Perspective on early internationalizing firms: Three decades of international entrepreneurship developments

Journal of International Entrepreneurship -     

UK SMEs’ motives for internationalizing: Differences between firms employing particular overseas market servicing strategies

A body of research exists in the area of international entrepreneurship and a number of motives for internationalizing have been identified. However, once firms commence exporting, mixed results have been found in respect of the most appropriate market servicing strategy. This paper reports on findings from a survey of UK small to medium enterprises investigating their motives for internationalizing. Multivariate quantitative analysis of survey data and subsequent findings from interviews indicate that differences exist between two groups of firms, that is, those that employ as a strategy an approach that concentrates on key overseas markets compared with those that spread their efforts over a number of markets. However, perhaps more important is the finding that managers’ commitment to overseas activities has a strong influence over and above the strategy employed and this change over time is likely to affect the market servicing strategy employed.     

DIY: How internationalization shifts the locus of indigenous innovation for Chinese firms

We elaborate theories of indigenous innovation by explaining how internationalization choices help emerging market firms transition from dependence on external knowledge to self-reliance on internal knowledge. Using a 1998–2007 census dataset of Chinese manufacturing firms, we theorize and test the moderation effect of foreign equity and export orientation on the relationship between knowledge and indigenous innovation. We show that foreign equity dis-incentivizes, while export orientation incentivizes, investments in internal knowledge. We contribute by showing that internationalization choices may radically change indigenous innovation outcomes by shifting the locus of problem solving outside or inside the firm. Our study corroborates the negative direct and indirect effects of external knowledge on indigenous innovation at the firm level previously suggested by China-centric scholars but also shows how two types of internationalization choices may gradually relieve firm-level dependence on imported technology. We bridge the gap between Western research and Chinese thought and practice by introducing a do-it-yourself (DIY) explanation of how firms may implement China’s indigenous innovation (zizhu chuangxin) policy.     

Triggering the internationalization of Malaysian quantity surveying firms

Although there is an increasing trend of services being traded across borders, quantity surveying (QS) firms in the construction sector remain under-researched. The triggers for the increasing globalization of QS firms are not clear, nor how these triggers are perceived by managers at different levels. A questionnaire was administered in over 84 QS consultancy firms, and the results were analyzed using the repertory grid technique, allowing a comparison between the general respondents and a focus group of senior managers. The findings show that senior managers with significant experience realize the importance of a strong internal capability of the QS firm and the capability to develop innovative offerings, coupled with an awareness of the target market and the ability to secure revenue through key contracts. Firm- and location-specific factors were more important than other competitive advantages or foreign markets’ characteristics when deciding to globalize.     

Appropriability as the driver of internationalization of service-oriented firms

An important factor facilitating the internationalization of product-oriented companies is an appropriability regime allowing a firm to become the sole or dominant provider of specific products. The challenge for service firms is that many appropriability mechanisms, such as patents, are traditionally targeted at protecting tangible products and processes from imitation. In this study, we address this issue and examine the role of appropriability conditions as a facilitator of internationalization in the service sector. The results collected from the analysis of 209 firms suggest that a strong appropriability regime (especially in terms of formal mechanisms) positively affects the internationalization of service industry firms.     

An ambidextrous learning model for the internationalization of firms from emerging economies

Emerging economies are playing an increasingly important role in the global economy. The rising phenomenon of the internationalization process of firms in emerging economies, or emerging market firms, particularly their capacity to increase their presence in the markets of developed economies, has been insufficiently studied. Because of the unique characteristics of emerging economies, some assumptions of traditional international models are irrelevant. This paper provides a theoretical framework that explains the importance of different types of knowledge and the relationships between them in the internationalization process. We delineate an ambidextrous learning strategy that is contingent on different levels of firm competitiveness.     

Outward FDI and profitability of emerging economy firms: Diversifying from home resource dependence in early stage internationalization

We investigate the effect of conducting FDI on the profitability of emerging economy firms in early stage internationalization. We argue that FDI can be an effective strategy to alleviate liabilities of emergingness, thus generating positive performance outcomes. We hypothesize that, contingent on factors altering motivation and capability of firms to diversify from home resource dependence, emerging economy firms can benefit from conducting FDI, resulting in a greater rate of intangible assets growth and enhanced profitability. Using panel data of Chinese firms prior to the global financial crisis, and through combining matching techniques with difference-in-difference analysis, we find empirical support for our arguments.     

