Introduction

Born-global (BG) firms are a unique type of organisational form that, from inception, have a strong intent to rapidly enter and serve multiple international markets (Cavusgil and Knight 2015; Coviello 2015). They face important challenges from their liabilities of newness and rapid international expansion—for example, they lack the scale to produce as efficiently as larger companies and the experience and time to learn how to tackle highly complex international markets.

However, evidence has shown that many entrepreneurs find it difficult to sustain and manage their ventures’ expansion into the global marketplace. Therefore, using different theoretical approaches and three analytical life-cycle stages (pre-entry, entry, and post-entry), scholars have identified the factors that drive the evolution of BGs during their life cycles (Gabrielsson et al. 2008). The current research highlights financial and technological resources, human resources (mainly the entrepreneurial team’s knowledge about and experience in international markets), and networks developed by the entrepreneur as the main drivers of BGs in their early stages. Organisational resources and capabilities, such as innovation and international market orientation, trigger growth in the post-entry stage, after a certain ‘turning point’ (Romanello and Chiarvesio 2017) of 4 to 5 years after the creation of the firm. However, most studies do not attempt to explain the processes through which BGs develop and maintain these organisational resources (Evers 2011b; Oxtorp 2014; Li et al. 2015), especially not in their early stage when they begin selecting employees and collaborators.

An approach based on organisational learning has been pinpointed as one of the main resources that are particularly relevant to BGs (Child and Hsieh 2014). From this perspective, researchers have studied how the knowledge and information acquisition processes needed for the sustainability of a BG shift, depending on whether it is in a pre-entry (Prashantham and Young 2011) or post-entry stage (Fletcher et al. 2013). Even the development of these organisational capabilities remains, in the learning literature, intimately tied to the entrepreneur or founding team (Secundo et al. 2017), and ignores the key role of the rest of the staff. Moreover, the main emphasis is put on the interaction with external forces, bypassing the importance of internal firm factors (El-Awad et al. 2016). This lack of attention to capture the internal context in which the founding team and its employees, at the outset, attempt to organise the process to satisfy external markets is an important gap that this paper addresses.

Understanding small and medium-sized enterprises’ (SMEs’) internationalisation behaviour requires the integration of organisational management perspectives that consider the conflicts that arise between people with different interests, perceptions, trajectories, and individual strategies (Savall and Zardet 2014). Prior research does not show what occurs inside the ‘black box’ of a BG—that is, what obstacles emerge in the early phase when an organisation internationalises rapidly and, in doing so, faces tensions between the agility necessary to respond to different markets and the internal coordination and formalisation required for efficiency (Fletcher and Prashantham 2011; Worley et al. 2016). This paper aims to identify and explore what internal barriers challenge BGs’ growth at the outset, thereby hindering their efficient use of financial, technological, and human resources. In particular, we argue that adjusting the company’s structure is fundamental from the moment that two or more people form the BG, that is, these people need to adopt an internal strategic orientation at inception to develop a cohesive organisation.

Through an action-research case study of a knowledge-intensive rapidly growing 2-year-old BG, we propose that the ‘right time’ for developing this internal orientation is not after a few years (Romanello and Chiarvesio 2017) but much earlier. Information on the internal functioning and performance of the different actors in the BG is one of the fundamental aspects of this orientation for the development of new management capabilities and an organisational structure that can take advantage of the opportunities of foreign markets.

This paper proceeds as follows: we begin with a review of the relevant literature on the sustainability of BGs. Then, we describe the methodology of the action research used and develop the analysis of our case study. We conclude with a discussion of the findings and development of propositions.

Literature review

Rennie’s (1993) identification of SME internationalisation in the early 1990s triggered the formation of a unique field and, consequently, attracted a great deal of research attention. This interest was primarily driven by SMEs’ contribution to national economies as BGs: today, BGs make up the fastest growing segment of exporters in most countries. BGs challenge the conventional wisdom that firms internationalise in incremental stages (Oviatt and McDougall 2005; Rialp et al. 2005). Researchers are intrigued by BGs’ ability to compete internationally from inception, despite their condition as young start-ups with scarce resources (Knight and Liesch 2016). BGs’ growth is fraught with distinct challenges and constraints exacerbated by the liabilities of newness and their early and quick internationalisation (Sui and Baum 2014). Extant research has investigated the main drivers of BGs during their life cycle, suggesting that they exist at the individual, organisational, and environmental levels (Evers et al. 2012; Andersson et al. 2014) during entry and post-entry stages (Romanello and Chiarvesio 2017), as synthesised in Table 1.

