Parliament of India. Companies Act. 1956. Accessed April 17, 2016.
http://www.mca.gov.in/Ministry/pdf/Companies_Act_1956_13jun2011.pdf
Perez, B. At 913m, China Has More Smartphone Subscribers than Populations of US,
Brazil and Indonesia Combined. South China Morning Post. July 14, 2015. Accessed April
17, 2016. http://www.scmp.com/tech/social-gadgets/article/1838421/china-grows-wealthiersmartphones-and-faster-networks-dominant.
Porter, M. Strategy and the Internet. Harvard Business Review, 2001
Pratt, M. From the Editors: For the Lack of a Boilerplate: Tips on Writing Up (and
Reviewing) Qualitative Research. Academy of Management Journal 52, 2009
Rennie, M. Born global. McKinsey Quarterly, 1993
RIA. The Taxi Service Uber and the Moscow Authorities Came to a Compromise. RIA
News.
February
03,
2016.
Accessed
April
19,
2016.
http://ria.ru/economy/20160203/1369228570.html.
73
Rialp, A., Rialp, J., and Knight, G. The phenomenon of early internalising firms: what
do we know after a decade (1993-2003) of scientific inquiry? International Business Review,
2005
Root, F.R. Entry Strategies for International Markets, New York D.C. Heath and
Company, Lexington, 1987
Rugman, A. Inside the multinationals: The economics of internal markets. New York,
NY: Columbia University Press, 1981
Saunders, M., Lewis, P., and Thornhill, A. Research Methods for Business
Students, 5th edition, Prentice Hall, 2009
Servais, P., and Rassmussen, E., Different types of international new ventures.
Academy of International Business (AIB) Annual Meeting, 2000
Shida, Y. 1-Chinese Taxi App Gains $600 Mln Investment from Softbank, Alibaba.
Reuters. January 14, 2015. Accessed April 17, 2016. http://www.reuters.com/article/chinataxis-softbank-idUSL3N0UU18V20150115.
Smart, D., and Conant J. Entrepreneurial orientation, distinctive marketing
competencies and organizational performance. Journal of Applied Business Research, 1994
Sokolova A. Who Leads in the Russian Market Taxi. Rusbase. February 1, 2016.
Accessed April 19, 2016. http://rusbase.com/story/taxi-market/.
Stone B. Invasion of the Taxi Snatchers: Uber Leads an Industry's Disruption.
Bloomberg. February 20, 2014. Accessed April 25, 2016.
http://www.bloomberg.com/news/articles/2014-02-20/uber-leads-taxi-industry-disruptionamid-fight-for-riders-drivers.
Sukharevskaya A. Uber: Service That Changes Everything. RBC. December 16, 2015.
Accessed April 15, 2016. http://www.rbc.ru/magazine/2016/01/56ba1b779a79477d693621e6.
Sukharevskaya A., Igumenov V. Co-owner of Uber, Ryan Graves — about New
Markets, Conflicts with Regulators and the Future of the Service. RBC. February 3, 2016.
Accessed
April
10,
2016.
http://www.rbc.ru/newspaper/2016/02/03/56ba1ecf9a79478429f1e801.
74
Swisher K. Man and Uber Man. Vanity Fair. December 2014. Accessed April 12, 2016.
http://www.vanityfair.com/news/2014/12/uber-travis-kalanick-controversy.
Teece, D., Pisano, G., and Shuen, A. Dynamic capabilities and strategic management.
Strategic Management Journal, 1997
Terpstra, V. and Sarathy, R. International Marketing, 5th Edition, New York, Dryden
Press, 1991
The Telegraph. A History of the New York Cab. May 4, 2011. Accessed April 25,
2016. http://www.telegraph.co.uk/news/worldnews/northamerica/usa/8491507/A-history-ofthe-New-York-cab.html.
The Unicorn List. Fortune, 2016. Accessed April 15, 2016.
http://fortune.com/unicorns/.
Uber in 2016 plans to settle in all million citizen cities of Russia. TASS. October 28,
2015. Accessed April 19, 2016. http://tass.ru/obschestvo/2384264.
Uber website, Accessed April 23, 2016. http://uber.com/
Uber. 205/55/24. Uber Newsroom. August 28, 2014. Accessed April 10, 2016.
https://newsroom.uber.com/2055524/.
Uber. A Reliable Ride for Your Deliveries. Uber Newsroom. April 7, 2014. Accessed
April 10, 2016. https://newsroom.uber.com/us-new-york/a-reliable-ride-for-your-deliveries/.
Uber. Hello India! Secret Ubers Have Arrived In Bangalore. Uber Newsroom. August
29, 2013. Accessed April 15, 2016. https://newsroom.uber.com/india/hello-india-secret-ubershave-arrived-in-bangalore/.
Uber. How Uber Helps Make Cities Better. Uber website. Accessed April 9, 2016.
https://www.uber.com/helping-cities/.
Uber. More People in Fewer Cars. Uber Newsroom. September 22, 2015. Accessed
April 19, 2016. https://newsroom.uber.com/ubercommute/.
Uber. Sberbank and Uber Signed Partnership. Uber Newsroom. September 3, 2015.
Accessed April 19, 2016. https://newsroom.uber.com/russia/сбербанк-и-uber/.
75
Uber. Secret Ubers Arrive in Moscow. Uber Newsroom. November 21, 2013.
