Why don't entrepreneurial firms internationalize more?

Finally, relational and network-based initiatives may be increasingly important for entrepreneurial firm internationalization regardless of the firm's country of origin. Recent studies of entrepreneurial firms in Germany's information technology sector suggest that increasing network contacts and the developing reputational networks can provide opportunities for entering new markets (Lechner and Dowling, 2003; Lechner et al., 2006). Considering that interfirm cooperative behaviors increasingly are being seen as a predictor of entrepreneurial firm growth and internationalization (Barringer et al., 2005; Gilbert et al. 2006; Steensma et al., 2000), entrepreneurial firms should consider pursuing partnerships with firms headquartered in other countries. This suggests that rather than seeing firms from emerging markets such as India and China as the enemy, North American and European information technology and manufacturing firms might consider pursuing alliances with firms in these countries more vigorously (Li and Labig, Jr., 2001; Robertson and Hoffman, 2000).

Future research on the non-internationalization of entrepreneurial firms also should examine the effects of ownership and governance structures. Internationalization research has focused for some time on tradeoffs between the firm's control of the process and resource costs (Anderson and Gatignon, 1986). It could be that the perceived loss of control of the venture may be a more significant influence than domestic success in explaining the decision not to internationalize. Since there is some evidence that these trade-offs and the internationalization decision may be at least partially influenced by the constitution of the firm's ownership structure (Bloodgood et al., 1996; George et al.,

2005; Tihanyi et al, 2003), examining these relationships could provide useful insights into the structure of these internal and external forces and their subsequent influence on entrepreneurial firm internationalization.

References

Acs, Z.J., P. Arenius, M. Hay and M. Minniti. 2004. Global Entrepreneurship Monitor: 2004 Executive Report. Wellesley, MA: Babson College and London Business School.

Anderson, E. and H. Gatignon. 1986. "Modes of Foreign Entry: A Transaction Cost Analysis and Propositions." Journal of International Business Studies 17: 1-25.

Arbaugh, J. B., L. W. Cox and S. M. Camp. 2005. "Nature or Nurture? Does National Culture, Growth Strategy or Entrepreneurial Orientation Better Explain Value Creation?" Frontiers of Entrepreneurship Research. Wellesley, MA: Babson College. pp. 464-478.

Baird, I. S., M. A. Lyles and J. B. Orris. 1994. "The Choice of International Strategies by Small Business." Journal of Small Business Management 32: 48-60.

Barkema, H. G.,J. H.J. Bell and J. M. Pennings. 1996. "Foreign Entry, Cultural Barriers, and Learning." Strategic Management Journal 17:151-166.

Barringer, B. R. and D. W. Greening. 1998. "Small Business Growth Through Geographic Expansion: A Comparative Case Study." Journal of Business Venturing 13: 467-492.

--, F. F.Jones and D. O. Neubaum. 2005. "A Quantitative Content Analysis of the Characteristics of Rapid-growth Firms and their Founders." Journal of Business Venturing 20: 663-687.

Bhattacharya, M. and K. K. Wheatley. 2006. "Organizational Risk and Capital Investments: A Longitudinal Examination of Performance Effects and Moderating Contexts." Journal of Managerial Issues 18 (1): 62-83.

Birch, D. 1979. The Job Generation Process. Cambrige, MA: MIT Program for Neighborhood and Regional Change.

Bloodgood, J., H. Sapienza and J. Almeida. 1996. "The Internationalization of New High-Potential US Ventures: Antecedents and Outcomes." Entrepreneurship Theory and Practice 20: 61-76.

Carland, J. W., F. Hoy, W. R. Boulton and J. C. Carland. 1984. "Differentiating Entrepreneurs from Small Business Owners: A Conceptualization." Academy of Management Review 9: 354-359.

Chandler, G. N. and S. H. Hanks. 1994. "Resource-based Capabilities, Strategy, and New Venture Performance." Journal of Business Venturing 9: 331-349.

Cox, L. W. and S. M. Camp. 2001. International Survey of Entrepreneurs: 2001 Executive Report. Kansas City, MO: Kauffman Center for Entrepreneurial Leadership.

Daily, C. M., P. P. McDougall, J. G. Covin and D. R. Dalton. 2002. "Governance and Strategic Leadership in Entrepreneurial Firms." Journal of Management 28: 387-412.

Davidsson, P. 2005. Researching Entrepreneurship. New York, NY: Springer.

--, F. Delmar and J. Wiklund. 2002. "Entrepreneurship as Growth: Growth as Entrepreneurship." Chapter in Strategic Entrepreneurship: Creating a New Mindset. Eds. M. A. Hitt, R. D. Ireland, S. M. Camp and D. L. Sexton. Oxford: Blackwell. pp. 328-342.

DeClercq, D., H. Sapienza and H. Crijns. 2005. "The Internationalization of Small and Medium-sized Firms." Small Business Economics 24: 409-419.

Eriksson, K., J. Johanson, A. Majgard and D. Sharma. 1997. "Experiential Knowledge and Cost in the Internationalization Process." Journal of International Business Studies 28: 337-360.

