2.2 The Born Global Life Cycle Stages
2.2.2 Determinants of Pre and Post-Internationalization Speed
34 same technology base for knowledge transfer, business networks, and existing customers (Grimaldi, & Grandi, 2005; Teixeira & Coimbra, 2014).
Zahra (2005) stresses that corporate spin off inherits networks, established systems, and reputation from the parent company. Pettersen and Tobiassen (2012) also highlights that the parent institutions and its network play an important role both in the pre-inception and in the early growth period of the established firm. In the pre-inception period, as the technology is being developed, the spin-off depends on the social network structure of these organizations. However, since these ties are business related, they turn into calculative networks as the business grows (Hite & Hestley, 2001).
35 Starting with the first approach (pre-internationalization), in a large extent, the majority of the researchers have mainly focused in investigate the antecedents behind this initial activity. This early international movement has received various denominations, such as: early internationalization (Autio et al., 2000; Knight & Cavusgil, 2004; Zhou, Wu, & Barnes, 2012; Cavusgil & Knight, 2015), precocity (Zuchella et al., 2002), rapid (Oviatt & McDougall, 2005), accelerated (Shrader et al., 2000; Weerawardena et al, 2007; Freeman & Cavusgil, 2007), speed (Kiss & Danis, 2008; Coeurderoy & Murray, 2008; Musteen, et al., 2010), and pace (Casillas, et al., 2015). Concerning its measurements, the studies are built above three bases of analyses: first year of the companies' exports (Weerawardena et al., 2007; Khavul et al., 2010); year of foundation x first export (Zucchella, 2002; Pla-Barber & Escribá-Esteve, 2006; Weerawardena et al., 2007; Gabrielsson et al., 2008; Coeurderoy & Murray, 2008; Kiss & Danis, 2008;
Musteen, Francis, & Datta, 2010; Ramos, Acedo, & Gonzalez, 2011; Madsen, 2013; Zhou
& Wu, 2014; Cavusgil & Knight, 2015; Coviello, 2015); and internationalization precocity (Zucchella, 2002; Teixeira & Coimbra, 2014).
For the second approach (post- internationalization) denominations like speed (Chang and Rhee, 2011; Casillas & Acedo, 2013; Casillas & Moreno-Menéndez, 2014) and pace (Vermeulen & Barkena, 2002; Prashantham & Young, 2011; Lin, 2012) has also been used. Moreover, the measurements rely on: growth in foreign sales/ country scope x international commitment (Prashantham & Young, 2011; Casillas & Acedo, 2013); average number of foreign expansions (subsidiaries) per year (Vermeulen &
Barkema, 2002; Lin, 2012), and international sales development (increase of foreign sales) after the first market operation (Morgan-Thomas & Jones, 2009; Casillas &
Moreno-Menéndez, 2014).
Concerning the ubiquitous and often polysemous usage of the terms “pace” and
“speed”, which are used to denominate both approaches, according to the English dictionary (Cambridge English, 2019) pace and speed are two different ways of measuring the same quantity. However, pace is referred to a single motion, or the distance you move when you precede a single motion, while speed is the total distance of your movements. In an attempt to clarify this differentiation, Chetty et al. (2014) highlights that a wide range of studies characterizes speed within a time-based period between the time a firm take to internationalize from its inception, which in turn provides a limited chronological outlook and ‘unidimensional view’ concerning the complexity of speed and the internationalization process. In fact, Melén and Nordman (2009) also alert to the
36 limited understanding of speed since it must be comprehended to a greater extent.
Considering these observations, this study adopts the term speed since it intends to capture the determinants behind the early motion and post-entry motion towards foreign markets, including the total distance (speed).
Given the first directions, several studies have captured the determinants behind the pre and post- internationalization speed. The determinants can be clustered into three groups: characteristics of the entrepreneur, firm’ internal factors (business related) and firm’ external factors (macro level). As highlighted previously, a wide spectrum of studies has concentrated more on the determinants of pre internationalization, while the determinants of post-entry are still scarce (Casillas & Acedo, 2013).
