Top

Journal of International Entrepreneurship

Published in:

01-09-2013

Untangling the relationship between new venture internationalization and performance

Author: Stephanie A. Fernhaber

Published in: Journal of International Entrepreneurship | Issue 3/2013

Activate our intelligent search to find suitable subject content or patents.

search-config

AI-assisted search

Off

Abstract

To help untangle the inconsistency in prior performance studies for new venture internationalization, the dynamic capabilities perspective is revisited to consider whether the relationship is more complex than previously assumed. While internationalization requires the reconfiguration of routines and resources, survivability is argued to peak at moderate levels of internationalization where the associated resources and risk is balanced between local and foreign markets. In contrast, sales growth is suggested to peak at either low or high levels of internationalization where a singular market focus and set of capabilities is being exploited. The results confirm that the level of new venture internationalization exhibits an inverted U-shaped relationship with survival, while the opposite U-shaped relationship exists with sales growth.

previous article Where Angels Fear to Tread: Internationalization of Emerging Country SMEs

next article Entrepreneurship: From motivation to start-up

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

über 102.000 Bücher
über 537 Zeitschriften

aus folgenden Fachgebieten:

Automobil + Motoren
Bauwesen + Immobilien
Business IT + Informatik
Elektrotechnik + Elektronik
Energie + Nachhaltigkeit
Finance + Banking
Management + Führung
Marketing + Vertrieb
Maschinenbau + Werkstoffe
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

über 67.000 Bücher
über 340 Zeitschriften

aus folgenden Fachgebieten:

Bauwesen + Immobilien
Business IT + Informatik
Finance + Banking
Management + Führung
Marketing + Vertrieb
Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

inform now

Adjei F, Cyree K, Walker M (2008) The determinants and survival of reverse mergers vs IPOs. J Econ Financ 32(2):176–194CrossRef

Aldrich H, Auster ER (1986) Even dwarfs started small: liabilities of age and size and their strategic implicaitons. Res Organ Behav 8:165

Augier M, Teece DJ (2007) Dynamic capabilities and multinational enterprise: penrosean insights and omissions. Manag Int Rev 47(2):175–192CrossRef

Autio E, Sapienza HJ, Almeida JG (2000) Effects of age at entry, knowledge intensity, and imitability on international growth. Acad Manag J 43(5):909–924CrossRef

Birkinshaw J, Hood N (1998) Multinational subsidiary evolution: capability and charter change in foreign-owned subsidiary companies. Acad Manag Rev 23(4):773–795. doi:10.5465/amr.1998.1255638

Bitar J, Hafsi T (2007) Strategizing through the capability lens: sources and outcomes of integration. Manag Decis 45(3):403–419. doi:10.1108/00251740710745043 CrossRef

Bloodgood JM, Sapienza HJ, Almeida JG (1996) The internationalization of new high-potential U.S. ventures: antecedents and outcomes. EntrepTheory Pract 20(4):61–76

Brush CG, Vanderwerf PA (1992) A comparison of methods and sources for obtaining estimates of new venture performance. J Bus Ventur 7(2):157CrossRef

Bruton GD, Filatotchev I, Chahine S, Wright M (2010) Governance, ownership structure, and performance of IPO firms: the impact of different types of private equity investors and institutional environments. Strateg Manag J 31(5):491–509

Buckley PJ, Dunning JH, Pearce RD (1984) An analysis of the growth and profitability of the world’s largest firms 1972–1977. Kyklos 37(1):3CrossRef

Bühner R (1987) Assessing international diversification on West German corporations. Strateg Manag J 8(1):25–37CrossRef

Burgel O, Murray GC (2000) The international market entry choices of start-up companies in high-technology industries. J Int Market 8(2):33–62CrossRef

Cao L (2011) Dynamic capabilities in a turbulent market environment: empirical evidence from international retailers in China. J Strateg Mark 19(5):455–469. doi:10.1080/0965254x.2011.565883 CrossRef

Carpenter MA, Pollock TG, Leary MM (2003) Testing a model of reasoned risk-taking: governance, the experience of principals and agents, and global strategy in high-technology IPO firms. Strat Manag J 24(9):802–820. doi:10.1002/smj.338 CrossRef

Cheng Y-T, Van de Ven AH (1996) Learning the innovation journey: order out of chaos? Organ Sci 7(6):593–614CrossRef

