[case by case #6] Peter Daly and Sabine Ruaud: why is the eco-branding strategy of Cabaïa a success?

What is a "born global" company? How is it characteristic of our 21st century economy?

Peter Daly: In the 1990s, academic research by Oviatt and McDougall (2) identified an emerging phenomenon: ‘international new ventures’ (INVs, new ventures internationalising at or near inception). Often called ‘born-globals’ (BGs) (3), these young firms experience accelerated internationalisation. While traditional start-ups generally originate as domestic firms, and gradually evolve into multinationals, contemporary start-ups increasingly begin as international firms and make the world their playground. The primary differentiating characteristic is the age of the firm when it becomes international. Barely created, they go abroad to reach larger markets. What could be considered the privilege of large multinational groups, has become the development model for these agile and ambitious entrepreneurs.

Sabine Ruaud: Nowadays however, such firms are found in abundance in many countries (4). This early and rapid process of internationalisation is disruptive and calls into question the universality of traditional models of a step-by-step internationalisation. The main model used is the Uppsala one (5), that suggests the mastery of current business activities first, the acquisition of certain know-how on the home market before exporting abroad, and a good knowledge of the foreign market before deciding to engage in it. According to this model, it is recommended to start exporting to nearby countries in terms of distance, language and culture, to gradually gain experience beyond its borders. Only then will the organization be ready to conquer more distant and more complex country markets. The Uppsala model of internationalisation is widely used because of its simplicity and applicability. However, the literature shows that company strategies (targeting a niche market, for example) and its resources (for example, an excellent brand image) can reduce barriers to entry, thus facilitating faster international development.

Peter Daly: Born Globals have also become role models for all entrepreneurs looking to expand internationally. Launching a start-up is one of the answers to the quest for experience so dear to millennials. ‘Millennipreneurs’ have established themselves as the new benchmark for self-made people around the world as the 21st century loves the entrepreneur…

Why are you interested in Cabaïa? What makes it special? How is it faring in what is clearly a highly competitive market?

Sabine Ruaud: We met Bastien Valensi at the very start of his entrepreneurial adventure. We were immediately won over by the concept of this committed brand, which began by selling woolen hats with the aim of: “bringing a dose of happiness into people’s daily lives by creating fun, colourful and ingenious fashion accessories”. The key to Cabaïa’s success, its DNA if you like, lay in its ability to disrupt, surprise and find creative ways to sell their products. Bastien Valensi explained: “Anyone can sell woolly caps. Our added value is neither in the design nor in the quality, because other brands also know how to do this. We conceptualise our ideas and dramatise our products, that is our secret.”

Peter Daly: Cabaïa’s success was based on storytelling, built around the products. Cabaïa was a seller of stories, not of products. Since its creation, Cabaïa has continued to develop other innovative products, and now has around fifteen products in its catalogue. One of its flagship products is the backpack. Launched in 2019, sales have doubled every year, thanks to a clever concept of customisable bags guaranteed for life and an ingenious distribution strategy. By 2023, Cabaïa had become the second-largest seller of backpacks in France behind Eastpak.

Sabine Ruaud: In an ultra-competitive economic environment where the power of emotions and experiences is important (6), Cabaïa has been able to stand out from the crowd and create a preferential product. Although the brand is already present in ten or so European countries (it has a strong reputation in Germany, where it is distributed by 400 retailers), it is its international success that will enable Cabaïa to change course. Bastien Valensi is currently looking across the Atlantic to achieve his most ambitious goal: sales of one billion euros by the end of the next decade.

How do you use this case with your students, and what are the main lessons to be learned?

Sabine Ruaud: This case aims at exposing entrepreneurship students to the challenges faced by international expansion of start-up companies. By tracing the narrative of how an INV (International New Venture) was created and developed, students can appreciate its internationalisation steps. The Cabaïa case highlights key topics related to understanding:

1. the antecedents of rapid international expansion for a company,
2. the most adapted models of international development for start-ups,
3. the most appropriate entry modes for start-ups to develop abroad,
4. the use of marketing capabilities to enhance quick internationalisation,
5. the potential existence of targets at a global level and
6. the appropriacy of the choice of an eco-branding strategy is appropriate for a born-global company.