The internationalization process of Brazilian software firms and the born global phenomenon: Examining firm,network, and entrepreneur variables

This paper examines the born-global phenomenon in the context of an emerging country, Brazil. A literature review was conducted in order to develop an integrative model of the phenomenon under study. Three sets of internal variables were identified in the literature which seemed to explain why a firm would follow a born global, rather than a traditional, internationalization process: firm, network, and entrepreneur variables. The final conceptual model was tested in a Brazilian sample of 79 software firms, of which 35 followed the born-global process of internationalization and 44 followed the traditional process. Logistic regression was used to test the research hypotheses. Results showed that certain firm and entrepreneur variables seemed to be associated to the type of internationalization process chosen by these firms. Network variables did not significantly differentiate the two groups.     

Retrospective and prospective learning: Accelerating the internationalization process

This paper contributes theoretical understanding to the learning processes adopted by firms for successful internationalization. Drawing from the internationalization process and organizational learning research, our longitudinal case study examines a firm’s learning processes as it grows internationally. In different phases and in different areas the firm learned at different paces, gradual and steep, and by responding retrospectively to past failings, and prospectively to anticipated challenges. From case data we identify and develop four constructs of internationalization learning: Gradual Retrospective, Steep Retrospective, Gradual Prospective, and Steep Prospective learning. The appropriateness of each depends on the urgency towards addressing challenges, and the firm’s learning capabilities. Firms can develop and steepen retrospective learning capability, enabling rapid identification and response to internationalization problems. Firms can also employ prospective learning to plan the development of knowledge capabilities ahead of future internationalization activity, to accelerate their learning, and increase the speed and effectiveness of internationalization.     

Family firms and internationalization: An exploratory study on high-tech entrepreneurial ventures

This paper empirically explores a highly relevant, although poorly investigated topic: internationalization of family firms that operate in high-tech industries. Specifically, we compare internationalization of family and nonfamily entrepreneurial ventures in these industries. Relying on prior studies on internationalization of family firms, we speculate on how the specificities of high-tech industries shape the advantages and disadvantages of family entrepreneurial ventures in pursuing internationalization as compared with their nonfamily peers. In the empirical part of the paper, through a rigorous quantitative analysis of unique data from 264 Italian high-tech entrepreneurial ventures, we explore whether in high-tech industries family entrepreneurial ventures are more (or less) likely to pursue internationalization than their nonfamily counterparts. Surprisingly enough, our econometric estimates indicate that, in high-tech industries, family entrepreneurial ventures exhibit a higher internationalization propensity than their nonfamily peers.     

Managing internationalization and innovation tradeoffs in entrepreneurial firms: Evidence from transition economies

For entrepreneurial firms (EFs), internationalization and innovation present two major avenues for growth. Prior research, based primarily on EFs from advanced economies, demonstrates mixed insights for the relationship between these strategies. A deeper understanding of the tradeoffs involved in the internationalization-innovation relationship may help better comprehend the issue. In this study, we draw on the organizational learning and capabilities-based literatures to examine the relationship in the context of EFs in transition economies (EFTEs). Our findings suggest that in EFTEs, internationalization is negatively associated with the likelihood of innovation. We also find that three knowledge-based capabilities of EFTEs (absorptive capacity, appropriation capability, and managerial capability) positively moderate the aforementioned negative relationship. We do not find any evidence of reverse causality (EFTE innovation impacting internationalization). Our research provides novel insights to the IE literature by shedding light on the internationalization–innovation tradeoffs that EFTEs experience.     

The internationalization process: Impact of competition and experience

The process, or evolution, through which multinational firms have reached their present international position is often referred to as “the internationalization process of the firm.” The most widely accepted theory of this phenomenon explains this slow, and sequential process in terms of organizations’ growth and learning. It is every now and then argued that this approach has lost some of its explanatory value. The purpose of this article is to discuss the validity of this model against the backdrop of assumptions in two key dimensions, namely, firms’ experience of international business and the industry's degree of internationalization.     

The antecedents of early internationalization: A configurational perspective

The literature on international business and international entrepreneurship provides multiple explanations for early internationalization. Using fuzzy-set qualitative comparative analysis, this study examines the antecedents of early internationalization for small firms based in a small economy, focusing on entrepreneurs’ attitudes toward the economic opportunities available in their domestic market, the risk of internationalizing, and the profitability of entering foreign markets. Three additional antecedents are examined: unsolicited orders, existence of underutilized capacity, and the behavior of competitors. The study uncovers three distinct combinations of antecedents that are equifinally linked to the early internationalization of small enterprises, and contributes to the literature through a multi-causal, configurational approach.     

