Re-internationalization, or firms’ re-entry into international markets after they have withdrawn from all their previous internationalization activities [1] , involves at least four stages: initial internationalization, de-internationalization or exit from internationalization, a time-out stage where no international operations take place, and finally a re-entry into internationalization.

One-fifth of all firms that internationalize exit internationalization [2]. Despite being found that intentions for re-entry to international activities among firms that have exited their initial internationalization are high [3] [4] , re-internationalization has received sparse attention in the published literature [1]. Though studies on re-internationalization have sprouted up in recent past [5] - [10] , differences in firms’ choices in modes of operations during various stages of internationalization have not been explained yet. We tried to address this gap from this study.

We shortlisted Indian firms that had undergone re-internationalization from the early 1990s till mid-2010s based on financial details available in CMIE-Prowess database. Post-1990s was significant in the Indian context, as it was during that period that economic activity thrived in the Indian markets due to the liberalization policies adopted by the union government [11] , which significantly helped the initial internationalization of many firms. After cross-verification of the shortlisted firms with four other databases, and also based on direct interviews, we generated a final list of 73 firms. A questionnaire survey was administered among senior managers of these firms to compare and contrast modes of operations adopted during initial internationalization and during re-internationalization stages.

Firms’ initial international experiences leave them with an international heritage [1] [12] , the learning from which firms are expected to utilize while they re-internationalize. Accordingly, we anticipated and later found that firms went for higher involvement modes of operations during re-internationalization period, utilizing their learning and experiences from the initial internationalization phase(s). We also found that firms having a presence in more No. of countries especially went for higher involvement modes of operations as compared to those firms that had a presence in lesser No. of countries during re-internationalization. This incremental nature of internationalization, i.e. from low involvement modes of operations toward high involvement modes of operations as firms gain experience both in time (initial to re-entry phase) and space (presence in more number of countries) finds support for Uppsala model of internationalization. Uppsala model of internationalization is explained as firms’ incremental process of building commitment in host nation(s) utilizing their experiences during the passage of time [13] [14].

Being among the pioneer studies that discuss and compare modes of operations during various stages of internationalization, we expect the findings from this research would be a valuable contribution toward international business management theory, apart from having meaningful implications to practice and policy.

The rest of this paper is structured as follows. We first discuss and locate the phenomenon of re-internationalization in the context of previous scholarship, then discuss the methods adopted for the study to collect data, and subsequently present the results and analysis, and finally conclude the study by delineating implications and limitations.

Internationalization is defined as firms’ activities that stretch beyond national boundaries in factor and/or product markets [15]. It can either be outward activities such as firms exporting their products and/or services, alliances, JVs, branches, subsidiaries, FDI, etc. beyond the territorial boundaries of their home markets, or inward activities such as import of raw materials or services, strategic alliances, countertrade, cooperative manufacture, etc., or activities where outward and inward activities are inter-linked [16].

Re-internationalization is defined as re-entry to internationalization after a firm has abandoned all its previous internationalization activities [1]. It is different from re-entry to previously abandoned international market(s), as re-internationalization occurs after a complete withdrawal from all international territories a firm had previously been operational, whereas re-entry to a specific international territory can occur even if a firm had partially exited the specific market while it continued operations in other markets.

De-internationalized firms intend to re-internationalize due to several internal and external factors, such as assets and liabilities flowing from initial internationalization, new international influences occurring after de-internationalization, and firm experiences during the time-out stage [1]. Also, changes in strategic orientation, changes in top management, or changes in other external factors such as environmental, political, competitive, technical scenarios can considerably influence re-internationalization of firms. The residual mind-share or psychological experiences flowing from firms’ initial internationalization activities may also influence firms’ decision and approach toward re-entry [12].

Re-internationalization has received limited attention in extant literature [1]. Some recent studies describe various aspects of re-internationalization, but none of these has addressed the query we tried to understand from this study. The case study of a UK-based firm talks about a firm that faced troubles even in the domestic market after exiting from initial internationalization [9]. It prompted this family-owned enterprise to professionalize managerial roles that were otherwise being held by family members alone, and this later helped the firm not only to overcome challenges in domestic market, but it also paved way for the firm to tap overseas opportunities and hence to successfully re-internationalize.

