The Export Incubator - morten-rask.dk

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The Export Incubator: Leveraging export assistance through networking? Morten Rask & Anne Bøllingtoft Department of Management Aarhus School of Business, University of Aarhus

Abstract The export incubator is a market entry platform, formed by the Danish Trade Counsil at foreign markets. Special rooms have been organised and fitted with an independent entrance, so that the companies renting the office space do not reside in the Embassy or Consulate building itself. Local administrative assistance provided by the trade council is also made available in addition to office facilities. We find these export incubators interesting because they promise a faster and more networkbased profound foreign market entry that have high control, limited risk and less resource commitment. All in all, the exporting firm can focus on market developing and creating a foothold on the market only, where physical presence often is necessary in order to react fast and efficient on changed market conditions and to create and maintain personal relations. We will in this paper discuss the characteristic of the export incubator as an entry mode, especially in relation to understanding the type and extension of the networking activities.

Introduction Thomas Højlund Christensen, Head of the Commercial Department at the Embassy in Beijing describe export incubators as: “The essence of the programme is the incubator conditions…We handle the barriers and the companies can focus on their own business…Far from all companies can manage a full-scale establishment in China within a short time. The incubator is ideal for that type of companies… It gives the possibility of testing the market, building up relations and hiring its own staff and starts the sales activities. After that the company can establish its own legal entity and leave the incubator” (The Trade Council of Denmark in China, 2007). The Trade Council of Denmark in Atlanta, Washington, Silicon Valley, Montreal, New Delhi, Bangalore, Beijing, Chongqing, Guangzhou, Tokyo and Sao Paulo has establish the so-called export incubator facilities in order to help Danish companies to establish an initial physical presence in the current market with a low risk and resource commitment and with a possible high market control and the possibility of intensive networking. This type of export incubator facilities have been

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called for in the literature (Bell, 1997; Harris and Wheeler, 2005; Moen et al., 2004; Prashantham and Berry, 2004) as it can be a more constructive support for one of the most critical incidences in the internalization process, that is the selection of entry mode (Hollensen, 2007). This is compared to traditional export assistance as providing market information, helping firms with visit trade fairs etc. (Seringhaus, 1985). The selection of entry mode relates to one of the central international business research themes, namely the form and character of the international activities concerning the commitment of resources for international activities and the types of activities and resources that are transferred to or duplicated in foreign market contexts (Strandskov, 1995). An entry mode is commonly defined as an institutional arrangement with the purpose of facilitating the transfer of goods and services from the exporters’ market context to the marketing channel of the target country (Andersen, 2005; Root, 1987). This choice involves a trade-off between desired degree of control, resource commitment and risk willingness. Conventionally, based upon this trade-off, the entry modes are grouped in three: 1) The export modes (as indirect sales though export houses or direct sales through agents, distributors and importers) involve low degree of resource commitment and thereby also not very risky but in consequence also very little control 2) The hierarchical modes (as founding of foreign sales or production subsidiaries) are characterized by high control, risk and resource commitment 3) The contractual modes (as licensing, franchising and joint ventures) comes in between export and hierarchical modes (Douglas and Craig, 1989; Hill et al., 1990; Hollensen, 2007; Root, 1987). Interestingly, the export incubator promise to function as high control sales subsidiary with limited risk and resource commitment which also reflects the digital globalization area (Dicken, 2003). These typified entry modes reflect the different eras of internationalization. Investment-based from 1950ies to the 1970ies were focused on foreign direct investments in the form of foreign manufacturing units where the trade-based internationalization from the 1970ies to around mid1990ties have focused on export modes together with the contractual modes. Since 1995, digital internationalization have been in focus (Gereffi, 2001). Developments in ICT and rapidly decreasing transportation costs have allowed efficient coordination and configuration of business activities across global distances, which has given rise for new forms of global organization of international production networks as a response to increasing global producer-driven and a buyer-driven global possibilities (Dicken, 2003; Gereffi, 2001). ICT and especially the Internet creates a very cost-effective and better possibility for control (Andersen, 2005) resulting in a dramatic increase in connectivity (Gereffi, 2001) and thereby threaten the conventional trade-off understanding when characterizing entry modes. For example virtual offices are used by small firms in their initial foreign market entry (Mainela and Puhakka, 2006; Moen et al., 2004). Virtual offices as a low risk and commitment and less resource

