SME internationalization modes in the German biotechnology industry: The influence of imitation, network position, and international experience

Abstract

In this article we reveal how network-enabled imitation processes impact young small-and medium-sized enterprises (SMEs) internationalization, and how a firm's network position as well as its experiential knowledge moderate imitative behavior in internationalization modes. Building on institutional, network, and organizational-learning theory, we suggest that firms imitate the internationalization modes of their peers in their network. Moreover, we argue that a firm's imitation propensity depends on two important boundary conditions: network position and past experience. Applying a longitudinal event history analysis to analyze the complete population of 977 German biotechnology firms between 1996 and 2012 largely supports our hypotheses. Our findings reveal that firms imitate the internationalization modes of their peers in a precise manner. This implies that the imitation of others can initially serve as a presumably convenient low-risk shortcut to a planned or experience-driven internationalization process. Furthermore, our results confirm that this imitation process is channeled through formal network relations and that central network positions that are associated with superior information access, enhanced legitimacy, and status may promote deviating behavior. Acknowledging the interplay of different learning sources, our findings additionally show that initial internationalization mode choices of SMEs can have a lasting effect on subsequent internationalization behavior. Overall, our study contributes to a more nuanced view of imitative behavior of internationalizing SMEs and its boundary conditions, and highlights future research opportunities that exist for considering imitation and its implications in international business research.

Beyond categorization: New directions for theory development about entrepreneurial internationalization

“…There may also be variance with respect to perceptions of opportunities: the entrepreneurship literature points out that decision-makers perceive market opportunities imitatively or innovatively and this affects the way that a firm enters a market (Cliff, Jennings, & Greenwood, 2006). The reporting of imitative behavior in internationalization among resourceconstrained firms (e.g., Fernhaber & Li, 2010;Oehme & Bort, 2015) suggests that small and young firms may be able to pursue international opportunities in ways that do not require the highly innovative behavior and risk-taking attitudes that have been linked to internationalization in studies of entrepreneurial orientation (see Brouthers, Nakos, & Dimitratos, 2014;Covin & Miller, 2014).…”

A note on the revisited Uppsala internationalization process model – the implications of business networks and entrepreneurship

“…A common issue in the discussion of a firm's structural embeddedness is the advantage of open versus closed networks. (Burt 1992;Coleman 1988 (Walker, Kogut & Shan 1997;Oehme & Bort 2015). The advantage of closed networks, in contrast, is related to the social capital created in a close-knit network.…”

Alliance Portfolio Diversity and Innovation: The Interplay of Portfolio Coordination Capability and Proactive Partner Selection Capability

“…Prior research suggests that in technology‐intensive industries, such as biotechnology, a new patent is not only a revenue‐generating invention but also a signal of the firm's underlying technological capabilities, important for potential future alliance partners (Caner et al, ; Stuart et al, ). To address this issues, we used the information from our secondary longitudinal dataset on the complete population of German biotech firms from 1996 until 2012 (see Oehme and Bort () for details). In particular, we updated the dataset from Oehme and Bort () until 2015 and regressed the APD on subsequent innovation relationship while controlling for age, size, biotech‐type, received grants and the number of prior patent applications.…”

“…To address this issues, we used the information from our secondary longitudinal dataset on the complete population of German biotech firms from 1996 until 2012 (see Oehme and Bort () for details). In particular, we updated the dataset from Oehme and Bort () until 2015 and regressed the APD on subsequent innovation relationship while controlling for age, size, biotech‐type, received grants and the number of prior patent applications. Our results show a significant positive impact of APD on innovation.…”