Table 1 Some drivers of BG growth in the literature
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Research on international entrepreneurship has paid special attention to entrepreneurs’ characteristics (e.g. global vision, motivation, global culture) and to entrepreneurial capabilities (Cavusgil and Knight 2015). BGs are strongly driven by the global mind-set of their founders and the need to attract more business beyond their domestic markets. These entrepreneurs have managerial and international competences, such as a technical knowledge base, networks, a proactive personality, and risk-taking tendencies (Andersson and Evers 2015; Chang et al. 2017). Factors associated with the firm itself, such as its global mission and growth orientation, availability of resources (human, technological, and financial), suitable products, a strategy of niche exploitation and differentiation, and access to external resources through partnerships, and networks, also help explain the emergence of BGs (Ryan et al. 2019; Ojala et al. 2018). In addition, strong external factors affect whether a company becomes a BG, such as the elimination of traditional barriers associated with distance and cross-border transactions through new technology and trade negotiations. Other external factors stimulating the rapid internationalisation of new ventures include a low/shrinking domestic demand; the shortening of product life cycles, which require a quicker amortisation of product development costs; the possibility to exploit emerging ‘global niche markets’; and the risk of plagiarism in high-tech (Andersson et al. 2014).

Literature has also tried to explain the sustainability of BGs (Efrat and Shoham 2012; Hagen and Zucchella 2014), considering the high mortality rate of these international undertakings. According to resource-based theory, BGs can survive and grow in exterior markets by applying a set of intangible resources and aligning their basic strategic assets to the specific demands of the markets (Cavusgil and Knight 2015). Rialp and Rialp (2006) show that the human and organisational resources have the most impact on the success and development of these companies; Ojala et al. (2018) highlight the role of key strategic partnerships in the international growth of BGs. Ughetto (2016) underscores the role of personal characteristics of the entrepreneur and the venture capital in the growth of BGs.

Understanding the conditions under which this organisational learning occurs in these new global ventures is important in order to promote the sustainability of these companies (Fletcher et al. 2013). Given that the unique knowledge of founders may only have temporary effects on internationalisation, researchers, using a dynamic learning-based approach, have studied other knowledge acquisition processes that BGs may use; for instance, Pellegrino and McNaughton (2015) suggest that learning from networks and doing market research influence a BG’s competitive advantage, its initial product and market scopes, and the pace of its entry into offshore markets. Other authors analyse the role of government networks and industry networks in providing essential information, knowledge and relational resources to international entrepreneurs (Chang et al. 2017). Much of the literature has studied the ways to generate organisational learning by assuming that no conflicts exist among the founders and the rest of the staff (El-Haddad et al. 2018). However, this perspective is overly optimistic, as conflicts always exist within an organisation, and those conflicts can be a barrier to learning by hindering the sharing and applying of information (Zahra et al. 2018). The theory on organisational learning focuses on how BGs can learn experientially by solving problems, observing and imitating their customers, suppliers, employees, or establishing alliances with external sources of knowledge. But learning includes not only knowledge acquisition, but also its dissemination and sharing.

The learning processes at the organisational level in the area of international entrepreneurship have received limited attention, assuming that BGs have the ‘learning advantages of newness’. Zahra et al. (2018) question this, and underline that even if BGs have flat organisational structure, the sharing and application of knowledge to problem solving is not automatic within the company. In BGs, conflicts exist, and the decentralisation of the organisational structure can mean an ambiguity in task and responsibility sharing, thus hindering coordination, acquisition, and transfer of information. Moreover, although international results can depend on the management capabilities of the entrepreneur (Andersson and Evers 2015; Evers 2011b), analysis on how the deficiencies in management style affect the sustainability of BGs is missing in the literature.

Similarly, recent studies have highlighted the importance for the entrepreneur in developing more team-oriented management abilities, and the impact of team cohesion on BG’s innovativeness (Efrat et al. 2017). In a longitudinal study of BGs’ growth processes, Hagen and Zucchella (2014) suggest the importance of entrepreneurs’ ability to communicate their drive and vision to the rest of the company within 4 to 5 years after inception.

We argue that from an early phase, rapid internationalisation generates a great deal of pressure on the BG organisation; these pressures include the incorporation of employees into the entrepreneurial project, the constant change of required professional abilities, the natural erosion of team cohesion (Savall 2003), and the dichotomy between designing adaptable and sufficiently agile organisational structures and formalizing efficient procedures (Fletcher and Prashantham 2011). Thus, our aim is to explore what occurs inside the black box of a BG and specifically identify what obstacles emerge hindering firm growth (Wang and Chugh 2014). Considering the conflicts that arise between people with different interests, perceptions, trajectories, and individual strategies (Savall and Zardet 2014), we posit that these obstacles will appear as early as the entry stage. Sustainable performance is only possible by reconciling social performance—namely, the satisfaction of involved actors overall and the economic performance of the organisation (Savall and Zardet 1987). In support of this fundamental proposition, Pfeffer (2005) finds that social performance and management quality strongly contribute to an organisation’s economic performance.

Furthermore, understanding the evolution of the organisation of BGs and their human capital would be beneficial, as would discovering the internal difficulties in adapting their structures and processes in response to external threats and opportunities (Dopfer et al. 2017). Thus, we also investigate the importance of these organisational issues in the growth of BGs in the early stages, assuming that barriers to the development of a cohesive organisation arise from the moment that two or more people become involved in a venture; thus, there is a need to identify and overcome them.

