Skip to main content
SpringerLink
Log in

Entrepreneurial proclivity, capability upgrading and performance advantage of newness among international new ventures

  • Article
  • Published:
Journal of International Business Studies Aims and scope Submit manuscript

Abstract

In spite of a notable interest surrounding the learning advantages of newness (LAN), centered on the emergent international entrepreneurship literature, we have only limited understanding of how young international new ventures (INVs) acquire learning advantages and avoid the liabilities of newness and foreignness in order to achieve LAN-related performance from early internationalization. In this article, two related but conceptually distinct capability upgrading constructs – knowledge capability upgrading and network capability upgrading – are identified to serve as mediating mechanisms that link entrepreneurial proclivity and LAN-related performance. Our findings from a sample of 436 young INVs from China provide supporting evidence for the mediating effect of capability upgrading, particularly among relatively larger new ventures and those operating with cost/price advantages in the international marketplace. This study fills a gap in the under-researched area of literature surrounding INVs from emerging economies, and demonstrates how young international venturing firms can leverage the entrepreneurial dynamics of learning to achieve growth opportunities from early internationalization.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1
Figure 2

Similar content being viewed by others

References

  • Anderson, J. C., & Gerbing, D. W. 1988. Structural equation modeling in practice: A review and recommended two-step approach. Psychological Bulletin, 103 (3): 411–423.

    Article  Google Scholar 

  • Andersson, S., & Wictor, I. 2003. Innovative internationalization in new firms: Born globals – The Swedish case. Journal of International Entrepreneurship, 1 (3): 249–276.

    Article  Google Scholar 

  • Autio, E., Sapienza, H. J., & Almeida, J. G. 2000. Effects of age at entry, knowledge intensity, and imitability on international growth. Academy of Management Journal, 43 (5): 909–924.

    Article  Google Scholar 

  • Baron, R. M., & Kenny, D. A. 1986. The moderator–mediator variable distinction in social psychological research: Conceptual, strategic and statistical considerations. Journal of Personality and Social Psychology, 15 (6): 1173–1182.

    Article  Google Scholar 

  • Brouthers, L. E., & Xu, K. 2002. Product stereotypes, strategy and performance satisfaction: The case of Chinese exporters. Journal of International Business Studies, 33 (4): 657–677.

    Article  Google Scholar 

  • Brown, R. L. 1997. Assessing specific mediational effects in complex theoretical models. Structural Equation Modeling, 4 (2): 142–156.

    Article  Google Scholar 

  • Cavusgil, S. T., & Zou, S. 1994. Marketing strategy-performance relationship: An investigation of the empirical link in export market ventures. Journal of Marketing, 58 (1): 1–21.

    Article  Google Scholar 

  • Chen, T.-J. 2003. Network resources for internationalization: The case of Taiwan's electronics firms. Journal of Management Studies, 40 (5): 1107–1130.

    Article  Google Scholar 

  • Coviello, N. E. 2006. The network dynamics of international new ventures. Journal of International Business Studies, 37 (5): 713–728.

    Article  Google Scholar 

  • Coviello, N. E., & Cox, M. 2006. The resource dynamics of international new venture networks. Journal of International Entrepreneurship, 4 (2–3): 113–132.

    Google Scholar 

  • Covin, J. G., & Slevin, D. P. 1989. Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10 (1): 75–87.

    Article  Google Scholar 

  • Dimitratos, P., & Plakoyiannaki, E. 2003. Theoretical foundations of an international entrepreneurial culture. Journal of International Entrepreneurship, 1 (2): 187–215.

    Article  Google Scholar 

  • Elango, B., & Pattnaik, C. 2007. Building capabilities for international operations through networks: A study of Indian firms. Journal of International Business Studies, 38 (4): 541–555.

    Article  Google Scholar 

  • Ellis, P. 2000. Social ties and foreign market entry. Journal of International Business Studies, 31 (3): 443–469.

    Article  Google Scholar 

  • Eriksson, K., Johanson, J., Majkgard, A., & Sharma, D. D. 1997. Experiential knowledge and cost in the internationalization process. Journal of International Business Studies, 28 (2): 337–360.

    Article  Google Scholar 

  • Fan, T., & Phan, P. 2007. International new ventures: Revisiting the influences behind the “born-global” firm. Journal of International Business Studies, 38 (7): 1113–1131.