Accessed April 17, 2016. https://newsroom.uber.com/russia/secret-ubers-arrive-in-moscow/.
Uber. Times Internet and Uber Enter into a Strategic Partnership. Uber Newsroom.
March 22, 2015. Accessed April 16, 2016. https://newsroom.uber.com/india/times-internetand-uber-enter-into-a-strategic-partnership/.
Uber. UberFRESH Is Now UberEATS. Uber Newsroom. April 28, 2015. Accessed
April 10, 2016. https://newsroom.uber.com/us-california/uberfresh-is-now-ubereats/.
Uber. We’re Going Global with Big Funding. Uber Newsroom. December 7, 2011.
Accessed April 9, 2016. https://newsroom.uber.com/france/were-going-global-with-bigfunding/
Vernon, R. International investment and international trade in the product cycle.
Quarterly Journal of Economics, 1966
Weerawardena, J., Mort, G., Liesch, P., and Knight, G. Conceptualizing accelerated
internationalization in the born global firm: A dynamic capabilities perspective. Journal of
World Business, 2007
Wei, K., Yuan, Y., and Huang, Y. Guangzhou Uber is investigate, Uber calls its routine
inspection from commerce department. Sina Tech. May 1, 2015. Accessed April 17, 2016.
htp://tech.sina.com.cn/i/2015-05-01/doc-icczmvuo0757400.shtml/.
Wong, S.-L., and Shakil, S. Bullish Uber Plans to Invest $1 Billion in China in 2015.
Reuters. June 12, 2015. Accessed April 17, 2016. http://www.reuters.com/article/us-uberchina-idUSKBN0OS0XV20150612.
Yin, R. Case study research: Design and methods (2nd ed.). Newbury Park, CA: Sage
Publications, 1994
Yin, R. Case study research: Design and methods (4th Ed.). Thousand Oaks, CA: Sage
Publications, 2009
Zahra, S., and George, G. International entrepreneurship: the current status of the field
and the future research agenda. In Hitt, M., Ireland, D., Sexton, D., Camp, M., Strategic
76
Entrepreneurship: Creating an integrated mindset, Strategic Management Series, Oxford:
Blackwell Publlishers, 2002
Zahra, S., Ireland, R., and Hitt, M. International expansion by new venture firms:
International diversity, mode of market entry, technological learning, and performance.
Academy of Management Journal, 2000
Zander, I., McDougall-Covin, P., and Rose, E. Born globals and international business:
Evolution of a field of research. Journal of International Business Studies, 2015
Zucchella, A., and Scabini, P. International Entrepreneurship: Theoretical Foundations
and Practices. Palgrave McMillan, 2007
77
APPENDICES
Appendix A. Timeline of Uber Technologies Inc.
Date
Type of the event Details
2009, March
Company
Foundation of UberCab
2010, July
Company
Launch in San Francisco
2010,
October
Funding
$1.25 mln of Angel financing
2010,
October
Regulation
Notice from San Francisco Transit Authority and the
Public Utilities Commision of California on operating
like a taxi without proper licensing
2011,
February
Funding
$11 mln Series A by Benchmark Capital
2011, May
National
expansion
Launch in New York
2011,
December
Funding
$37 mln Series B by Menlo Ventures, Goldman Sachs, and
Bezos Expeditions
2011,
December
International
expansion
Launch in Paris, France
2012, July
Company
Launch of UberX
2012, winter
Regulation
Increasing pressure from regulators: $20’000 fine by CPUC
2013, August
Funding
$361.2 mln Series C by Google Ventures and TPG Growth
2013, August International
expansion
Launch in Johannesburg, South Africa and Bangalore,
India
2013,
September
Regulation
CPUC introduces the regulatory framework for TNCs
2014, April
Company
Launch of UberRUSH in New York, a courier service
2014, June
Funding
$1.2 bln in Series D by Google Ventures, BlackRock,
Kleiner Perkins Caufield & Byers, SherpaVentures, Menlo
Ventures, Wellington Management, Summit Partners.
2014, July
International
expansion
Launch in Beijing, China
2014, August
Company
Launch of UberPool, a ridesharing service
2014,
December
Funding
$1.2 bln in Series E by Qatar Investment Authority, Lone
Pine Capital, Valiant Capital Partners, SherpaVentures, New
Enterprise Associates
78
2014,
December
Regulation
Uber driver in Dehli rapes a passenger
2014,
December
Funding
$600 mln of strategic investment (Series E) by Baidu,
Chinese search technology company
2015,
January
Company
Launch of Uber Cargo in Hong Kong, logistics service
2015, January Funding
$1.6 bln by Goldman Sachs in debt financing
2015,
February
Funding
$1 bln in Series E by Foundation Capital, Times Internet,
Accelerated IT Ventures
2015, June
Regulation
California Labor Commission deems Uber drivers as
employees
2015, JulySeptember
Funding
$1 bln in Series F by Microsoft, Bennet, Coleman, & Co,
Ltd.
$100 mln in private equity by Tata Opportunities Fund in
India
$1.2 bln in private equity by Baidu
2015,
October
Regulation
Legal framework proposed by the Government of India
2015,
December
Funding
$2.1 bln in private equity
Appendix B. Locations where Uber is fully or partially banned.
79
Отзывы:
Авторизуйтесь, чтобы оставить отзыв