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draining entry mode is supported by the Trade Council of Denmark (Jensen et al., 2006). When is comes to risk, a recent stream of literature has suggested that the risk avoidance is often the reason for learning through networks of personal relationships in selecting market and foreign entry modes (Andersen and Buvik, 2002; Coviello and Munro, 1997; Johanson and Mattson, 1986; Johanson and Vahlne, 1990; Johanson and Vahlne, 1992; Moen et al., 2004; Sharma and Blomstermo, 2003) This is especially important for the so-called Born Globals or New International Ventures that rely on an combination of ICT and relationship networks in their accelerated internationalization process (Gabrielsson and Manek Kirpalani, 2004; Madsen and Servais, 1997; Mainela and Puhakka, 2006; Moen et al., 2004; Sharma and Blomstermo, 2003; Weerawardena et al., 2007). The business incubator phenomenon have until know been associated with business startups where the general goal of business incubators is to develop firms and stimulate entrepreneurship (Bøllingtoft, 2005). Shortly defined, a business incubator is an umbrella term for any organization which provides access to affordable office space and shared administrative services (Allen and McCluskey, 1990; Fry, 1987a). Business incubators are generally perceived as a kind of infrastructure geared to support and nurture the establishment and development of small and medium-sized enterprises by actively ensuring that start-up firms get the resources, services and assistance they need. Apart from offering the entrepreneurs space and shared services, the opportunity for networking in general and among its incubatees is arguably one of the most important services offered by an incubator (Hansen et al., 2000a; Lyons, 2000). We find these export incubators interesting because they promise a faster and more network-based profound foreign market entry that have high control, limited risk and less resource commitment. We will in this paper discuss the characteristic of the export incubator as an entry mode, especially in relation to understanding the type and extension of the networking activities. This paper is organized as follows. After the methodology section, we have a short introduction to the export incubator phenomena seen from the export promoters’ point of view. Then we review the literature about networking activities in relation to export/internationalization and incubators in order to create propositions. We finalize the paper with a discussion of our findings and a conclusion where practical and research implications are highlighted.

Data and methodology This explorative study consists of three sets of data used in the three stages of the research process. The first research stage was based upon secondary data public available from the Trade Council of Denmark and was used to make an initial description of the export incubator phenomena. This description was confronted with the findings in the literature review in order to develop some central propositions. These propositions served as the foundation for the second stage in analyzing 4 reports about export incubators at the Danish Trade Commissions in Atlanta, Washington, Singapore and Sweden. The 4 reports were written by students during

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their internship at these locations. We used these student created reports as cases to examine our propositions (Forsgren and Hagström, 2001; Vahlne and Johanson, 2002). The students were supervised by one of the authors of this article, while the analyses of the reports were done by the author who has not supervised the students. This was done in order to create a suitable distance and a more ‘neutral/objective’ view at the reports. The students have all based their report on interviews and/or focus group interviews with personnel from the Embassies, the Danish Trade Counsil and the firms using the Export Incubator facilities. In this paper we are relying on actual quotes from these informants rather than the students’ interpretation of these quotes. Relying on student reports when examining propositions that are based on a literature review, may cause problems in the analysis, as these 4 student reports were not designed specifically to inform nor answer the propositions. Thus, not all the reports contain information related to all the propositions. The term ‘missing information’ will be used in this situation in the analysis/findings. We apply a hermeneutic procedure that involves several iterative loops between phases of the research process. This is often referred to as the three-step process of interactive redevelopment of understanding: pre-understanding, understanding and post-understanding. The purpose of pre-understanding is to create a common language about the phenomena under investigation. The goal in the understanding phase is to find essential patterns in the information. In the postunderstanding phase we interpret what is factual and actual in the current study (Arbnor and Bjerke, 1997). The following list describes the research process of the present study, where the three first phases focus on building the theoretical framework and the three following phases on analysing the cases. 1. Pre-understanding • Reading secondary data about the export incubators 2. Understanding • Grounding study in existing literature 3. Post-understanding • Developing a set of propositions based upon the secondary data and literature 4. Pre-understanding • Analysing the case reports 5. Understanding • Matching the propositions with the statement in the cases 6. Post-understanding • Evaluation and further generation and revision of theoretical understanding of networked based export assistance We apply an analytical procedure known as the DFA (Wilson and Woodside, 1999). This is a formal case study approach used for matching patterns of observations to expected statements, allowing the researcher to evoke and test minitheories on simple causal relationships and let these form into more complex patterns (Weick, 1979). This process of pattern matching is analogous to having degrees-offreedom in a formal statistical test (Campbell, 1975). However, the purpose of this approach is not to generalize findings into predictions about a population, but to ground theory development in empirical observations and further refine it through the test of reality (Mills, 1959; Strauss and Corbin, 1990; Yin, 1994). In contrast to the traditional procedures of grounded theory (Glaser and Strauss, 1967), which exclude formal theory in the development of causal relationships, to ensure empirical

