Measuring the performance of born-global firms throughout their development process: the roles of initial market selection and internationalisation speed.
| Verfasser | Trudgen, Ryan |
| Posten | RESEARCH ARTICLE - Report |
Abstract Recent efforts have been made to operationalise the performance of born-global (BG) firms in ways that acknowledge their unique characteristics and strategies. This paper explores the BG development process and assesses the relevance of various types of performance measures. Two questions are addressed: first, which types of performance measures are most relevant to BGs in the various phases of their development? Second, how do initial market selection and internationalisation speed influence BG development, and therefore the relevance of performance measures? Drawing on international entrepreneurship theory, this study undertook a progressive focussing, theory development/refinement (abduction) approach. Utilising a multiple case study design, data were collected primarily through in-depth, face-to-face interviews with senior managers from Australian BGs and with industry experts and analysed using open, axial and selective coding. Data were collected from BGs across each of the three phases of BG development: pre-start-up/venture creation; early international entry/development; and international growth/consolidation. Building on recent conceptualisations of the BG development process, we found that the relevance of performance measures is dependent, in part, on the BG's phase of development. Further, the rapidity of internationalisation and the psychic distance of initial markets influence the duration of each phase. The unique characteristics and strategies of BGs should be reflected in the measures used to evaluate their performance in each of the three phases. This study represents the first empirical examination into the measurement of BG performance across the phases of development, providing a foundation for future scale development.
Keywords Born-global * Performance measurement * Pre-founding * Initial internationalisation * Maturity * International entrepreneurship
1 Introduction
Changes in the global business environment have substantially reduced barriers to international trade, making global markets accessible to even the youngest and smallest of firms (Efrat and Shoham 2012). This has created conditions conducive to the emergence and proliferation of born-globals (BGs) (Knight and Cavusgil 2005; Freeman and Cavusgil 2007). Frequently defined as firms that enter multiple foreign markets at, or soon after, inception (Knight and Cavusgil 1996), BGs have become increasingly important to both emerging and developed economies (Almor 2013; Varma 2011). However, many variables are used to distinguish venture types with key variants defined by differences in innovation and technology, operational and competitive strategies, international entrepreneurial orientation, finance and performance (Knight and Cavusgil 2005; Gabrielsson et al. 2008; Kuivalainen et al. 2012). Consequently, greater understanding of BGs, and the factors that facilitate their success within the global market place, is required (Griffith et al 2008).
Recent and extensive reviews reveal substantial theoretical and empirical gaps in our understanding of venture types, such as the BG, despite their prevalence in the international entrepreneurship (IE) literature since the 1980s (Jones et al. 2011). Considerable effort has been devoted to differentiating BGs from the broader categorisation of international new ventures (INVs) (Madsen 2013), and also traditional (gradual) internationalizers (Johanson and Vahlne 1977) in terms of their entrepreneurial mindset and risk tolerant behaviour, international experience, networks and international entrepreneurial capability. Recent conceptualisations reveal that BG strategic behaviour and performance objectives are influenced, at least in part, by the phase of development in which they find themselves (Efrat and Shoham 2012; Rialp-Criado et al. 2010; Gabrielsson et al. 2008; Sleuwaegen and Onkelinx 2013). While the performance outcomes of BG strategies have emerged as a prominent topic of interest (Efrat and Shoham 2012; Zhang et al. 2013), progress in this area has been
slowed by the myriad of approaches undertaken to select measures of BG performance. With BG performance defined 'as the extent to which financial and other goals are achieved as a function of business strategies' (Knight and Cavusgil 2004, p. 129), the selection of performance measures should take into account not only the unique characteristics of BGs, but also their level of development (Gabrielsson et al. 2008). To our knowledge, this approach has not yet been systematically addressed. Responding to a lack of empirical evidence in this area, the first research question of this study is: Which types of performance measures are most relevant to BGs in the various phases of their development?
