Academic journal article Irish Journal of Management

Why Do New Ventures Internationalise? A Review of the Literature of Factors That Influence New Venture Internationalisation

Academic journal article Irish Journal of Management

Why Do New Ventures Internationalise? A Review of the Literature of Factors That Influence New Venture Internationalisation

Article excerpt

ABSTRACT

This paper presents a review of the literature on internationalisation of new ventures, with particular focus on the factors explaining why new ventures internationalise at inception. The paper draws together findings from the most-cited publications most closely associated with factors explaining new venture internationalisation across various industry sectors. The paper draws on theoretical push and pull constructs to organise and classify the most recurrent findings across extant studies driving the early and rapid internationalisation of new firms. What emerges as central to understanding these firms is the role of the entrepreneur, who can act as a pivotal force in the decision-making process and who also represents an intermediating factor between push and pull forces in a new firm's decision to internationalise.

Key Words: international new ventures; international entrepreneurship; literature review

INTRODUCTION

The international landscape, once regarded as off-limits for new firms, is now becoming not only an option for some firms, but also a strategic route for survival (McDougall et al., 1994). The rapidly changing global business environment, global economic integration and advances in technology and communications have created unprecedented opportunities for small firms looking to extend their sales activities beyond the domestic market. This has been reflected not only in the large number of small- to medium-sized enterprises (SMEs) that have availed of international expansion in recent times but also in the number of firms - more commonly referred to as international new ventures (INVs) - that have internationalised and have engaged in international business from their inception (Autio et al., 2000; Oviatt and McDougall, 2005) . Many recent studies (Aspelund et al., 2007; Mudambi and Zahra, 2007) have used Oviatt and McDougall's (1994: 49) definition, describing USTVs as 'firms that seek internationalisation and derive at least 25% of their total sales from foreign markets in the first few years of operation'. Knight and Cavusgjl (1996: 11) conceptualise ESTVs as being 'small, technology-oriented companies that operate in international markets from the earliest days of their establishment'. It has been well documented in the empirical research that an increasing number of firms can be classified as ESTVs according to the above definitions. The most common denominator of all these various definitions in the literature is that the firm acquires significant export involvement early in its life cycle. An increasing number of firms can be classified as INVs, and although many researchers have given such firms many titles,1 in essence they refer to the same thing. The name ESTV has been adopted in this review.

There exist three published and comprehensive literature reviews on ESTVs; these are by Keupp and Gassmann (2009), Aspelund et al. (2007) and Rialp et al. (2005). Building on these works, this inquiry is more specific in its review. The focus of this research is to identify and review the factors influencing the firms' decision to internationalise at or near inception. Although noting the value of Oviatt and McDougall's (2005) paper, this review does not seek to measure the factors that regulate the speed of entrepreneurial internationalisation and country scope. Instead, it aims to synthesise findings from key published studies on ESTVs, specifically pertaining to factors influencing a new firm's decision to internationalise. Secondly, this review draws on constructs of push, pull and mediating forces of the entrepreneurial mindset (Etemad, 2004) to organise and underpin the key findings on extant ESTVs. The paper concludes by identifying some avenues for further research.

SYNTHESIS OF LITERATURE

An interesting and relevant research question is 'Why do some new firms choose to go international within a few years of starting up rather than to purely focus their efforts on home markets? …

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