The Uppsala model

The Uppsala model is the theoretical reference to the analysis of the process and not to the causes of internationalisation. It answers the question of “how” companies can go international. It’s developed in the Sweden Uppsala university by Johanson et Vahlne

In 1977.

The main characteristic of the Uppsala model is the importance of progressivity in the firm international expansion.

The principal objective of this expansion is to reduce the uncertainty related to the foreign markets by relying on an expanded "experiential" knowledge of international operations.

It is an internalisation through steps that the model offers.

the theory describes the internalisation of the company as a process in which the firm slowly increase its international involvement.

This theory can also explain the internalisation process by two models:

The first known as the establishment chain; which is a series of phases made in small steps that shows the degree of commitment for every new step

The different stages of the model are:

• no regular export activities
• export via independent representatives
• sales subsidiary
• production/manufacturing

The second model based on observations by the two authors explains first, that firms were gradually engaging more resources as their experience in the host market grew. Secondly, firms were internationalising themselves in nearby markets before moving to countries that were more "psychically" distant.

The authors have explained the process of internationalisation through the interaction between static and dynamic aspects that divide the model into four core concepts:

market commitment, market knowledge, current activities and commitment decisions.

The state aspect englobes the market commitment meaning the resources dedicated to foreign markets, plus the market knowledge which is the knowledge held by the firm about the market and its operations at a given time.

The change aspect includes the current activities and commitment decisions. The decision to bind resources to foreign operations is the last latter.

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