International entrepreneurial culture and growth of international new ventures.
| Verfasser | Gabrielsson, Mika |
| Posten | RESEARCH ARTICLE |
Abstract A premise in the international new venture (INV) literature is that a strong entrepreneurial orientation distinguishes an INV's behaviour over time. Employing the concept of international entrepreneurial culture (IEC), which provides a holistic operationalisation of international entrepreneurship, we provide evidence from a longitudinal case study of four Finnish INVs as they grow over time. The findings suggest that various IEC dimensions affect the growth of INVs across their different phases. Although international motivation, innovation propensity, risk attitude, market orientation and proactiveness positively affect advancement through the early INV growth phases, their effect is negative in the later phases. International learning and networking positively affect INV growth throughout all its phases. The motivation of INVs towards the global rather than the international marketplace largely dictates a born global instead of a born international path. The contribution of the study is that it suggests that the nature and intensity of the "entrepreneurialness" of INVs change during their growth. The findings challenge the implicit rationale in the literature, according to which INVs consistently exhibit a strong entrepreneurial orientation. It is advisable to harness most aspects of entrepreneurialness during the later phases of born global firms.
Keywords International entrepreneurial culture * International new venture * Growth * Born global * Born international * Born again global
1 Introduction
There are numerous studies in the international new venture (INV) field on the motivations, managerial characteristics, environmental influences and activities of these firms abroad. The international entrepreneurship literature has primarily examined the activities of INVs that are those firms that go abroad following their inception. This literature presumes that the "entrepreneurialness" of these firms is strong. This proposition was more formally articulated by the two pioneers in this field, McDougall and Oviatt (2000), when they noted that international entrepreneurship is a mixture of innovative, proactive and risk-seeking behaviour across national borders. Their definition seeks to bring the INV field closer to mainstream research on entrepreneurship, whereby three characteristics, namely innovativeness, proactiveness and risk-seeking behaviour are commonly used to measure the entrepreneurial orientation of the firm (Covin and Lumpkin 2011).
A more recent definition of international entrepreneurship by Oviatt and McDougall (2005, p. 540) posits that it is "the discovery, enactment, evaluation, and exploitation of opportunities across national borders to create future goods and services". This opportunity theme does not shift the focus of INV study away from the three aforementioned entrepreneurial characteristics. On the contrary, it emphasises that entrepreneurial firms seek to identify and seize opportunities in the marketplace (Shane and Venkataraman 2000). Hence, it can be posited that through a combination of innovativeness, proactiveness and risk-seeking behaviour INVs attempt to exploit opportunities by entering the international marketplace quickly. Nonetheless, recent international entrepreneurship reviews (Jones et al. 2011; Keupp and Gassmann 2009) suggest that the field is devoid of strong theoretical frameworks related to entrepreneurial orientation. In particular, Keupp and Gassmann (2009) argue that research in the field is largely phenomenological and studies capturing the entrepreneurial orientation of the firm are underrepresented. Hence, there is a contradiction in the INV field; on the one hand the entrepreneurialness of these firms is taken for granted while, on the other hand, studies of international entrepreneurial orientation that examine their opportunity-driven behaviour are lacking.
We aim to fill this void by providing empirical evidence drawn from the growth processes of INVs. In line with earlier suggestions (Bell et al. 2001; Oviatt and McDougall 1994), in this study we define an INV as the firm that has achieved a substantial proportion of international sales within 5 years after inception or a critical incident. A critical incident can be an internal or external factor affecting internationalisation such as a change of management, rapid client followership or acquisition (Bell et al. 2001). There has been little research on longitudinal development and growth in the international marketplace of INVs (Jones and Coviello 2005; Mudambi and Zahra 2007). INV growth is important because discovering what happens to these enterprises after they enter the foreign marketplace is of value for both research and management. Prior research suggests that they evolve in different phases in the international marketplace, in which they can grow organically, acquire or be acquired by other firms, retrench resources or even deinternationalise and reinternationalise (Freeman et al. 2013; Gabrielsson and Gabrielsson 2013; Hashai and Almor 2004). The characteristics of the entrepreneurial orientation that propel mature INV growth through the different phases are largely unknown.
