In this section, we present the results of our research, based on four cases analysis. The first step consists of a brief description of each case, followed by their cross-comparison, in a pattern-matching approach. Thus the different factors described in our theoretical framework that comprises a literature synthesis are overlapped with the empirical findings, with the aim to uncover in what extent these firm cases match the predicted pattern of internationalization.
Researchers did not come to a consensus regarding the appropriate measure of the internationalization degree, in the attempt to rigorously define a born global. Following the approach of Zahra, Matherne & Carleton (2003) that consider international strategies as value creating, we use the percent of foreign sales in total sales as a measure of the degree of internationalization for technology BGs. Another criterion is the speed of internationalization, measured as the time span between the inception date of a new venture in Romania and the date of its first product launching in a foreign market.
In addition to being an IT Romanian company, in the category of SMEs, potential case firms had to fulfill the following requirements: the internationalization process should have begun within a time span of maximum 15 years from the inception of the company and the weight of the current external turnover in the total turnover should exceed the value of 25%.
The analyzed data was gathered from secondary sources: company sites, databases, news articles, interviews with the founders and annual reports.
We used for each case a pattern-matching technique to overlap the empirically established pattern with the theoretical one. We employed as well a cross-synthesis technique, treating every case as a separate study, finding both similarities and differences. Then we assembled them for general findings across the cases.
We employed the case study method because it is the most appropriate method in the exploratory studies to answer the questions”how” and “why” about a set of events over which we didn’t have control. The companies were codified in order to ensure confidentiality.
Firm A – provider of digital products and businesses
Company A is an international technology and innovation company that creates and invests in digital products and businesses for global start-ups and organizations. It uses technologies as experience design, rapid prototyping and emerging technologies as AI to create innovative products and services that help big organizations to take the steps towards the hyper-scalable digital economy of the 21 century.
The company was founded in 2007 by two business partners and has reached in 2020 a number of 200 employees, from which 150 programmers and a turnover of 11 million Euros. The company has today subsidiaries on 3 continents and builds digital products and services that use emergent technology for some of the biggest global brands.
In 2013 it began the international extension of its business, starting the collaboration with the first clients in US. In 2016 it purchased an experience design start up in US, which became the company’s American office. In the same year, the founder of that start-up joined the management of the company as managing partner and innovation manager, and then as chief executive officer. In 2016 the company opened its first office in Sidney, where it started the development of innovation projects with global brands. In 2019, the company founded its first subsidiaries, in US and Australia.
Company A has entered in several tops of European companies with the fastest ascension, having an average growth rate of 38.3%, a turnover of 4.2 million Euros and 143 employees in 2015, such as Financial Times top Inc.Magazine, Deloitte.
The company activates in the segment of technology innovation, more precisely in services of consultancy in digital transformation and innovation, where it has not identified direct Romanian competitors and in the segment of technology outsourcing where it has numerous local competitors.
The company differentiates its offer by designing innovative products, being one of the few companies in Eastern Europe that approach innovation projects, for example augmented reality for a luxury home electronic products manufacturer in Australia. Other examples of the innovative digital products that the company offers are: mobile applications, applications for the medical field, and virtual mirrors for malls.
Another differentiating point for company A is the speed with which it can develop a product or a service. The company obtains a prototype developed from an idea in two days, an a validated product from a prototype in 10 weeks, while most companies need 12 to 18 months to develop a prototype from an idea. The company is capable to obtain such performances by developing and using its own innovation framework, which brings innovation in the operational process combining the rapid prototyping technique, the Agile and skunkworks methodologies and emerging technologies as AI and machine learning.
The company builds and scales digital businesses for its clients, centering on rapid development of digital solutions – in which it includes strategy, product design, behavioral psychology, growth marketing and experience design.
The business technology innovation activities bring 38% of the total external turnover, and 31% of total number of employees work in technology innovation area, while 57% work in technology outsourcing, 31% in technology innovation and 12% in administrative area.
In 2017, within the pale of technology innovation segment, the company scored 2 new income categories:
income from consultancy services and incomes from maintenance services, which represents together 3.59% of the income from technology innovation.
A part of the revenues obtained from the innovation technology segment are represented by the incomes from the R&D activity, that reached in 2016 a value of 800000 euros, meaning 54% of the total revenues from technology innovation.