Chien S-Y, Tsai C-H (2012) Dynamic capability, knowledge, learning, and firm performance. J Organ Chang Manag 25(3):434–444. doi:10.1108/09534811211228148 CrossRef

Cieślik J, Kaciak E, Welsh D (2012) The impact of geographic diversification on export performance of small and medium-sized enterprises (SMEs). J Int Entrep 10(1):70–93. doi:10.1007/s10843-012-0084-7 CrossRef

Coeurderoy R, Cowling M, Licht G, Murray G (2012) Young firm internationalization and survival: empirical tests on a panel of ‘adolescent’ new technology-based firms in Germany and the UK. Int Small Bus J 30(5):472–492. doi:10.1177/0266242610388542 CrossRef

Contractor FJ, Kundu SK, Chin-Chun H (2003) A three-stage theory of international expansion: the link between multinationality and performance in the service sector. J Int Bus Stud 34(1):5–18CrossRef

Corner PD, Wu S (2012) Dynamic capability emergence in the venture creation process. Int Small Bus J 30(2):138–160. doi:10.1177/0266242611431092 CrossRef

Coviello NE, Jones MV (2004) Methodological issues in international entrepreneurship research. J Bus Ventur 19(4):485CrossRef

Coviello NE, Munro HJ (1995) Growing the entrepreneurial firm. Eur J Market 29(7):2–61CrossRef

Coviello N, Munro H (1997) Network relationships and the internationalisation process of small software firms. Int Bus Rev 6(4):361CrossRef

Dimitratos P, Johnson J, Slow J, Young S (2003) Micromultinationals: new types of firms for the global competitive landscape. Eur Manag J 21(2):164. doi:10.1016/s0263-2373(03)00011-2 CrossRef

Drnevich PL, Kriauciunas AP (2011) Clarifying the conditions and limits of the contributions of ordinary and dynamic capabilities to relative firm performance. Strat Manag J 32(3):254–279. doi:10.1002/smj.882 CrossRef

Dunning JH (1995) Reappraising the eclectic paradigm in an age of alliance capitalism. J Int Bus Stud 26(3):461–491CrossRef

Eisenhardt KM, Martin JA (2000) Dynamic capabilities: what are they? Strat Manag J 21(10/11):1105CrossRef

Fernhaber SA, Li D (2010) The impact of interorganizational imitation on new venture international entry and performance. Entrep Theory Pract 34(1):1–30. doi:10.1111/j.1540-6520.2009.00365.x CrossRef

Fischer HM, Pollock TG (2004) Effects of social capital and power on surviving transformational change: the case of initial public offerings. Acad Manag J 47(4):463–481. doi:10.2307/20159597 CrossRef

Florin J, Lubatkin M, Schulze W (2003) A social capital model of high-growth ventures. Acad Manag J 46(3):374–384CrossRef

Gilbert BA, McDougall PP, Audretsch DB (2006) New venture growth: a review and extension. J Manag 32(6):926–950CrossRef

Giovannetti G, Ricchiuti G, Velucchi M (2011) Size, innovation and internationalization: a survival analysis of Italian firms. Appl Econ 43(12):1511–1520CrossRef

Gomes L, Ramaswamy K (1999) An empirical examination of the form of the relationship between multinationality and performance. J Int Bus Stud 30(1):173–187CrossRef

Griffith DA, Harvey MG (2001) A resource perspective of global dynamic capabilities. J Int Bus Stud 32(3):597CrossRef

Han M (2006) Developing social capital to achieve superior internationalization: a conceptual model. J Int Entrep 4(2/3):99–112. doi:10.1007/s10843-007-0003-5

Hitt MA, Hoskisson RE, Kim H (1997) International diversification: effects on innovation and firm performance in product-diversified firms. Acad Manag J 40(4):767–798. doi:10.2307/256948 CrossRef

Holmlund M, Kock S (1998) Relationships and the Internationalisation of Finnish small and medium-sized companies. Int Small Bus J 16(4):46CrossRef

Hymer S (1976) The international operations of national firms: a study of direct foreign investment. MIT Press, Cambridge

Jantunen A, Puumalainen K, Saarenketo S, Kyläheiko K (2005) Entrepreneurial orientation, dynamic capabilities and international performance. J Int Entrep 3(3):223–243. doi:10.1007/s10843-005-1133-2 CrossRef

Keupp MM, Gassmann O (2009) The past and the future of international entrepreneurship: a review and suggestions for developing the field. J Manag 35(3):600–633CrossRef

