Internationalize to live: a study of the post-internationalization survival of new ventures

Abstract

Despite a growing number of studies on the survival of new ventures who pursue an international entry strategy, research in this area is not yet conclusive. One line of argument tells a story of unprepared novices making a risky move, and thus predicts negative consequences. Another line of argument tells a story of prepared entrepreneurs making a strategic decision, and thus predicts positive consequences. The problem of estimating the true effect involves an important endogeneity problem that can only be overcome by accounting for the fact that new ventures self-select into internationalization. The goal of this research is to add to the post-internationalization survival literature by accounting for this selfselection using an endogenous switching model in a potential outcomes or counterfactual inference approach. Leveraging a panel of US new ventures from the Kauffman Firm Survey, our results paint a picture more in line with the preparedness logic of new venture internationalization. After controlling for this self-selection we find a positive average treatment effect of internationalization on survival, and we find evidence that early internationalization is better for post-internationalization survival than late internationalization. We argue that these results suggest that the new theories of new venture internationalization needs to be further unchained from the process theories of internationalization.

The determinants of international new venture performance: a review and future research agenda

“…early internationalization, born-global and born-regional strategies) on INV performance. Most articles argued that different types of internationalization modes play rather different roles in INV performance (Choquette et al , 2017; Fariborzi and Keyhani, 2018; Fernhaber and Li, 2010; Jiang et al , 2016; Li et al , 2012; Puig et al , 2014; Sapienza et al , 2006). However, after strategy endogeneity is considered, the performance differences of these internationalization modes are not obvious (Braunerhjelm and Halldin, 2019; Kuivalainen et al , 2007; Mudambi and Zahra, 2007; Sleuwaegen and Onkelinx, 2014; Sui and Baum, 2014).…”

New Venture Survival: A Review and Extension

“…2019). Diverging from these findings are those relating to internationalization strategies with positive (Fariborzi and Keyhani 2018; Joardar and Wu 2017; Puig et al . 2014), negative (Yu and Kim 2013) and insignificant (Westhead et al .…”

Internationalization strategies of hidden champions: lessons from Germany

“…We contribute to research on the role of SMEs in internationalization (Audretsch et al , 1999; Coviello and McAuley, 1999; Westhead et al , 2001; Francioni et al , 2016; Fariborzi and Keyhani, 2017) and, in particular, to the special case of the German Mittelstand model in achieving a strong and sustained economic performance through internationalization. It is not surprising that, subsequent to its recovery from the Second World War, German exports soared to unprecedented levels (Audretsch and Lehmann, 2016).…”