    Article  Google Scholar 

  • Fornell, C., & Larcker, D. F. 1981. Structural equation models with unobservable variables and measurement error: Algebra and statistics. Journal of Marketing Research, 18 (3): 382–388.

    Article  Google Scholar 

  • Freeman, S., Edwards, R., & Schroder, B. 2006. How smaller born-global firms use networks and alliances to overcome constraints to rapid internationalization. Journal of International Marketing, 14 (3): 33–63.

    Article  Google Scholar 

  • Hadley, R. D., & Wilson, H. 2003. The network model of internationalization and experiential knowledge. International Business Review, 12 (6): 697–717.

    Article  Google Scholar 

  • Harris, S., & Wheeler, C. 2005. Entrepreneurs’ relationships for internationalization: Functions, origins and strategies. International Business Review, 14 (2): 187–207.

    Article  Google Scholar 

  • Hoang, H., & Antoncic, B. 2003. Network-based research in entrepreneurship: A critical review. Journal of Business Venturing, 18 (2): 165–187.

    Article  Google Scholar 

  • Holmbeck, G. N. 1997. Toward terminological, conceptual, and statistical clarity in the study of mediators and moderators: Examples from the child-clinical and pediatric psychology literature. Journal of Consulting and Clinical Psychology, 65 (4): 599–610.

    Article  Google Scholar 

  • Hymer, S. 1976. The international operations of national firms. Cambridge, MA: MIT Press.

    Google Scholar 

  • Johanson, J., & Vahlne, J.-E. 1977. The internationalization process of the firm: A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8 (1): 23–32.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J.-E. 1990. The mechanism of internationalization. International Marketing Review, 7 (4): 11–24.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J.-E. 2003. Business relationship learning and commitment in the internationalization process. Journal of International Entrepreneurship, 1 (1): 83–101.

    Article  Google Scholar 

  • Jones, M. V., & Coviello, N. E. 2005. Internationalisation: Conceptualising an entrepreneurial process of behaviour in time. Journal of International Business Studies, 36 (3): 284–303.

    Article  Google Scholar 

  • Kenny, D. A., Kashy, D. A., & Bolger, N. 1998. Data analysis in social psychology. In D. T. Gilbert, S. T. Fiske & G. Lindzey (Eds), The handbook of social psychology, (4th ed.) 233–265. New York: Oxford University Press.

    Google Scholar 

  • Knight, G. A., & Cavusgil, S. T. 1996. The born global firm: A challenge to traditional internationalization theory. Advances in International Marketing, 8: 11–26.

    Google Scholar 

  • Knight, G. A., & Cavusgil, S. T. 2004. Innovation, organizational capabilities, and the born-global firm. Journal of International Business Studies, 35 (2): 124–141.

    Article  Google Scholar 

  • Lau, V. P., Shaffer, M. A., & Au, K. 2007. Entrepreneurial career success from a Chinese perspective: Conceptualization, operationalization, and validation. Journal of International Business Studies, 38 (1): 126–146.

    Article  Google Scholar 

  • Lewin, A. Y., & Massini, S. 2003. Knowledge creation and organizational capabilities of innovating and imitating firms. In H. Tsoukas & N. Mylonopoulos (Eds), Organizations as knowledge systems: Knowledge, learning and dynamic capabilities: 209–237. New York: Palgrave Macmillan.

    Google Scholar 

  • Li, H., & Zhang, Y. 2007. The role of managers’ political networking and functional experience in new venture performance: Evidence from China’s transition economy. Strategic Management Journal, 28 (8): 791–804.

    Article  Google Scholar 

  • Lumpkin, G. T., & Dess, G. G. 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21 (1): 135–172.

    Google Scholar 

  • Luo, Y. 2000. Dynamic capabilities in international expansion. Journal of World Business, 35 (4): 355–378.

    Article  Google Scholar 

  • Luo, Y. 2003. Industrial dynamics and managerial networking in an emerging market: The case of China. Strategic Management Journal, 24 (13): 1315–1327.

    Article  Google Scholar 

  • Luo, Y., & Mezias, J. M. 2002. Liabilities of foreignness: Concepts, constructs, and consequences. Journal of International Management, 8 (3): 217–221.

