Exploring the Role of Diversity Management During Early Internationalizing Firms' Internationalization Process.

VerfasserBreuillot, Angelique

1 Introduction

Early internationalizing firms (EIFs) (Rialp et al. 2005; Romanello and Chiarvesio 2019), such as international new ventures (McDougall 1989) or born globals (Rennie 1993), distinguish themselves by their ability to internationalize early and grow, signaling a potential performance advantage (Knight and Cavusgil 2005; Knight et al. 2004; Oviatt and McDougall 2005). This potential is broadly relevant, because it would benefit both the EIFs and society if these small firms consistently progressed through internationalization and grew larger in a sustainable way (Oxtorp 2014). Instead though, EIFs display poor survival rates (Khan and Lew 2018; Meschi et al. 2017) and diminishing performance over time (Almor et al. 2014), which raises questions about how they truly progress along the internationalization process and how they might sustain their growth in the long term (Garcia-Lillo et al. 2017; 0yna and Alon 2018; Romanello and Chiarvesio 2017).

Their progress may depend on various factors that evolve over time (Efrat and Shoham 2012; Hagen and Zucchella 2014). One such factor reflects the strategic influence of human resource diversity, defined as "the distribution of differences among the members of a unit with respect to a common attribute" (Harrison and Klein 2007, p. 1200). According to Shen et al. (2009), rapid internationalization can increase the significance of workforce diversity. In turn, the strategic implications of diversity for EIFs have ben introduced in prior international entrepreneurship literature (Fletcher and Harris 2012; Kumar 2012; Welbourne and De Cieri 2001), in studies that imply that different types of human resource diversity (e.g., cultural or national origin, gender, experience, knowledge) could expand EIFs' resource and knowledge bases (Loane et al. 2007; Romanello and Chiarvesio 2017). Such firms often suffer liabilities of foreignness and newness (Evers and O'Gorman 2011; Fernhaber 2013), so diversity may be especially relevant for them. Studies of larger firms' internationalization also explore a potential strategic role of diversity (De Jong and van Houten 2014; Rivas 2012).

Although both these lines of research are informative, they feature two key limitations. First, they tend to prioritize the positive effects of diversity. Cox and Blake (1991) cite competitive advantages for diverse firms, but subsequent contributions (Joshi and Ron 2009) note not just positive effects of diversity (Cox and Blake 1991; Shore et al. 2009) but also neutral implications (Jehn and Bezrukova 2004) or negative performance outcomes (Jackson and Joshi 2004; Williams and O'Reilly 1998). Second, extant research addresses the attributes of diversity, not its management (Jehn et al. 1999; Mannix and Neale 2005). A separate research stream has established though that it is diversity management in particular that matters, not diversity alone. In this field of research, studies have established that diversity management spans a continuum of perspectives, from total ignorance about diversity issues to recognition of diversity as a source of value creation (Dass and Parker 1999; Lorbiecki 2011; Thomas and Ely 1996). Such insights also imply that diversity management can explain heterogeneous firm performance (Podsiadlowski et al. 2013), in line with the resource-based view (RBV) of the firm (Barney 1991; Wernerfelt 1984). According to this theory, firms create competitive advantages by "developing, combining, and effectively deploying its physical, human, and organizational resources in ways that add unique value and are difficult for competitors to imitate" (Colbert 2004, p. 343). By integrating these theoretical foundations, the current study aims to explore how diversity management influences the progress of early internationalizing firms through their internationalization process.

Accordingly, this research adopts a processual approach to EIFs' internationalization, which occurs in phases (Gabrielsson et al. 2014; Trudgen and Freeman 2014). Despite a lack of standard consensus about specific phases, existing conceptualizations tend to represent the process as evolving from concept generation to sustainable growth. Sustained growth in the long run is the goal, even if there is no ultimate end to the process, and a key issue is determining how to reach that goal. The intuition and impetus for this study predicts that diversity management could be a decisive factor. To establish the potential role of diversity management, this study explores multiple perspectives on diversity management, across internationalization phases, and the effects on EIFs' progress in reaching the next phases. The exploratory qualitative analysis of eight EIFs at different phases of their internationalization process thus relies on different perspectives on diversity management (Jonsen and Schneider 2011; Podsiadlowski et al. 2013). Most previous research addresses either individual- or team-level diversity (Jonsen and Schneider 2011); the current effort focuses on diversity at an organizational level, to account for different diversity attributes that likely inform internationalization, such as cultural and national origin, experience, knowledge, and gender (Parrotta et al. 2016; Richard et al. 2004). The sample of eight firms reflects the data saturation point (Yin 2003), consistent with extant qualitative research (Ji et al. 2019).