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‘‘purity’’ we allow the formulation of predictions based on our theoretical preunderstanding. Among the advantages of this approach to case analysis are the possibilities for others to better understand and follow the interpretation processes of the researcher in deriving findings from complex data material, something which less structured qualitative analysis procedures have been criticised for lacking (Miles, 1979; Miles and Huberman, 1984).

The export incubators phenomena according to the Trade Council of Denmark Since February 2001, The Danish Trade Commission in Atlanta, Georgia, has as the first location made it easier for smaller Danish companies to establish an initial physical presence in the American marketplace and 17 companies have since then taken part in the experience: “The Danish companies are provided with immediate access to a complete infrastructure - phones, furnishings, conference facility and support staff. The purpose behind the concept is to help reduce time spent and the initial risk in the start-up phase, which allows the companies to focus, from the beginning, on their respective growth strategies while reducing the overall risk of starting up in a foreign country. Some of the major advantages are that the companies save on accommodation costs and time saved on finding a location. Additionally the companies have access to the people as a resource and to the network of the Danish Trade Commission. Finally, if the start-up in the American market should not turn out to be as successful as expected, it is easy to pull out of the market almost instantly” (The Trade Council of Denmark in Atlanta, 2005). The Trade Council of Denmark is the governmental export and investment promotion organization under the Ministry of Foreign Affairs. The organisation comprises more than 100 embassies, consulates-general and trade commissions. At the representations in Atlanta, Washington, Silicon Valley, Montreal, New Delhi, Bangalore, Beijing, Chongqing, Guangzhou, Tokyo and Sao Paulo the so-called incubator facilities have been established and it is expected that more representations in the future will follow. The export incubator is also called the accelerator programme, the Danish Business Centre, and the market entry platform, where either in direct attachment to the trade council or in leased office premises located externally – special rooms have been organised and fitted with an independent entrance, so that the companies renting the office space do not reside in the Embassy or Consulate building itself. Local administrative assistance provided by the trade council is also made available in addition to office facilities (Ministry of Foreign Affairs, 2006). The originator, of the export incubator, Kent Fallensen from Danish Trade Commission in Atlanta has a background in the IT-industry, from which he was inspired by the incubator idea (Tüchsen, 2001). The export incubator comes in three types that reflect a gradual engagement in the current foreign market. To a start, the virtual office encompasses a permanent address and local phone number and the local trade commission handles the legal registration of the sales-subsidiary and the reception forward mail, phone-calls, product enquiries, etc. The next step in engagement is the limited use of the export incubator. In addition to the virtual

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office, facilities, the local trade commission offers simple administrative support, help with travel arrangements and access to the common office area and sparring with the employees at the local trade commission and other incubator firms. The full utilization of the export incubator do also include an office space where access to photocopier, printer, fax, internet and the local trade commission helps with visa and work permit. It is expected that after maximum 2-3 years, the firm will establish themselves outside the export incubator (Jensen et al., 2006). We will in this research primarily focus on the full utilization of the export incubator. The central idea is to make it as fast, smooth and easy as possible to establish physical presence with a fully owned sales subsidiary at the foreign market. At the same time the exporting firm can reduce the risk substantially while the cost in establishing and eventually leaving the market are relatively low. Additionally the access to the locale trade commission’s network also eases bureaucratic processes. At least but not last the networking with the other 4-10 incubator firms at the export incubator can comes handy too. All in all, the exporting firm can focus on market developing and creating a foothold on the market only, where physical presence often is necessary in order to react fast and efficient on changed market conditions and to create and maintain personal relations (Jensen et al., 2006).

