Strategic Commitment and Timing of Internationalization from Emerging Markets: Evidence from China, India, Mexico, and South Africa

Abstract

In a study of 257 new ventures from China, India, Mexico, and South Africa, we find support for the mediating effect of strategic early internationalization on international sales intensity. We argued that when new ventures from emerging markets internationalize early and with commitment, the legitimacy they acquire helps them overcome liabilities of newness and foreignness. We develop a typology of international new ventures that, based on strategic intent and timing of internationalization, distinguishes strategic early internationalizers from persistent, serendipitous, and long‐term internationalizers. We show that strategic early internationalization accounts for over half of the explained variance in international sales intensity and either fully or partially mediates the effects of managerial knowledge and market orientation on international sales intensity.

Notes

1 We want to be clear that strategic early internationalizers are not exclusively born globals. Strategic early internationalizers often establish domestic sales before venturing abroad. In the next section, we develop a typology of internationalizers and define each in turn. In the methods section, we give operational definitions.

2 In the methods section, we show how we operationalized early and late internationalization for new ventures using Oviatt and McDougall's (1994) definition.

3 For the response rate calculation, we removed from both the denominator (sampling frame) and the numerator (surveys received) those firms that did not fit the a priori stated parameters of the study. That is, the firms were more than 10 years old, were not independently owned, or did not currently have international sales. For example, for China, this calculation is (144 – 52)/(610 – 52) = 16.5 percent; in Mexico, similar calculation yields (100 – 38) / (105 – 38) = 92.5 percent; in South Africa (103 – 27) / (219 – 27) = 39 percent; and in India, (166 – 26) / (593 – 26) = 24.7 percent.

4 In the case of Mexico, we followed the same initial process; however, upon inspection, few of the firms listed fit our criteria. In doing this study, we had the opportunity to tap into an extensive, geographically and industrially broadly based network of internationalized new ventures. The size of the network, its reach, and its affiliation with a network of business schools across Mexico convinced us that this was a prudent route because it would both facilitate the identification of appropriate companies and increase the chances that respondents would disclose appropriate firm‐level information. Aulakh, Kotabe, and Teegen (2000) followed the same approach.

5 The Chinese sampling frame did not include apparel, crafts, and food industries and in order to maintain sample comparability across the four countries, we have excluded South African, Mexican, and Indian firms in apparel, crafts, and food industries. However, they remain in the response rate calculations for the study since they represent useable surveys that are appropriate to include in future analyses. In addition to firms in craft apparel and food, we removed from the sample Chinese firms that were either foreign majority owned or were publicly listed, and Indian firms and one Mexican firm that had missing values for our dependent variable.

6 In an additional analysis, we used R&D expenditure as a percentage of total sales as an indicator of the intensity of internal knowledge development (Cooper and Kleinschmidt 1985). Results were similar to those reported here.

7 We designed the sample to maximize the likelihood of identifying intentional early internationalizers; therefore, the results do not reflect the prevalence in the population. The relatively small variance in prevalence across the four countries implies that this phenomenon is neither isolated nor random.

Additional information

Notes on contributors

Eric Wood

1.

Eric Wood is professor in the Graduate School of Business at the University of Cape Town.

Susanna Khavul

2.

Susanna Khavul is assistant professor in the Department of Management at The University of Texas at Arlington.

Liliana Perez‐nordtvedt

3.

Liliana Perez‐Nordtvedt is associate professor in the Department of Management at The University of Texas at Arlington.

Srinivas Prakhya

4.

Srinivas Prakhya is associate professor in the Department of Marketing at the IIM—Bangalore.

Raul Velarde dabrowski

5.

Raul Velarde Dabrowski is professor of business policy at the IPADE, Mexico City.

Congcong Zheng

6.

Congcong Zheng is assistant professor in the Department of Management at San Diego State University.