The evolution of internationalization
There have been a variety of different approaches to explain the internationalization of business activities.
They normally concentrate on distinct aspects of the reasons for and results of, enterprises operating in more than one environment and have changed dramatically throughout the last decade.
Whereas traditional theories have focused their attention on the internationalization of production and foreign direct investment (FDI) where the multinational enterprise (MNE) played a central role, recent theories have approached internationalization as a process in which firms increase their involvement in international operations adapting their strategies, resources and structure to new investments. The focus of recent theories has centered on small and medium-sized firms (SMEs).
In the late 1960s, scholars started to study international business in a historical perspective. Historians established a very fruitful dialogue with applied and development economists who helped to explain quite convincingly why American and British firms went international and how they influenced their home and host economies (Jones, 1986, 2002; Wilkins, 1970, 1991).
As pointed out by Geoffrey Jones (2005), internationalization is a rather cumulative process, two powerful explicative factors being technology and networking.
A major factor in the history of internationalization is the family firm. So far, however, little attention has been paid to the advantages and/or disadvantages of this particular ownership structure in the internationalization of firms, either in the business history or in the social sciences literature (Graves & Thomas, 2008).
(1) The creation or expansion of an export basis that familiarizes the firms with other markets in terms of demand and marketing techniques. This was hegemonic in the food and beverages industry, publishing and shoemaking.
(2) The establishment of joint ventures or technological assistance agreements at home. This was frequently seen not only in technologically complex industries such as chemicals and pharmaceuticals, metal, motor and engineering, but also in communications and the food processing.
(3) The establishment of joint ventures abroad. This strategy was implemented in the 1960s by firms such as Ficosa, Indo, Puig, Minersa and Alsa and later on by Marca, Catalana Occidente, Comsa, Esteve, Nutrexpa, Pronovias, Roca, Lladro´ , Campofrı´o, Pescanova and many others.
(4) The acquisition of full control of Spanish-based joint ventures.
(5) The acquisition of foreign firms as a platform for further growth. Spanish publishers and a few food processing and industrial firms adopted this strategy in the 1960s and 1970s. However this only became popular after 1986.
(6) Direct investment by the establishment of productive subsidiaries. Again, we see a few publishers alongside a small number of firms in the food and logistics industries embracing in the 1960s and 1970s a strategy widely implemented by Spanish family firms in the late 1980s.
(7) Strategic alliances. Although pioneered by the insurer Catalana Occidente before the Spanish civil war and then by Puig and Pescanova in the 1960s, this strategy, characteristic of research-intensive industries, spread after Spain’s integration into the EU. We find examples of this in the pharmaceutical and food industries, as well as in engineering and the service
The modern macroeconomic theories of international production addressing the growth of international production have been experiencing a reduction of influence when compared to microeconomic theories due to the reduction of influence of the Product Life Cycle (PLC) model. The technology gap theory is based on the different propensities for learning and innovating experienced between countries and is antecedent of the PLC model. It tries to recognize the importance of technological determinants in international trade. The PLC model, essentially a microeconomic approach, was applied in response to the inability of the trade models to explain the patterns of trade at that time.

One of the most fashionable concepts of today, globalization, is in fact not a product of 20th century. Trade is international since the flint stone trade of Neanderthal human and globalization is a subject of history since first ages. It existed when the Silk Road started in China and reached to the frontier of the Persian Empire and enlarged towards the Roman Empire and during the Roman Empire, the Persian Empire and the Dynasty of China. Another example is the Golden Age of Islam: Early global economy created by Muslim merchants and explorers that ended up with the globalization of crops, commerce, knowledge and technology in the Old World-wide and the times that more integration was achieved along the Silk Road during the Mongol Empire. With the accession of Portuguese and Spanish Empires to every corner of the world in the 16th and 17th centuries after they had reached India, global integration continued through the enlargement of European trade. During their dynasties Roman and Ottoman Empires developed “world systems” consistent with their hegemony in the “discovered” world and Pax Romana and Pax Ottoman constituted examples of globalization that “effects and compasses the whole world” in 19th century with the Pax Britannica known as the world order developed by Britain. The development in the automation network with the Industrial Revolution accelerated the globalization process. Two significant world wars and then the competition between the United States of America (USA) and the Union of Soviet Socialist Republics (USSR) carried humanity into a very dangerous point. Consequently, the reality that instead of “power” “norm” should operate in order to alleviate the tension between these two blocs loomed large.
According to the internationalization theory the reason why production is done by only one company instead of many in various locations is that it is more profitable to produce with one company.
In the explanation of the advantage of internationalization the first approach of the internationalization of MNCs emphasizes the importance of technology transfer. Technology transfer may come across with some difficulties. It is difficult for a potential buyer to appraise the actual value of knowledge. Besides knowledge can not be packed and sold. The intellectual property rights are also difficult to secure. Therefore for a MNC the establishment of a new enterprise in a foreign country is more profitable than the sale of technology to another company.
The second approach intensifies on vertical integration. For example under the assumption that both companies are monopolies, the price of input used by first company and produced by second company is tried to be lowered and increased by the first and second companies respectively. Therefore a dispute between these two companies will exist. Moreover some coordination problems may occur because of the demand and supply imbalances between two companies. Volatile prices constitute high risks for both companies. In case of a vertical integration of these two companies the problems will disappear or be relieved.
The literature on the process of internationalization of individual firms is thin and that on the internationalization of banks is thinner still. The theory of internationalization suffers from the lack of a general paradigm encompassing the variety of patterns observed in reality.
We begin by briefly reviewing the Stage theory of internationalization, currently the dominant conceptualization of the process.
The Stage theory originates in the work of Stopford and Wells (1972), who provided a model of organizational phases, and the “Uppsala Model” (Johanson & Wiedersheim-Paul 51975 and Johanson & Vahlne 1977). In the Uppsala model, the firm overcomes the initial obstacles to internationalization—basically a lack of knowledge and resources— through a series of incremental decisions. The firm engages in a stepwise extension of current operations, going first to environments that are culturally close to the home environment. Over time the firm acquires, integrates and uses knowledge about foreign markets and operations; this leads the firm gradually to increase its commitment to foreign markets. As the firm’s involvement grows, it adopts a congruent organizational structure.
The Uppsala model has its theoretical base in the behavioral theory of the firm (Cyert and March, 1963; Aharoni, 1966) but shares some characteristics with Product Life Cycle (PLC) theory (Vernon 1966). Both Uppsala and PLC are stage or phase models.