Company B- developer of custom digital products and services
The company develops custom software for its clients, big companies or start-ups, building dedicated teams for companies in a variety of industries, as financial sector, health, commerce, communications industry.
Company B is one of the biggest providers of software services in the region, repeatedly included in several tops of technology companies with fastest growing rate and of companies that provide business excellence.
Company B began its activity with 60 employees in 2003, now having over 800 software engineers.
In 2005 it started its first collaborations with external clients and in 2019 it opened its first office in the US. Today, the commercial projects in the US represent 45% of the total number of commercial contracts. The company has a portfolio of over two hundred client companies.
The company acts as an integrant part of the technical ecosystem of clients, following an adaptive collaboration model. It facilitates the achievement of competitive advantages for its clients by using dedicated software development teams, capability to scale and high software engineering expertise. The company has expertise in industries like healthcare, financial services, automotive and covers the end-to-end software lifecycle development, delivering innovation, scalability, quality and speed.
In the last 5 years, the company invested in 15 tech start-ups over 4 million dollars, the majority of them being located in the US, but also in 2 Romanian start-ups, offering them not only financial capital, but also the option of product and business development or becoming partners with experts in different areas that want to involve in the business.
C – provider of business informatics systems
Company C is one of the most important regional providers of business informatics systems ((ERP, HCM, CRM, DM and BI) and one of the top global players on the financial and leasing applications market. The company has now over 700 employees and projects in 46 countries, on four continents. Company C develops o suite of business software solutions –that includes ERP systems, remuneration and HR management solutions, solutions for the banking and financial companies, solutions for medical activity management and eBusiness applications. The applications suite is complemented by services of HR management outsourcing. Also the company implements the CRM informatic system for its clients.
Company C was founded in Bucharest by six software experts in 1994, two years later beginning to develop software for external clients. In 2001 the development of its first ERP system began, system that was launched internationally in 2004 and became the most important software products for retail and distribution companies in Romania. The division of HR solutions launched the first product of Self Service HR in Romania. 2002 is the third year with a consecutive growth of over 50% in turnover. In 2006 the company entered the leasing and financial informatics products market, and in 2008 it approached a new market niche, multimedia and infotainment systems for automotive industry.
In 2010 the mobile devices division is founded, division that developed over 10 applications, among which the first business intelligence application available on mobile devices in the world and the first service of credit risk appraisal. Beginning with this year, the company opened subsidiaries in five countries.
2012 was the fourth year in which the company occupied the first place in the ERP Romanian providers and was the market leader for software systems for services, retail and distribution companies. In the same year it launched three new products in the ERP suite and it developed and implemented CRM platforms for multinational companies, also providing solutions and services for project management.
The international activity of the company outspread on 35 countries in 2014.
In 2019, the income from external markets reached 35% of the total income.
In 2018 the company bought and integrated a group of companies specialized in outsourcing, technology and business management.
D – developer of software in outsourcing system and of digital products
Company D is a software developer with expertise in automotive industry, IoT, travel & hospitality, life sciences, enterprise solutions. The three business lines of the company – software development in outsourcing system, software solutions for internal market and retailing of navigation systems placed the company in the top five of technology companies with the fastest growth pace in Eastern and Central Europe. The company was mentioned four years consecutively in the Deloitte Technology FAST 50 CET Report, and received many awards and nominalizations in numerous European events.
Today the company has over 800 employees and has offices in 7 countries and 25% of the total income, estimated at about 30 million Euros, is generated by the external subsidiaries
It was founded in 1998 and it began its activity with 10 employees that developed products in outsourcing system for important companies in Western Union and the US. The experience gained in the collaboration with global players was used to develop its first own products in 2003, a series of software solutions for Romanian market: a solution for sales forces automation, systems for automotive fleet localization and monitoring and tourism agencies applications. The number of national clients that use these solutions is over 400. In 2006, company D has diversified its activities by initiating a new business line, becoming national distributor of complete GPS navigation systems and of GPS smart phones. In 2008 the company launched the first Romanian brand of navigation systems. Today, the company sells 3 models of navigation systems and a netbook. The products in fleet management area are already stable in the top of providers in Eastern and South-Eastern Europe.
In 2011 the company extended its activity on international markets, opening subsidiaries in four countries.