Theoretical Propositions During the last decade, much of the research in accelerated internationalization through networks takes in starting point in Bell (1995). This contribution gave rise for a massive body of research focusing on small software or other similar knowledge-intensive firms primarily with a origin in small open economies (Bell, 1997; Bell et al., 2004; Burgel and Murray Gordon, 2000; Coviello and Munro, 1997; Gabrielsson and Manek Kirpalani, 2004; Loane and Bell, 2002; Loane and Bell, 2006; Loane et al., 2004; Mainela and Puhakka, 2006; Moen et al., 2004; Mort and Weerawardena, 2006; Prashantham and Berry, 2004) as the firms in question in Bell (1995). In this paper, a small knowledge intentive firm is defined as one that has fewer than 100 employees, the majority of whom compromise a highly qualified workforce, which is its most important resource and is engaged in knowledge work – meaning that knowledge is inherent in the firm’s main activities as it’s central preoccupation (Prashantham and Berry, 2004). However, we will use 250 employees as the upper limit concerning the definition of small and medium-sized enterprises (EU Directorate General-IV, 1996). Based upon this understanding we suggest the following proposition: P1: It will be small and medium-sized knowledge intensive companies using the export incubator in order to establish a platform for creating and maintaining networks of business relations The research most often focused on networks as motives and prerequisites related to the triggers and motives initiating the firm to expand its activities beyond its domestic task environment. Besides that the firm had a global focus from outset (Loane et al., 2004) and a initial strong international vision (Loane and Bell, 2006) the networks were important because of scared resources of the firm (Prashantham and Berry, 2004) because the networks provided crucial resource and legitimacy (Loane et al., 2004), market information and market access (Mainela and Puhakka,

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2006) and access to decision makers in target firms, market knowledge and funding (Loane and Bell, 2006). P2: Firms using the export incubator have an initial strong international vision but limited resources for creating market legitimacy, information and access Also, risk exposure was minimized by networking capability of the firm, nurtured by the owner of the firm (Mort and Weerawardena, 2006) and in general, the risk avoidance is often the reason for learning through networks of personal relationships in selecting market and foreign entry mode (Andersen and Buvik, 2002; Coviello and Munro, 1997; Johanson and Mattson, 1986; Johanson and Vahlne, 1990; Johanson and Vahlne, 1992; Moen et al., 2004; Sharma and Blomstermo, 2003). P3: Firms using the export incubator have as a motive to lower the financial risk related to the selection of foreign markets and entry modes The main focus of this research has been on the scope, process and especially speed of the international expansion concerning the sequence of international entries and the decision-making or strategic process behind the international evolution of the firms. The researchers find a tight connection among rapid/accelerated internationalization process of the firms and their use of networks of formal and informal inter-organizational, personal and social relationships as bridges to foreign market exploitation, which none of the firms could do themselves because of lack of resources (Coviello and Munro, 1997; Loane and Bell, 2002; Loane and Bell, 2006; Loane et al., 2004; Mort and Weerawardena, 2006). P4: There is a tight connection among accelerated internationalization process of the firms and their use of networks as bridges to foreign market exploitation At last the research investigated to some degree the form and character of the international activities concerning the commitment of resources for international activities and the types of activities and resources that are transferred to or duplicated in foreign market contexts. In general, previous research has found that the firms in question primary used low commitment modes as direct export (Bell, 1995; Loane et al., 2004). Only serious commitment in countries where relationships existed (Moen et al., 2004). Very few firms used high commitment modes as sales subsidiaries (Bell, 1995; Mort and Weerawardena, 2006) and when it was the case it was most often relative late in the internationalization process of the firm (Coviello and Munro, 1997). However, there was a need for being closer to customer, so virtual offices was created in order to create legitimacy (Mainela and Puhakka, 2006) together with using Internet as a important tool for creating and maintaining relationships (Moen et al., 2004). And, even though the software firms were good at using the Internet for communication, one of the major export problems was the cost of communication e.g. the need for face-to-face communication when demonstrating the software values for the customer (Bell, 1997). In other words, there was a need for a low resource commitment mode with a high degree of presence on the foreign market as the export incubator to maintain networks of relationships. P5: The form and character of the international activities are constituted by their need of being physical present in order to build network relations, face-toface communication (e.g. demonstration of software) Turning attention to the business incubator phenomenon, the American National Business Incubation Association (www.nbia.org) defines a business

