International Knowledge, Reputation And New Venture Internationalization: The Impact Of Intangible Resources Attained Through Internal And External Sources

Abstract

International new ventures are an increasingly prevalent phenomenon. Of particular interest is the ability of these new ventures to develop and exploit a competitive advantage internationally. Recent research drawing on the resource-based view emphasizes how the internal resources of a new venture lead to the development of such a competitive advantage. While insightful, this research has tended to overlook those resources possessed vicariously by a new venture through external sources. Another shortfall of prior research is the lack of consideration for potential interdependencies among resources and the resulting implications on different aspects of new venture internationalization. These represent critical gaps in the literature that could potentially explain how new ventures overcome resource constraints related to the so-called liabilities of smallness and newness to pursue and benefit from what is otherwise considered to be a large scale strategy.

In this dissertation, I addressed these gaps by integrating the resource-based view with the economic geography and network literatures to consider the complex relationships between new venture internationalization and two internal sets of resources (the new venture's international knowledge and reputation) and external sets of resources (the potential international knowledge and reputation available through the new venture's headquartered location, venture capital firms, and alliance partners). A sample of 213 U.S.-based, high-technology new ventures that underwent an IPO between 1995 and 2000 was analyzed. The results underscore the importance of both internal and external sources of international knowledge for new venture internationalization, implying that new ventures internationalize not alone but as a player within their network. Although it was expected that new ventures with higher levels of international knowledge would develop the absorptive capacity to more effectively exploit and benefit from the resources available externally, the opposite relationship was found. Thus, vicariously exploiting external resources illustrates one way internationalizing new ventures can compensate for internal resource gaps. While the main effects of reputation on new venture internationalization were not supported, the existence of two significant interactions suggests that this relationship may be more complex. The results of the study were fairly consistent across three measures of internationalization.