Methodology

Inductive qualitative methods offer a deep immersion in the BG over time, allowing the gathering of a rich mix of data, for more insightful explanations about organisational variables, difficult to identify through other methods (Eisenhart et al. 2016). The main concerns about the value of case study research are scientific generalisation from a specific case and the possible bias created by the proximity of the researcher to the context. However, Birkinshaw et al. (2011) point out how social sciences may be strengthened by good case studies.

The goals of the research suggested an approach capable of capturing the complexities that emerge over time from the interactions between different agents in the rapid internationalisation and the newness of the international venture, and also of gaining access to fine-grained data from all categories of employees in the BG. We used action research (Coghlan and Brydon-Miller 2014), which can lead to superior research results through its real-time assessment by a researcher who is involved in the ongoing process.

We used the socio-economic approach to management (SEAM) intervention-research methodology, which is a form of participatory action research (Capelletti and Baker 2010; Savall and Zardet 2014). Specifically, we present herein the first phase of a Spanish action-research project in a 2-year-old BG that consisted of a socio-economic diagnosis of the organisation’s dysfunctions. The SEAM suggests that the efficient functioning of any company also necessarily generates dysfunctions (functioning other than expected) that constitute ‘organisational pathologies’ that the SEAM, in turn, arranges into six areas: working conditions, working organisation, communication–coordination–cooperation, time management, training strategy, and implementation strategy. These dysfunctions and their impacts on economic performance are not reflected in the company’s information system, even though they affect its results, so the SEAM denominates them as hidden costs (Savall and Zardet 1987).

The SEAM intervention-research began by negotiating the research protocol. Specifically, we established a relationship with the company’s management and negotiated receipt of information before the start of the study that would likely not be accessible through other methods (Welch et al. 2002). The negotiation was initiated directly by the company’s founder in December 2015, and the project continued until the final term of 2016.

We purposefully selected a single empirical case that is fully representative of BGs and that allows for the intensive engagement of the researchers in the firm to gather insights into conflicts that the whole staff experiences in the on-going change process of growing as a BG (Bansal et al. 2018). Based on that, our purpose was to provide a thick description of the internal barriers that hinder this BG’s growth in the early stages, for inductive-base theorizing on this topic (Welch et al. 2011). Moreover, we prevented any bias arising from information about the decisions adopted being solicited a posteriori, and the generalisation of the case study could be increased by its strategic selection.

In order to establish reliability and validity, we relied on well-established criteria and protocols in SEAM intervention-research (including for the capture and analysis of data), validated by SEAM researchers for more than 40 years (Savall and Zardet 2011). To reduce subjective bias, we achieved triangulation of the results by cross-checking factual information from interviews against key secondary sources (i.e. strategic company plans, website, and annual reports). As such, we obtained rich data on the company, its evolution, its strategic decisions, and so forth. Secondary data are insufficient by themselves to understand the evolution of an organisation and to discover the internal elements that limit its international development, as are mere interviews with directors and internationalisation managers. In a BG, all employees bear witness to the difficulties in attending to international markets. Hence, we interviewed not just the key informants with experience in the critical internationalisation decisions but also employees from all hierarchical levels. This method thus avoids the limitations of BG studies that rely only on managers’ perceptions.

In this field research, half the personnel of the BG participated. We undertook three individual interviews (with the founder, the administration director, and the R&D director) and two group interviews (with the international marketing expert, an administrator, a technician, and a sales representative), using a semi-structured interview guide, to address all the dysfunction types proposed by SEAM. The interviews were anonymous, registered by written notes and re-read for the responder’s approval before being finalised. The processing method of notes taken during interviews and observation consists in identifying the main phrases expressed by actors, called field-note quotes. We then classified them according to the themes and subthemes defined in the initial analysis of the research problem, that is, in the six categories of dysfunctions. Next, within each subtheme, field-note quotes were grouped by semantic proximity and key ideas were formulated. The richness and relevance of the findings come from the quality and analysis of notes. In the classification of the findings and the formulation of key ideas we used the SEGESE expert system software developed by ISEOR. We followed the two-stage processing approach to obtain validation from the actors in the company of the information collected by the researcher: the mirror effect and the expert opinion. Three months after the initiation of the interviews, we presented the results of the diagnosis to the interviewees in a meeting termed ‘mirror effect’. One week later, the expert advice was also presented for validation and contradictory discussion to the interviewees. Expert advice designates the researchers’ interpretations as the root causes of organisational dysfunctioning, formulated in several pivotal ideas that convey the knowledge elements not clearly articulated by the firm staff. The purpose of these open discussions was to extract common understanding and to eliminate misunderstandings. This cognitive interactivity between company actors and the researchers produced new generic knowledge (Savall and Zardet 2011; Coghlan and Brydon-Miller 2014).

