1) Uppsala Framework The Uppsala model was formed to explain howinternational operations of firms were developed in gradual stages and at thesame time outlining decision-making processes to expand internationally (Johanson and Vahlne, 2006). The Uppsalamodel is built upon the concept of market knowledge as it encompassesstep-to-step learning and knowledge appropriation process in conjunction with foreignmarket and operation (Johanson and Vahlne, 2006). Frynas andMellahi (2015) advocate the view that firm should garner good knowledgeaccumulation and learning as these offers better comprehension of prospects andrisks of continual market involvement.
Market commitment is another essentialaspect of the model in which company expanding abroad is required to carefullydedicate appropriate resources or assets to the foreign market and usuallyEMNEs are required to have higher commitment (Frynas and Mellahi, 2015). As bothmarket knowledge and commitment are analogous and connected, one decision willbecome input for subsequent decision (Forsgren, 2002). Thus, themore the firm gather knowledge about the foreign market, the lower theexistence of perceived risk and there will be high commitment and investment inthat market (Forsgren, 2002).
Henceforward,the Uppsala explains how firms internationalize progressively and cautiously asit is based on incremental decisions. The model also illustrates the significance ofpsychic distance that is described as factors that prevent or disrupt firms fromlearning or understanding the foreign environment (Johanson and Vahlne, 2009). Factors canbe differences in business practices, language or culture. It is also assumedthat firms should expand into markets that are closer to their home country. Therefore,psychic distance influences firm’s market selection (Johanson and Vahlne, 2009).
Despite the gradual stages and concepts that themodel entails, it is still being criticized for being too rigid in light oftheir approach during internationalization as the model omits low level ofinvestment and less risky approaches such as franchising (Ramamurti, 2012). Furthermore, the model explainsthe incremental internationalization of firms, which is contrary to theaggressive acceleration expansion method that EMNEs usually undertake (Ramamurti, 2012). However, theUppsala model is able to highlight risks that EMNEs may face which is vitalduring decision-making (Forsgren, 2002).
Frynas andMellahi (2015) further indicate that despite the model being general in nature,it is able to illustrate issues related to location, strategic changes andoperation modes, which cover essential contextual aspects of companiesexpanding internationally. 2) LLL Model The linkage, leverage, learning (LLL) model wasoriginated due to the critics of the OLI framework as it advocates the assetexploration motive that is a springboard perspective (Matthews, 2002). Matthew (2006) developed thismodel to provide pivotal understanding to the accelerated internationalizationdecisions of EMNEs through resource-based analysis. The first aspect is linkage, which understandshow companies decide to leverage into new markets. EMNEs are viewed aslatecomers hence linkage is a mechanism that provides them with ready access tointernally lacked resources such as advanced technology or brand reputationthrough collaborative partnership with foreign firms (Luo and Tung, 2007).Risk due to uncertainty in the market is reduced often through partnership thusit is a popular strategic decision that is utilized by Chinese EMNEs (Morck, Yeung and Zhao, 2008).
The second feature,leverage, concentrates on the exploitation of linkage by channeling theseresources and cost advantages to overcome barriers in order to remaininternationally competitive (Matthews, 2002). Lastly,learning is a stage established when EMNEs acquire competitive advantages anddynamic capabilities through linkage and leverage strategies and attainknowledge on how to compete on international level (Matthews, 2006). He and Fallon (2013) illustrates theimplementation of LLL model analysis on Tata Motors whereby through theacquisition of Jaguar Land Rover, they were able to enhance both their brandreputation and technological skills. Furthermore, they were able to leveragetheir knowledge to evolve into global players (He and Fallon, 2013). Therefore,the LLL model is able to furnish strategic intents of EMNEs as well asproviding account for the rapid rise of EMNEs (Matthews, 2006).
Hence, the theory reckoned thatany EMNEs, which lack strategic resources, have the possibility tointernationalized in an accelerated manner through integration of the LLL model(Matthews, 2002).
