Market deployment planning

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Market Deployment Planning

Thèse

Salman Kimiagari

Doctorat en sciences de l’administration

Philosophiæ doctor (Ph.D.)

Québec, Canada

© Salman Kimiagari, 2016

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Market Deployment Planning

Thèse

Salman Kimiagari

Sous la direction de:

Benoit Montreuil, directeur de recherche

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Résumé

Dans l'actuelle économie mondiale en évolution rapide, les entrepreneurs ont de plus en plus tendance à concevoir globalement leurs entreprises au cours des premières étapes de création. Cette tendance met en relief la nécessité d'une approche efficace et systématique de la planification du déploiement de marché en raison de la nature dynamique et complexe des marchés actuels ainsi que de l'importance croissante du positionnement stratégique mondial. Cette thèse présente une nouvelle approche pour

développer une feuille de route de déploiement de marchés. Cette nouvelle

méthodologie comprend une approche systématique avec les avantages d'une approche qualitative de niveau stratégique et une approche quantitative pour l'élaboration d'une feuille de route de déploiement sur les marchés. Cette feuille de route est un ensemble de scénarios chacun indiquant quels marchés sont ciblés pour le déploiement dans chaque phase du développement de l'entreprise (généralement sur un horizon de planification de trois à dix ans). Basée sur les données pertinentes du marché, l'approche de modélisation hybride proposée utilise des plans auto-organisés pour le groupement des marchés en clusters et un modèle mixte d'optimisation multi–

objectif pour la planification du déploiement de marché au sein de chaque cluster.

Cette méthodologie peut être appliquée dans la sélection de marchés et la planification de l'expansion, à la fois aux plan national et international, notamment pour les entreprises nées globales (Born Global). Nous appliquons l'approche introduite dans le cadre de Global Relief Supply, un projet d’entreprise visant à servir une niche dans le marché mondial de la préparation et de la récupération face aux catastrophes naturelles.

Mots clés:Déploiement de marchés, Sélection de marchés, Planification de

l’expansion, Entreprises nées globales, Optimisation, Multi-objectif, Groupage, Cartes auto-organisées, Catastrophes naturelles

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Abstract

In today’s fast-paced global economy, entrepreneurs increasingly tend to holistically design their business ventures during the early stages of business creation. This tendency highlights the need for an efficient and systematic approach to market deployment planning due to the dynamic and complex nature of current markets as well as the evolving significance of global strategic positioning. This thesis introduces a new approach in order to develop a market deployment roadmap.

This novel methodology includes a systematic approach with the benefits of a qualitative approach to strategic level and quantitative approach to developing a market deployment roadmap. Such a roadmap is a set of scenarios; each stating which markets is targeted for deployment in each phase of the business development (usually over a three to ten-year planning horizon). Based on pertinent market databases, the proposed hybrid modelling approach uses self-organizing maps for market clustering and a multi-objective mixed integer optimization model for market deployment road mapping within each cluster.

This methodology can be applied in both national and international market selection and expansion planning, notably for born global ventures. We apply the introduced approach to the case of Global Relief Supply, focused on a venture project aiming to serve a niche in the US and world market for disaster preparation and recovery. Key words: Market deployment, Market selection, Expansion planning, Born Global Business, Optimization, Multi-objective, Clustering, Self-organizing maps, Natural disasters

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Résumé des articles insérés

Article 1

Titre

Stratégie de marché des nouvelles entreprises internationales:

enseignement d'une haute technologie d'entreprise d'une petite

économie ouverte

Résumé

Les stratégies du marché utilisées par les nouvelles entreprises internationales n'ont

jamais fait l'objet d'études détaillées. La présente étude examine ces stratégies et les facteurs qui les affectent. Elle développe un modèle et des propositions sur la base d'une étude de cas approfondie d'une entreprise de haute technologie dans une petite économie ouverte. Cette entreprise peut choisir parmi une diversification de pays, une diversification de clientèle ou une stratégie hybride. Cependant, cette entreprise de a constaté que la poursuite d'une stratégie hybride était un défi détaille. Les résultats indiquent en outre que la stratégie marketing est influencé par les avantages de l'apprentissage de la nouveauté, l’orientation de gestion internationale, et la mesure dans laquelle une logique d’effectuation a été utilisée. La distance psychique ne semble pas être une grande préoccupation. Les résultats ont des implications importantes pour les chercheurs et les praticiens de l'entrepreneuriat international.

Mots clés: Stratégies du marché, Avantages de l'apprentissage de la nouveauté,

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Article 2

Titre

Approche de modélisation hybride pour le déploiement de marché :

une application à un projet de pilote dans le domaine de l’assistance

d’approvisionnement en situations de désastres naturels

Résumé

Dans le contexte de l'économie mondiale d’aujourd’hui qui est en perpétuelle évolution, les entrepreneurs essaient de plus en plus de concevoir leurs entreprises d’une façon holistique dès les premières étapes de création de leurs affaires. Cette tendance souligne le besoin d’une approche efficiente et systématique pour la planification du déploiement du marché en raison de la nature dynamique et complexe des marchés actuels et de l’évolution significative de l’importance du positionnement stratégique global. La planification traditionnelle de l'expansion du marché n’est plus adéquate pour les contextes caractérisés par une cadence élevée de changements. Cet article présente une approche de modélisation hybride afin de développer une feuille de route de déploiement de marché. Cette feuille de route est un ensemble de scénarios, chacun indiquant les marchés ciblés pour le déploiement à chaque phase du développement du marché (généralement sur un horizon de planification de trois à dix ans). Basée sur données de marché pertinentes, l'approche proposée utilise des cartes auto-organisatrices de regroupement de marché et un modèle mixte d'optimisation entier pour la planification du déploiement de marché au sein de chaque regroupement. Cette approche est illustrée à travers son application à la création de feuilles de route de déploiement commercial d’une entreprise spécialisée dans les approvisionnements des secours en cas de catastrophes naturelles.

