The M Curve and the Performance of Spanish International New Ventures

Abstract

In this paper we address three challenges. First, we discuss how international new ventures (INVs) are probably not explained by the Uppsala model as there is no time for learning about foreign markets in newly born and small firms. Only in the longer term can INVs develop experiential learning to overcome the liability of foreignness as they expand abroad. Second, we advance theoretically on previous research demonstrating that the multinationality−performance relationship of INVs follows a traditional S-shaped relationship, but they first experience a 'born global illusion' which leads to a non-traditional M curve. Third, using a panel data analysis for the period 1994-2008 we find empirically that Spanish INVs follow an inverted U curve in the very short term, where no learning takes place, but that experience gained over time yields an M-curve relationship once learning takes place.

Pluripotent Dynamic Capabilities in the Internationalization of Firms: Focus on Learning, Innovating and Networking in SMEs from Sweden

“…MNEs (Al-Aali and Teece, 2014;Almodóvar and Rugman, 2014;Cantwell et al, 2010;Teece, 2014a;Vahlne and Ivarsson, 2014). However, applying the dynamic capabilities view in IB studies is still a "black box" that needs to be clearer.…”

“…Obviously, both strategies are important, but the focus of this study is limited only to the firm-specific advantages (FSAs) as a firm-level phenomenon. The FSAs refer to strategic intangible resources, such as unique organizational capabilities possessed by the firm (Almodóvar and Rugman, 2014;Hillemann and Gestrin, 2016). In line with this definition, Rugman and Verbeke (2008) argued that the concept of organizational capabilities is the reinvented form of the FSAs concept.…”

“…Focusing on the firm-specific advantages (FSAs) as an internal factor or factors could be an effective strategy to explain the differences in the internationalization of a firm for the following reasons: (1) the FSAs, as the unique source of superiority, could be critical to overcome the firm's (large and small) liability of forgiveness (LOF) (Almodóvar and Rugman, 2014;Hymer, 1960Hymer, , 1976Zaheer, 1995); (2) a firm that possesses sustainable FSAs, on the one hand, would be able to apply international market opportunities, and on the other, to neutralize its competitive threats; (3) the FSAs are vital to address the highly dynamic IB business environment (Dunning, 2000); (4) timely development and deployment of the FSAs by a firm ensure its SCA in today's global economy across national borders (Teece, 2014a;Verbeke et al, 2014); and (5) those firms with strong FSAs would be able to create market imperfection rather than looking for it (Bukley 2009).…”

“…It is also important to note that IE studies have been affected by developments in the fields of entrepreneurship, strategic management, and IB. The results of these studies have enriched the IE field and led to the development of new definitions, models and theories in the IE field (Almodóvar and Rugman, 2014;Coviello et al, 2011;Coviello and Jones, 2004;Covin and Miller, 2014;Dimitratos and Jones, 2005;Jones et al, 2011;Jones and Coviello, 2005;Keupp and Gassmann, 2009;Knight and Cavusgil, 2004;McDougall and Oviatt, 2000;Oviatt and McDougall, 2005;Peiris et al, 2012;Zahra and George, 2002a). In this regard, the IE field has experienced a considerable evolutionary path for the past 21 years, and there is a substantial movement toward theoretical integration among IE scholars (Jones et al, 2011;Rialp et al, 2005).…”

“…Similarly, Chandra et al (2009) suggested that the U-M is able to explain SMEs' internationalization behavior in comparison with other IB theories. However, other international entrepreneurship scholars (Almodóvar and Rugman, 2014;Coviello and McAuley, 1999;Madsen and Servais, 1997;McDougall et al, 1994;Oviatt and McDougall, 1994;Rialp and Rialp, 2001) markets is strongly associated with its ability to enter the network of business relationships; in this manner, internationalization is the by-product of the firms' efforts to establish its positioning within the business network or networks (Johanson and Vahlne, 2009;Schweizer et al, 2010). Vahlne (1977, 2009) and Vahlne and Johanson (2013 (Schweizer et al, 2010).…”