ERASMUS + - KA2 Knowledge Alliances

Project GLOBAL-SPIN Transnational Entrepreneurship and Corporate Learning: Fostering Effective Internationalization Strategies in Academic Spin-Offs

Assessment on effective

internationalization strategies for academic spin offs

GLOBAL-SPIN: Transnational Entrepreneurship and Corporate Learning: Fostering Effective Internationalization Strategies in

Academic Spin-Offs

ERASMUS + Knowledge Alliances for Higher Education

Project Number: 574706-EPP-1-2016-1-ES-EPPKAl-KA

D5.3 Assessment on effective internationalization strategies for academic spin offs

This project has been funded with support from the European Commission. This Communication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

5.3 Internationalisation strategies Some of the start-ups have internationalized from the launch (“born global”) by externalizing the production process. Another strategy is to externalize the commercialization of the product and services in the new country and, secondly, only if there are good economic results, a development and production team is formed in the new country with local employers. The testing process in the new country is recommended not to be longer than 1 year.

Other strategy mentioned in the focus group discussions was to count directly with the support of private investors or business angels from abroad to fund the internationalization process. However, although there exist internationalization support programs offered by national and European administrations, the long periods of time as well as the bureaucracy that these programs involve make them highly inefficient for many business models and projects.

Another strategy has consisted in hiring human resources for specific projects, instead of fixed contracts. This labour flexibility has been a key to make the company sustainable meanwhile assuming the costs of the internationalization process.

Some companies had good experiences in using recruitment networks (e.g. pool for specialized talents) where you can find experienced people who have gathered experience in international markets. Also international students were regarded as potential resources. Companies can give interesting themes for students who are making their thesis. With this strategy, you get to know the student and potentially find a new talent. Foreign students may have important knowledge and skills related to business opportunities in their own countries.

Entrepreneurship mentoring could also help academic spin offs to internationalise their products/services. Even if the mentor and mentee work in different fields, the support and coaching of someone experienced is extremely valuable. When supporting academic entrepreneurs it is important to ensure long term support, and not just help them through the early stages of the internationalisation process. However, it was also pointed out that previous experience (whether it is your own experience or your mentor’s experience) is beneficial only in general level if it originates from a different business field. When business sector, product/service or customer type changes, you need to start from scratch learning how to run that particular business.

Current mentoring and training offered by accelerators and incubators in internationalization strategies is often not useful as it is focuses on visioning strategies more than real execution. The support is more efficient when it is about looking for external investors and managing the contacts and relations between the founder partners and these investors. Providing academic spin offs managers with a list of organisations that could help them would also be effective, so that they could get help in specific matters. For example a database with the names of providers with a specific specialization. Also access to internationalised contacts and networks is probably very beneficial for long-term international success as well as technical and scientific alliances.

Following strategies were found as effective when it comes to internationalization:

• systematic and targeted networking with European and international actors (funds, potential clients),

• recruit people that are either situated abroad or travel a lot and have contacts abroad, • participate in events and competitions, • have legal advice on matters of IPR and patenting, • recruit highly skilled personnel that can produce fast qualitative outputs, • keep the personnel trained according to the latest advances in the field, • recruit new personnel as the business grows to undertake tasks that currently none of the existing

personnel has the qualifications for (marketing, management, business development, etc.), • use advice available from structures that provide mentoring (incubators, accelerators, etc.), • develop a prototype as soon as possible and try to receive as much feedback as possible

(feedback will greatly shape the end product)

Focus group participants found that companies should collaborate in internationalization as much as possible. Companies can for example organize international activities together. These activities can include activities such as visits in interesting market areas, studying customer needs and locating business opportunities or combined solution development resulting in networked solution.

Finding a good distributor or partner was seen very powerful in internationalizing. This is also a very common strategy to overcome two major barriers in going to another market: one is the knowledge and the other the investment that you need to do. Also franchising might be something to consider when searching for a good way to promote internationalization, even for companies located in more traditional sectors.

Pilot projects were also considered as an important step in the internationalization process. Companies were looking for these projects at least for two reasons: 1) to get first-hand experience from interesting market area, 2) to test their offering (e.g. technical testing in extreme conditions, market fit). Pilot projects were seen important also in order to create contacts and get reference cases.

Participation (as partner or subcontractor) in Eu-projects was seen as one potential internationalization strategy, especially for micro companies. Within these projects companies can create important contacts and useful networks as well as reveal concrete business opportunities. Also collaboration with other micro companies was mentioned as a powerful strategy in international actions. Combing knowledge, skills and contacts with other micro-companies (e.g. organizing visits, networking events and projects together) were seen useful when aiming into international markets. Subcontracting was also mentioned as one potential strategy for micro companies.