Mots clés : Déploiement de feuilles de route de la Marché, Modélisation, Multi-Objectif Optimisation Mixte Entier, la carte d’auto-organisation, les catastrophes naturelles, les entreprises commerciales, la planification de l'expansion du marché

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Article 3

Titre

Planification de déploiement de Marché pour le commerce né

mondial

Sur les marchés concurrentiels d'aujourd'hui, notamment les gestionnaires entrepreneurs de nouvelles entreprises ont besoin d'outils de décision appropriés afin de leur fournir un modèle optimal de planification de l’expansion du marché. La planification Traditionnelle de l'expansion du marché n’est plus viable dans l'économie mondiale rapide d'aujourd'hui. Ce document met l'accent sur un processus de décision vitale, encore nouveau intégré dans le processus global de conception d'affaires; que les gestionnaires de l'aide à un stade précoce de la fondation de l'entreprise pour sélectionner les marchés cibles à atteindre en quelque sorte leurs objectifs attendus de profits et diminuer les risques associés de l'expansion du marché. Le présent document fournit une formulation pour aider particulièrement spécialisés en marketing de commerce né mondial à prendre de meilleures décisions dans de nouvelles situations. Le modèle proposé peut également être appliqué dans un contexte international là où les gestionnaires ciblent le fonctionnement et la planification sur des marchés mondiaux. Aujourd'hui, compte tenu de l'importance des catastrophes naturelles, la volonté des solutions globales de secours en alimentation, ont exigé plus d'attention de la part des participants de l'industrie, des fournisseurs de services, des gouvernements locaux et des gens qui vivent dans des zones qui pourraient être touchées par ces catastrophes. Par conséquent développer un modèle pour l'étude d’un marché simplifié de l’acheminement fournitures, peut être considéré comme un cadre précieux pour les différents intervenants. L'application de l'approche proposée pour une société née mondiale, qui est un fournisseur de services dans les événements de catastrophes naturelles, illustre la capacité du modèle.

Mots clés: Marché planification du déploiement, facteurs nés mondiaux, Multi-

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Abstracts of inserted articles

Paper 1

Title

Market strategy of international new ventures: Insights from a high technology Business from a small open economy

Abstract

The market strategies of international new ventures (INVs) have not been the topic of extensive study. This paper investigates these strategies and examines the factors that affect them. It develops a model and propositions based on an in-depth case study of a hight technology firm from a small and open economy. The INV firm can select from a country diversification, customer diversification or a hybrid strategy. Our case firm showed that pursuit of a hybrid strategy, however, proved to be challenging. The results further indicate that market strategy is affected by the learning advantages of newness, an international management orientation, and the extent to which effectuation logic was used. Psychic distance does not seem to be an important concern. The findings have important implications for international entrepreneurship scholars and practitioners.

Keywords: Market Strategy, Learning Advantages of Newness, International Management Orientation, Customer Segmentation, Effectuation Logic, Psychic Distance

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Paper 2

Title

Hybrid Modeling Approach for Market Deployment Road mapping:

An Application to a Natural Disaster Relief Supply Business Venture

Abstract:

In today’s fast-paced global economy, entrepreneurs increasingly tend to holistically design their business ventures during the early stages of business creation. This tendency highlights the need for an efficient and systematic approach for market deployment planning due to the dynamic and complexity nature of current markets and the evolving significance of global strategic positioning. Traditional market expansion planning is no longer adequate for fast-paced contexts. This paper introduces a hybrid modeling approach in order to develop a market deployment roadmap. Such a roadmap is a set of scenarios; each stating which markets are targeted for deployment at each phase of the business development (usually over a three to ten year planning horizon). Based on market pertinent databases, the proposed approach uses self-organizing maps for market clustering and a mixed integer optimization model for market deployment road mapping within each cluster. The approach is illustrated through its application to market deployment road mapping for a business venture specializing in natural disaster supply relief.

Keywords: Market deployment road mapping, Modeling, Multi-Objective Mixed Integer Optimization, Self-Organizing Map, Natural Disasters, Business Ventures, Market Expansion Planning

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Paper 3

Title

Market Deployment Planning: A Case for a Born

Global Business

Abstract

In today’s competitive markets, managers particularly entrepreneurs of new ventures need appropriate decision tools in order to provide them by an optimal market expansion planning model. Traditional market expansion planning is no longer viable in today’s fast global economy. This paper focuses on a vital, yet novel, decision process embedded in the global business design process; that aid managers in early stage of business foundation to select target markets in somehow achieving their expected profit objectives and decrease the associated risks of market expansion. The present paper provides a formulation to help managers and specially marketing managers for born global business to make better decisions in new situations. The proposed model can also be applied in international context where managers want to make decisions for the operation and planning in global markets. Today, considering the importance of natural disasters, the willingness of global supply relief solutions, have demanded more attention from industry participants, services providers, local governments and the people who live in areas which may be affected by these catastrophes. Hence developing a model for studying the supply relief market can be considered as a valuable framework for different stakeholders in this context. The application of the proposed approach to a born global firm, which is a service provider in natural disaster events, illustrates the capability of the model.

Key words: Market Deployment Planning, Born Global, Multi-Objective Mix Integer Optimization, Clustering, Executive Factors

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Paper 1... viii Paper 2... ix Paper 3... x Table of Contents ... xi List of Tables ... xv List of Figures ... xvii Acknowledgments ... xx Preface... xxi 1. Introduction ... 1 1.1. Overview of thesis ... 1 1.2. Contribution of research ... 3 1.3. Research context... 4 1.4. Literature review framework ... 5 1.5. Research questions ... 6 1.6. Research methodology ... 6

2. Literature review and market deployment concept ... 9

2.1. Introduction ... 9

2.2. Literature review ... 9

2.2.1. Strategic intents ... 9

2.2.1.1. Internationalization (definition and theories) ... 10

2.2.1.2. Born-Global business ventures ... 11

2.2.1.2.1. Definition ... 13

2.2.1.2.2. Drivers ... 14

2.2.1.2.3. Configuration ... 16

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2.2.2.1. Country selection elements ... 18

2.2.2.2. Foreign market selection ... 21

2.2.2.2.1. Outline of the international market selection (IMS) literature... 21 2.2.2.2.2. Shift ‐share model ... 22 2.2.2.2.3. Dunning’s framework ... 23 2.2.2.2.4. Location advantages... 23 2.2.2.2.5. Ownership advantages ... 24 2.2.2.2.6. Ownership–location interactions ... 24 2.2.2.2.7. Internalization advantages ... 24 2.2.2.2.8. Business factors ... 25 2.2.2.2.9. Chance ... 25 2.2.3. Market deployment approaches ... 26 2.2.3.1. Market clustering approach ... 30 2.2.3.1.1. Self‐organizing map approach ... 32 2.3. Synthesis in literature ... 35 2.4. Market deployment plan: A conceptual framework ... 36 References ... 41

3. Market Strategies of International New Venture ... 54

3.1. Introduction ... 54 3.2. Market strategy for INVs ... 55 3.3. Theoretical framework ... 58 3.3.1. Psychic distance ... 59 3.3.2. Learning advantages of newness ... 59 3.3.3. International management orientation ... 60 3.3.4. Consumer segmentation ... 60 3.3.5. Effectuation theory ... 61 3.4. Research methodology ... 62 3.5. Empirical results, case study analysis, and development of propositions63 3.5.1. Background of the case firm ... 63 3.5.2. Psychic distance ... 65 3.5.3. Learning advantages of newness ... 66 3.5.4. International management orientation ... 67 3.5.5. Customer segmentation ... 68 3.5.6. Effectuation theory ... 69