In this study, we use the concept of international entrepreneurial culture (IEC) (Dimitratos et al. 2012) to examine international entrepreneurial orientation. This concept captures opportunity-based behaviour and consists of six behavioural dimensions: international motivation, innovativeness, risk attitude, market orientation (which includes proactiveness), learning orientation and networking orientation (towards competitors and non-competitors). The notion of IEC aims to provide a more comprehensive portrayal of INV entrepreneurialism. Hence, the research objective of the current study is to determine how IEC dimensions affect INV growth.
The contribution of this research is the suggestion that the nature and intensity of the IEC of a mature INV are modified during its growth. In so doing, it enriches the scant entrepreneurial orientation literature in the INV field and informs management of the "best IEC practices" during INV evolution. The remainder of this article is structured as follows. The next section reviews the literature on the themes of international entrepreneurial orientation and culture, and INV growth. The following section elaborates on the case research methodology used. The penultimate section presents the findings and advances the research propositions. The concluding section discusses the implications for theory and practice, and offers suggestions for future research directions.
2 Literature Review
2.1 International Entrepreneurial Orientation and Culture
Since the beginning of the last decade few international entrepreneurship studies have focused on international entrepreneurial orientation. This orientation typically manifests itself in innovative, proactive and risk-seeking behaviour abroad. Firms that are distinguished by a strong international entrepreneurial orientation generally enjoy enhanced international performance (Dimitratos et al. 2004; Hagen et al. 2012; Zhang et al. 2012). In a recent literature review, Covin and Miller (2014) propose that the various components of an international entrepreneurial orientation may affect dissimilar dimensions of INV internationalisation such as the range of geographic activities, mode of entry and choice of destination countries in different ways. If one transfers this line of argumentation to the INV growth field, it becomes necessary to delve into how the individual components of the international entrepreneurial orientation affect the growth of mature INVs.
In order to examine this theme in a holistic way, we employ the construct of an IEC. An IEC is that organisational culture that enables and empowers the entrepreneurial activities of the firm abroad (Zahra 2005). It emboldens new ideas and creativity by seeking novel international opportunities (Naldi et al. 2014). Following suggestions to identify a thorough measurement of an IEC (Jones et al. 2011), Dimitratos et al. (2012) propose that a comprehensive understanding of the international entrepreneurialness of a firm regardless of its size, age or sector requires an examination of its international motivation, innovativeness, risk attitude, market orientation, learning orientation and networking orientation. This six-dimensional IEC operationalisation follows from a comprehensive literature review on the international business, (international) entrepreneurship, strategic management and marketing fields.
First, international motivation is linked to the process of commencement and invigoration of enterprise management and employee behaviour towards foreign ventures. It also involves management's international growth orientation that is a catalytic enabler of entrepreneurial ventures in internationalised firms (Nummela et al. 2005). Second, international innovativeness deals with the proclivity of the firm to support new and creative ideas, products or processes for markets abroad. It is a fundamental aspect of the entrepreneurialness of the firm (Knight and Cavusgil 2004). Third, international risk attitude has to do with the extent to which the firm is committed to extensive and risky acts abroad. It affects decisions over critical resources for entrepreneurial decisions that firms have to make (Perks and Hughes 2008). Fourth, international market orientation captures the proclivity of the firm to seek superior value for its foreign customers. Following Narver and Slater (1990), it includes international customer orientation, interfunctional coordination of resources within the firm and competitor orientation. The last aspect of international competitor proactiveness pertains to consideration of the core competencies and weaknesses of rivals in foreign markets with the intention of exploiting opportunities. It involves both an aggressive and reactive stance towards...
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