The Importance Of Domestic Expansion In Business

Firms’ overall business strategies and approaches changes during their expansion process (Penrose, 1959) and the expansion strategies will also depend on their business context. Firms evolve, according to Gammeltoft et al. (2010), through the co-creating of the economic system and in this process, the firms and its strategies change and this change will have a remarkable effect on the domestic economic outcome. As a result of governments respond to the emergence of firms by developing policies and regulations and supporting institutions to enhance their evolution as illustrated by Chandler, (1977). Therefore, a correlation exists between firms’ domestic expansion and their tendency to expand beyond their national borders to foreign markets. …show more content…
Though, extant literature had contributed and accorded us the understanding of EMNCs’ IP, the role played by drivers, motivations and location of internationalisation of firms in this understanding cannot be overemphasized (Athreye & Kapur, 2009; Deng, 2012; Gammeltoft, Pradhan, & Goldstein, 2010; Gaur & Kumar, 2014; Sim, 2005; Verhoef, 2011 Amal, Awuah, Raboch, & Andersson, 2013; Aulakh, 2007; Bianchi, 2014; Dunning, 1988; Gammeltoft, Barnard, & Madhok, 2010; Mihailova & Panibratov, 2012; Olaya, Olaya, & Cuéter, …show more content…
Uppsala model buttress that firms’ are a domestic focus on the first stage of the internationalisation process (IP), then export focus and then subsequently involved in the foreign production. It is also noted that firms’ at the early stage of internationalisation will first invest in a close psychic distance market to mitigate the liability of foreignness. The model also stresses the importance of experiential knowledge about a market, the more knowledge a firm have about a particular market the more resources will be committed to that market (Banalieva & Santoro, 2009; Elango, 1998; Elango & Sethi, 2007; Johanson & Vahlne, 1977, 1990; Johanson et al., 2009). Jansson (2009, p.:48) position supports the “Uppsala model” and he argues that the internationalisation process of firms’ are in five different stages whereby, organisations’ business activities are domestically focused on the first stage of the internationalisation process. Firms then develop active involvement in foreign markets with committed involvement in internationalisation through FDI in the fourth and fifth stages respectively. According to Meyer and Thaijongrak, (2013) the process of firm’s