Analysis of the case findings

The beginning: the creation of an international patent

The essence of the studied firm cannot be completely understood without knowing about its founder, an entrepreneurial spirit who, despite having no university degree, had important experience in the water supply sector. At the young age of 18, he began working at the water provider of his city of origin, where his father also worked. One day, a statistical study that landed on his desk reported that, in Spain, 30% of the water was lost to leaks; this led to his decision to create his first business in 2007, which was exclusively dedicated to detecting water leaks in the domestic market. To finance the acquisition of the necessary technology, he collaborated with a German firm leader in equipment and systems for the detection of gas and water leaks. It was precisely this collaboration that made him consider the idea of creating a different device for leak detection in large conduction: ‘I became aware of the great quantity of water that was wasted through leaks, especially in outdoor large-scale pipes, and that there was not any patented system to locate them’.

The entrepreneur decided to undertake an international venture to exploit this innovation, which began with two people: the founder and the R&D expert (see Table 2). With the help of a research department at a university in the city where the founder lived, and after years of research, they managed to patent the system in 2015, after which the challenge of commercialisation began.

Table 2 Case study: characteristics of the Spanish BG
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International market opportunities

The opportunities in the international market were significant. According to the data the firm had, approximately 20% of the water supplied in Europe was lost to leaks. The situation was much worse in underdeveloped countries, such as in South America, where this number reached 50%. In many countries around the world, most of the piping that supplied the water was between 30 and 60 years old and was in need of renovation. The patented system could assess the state of the pipes and pinpoint the exact location of the leak. At the global level, only a Canadian firm possessed similar technology, but it offered inferior performance and at a much higher price. Our studied firm’s potential market was fundamentally comprised of water supply companies (public, private, or mixed). It also operated in a concentrated market, so that potential buyers (large companies) were easily identifiable but had a high level of negotiation power and usually worked with trusted providers, complicating the selling process. Because the company was a niche player in the global market and had an international patent at its disposal, it had a competitive advantage susceptible to being exploited internationally. Moreover, it had the protection of the international patent, but the founder of this BG was aware that his invention could be copied in other countries, where intellectual property laws were not respected, so he had to expand quickly. From the beginning, the product was commercialised in Spain, and immediately the search for international clients began.

International trajectory

It is necessary to acknowledge the important role of the founder’s network of contacts in the firm’s international development, which was also identified as a fundamental factor in the BG’s own research. Thus, the firm’s first encounters with international buyers took place in 2015 in Chile and Colombia, due to contacts provided by the German partner.

The entrance of a venture capital partner shortly after the firm obtained its patent was an important landmark. This associate provided the firm not only with funding but also with support in daily management and access to a contact portfolio, which was critical to speeding up its international development. As with many firms in the early stages, the main worry of management was selling, that is, opening up the market for its product. As such, quick expansion was undertaken; however, this was not supported by the structure of organisational resources able to efficiently respond to the challenges faced.

In an attempt to alleviate these problems, the decision was taken to hire more staff. In 2015, an international commerce expert and additional administration staff were hired, and a technical department, comprising four people responsible for both production and R&D, was created. By the end of the year, 15 members made up the new organisation model of the firm. The company was located in two spaces in the city: the Board and the Administrative and Commercial Departments were located in an office in a technological park, and the R&D and production departments shared a unit in an industrial estate. The first task of the international commerce expert was to develop an internationalisation plan, integrating the markets into which entrance was already being initiated (Colombia, Chile, and Mexico) and establishing new goals. This planning was set in motion at the end of 2015.

By September 2016, the firm’s international sales made up 80% of its total income. The firm was currently present in Mexico, Colombia, Chile, and Taiwan, and it was preparing to enter the USA through the opening of a commercial delegation with a Canadian partner. The forms of entrance used were in concert with the firm’s characteristics and resource limitations: direct export, contracts with exclusive distributors, licence concession, and joint venture.

Need of internal information about organisational problems

In January 2016, the CEO was concerned about the actions taken to better organise the firm’s growth. Although he was satisfied with what had been accomplished, and the international strategy was set up, he believed the firm could take a step forward in its implementation.

The economic performance of the international markets was not clear, and during the realisation of Taiwan’s service, some mistakes and delays occurred that jeopardised the realisation of the first contact with this market. As the CEO stated: ‘I feel I’m losing the control of my company … that it’s out of my hands…. It’s as if we were always putting out fires’. In this context, we met with the CEO in January 2016 to negotiate the execution of an action-research project using a SEAM qualitative diagnosis to detect the organisational problems undermining the development of his enterprise, which would guide him and his staff through the decision process of leading the organisational change of the company and help us obtain valuable information for our research aims.

Findings of the socio-economic diagnosis

The socio-economic diagnostic analysis helped identify the dysfunctions in the working conditions that were the root causes adversely affecting the performance of the BG. Table 3 synthesises the most disruptive dysfunctions.