Selected internationalisation strategies

Survey respondents were asked to identify the path of internationalisation in their company (n=330). Co-operations and strategic alliances was selected as a preferred internationalisation path by 40 % of companies. 25 % of responding companies were born-globals.

In the survey, respondent were asked to identify the selected internationalisation strategies applied in their company at the moment or potentially in the near future (n=693). Several selections were allowed. Joint ventures, strategic alliances and international collaboration was selected by 27 % of respondents. Indirect/direct export (17 %), e-commerce (13 %), recruiting international workers (i.e. global talents) (11 %) and licensing (11 %) were also among the widely used strategies.

Among the commonly mentioned external determinants of affecting the market entry choices were:

• Availability of the capital (investors) • The Global nature of the current market • Market potential and product fit; Market readiness in target country, market size, understanding

the need for which the customer is willing to pay, the better benefits of the product in comparison to the local offer

• Reliable partners and long-standing partnership, contact network, supply chain locations • Random opportunities; chance meeting with the right person in a networking event, leading to a

partnership • Cultural similarities; easy of entry, Low cost of entry

Among the commonly mentioned internal determinants affecting the market entry choices were:

• Previous knowledge of the target market • Language skills (ability to do translations, easy to communicate), • Funding expertize in the market, the availability of spare financial resources; • Current staff availability, Capable team, right resources • Research Interest, Learning/Knowledge Exchange possibilities • Motivation to go international fast, Maturity within the company for the next steps • Small internal structure; nature of the services and products don't require an initial bet on other

entry options; conservative risk profile of the company • Managerial support, Marketing and communication strategy, Marketing and branding skills "can

do" attitude

When asked about the pace of internationalisation (n=330), 30 % reported that entry occurred over a period of time more than a year and 20 % that the entry had occurred over a period of time less than a year. 21 % of respondents had planned the entry to occur over a period of time more than one year and 12 % entry to occur over a period of time less than one year.

Recruiting of global talent

Survey respondents were asked to name the best way to acquire transnational skills, information and resources that are needed for the internationalisation (n=904). Several selections were allowed. 43 % of survey respondents have recruited or currently employ international workers. Partnerships and joint ventures were regarded as the best way to acquire transnational skills, information and resources needed for the internationalisation of the business by 18 % of the survey respondents. Networking with incubators and companies (17 %) and use of expert services provided by target country (15 %) were also

rated among the best ways to acquire transnational skills, information and resources.

Survey respondents were also asked to share their experiences related to the best ways to recruit international workers. Following methods were mentioned:

• Collaboration with local university • Business and personal contact networks (word-of-mouth), LinkedIn, social media, head-hunters,

recommendations, “hire those people you have already worked together with in the past”, • Employer branding; interesting projects, to make our company interesting to create pull • Fellowship programmes, Participating in Job Fairs and Communities of Practice, Traineeship

agreements • “It is important to have a local presence and knowledge about the local culture in the country

you recruit”, Local consultant and recruitment companies, Head hunters, exchange programs, Job adverts, find the first skilled local employee and grow the company around him

As a common barriers and challenges to international recruitment, following themes were mentioned among others:

• Lack of/or poor understanding of cultural differences, language barriers, different perspectives

• Global competition, lack of local attractiveness and long-term commitment, small and/or newly established company is not attractive enough

• Lack of talent, brain drain • General logistics of recruiting talent and bureaucracy • Lack of skills in recruiting from abroad, lack of practices to manage multicultural organizations,

groups and teams • Aims to reduce barriers; national programmes and organizational strategies (shares, value,

transparency promotion, personalized workdays and job positions etc.). • Needs and expectations are different at all levels (salary, schedule, commitment, bonus, etc.), to

find a motivated person and be able to know for sure this person fits well into your organizational culture

• The full package offered (they must be willing to change country maybe even bring their families too)

As key determinants for engaging international workers following were mentioned:

• Motivating work and environment; attractive salary, personal development possibility, • mission and vision of the company for its future development; Mission that workers want to be part

of, Mutual commitment of growth, vision of the company • Making them feel welcome in the company; Avoiding feeling of isolation, good leadership,

Transparency, flexibility and trust, Good communication, Several good contacts to main organization on different levels, involve them virtually and face to face to forge links as much as possible.