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incubator as ”a business support process that accelerates the successful development of start-up and fledgling companies by providing entrepreneurs with an array of targeted resources and services”. According to Sherman and Chappell (1998), these support services include assistance in e.g. developing business and marketing plans, building management teams and obtaining capital and access to a range of other more specialized professional services. Furthermore, they also provide flexible space, shared equipment and distinct (administrative) services (Allen and McCluskey, 1990; Fry, 1987b; Grimaldi and Grandi, 2005). Over time the focus within the business incubator literature has shifted from enterprise development and expansion of services towards the business incubator as a formal mechanism for embedding the company in (entrepreneurial) networks (e.g. Hackett and Dilts, 2004; e.g. Hansen et al., 2000b; McAdam and McAdam, 2006). This can be seen as a consequence of the recognition in the broad spectrum of entrepreneurship literature that access to networks often plays a crucial role for new ventures and small companies (Birley, 2000; Dubini and Aldrich, 1991; Johannisson, 2000; Malecki, 1997). Thus, apart from offering the entrepreneurs space and shared services, the opportunity for networking among the incubatees is arguably one of the most important services offered by an incubator (Hansen et al., 2000b; Lyons, 2000). Moreover, Sherman and Chappell (1998) suggest that tenants tend to use incubators to facilitate relationships with other incubator tenants. Grimaldi and Grandi (2005) argue that the existence of different incubators and the evolution of their business models over time have been driven by an evolution of company requirements and needs. Following this line of thought, networking in general as well as networking among the incubatees, has gained increasing importance. P6: The opportunity for networking among the export incubates is called for by the companies using the export incubator Although the general goal of business incubators is to develop firms and stimulate entrepreneurship, they have different priorities, strategies and goals (Aernoudt, 2004; Grimaldi and Grandi, 2005). This is also reflected in the different labels under which business incubators have been marketed over the years, e.g.: ‘business accelerators’ (Barrow, 2001); ‘research parks’ (Money, 1970); ‘science parks’ (Martin, 1997); ‘seedbeds’ (Felsenstein, 1994); and ‘networked business incubators’ (Hansen et al., 2000b). The variety of distinct support services provided by business incubators thus give rise to different incubation models (Grimaldi and Grandi, 2005), and as expressed by Aernoudt (2004: 128), the term ‘business incubator’ is becoming more and more of an ‘umbrella word’, covering a heterogeneous reality. Despite of this heterogeneous reality, different attempts at classifying business incubator types have been made (Hulsink and Elfring, 2001). The table below illustrates a simplified classification provided by Allen and McCluskey (1990).

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Table 1: The Business Incubator Continuum Value added through

Real Estate For-profit property development incubators Real estate appreciation

Sell proprietary services to incubatees

Non-profit development corporation incubators Job creation and enhancing of the entrepreneurial climate Regional/area development

Academic incubators

Business development For-profit seedcapital incubators

Commercialization of university research

Capitalize investment opportunity

Capitalize investment opportunity

Secure availability to risk capital

Source: Adapted from Allen & McCluskey (1990).

The for-profit property development incubators provide shared office space together with shared services. They are mainly interested in rental income and real estate value growth and do not focus on developing the firms within the incubator (Allen and McCluskey, 1990; Barrow, 2001). The main objective of the non-profit development corporation incubators is often area development. The academic incubators are also referred to as university incubators. New companies are offered access to e.g. laboratories and libraries, and their main goal is to transform research and development findings into new products or technologies. The for-profit seed capital incubators which have the explicit goal of capitalizing investment opportunities often help their incubatees with financing issues. Their major goal is to make profit by developing the firms (Barrow, 2001). Based on our pre-understanding of export incubators, we suggest that the export incubator is quite similar to the for-profit property development incubators. Focus in the export incubators is to establish an initial physical presence in the foreign market via access to a complete infrastructure provided by the embassies. P7: The firms using the export incubators expects access to a complete office infrastructure (office space with access to photocopier, printer, telephone, fax, internet access) as well as administrative support and specialized professional services (e.g. legal registration of salessubsidiary) P8: The export incubator is established by the Danish trade commission to rent vacant office space and their interest is to sell services to incubatees

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Discussion of findings Based upon the 4 reports (Davidsen, 2007; Frederiksen, 2007; Hinge, 2008; Pedersen, 2008) we can confirm three of the propositions (P1, P2 & P6), partly confirm 3 more propositions (P3, P4 & P5) and the last two propositions (P7 & P8) are subject for further research in due to lack of information in the reports. Table 2 gives an overview of the correlation between the propositions and the reports.