Table 3 Findings of the socio-economic diagnosis in the BG case study
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The analysis revealed a set of working conditions that were inappropriate to support the rapid growth of the BG, especially in the technical area (R&D and production), as well as a lack of resources for production. This finding is consistent, to a certain extent, with research that predicts a greater interest in market orientation than in the product itself after firms enter a market (Ghannad and Ljungquist 2012). A bad working atmosphere had erupted, due to the lack of understanding between the technical and marketing staff; this type of conflict would likely become a major problem after 4 or 5 years if no action to remedy it was taken. Other dysfunctions arose from the lack of material resources of equipment and basic stock in the R&D and production departments, as a technician reported: ‘There is no stock of basic materials, which requires trips to stores and online orders each time, which delays and makes the process more expensive’. This is an example of the hidden costs, as without precise internal information, the decisions taken are often irrational (Savall and Zardet 1995): the cost of each order was much higher than it needed to be because these dysfunctions were not considered.

The BG faces a rapid pace of growth in as complex an environment as the international one. As such, its organisational structure and work processes must evolve to adapt to this pace and environment. Important dysfunctions nevertheless occurred in this area. The informants perceived improvement opportunities in the work procedures and task distribution that would alleviate the excessive workload; this, combined with a lack of multi-skilled workers (which created important delays in case of absenteeism), led to ‘bottlenecks’ and had a non-negligible impact on productivity. As the literature predicts, structuration was not highly valued in this SME because coordination was assumed to be spontaneous (Evers 2011a; Fletcher and Prashantham 2011); an organisational chart did exist, but the pace of change was so rapid that it required dynamism in changing assignments and task distribution, highlighting the utility in dedicating more time to internal matters (Savall and Zardet 1995). As a member of the staff explained: ‘There are no clear rules and procedures for the development of work, it is done contract by contract’. Thus, we can infer that the knowledge acquired from past experience was not being mobilised in the existing procedures.

Other important dysfunctions stemmed from the insufficient communication/coordination between the different areas of the company, but especially between the commercial area and the technical departments (they seemed to walk parallel paths without ever meeting), which had notable repercussions in the configuration of the offer. This lack of communication was not only prevalent at the horizontal level though; effective communication was also absent at the vertical level (from the company’s management to its staff), as the testimonies of several employees evidenced (e.g. ‘It is very hard to talk to the director because he is always out’). This eroding communication (‘Before, there were weekly coordination meetings with all the departments and they were important, but they are no longer held’) defies the myth that coordination is automatic in SMEs (Li et al. 2015) and created, among the employees, the sentiment of not having a clear objective, which made the cohesion inside the company more difficult. Mechanisms that would promote coordination between the different departments were demanded by the staff to solve the organisational chaos they perceived in high-workload situations.

The planning actions were subject to frequent interruptions, usually because urgent tasks that needed to be resolved immediately arose often, turning the extraordinary into something ordinary. The entrepreneur, overloaded with operational and external functions, did not dedicate time to organising and planning the work, so he frequently changed priorities, causing everyone to focus on what was urgent and ignore the strategic plan. This caused delays not only in delivery deadlines but also to tasks being undertaken by the most available employees rather than the most qualified for each task, which in turn was a source of personal dissatisfaction. At the same time, poor time management was also causing the R&D personnel to dedicate a substantial part of their time to production tasks, at the detriment to their capacity for innovation (‘The R&D department needs to be focused on the operational part too, they themselves give solutions to the problems. That decreases the continual rhythm of improvement’), constituting a loss of potential.

Another dysfunction revealed by the diagnosis was the absence of a continuous training program, demanded by all the departments that would allow the acquisition and maintenance of the skills necessary to respond to the difficulties caused by the company’s international development. Each new employee was essentially self-trained (‘When I arrived, there were a lot of things I didn’t know how to resolve, I had to look for manuals online to find out’), resulting in low productivity and some deficiencies in the service.

Finally, we address the dysfunctions mentioned in the area of the implementation strategy. We found a directive and not participative managerial style, with the entrepreneur-director overloaded with work, unable to delegate, and assuming tasks that were beyond what should have been his directive function (‘There is a ‘bottleneck’ at the level of the director, there is no delegating, which makes us waste time’). The entrepreneur personally chose the channels and modes of entry into new markets, decided the first approaches with potential distributors and clients, and even carried out direct promotion tasks. Most of the marketing director’s plans were under-mobilised: ‘We know where we’re supposed to be going with the marketing planning, but we don’t always go there. It was planned for us to go to six markets this year but then it didn’t happen like that’. This control caused not only numerous delays, due to the ‘necessity’ of consulting a director who was always travelling, but also the adoption of a laissez-faire policy, due to the impossibility of controlling everything. The R&D department was not consulted on most decisions, leading this vital department to feel under-valued. As the R&D director explained: ‘The priorities are changed from above and we have to adapt to the management and commercial staff, and then I have to explain that to my people’. All these issues led to improvisation in the company, as employee did not know where they were headed or what the objectives were, possibly compromising the survival of the BG. The main findings show that the entrepreneur had underestimated the internal organisation, as posited by Savall and Cai-Hillon (2017).

