Internalization theory, entrepreneurship and international new ventures
Abstract
Purpose
The aim of the article is to establish robust linkages between internalization theory and the empirical phenomenon of international new ventures (INVs). Here, the focus is on firm-specific advantages (FSAs) critical to early new venture internationalization.
Design/methodology/approach
On the conceptual level, we explain how the INV literature can easily be accommodated using an internalization theory lens, and we formulate hypotheses to that effect. On the empirical level, we use the Kauffman Firm Survey (KFS) dataset, which includes a panel of 4,928 US-based new businesses founded in 2004, tracked over their early years of operations. We use logistic regressions building upon pooled cross-sections, and including lagged dependent variables.
Findings
INV-type foreign expansion is a special case of international growth, easily and credibly predicted by internalization. No new theory beyond internalization theory is needed to explain this phenomenon.
Originality/value
The early stages of the Uppsala model, in terms of requisite resources accumulation and recombination, may have been undertaken at the individual level, by founding entrepreneurs, in the pre-stage of the new venture, and are “invisible” when focusing on organizational experience built up in the new venture. Here, particular founding entrepreneurs’ characteristics function as FSAs.
Keywords
Acknowledgements
Each author contributed equally to this article. The authors are indebted to Professor Mark Casson (Guest Editor), as well as to an anonymous reviewer and to Dr Olga Petricevic for their critical comments on an earlier version of the paper. The authors are grateful to the Kauffman Foundation, Alicia Robb and Joseph Farhat for providing access to the Kauffman Firm Survey data and for their support.
Citation
Verbeke, A., Amin Zargarzadeh, M. and Osiyevskyy, O. (2014), "Internalization theory, entrepreneurship and international new ventures", Multinational Business Review, Vol. 22 No. 3, pp. 246-269. https://doi.org/10.1108/MBR-06-2014-0023
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited