Recent research published in the Global Strategy Journal, coauthored by Esther Tippmann (National University of Ireland Galway), Sinéad Monaghan (Trinity College Dublin) and Becky Reuber (University of Toronto), shows that the need for both replication and entrepreneurship loom large for such firms. To maintain and sustain competitiveness, they need to replicate products and processes to expand to new markets rapidly, but they also need to be entrepreneurial in developing innovative products and processes. To do both simultaneously is paradoxical because replication requires adherence to the firm’s global business model, while entrepreneurship requires adjustments to it to capture new opportunities.
To do both simultaneously is paradoxical because replication requires adherence to the firm’s global business model, while entrepreneurship requires adjustments to it to capture new opportunities.
The authors investigated how firms navigate this paradox through an in-depth study of globally scaling firms in the Software-as-a-Service (SaaS) industry. They found that the firms followed a strategy of replicable innovation. This strategy consists of three mechanisms which operate in tandem in a virtuous cycle: a top-down replication mechanism, a bottom-up entrepreneurial mechanism, and a replicable innovation generation mechanism.
- From a top-down vantage point, the industry experience of senior managers throughout the firm, formalized standard processes, knowledge of generic needs across locations and a common culture enforce the uniformity needed for replication.
- From a bottom-up vantage point, individual proactiveness, supported by hiring young people and giving them autonomy in their job roles, pushes against this uniformity to provide a continual source of new ideas for products and processes.
- At the same time, on an ongoing basis, new ideas are elicited and assessed in order to determine which have the replication potential to improve the firm’s global business model and its competitiveness.
Notably absent as core strategic requirements are adaptations tailored to local county requirements. Although local responsiveness has long been a tenet of global strategy, the firms in this study avoided localization because it detracted from their ability to replicate. That said, it is still essential for globally scaling to understand local requirements. The reason for this is that such knowledge provides a better understanding of the requirements that are generic across markets and therefore might offer promising replicable opportunities to pursue.
Based upon: Tippmann, E., Monaghan, S. and Reuber, A.R. (2022). Navigating the paradox of global scaling. Global Strategy Journal. DOI: 10.1002/gsj.1435, https://onlinelibrary.wiley.com/doi/10.1002/gsj.1435