Beginning with 2013, the company has begun its process of integrating several local players as well, in order to develop the product and service lines it provides, and also to diversify the industries it activates in.
In 2014 the company decided to set up a new division, beside the four existing ones, with resources dedicated for R&D of new ideas and technologies. The Innovative projects division is a lab dedicated to R&D of projects for the private and public sector.
In 2018 the company absorbed a local company that produces software solutions for HR and remuneration management. It also purchased a Hungarian company with the purpose to become one of the biggest players on the car monitoring services market in central and south-eastern Europe and also a company in Belgium, whose products and services are complementary with the company’s own products, in the areas of fleet management, automation process, but also on educational software area.
3.2. Cross-case analysis
In this section the cases are cross-compared, the characteristics of every company being also compared with the conceptual framework depicted in the literature. This way, we can identify the expected triggers that drive the Romanian software companies to internationalize at a rapid pace.
This characteristic seems to be common to all the four analyzed companies. The founders of company A seized the opportunities the fundamental technologic evolution would offer and the fact that a new era for businesses would begin. The future evolutions meant user experience that could allow the company to build extraordinary successful MVPs (Minimum Viable Products). “Businesses outside technology seem unsuccessful to me, because somebody else will use technology in the same business idea and will scale them exponentially”, says one of the founders and managers of company A. The founders of the company invested in innovation area, the company passing in a short span of time from offering software outsourcing services to develop software using clients’ specifications and then to writing its own specifications and building its own innovative IT products for some of the biggest brands in the world, for example developing an augmented reality product for a luxury domestic appliances company. “The difference is the courage to involve in the most complex projects and bring 10 times a benefit to the clients through software applications” – is another idea expressed by the managers.
The growth of the company was accelerated, the challenge being a more structured and prudent expansion of the business, as founders declare. Another challenge was to create and build a consistent and coherent company culture.
Company B is also characterized by a high entrepreneurship orientation, beginning its activity by being a code developer company, then seizing the opportunity of becoming a provider of complete IT services range, integrating business analysis, architectures, complex applications and project management practices for healthcare, financial services and automotive companies.
Company B also established an investment division that has the goal to support start-up companies to reach their business objectives, creating joint ventures. In the last five years, company B invested capital in 13 tech start-ups, the majority of them in US, but also in 2 Romanian start-ups, the last major investments being companies that offer financial software and tele-medical services. This investment division offers not only financial capital for the start-ups, but also the support for product and business development or the opportunity of becoming partners with experts in diverse areas that are willing to start a business. The product investment manager of company says “we searched for solutions whose clients we may become ourselves”.
Company C also exhibits an entrepreneurial behavior and a high risk taking attitude, entering new market niches, diversifying its product lines and launching some innovative products. The company began its activity by offering software services for other companies, in several years managing to launch on the international market its first own product, an ERP solution. Company C also seized the opportunity to launch the first business intelligence applications for mobile devices in the world and also some local premieres, such as a service of credit risk assessment.
Company D has implemented the strategy of growing by acquiring new companies, the audacious acquisitions diversifying constantly the range of products it offers. The economic and medical crisis in 2020 was seen as an opportunity to develop a new telemetric platform for car fleet management, in order to enhance the services it offers. The company realized quickly that the clients’ needs are changing, in unpredictable environments, so it enhanced the flexibility of the instruments it provides to customers, including in the telematics platform a mobile application that clients can use.
The previous international market knowledge is a characteristic only for company B, whose founder had a previous significant international experience in IT industry, which allowed him to acquire many useful abilities. The entrepreneur decided to capitalize this experience by opening his first business.
For company A, international market knowledge was acquired from the beginning of its activity by attracting experts that form a Board of Advisors with international experience, especially founders of technology start-ups. Company C gained market experience by working with important international clients. Company D uses the strategy of audacious acquisitions in order to gain external market knowledge.
But the common characteristic of all four companies is all the founders had a global vision from the start, the companies starting to work with international clients from the beginning, even if the knowledge of international markets was scarce.