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3.6. Conclusion ... 71

References ... 74

4. Hybrid Modeling Approach for Market Deployment Road Mapping: An Application to a Natural Disaster Relief Supply Business Venture ... 80

4.1. Introduction ... 80 4.2. Literature review ... 81 4.2.1. Proposed road map optimization model ... 86 4.2.2. Market Clustering approach ... 89 4.3. Application to Case study ... 91 4.3.1. Business context ... 92 4.3.2. Global Relief Supply (GRS) ... 92 4.3.3. Market deployment plan for GRS ... 93 4.3.4. City‐disaster risk factor data set... 94 4.3.4.1. The risk of natural disasters ... 94 4.3.4.2. Hazard ... 95 4.3.4.3. Vulnerability ... 95 4.3.4.4. Natural disasters risk calculation ... 96 4.4. Model parameterizing for the case study ... 100 4.5. Generating geo‐market clusters based on self‐organizing map ... 103 4.6. Goal oriented optimization model parameters ... 107

4.7. Market Deployment Roadmap Optimization Results ... 110

4.8. Sensitivity analysis ... 129

4.9. Conclusion ... 133

References ... 135

Appendix: ... 141

5. Chapter 5: Market Deployment Planning : A case study of a Born Global Firm ... 144 5.1. Introduction ... 144 5.2. Literature review in market deployment approach ... 146 5.3. Model formulation ... 151 5.4. Application to case study ... 155 5.4.1. Model parameterizing for the case study ... 156 5.4.2. City‐disaster risk factor data set... 161 5.4.2.1. Hazard ... 162

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5.4.2.2. Vulnerability ... 162 5.4.3. Natural disasters risk calculation ... 164 5.4.4. Target market clustering ... 166 5.4.5. Goal oriented optimization model parameters ... 171 5.4.6. Results ... 174 5.4.7. Sensitivity analysis ... 198 5.5. Conclusion ... 203 References ... 205 6. Chapter 6: Conclusion ... 210 6.1. Synthesis of the research ... 210 6.2. The main contributions of the thesis ... 211 6.3. Implications of the research ... 214 6.4. Limitations and future research avenues ... 215 Appendix 1: ... 217 Appendix 2: ... 218 References ... 222

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List of Tables

Table 1 : Internationalization literature theories ... 11

Table 2 : Comparing traditional internationalization and born global, based on Gabrielsson et al. (2008) ... 13

Table 3 : Different techniques in market clustering ... 31

Table 4 : The different characteristics of generic foreign market strategies ... 56

Table 5 : Facts on foreign market expansion of SSH ... 65

Table 9 : Goals entered by decision maker for a 5 year-plan ...109

Table 10 : Target market selection for GRS in a 5 years plan ...115

Table 11 : Goals entered by decision maker for a 5 year-plan in cluster 1 ...117

Table 12 : The goals of Scenario 1 and 2 for cluster 1 to cluster 4 ...118

Table 13 : Target market selection for GRS in a 5 years plan in cluster1 ...119

Table 14 : Target market selection for GRS in a 5 years plan in cluster 2 ...121

Table 17 : Contrasting the optimization model results of scenario 1 and 2, as well as between cluster-centric solutions in scenario 2 ...127

Table 18 : Total expected profit present value through five years horizon (M$), budget and optimization time ...127

Table 27 : Survey in qualitative approaches of market selection ...149

Table 29 : The parameters value used in the case study ...161

Table 31 : Executive factors ...172

Table 32 : Data entered by decision maker for a 10-year plan ...174

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Table 35 : The goals of Scenarios 1 and 2 ...179

Table 36 : Market deployment roadmap for GRS in 10-years plan in cluster 1 ...181

Table 37 : Market deployment roadmap for GRS in 10-years plan in cluster 2 ...183

Table 38 : Market deployment roadmap for GRS in 10 years plan in cluster 3 ...185

Table 39 : Market deployment for GRS in 10-years plan in cluster 4 ...187

Table 41 : Contrasting the optimization model results of scenario 1 and 2, as well as between cluster-centric solutions in scenario 2 ...191

Table 42 : Total expected ten-year horizon profit present value, financing needs and optimization time ...192

Table 43 : Comparison between results of optimization model in scenario 1 and 2 ...193

Table 44 : Boundary goal deviation for cluster 1 ...196

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List of Figures

Figure 1 : Literature review framework ... 6

Figure 2 : The developed methodology ... 8

Figure 3 : The major dimensions of Born-Global firms ... 16

Figure 4 : Potential-barrier trade-off IMS model (Papadopoulos et al., p170, 2002) ... 22

Figure 5 : International Market Selection Criteria ... 27

Figure 6 : SOM function ... 32

Figure 7 : Updating the best matching unit (BMU) and its neighbors towards the input vector x. the black and gray circles correspond to situation before and after updating, respectively. The lines show neighborhood relations (Vesanto, 2000). ... 33

Figure 8 : The training process of SOM method ... 34

Figure 9 : Topological neighborhood sets and the position of neurons in 3 radiuses ... 35

Figure 10 : Market deployment road map schema ... 38

Figure 11 : The potential outcome of the process (1-5) ... 40

Figure 12 : Foreign market strategy based on country and customer diversity ... 57

Figure 13 : Market strategy framework for international new ventures ... 62

Figure 14 : Variable Matrix Views of a Self-Organizing Map( Earth-H, Torn-H ,Hurr-H, Vul, Pop, GDP stand for Earthquake hazard, Tornado hazard, Hurricane hazard, Vulnerability, Population and Gross Domestic Product respectively) ... 91

Figure 15 : Set of five Neuronal Clusters in a Self-Organized Map, displayed on a U-matrix ... 91

Figure 16 : Maps of Natural disaster history in the USA (A: Earthquake hazard map, B: Tornado history Map, C: Hurricane history map) ... 97

Figure 17 : Illustration of the location of the city and relevant disasters ... 98

Figure 18 : The flowchart of the algorithm for calculating the hazard of cities ... 99

Figure 19 : Variables planes of self-organizing map ...106

Figure 20 : U-matrix of SOM for US natural disaster market ...106

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Figure 22 : Four clusters on US map ...107

Figure 23 : Selected market on US map ...116

Figure 24 : Selected market on US map in cluster 1 ...120

Figure 27: Selected market on US map in cluster 4 ...126

Figure 28 : GDP Variation ‐1980‐2014(Source of data: U.S. Bureau of Economic Analysis) ...130

