Operating characteristics, risk, and performance of born‐global firms

Abstract

PurposeTo determine what characteristics distinguish firms that conduct international business within three years of going public and six years from founding, and how these firms perform.Design/methodology/approachA logistic regression analysis is used to identify characteristics that distinguish firms that are international at the time they go public, versus those that are not. The paper also assesses post‐IPO performance and apply multivariate analysis to determine how performance varies among these firms.FindingsCompared to firms of similar age who do not pursue rapid internationalization, born‐global firms are generally larger, more diversified, and have more venture capital backing. Their founders, board members and managers exhibit more international experience. The returns 12 and 18 months post‐IPO are significantly higher for born‐global firms than for a control sample of firms who do not engage in rapid internationalization. Furthermore, those born‐global firms with joint ventures or acquisitions in several countries perform better than those that only export within the first six years since their inception.Research limitations/implicationsManagerial implications include having a board of directors with sound international business experience as well as using a venture capital firm to provide monitoring and oversight of operations at home and in the foreign market.Originality/valueThis paper is original in that it is the first to provide a financial markets‐oriented empirical investigation of the “born‐global” phenomenon using a sample of newly public American firms.

Born global firms: The differences between their short- and long-term performance drivers

“…These have ignored BGs' unique characteristics (Gleason, Madura, & Wiggenhorn, 2006;Kuivalainen et al, 2007;Sapienza, Autio, George, & Zahra, 2006). First, BGs confront greater financial and operational risks than GGs, because they face both the traditional risks of internationalization and the uncertainty embodied in the introduction of new products (Knight & Cavusgil, 2004).…”

Opening the black box: a comparative case study on international prospectors

“…Previous empirical research on rapid outward internationalisers has centred its definitions on the dimensions of speed, intensity, and scope of internationalisation (e.g., McDougall and Oviatt, 1996;Ibeh, 2005;Knight and Cavusgil, 2005;Gleason et al, 2006;Gabrielsson et al, 2008). The speed of internationalisation essentially manifests itself when the first international market entry occurs, as well as in the scope and intensity of international activities.…”

The Relationsip Between Entrepreneur S Level of Perceived Business-Related Fear and Business Performance

“…This is an important criterion for performance and in the related literature; Knight and Cavusgil (2005) find that the earlier the firm internationalizes, the better its performance in foreign markets. A few studies have examined long run performance of born global firms comparing to others, although the results have been mixed, generally significant associations were found (Aspelund & Moen, 2005;Knight & Cavusgil, 2005;Gleason, Madura et al, 2006).…”

“…For instance; being burn global (Oviatt and McDougall defined born global companies that "from inception, seek to derive significant competitive advantage from the use of the resources and sales of outputs to multiple countries" (1994, p. 49) has been found in relation with performance (Aspelund & Moen, 2005;Knight & Cavusgil, 2005;Gleason, Madura et al, 2006). In addition to this, Harting (2005), along with several others, suggests that the knowledge and experience of the business owner are key human performance factors that have a positive effect on increasing the business success (Chowdhury & Lang, 1993;Cochran, 1981;Gaskill, Van Auken & Manning, 1993;Haswell & Holmes, 1989;Kennedy, Loutzenhiser & Chaney, 1979;Otterbourg, 1989;Worthington, 1984).…”