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Source: Developed by the Author (2019)
4.4 PR E-AN AL Y S ES O F DC OR’S NE T W OR KS AND NE T W OR K TR ANS IT I ON S
80 Overall, in the pre-inception phase of Dcor, the main networks that helped the business to grow to the next stage and to build internal development were mainly through institutional ties or obtained through institutional ties. In this case, the incubator as an organizational entity integrating different actors provided the company with product development, market knowledge, and a network that employed capital to initiate the business.
By being exposed to experts in the segment facilitated resources and knowledge flows.
Moreover, through public programs supported by governmental agencies aiming to promote business development, allowed the company with the initial visibility to future integrate with other projects as well as being integrated to a range of new business actors.
As the company was ready to set of independently, the entrepreneurs knew that they needed to increase their cash flow in order to guarantee their survival. Moreover, their network of online designers and architects were pivotal since it provided them with the opportunity recognition to establish a partnership with Mobly, a big player in the domestic Brazilian furniture industry, correlating with the findings of Gabrielsson, et al., (2008) and Manolova, et al. (2010). Although the partnership did not provide profits, it was important to promote awareness of new potential clients, which started to appear as a reflection of this
‘free partnership’. Furthermore, since the potential clients were requesting for their services they were able to give their price, in fact, the firm focused towards the new clients which allow the company to finance itself through them, as PVV highlights; “Since the retailer is one of the most popular and innovative companies in Brazil, this initial partnership provided us with visibility since their competitors started to notice us. Therefore, these competitors approached us and requested for our services. This was extremely motivating since we were able to establish “our price” providing us the first real profits.” (PPV, 2018).
Despite the initial increase of sales, it was through Mobly’s network that provided a turning point for the future of Decor. By meeting one of Mobly’ suppliers that questioned them if they could provide some services by generating 3D images they perceived another market opportunity. Also, thanks to their platform networks they had the ability to quickly act upon the new market opportunity that aroused. This turning point was strategic to create a new business strategy that provided knowledge and a technical level differentiation since they integrated the CGI technology and the 3D models in their images sets. Furthermore, it gave the new venture confidence to expand the business and find a new market to act since they realized that they had no support from their domestic clients, perceived as a negative aspect of Dcor’s network.
81 Throughout the inception phase of Dcor it is noted that the partnership with the domestic company provided great contributions to the development of the new venture and to consolidate in the domestic market. Firstly, they gained visibility and the access to new domestic customers. Secondly, by meeting one of the company’s suppliers Dcor perceived market opportunity, which allowed the venture to create a new service method to respond to the client needs. Through their online networks of professionals, they were able to gain knowledge and to incorporate the technology needed to develop a product differentiation (Laurell et al., 2017) and to act in a strategic market niche which is one of the main attributes of BG companies linked with early internationalization (Knight, 1996; Madsen & Servais, 1997). By fulfilling a specific market, the company had sufficient know how to bring the service to the American retailers. Furthermore, according to Dib et al. (2010) one of the influential decisions for BGs from emerging markets to internationalize is when they attained domestic legitimacy, which gives more confidence to sustain foreign business operations.
When the company progressed to the growth phase, Dcor had to look for support in order to internationalize. As stated by GVP: “At the time our business reached 100% of increase in sales within our domestic customers, and since we saw no potential within our current clients to make our way abroad, it was a natural decision to take these solutions to the American market by our own” (GVP, 2018). Within the argument the internationalization justifies itself as the company was looking for larger client basis since the business solely focusing in the domestic market had no prosperity to grow (Coviello & Cox, 2006).
Additionally, since the company was looking for knowledge to better develop the product, the American market prevailed the choice due to its well-organized structure and know-how in the field of digital technologies (Luo et al., 2010; Luo; Wu, et al., 2016), as highlighted by PPV: “the CGI technology was much more advanced in USA than in Brazil, and the expansion was also to seek for knowledge within this technology” (PPV, 2018).
With the help of an institutional tie through the program Exporta/SC created by Sebrae and also with the support from one of the business partners the company enter the US market establishing an office at a University accelerator, which helped the company with the initial business support, including market research, legal regulations, and physical resources.
With the business established, they were able to attend the first trade shows to start positioning the product inside the new market, which allowed them to get the first international customer and establish new networks (Evers & Knight, 2008).
However, the biggest turning point for Dcor in the foreign country was the demand requested by a big American retail company, which settle an immense challenge for the
82 venture in order to develop operationalization skills of the service to meet with the requirements established. As highlighted by GVP: “at first we thought we could not make it, but, since it was a life opportunity we started working almost 24h/7 with our professional architects and designers to deliver the request on time” (GVP, 2018). By committing to the client and accomplishing the requested services the company gained market acceptance by getting the most important client in the American retail industry which provided them the to offer services in a greater production scale, big profits as well as generating growth and survival. Additionally, the new client raised the alert of companies in the media industry, which recognized them as being a highly qualified competitor. As a consequence to the high competitive advantage due to its innovation, product quality and adaptability to meet large scales of digitalized scenarios, the company were able to get a selling offering to be acquire by a big player in the global industry of media content.