    Article  Google Scholar 

  • Luo, Y., & Tung, R. L. 2007. International expansion of emerging market enterprises: A springboard perspective. Journal of International Business Studies, 38 (4): 481–498.

    Article  Google Scholar 

  • Mackinnon, D. P., Lockwood, C. M., Hoffman, J. M., West, S. G., & Sheets, V. 2002. A comparison of methods to test mediation and other intervening variable effects. Psychological Methods, 7 (1): 83–104.

    Article  Google Scholar 

  • Madsen, T. K., & Servais, P. 1997. The internationalization of born globals: An evolutionary process? International Business Review, 6 (6): 561–583.

    Article  Google Scholar 

  • Madsen, T. K., Rasmussen, E., & Servais, P. 2000. Differences and similarities between born globals and other types of exporters. In A. Yaprak & H. Tütek (Eds), Advances in international marketing, (Vol. 10) 247–265. Amsterdam: JAI Press.

    Google Scholar 

  • Makadok, R. 2001. Toward a synthesis of the resource-based and dynamic-capability views of rent creation. Strategic Management Journal, 22 (5): 387–401.

    Article  Google Scholar 

  • March, J. 1991. Exploration and exploitation in organizational learning. Organization Science, 2 (1): 71–87.

    Article  Google Scholar 

  • Mathews, J. A., & Zander, I. 2007. The international entrepreneurial dynamics of accelerated internationalization. Journal of International Business Studies, 38 (4): 387–403.

    Article  Google Scholar 

  • Matsuno, K., Mentzer, J. T., & Özsomer, A. 2002. The effects of entrepreneurial proclivity and market orientation on business performance. Journal of Marketing, 66 (3): 18–32.

    Article  Google Scholar 

  • McDougall, P. P., & Oviatt, B. M. 2000. International entrepreneurship: The intersection of two research paths. Academy of Management Journal, 43 (5): 902–906.

    Article  Google Scholar 

  • McDougall, P. P., Shane, S., & Oviatt, B. M. 1994. Explaining the formation of international new ventures: The limits of theories from international business research. Journal of Business Venturing, 9 (3): 469–487.

    Article  Google Scholar 

  • Ministry of Commerce of China. 2006. China Commerce Yearbook. Beijing: China Commerce and Trade Press.

  • Mudambi, R., & Zahra, S. A. 2007. The survival of international new ventures. Journal of International Business Studies, 38 (2): 333–352.

    Article  Google Scholar 

  • Oviatt, B., & McDougall, P. 1994. Toward a theory of international new ventures. Journal of International Business Studies, 25 (1): 45–64.

    Article  Google Scholar 

  • Oviatt, B., & McDougall, P. 2005. Defining international entrepreneurship and modeling the speed of internationalization. Entrepreneurship: Theory & Practices, 29 (5): 537–554.

    Google Scholar 

  • Peng, M., & Luo, Y. 2000. Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Academy of Management Journal, 43 (3): 486–501.

    Article  Google Scholar 

  • Podsakoff, P. M., & Organ, D. W. 1986. Self-reports in organizational research: Problems and prospects. Journal of Management, 12 (4): 531–545.

    Article  Google Scholar 

  • Podsakoff, P. M., MacKenzie, S. B., Lee, J.-Y., & Podsakoff, N. P. 2003. Common method biases in behavioral research: A critical review of the literature and recommended remedies. Journal of Applied Psychology, 88 (5): 879–903.

    Article  Google Scholar 

  • Preece, S. B., Miles, G., & Baetz, M. C. 1999. Explaining the international intensity and global diversity of early-stage technology-based firms. Journal of Business Venturing, 14 (3): 259–281.

    Article  Google Scholar 

  • Rennie, M. 1993. Born global. McKinsey Quarterly, 4: 45–52.

    Google Scholar 

  • Rialp, A., Rialp, J., & Knight, G. A. 2005. The phenomenon of early internationalizing firms: What do we know after a decade (1993–2003) of scientific inquiry? International Business Review, 14 (2): 147–166.

    Article  Google Scholar 

  • Sapienza, H. J., De Clercq, D., & Sandberg, W. 2005. Antecedents of international and domestic learning effort. Journal of Business Venturing, 20 (4): 437–457.