Friedman, B. M. 2005. The Moral Consequences of Economic Growth. New York, NY: Alfred A. Knopf.

George, G., J. Wiklund and S. Zahra. 2005. "Ownership and the Internationalization of Small Firms." Journal of Management 31: 210-233.

Gilbert, B. A., P. P. McDougall and D. B. Audretsch. 2006. "New Venture Growth: A Review and Extension." Journal of Management 32: 926-950.

Huether, D. 2006. "The Case of the Missing Jobs." Business Week, April 3, p. 136.

Insch, G. S. and H. K. Steensma. 2006. "The Relationship between Firm Strategic Profile and Alliance Partners' Characteristics." Journal of Managerial Issues 18 (3): 321-339.

Ireland, R. D., M. A. Hitt, S. M. Camp and D. L. Sexton. 2001. "Integrating Entrepreneurship Actions and Strategic Management Actions to Create Firm Wealth." Academy of Management Executive 15 (1): 49-63.

Johanson, J. and J.-E. Vahlne. 1990. "The Mechanism of Internationalization." International Marketing Review 7 (4): 11-24.

--and--. 1977. "The Internationalization Process of the Firm: A Model of Knowledge Development and Increasing Foreign Market Commitment." Journal of International Business Studies 4: 20-29.

Kennedy, D., J. Lakonishok and W. H. Shaw. 1992. "Accommodating Outliers and Nonlinearity in Decision Models: Professional Adaptation." Journal of Accounting, Auditing & Finance 7 (2) : 161-193.

Lechner, C. and M. Dowling. 2003. "Firm Networks: External Relationships as Sources for the Growth and Competitiveness of Entrepreneurial Firms." Entrepreneurship & Regional Development 15: 1-26.

--, -- and I. Welpe. 2006. "Firm Networks and Firm Development: The Role of the Relational Mix." Journal of Business Venturing 21: 514-540.

Li, J. and C. E. Labig, Jr. 2001. "Negotiating with China: Exploratory Study of Relationship-Building." Journal of Managerial Issues 13 (3): 345-359.

Lu, J. W. and P. W. Beamish. 2001. "The Internationalization and Performance of SMEs." Strategic Management Journal 22: 565-586.

Manlova, T. S., C. G. Brush, L. E. Edelman and P. G. Greene. 2002. "Internationalization of Small Firms: Personal Factors Revisited." International Small Business Journal20 (1): 9-31.

McDougall, P. P. and B. M. Oviatt. 2000. "International Entrepreneurship: The Intersection of Two Research Paths." Academy of Management Journal 43: 902-906.

Morrow, J. L. Jr., M. H. Hansen and A. W. Pearson. 2004. "The Cognitive and Affective Antecedents of General Trust within Cooperative Organizations." Journal of Managerial Issues 16 (1) : 48-64.

Oviatt, B. M. and P. P. McDougall. 2005. "Defining International Entrepreneurship and Modeling the Speed of Internationalization." Entrepreneurship Theory & Practice 29: 537-553.

-- and --. 1994. "Toward a Theory of International New Ventures." Journal of International Business Studies 25: 45-64.

Peng, M. W. 2001. "The Resource-based View and International Business." Journal of Management 27: 803-829.

Preece, S. B., G. Miles and M. C. Baetz. 1999. "Explaining the International Intensity and Global Diversity of Early-stage Technology-based Firms." Journal of Business Venturing 14: 259-281.

Reuber, A. R. and E. Fischer. 1997. "The Influence of the Management Team's International Experience on the Internationalization Behaviors of SMEs." Journal of International Business Studies 28: 807-825.

Reynolds, P. D., M. Hay, W. D. Bygrave, S. M. Camp and E. Autio. 2000. Global Entrepreneurship Monitor: 2000 Executive Report. Kansas City, MO: Kauffman Center for Entrepreneurial Leadership.

Robertson, C.J. and J. j. Hoffman. 2000. "How Different Are We? An Investigation of Confucian Values in the United States." Journal of Managerial Issues 12 (1): 13-33.

Rothaermel, F. T., S. Kotha and H. K. Steensma. 2006. "International Market Entry by U.S. Internet Firms: An Empirical Analysis of Country Risk, National Culture, and Market Size." Journal of Management 32: 56-82.

Rynes, S. L. and D. L. Shapiro. 2005. "Public Policy and the Public Interest: What If We Mattered More?" Academy of Management Journal 48: 925-929.

Sapienza, H.J., E. Autio, G. George and S. A. Zahra. 2006. "A Capabilities Perspective on the Effects of Early Internationalization on Firm Survival and Growth." Academy of Management Review 31: 914-933.

Shane, S. and S. Venkataraman. 2000. "The Promise of Entrepreneurship as a Field of Research." Academy of Management Review 25: 217-226.

Shrader, R. C., B. M. Oviatt and P. P. McDougall. 2000. "How New Ventures Exploit Tradeoffs Among International Risk Factors: Lessons for the Accelerated Internationalization of the 21st Century." Academy of Management Journal 43: 1227-1247.

Print Get the Mag Weekly Updates