In addition to undertaking the first effort to link international entrepreneurship and diversity management literature, this article offers three propositions, detailing the role of diversity management during EIFs' internationalization process. First, EIFs progress differently along the internationalization process, depending on the diversity management perspectives they adopt. Resistance, access and legitimacy, and learning perspectives all can alter the nature of the diversity, which might become a negative, ordinary, or strategic resource for advancing the internationalization process. This view of diversity as a nuanced resource helps extend diversity management literature and RBV theory, by suggesting another way to look at resource heterogeneity, through the lens of diversity management. Second, the learning perspective can help EIFs progress along their internationalization process, notably by allowing them to overcome the transition between entry and post-entry phases. In confirming the importance of this transition phase, this study contributes to research devoted to EIFs' internationalization processes. Third, this investigation reveals a boundary condition, required for firms to benefit from a learning perspective. That is, they must combine a positive view of diversity with a proactive strategy, featuring practices that are embedded in both diversity programs and general management. Along with these propositions for theory, this study offers useful managerial recommendations for EIF managers, public authorities, and international support services, highlighting the need to manage diversity, along wiffi suggestions for how and when.

2 Literature Review

2.1 EIFs'Internationalization Process

The field of international entrepreneurship, recognized as a distinct research field (Baier-Fuentes et al. 2019; 0yna and Alon 2018; Peiris et al. 2012; Servantie et al. 2016), provides various conceptualizations for the internationalization process undertaken by rapid, early internationalizing firms (Gabrielsson et al. 2014; Pellegrino and McNaughton 2015; Trudgen and Freeman 2014), so a proliferation of definitions exists (Servantie 2007). For this study, the similarities among EIFs are more relevant than their differences (Rialp et al. 2005; Zander et al. 2015). Rather than address fragmented views, this study defines any firm that expands internationally within 3 years of its inception, through any entry mode, as an EIF (Zucchella et al. 2007).

As prior empirical studies suggest, the internationalization process comprises various phases (Dominguez and Mayrhofer 2017; Gabrielsson et al. 2008, 2014; Trudgen and Freeman 2014). For EIFs though, those phases differ fundamentally from those displayed by traditional international firms, as described by various stages models (Coviello and McAuley 1999; Hashai and Almor 2004; Kocak and Abimbola 2009). For example, the Uppsala internationalization model (Johanson and Vahlne 1977, 2009) predicts that firms internationalize only after they have established a presence within their domestic market, using a gradual process in which they focus first on proximal countries. Innovation-related models (Bilkey and Tesar 1977; Cavusgil 1980) instead predict that internationalization is an innovation and insist that "the slowness of its process is due to management's aversion to risk taking and its inability to acquire market knowledge efficiently" (Knight et al. 2004, p. 646). But EIFs contradict both models. They are characterized by the speed of their internationalization (Madsen 2013), which occurs at or shortly after their inception, sometimes even before they sell products or services within their domestic market (Bloodgood et al. 1996). Furthermore, studies have highlighted unique traits of EIFs, such as their propensity to take risk (Khan and Lew 2018; Kiss et al. 2013; Zhou et al. 2010) and previous international experience by their entrepreneurs (Baum et al. 2015; Cannone et al. 2014; Laanti et al. 2007).

In a popular model, Gabrielsson et al. (2008) propose three growth phases (introductory, growth, and resource accumulation), followed by a break-out phase. Other models include a pre-venture phase (e.g., Rialp-Criado et al. 2010). In their empirical research, Pellegrino and McNaughton (2015) also derive three phases: pre-internationalization, early internationalization, and later internationalization. Although various models propose different phases, they all generally reflect a three-way evolution, from concept generation to...

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