Khavul S, Pérez-Nordtvedt L, Wood E (2010) Organizational entrainment and international new ventures from emerging markets. J Bus Ventur 25(1):104–119. doi:10.1016/j.jbusvent.2009.01.008 CrossRef

Knight GA, Cavusgil ST (1996) The born global firm: a challenge to traditional internationalization theory. Adv Int Mark 8:11–26

Knight GA, Cavusgil ST (2004) Innovation organizational capabilities and the born-global firm. J Int Bus Stud 35(2):124–141CrossRef

Kobrin SJ (1991) An empirical analysis of the determinants of global integration. Strat Manag J 12:17–31CrossRef

Kotha S, Rindova VP, Rothaermel FT (2001) Assets and actions: firm-specific factors in the internationalization of U.S. internet firms. J Int Bus Stud 32(4):769CrossRef

Lee H, Kelley D, Lee J, Lee S (2012) SME survival: the impact of internationalization, technology resources, and alliances. J Small Bus Manag 50(1):1–19. doi:10.1111/j.1540-627X.2011.00341.x CrossRef

LiPuma JA (2012) Internationalization and the IPO performance of new ventures. J Bus Res 65(7):914–921. doi:10.1016/j.jbusres.2011.05.007 CrossRef

Lu JW, Beamish PW (2001) The internationalization and performance of SMEs. Strat Manag J 22(6/7):565. doi:10.1002/smj.184 CrossRef

Lu JW, Beamish PW (2004) International diversification and firm performance: the S-curve hypothesis. Acad Manag J 47(4):598–609. doi:10.2307/20159604 CrossRef

Lu JW, Beamish PW (2006) SME internationalization and performance: growth vs. profitability. J Int Entrep 4(1):27–48CrossRef

Luo Y (2000) Dynamic capabilities in international expansion. J World Bus 35(4):355CrossRef

Madhok A (2000) The international biotechnology industry: a dynamic capabilities perspective. J Int Bus Stud 31(2):325–335CrossRef

Madsen TK, Servais P (1997) The internationalization of born globals: an evolutionary process? Int Bus Rev 6(6):561CrossRef

McDougall PP, Oviatt BM (1996) New venture internationalization, strategic change, and performance: a follow-up study. J Bus Ventur 11(1):23CrossRef

McDougall PP, Oviatt BM, Shrader RC (2003) A comparison of international and domestic new ventures. J Int Entrep 1(1):59–82CrossRef

Mudambi R, Zahra SA (2007) The survival of international new ventures. J Int Bus Stud 38(2):333–352CrossRef

Oviatt BM, McDougall PP (1994) Toward a theory of international new ventures. J Int Bus Stud 25(1):45–64CrossRef

Oviatt BM, McDougall P (1995) Global start-ups: entrepreneurs on a worldwide stage. Acad Manag Exec 9(2):30–43. doi:10.5465/ame.1995.9506273269

Porter ME (1980) Competitive strategy techniques for analyzing industries and competitors. The Free Press, New York

Porter ME (1990) The competitive advantage of nations. Harvard Business Review, Boston

Prange C, Verdier S (2011) Dynamic capabilities, internationalization processes and performance. J World Bus 46(1):126–133. doi:10.1016/j.jwb.2010.05.024 CrossRef

Preece SB, Miles G, Baetz MC (1999) Explaining the international intensity and global diversity of early-stage technology-based firms. J Bus Ventur 14(3):259CrossRef

Qian G, Li L (2003) Profitability of small- and medium-sized enterprises in high-tech industries: the case of the biotechnology industry. Strat Manag J 24(9):881–887. doi:10.1002/smj.344 CrossRef

Ranft AL, Lord MD (2000) Acquiring new knowledge: the role of retaining human capital in acquisitions of high-tech firms. J High Tech Manag Res 11(2):295CrossRef

Reuber AR, Fischer E (1997) The influence of the management team’s international experience on the internationalization beahviors of SMEs. J Int Bus Stud 28(4):807–825CrossRef

Reuber AR, Fischer E (2002) Foreign sales and small firm growth: the moderating role of the management team. Entrep Theory Pract 27(1):29–45CrossRef

Roberts N, Grover V (2012) Investigating firm’s customer agility and firm performance: the importance of aligning sense and respond capabilities. J Bus Res 65(5):579–585. doi:10.1016/j.jbusres.2011.02.009 CrossRef

Robinson KC (1999) An examination of the influence of industry structure on eight alternative measures of new. J Bus Ventur 14(2):165CrossRef

