The determinants and performance of international new ventures: three studies

Abstract

New venture internationalization differs from that of large established firms and is an important research inquiry for international entrepreneurship. In the past 30 years, studies on new venture internationalization have proliferated but with fragmented nature. The first study reviews extant studies regarding conceptual and methodological developments of international new ventures (INVs) through content analysis of 74 influential works. Particularly, this study focuses on the determinants and performance of INVs at the entrepreneur, firm, and environment levels. We then identify significant gaps within this stream of research and suggest future research directions. The second study explores the effect of founding team ethnic composition on a new venture's internationalization strategic choice and then examines the consequent performance implications of INV strategy. A new venture with an ethnically diversified founding team could leverage international experience and network of each of its founders, thereby influencing its recognition of opportunities and access to resources to pursue internationalization strategy. Analyzing longitudinal data of 4,928 new ventures in Kauffman Firm Survey, our empirical results suggest that more immigrant entrepreneurs in a new venture's founding team are more likely to pursue INV strategy while more US citizen entrepreneurs in a founding team will pursue domestic new venture (DNV) strategy. Furthermore, an INV has higher revenues than a DNV but there is no difference in profits between them. The findings suggest that early internationalization is critical to immigrant-started new ventures through revenue growth. The third study explores the survival of ethnic new ventures, particularly testing the roles of INV and ethnic entrepreneurs' immigration status. New ventures are more likely to fail in early years of formation as they face liability of newness and smallness. We found that ethnic new ventures overall have a lower likelihood of survival compared with non-ethnic new ventures. But, ethnic new ventures could increase survival through INV strategy and immigration status. After ethnic entrepreneurs' naturalization, ethnic new ventures could achieve legitimacy, seeking further social capital in host country. Meanwhile, INV strategy could compensate for ethnic new venture's liability of ethnicity in host country. By incorporating diaspora and ethnic entrepreneurship literature, my dissertation focuses on the role of immigrants on early internationalization strategy and the effect of such strategy on performance and survival of their started new ventures, further advancing the understanding of international entrepreneurship.