Figure 29 : Number of events of Geophysical events and Meteorological events in US (1980-2014) ...131

Figure 30 : The results of Sensitivity analysis in scenario 1(GDP Variation) ...131

Figure 31 : The results of Sensitivity analysis in scenario 1(Disaster Risk Variation) ...132

Figure 32 : The results of Sensitivity analysis in scenario 2 (Disaster Risk Variation), (The total profit is based on K$) ...132

Figure 33 : The results of Sensitivity analysis for GDP variation in scenario 2 ...133

Figure 34 : Map of world Natural hazard ...165

Figure 35 : Variables Planes of self‐organizing map ...167

Figure 36 : U-matrix of SOM for world natural disaster market ...168

Figure 37 : Five clusters ...168

Figure 38 : Five clusters on world map ...169

Figure 39: Selected market on map ...177

Figure 40: Geographical display of 10‐year market deployment roadmap for GRS in cluster 1 ...182

Figure 41: Selected market on World map in cluster 2 ...184

Figure 45: The variation of GDP of the countries under the study during 17 years (based on data from The Maddison Project) ...199

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Figure 46: The average of GDP growth of the countries under study from 1991‐2008 (based on data from The Maddison Project) ...200 Figure 47: The results of Sensitivity analysis in scenario 1(GDP variation) ...201 Figure 48: The results of Sensitivity analysis in scenario 1(Disaster Risk Variation) ...201 Figure 49: The results of Sensitivity analysis in scenario 2(Disaster Risk Variation) ...202 Figure 50: The results of Sensitivity analysis in scenario 2(GDP Variation) ...203

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Acknowledgments

First, I would like to express my sincere gratitude to my advisor, Professor Benoit

Montreuil (Stewart School of Industrial & Systems Engineering at Georgia Tech) for

his endless encouragement, guidance and support. His insights and knowledge and his valuable and pertinent comments guided me continuously through my Ph.D. journey and taught me how to conduct high quality research.

I am grateful to Professor Margaret Schomaker (Business school (FSA), Laval University), Professor Frank Pons (Business school (FSA), Laval University), and Professor Walid Klibi (KEDGE-Business School) for serving on my thesis committee and for their constructive comments on the final thesis.

This thesis has been realized with the financial support and the productive collaboration of research professionals of the Canada Research Chair in Business Engineering at Laval University. I would like to acknowledge and thank all CIRRELT and FORAC research professionals for their technical assistance.

A special thanks to my dear mother, Mah Lagha Shahidi Hamedani, and father, Dr.Ali Mohammad Kimiagari, whose calm and kind character were an endless source of support and encouragement and an important source of inspiration for me. They always tried to provide the best opportunities for my education. Finally, I would like to thank my brother, my professors: Dr. Mohammad Javad Zarif, Dr. Mohammad Javad Asayesh, Dr. Davood Karimi, Dr. Fariborz Jolai, Dr. Masoud Rabbani, Dr. Seyed Farid Ghaderi, Dr. Abas Keramati, Dr.Seyed Ali Torabi, Dr. Seyed Hossein Iranmanesh, Dr. Mohammad Reza Mehregan, Dr. Seyed Reza Seyed Javadien, Dr. Manochehr Ansari, Dr. Seyed Mansour Razavi and finally my friends, Driss Hakimi and Muhammad Mohiuddin and last but not least my deep love and appreciation goes to my love, for her kindness and I dedicate this achievement to my beloved country.

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Preface

This thesis has been realized under the direction of Professor Benoit Montreuil, professor at the Faculty of administration science of Laval University. It has been prepared as an article insertion thesis. The thesis includes three articles. In all of the presented articles, I have acted as the principal researcher. As the first author, I have also performed the mathematical model development, the algorithm coding, the analysis and the validation of the results, as well as writing of the first drafts of the articles. Professor Benoit Montreuil has revised the articles to obtain the final version. The first article entitled: " Market strategy of international new ventures: Insights from a high technology Business from a small open economy ”, co-authored " by Pr. Mika Gabrielsson , Pr.Peter Gabrielsson and Pr., Benoit Montreuil has been published in Handbook of Research on International Entrepreneurship Strategy: Improving SME Performance Globally, Edward Elgar Publishing, 2015

The second article entitled: “A hybrid modeling approach to Market Deployment Roadmap planning- Natural disaster relief supply market deployment in USA ", co-authored by Professor Benoit Montreuil and the third article entitled: “Market deployment planning for born global business ", co-authored by Professor Benoit Montreuil, are under review.

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1. Introduction

1.1. Overview of thesis

In today’s fast-paced global economy, entrepreneurs increasingly tend to holistically design their business ventures during the early stages of business creation. This leads them toward exploiting rigorous business modeling methodologies as they aim for rapidity and a position where they will be well poised for large-scale deployment. Contributing to addressing this emerging need is at the core of this thesis. It focuses on an important, yet novel, decision process embedded in market selection and expansion planning, itself embedded in the global business design process: market deployment planning. The deliverable of this process is a market deployment roadmap or a set of alternative roadmaps, a roadmap states which markets are targeted for deployment at each phase of the development of the business, usually over a three-to-ten year planning horizon. Markets (or market segments) can refer to countries, regions, cities, niches, and etcetera. The market deployment roadmap becomes a key tool for helping further design the business and plans the activities, resources, networks, financial flows and expected value creation of the business to be launched. During the business design phase, the market deployment roadmap process is characterized by its fast pace with tight lead times; an absence of comprehensive hard numbers and figures relative to all potential markets, partners, resources and sites; a strong need for conceptual and strategic alignment with the character of the business and the type of offers and value creation processes to be put in place; and a need to build a realistic roadmap, detailed per market-year over a significant planning horizon, even though everyone knows that the roadmap will be dynamically revisited as the business takes shape and gets through its development and growth phases. Developing a market deployment planning can help managers to select target markets not only to achieve their profit objectives and decrease the associated risks of market expansion but also provides target market insights and a road map perspective. The present thesis provides a formal description of the proposed approach and its formal

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optimization models to help managers and specially marketing managers to make better decisions in new situations. This approach can be applied in regional or international market expansion.

Today, among firms and ventures that grow through a gradual internationalization process, there are some enterprises that experience international business activities starting in the early stages of their foundations and that aim to have a global clientele base and a global value creation network. Representing a new phenomenon in the international business context, these businesses have been identified as born global. Such businesses have to develop some special competencies in order to adopt with competitive environment. For them, developing an appropriate model for market deployment plan is getting ever more essential. Hence the introduced approach in this thesis is notably targeted to be applied in born global businesses.

