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As Prime Minister Mark Carney jets around the world in his emergent role as Canada’s head of global sales and marketing, his message to domestic companies—from large established firms to entrepreneurial startups—is not only to venture outside North America, but to execute this pivot as quickly as possible so we can reduce our dependence on tariffed U.S. exports.
For some firms, dubbed “born globals” or “early internationalizers,” this kind of outward orientation is bred in the bone. These companies—whose exports, by definition, account for 25% of revenues within their first two to three years — don’t set off to gradually build a domestic book of business. Rather, they charge into offshore markets right out of the gate, sometimes even before amassing the capital needed to sustain this kind of expansion. Think BlackBerry, Shopify, Cohere.
Born globals would seem to be promising role models for firms determined to follow Carney’s advice. But what’s the secret sauce that separates these success stories from other companies that struggle to balance the competing demands of internationalization and growth? Business scholars have been debating that question since 1993, when Michael Rennie, a McKinsey partner in Australia, coined the “born global” label.
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Theories abound, as do empirical formulas, such as an “index of internationalization” that can be used to gauge how internationalization in SMEs takes shape, per a recent Saudi Arabian study of Indian startups. Past studies suggest that born globals succeed because they move fast, keep costs low and pick up on opportunities early to make up for limited resources. Yet new research, published in January in the Journal of Management Studies, debunks some of that Horatio Alger–like mythology.
A team of Canadian academics, led by Hadi Fariborzi, an assistant professor of innovation and entrepreneurship at Mount Royal University in Calgary, reviewed almost 400 previous studies of born globals to look for patterns. Contrary to the caricature of the ambitious startup that launches itself into foreign markets with little more than a novel product and a founder’s zeal, they concluded that young firms that succeed abroad have executives with international experience, some kind of R&D advantage, access to capital and the patience necessary to put these pieces in place before attempting to sell abroad.
Also, and perhaps most importantly, it takes a global village. “They might not have resources per se, as in lots of cash, but they have a big network of people,” says Fariborzi. “Their networks are extremely important to international success.”
Successful early internationalizers are good at drawing on “complementary resources,” adds study co-author Alain Verbeke, professor of international business strategy at the University of Calgary’s Haskayne School of Business. These might be investors prepared to provide the capital to establish international sales and marketing operations or consular trade officials willing to make introductions. “Money, of course, plays a role,” he says, “but it’s really this capacity to develop these networks and to ultimately then close the deal.”
Canadian SMEs, as is well known, do not excel in this race and, as Carney likes to remind us, we have tended to take the path of least resistance—the U.S.—when selling abroad. Despite the large numbers of well-educated newcomers with contacts all over the world, Canadian SMEs’ “involvement in cross-border trade has been relatively limited,” concluded a 2024 federal government report.
Another Ottawa evaluation, of Canadian supply chains, observed that born globals or born regionals—companies that export within a region, such as North America—tend to be able to sustain their export revenues longer than one that have grown up in a traditionally methodical way, i.e., by focusing mainly on domestic customers. “Firms that build for multiple markets from inception are more resilient and ultimately more profitable,” Verbeke agrees.
Based on their work, Farborzi and Verbeke suggest there’s a bit of the hare-and-tortoise dynamic at play here, and make the entirely commonsensical point that it’s better for young firms to take the time to build up networks of international contacts, line up supports for their export ventures, and steer clear of temptations, such as the belief that you can close deals with a few Teams meetings. “This idea of boots on the ground,” says Verbeke, “you really need to have these competent representatives who can actually provide access to networks abroad in all these countries that are hungry for these types of products.”
This narrative, however, plays out somewhat differently for the export of services, especially AI-enabled digital services, which can be distributed through shared clouds, says Danielle Goldfarb, a distinguished fellow at the Asia-Pacific Foundation of Canada. In a report published last July, she and co-author Kati Suominen, founder and CEO of Nextrade Group, point out that Canada’s digital service exports grew by 215% between 2005 and 2024, and now exceed US$84 billion—making it the “most dynamic” element of Canada’s overall export sector. The U.S., moreover, accounts for just 60% of our digital service exports, compared to 75% for merchandise and other goods exports, meaning that the diversification Carney espouses already exists in these industries.
The combination of digitization and advances in AI lessens the friction that companies encounter when shipping something across a border. “Still, proximity, language, culture—all these things still matter,” says Goldfarb, adding that startups in this space still need to develop local contacts as well as an understanding of offshore markets to take advantage of those export opportunities. “You still have to do the business trips, but you now have tools so you can nurture those relationships in different ways than you could before.”
Hariborzi and Verbeke emphasize that there are policy lessons that emerge from their findings—learnings that seem especially pertinent as Canada’s export-minded entrepreneurs seek to wean themselves off an over-dependence on U.S. markets. “The biggest thing that the government can do,” says Hariborzi, “is facilitate these networking opportunities by connecting [young firms] to trade expos, potential local partners and customers.”
From his work with exporters both in Canada and abroad, Verbeke stresses the value of a corps of consular trade officials who know how to open doors. “You want to talk to someone who can help you, who can immediately guide you, and is going to be your concierge to make these export or foreign direct investment projects feasible.” Government investment in such services, he and Fariborzi argue, are “more valuable than just financial subsidies for rapid expansion.” (Interestingly, in a Canadian Federation of Independent Business survey, the majority of SMEs that export said they aren’t aware of, or haven’t used, federal trade support services.)
Prior to his academic career, Fariborzi oversaw international marketing for an Iranian software developer in the late 2010s. “They wanted to sell to the Gulf countries, East Asia, you name it,” he recounts. “We faced all sorts of issues. We had some success. We were dominating in some markets. But there were a lot of things that were not going as well. That became the whole question for me: What are the things that make us successful? What are the things that make this really difficult?” He went back to school and built those questions into a PhD.
Asked what he would do differently then knowing what he knows now, Fariborzi says the firm’s mistake was trying to connect with a single person—the buyer—and assuming that it had “a fantastic product” to sell. “That’s totally wrong. You might have the product. You might have a really great idea that’s working very well with some local customers. But to actually build the relationship you need for [foreign] buyers to trust you and buy your product, you need a whole lot more. You need to build the network. And you need to show that you are present there.”
In other words, those riveting born global startup tales are just another version of the old adage about the overnight success that was years in the making.