    Article  Google Scholar 

  • Sapienza, H. J., Autio, E., George, G., & Zahra, S. A. 2006. A capabilities perspective on the effects of early internationalization of firm survival and growth. Academy of Management Review, 31 (4): 914–933.

    Article  Google Scholar 

  • Shrader, R. C., Oviatt, B. M., & McDougall, P. P. 2000. How new ventures exploit trade-offs among international risk factors: Lessons for the accelerated internationalization of the 21st century. Academy of Management Journal, 43 (6): 1227–1247.

    Article  Google Scholar 

  • Slater, S. F., & Narver, J. C. 1995. Market orientation and the learning organization. Journal of Marketing, 59 (3): 63–74.

    Article  Google Scholar 

  • Styles, G., & Ambler, T. 1994. Successful export practice: The UK experience. International Marketing Review, 11 (6): 23–47.

    Article  Google Scholar 

  • Yamakawa, Y., Peng, M. W., & Deeds, D. L. 2008. What drives new ventures to internationalize from emerging to developed economies? Entrepreneurship Theory and Practice, 32 (1): 59–82.

    Article  Google Scholar 

  • Yeoh, P. L. 2000. Information acquisition activities: A study of global start-up exporting companies. Journal of International Marketing, 8 (3): 36–60.

    Article  Google Scholar 

  • Yip, G. S., Gomez-Biscarri, J., & Monti, J. A. 2000. The role of the internationalization process in the performance of newly internationalizing firms. Journal of International Marketing, 8 (3): 10–35.

    Article  Google Scholar 

  • Yiu, D. W., Lau, C. M., & Bruton, G. D. 2007. International venturing by emerging economy firms: The effect of firm capabilities, home country networks, and corporate entrepreneurship. Journal of International Business Studies, 38 (4): 519–540.

    Article  Google Scholar 

  • Zaheer, S. 1995. Overcoming the liabilities of foreignness. Academy of Management Journal, 38 (2): 341–363.

    Article  Google Scholar 

  • Zahra, S. A. 2005. A theory of international new ventures: A decade of research. Journal of International Business Studies, 36 (1): 20–28.

    Article  Google Scholar 

  • Zahra, S. A., Ireland, R. D., & Hitt, M. A. 2000. International expansion by new venture firms: International diversity, mode of market entry, technological learning, and performance. Academy of Management Journal, 43 (5): 925–950.

    Article  Google Scholar 

  • Zahra, S. A., Zheng, C., Yu, J., & Yavuz, R. I. 2006. Learning advantages of newness: An analysis, critique, and assessment of its antecedents. Proceedings of the 48th Annual Meeting of the Academy of International Business, Beijing, China.

  • Zhou, L., Wu, W. P., & Luo, X. 2007. Internationalization and the performance of born-global SMEs: The mediating role of social networks. Journal of International Business Studies, 38 (4): 673–690.

    Article  Google Scholar 

Download references

Acknowledgements

The authors express their sincere gratitude to the Consulting Editor, Professor Yadong Luo, for his instrumental and insightful guidance, and the three anonymous reviewers for their constructive comments and suggestions. They also thank Professor Shaker. A. Zahra for his helpful comments on an earlier version of this manuscript, as well as the Research Grant Council of Hong Kong for financially supporting the research (CERG LU3107/03H).

Author information

Authors and Affiliations

  1. Department of Marketing, International Business, and Strategy, Brock University, St Catharines, Ontario, Canada

    Lianxi Zhou

  2. Sheffield University Management School, Sheffield, UK

    Bradley R Barnes

  3. Department of Management, Chinese University of Hong Kong, Shatin, Hong Kong

    Yuan Lu

Authors
  1. Lianxi Zhou
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Bradley R Barnes
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Yuan Lu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Lianxi Zhou.

Additional information

Accepted by Yadong Luo, Consulting Editor, 22 July 2009. This paper has been with the authors for five revisions.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Zhou, L., Barnes, B. & Lu, Y. Entrepreneurial proclivity, capability upgrading and performance advantage of newness among international new ventures. J Int Bus Stud 41, 882–905 (2010). https://doi.org/10.1057/jibs.2009.87

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/jibs.2009.87

Keywords

Search

Navigation