Another study [8] described the successful re-internationalization of Australian born-global firms which initially were forced to retrieve from international markets due to external pressures and resource constraints. The focus of this study is on the entrepreneurial roles of managers, who quickly restructured their organizations to re-internationalization strategies as and when they found favorable circumstances emerged during their time-out periods.

A study on re-internationalization paths of French SMEs identified the major elements aiding successful re-internationalization as learning, resilience, and the internationalization orientation of the entrepreneurs [6].

Internationalization and/or re-internationalization can be an outcome of several external or internal factors. For instance, it could be triggered by fortuitous foreign orders, a decline in domestic demand, government policy implications, exchange rate fluctuations, changes in competitive scenarios, changes in top management, changes in strategic orientation, developments in R&D, etc. [1].

Firms re-entering international operations would already possess experiences in terms of knowledge, skills, familiarity acquired from such operations [17] including experiences of key individuals involved in initial operations. For instance, it is strongly supported by export-related studies that previous international experiences of managers have a positive impact on internationalization of firms [8] [18]. Firms may also have built networks and relationships, gained knowledge and access to certain markets, and knowledge about cultural and legal aspects of certain markets [12]. Continuity in their inter-organizational networks and key personnel associated with international operations could be valuable for firms’ re-internationalization prospects.

A prolonged time-out from internationalization is expected to diminish the usefulness of firms’ learning and experiences [19] acquired from initial internationalization, as new and different challenges and events are expected to occur during the time-out phase [1] [12]. Nonetheless, some of the intangible resources including experiential knowledge and managerial skills are expected to remain with a firm to some extent [20] [21] from its initial through re-internationalization stages [1].

Firms’ learning and experiences from their initial internationalization phases(s) through de-internationalization and time-out periods could be capitalized by firms during their re-internationalization phase [1]. We, therefore, anticipated that the learning and experiences carried forward from initial international operations would enable a firm to re-enter international operations with higher involvement modes of operations.

The above argument is indirectly followed from the Uppsala school of thought on the process model of internationalization [13] [14] , which articulates that firms enhance their commitments in host nations over time as they accrue experience and learning from foreign markets. Accordingly, firms are expected to move ahead from an initially low-involvement modes of operations for internationalization such as direct exports or trading via agents to higher involvement modes of operations for international operations such as having branch offices, joint ventures, or establishing own subsidiaries.

In our study, we tried to understand whether this was indeed the case or not by comparing the modes of operations during initial internationalization and that during re-internationalization periods.

As this research is among the very first efforts that compare firms’ choices in modes of operations during re-internationalization as against that during initial internationalization, we expect the outcomes of this study to serve as a foundation for scholars engaging in deeper queries, apart from its contribution toward international business management theory. For instance, case studies to understand the process of re-internationalization on how and why firms undertook various decisions at different stages of their initial through exit through re-entry stages, especially to understand the reasons why which they opted for higher involvement modes of operations during re-internationalization would be an interesting topic for future research. As the study was undertaken in an emerging economy context, i.e. amongst Indian firms, which might have some limitations on generalizability of the findings to a developed economy context, it threw up a noteworthy research agenda for replication of this study in a developed economy context to understand whether the patterns identified in this study were universal or not.

We also expect the findings from this study to be useful for practitioners and policy-makers. From a managerial perspective, the findings that initial internationalization experiences help firms in their subsequent re-internationalization, as it enables them to go for higher involvement modes of operations during re-internationalization, should be motivating for managers, firstly not to be disappointed about initial failure attempts, and secondly and more importantly to invest in facilities such as knowledge management systems that record organizational learning and experiences so as to make it available when required at a later stage. Managers should ideally be exploring and looking forward to future opportunities in international markets rather than being constrained by residual negative mindshare from their initial failed internationalization attempts because learning and experiences even from failed attempts can be helpful during re-internationalization.

From a policy perspective, regulatory authorities should support firms that have retracted from initial internationalization to re-internationalize, as our study provides evidence that learning from initial attempts is indeed helpful for firms when they re-internationalize, which not only helps the firms that re-internationalize, but also in turn will benefit the larger economic prospects of the countries where they’re based at as well.

The author declares no conflicts of interest regarding the publication of this paper.

Ali, S. (2019) Re-Internationalization v/s Initial Internationalization: Comparison of Modes of Operations. Theoretical Economics Letters, 9, 223-233. https://doi.org/10.4236/tel.2019.91017