Discussion of findings

This SEAM action-research case analysis revealed some important organisational dysfunctions in the BG’s 2-year existence, barriers that were undermining its development and hindering the implementation of the strategic plan designed to fully exploit the international opportunities. After our interactions with the company’s personnel and presentation of the first findings in the mirror effect meeting, the members of the organisations, who agreed that the diagnosis was accurate, validated our results.

We summarise the key barriers hindering the growth of this BG under five pivotal themes:

  1. 1.

    Deficiencies in the exercise of effective leadership due to a personalised managerial style oscillating between excessive centralisation and laissez-faire, a lack of communication of the strategy, and inefficiencies in time management: The entrepreneur, as the literature predicts, invested his time and energy in exploring markets and selling the product because of the need to internationalise quickly (Karra et al. 2008), instead of steering the human potential. As such, he overlooked the importance of all departments, including R&D, in the success of the company when entering international markets (Efrat et al. 2017).

  2. 2.

    Lack of internal organisation: Delimitation of responsibilities, formalisation of the work organisation, and planning of activities were absent, and integrated training was deficient. Although the company had an organisational chart, the growth of its activities in different markets demanded continual adjustment of organisational structures that formalised the changes in work procedures and the distribution of authority and tasks. A lack of organisation and steering was mistaken for flexibility and agility (Worley et al. 2016).

  3. 3.

    Deficiency in the development of communication–coordination–cooperation practices in real time during the activity process, thus generating a lack of synchronisation: Especially significant was the stark separation between the production and commercial areas, which was visible in the work conditions (they were situated in different locations) and the latent conflicts between the two areas.

  4. 4.

    The shift from a technology orientation to a market orientation: This shift was undertaken without considering the potential individual and collective conflict behaviours it could generate, which provoked a sense of undervaluation by the R&D department. Although the R&D area served to give this BG a competitive advantage, it was forced to undertake the production tasks with a shortage of means and away from the central site where all strategic decisions were made.

  5. 5.

    Absence of indicators of the internal performance of the company: The strategic piloting indicators controlled by the entrepreneur enabled us to check and measure the immediate results of the activities (e.g. sales, cash flow, profits), but he had no information on social performance, in terms of the dysfunctions and their impact on hidden costs. The pro-active strategic steering is more effective and efficient when an organisation uses indicators focusing on both its economic and social performance (Savall and Zardet 1987).

Although the lack of financial resources was presented in the initial discourse of the management team as the cause of the lack of organisation, the informants were even more worried about the problems of communication–coordination–cooperation, the time management of the founder, and the lack of rigour in the distribution of tasks and responsibilities. During the discussion and presentation of the mirror effect, the informants agreed with these pivotal dysfunctions, deeming financial resources secondary. They actually took measure to improve communication and formalise the structure and subsequently initiated several important R&D projects. Financial resources are an implicit requirement for an entrepreneurial growth strategy such as in internationalisation (Cavusgil and Knight 2015; Chang et al. 2017), but the results show that this BG needed to adapt its structures and behaviours as it grew.

The described dysfunctions, as indicators of a low internal orientation, affect the cohesion between managers and staff. Too much emphasis on the external (exterior market orientation) can lead new and small companies (Li et al. 2015) to neglect the crucial importance of the internal. In the following sub-section, we show how this less-than-optimal internal orientation, in turn, obstructs the identification and exploitation of international market opportunities.

Influence of organisational barriers on the identification and exploitation of international opportunities

The success of the external strategy of a company depends on its degree of internal cohesion (Savall and Zardet 1995). To what extent do the detected organisational barriers, revealing a low internal cohesion, hurt the development of entrepreneurial and market-oriented behaviours that affect strategic processes (e.g. recognition of external opportunities, organisation of resources) to make the most of exterior market opportunities?

In the process of searching for new growth opportunities from abroad, the organisation must systematically gather information about the needs and preferences of both their clients and external forces. At the studied BG, continual changes in the strategy caused the priorities to shift, making it hard to assess clearly which information would be relevant to or consistent with the new objectives. As a tangible example, the marketing department elaborated a plan that took into account the expansion of certain markets but addressed others without sufficient information. The lack of internal organisation and its orientation to resolving ‘what was urgent’ at the expense of ‘what was important’ caused the information generated to be integrated into the organisational routines in an inefficient and unsystematic manner. Throughout the process, proactivity was verified in the behaviour of the entrepreneur; however, barriers impeding the proactivity of the whole organisation existed. The centralised management style did not facilitate the participation of the different areas in the proactive search for market opportunities, and the lack of internal organisation distorted the company’s focus of attention, which was too centred on resolving the problems arising in the process instead of dedicating time to actively search for new opportunities.