The thesis exploits two case studies for testing and validating the introduced approach. The first case, the SSH company, focuses on market selection strategies (qualitative). The second case is used for validating the introduced approach and models, both qualitatively and quantitatively). It relates to a business venture project, Global Relief Supply (GRS), in the niche market of natural disaster preparation and recovery. In the thesis, the case is studied at two levels: first for US market deployment road mapping and then for global market deployment road mapping. Emphasis is put on adapting the market deployment model for the case, identification of target markets and exploiting data set from pertinent data bases. The results related to the second case show how the proposed market deployment approach can aid decision makers to investigate the target markets and develop a deployment plan within a flexible time horizon.

In this thesis, we introduce:

(1) A market deployment roadmap process exploiting today’s vast availability of market pertinent databases;

(2) An optimization model for market deployment applicable in national and global market contexts;

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(3) An integrated holistic approach to market deployment roadmap planning including target market, operational and supply aspects.

For achieving these goals, we explicitly address several objectives:

• Developing a conceptual framework for market deployment road-mapping • Developing an optimization model for market deployment

• Introducing a clustering method using Self Organizing Map (SOM) for visualization of geo-markets and applying the introduced method for Global Relief Supply (GRS)

• Developing a hybrid model including self-organizing map for market clustering, visualization of target market and an optimization model to sustain the roadmap process

• Developing an optimization model based on portfolio selection approach • Applying the introduced framework for case study and fine tuning (GRS case

study)

This thesis is structured as follows. In the remaining part of this chapter, the contribution of the research will be explained. Chapter two presents the research problem, including a literature review and a proposed market deployment framework. Chapter tree describes and tests a new qualitative approach for market deployment roadmap strategies and its application in a business case study (SSH company). Chapter four describes and tests a new quantitative approach for market deployment roadmap in a business case study: US market deployment of Global Relief Supply. Chapter five merges the result of chapter 3, the qualitative approach, and an extended version of the quantitative approach presented in chapter four for a born global business case, that is the global market deployment of GRS. Chapter six provides conclusive remarks and future research directions.

1.2. Contribution of research

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1. Developing a new qualitative approach for market deployment planning. (This step-by-step method has been introduced based on requirements of a real case study, SSH company )

2. Developing an optimization model (factor-based and multi-period optimization) for market deployment planning (budget and cost constraints have been considered in order to obtain the best set of candidates according to their contribution to profit over the planning horizon).

3. Introducing a clustering approach based on self-organizing map in order to provide more insights of the market and facilitating the visualization of target market

4. Developing a hybrid modeling approach for market deployment roadmap. This approach provides a novel contribution in formulating the roadmap planning in new markets.

5. Validating the model with realistic case studies (using the qualitative model in a software company in world market, using the quantitative model in natural disaster relief supply market in USA, using the quantitative and qualitative model in natural disaster relief supply market in world market).

6. Developing a systematic approach for creating a segregating data set for case studies

7. Extending the model to global market expansion context, particularly for born global business ventures, considering the associated uncertainty and risks in their market expansion plans.

1.3. Research context

The market plan is an essential part of a business plan. A well-organized market plan is needed by business designers, investors, entrepreneurs, market managers, new product development managers and all other managers who want to extend their markets. A Market roadmap provides evidence how an enterprise plans to developing its market and allocating the resources in order to maximizing the profit in a certain horizon. In the other words, developing a market deployment planning can help managers to select target markets in order to achieve their profit objectives and decrease the associated risks of market expansion. This plan can define company’s long term strategies and generate the path to their executing. This overall picture of

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the market deployment could facilitate the measurement of the company’s efforts aligned with the corporate goal systematically.

1.4. Literature review framework

The objective of the conducted literature review is to provide an overview on the theories and concepts of market selection as well as market deployment.

We focused on three subjects (Figure 1) in the literature in order to address the gaps and develop a concept for market deployment plan.

 Strategic intents for market deployment plan  Influential factors

 Market deployment approaches

In order to study the strategic intents, we reviewed internationalization theories and international market selection literature as well as the born global recent studies. In the second step, we reviewed international market selection factors, and country selection criteria, which led to the list of influential factors.

In third step, we reviewed the existing approaches in market deployment including quantitative approaches, market clustering as well as the pros and cons of these approaches.

In spite of plenty of scholars in the context of market selection for multinational firms, there is not any work found that addresses the concept of market deployment planning in an organized way and that can be applied to the context of domestic market expansion, international market selection or target market selection for born

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Figure 1 : Literature review framework

1.5. Research questions

Our research aims to answer the following question:

How to develop an efficient and effective data-intensive scientific approach for market deployment roadmap generation, analysis and selection?

Stated otherwise, we aim to fill the existing theoretical gap and managerial need associated with enabling business managers and entrepreneurs to rigorously and efficiently plan their market deployment roadmap in an information-rich society and economy.

In order to answer our research question, we need to address the following sub-questions:

1- How to design a data-intensive framework that helps managers in developing market selection and expansion strategies?

2- How to exploit optimization models and heuristics within this framework to produce market deployment roadmap alternatives for entrepreneurs?

3- How to select the best market deployment roadmap alternative? 4- How to apply this framework in real business cases?

1.6. Research methodology

The methodology has five stages to accomplish the goal of the thesis. Stage 1 consists of identifying the research problems and analyzing them from the theoretical points of view. The theoretical analysis starts with a literature review, which demonstrates the lack of existing methodology in market deployment and form the conceptual framework of the study. We focused on a real case study in order to find the requirements of market deployment plan. This led us to introduce a market deployment concept that is applicable in international market selection and market expansion contexts.

In the next stage we developed a conceptual framework based on the case study and a synthesis of literature review. This step starts with defining the strategic intents. Then we need to find a set of executive factors that influence market deployment. These factors are related to the needs and requirements of the business case under study. Applying an optimization model for finding the target markets and assessing the

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optimized model based on the managers and experts opinions for acceptation the result or repeating the algorithm are the other steps in this stage.

In stage 3 we applied the introduced framework for the GRS case study and made some fine tunings. In order to prepare the data set for this case study, certain steps have been followed. First of all, selecting US metropolitan cities with potential risk of natural disasters should be considered. Classification of cities based on the populations and the types of disasters are the next step. After this step, we need to identify the executive factors and influencing parameters. We focused on the factors such as Gross Domestic product (hereinafter GDP) and population, Risk of disaster including, vulnerability and hazard of each types of disaster, probability of disaster incident, acquisition costs, operation costs and budget. Preparation of the data set for achieving the objectives was the next challenge. For dealing with this challenge we developed a systematic way in order to prepare the data set based on the data sources and maps. Developing the mixed integer programming model and assessing the optimized roadmap in a 5 year horizon plan and performing a sensitivity analysis based on probability of disaster risk, GDP (Gross Domestic Product) variability and estimated costs are the next steps in this stage.