2 (Davidsen, 2007)

3 (Hinge, 2008)

4 (Pedersen, 2008)

Hits

P2: Firms using the export incubator have an initial strong international vision but limited resources for creating market legitimacy, information and access P3: Firms using the export incubator have as a motive to lower the financial risk related to the selection of foreign markets and entry modes P7: The firms using the export incubators expects access to a complete office infrastructure as well as administrative support and specialized professional services P1: It will be small and medium-sized knowledge intensive companies using the export incubator in order to establish a platform for creating and maintaining networks of business relations P4: There is a tight connection among accelerated internationalization process of the firms and their use of networks as bridges to foreign market exploitation P5: The form and character of the international activities are constituted by their need of being physical present in order to build network relations, face-toface communication P6: The opportunity for networking among the export incubates is called for by the companies using the export incubator P8: The export incubator is established by the Danish trade commission to rent vacant office space and their interest is to sell services to incubates

1 (Frederiksen, 2007)

Table 2: Findings

1

1

1

1

100%

1

1

1

1

100%

1

1

1

1

100%

-1

1

1

1

50%

½

½

½

½

50%

½

½

½

½

50%

½

13% -1

-25%

1 = confirmed by the interviews in the report ½ = partly confirmed by the interviews in the report -1 = rejected based on the interviews in the report Blank = no information about this issue in the reports Both proposition 2, 3 and 7 was confirmed by all the interviewed firms using the export incubator. In other words, we found that the firms are using the export incubator for accessing a complete infrastructure like office space with access to photocopier, printer, telephone, fax, internet access as well as administrative support and specialized professional services e.g. legal registration of sales-subsidiary in order to lowering the financial risk related to the selection of foreign markets and entry modes and lowering the demand on resources for creating market legitimacy, information as well as market access. As the sales person from Hydrema, which develop, manufacture and market high-technology earth moving equipment, the incubator – here called the Growth-house – limits the demanded resources normally used on accessing a new market: “We had all the preliminary investigations in place before we entered the Growth-house. However, it created a sense of calmness that helped us to focus on business because the employees at the Growth-house already

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had created contacts to attorneys, accountants, etc. The establishment of company name, phone and fax happened almost automatically” (Davidsen, 2007 p. 18) Proposition P1: An examination of the different interviewed companies reveals that almost all of the companies are small and mediums-sized (fewer than 250 employees) and almost all of the companies qualified as knowledge-intensive companies. When it comes to establishing a platform for creating and maintaining a network of business relations, the overall impression from the reports is, that the creation and maintaining of a network of relations is extremely important. Even though it was possible to find firms in the reports where all issues are in place, we find P4 and P5 too indefinite. The majority of the interviewed firms highlight the importance of their networks as bridges to foreign market exploitation. However, for some companies, the physical presence seems even more important in relation to market exploitation than their use of networks as bridges to foreign market exploitation. On the other hand, for some companies the physical presence was necessary only in order to have face-to-face communication with the potential customers. Thus, building of network relations was not always necessary. This is typically in cases, where the firm has a product that is important for the potential customers to see and/or test. As a consequence each of propositions P4 and P5 has to be spilt into two separate more specific propositions: P4a: There is a tight connection among accelerated internationalization process of the firms and their use of networks as bridges to foreign market exploitation P4b: There is a tight connection among accelerated internationalization process of the firms and their physical presence as the fundamental basis for foreign market exploitation P5a: The form and character of the international activities are constituted by their need of being physical present in order to build network relations P5b: The form and character of the international activities are constituted by their need of being physical present in order to create a basis for face-to-face communication Both proposition 7 and 8 were neither confirmed nor rejected by the reports because of lack of information. None of the reports explicitly touch upon the .opportunity for networking among the export incubates, and only in one interview, the informant comment positively upon this opportunity as describe in P7. As with proposition 7, none of the reports explicitly touch upon this described in P8, regarding that the export incubator is established by the Danish trade commission to rent vacant office space and their interest is to sell services to incubatees. Indirectly statements from informants representing the Trade Councils seems to be the ’standard answer’ when the purpose with the export incubator is discussed. This, however, does not tell us whether it also is a motive to rent vacant office space and sell services to incubatees. As a consequence, more research on these issues is needed.

