[Abstract]
Traditionally, studies on the internationalization of a firm focused on the gradual internationalization of multinational corporations (MNCs). These studies often suggested that the internationalization takes quite a long time because it is a gradual learning process. However, we have recently seen that some small-sized venture firms have shortened this process even went abroad from their inception. Scholars who have studied this phenomenon, including Oviatt McDougall, argue that traditional ¡°stage model¡± of internationalization is no longer appropriate for understing how why new ventures internationalize early on.
In this study, we aim to advance our knowledge about factors influencing early internationalization of venture firms. Drawing primarily on the capability-based view, we investigated how capabilities of a venture company promote the firm¡¯s early internationalization decision. Focusing on firm¡¯s technological international experiential capabilities at both the top management team(TMT) the firm levels, we offer an framework for the determinants of early internationalization test it empirically.
The sample for this study consists of 235 Korean ventures listed in KOSDAQ (Korea Securities Dealers Automated Quotations System). The empirical results from the binary logistic regression analysis generally support our arguments. Our findings show that strong technological capabilities of TMT members those accumulated over time at the firm level are key drivers of the early internationalization of new ventures. We could also find that the high ratio of research workers has stronger impact on the early internationalization than that of R&D costs has. The finding suggests that capabilities which reside in humans are critical to new ventures that are small relatively short of resources needed for internationalization.
In addition, we found that firms with international networks are more likely to exp their businesses at or near inception since they provide firms with knowledge information of unfamiliar overseas markets. Yet, we did not find significant relationship between international experience that the TMT members held early internationalization of the firm.
Our study has some theoretical implications contributions to the study of the early internationalization phenomenon. In this paper, we examined firm capabilities at two levels, TMT firm. The previous researches have focused little on technological capabilities of TMT members, let alone considering both levels simultaneously. In this study, we found that strong technological capabilities of TMT members including founders are very important for the early internationalization decision. Moreover, this paper offered an answer to the question of whether or not networks help new ventures overcome resource deficiencies. We found that a venture firm with international tie-ups with overseas institutions such as venture capital firms is more likely to go abroad early on.