Framework library · International strategy

Uppsala internationalisation model

The Uppsala model holds that firms expand abroad gradually: they commit more to a market as they learn about it, and they tend to start where psychic distance is small before moving to markets that feel far. The 2009 revision adds that the position a firm holds in networks of customers and partners matters most, because being an outsider, more than being foreign, is what creates the uncertainty.

LevelIntermediate
TimeTwo hours for a portfolio of up to ten markets
Who to involveThe head of international business, the people who manage each foreign market, and finance for the cost of each next step.
Also calledUppsala model, Uppsala internationalization model, establishment chain, internationalisation process model, stages model of internationalisation

Use it when

  • You are deciding the next step in markets you already serve: hire locally, open an office, set up operations.
  • International growth has been opportunistic and you want to see whether commitments followed learning.
  • A board is asked to fund a large step in a distant market and wants to know what experience it rests on.
  • You are planning entry into a new market and want to start with the step the evidence supports.

Avoid it when

  • Your niche is global from the start and too small in any one country to grow step by step. Use born global strategy.
  • You are choosing which market to enter. Use the CAGE distance framework and a country selection matrix. The Uppsala model describes how commitment grows once you are there.
  • The entry is by acquisition or a large licence award, where commitment is made all at once by design. Assess that with market entry modes and a political risk assessment.

How to run it

  1. List every foreign market you touch

    Include markets with occasional sales and those served through a customer's branches abroad. The model is about the whole pattern, not only the markets you are proud of.

  2. Rate psychic distance from home

    How different each market feels to the people who decide: language, business practice, education, legal and political systems. Score 1 (close) to 5 (far) from the team's experience rather than from statistics.

  3. Record the stage of commitment

    No regular exports, exports through agents or partners, a sales subsidiary of your own, or local production or operations. These are the four stages of the establishment chain.

  4. Record your position in local networks

    Outsider, some relationships, or insider. The 2009 revision argues that being outside the network of customers, suppliers and partners creates more uncertainty than being foreign.

  5. Write what each market has taught you

    Commitment should follow knowledge gained by operating there. If you cannot say what the last step taught you, the next step is a bet.

  6. Set the next commitment and its trigger

    For each market, the next step and the evidence that would justify it: a number of customers, a partner relationship, a cost threshold. Markets with no trigger stay where they are.

Work through it

Answer the questions below, or load the worked example to see a finished one. The drawing updates as you type. Export the result as a PowerPoint deck, a Word document, an Excel workbook, a PDF or plain text.

What you type stays in this browser, so you can close the page and come back to it. It is not sent to Blue Prysm or anyone else, and the exports are made here, on your device. Privacy policy.

Mistakes to avoid

  • Reading the model as a rule that firms must go slowly. It describes how uncertainty is reduced. A firm that learns faster, through a partner or an acquired team, can move faster.
  • Measuring psychic distance with statistics alone. It is a perception of the people who decide, and it shrinks as they gain experience.
  • Taking a big step on the strength of one customer. A single contract is not knowledge of a market; wait for a pattern or for a place in the local network.
  • Ignoring network position. A firm that follows a key customer abroad starts as something of an insider and can commit sooner than a nearby outsider.

Where it comes from

Jan Johanson and Jan-Erik Vahlne, "The internationalization process of the firm: a model of knowledge development and increasing foreign market commitments", Journal of International Business Studies 8(1), 1977, building on the establishment chain described by Johanson and Finn Wiedersheim-Paul in "The internationalization of the firm: four Swedish cases" (Journal of Management Studies 12(3), 1975). Johanson and Vahlne revised it in "The Uppsala internationalization process model revisited: from liability of foreignness to liability of outsidership", Journal of International Business Studies 40(9), 2009. Source.

Use it with

Work through it with us

The frameworks here are free to use as they stand. If you would rather work through the question behind this one with us, these are the ways an engagement starts.