Internationalization of new ventures: tests of growth and survival

Abstract

PurposeThe purpose of this paper is to investigate key contingencies affecting the internationalization of young ventures, and to shed light on early internationalization's implications for organizational survival and growth.Design/methodology/approachA previously suggested conceptual framework is tested based on a quantitative study of UK firms before explorative analysis takes the analysis further.FindingsContrary to the model suggested by Sapienza et al. that internationalization is of increasing importance at young ventures' founding stage, no such indications were found in this study. Further statistical tests revealed interesting insights into the relationship between other organizational factors and a young firm's survival and growth prospects.Research limitations/implicationsThe empirical results suggest that internationalization is a largely overrated theoretical factor as far as young ventures' short‐term survival and performance are concerned. As internationalization paths differ contingent upon country of origin and other factors, further empirical tests are needed beyond the UK sample.Originality/valueEmpirical tests of previously suggested conceptual frameworks are needed to advance the body of knowledge on successful internationalization. Next to this initial test, further exploratory analysis suggests a refined framework.

Internationalisation for Survival: The Case of New Ventures

“…These results are consistent with earlier studies (Coucke and Sleuwaegen 2008;Pla-Barber and Puig 2009). The lack of significance of the moderating effect of age on the internationalisation-survival relationship is in part agreement with results reported by Westhead et al (2001), Zou et al (2010), and Schueffel et al (2011). This implies that in the short and medium term (in our case during the 10 first years), age has only a very weak impact on the internationalisation-survival relationship.…”

“…Carr et al (2010) found that the age of a firm positively impacts higher survival rates in international markets and that among surviving internationalised ventures, younger firms show higher short-term growth rates than their older counterparts. Schueffel et al (2011) suggested similar relationships in terms of the moderating effect of firm age on survival and growth when entering international markets. Bausch and Krist (2007) found that firm age has a strong impact on the proportion of performance variance that can be attributed to internationalisation.…”

“…Methods include logit/probit regressions (Mudambi and Zahra 2007;Coucke and Sleuwaegen 2008;Schueffel et al 2011;Lee et al 2012), Cox's proportional hazard (Lu and Hébert 2005;Meschi and Riccio 2008;Giovannetti et al 2011), multivariate regression (Chen et al 2009;Manolova et al 2010), and structural equation models (Zou et al 2010;Khalid and Larimo 2012). The method should take into consideration how events occur over time.…”

“…It was not possible to obtain any information on possible discontinuities in international activity or the starting date for international activity for each firm. Schueffel et al 2011). According to Hypothesis 1, becoming international is a better choice than remaining as a purely domestic new venture.…”

The Effect of Global Orientation on the Performance of International New Ventures: Evidence from Italy

“…The basic argument is that, when expanding internationally, firms are able to develop and adopt new routines once they have unlearned established routines (Barkema and Vermeulen 1998). Such unlearning process becomes increasingly difficult over time since inertial constraints hinder the exploration of opportunities and the development of new routines (Zahra 2005;Schueffel et al 2011;Zhou and Wu 2014). Lock-in mechanisms prevent older firms from learning and developing new competencies and routines.…”