This case can be used at undergraduate and postgraduate level programs. It is particularly suited for courses such as entrepreneurship, international business and management of small businesses. The case can be used to help students discuss and understand the Born Global model of internationalisation as well as the preferred choices of entry modes for SMEs. It can also help discuss the benefits and opportunities of addressing a global target and of using an eco-branding strategy to internationalize.

Peter Daly: To take an interest in the BG phenomenon involves not only economic considerations, but also societal and generational issues. It's a theme that resonates strongly with our students, who are characterised by personalities with a winning spirit and a pronounced taste for the international (7). Let's not forget that entrepreneurship has been part of EDHEC’s DNA since it was founded in 1906 by business leaders and since the School joined Station F in 2017!

How does this case fit in with your other research work, both past and future?

Sabine Ruaud: Peter and I have been working on this theme of BGs for several years. We have forged close links with a number of start-ups, which has enabled us to conduct various research projects publications, for example, “Merci Handy: From start-up to born global?” (8). We have also carried out a wider reflection on “Language in French DNVB Start-ups: Challenges when internationalizing”, which was presented at the 12th Congress of the Académie de l'Entrepreneuriat et de l'Innovation (9). Finally, we regularly write case studies that help develop the skills of our student-entrepreneurs, combining theoretical training with practical applications. The latest of these is the case about Cabaïa (1) we are presenting in this interview.

References

1) Boulocher V., Daly P and Ruaud S. (2023), Cabaïa: Can an eco-branding sustainability strategy foster the internationalisation of a Born Global? – Chapter 10, in Erik S. Rasmussen E.S., J.D. (coord.), Cases on Born Globals, Edward Elgar Publishing, pp.130 145. https://ideas.repec.org/h/elg/eechap/21625_10.html

(2) Oviatt B.M. and McDougall P.P. (1994), Toward a theory of international new ventures, Journal of International Business Studies 25(1): 45–64. https://link.springer.com/article/10.1057/palgrave.jibs.8490193

(3) Rennie M.W. (1993), Global competitiveness: Born global. McKinsey Quarterly, 4: 45–52. https://www.proquest.com/docview/224554703?sourcetype=Scholarly%20Journals

(4) Cavusgil S.T. and Knight G. (2015), The born global firm: an entrepreneurial and capabilities perspective on early and rapid internationalization, Journal of International Business Studies 46(1): 3–16. https://link.springer.com/article/10.1057/jibs.2014.62

(5) Johanson J. and Vahlne J.E. (1977), The internationalisation process of the firm – a model of knowledge development and increasing foreign market commitment, Journal of International Business Studies 8(2): 23–32. https://www.jstor.org/stable/254397

(6) O'Shaughnessy, J., & O'Shaughnessy, N. J. (2002). The Marketing Power of Emotion. Oxford University Press. https://global.oup.com/academic/product/the-marketing-power-of-emotion-9780195150568?cc=fr&lang=en&

(7) EDHEC New Gen Talent Centre Barometer – Nov 2023.
https://www.edhec.edu/sites/default/files/2023-11/202311_Barom%C3%A8tre_3%C3%A8me%20edition.pdf

(8) Boulocher V., Daly P and Ruaud S. (2019), Merci Handy: From start-up to born global? The International Journal of Entrepreneurship and Innovation, vol.20, n°4, pp.301 309. https://journals.sagepub.com/doi/abs/10.1177/1465750319831921

(9) Boulocher V., Daly P and Ruaud S. (2024), Sustainable entrepreneurship within fashion: La Gentle Factory story’, The International Journal of Entrepreneurship and Innovation (forthcoming).