The main asset that brings company A competitive advantage is the innovation capacity. There are very few companies in Eastern Europe that approach innovation projects. The innovation process in the operational field, that combines the technique of rapid prototyping, the principles of design thinking, the Agile and Skunkworks methodologies and emerging technologies as AI and Machine learning contributes to the development of revolutionary products and services that are subsequently implemented, as for example a solution for augmented reality for a luxury home electronic products company in Australia. Company A has an R&D division, whose activity brought in the last 4 years between 14 and 54% of the revenues obtained by company A from the innovation technology segment
The innovation capability lead to the creation of a technology platform that covers 70% of the digital products and services development effort, facilitating the building of infrastructure and the generic functionalities and assuring the development of a technical MVP for clients in only 10 weeks.
Another intangible asset is the organizational culture, which is centered on people. The company is very careful with their development needs, taking constant efforts to reduce the risk of losing employees that have specific skills and key roles. “Comfort and death are good friends” is an idea included in the set of cultural instruments used by the company, which encourages employees to outgrow themselves and not to become auto-sufficient.
The company implements a retention plan that contains actions like the annual salary renegotiation, performance bonuses, continuous evaluation processes, trainings for professional development (e-learning platform subscriptions, library), but also the possibility to allocate shares by the programs of stock option.
The development of team’s competencies is assured by the company’s own e-learning platform – BottomUp Skills, by which the employees but also the technology and business community are provided with the advanced courses on innovation technologies and digital tools that help them to create digital products and experiences with impact and value for users – design thinking, rapid prototyping, business innovation etc. The classes are available in podcast and masterclass format.
An important intangible asset of company B is the know-how on the model of team extending, acquired after years of calibrating it. Also the communication skills and cultural affinity enable the company to bring real value for customers.
The company constantly invests in enhancing employees’ skills and competencies by using an organized centralized system for knowledge sharing, coaching, training, and internal communication, built on the Atlassian collaboration tools. All employees have unlimited access to a technical knowledge base that is constantly extended through members’ contributions.
The common practices used to enhance project or product teams’ competencies are informal learning sessions and presentations across projects. Many software developers of company B are involved in company-wide communities, where monthly meetings are held in order to share knowledge about technology and software practices. The company also has an internal network of coaches, which has the role to promptly transfer knowledge across all departments of the organization.
Company C has a high innovation capacity, making investments in the adoption of new technologies, in the enhancement or re-writing of new technologies of over 10 million euros in the last 3 years. The budget for investments in technology, products and innovation is 5 million euros.
The company uses internship programs in order to attract young employees but is open to attract experienced employees also.
In order to enhance the employees experience the environment is collaborative, the teams are aligned to the same vision, objectives and strategies. The values of the company are translated in actual behaviors that inspire the employees, imbuing them the sense of pride for contributing to the creation of some of the most successful products in the world, for example in the credit and leasing area, and the redefinition of performances assessment system. The goal is that employees find their intrinsic motivation to contribute to daily activity and to encourage them to enhance their abilities, investing in their training. In 2019 the company had a generous budget for external training.
Company D also possesses a high innovative capability and has a division called Innovative projects that is a lab dedicated to project R&D activity. The ability to encourage innovative projects within the company is based on the long term perspective the founder of the company had even from the beginning of the activity in 1998 about the importance of durable innovation development, of generating and collecting new software solutions ideas and transforming them in prototypes and products.
Company A provides business consultancy and digital strategy for its clients, and also technological implementation of the strategies. The company practically builds digital businesses, focusing on a rapid development of digital solutions, in which it includes strategic, product design, behavioral psychology, growth marketing and experience design for the client. Thus company A addresses the whole value chain of the client companies, beginning with the identification of the business problem, offering business consultancy, creating strategies for the client and then translating these strategies in digital products and services that are implemented in the client companies. This approach is unique, no other competitors succeeding to offer such comprehensive services.
The company also offers stable and safe MVP (minimum viable products) for the clients in only 10 weeks, owing to its own library of reusable technological components, tested and enhanced for 10 years of technology and digital products development. The company’s platform exponentially reduces the period of time necessary for the development of digital products, covering a variety of necessities in development – from infrastructure, UI/UX, mobile – iOS and Android to front-end and back-end web.