In stage 4, we tried to complete the introduced model with adding some new features to the model including applying clustering approach and visualization of geo-markets. To this end we followed a four-phase approach. In the first phase, we need to define the strategic intents. The second phase is creating segregating data set and variables. Phase 3 includes creating a set of geo market clusters based on the method (self-organizing map) and last phase is result interpretation.

Finally in stage 5 we applied an extended version of the mathematical model with the results of the qualitative study in the case of born global firms in a 10 year horizon plan. The details of methodology stages and the contributions of the thesis in each stage have been shown in Figure 2.

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8

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2. Literature review and market deployment

concept

2.1. Introduction

In order to achieve a holistic approach for target market selection, we reviewed the related literature in international market, born-global and market expansion context. In this chapter we provide a review in three main parts. First, we focus on strategic intents for market deployment map. Next we review the relevant studies in international market selection in order to extract the influential factors. The third part of literature review covers the existing approaches in market deployment. We conclude with some highlights in a synthesizing section and we introduce the market deployment framework at the end of this chapter.

2.2. Literature review

As mentioned above, we conducted the literature review based on three areas. First the strategic intents for market deployment plan, which comes from firm growth theory and evolving new ventures in the 21st century. The second one is the market selection process and its influential factors. Finally, the third area covers the different approaches in market deployment planning. In the sections below, we review the highlights for these three areas.

2.2.1. Strategic intents

In new venture literature, growth is mandatory for obtaining viability: in the absence of growth, new ventures are confronted by a minor likelihood of survival (Freeman et al., 1983). In addition, today’s global economy requirements increasingly lead entrepreneurs to design their business ventures in order to capture international

markets during the early stages of business creation. Internationalization and born

global are two important responses to the need of firms for growth and the requirements of today’s global economy. Indeed, in firm growth theory, market deployment can be considered as an essential step in the process of growing a firm.

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2.2.1.1. Internationalization (definition and theories)

In the last decades, the business world has changed significantly in the course of globalization and internationalization. The first wave of internationalization has started through internationalization of Europe and US multinational companies. The second wave was internationalization of Japan and South Korea companies (Jansson, 2007). The third wave of internationalization of firms have been formed in companies domiciled in mature western markets establish themselves on a large scale in emerging markets such as Central and Eastern Europe (CEE), Russia, China and India (Jansson, 2007). These markets have become ever more important grounds for international business activities during the last three decades (Cavusgil et al., 2002). Internationalization processes and competitions in this context are becoming more complex and difficult (Forsgren, 2002; Jansson, 2007). The ability of a firm to export a proportion of its sales abroad is increasingly regarded as an important measure of competitive performance at national and regional levels (O’Farrell et al. 1996). Furthermore, the ability to participate in exporting activities is supposed to be an important element to sustain the survival and growth of new and small firms (D’Souza and McDougall, 1989). The importance of international business in the global economy has grown exponentially, especially in the post-World War II period. In 1980, the ratio of foreign investment decision to worldwide gross fixed capital formation was just 2% while by 1999 it had increased to about 14% (UNCTAD, 2000). These evidences show the importance of internationalization in today’s global economy.

There are many different theories and ideas that influence internationalization. Early economic literature (Smith,1776; Ricardo,1817) discusses these matters (although their focus are not only on an individual firm but also on a national level). Later theories on the subject of multinational companies (e.g., Hymer, 1960) and the process of internationalization (e.g., Johansson and Vahlne,1977) discuss which national markets should be selected in firms entry mode strategies. Research on internationalization has shown that different internal and external factors are important in the early and late stages of a firm's international development (Johansson and Vahlne,1990).

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There is not a single unified theory of internationalization, indeed several theories

have been proposed in the literature. A brief survey I provided in Table 1.

Table 1 : Internationalization literature theories

No Theory Explanation Author(s)/year

1 Monopolistic advantage theory Firms internationalize when they can use their established advantages in foreign countries at little costs

(Caves, 1982)

2 Product cycle theory Firms internationalize in order to protect their _{existing markets of established products} (Vernon, 1966)

3

Stage theory Firms internationalize for obtaining knowledge

and experience in the international areas and developing relationships in cross

international boundaries

(Bilkey and Tesar, 1977; Johanson and Vahlne, 1977 ; Johanson and Wiedersheim-Paul, 1978)

4

Oligopolistic reaction theory

Firms internationalize in order to reduce their risk by imitating competing firms’ entrance into foreign markets

(Knickerbocker, 1973)

5

Internationalization theory

Firms internationalize to reduce costs by internationalizing the transfer of goods and services across national borders

(Buckley and Casson, 1976)

6

The eclectic

theory of international production

This theory integrates internationalization theory with location-specific elements of international economies, such as labor costs, barriers to

trade, and transport costs

(Dunning, 1988)

7 Strategic choice theory As a respond to changing market opportunities (O’Farrell et al., 1998ab) 8

Network theory Firms internationalize to achieve their competitive advantage by developing mutually supportive

interactions with other service firms

(O’Farrell et al., 1998ab)

9

Transaction cost theory

Firms choose the least-cost international location for each activity and they perform and grow by internationalizing markets

(McDougall et al., 1994; Bloodgood et al., 1996)

10

Resource-based theory Firms internationalize to accumulate tangible

and intangible resources (Barney, 1991; Chandler and Hanks, 1994; Carter et al., 1997;Westhead et al., 2001)

2.2.1.2. Born-Global business ventures

The born global is an important phenomenon from both theoretically and managerial points of view (Aspelund et al., 2007). Theoretically, it challenges the traditional domestic orientation of entrepreneurship research (Oviatt and McDougall, 1994) as well as the stage theory of internationalization (Knight and Cavusgil, 1996). From a managerial point of view, empirical investigations confirm the presence and significance of born global firms in today’s economy (Burgel and Murray, 2000; McNaughton, 2003). Moen (2002) listed three reasons for the increasing importance of born global firms. First the deviation of internationalization process of born global firms from the conventional theories makes this phenomenon an important research

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topic. In some developed countries such as Australia and the United States, born global firms are estimated to account for a significant portion of export growth. There are more than 1,000 born global firms in the United States, their international sales exceeding the quarter (25%) of their total sales within three years of their founding (Knight and Cavusgil, 2005). Second, the number of born global firms is increasing. More than 50% of the exporting small and medium enterprises (SMEs) established in 1990s in Norway and France was born global firms. Finally born global firms play an important role in terms of innovation, employment and country economic growth and development. Gabrielsson et al. (2008) demonstrated four characteristics for a firm to be recognized as a born global:

1- Capability of accelerated internationalization;

2- Not a spin-off from a multinational enterprise (MNE);

3-Its products should be unique and have a global market potential; 4-It should be a SME with a global vision at inception.