Within the growth phase of Dcor it is observed that the institutional networks played an important part in the initial steps of the internationalization process of the company as a means to obtain internationalization experience and initial market knowledge, be exposed to a new variety of resources, including networks and network mechanisms. Further, the client network established by the company is what mostly influenced on their international trajectory by gaining profitability, ability to invest in product development and its innovation, and gaining market positioning (Yli-Renko et al., 2001; Mais et al., 2010; Yu et al, 2011).
Again, with the purpose to better visualize the analysis written above, table 11 brings the interview positioning and the content of the network connected to each life cycle stage.
As highlighted previously, positioning is the way the interviewee positioned oneself to explain the network transition and through the positioning of the interviewees, it was verified the content that led the change of cycles as well as its internationalization.
Table 11 – Dcor’s Network Transitions within the Life Cycle Stages
Life Cycle Stages Interview Positioning Network Content
Pre-Inception Phase
“First we wanted to test hypothesis. The first hypothesis was: 1) are people interested in buying decoration projects online?; 2) are architects and designers interested in making projects online?. To find the answers we developed the crowscontest at the incubator, which served to get clients to register the characteristics of the space and professionals to create and dispute the designed ambient. This first idea helped us to capture professionals’ contacts and customers” (PRO, 2018);
Opportunity Identification;
Product Knowledge Development (Market Preparation);
Initial Business Finance;
Access to new networks;
Operational Skills.
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“our capital at the time mainly came from ourselves (the entrepreneurs) and through three investors from the incubator where our platform was being created”
(GVP, 2018).
Network Transition From Internal Development to Domestic Market Positioning Inception Phase “the demand was very small and the revenue did not
support the company” (GVP, 2018);
“we also realized in that moment that the architects and designers merged into the project mainly furniture’s from MBR, a big Brazilian retailer, providing them with free advertising through our platform” (GVP, 2018);
“Since the retailer is one of the most popular and innovative companies in Brazil, this initial partnership provided us with visibility since their competitors started to notice us. Therefore, these competitors approached us and requested for our services. This was extremely motivating since we were able to establish “our price” providing us the first real profits” (PPV, 2018);
“Fortunately, some of the architects accepted the challenge and we were able to produce the sceneries for the customer who demanded” (GVP, 2018);
“In order to make photos retailers had to photograph a scenery with real furniture and accessories which was very expensive and nothing scalable. So, we took a picture of a product and put it in a beautiful 3D scenario to draw the attention of the consumer. In addition, it allowed a much larger reproduction of sceneries at a significantly lower cost for them than in a traditional way.” (GVP, 2018).
Opportunity Recognition (Innovation Awareness);
Self-Finance (Profitability);
Capacity to Grow;
Partnerships with Domestic Companies Potential Clients;
Client Commitment Product Development;
Visibility/Credibility;
Pre-Internationalization
Network Transition From Domestic Market Positioning to International Market Positioning
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Growth Phase “At the time our business reached 100% of increase in sales within our domestic customers, and since we saw no potential within our current clients to make our way abroad, it was a natural decision to take these solutions to the American market by our own” (GVP, 2018);
“the CGI technology was much more advanced in USA than in Brazil, and the expansion was also to seek for knowledge within this technology” (PPV, 2018);
“the Florida State government, along with the university accelerator, assisted us by providing free market research, tax incentives and physical structure which was very important in that initial moment”
(GVP, 2018);
“at first we thought we could not make it, but, since it was a life opportunity we started working almost 24h/7 with our professional architects and designers to deliver the request on time” (GVP, 2018);
“The sale was extremely important for the future of the company, “[GlobalC] is the ideal strategic partner for Dcor by working with leading brands and companies from different segments and industries.
They have a high quality reputation and a truly global reach. Together we will create inspiring content for our customers while generating cost-effective productivity in the digital content creation process.”
(GVP, 2018);
“technology changes very fast. It may be that in one or two years we do not even exist anymore, or that someone comes along doing better and faster” (GVP, 2018).
Profitability;
Product Development;
Innovation;
Client Commitment;
Market Positioning;
Recognition;
Internationalization.
Source: Developed by the Author (2019)
To have a complete visualization of the findings, figure 15 combines an overview of Dcor’s network development and transition, including the main network actors and the outcomes that contributed to the BG development, located in the upper side of the figure, in parallel with its internationalization process, exposed in the bottom part of the figure.
Figure 15 – Overview of Dcor’s Networks, Network Transitions and its Internationalization Process within the Life Cycle Stages
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Source: Developed by the Author (2019)
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