• Opportunities for development, interesting job tasks, salary, Carrier path and new challenges, ability to increase skills with the provision of training paths

• Company's ability to follow their advice and speed up product and business development into the direction they show

Learning and training preferences Potential themes for training

Based on the focus group discussions, following themes were mentioned as preferred ones in the training:

• financial opportunities, IPR management, patents, national and international legal issues and bureaucracy,

• business analytics, profit & loss analysis, market survey and targeting, access to statistics and market information, competition monitoring,

• business planning, change management, HR, marketing management, growth strategy development,

• export documentation, international payments, import procedures, INCOTERMS rules and systems, • evidence-based entrepreneurship, mentoring, mock-up design, presentation skills

Learning/training preferences

In the focus group discussions companies were asked to share their learning and training preferences. The interviewed companies had good experiences in participating seminars, events and conferences. Sharing success stories, utilizing mentoring services, and guides were also found useful.

All focus groups participants found online training to be a good solution for those who struggle to find the time to follow a course. The apps and platforms should be motivating and easy to access even with smartphones. Also if the webinar is delivered at an international level linking to participants from abroad could be very helpful in order to increase entrepreneurs’ international networks and contacts. One participant highlighted: “A webinar should be dynamic, short and concise and not just a PowerPoint being read out loud.” Many respondents pointed out that all learning resources must be available on a user-friendly platform which is easy to access and doesn’t ask for a lot of information to register. It was seen as important that the platform should offer an opportunity to connect with other international academic spin offs.

Also online-communities (e.g. micro-companies in the same region, companies in the eu-area) were mentioned. Discussion forums and benchmarking events with other companies (not only in the same field) were mentioned as concrete actions that have been experienced as useful and inspiring.

Webinars and education platforms were found easy to approach medias. Combination of videos, reliable and trustworthy articles are the backbone of interesting training material. “Latest from the research” popularized research findings were also mentioned as a way to create credibility and disseminate latest research findings to companies.

Many respondents felt like face-to-face training was really important for them to keep them motivated throughout all the training and feel involved. Trainings also offer interesting networking opportunities. Networking activities and face-to-face sessions were regarded as important element of training because they give a possibility for sharing experiences and meeting potential partners.

It was suggested by many respondents that blended learning might be ideal with a bit of contact hours and the rest online. Entrepreneurs find themselves working too many hours so having on line content which was brief and effective such as TEDtalks was welcomed.

People like training to be hands-on, and based on practical experience. In cases of highly motivated personnel all types should work well and the flexibility of webinars and distance learning make them excellent choices. Face-to-face training has the advantage of personal involvement and is much more direct. It should be used when the trainer is well skilled and has personal experiences to share.

The choice of online training or face-to-face –training depends on the kind of competencies to transfer and the level of trainees. It was seen as important to have general facts about the internationalization compiled in one material but more than this, there is a need for sharing experiences with others. It was suggested that the best way is to share first-hand experiences (e.g. cultural aspects, market specific problems) with others in discussion sessions.

For some companies involved in the study the best method that guarantees the result is experiential learning (“learning by doing”). They also understand that the use of success stories, multimedia simulations and team projects are very suitable for companies whose value is innovation.

It was pointed out that free of charge learning material is very relevant idea, especially for micro companies. E-learning is also good method; if training takes too much time, small companies do not have possibility to dedicate time for participating.

The training should also be very pragmatic in terms of feeding information and content that is direct and case based and not so theoretical driven. Also peer-to-peer learning is very important.

Preferred teaching methodologies and tools

Blended learning and webinars were seen as the most preferred tool for learning followed by face-to-face and peer-to-peer learning. Training abroad was seen a good way of allowing you to grow your network and a wider development of skills set.

Comments; ideas; suggestions

All participants welcomed the GLOBAL SPIN project and mentioned that international strategies are crucial in the current context but more help is needed in order to access new markets. Entrepreneurs need international expert support from the beginning and throughout their business life.

• Products from academic spin-offs and start-ups can rarely be restricted to the local market and normally must be internationalized for success.

• Student entrepreneurs are more successful than researcher entrepreneurs. • Younger academic spin-offs and start-ups tend to be in a better position to

internationalise than older ones. • The more R&D orientated, the slower the internationalisation. • Academic spin-offs and start-ups are often started before they have the resources

necessary for full business operations. • If university spin-offs do not internationalise in the growth stage, it is less likely that they do

so at a more advanced stage. • Choose the countries in a logical way (perhaps one at a time).

The content of the training course should be focused on some specific theme, business field or segment (e.g. SaaS services) which leads the whole content creation.

Some pointed out that the fear of failure is well rooted in some countries and this poses a huge obstacle and holds back people from experimenting with an idea.

Training material should be engaging, visually attractive and really direct. In the preferred method, digital content is mixed with moments where participants can interact with each other.