Gabrielsson et al. (2008) also emphasize the founder and the firms’ global vision at foundation as one of the most important factors. They found that the born global internationalization process is different in some aspects from the traditional internationalization process model as explained by Johanson and Vahlne (1977). These differences are summarized in Table 2.

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Table 2 : Comparing traditional internationalization and born global, based on Gabrielsson et al. (2008)

Model Element

Born global Traditional SME internationalization

Risk Exports, New products Exports

Specific investment Resource deployment must occur prior to market knowledge

Resource deployment occur after gaining necessary market knowledge Market strategy New product in a global market New market for existing products Resource allocation Founder commitment to

internationalization from inception Gradual

Growth rate Rapid Slow

Learning From network Step by step from engagement in the foreign market

Vision Global perspective from inception Gradually developed global vision Cause Founder background Economies of scale ,Unsolicited orders Export activities Relies on network or channels First through agents, then subsidiaries and

maybe establishing plants

Hereafter, we focus on the born global, first studying the proposed definitions from the literature review, then specifying the drivers for born global and finally addressing the configuration of these enterprises.

2.2.1.2.1. Definition

There is currently not a unique definition for born global in literature review. Leonidou and Samiee (2012) remark, that this blurring in definition of the born global phenomenon comes from the lack of operationalization of born global as a distinct and unique entity.

Oviatt and McDougall (1994, p. 46) explained the use of the word 'born' I the expression born global as indicative of globalization from the firm's inception. From the time they are established, these organizations try to gain competitive advantage by exploiting business opportunities in multiple foreign markets.

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Knight and Cavusgil (1996) defined a born global as a firm that has globalized their business activities by the use of methods that avoid the traditional approach to international business arrangement.

In another definition by Kirpalani and Gabrielsson (2012), born global firms are a class of international entrepreneurial SMEs. These firms are different from the traditional SME, in their roots, choice of foreign markets to enter, and growth processes. Such firms are initiated by entrepreneurs who are creative with technological knowledge of a high order. The growth is very hasty and thus its process needs large channels, large partner or other networks.

Leonidou and Samiee (2012) state that born global are not described by a progress on the internationalization pathway, for example recommended by different 'stages models'.

2.2.1.2.2. Drivers

There are several factors that are important in the emergence of born global firms. Leonidou and Samiee (2012) classified these factors in three groups; environmental, organizational, and managerial. The environmental forces, principally over the last three decades, are more responsible for firms to quickly internationalize or be international at beginning (Levitt, 1983).

Considering the acceleration in change of external forces, for example, joining the World Trade Organization (WTO) or the European Union (EU), there is a jump in forming born global firms. (Leonidou and Samiee, 2012). The increasing convergence of consumer tastes and needs around the world, as a result of growing incomes, increasing consumer movement, and intensifying economic trade integration, offers productive context for immediate internationalization (Gabrielsson et al. 2008). Leonidou and Samiee (2012) remark, that born global firms have a tendency to consider the world as a potential market rather than focus only on home market. In addition, the economies of scale related to selling the products in multiple foreign markets are very attractive. The regulatory environment of a firm's home market can be considered as another reason for born global. Leonidou and Samiee (2012)

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demonstrated this through an example in the pharmaceutical industry, explaining how the establishment of some special products with respect to regulatory can lead to start internalization in beginning. They believe that competitive pressure on a global scale and the need to provoke competitors quickly in their strong markets, in addition to the increasing requirements of customers for global sourcing, are other factors responsible for the currently growing dynamism of many of the markets. As a result of these changes in markets, the market dynamics brings more completive advantages for born global firms. With respect to organizational drivers, Leonidou and Samiee (2012) focused on three specific characteristics: product features, organization culture and networking capability. The ownership of an innovative product is a key characteristic of born global firms (Gabrielsson and Kirpalani 2004; Knight and Cavusgil 2004). An innovative product, which is aesthetically, functionally, and strategically superior to competing products, is an essential element when adopting a niche business strategy (Kirpalani and Luostarinen 1999).

According to Gabrielsson and Kirpalani (2012, p.26), Successful born global firms have four major dimensions in their organizational culture: (a) proactiveness, that is, actively pursuing foreign market opportunities (b) risk-taking, that is, a tendency to accept risk associated with business ventures in foreign markets; (c) innovativeness, that is, the ability to develop new ideas, products, and services, and (d) flexibility, that is, the ability to adopt quickly to different environments and unanticipated problems. Another important organizational characteristic of born global firms is their networking ability with distributors, financiers, sellers, and customers in international markets (Oviatt and McDougall 1994: Knight and Cavusgil 1996).

The managerial characteristics of a born global can be grasped through the entrepreneurial behavior of the founder, which integrates elements of innovativeness, proactiveness and risk-taking (Knight and Cavusgil, 1996; Madsen and Servais, 1997; McAuley 1999; McDougall and Oviatt 2000; Zahra and George 2002). Leonidou and Samiee (2012) also mention the global mindset of managers, implying the tendency to participate in visionary and preemptive behavior to understand strategic objectives in foreign markets, as an important factor of many born global firms. Furthermore, experiences in international matters play an essential role in facilitating the operation

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of these firms (Oviatt and McDougall, 1994; Madsen and Servais, 1997; McDougall et al. 2003).

2.2.1.2.3. Configuration

The major dimensions that have been used by academics to define a firm as a born global is shown in Figure 3 (Leonidou and Samiee, 2012; Gabrielsson and Kirpalani ,2012). In this Figure, the starting time refers to the time that passes between the formation of the firm and its first appearance in international markets (Gabrielsson and Kirpalani, 2012). Some researchers offer that born global firms go to the international market between two (Rennie, 1993; Moen and Servais, 2002) to eight (McDougall et al. 1994) years after their startup.

Another dimension is the speed. This dimension usually depends on the company's ability to tackle with the problems and complexities involved in foreign markets (Vermeulen and Barkema, 2002).

Figure 3 : The major dimensions of Born-Global firms

Scale of internationalization is the proportion of sales derived from international activities as the proportion of total corporate sales. However there is no consensus in the literature as to the level of international sales intensity at specific times after launching necessary for a firm to be declared born global (Leonidou and Samiee, 2012 ; Gabrielsson and Kirpalani, 2012).