To address this first research question, this study explored not only the relevance of specific performance measures during the BG's early international entry/development phase, but also the often neglected pre-start-up/new venture creation and international growth/consolidation phases of BG development (Rialp-Criado et al. 2010). However, these phases are not easily operationalised (Gabrielsson et al. 2008). Identifying a point of incorporation can be problematic, with BG inception recently conceptualised as a process, rather than a single event (Hewerdine and Welch 2013). Similar challenges arise in identifying the point at which a BG has progressed from early international entry/development, to international growth and consolidation. The pace of progression through these phases is likely to be unique to each individual BG, and to be dependent on the strategic decisions made by entrepreneurial management (Gabrielsson et al. 2008). Consequently, this study explored the influence that BG strategies have on the pace of BG development. The second research question of this study is: How do initial market selection and internationalisation speed influence BG development, and therefore the relevance of performance measures?
Responding to recent calls for performance to be assessed through 'theoretically stronger discipline-specific measures' (Richard et al. 2009, p. 744), we adopt international entrepreneurship (IE) as our primary theoretical lens. There are other perspectives in international business (IB) research, namely the economic (e.g. eclectic paradigm) (Dunning and Lundan 2008) and the process view (e.g., Uppsala internationalisation process (IP) model (Johanson and Vahlne 1977), which provide valuable knowledge on the behaviour of internationalising firms, and we realise that these should not be ignored. As internationalisation is a complex process, many different perspectives need to be understood, especially if we accept that entrepreneurs are individuals and that research suggests these individuals influence ... firms' international processes in various ways' (Andersson 2000, p. 64). Given this 'reality', the purpose of our study is to provide a perspective that acknowledges entrepreneurs and 'the importance of individuals' actions' (p. 66) in our analysis, to enhance our understanding of the complex phenomenon of firms' international performance throughout their various development phases (pre-startup, initial internationalisation and maturity). Operating at the owner/manager level of analysis, the development of IE literature has followed the emergence and continued growth of BGs in the global marketplace (Andersson and Floren 2011). Originally defined as 'a combination of innovative, proactive and risk-seeking behaviour that crosses national borders and is intended to create value in organisations' (McDougall and Oviatt 2000, p. 903), IE theory continues to develop and is commonly adopted to explain the internationalisation and performance of BGs (Peiris et al. 2012). This perspective is valuable as it provides insights into both the unique strategies pursued by BGs, and the heterogeneity of firms that fall under the BG label.
The BG literature has recently progressed from qualitative explorations of BG internationalisation strategies (Knight and Cavusgil 1996), to quantitative tests of their performance outcomes (Efrat and Shoham 2012; Zhang et al. 2013). However, this emerging stream of research has been comprised largely of BG performance studies that 'have ignored BGs' unique characteristics' (Efrat and Shoham 2012, p. 676) and 'the context of BGs varies greatly' (Gabrielsson et al. 2008, p. 400). This current study is unique and makes valuable contributions to this emerging field of literature; specifically, by applying an IE lens, this study will provide insights into how researchers can identify performance measures that reflect more accurately the changing goals and objectives of BGs at various phases of their development process. Furthermore, this study will highlight how the strategic internationalisation decisions made by BG mangers affect their BG's progression through the three phases of their development process and, therefore, the relevance of performance measures.
This study begins with a review of extant literature on defining BGs, their development phases, and the measures typically selected to measure their performance. We then outline the methodology and analysis utilised to address the first and second research questions stated above. The paper concludes with a discussion of the findings, development of propositions and conceptual framework and implications for future research.
2 Theoretical Perspectives on BGs
BGs are a distinct subset of INVs, which are characterised by early, rapid, and extensive involvement in multiple geographically dispersed foreign markets (Madsen 2013). The emergence of BGs has been driven by factors at the environmental, industry, and managerial levels. At the environmental level, substantial advances in communication, transportation, and information technology, combined with the removal of many tariff and non-tariff barriers to international trade (Efrat and...
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