Academic journal article Canadian Journal of Administrative Sciences

The Effect of Environmental Turbulence and Leader Characteristics on International Performance: Are Knowledge-Based Firms Different?

Academic journal article Canadian Journal of Administrative Sciences

The Effect of Environmental Turbulence and Leader Characteristics on International Performance: Are Knowledge-Based Firms Different?

Article excerpt

Abstract

The aim of this paper is to study the effect of environmental turbulence and leader characteristics on international performance. It is suggested that these phenomena explain the differences between knowledge-intensive companies and traditional industrial enterprises in the internationalisation process. The empirical part of the study is based on a large cross-industrial survey of Finnish small and medium-sized enterprises. Our results indicate that knowledge-intensive firms have experienced more intensive international growth than other firms. They are also operating in an environment in which technological turbulence is significantly higher, and their leaders put more emphasis on internationalization. Generally, environmental turbulence is a better indicator of international performance in knowledge-intensive firms than in others.

Resume

Dans le present article, nous etudions l'impact de la turbulence environnementale et des caracteristiques des leaders sur la performance internationale. On estime que ces phenomenes rendent compte des differences qui existent, dans le processus d'internationalisation, entre les entreprises a forte concentration de savoir et les entreprises industrielles traditionnelles. La partie empirique de l'etude s'appuie sur une grande enquete trans-industrielle de petites et moyennes entreprises finnoises. Nos resultats indiquent que les entreprises a forte concentration de savoir connaissent une croissance internationale plus grande que les autres entreprises. L'etude montre aussi que les entreprises a forte concentration de savoir operent dans un environnement marque par une plus grande turbulence technologique. Par ailleurs, leurs leaders mettent plus l'accent sur l'internationalisation. D'une facon generale, la turbulence environnementale permet de mieux apprecier la performance internationale dans les entreprises a forte concentration de savoir que dans d'autres entreprises.

Growth through internationalization is an important strategic option for small and medium-sized enterprises (SMEs). Since the late 1980s there has been a lot of published evidence and research on the internationalization of small, service, and knowledge-intensive firms (Bell, 1995; Coviello & Munro, 1997; Oviatt & McDougall, 1994, 1997). As Zahra, Ireland, and Hitt (2000) point out, prior studies (e.g., Brush & Vanderwerf, 1992) have shown that a combination of institutional (regulations, trade barriers), industry (competition), and organizational factors (resources and capabilities) increases international expansion by new venture firms.

As more and more firms are becoming international, often in an increasingly competitive environment, there is an growing need to identify factors that affect international performance. Despite the concentration on export performance in the literature, there is a scarcity of empirical studies on its relationship with a firm's external environment (Zahra, Neubaum, & Huse, 1997). The broad theoretical acceptance of this link (Madsen, 1994) has received mixed results in a limited number of empirical studies (Calof, 1994; Samiee & Walters, 1990). Walters and Samiee (1990) argue that this lack of consistency indicates the need to explore various contextual dimensions of export performance.

It has been argued that knowledge and ability to learn are the only keys to sustainable competitive advantage in a dynamic environment (Eisenhardt & Martin, 2000; Teece, 1998). By controlling several organizational variables, we examine the impact of environmental turbulence and leader mindset on international performance. Knowledge-intensity affects both of these issues.

The empirical part of this study is based on a cross-industrial survey of Finnish small and medium-sized enterprises. Our results indicate that knowledge-intensive firms have experienced more intensive international growth than others. They also operate in an environment in which technological turbulence is significantly higher and their leaders put more emphasis on internationalization. …

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