Benjamin M. Oviatt

Explaining the formation of international new ventures: The limits of theories from international business research

Examines the formation process of international new ventures (INVs)--i.e., firms that are international from the time of their formation. It is discovered that none of the existing theories from the field of international business explain the formation process because they focus on firm-level analysis of large, mature firms. An alternative formation process for international startups is proposed that identifies the specific characteristics of entrepreneurs and their social network of business alliances that makes them ideally suited for the international market. Data were gathered from twenty-four case studies of international new ventures identified through business press articles and an iterative networking process. The investigation involved interviews and analysis of documents and physical artifacts. Findings demonstrate that founders of INVs are more alert to the possibilities from different national markets due to the competencies developed from earlier activities, and only someone with these particular competencies is capable of combining the necessary resources across national borders to start an international business. Also, access to exceptional international funding networks is a major factor inducing these entrepreneurs to compete internationally rather than just locally. In addition, international entrepreneurs have routines for managing multicultural workforces, coordinating resources from different nations, and simultaneously targeting customers located in multiple geographic locations. Finally, founders rely on trust developed through repeated interactions over time to diminish opportunistic behavior in hybrid partners. (SFL)

International Entrepreneurship: The Intersection of Two Research Paths

Reflecting the internationalization of the marketplace and the increasing prominence of entrepreneurial firms in the global economy, the research paths of international business and entrepreneurshi...

Defining International Entrepreneurship and Modeling the Speed of Internationalization

This article provides a reformulated definition of international entrepreneurship. Consistent with the new definition, a model is presented of how the speed of entrepreneurial internationalization is influenced by various forces. The model begins with an entrepreneurial opportunity and depicts the enabling forces of technology, the motivating forces of competition, the mediating perceptions of entrepreneurs, and the moderating forces of knowledge and networks that collectively determine the speed of internationalization.

New venture internationalization, strategic change, and performance: A follow-up study

Abstract Although many scholars, business experts, and government agencies enthusiastically advise all firms, including new and small ventures, to internationalize, such advice does not appear to be based on empirical evidence. Few researchers have empirically examined the link between new venture performance and the internationalization of new ventures. At best, the evidence suggests that there is no significant relationship. We used a sample of 62 U.S. new venture manufacturers in the computer and communications equipment industries during the late 1980s. These industries were purportedly globalizing and may have been leading other industries into increased international operations. We found that higher levels of internationalization (percentage of foreign sales to total venture sales) were associated with higher relative market share two years later. However, there was no significant direct relationship between percentage of international sales and subsequent return on investment (ROI). Perhaps international operations simply cost more than expected. Or perhaps, as MacMillan and Day (1987) found in their study of corporate ventures over a 4-year time period, increases in market share may be a prelude to higher ROI as scale benefits translate into higher profitability. However, the 2-year time period of our study may simply not be long enough for investments in higher market shares to produce improved profits. During the 2-year study period, many of the ventures changed their level of internationalization. Of the 36 ventures who were domestic (no international sales) in the prior study, 10 expanded into international markets over the 2 years. Of the 26 originally international ventures (international sales of at least 5%), half increased their percentage of international sales, nine reduced it, and four stayed the same. Whereas the average change in international sales percentage of the ventures was only 2.9 percentage points, the large standard deviation of 13.0 percentage points, and the leptokurtic distribution (9.2) reflected the dramatic changes made by some of the ventures. Using subgroup analysis we examined these changes in percentage of international sales in conjunction with changes in strategies and performance. Ventures that had increased international sales, relative to those that had not, exhibited more positive associations between the degree of strategic change and performance as measured in terms of both relative market share and ROI. Increased international sales in technology-based new ventures seems to require simultaneous strategic changes in order to positively impact venture performance. This study is a follow-up to McDougalls (1989) finding that technology-based new ventures that had sales in foreign markets had significantly different strategies than similar ventures that sold their products only domestically. The current study enriches the previous findings by adding consideration of (1) changes in degree of internationalization, (2) changes in strategy, and (3) venture performance. Although we found no performance penalty associated with increasing international sales alone, indiscriminant advice for new ventures to sell in foreign markets without other supporting strategic actions is inconsistent with our findings. Internationalization, alone, did not lead to increased profitability. Entrepreneurs of young technology-based firms who are considering internationalization should take heed of our results. Internationalization of sales does not appear to be a simple matter of applying established strategies and procedures developed for a domestic arena. Successful internationalization appears to require changes in the ventures strategy as well.

How New Ventures Exploit Trade-Offs Among International Risk Factors: Lessons For The Accelerated Internationization Of The 21St Century

The Organisation for Economic Co-operation and Development predicts that the internationalization of businesses will accelerate in the 21st century. Our study examined how the risks of accelerated ...

A Comparison of International and Domestic New Ventures

Differences between international new ventures (INVs) and domestic new ventures (DNVs) were examined using a sample of 214 IPO new ventures (ventures 6 years old or less). INVs were found to be significantly different on the basis of their entrepreneurial team experience, strategy, and industry structure. Specifically, the entrepreneurial team of INVs exhibited higher levels of previous international and industry experience. The strategies of INVs were more aggressive, and they operated in more channels of distribution than did DNVs. INVs competed on the basis of differentiation, placing greater emphasis on product innovation, quality, service, and marketing as strategic weapons. In addition, INVs were more likely than DNVs to operate in industries characterized by a high degree of global integration.

Performance of Acquisitions of Distressed Firms

In 51 acquisitions of financially distressed firms, related business combinations in which the acquirers had prior acquisition experience performed best. However, business relatedness and acquisition experience had no effect on performance in a control group of 46 acquisitions of firms that were not distressed. The results imply that tacit knowledge about the acquisition process and about how to integrate and manage the assets of distressed firms may be keys to their successful acquisition.

Exploring the Role of Industry Structure in New Venture Internationalization

While we have gained considerable knowledge since the late 1980s regarding the phenomena of international new ventures, less is known about the influence of industry structure on these ventures. In the present paper, we draw on literature from industrial economics, international business and entrepreneurship to identify industry structure variables that fit within the theoretical framework of international new ventures. We then offer propositions as to how the identified industry structure variables individually and jointly influence the likelihood of new venture internationalization.

Service Content and the Internationalization of Young Ventures: An Empirical Test

Young ventures are becoming increasingly sophisticated about internationalizing their firms. However, this article suggests that young ventures may be overlooking the influence of service content on internationalization. This research argues and tests the proposal that service content is a critical variable influencing both the propensity of young ventures to internationalize and their location decisions. Employing a sample of 190 U.S.–based firms, this study measures the service content characterizing a ventures output, and found (1) the service content of the outputs of international young ventures is significantly different than the service content of domestic young ventures; and (2) the service content of the outputs of international young ventures is significantly different in different overseas locations.

THE INTERNATIONALIZATION OF NEW VENTURES: A RISK MANAGEMENT MODEL

Yves Doz, Jose Santos, and Peter Williamson’s (2001) book about metanational processes emphasizes entrepreneurial behavior and briefly considers what they call metanational upstarts. We extend their exploration in this article through our focus on the rapid internationalization of new ventures. We present a multilevel model of new venture internationalization that highlights the importance of managing risk. The model specifies relationships between the general environment and venture entrepreneurs that are mediated by industry conditions, and relationships between industry conditions and the venture that are mediated by the decisions and actions of entrepreneurs. Complex interactions and simultaneous relationships are described among the entrepreneurs, the venture, and venture internationalization.