Starting with the determinants of the pre-internationalization, amongst the factors that stands out within the entrepreneur’s characteristics (table 4) are: the entrepreneur international experience (Harveston, et. al., 2000; Luo, et al., 2005; Zuchella, et al., 2007;
Musteen, et al., 2010; Casillas & Acedo, 2013; Casillas & Moreno-Menéndez, 2014;
Teixeira & Coimbra, 2014) and the entrepreneur’s networks (Pla-Barber & Escribá- Esteve, 2006; Zuchella, et al., 2007; Musteen, et al., 2010; Felzensztein, 2015).
International experience appears to be a crucial aspect of the entrepreneur's characteristics for early internationalization. Experiences gained by working, studying and travelling abroad provide personal aptitudes to get familiar with other languages, cultures, to develop a global mindset, and to establish network ties, which minimizes the risk perception enhancing the confidence of the entrepreneur to take a step ahead towards international markets (Acedo & Jones, 2007; Coeurderoy & Murray, 2008; Osarenkhoe, 2009; Musteen et al., 2010).
Concerning the second approach (post-internationalization), the entrepreneurial characteristics continues to be a crucial element for the internationalization speed, especially international experience (Mudambi & Zahra, 2007; Casillas & Acedo, 2013), and the entrepreneur personal network ties (Zárate-Montero & Torres-Ortega; 2018;
Khan & Lew, 2018; Safari & Chetty, 2019). In addition, an interesting fact is how psychic distance is perceived differently on the post-entry speed compared to the pre- internationalization entry, both in the individual and firm level. In a recent study conducted by Safari and Chetty (2019) involving six Swedish SME’s, the authors pointed out that psychic distance is a paradox. On their study, the first markets selections of the companies were based on the psychic distance, which allowed the companies to internationalize faster and achieve significant quick returns (Lopez et al., 2009).
37 However, in the post-entry internationalization even in physically closed markets psychic distance may cause difficulties for market entry since they confront several challenges including closed networks that can lead to opportunistic advantages, the commitment to find new network ties, and the cost of managers to adapt to new routines.
Table 4 - Determinants of Pre and Post-Internationalization – Entrepreneur Characteristics
Determinants Pre-Internationalization Post-Internationalization
Author(s) and Year Level of Influence
Author(s) and Year
Level of Influence Academic Degree Zucchella, et al. (2007)
Acedo and Casillas (2007)
Teixeira and Coimbra (2014)
+ -
N/I N/I
Entrepreneurial Orientation
N/I N/I Khan and Lew
(2018)
+ Global Vision Pla-Barber and Escribá-
Esteve (2006)
Casillas and Moreno- Menéndez (2014)
+
Casillas and Acedo (2013) Hagen and Zucchella (2014)
+
International Education Acedo and Jones (2007) Casillas and Acedo (2013)
+ Casillas and
Acedo (2013)
Hagen and
Zucchella (2014)
+
International Experience Harveston, et. al., (2000) Luo, Zhou, and Liu (2005)
Zucchella, et al. (2007) Coeurderoy and Murray (2008)
Musteen, et al. (2010) Casillas and Acedo (2013)
Casillas and Moreno- Menéndez (2014) Teixeira and Coimbra (2014)
+
-
Mudambi and Zahra (2007) Casillas and Acedo (2013)
Hagen and
Zucchella (2014)
+
-
Leadership N/I N/I Khan and Lew
(2018)
+ Market Knowledge Oviatt and McDougall
(2005)
Weerawardena, et al.
(2007)
Prashantham and Young (2011)
Casillas and Moreno- Menéndez (2014) Chetty, et al. (2014)
+
N/I N/I
38
Networks Oviatt and McDougall (2005)
Pla-Barber and Escribá- Esteve (2006)
Zucchella, et al. (2007) Weerawardena, et al.
