Abstract

An increasing number of new and small firms sell their goods/services abroad (Reynolds, 1997). International new ventures (INVs) are described as ‘born global’ (Rennie, 1993), however this research is criticized for lacking theory (Keupp & Gassmann, 2009) and appropriate methodology (Coviello & Jones, 2004). The present study seeks to integrate IB theory and offer a better measure of INV internationalization. Although theoretically firms could sell their goods anywhere in the world, Ohmae (1985) argues that firms face a ‘global impasse’ in terms of difficulty replicating strong home region performance in other regions. The world is ‘semi-globalized’ due to costs emanating from cultural, administrative, geographic, and economic distances (Ghemewat, 2003). Regionalization is a form of semi-globalization. New/small firms face a liability of foreignness overseas and to overcome this, must possess some distinct FSAs. FSAs are unique capabilities that emerge from asset internalization (e.g. knowledge). FSAs are often location-bound and most easily transferred and exploited in similar institutional contexts, e.g. regionally rather than globally. New ventures face TCs both ex-ante (information search) and ex-post (monitoring) (Zacharakis, 1997). When internationalizing, TCs are higher due to complex coordination across diverse cultural and institutional environments (Goerzen & Beamish, 2003). Generally TCs are lower within a triad region due to geographic proximity, ease of communication, and more similar institutions. H1: New ventures are more likely to export to countries within their home region of the triad than to countries outside their home region. H2: The greater the INV’s home region orientation, the better the performance.

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