After the identification of market opportunities, a company must organise the activity to generate value for clients. In this process of responsiveness to the market, the whole organisation must participate, organising resources in a quick and flexible manner to consumers’ needs. Here, all the pivotal deficiencies detected were complicating the exploitation of market opportunities and compromising the creation of value for the client. The lack of both formal and informal communication/coordination mechanisms between R&D and the production and commercial departments was causing a distance between the technical departments and the market, and the commercial department was ignorant of the problems that could arise from a technical standpoint. Owing to the internal dynamics of the company, the R&D department was almost completely removed from the market, with a resource endowment that obstructed a continual flux of innovation and with training deficiencies hindering knowledge updates. As such, its capacity to create incremental innovations to adapt to product demand and anticipate needs was compromised.

The entrepreneur had a low propensity for risk-taking, despite having a patent that was competitive at the global level, so he was searching for modes of entry that required less commitment of resources, even though they entailed a lesser degree of control. This occurred because of the negative experiences in some markets (e.g. Taiwan), which were due largely to the lack of planning and internal coordination. We argue that the absence of a cohesive structure and the style of management, with lacked indicators of internal steering, affected the entrepreneur’s perception of risk in external markets.

Finally, it is worthy to mention how these organisational barriers hinder the relationship between individual and organisational learning in international entrepreneurship. In this company, the external sources of knowledge acquisition (networks with universities, providers and allies; hiring a specialist in international markets) and the experiential learning acquired by individuals in the company during the daily operations of its 2 years of existence were only transformed into organisational learning with extreme difficulty, if ever. Even in a small enterprise, the transfer of individual learning into organisational learning is not as automatic as assumed by the learning advantage of newness concept (Zahra et al. 2018); conflicts exist and time is required to generate a common vision and to negotiate common solutions at the organisational level. It is not that conflict is inherently bad for the generation of knowledge but that it is necessary to make it visible and manage it; in this process of negotiation to solve conflicts is where a shared understanding of the issues at hand can occur. So leadership and organisational structure appear as critical dimensions when generating organisational learning (Magala 2017).

Development of propositions

The discussion of our analysis reveals the organisational challenges that BGs face during the process of rapid expansion into different markets, including a lack of effective leadership, lack of formalisation of the organisational structure, inefficient communication–coordination–cooperation mechanisms, existence of conflict due to the shift from a technology orientation to a market orientation, and absence of indicators of the socio-economic performance. These are barriers to the development of entrepreneurial and market-oriented behaviours, which are important resources that explain the growth and sustainability of BGs (Evers 2011a). Through SEAM diagnosis, we obtain evidence that shows the necessity for BGs to overcome these barriers by developing an internal orientation geared to creating a cohesive organisation. In turn, we put forth three propositions.

First, the entrepreneur or his or her team must decide on the international strategy, but this decision should also be made in interaction with other parties from inside and outside the company; therefore, the entrepreneur’s orientation and energy are important (Chang et al. 2017), but so is the participation of the entire human potential in the company (Buono and Savall 2007). The entire staff contributes to the identification and exploitation of opportunities in exterior markets and thus plays an important role in the performance of the BG. The quality of management is the lever to improve the functioning of the company and its social performance, which in turn determine its economic performance (Savall and Zardet 1987). Therefore, the use of the entrepreneur’s time is important. In contrast with multi-tasking entrepreneurs who undertake many operative tasks (Romanello and Chiarvesio 2017) and thus exhibit a kind of myopia in managerial focus on day-to-day operations, we propose a management style based on a paradigm of negotiation (Savall and Zardet 1995) that favours participation and the multiplication of innovation sources:

Proposition 1:

An innovative style of management that promotes active participation of the staff in the identification of internal and external opportunities and in the search for and implementation of negotiated solutions will improve the functioning of the BG and, thus, its economic performance.

Second, the effectiveness of strategic decisions and their positive impact on performance rely on their implementation. Therefore, it is essential to ensure the participation and motivation of the personnel and the organisation’s structure because dysfunctions in these areas can result (Savall and Zardet 1987), such as different velocities of the marketing and technical departments in adapting themselves to international markets. As we identified in our case study, coordination and structuration are not automatic in all departments, possibly leading to different velocities in the orientation to international markets: a fast velocity in the commercial and marketing departments and an unhurried one in R&D and administration departments. Every area of the company contributes to the exterior market performance, and the BG’s growth must be accomplished in a synchronised way among the different areas of production, marketing, finance, and so forth. Fletcher and Prashantham (2011) confirm the importance of formality in facilitating knowledge sharing in young SMEs. The importance of organisational factors in BGs is prevalent from the early entry stage; thus, dysfunctions that must be corrected begin to appear at the outset. This internal orientation to organisation and formalisation is not incongruous with entrepreneurial behaviours (El-Awad et al. 2016). With innovation and proactivity, the lack of organisation is likely to exclude some personnel from participating in entrepreneurial and market-oriented behaviours. Thus:

Proposition 2:

Attention must be paid to the organisation and synchronisation of the different areas of the BG at the outset of its activity, when internal dysfunctions that hinder the economic performance of the company appear.