Company B covers the end-to-end software lifecycle development, delivering its clients innovative products, scalability, quality and speed, having expertise in healthcare, financial services, automotive. The whole span of a software product is covered, from need assessment, UI/UX, application development, testing and quality ensuring to maintenance or project management
The company is not only providing software customized products for the client companies, but is also provides support that enables decision making and change management for its clients. These services smooth the running of operational processes across the client companies and ensure the objectives they settled are met. Company B treats every client with most care, configurating dedicated software development teams that work exclusively on client’s projects. Such teams can extend the client company’s in-house software development capacity or add specific knowledge to its team, working together closely with its developers and testers.
The teams that will work with a specific client are also selected by taking into account the cultural matching, the members’ desire and interest to work on a particular project, and not only their technical skills and relevant experience. Thus it is assured an effective knowledge transfer through workshops and intense collaboration. Knowledge transfer is ensures also workshops and intense collaboration, either on company’s premises or at the client’s site.
Company C sells digital products for companies that have a high impact on their businesses, such as the reduction of costs, the reduction of time necessary for repetitive tasks. The main product is a software solution for ERP, which includes segments for accountability, sales and for financial flow management. The clients manage to reduce their costs and obtain important increase in their productivity, some of them declaring that the ERP solution has helped them to make progress every month and that without the positive impact of this digital product, their business would close.
Company D offers solutions for business optimization, car fleet management and HR management. The solution for business optimization is created for the necessities of implementation of internal processes for small or medium companies and represents an alternative to CRM solutions (a plurality of instruments for organizing intra and inter departmental interactions, as well as interactions with prospects, clients, providers and other companies) at a much lower cost. The solution helps company D’s customers to improve their relations with their own clients. The product of company D is not only a software product, but a tool useful for business strategy, flexible and easy to implement, on a growing market of companies that begin to use CRM solutions in order to enhance their relations and interactions with existing or potential clients and UCMS solutions (instruments to measure a team’s performance) because they need to manage their remote teams.
In the middle of 2008 crisis, another product of company D, a solution for car fleet monitoring became market leader, because offered the companies a solution to optimize their costs and to increase their human resources efficiency. The product brought a reduction of car fleet expenses with 30%.
The software solutions for HR management are characterized by a very good customer experience and an agile reaction in the implementation process. They offer a very good customer experience, an agile reaction in the process of implementation for the final customer and are consolidated by the newest technologies.
The company also offers advanced client services and frequently re-designs all its digital solutions so they form an integrated system of digitalization, optimization and flexibility.
All of the examined companies are part of business networks that allowed them to access new technical and business knowledge. For example, company A experienced a boom of its activity beginning with 2012, after it reached the US market Silicon Valley and started collaborations in Silicon Valley. The company integrated an American start up of experience design and storytelling, whose founder joined the management of the company as managing partner and innovation manager and then became CEO. The experience and business network of the new manager helped the company establish a subsidiary in Australia and develop its business globally. Company A also attracted several entrepreneurs and experts from American IT industry as advisors.
Company B established strategic partnerships with leading companies in complementary sectors, ensuring that their clients receive the best services for their digital challenges and complex needs. Through industry affiliations, it keeps up to date with the dynamic landscape in every ecosystem, from healthcare to fintech and automotive, continuously aligning the services of custom software development with the latest innovations and trends.
Also, the company’s business model itself is to develop nearshore dedicated partnerships, building teams for the long term needs of its customers. Every customer benefits from team extensions, the success of this tactic laying in the collaborations the company has built.
The networking ability has allowed company B to also engage in partnerships that led to the creation of new companies. The knowledge capital of the founders is transferred to the new companies, the most recent start-ups that company B has created together with its business partners as joint ventures activating in the tele-medical services and in financial services. The start-ups are provided with support for product or business development and with the opportunity to meet different experts in its business network.
Company C also exhibited networking abilities since the beginning of its activity, becoming a founding member of the romanian association of software and services industry in 1998. It also established partnerships with a world leader in business intelligence technologies, with the main European talent management provider and with a leading company in HR services in order to enhance its products’ features and to find new international clients.
Company D has chosen to develop its activity by using the acquisition strategy. It strengthened and diversified its offer for its clients, absorbing companies in several countries. This way, the product line company D provides has enriched with HR management software solutions, fleet management, CRM, automation of processes for companies in FMCG industry, warehouse management systems, distribution management.
All of the examined companies have proven to employ flexible strategies and to have a proactive business approach.
