In spite of the considerable interest in international new ventures since the late 1980s and the wealth of studies that have followed, the performance implications of early internationalization are less clear. To help untangle the inconsistency in previous performance studies, we build upon the conceptual paper by Sapienza, Auto, George and Zahra (2006) that suggests early internationalization will decrease the likelihood of survival and increase venture sales growth. We posit these relationships hold, but only for new ventures that are moderately to highly committed to internationalization. For ventures that are just dabbling in internationalization, perhaps in response to the pull from foreign customers or other institutional reasons, the relationships are the opposite.
Internationalization is therefore hypothesized to initially increase the likelihood of venture survival as the costs to configure the necessary resources are relatively low and can be done via exporting. Yet, at higher levels of internationalization the likelihood of survival decreases due to the high costs involved with the configuration of international routines and required resources.
The relationship between internationalization and venture sales growth is hypothesized to initially decrease, as the capabilities are not yet fully developed for pursuing foreign opportunities. However, at moderate to high levels of internationalization, these capabilities are able to give ventures the flexibility to pursue opportunities and positively impact sales growth.
Fernhaber, Stephanie A. and McDougall, Patricia P.
"UNTANGLING THE RELATIONSHIP BETWEEN NEW VENTURE INTERNATIONALIZATION AND PERFORMANCE (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 30
, Article 1.
Available at: http://digitalknowledge.babson.edu/fer/vol30/iss16/1