Organizational slack as an enabler of internationalization: The case of large Brazilian firms

In this paper, we address an empirical puzzle. We note that a deliberate and serious drive to internationalize has occurred rather late in the evolution of large Brazilian firms. Meanwhile, and despite their late internationalization, these Brazilian firms expanded rapidly and intently. Despite the rich literature on Emerging Market Multinational Enterprises (EMNEs), there is still much contention on what drives rapid EMNE internationalization, particularly for the less explored firms from Latin America. Using an inductive case study of five leading Brazilian MNEs, we bring new insights on this neglected question. We unveil that the existence of organizational slack (of operational, managerial, and financial nature) can indeed facilitate rapid internationalization, particularly when triggered by unique home country conditions (e.g., regulation; rising cost of doing business at home; exhaustion of profitable growth opportunities in the domestic market).     

The process of internationalization in the operating firm

Two factors have been emphasised as influencing the choice of, and subsequent shifts between, modes of foreign market servicing: (1) market-specific knowledge; and (2) the generalised knowledge from operating internationally. The process-oriented literature on internalisation has tended to emphasise the former over the latter. This article maintains that market-specific knowledge is not the only source of information available to a firm. As firms operate in foreign markets they develop, in addition to networks of institutional arrangements, a knowledge of the process of internationalization. Account therefore has to be taken of the general knowledge from operating internationally in understanding the development of institutional arrangements in foreign markets. Consequently, the appropriate unit of analysis is not the individual market but the operating firm as a whole. This argument is illustrated with reference to an empirical study of the internationalization of 25 UK-based organizations.     

Strangers on the board: The impact of board internationalization on earnings management of Nordic firms

The internationalization of firms has led to boards becoming more international as well. In this study, we investigate the consequences of board internationalization. In particular, by drawing on research on language and board dynamics, we identify theory-based reasons why board internationalization could increase, or decrease, earnings management practices. We use agency theory, stressing how board internationalization may positively or negatively affect monitoring quality of boards. Next to agency theory, we use theories explaining how language differences in the boardroom complicates communication and how differences in language structures (referred to as linguistic relativity in the literature) affect directors’ perception and detection of earnings management practices. Using a sample of 3249 firm-year observations representing 586 non-financial listed Nordic firms during 2001–2008, we find that the presence of non-Nordic foreign directors on the board is associated with significantly higher levels of earnings management. Our analysis indicates that this effect is driven by language-related factors, as well as by the level of foreign board members’ accounting knowledge.     

The drivers of the early internationalization of the firm

Time in firm internationalization has different dimensions: it might refer to the early start of international activities, the speed of international growth, or to its pace and rhythm. This contribution considers the first dimension mentioned, viz. precocity, and aims at understanding which variables determine an early international orientation. Building on a literature review, a theoretical framework is proposed in order to integrate a fragmented literature body. The framework is then tested through an analysis on a sample of 144 SMEs. Among the drivers of early internationalization the role of the previous experience of the entrepreneur, and especially of their international experience, frequently nurtured in internationally oriented family firms on one side or in multinational/foreign firms on the other one, was found significant. The positive association between precocity and niche positioning of the business enforces the relevance of entrepreneurship because focalization is a reflection of entrepreneurial orientation and strategic decisions.     

Organizational slack and firm’s internationalization: A longitudinal study of high-technology firms

We employ both organization theory and economic theory for exploring how the effects of high-discretion organizational slack and low-discretion organizational slack impact the degree of firm’s internationalization. We tested hypotheses using longitudinal data (2000–2005) from 179 high-technology publicly listed companies in Taiwan. The results indicate a U-shaped relationship exists between high-discretion organizational slack and the internationalization of firms. In contrast, low-discretion organizational slack presents a positive linear relationship with the internationalization of firms.     

The internationalization process of Born Globals: a network view

This paper attempts to make a contribution to the theory of development of the internationalization process of Born Globals. We propose that models emphasizing knowledge and networks are suitable for this purpose. The findings show that Born Globals possess international market knowledge before their first foreign market entry. The selection of foreign market entry mode is based on their existing knowledge and the knowledge supplied by their network ties.