Company A exhibits a high strategic flexibility, passing through three profound changes of its business – which the founders call “re-inventions”, from outsourcing software to innovation activities (design and building of digital products and services that use emergent technologies, including artificial intelligence).
The founders of the company started with a low budget and had to be inventive in order to identify financing sources. The beginnings of the company, which were “a little bit forced” (as one of the founders says) - meaning the growth was too fast, gave it resistance and attention to details, making it extremely resilient. The economical crisis is seen by the managers of the company as bringing opportunities to sign new contracts, starting new digital projects for several clients in the financial area.
Company B is one of the most dynamic software developers in south and Eastern Europe. It changed its leadership structure, including new functionalities in the areas of project management, processes and quality. The company passed through accelerated evolutions, calling for a need of business processes optimization. For this task, company B, as well as the other companies in the selected group, is using the strategy of recruiting international experts, whose knowledge can help the organization develop successfully abroad. The proactivity of company B is illustrated by an investment division, which has the goal to identify the opportunities for new investments in potentially successful start-ups.
Company C’ business extending to an international level was not based on a clear stated strategy, according to its founder. The company flexibly adapted its activity to the requests of multinational companies, former clients, which wanted company C to become the provider of software systems for other subsidiaries. The structure of the company was modified and the internal processes were adapted to the continuous growth of its business.
Company D’s founder deems a crisis is testing a company’s adaptability capacity and forces it to get out of its comfort area and to find new business solutions. In the context of the pandemic 2020 crisis, many customers of company D reacted rapidly and well when they had to let their employees to work from home, but they also faced the challenge to manage remote teams and remote prepare time sheets. Company D adapted a HR management product for the new needs of its customers, seeing the crisis as an opportunity and benefiting from it. It also saw the opportunity to develop a new telematics platform, with the purpose to enhance the services it provides to customers, with a mobile application, available on app stores, included.
The recent crisis taught the company a lesson about unpredictability, highlighting the level of adaptability, from all points of view: internal and external communication, re-organization and re-dimension of operations, keeping the balance even in rough conditions. With seven national offices and six international subsidiaries and over 950 employees, company D succeeded a successful re-thinking of its internal systems, business strategies and work methods.
All of the four analyzed companies exhibit a client-oriented culture and excellent customer care services. The culture of company A is built on the idea of customer care. All the employees are encouraged to thoroughly analyze the needs of the clients and to find the sources of value creation for every client, by maintaining a close relationship with every client. The managers encourage the employees, even the programmers, to dialogue with the clients, to thoroughly understand the business they are working for, before they are starting their activity and to offer advices where needed.
Company B is also characterized by strong customer care competencies. “We have learnt that any technological intervention implies more profound changes in the client organization”, declares one of the managers. In the light of this understanding, company B’s employees practice a consultative approach, facilitating the navigation of every step in the development and acquisition of a new software project. The dedication of the teams that develop “carefully crafted custom software” for established companies, startups, software houses and solution providers is acknowledged by its former clients. Company B’s teams are self managed, can add new members as needed, are flexible, and ensure knowledge transfer to client teams through workshops and intense collaboration, establishing together a remote process and communication, thus operating as integrant part in clients’ technical ecosystem, on a model of adaptive collaboration, ensuring that the distributed team works seamlessly. The excellent communication process with the clients led to an increasing market share in the US.
Although the company had a 15 years experience in international market and a commercial portfolio generated in a proportion of 45% by American clients, it decided in 2019 to enhance its services for customers and in order to put this into practice, it established an office in US where a multi-disciplinary team, composed by software architects, business and sales consultants will ensure a close relationship with the prospects and clients in the region. The purpose is to deepen its understanding of local market specific needs.
In order to acquire marketing and customer care competencies, company C’s founder recruited an international sales manager with a high expertise in this area. The integrated business solutions are sold in the entire Europe, the company having excellent relations with its customers. “We sell trust. Our clients become dependent on our products, they use them several years”, declares the founder of the company.
Company D is constantly improving the products and services it offers to its customers, complying with the always changing needs of its customers, because it realized that they need flexibility, in unpredictable environments. Company D implements as flexibly as possible the instruments needed by the customers, an example being the adaptation of a HR management product for the new clients’ needs of remote team management and of remote time sheet preparing.