(2007)
Musteen, et al. (2010) Kiss and Danis (2010) Casillas and Acedo (2013)
Felzensztein, Ciravegna, Robson, & Amorós (2015)
Safari and Chetty (2019)
+
Hagen and Zucchella (2014) Khan and Lew (2018)
Zárate-Montero and Torres- Ortega (2018) Safari and Chetty (2019)
+
Previous Working Experiences
Zucchella, et al. (2007) Safari and Chetti (2019)
+ Zheng et al.
(2012)
+ Psychic Distance Safari and Chetty (2019) + Safari and
Chetty (2019)
-
Risk Perception Acedo and Jones (2007) Acedo and Casillas (2007)
Osarenkhoe et al. (2009)
+ N/I N/I
Note: (+) Positive, (-) Negative, (N/I) Not identified, (N/A) Not Applied.
Source: Developed by the Author (2019)
Concerning firm’ internal factors (table 5) the main determinants of pre- internationalization are amongst the firms’ innovation and knowledge intensity, comprehended through product innovativeness and innovation capacity (Autio et al.
2000; Luo et al., 2005; Osarenkhoe, 2009; Ramos et al., 2011). Aspects such as, niche positioning is perceived as an important aspirant for internationalization precocity (Zucchella et al., 2007). On this matter, globalization have immensely impacted on competition and by fulfilling specific market niches BGs are more capable in internationalize faster by differentiating themselves against competitors.
Likewise, some authors focus on company’s size (Luo, et al., 2005, Acedo &
Jones, 2007; Musteen, et al., 2010) and firm’s location (Luo, et al., 2005; Zucchella, et al., 2007; Casillas and Acedo, 2013; Teixeira and Coimbra, 2014) as determinants of early internationalization. Firm’s characteristics such as size and location may contribute to explain differences in the speed of internationalization of BGs. Firm size is associated to high levels of market knowledge that affects positively on foreign sales growth and the speed of the first international market entry (Yli-Renko et al., 2002). While firms’
location, especially those concentrated in highly entrepreneurial agglomerations, tend to have a superior position concerning market information, networks, and marketing practices that nourishes the firm’s further expansion (Luo et al., 2005).
39 When it comes to the post-entry internationalization, concerning firm’s internal factors, the majority of the determinants are concentrated within this cluster. Amongst the determinants that mostly appear are the firm’ networks (Mudambi & Zahra, 2007;
Prashantham & Young, 2011; Fraccastoro & Gabrielsson, 2018; Gerschewski, et al., 2018; Dykes, et al., 2019; Safari and Chetty, 2019) and strategy diversification (Morgan- Thomas & Jones, 2009; Casillas & Moreno-Menéndez, 2014; Sadeghi et al., 2018).
Furthermore, family ownership shows different results concerning pre and post- entry speed. Kontinen and Ojala (2010), for example found that family businesses tend to internationalize later and in a slow pace, while Lin’s (2012) research conducted with 656 Taiwanese companies, states that family ventures that possesses high levels of ownership advantages were expanding their business internationally rapidly through a narrow scope, showing that family ownership has a positive influence on internationalization speed, especially on post-entry foreign expansion.