Facilitating export market intelligence sharing through networked export incubators In order to facilitate the further research, we will focus on the export assistance while the export incubator clearly is an innovative export assistance initiative.

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Traditionally, export assistance is understood as the providing of “… standardized and customized market information and guidance on exporting and export marketing and second, more comprehensive programs ranging from helping firms research specific foreign market visits – individual or with trade missions – trade fairs to actual market entry” (Seringhaus, 1985). However, extensive research done about export assistance has consistently shown that businesses consider export intelligence/experiential knowledge as having a highest utility value (Hart et al., 1994; McAuley, 1993; Reid, 1984; Walters, 1983) so more informal and experiential approaches that include collecting information from one’s networking partners (Souchon and Diamantopoulos, 1999) could be added to the provision of export assistance trough networked export incubators. Table 3 is a framework for further research on the networked export incubator phenomena, where the basic features relates to what the Trade Councils already provides and the additional networked features are our suggestion. Table 3: A framework for further research on the networked export incubator phenomena

Additional networking features

Basic features

Motives and prerequisites P1: It will be small and mediumsized knowledge intensive companies using the export incubator in order to establish a platform for creating and maintaining networks of business relations P2: Firms using the export incubator have an initial strong international vision but limited resources for creating market legitimacy, information and access

P3: Firms using the export incubator have as a motive to lower the financial risk related to the selection of foreign markets and entry modes

Incubator facilities

P6: The opportunity for networking among the export incubates is called for by the companies using the export incubator

P7: The firms using the export incubators expects access to a complete office infrastructure as well as administrative support and specialized professional services P8: The export incubator is established by the Danish trade commission to rent vacant office space and their interest is to sell services to incubatees

International market exploitation

P4a: There is a tight connection among accelerated internationalization process of the firms and their use of networks as bridges to foreign market exploitation

P4b: There is a tight connection among accelerated internationalization process of the firms and their physical presence as the fundamental basis for foreign market exploitation

Market Entry mode P5a: The form and character of the international activities are constituted by their need of being physical present in order to build network relations

P5b: The form and character of the international activities are constituted by their need of being physical present in order to create a basis for face-to-face communication

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Conclusion and implications Based on our explorative and initial findings, we find that the export incubators promise of a market entry with high control, limited risk and less resource commitment is largely confirmed on a theoretical level as well as in practice by the informants interviewed in the student reports. However, when it comes to the promise of a faster and more network-based profound foreign market entry and thereby to leverage export assistance through networking, we suggest that the export incubators deserve further attention as well as investigation. As the student reports served as the empirical foundation in this explorative phase, they had quite an important role. However, as revealed in table 2, the reliance on student reports in the examination of the propositions was not quite without problems, the main problem being the fact that these reports were not ‘designed’ to inform or answer the literature-based propositions. Thus, status is that the student reports were not able to completely reject any of the suggested propositions, however only three of the propositions could be confirmed. This leaves unanswered propositions for further investigation. One highly interesting proposition for further investigation relates specifically to proposition 6, i.e. that the opportunity for networking among the export incubatees was called for by the companies using the export incubator. The student reports mainly focused on the creation of networks of business relations outside the export incubators. However, seen in the light of the development within the business incubator literature and research, it is highly interesting to examine whether the export incubator might have a central and important role as to being a formal mechanism for facilitating some kind of networking between/among the companies. We have one informant who partly confirms this in one of the reports, but we do realize that this needs further investigation. Depending on the result of this further investigation, the result could be that the incubatees in the export incubators wish more than just access to a complete office infrastructure as well as administrative support and specialized professional services (proposition 7). Consequently, the people behind the export incubator concept might consider adjustments of the concept. These adjustments will be of high importance if it can be confirmed that the export incubators are merely interested in renting out vacant office space and sell services. This roughly corresponds to focusing on value added through real estate as illustrated in table 1. An adjustment in the concept export incubators towards value added through business development might be beneficial. Also important to bear in mind is that most of the student reports were based on export incubators situated in USA. Compared to other relevant export markets, the market in USA might be different to gain foothold in because of e.g. size and culture .

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