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Market scope is the number of countries to which the firms introduce their products. It is clear that born global firms sell products to several countries, yet there are no clear specifications in the existing literature as to the number of countries and the geographical locations to which firms are expected to sell (Leonidou and Samiee, 2012). Location selection and distribution are a fundamental issue for born global firms. The majority of SMEs in the early stages of internationalization lack a systematic approach to international market selection. While the survey results of 88 small computer software firms seemed to support “psychic distance” as a key factor in the selection of export markets, Bell (1995) interviewed 24 managing directors and found that other factors such as international strategies of the domestic clients, target market sizes, growth rate, and industry trends are also important factors. Some other researchers also argue that the relationship between psychic distance and market choice is less important for born global firms than for traditional SMEs (Andersen, 1993; Madsen et al., 2000; Bell et al., 2004).

The final dimension is the mode of entry into foreign markets. Born global firms have to decide either to focus on a few important foreign markets (international intensity) or consider a broader range of markets. Aspelund et al. (2007) argue that born global firms consider a combination of both strategies to discover for opportunities globally, but remain focused on their key markets due their limited resources. For born global firms, it is not only important to decide which market to enter but also how to expand to the target market. On one hand, there is a general agreement among scholars on the fact that born global firms prefer low-commitment entry modes (Jolly et al, 2000; Burgel and Murray, 2000; Gabrielsson and Kirpalani, 2004). On the other hand, there is less agreement on the type of entry mode. While some scholars emphasized on the importance of joint ventures (Madsen and Servais, 1997), alliances (Jolly et al., 1992; Oviatt and McDougall, 1994) and licensing (Zahra et al., 2000), and Bell (1995) and Shrader et al (2000) reported such entry modes unfavorable mostly due to the high risk of knowledge appropriation, particularly in high tech born global firms, and instead highlighted the importance of export sales staff.

Oviatt and McDougall (1994) classify different typologies of born global firms (cited in Gabrielsson and Kirpalani, 2012, p38) as follows:

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1. Export-import startup, which coordinate just a few activities, mostly logistics abroad, and operate in few international markets;

2. Multinational traders, which, on the one hand possess a limited degree of internationalization, and on the other, have a high degree of international diversification in terms of markets served;

3. Geographically focused startups, which are internationally concentrated, but coordinate plenty of operations abroad;

4. Global startups, characterized by a huge number of foreign markets served, as well as the coordination of many activities across countries.

2.2.2. Influential factors

In order to achieve successful market deployment plan, the selection of criteria for market screening (e.g. Russow and Okoroafo, 1996) plays an important role. Generally, a variety of factors such as demand, geographical, cultural and economic distances, is used in international market selection literature. In market screening approaches, the influential factors in market selection are primarily achieved on a qualitative basis; however these approaches have been mostly limited to addressing market potential assessment and in a systematic way. In this part of the literature review, we study relevant research that considered the influential factors in international market selection.

2.2.2.1. Country selection elements

The decision regarding which countries and markets should be selected is an essential decision in internationalization process. This decision will be affected by a number of factors. Some of important studies which address these factors are reviewed in this section. Clark et al. (2001) introduce four factors which are particularly important. They believe that other things being equal, the countries which reveal the following features would be more attractive for market expansion.

1. Countries where the markets are large; 2. Countries where the markets are affluent;

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3. Countries that are geographically close to the home country; 4. Countries those are culturally more similar to the home country.

According to the authors, these foreign countries would appear to be more attractive to exporters and investors and should be put in priority. According to the authors, in the original Uppsala model (Blomstermo and Sharma, 2003), the first and third factors (size of foreign market, and physical distance of that market from home country) were considered separately, although the second and fourth factors (affluence and cultural affinity of target market) were included in the concept of physical distance.

It should be noted that Uppsala model describes that how firms gradually internationalize their activities. In this theory, firms start their market development with the near and culturally similar markets. Then after getting more experiences and knowledge, they expand to the more distance market.

Kortas et al. (2005) focus on seven variables (two fundamental, two macroeconomic, two technical variables, and one country risk variable). These variables can predict cross-sectional differences of future returns in emerging markets. They use two fundamental variables, the price-to-book (A ratio used to compare a stock's market

value to its book value1_{.) and the 1-year forward price-to-earnings ratios (A valuation}

ratio of a company's current share price compared to its per-share earnings). The authors focus on two macroeconomic variables: the inflation rate as measured by changes in the consumer price index and the quarterly growth rate of the industrial production index. For examining the predictable variation in emerging market returns, Harvey (1995) found evidence that local information variables (such as the change in the foreign exchange rate versus the local rate, the dividend yield and a local short-term interest rate) play a more important role than the case of developed markets. Bekaert et al. (1997) and Erb et al. (1997) stated that a portfolio of high-inflation countries produces much higher returns than a low-inflation portfolio over the studied period. The two technical variables include price-related variables. The first is the short-term return (the return of holding an asset for short period of time) over a 6-month horizon. They proved their proposed period for return based on several sources

1_{http://www.investopedia.com/terms/p/price‐to‐bookratio.asp}

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in the literatures (e.g. Jegadeesh and Titman, 1993; Rouwenhorst, 1999; Serra and

Rouwenhorst ,2003; Van Der Hart et al.,2003) and studies which report that the

momentum effect is stronger, respectively, over 6-month (Richards, 1997) and 12-month horizons (Macedo, 1995; Asness et al., 1997) or even over shorter horizons of 1 and 2 weeks (Chan et al., 2000). The second technical variable is the long-term past return (A unit investment trust's estimated return over the life of the portfolio [1]). They calculate this variable over a 36-month horizon, which captures contrarian (An investment style that goes against prevailing market trends by buying assets that are performing poorly and then selling when they perform well [1]) effects. The authors also introduce country risk as the last factor and explain that this factor is a key variable in screening investment opportunities among emerging markets.

Ellis (2007) studied the most important barriers to trade market. The author introduces

two barriers in his article on geographic distance and cultural/

psychic distance. The

author explains that geography affects trade by the obligation of transport costs incurred in delivering goods to distant markets and also the reduction costs of goods in transit (Leamer, 1974; Linmão and Venables, 2001; Clark et al., 2004). In contrast with their economist, business scholars have generally measured distance in terms of culture rather than kilometers (Benito and Gripsrud, 1992; Barkema et al., 1996; Dow, 2000; Mitra and Golder, 2002).

Differences in languages and business practices make much more costs rather than export to similar culture markets (Johanson and Vahlne, 1990).

Work in this tradition can be traced back to early studies done in Scandinavia investigating the trade-constraining aspects of physic or cultural distance (Johanson and Wiedersheim-Paul, 1975; Johanson and Vahlne, 1977; Engwall and Wallenstål, 1988). The psychic distance makes the greater uncertainty and learning costs associated with entering that market. psychic distance-based moves accounted for about 50% of the agency and subsidiary establishments of four Swedish multinationals recorded by Johanson and Wiedersheim-Paul (1975).