Table 5 - Determinants of Pre and Post-Internationalization – Firm’ Internal Factors
Determinants Pre-Internationalization Post-Internationalization Author(s) and Year Level of
Influence
Author(s) and Year
Level of Influence
Firms Size
Acedo and Jones (2007) Chang and Rhee (2011) Khavul, Pérez-Nordtvedt, and Wood (2010) Luo, et al. (2005) Musteen, et al. (2010) Teixeira and Coimbra (2014)
+
N/I N/I
Technology/Product Innovativeness
Autio et al. (2000) Osarenkhoe (2009) Ramos et al. (2011)
+ Mudambi and
Zahra
(2007)Morgan- Thomas and Jones (2009)
+
Distribution Channel Schu, Morschett, and Swoboda (2016)
+ Morgan-
Thomas and Jones (2009)
+
Firms Age Chang and Rhee (2011) Casillas and Acedo (2013)
– +
Casillas and Acedo (2013)
+
40
Casillas and Moreno- Menéndez (2014) Teixeira and Coimbra (2014)
R&D Investment/Intensity
Ramos et al. (2011) + Mudambi and
Zahra (2007)
+ Family Ownership Kontinen and Ojala
(2010)
- Lin (2012) +
Firms Location Luo, et al. (2005) Zucchella, et al. (2007) Casillas and Acedo (2013)
Teixeira and Coimbra (2014)
+ N/I N/I
Firms Strategy Khavul, et al. (2010) - N/I N/I
Frequency of Market Interaction
Musteen, et al. (2010) + N/I N/I
Industry Segment/Niche Positioning
Zuchella et al. (2007) Osarenkhoe (2009) Khavul, et al. (2010) Teixeira and Coimbra (2014)
+ Hagen and
Zucchella (2014)
Gerschewski, et al. (2018) Khan and Lew (2018)
+
Innovation Luo et al. (2005) Ramos, et al. (2011)
+ Khan and Lew
(2018)
+ Innovation Renewal
Capabilities
N/I N/I Khan and Lew
(2018)
+ Marketing Luo, et al. (2005)
Pla-Barber and Escribá- Esteve (2006)
Weerawarden, et al.
(2007)
Chang and Rhee (2011)
+
N/I N/I
Networks Freeman, et al. (2006) Kiss and Danis (2010) Lee, Kelley, Lee, and Lee (2012)
+ Mudambi and
Zahra (2007) Prashantham
and Young
(2011)
Hagen and
Zucchella (2014)
Fraccastoro and Gabrielsson (2018)
Gerschewski, et al. (2018) Dykes, et al.
(2019) Safari and Chetty (2019)
+
-
Previous Performance Teixeira and Coimbra (2014)
+ N/I N/I
Psychic Distance Ojala (2008)
Casillas & Moreno- Menéndez (2014) Safari and Chetty (2019)
+ -
Ojala (2008) Ciszewska- Mlinarič et al.
(2019)
Safari and Chetty (2019)
+
41
Service Industry Musteen, et al. (2010) Casillas and Moreno- Menéndez (2014) Teixeira and Coimbra (2014)
+ N/I N/I
Staff International Experience
N/I N/I Khan and Lew
(2018)
+
Social Media Fraccastoro and
Gabrielsson (2018)
+ Fraccastoro and Gabrielsson (2018)
-
Strategy/Activities Diversification
N/I N/I Morgan-
Thomas and Jones (2009) Casillas and Moreno-
Menéndez (2014)
Sadeghi et al.
(2018)
Chetty et al (2014)
+
Absorptive Capacity/
Learning Capability
N/I N/I Prashantham
and Young (2011) Chetty et al.
(2014)
Gerschewski, et al. (2018)
+
Accumulated Knowledge
N/I N/I Prashantham
and Young
(2011)
Casillas and Moreno-
Menéndez (2014)
+
Export Commitment N/I N/I Sleuwaegen and
Onkelinx (2014)
+ Financial Export
Performance
N/A N/A Sadeghi et al.
(2018)
+
Survival N/I N/I Sleuwaegen and
Onkelinx (2014)
-
Knowledge Intensity N/I N/I Mudambi and
Zahra (2007) Morgan-
Thomas and Jones (2009)
+ -
Location N/I N/I Casillas and
Acedo (2013) Casillas and Moreno-
Menéndez (2014)
+
Modes of Operation N/I N/I Almor (2013)
Casillas and Moreno-
Menéndez (2014)
+
Resources N/I N/I Casillas and
Acedo (2013)
+
42
Chang and Rhee (2011)
Profitability N/I N/I Vermeulen and
Barkema (2002)
+
Speed of Learning N/I N/I Prashantham
and Young (2011) Casillas and Moreno- Menéndez (2014)
Chetty at al.
(2014)
+ -
Organizational Speed N/I N/I Dykes, et al.