Robinson KC, McDougall PP (1998) The impact of alternative operationalizations of industry structural elements on measures of performance for entrepreneurial manufacturing ventures. Strat Manag J 19(11):1079CrossRef

Rugman AM (1981) Inside the multinationals. Columbia University Press, New York

Rugman AM, D’Cruz JR (1996) Partners across borders: the five partners business network model. Manag Int 1(1):15–26

Rugman AM, Oh CH (2010) Does the regional nature of multinationals affect the multinationality and performance relationship? Int Bus Rev 19(5):479–488. doi:10.1016/j.ibusrev.2009.02.012 CrossRef

Ruigrok W, Wagner H (2003) Internationalization and performance: an organizational learning perspective. Manag Int Rev 43(1):63–83

Sapienza HJ, Autio E, George G, Zahra SA (2006) A capabilities perspective on the effects of early internationalization on firm survival and growth. Acad Manag Rev 31(4):914–933CrossRef

Siddharthan NS, Lall S (1982) The recent growth of the largest US multinationals. Oxf Bull Econ Stat 44(1):1–13CrossRef

Staw BM (1981) The escalation of commitment to a course of action. Acad Manag Rev 6(4):577–587. doi:10.5465/amr.1981.4285694

Stinchcombe AL (1965) Social structure and organizations. In: March JG (ed) Handbook of organizations. Rand McNally, Chicago

Stray S, Bridgewater S, Murray G (2001) The internationalisation process of small, technology-based firms: market selection, mode choice and degree of internationalisation. J Glob Mark 15(1):7CrossRef

Tallman S, Li J (1996) Effects of international diversity and product diversity on the performance of multinational firms. Acad Manag J 39(1):179–196. doi:10.2307/256635 CrossRef

Teece D, Pisano G (1994) The dynamic capabilities of firms: an introduction. Ind Corp Chang 3(3):537–556CrossRef

Tzeng C-H (2008) Developing high-technology latecomer firms to compete internationally: a three-sector growth model. J Int Manag 14(2):190–206. doi:10.1016/j.intman.2008.01.003 CrossRef

Vernon R (1971) Sovereignty at bay: the multinational spread of U.S. enterprises. Basic Books, New York

Weerawardena J, Mort GS, Liesch PW, Knight G (2007) Conceptualizing accelerated internationalization in the born global firm: a dynamic capabilities perspective. J World Bus 42(3):294–306. doi:10.1016/j.jwb.2007.04.004 CrossRef

Yigang P, Chi PSK (1999) Financial performance and survival of multinational corporations in China. Strat Manag J 20(4):359CrossRef

Zaheer S (1995) Overcoming the liability of foreignness. Acad Manag J 38(2):341–363. doi:10.2307/256683 CrossRef

Zahra SA, George G (2002) International entrepreneurship: the current status of the field and future research agenda. In: Hitt M, Ireland R, Sexton D (eds) Strategic entrepreneurship: creating a new mindset. Blackwell, London, pp 255–288

Zahra SA, Ireland RD, Hitt MA (2000) International expansion by new venture firms: international diversity, mode of market enry, technological learning, and performance. Acad Manag J 43(5):925–950. doi:10.2307/1556420 CrossRef

Zhou L, Wu A, Barnes BR (2012) The effects of early internationalization on performance outcomes in young international ventures: the mediating role of marketing capabilities. J Int Mark 20(4):25–45CrossRef

Zott C (2003) Dynamic capabilities and the emergence of intraindustry differential firm performance: insights from a simulation study. Strat Manag J 24(2):97. doi:10.1002/smj.288 CrossRef

Title: Untangling the relationship between new venture internationalization and performance
Author: Stephanie A. Fernhaber
Publication date: 01-09-2013
Publisher: Springer US
Published in: Journal of International Entrepreneurship / Issue 3/2013
Print ISSN: 1570-7385
Electronic ISSN: 1573-7349
DOI: https://doi.org/10.1007/s10843-013-0104-2

Springer Professional

Abstract

Please log in to get access to your license.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Springer Professional "Wirtschaft"

Other articles of this Issue 3/2013

Where Angels Fear to Tread: Internationalization of Emerging Country SMEs

Entrepreneurship: From motivation to start-up

The entrepreneurial experience and strategic orientation of high-tech born global start-ups: An analysis of novice and habitual entrepreneurs

Editorial

Premium Partner