Third, information, knowledge, and relational resources are crucial for international market entry. Prior research evidences the crucial role of external information for new international ventures (Pellegrino and McNaughton 2015; Chang et al. 2017). Our findings suggest that internal information enables entrepreneurs to develop a more participative management style that stimulates the human capital, which plays a crucial role in the structure of the organisation and in driving ‘the external’. The information revealed by the socio-economic diagnosis of the case study helped the entrepreneur realise the importance of preventing dysfunctions and of the cohesion of the organisation. Information on the internal functioning of the company is crucial for decision-making; if this information is taken for granted, the decision-making process is more myopic than rational (Goffnett et al. 2016). Identification of the perceived dysfunctions would be an indicator of the level of social performance of a company and would aid in the discovery of latent conflicts in staff relations, which affect the level of economic performance, through their impact on hidden costs. The information obtained through the socio-economic diagnosis is qualitative and brings to light issues and conflicts that were not consciously acknowledged previously (El-Haddad et al. 2018). In this generation of internal knowledge, the fundamental stakeholders are the whole staff of the organisation and those who carry out the diagnosis. Thus:

Proposition 3:

Acquiring internal information is of vital importance for anticipating conflicts during the shift from technology to market orientation and is the main guide for adequate growth management.

Conclusions

BGs are companies that have many resources and competitive advantages but are subject to growth problems. The literature explaining barriers to sustainability is scarce, as researchers still have little insight into the internal aspects that influence external behaviour and performance and situate these in the post-entry stage, after a turning point.

By using SEAM action-research methodology, this paper provides evidence of the conflict/cooperation relationships that act as barriers to growth in a young BG, interfering in the search and exploitation of market opportunities, even though the company possesses the drivers the literature considers essential in the entry phase.

In this way, our research makes two important contributions to the literature on the growth of BGs. First, by proposing a new construct—the internal orientation—during the early stage as a fundamental lever for this growth, we can explain why BGs cannot generate as much productivity as could be expected from their sale levels (Choquette et al. 2016). Second, by revealing several important findings that contradict some of the assumptions about the behaviour of companies facing dynamic markets.

The resources an entrepreneur brings to the company, such as vision, proactivity, and resource acquisition, are relevant, as established in the literature (Chang et al. 2017), but insufficient to lead the BG growth. The founders’ role must evolve, and in doing so, their management tools must switch from an individual entrepreneurial focus to a leadership focus as a symphonic orchestra director, stimulating entrepreneurial and market-oriented behaviours across the whole company (Magala 2017) and creating human potential committed to the strategic development of the BG at inception (rather than after 4or 5 years).

We also question whether the formalisation of an organisation goes against the entrepreneurial orientation, as suggested, for example, by Fletcher and Prashantham (2011), who recognise the importance of formalisation in some respects (e.g. knowledge transmission) but treat it as a barrier against timely decision making. Our findings suggest that the lack of organisation and formalisation in the company induced lesser entrepreneurial behaviour: organisation is not necessarily bureaucracy, and rapid internationalisation requires the use of tools that provide a high level of enquiry and participation in decision making, as well as control in managing them as proposed by SEAM (Savall 2003). In this manner, synchronised decentralisation in the organisation can occur. There is a way to organise and formalise without harming the creativity of personnel, but the absence of formalisation means that the decisions taken by someone are not implemented by the rest (Savall and Zardet 1995; Worley et al. 2016).

Thus far, the advances in BG research have underscored the importance of networks as sources of information on products, markets, foreign business, and so on (Ryan et al. 2019; Ojala et al. 2018); assuming the relevance of this type of knowledge, our study adds to the framework the necessity of focusing on dysfunctions and treating the entire personnel of the organisation as a source of this knowledge, through a socio-economic diagnosis. Research often takes for granted that entrepreneurs possess the information about their SMEs and maintain effective communication fluxes inside them (Evers 2011a); conversely, we reveal that this is not necessarily the case—that internal information must be developed consciously and methodically. Internal information about dysfunctions gives the firm the opportunity to solve any latent dysfunctions before they seriously affect its capabilities in the future. The search for information about dysfunctions pushes firms to think about the root causes of problems on which they can act and thus allows them to escape the fatalism of the first apparent causes, such as the lack of time or financial resources.

As a limitation, our research covers the first phase of intervention—a socio-economic diagnosis of organisational barriers to international entrepreneurship; the next phase is to implement the rest of the process, which includes calculating the hidden costs associated with the dysfunctions, leading project groups in the search for negotiated solutions among the BG staff to correct them, and training the management on socio-economic tools. In addition, our research only addresses one case study. To enrich its utility, further research could apply the methodology of socio-economic intervention to other BGs to shed more light on this phenomenon.