(2019)
+ Internationalization
Volocity
N/A N/A Vermeulen and
Barkema (2002) Wagner (2004) Jiang et al.
(2014)
-
Note: (+) Positive, (-) Negative, (N/I) Not Identified, (N/A) Not Applied.
Source: Developed by the Author (2019)
Lastly, the determinates of speed within the external factors (table 6) for pre internationalization was observed to be: cultural distance (Luo et al., 2005; Chang &
Rhee, 2011; Casillas & Moreno-Menéndez, 2014) and technological capacity (Luo, et al., 2005; Khavul, et al., 2010; Musteen, et al., 2010; Teixeira & Coimbra, 2014). In a study conducted by Zou et al. (2010) with Chinese international new ventures, technological capabilities aligned with networks provide a positive impact on the internationalization strategies and the international growth of the companies. The authors argue that technological needs enhance the networking capability influencing the firm to build an international-oriented strategy.
Within the determinants of the firm’s external factors for post-entry internationalization, so far, the first mover advantages (Verdier et al., 2010; Fariborzi &
Ghauri, 2014; Fariborzi & Keyhani, 2018; Puig, González-Loureiro, & Sadeghi, 2018) and number of countries (Chang & Rhee, 2011; Felzensztein, 2015; Hilmersson, et al., 2017) appear to have the biggest influence on internationalization rapidity.
Table 6 - Determinants of Pre and Post-Internationalization – Firm’s External Factors
Determinants Pre-Internationalization Post-Internationalization Author(s) and Year Level of
Influence
Author(s) and Year
Level of Influence Country Institutional
Quality
Surdu et al. (2018) + N/I N/I
43
Cultural Distance Chang and Rhee (2011) Luo et al. (2005) Casillas and Moreno- Menéndez (2014)
+ N/I N/I
Firms Influence Chang and Rhee (2011) - N/I N/I
Technological Supportiveness
Luo et al. (2005) + N/I N/I
Market Commitment Chetty et al. (2014) + N/I N/I
Subsidiary Proportion N/A N/A Chang and Rhee
(2011)
+ Technological
Capacity
Luo et al. (2005) Oviatt and McDougall (2005)
Musteen, et al. (2010) Khavul, et al. (2010) Teixeira and Coimbra (2014)
+ -
N/I N/I
Economies of Scale N/I N/I Sadeghi et al.
(2018)
+ Industry Globalization Chang and Rhee (2011) - Hagen and
Zucchella (2014)
+
First Mover Advantage N/I N/I Verdier et al.
(2010)
Fariborzi and Ghauri (2014) Keyhani, (2018) Puig, González- Loureiro and Sadeghi et al.
(2018)
+ -
International Alliances N/I N/I Casillas and
Acedo (2013)
+
Industry Growth N/I N/I Mudambi and
Zahra (2007)
+
Networks N/I N/I Prashantham
and Young (2011) Casillas and Acedo (2013)
+
Rivalry and Imitation N/I N/I Casillas and
Acedo (2013)
+
Strategic Market N/I N/I Jin, et al (2018) +
Number of Countries N/I N/I Chang and Rhee
(2011) Chetty et al. (2014) Felzensztein (2015) Hilmersson, et al. (2017)
+
Note: (+) Positive, (-) Negative, (N/I) Not identified, (N/A) Not Applied.
Source: Developed by the Author (2019)
By evaluating some of the findings, it is detected that networks appear as a major aspirants of internationalization speed within the early and post-entry internationalization considering the different levels of analyses. This conclusion correlates not just with the
44 characteristics described of a BG, in which they seek networks because they mainly depend on international markets to commercialize their products or services (Freeman, et al., 2006), but also because networks go beyond in just providing knowledge. Networks enhance the learning of foreign environments, and they provide valuable information to develop capabilities (Laurell at al., 2017) to improve the company’s outcomes to reach its objectives.
2.3 NE T W OR K TRAN SI TI ON S AND IN T ERN AT I ONA LI ZA T I ON SP E ED W ITH I N