The size of the challenge facing early stage Australian companies seeking to go global was graphically brought home to me in a recent presentation by Professor George Foster of Stanford University, which the Australian Business Foundation hosted with the Australian Stock Exchange.

Professor Foster was presenting the findings of research commissioned by the Australian Stock Exchange delving into what drives company fortunes in the high tech sector.

Professor Foster and his colleagues asked the question: is it 'country' or 'company' factors that are decisive in the comparative pricing of technology stocks?

They come down firmly on the side of company-specific variables, such as profitability, leverage, firm size and revenue growth as the major factors driving stock valuations, rather than the geography of where companies are listed or doing most of their trading.

The challenge for Australian firms comes because for most of these company-specific fundamentals, there is a premium on being a large-scale player. Unfortunately, Australia struggles with scale on a number of dimensions, as Professor Foster's study points out:

• In absolute dollar terms, the total Australian high tech market is small on the global stage.
• The relative importance of the high tech sector on the Australian capital market is also sizeably below that of the US market.
• Early stage Australian firms have few Australian-based partners who themselves have a global presence. There are few players of global stature in general.
• The Australian market is highly concentrated, dominated by a small number of companies who account for the lion's share of ASX high tech market capitalisation, very different from the US picture.

Professor Foster examines five cases of high tech companies that have recently and rapidly become successful global players, including Australia's Resmed and eBay.

Several key factors to aid firms in going global emerge from these case studies.

• The importance of a highly focused product or service strategy.

The message is 'stick to the knitting' and don't be distracted, at least for the first few years. But, there is a risk that a single product or service focus can in time be blown away by fast follower imitations or by a totally new disruptive technology that changes the market.

• Alliances are pivotal.

Leveraging third parties is a must, whether by piggy backing on larger multinationals who can push your products and give you credibility or by aggressive distributorships in multiple markets or by formal joint ventures.

• Be opportunistic and maintain flexibility.

An element of chaos in capturing opportunities when and where they emerge is needed to balance a high level of focus and well-planned strategy.

• Early revenues from serious customers are needed to validate the product.

Real resources from real sales at an early stage are vital not only for the company's balance sheet, but for position and profile in the market place.

• Successful global entrants invariably have a few key individuals who 'laser-beam' on the company's growth and global footprint.

This refers to the entrepreneurial champions with the passion, drive, vision and stubbornness to take the firm global against all the odds.

• Think global, act local.

While the company's strategy is global, there is sensitivity to different, idiosyncratic local market conditions and specific localisation strategies put in place accordingly.

• Anticipate surprises.

This is a warning that today's business environment is fast-paced and volatile, so it is advisable to keep an eye out for as yet unrecognised threats and opportunities and be prepared to meet them.

While Professor George Foster's study for the Australian Stock Exchange focuses on the experience of the high tech sector in the lead-up to its boom and shake-out, the insights ring true for any Australian company with aspirations of growth and global reach.