Global before birth: A study of internationalization mindsets of entrepreneurs

ABSTRACT

Our research finds that even before a start-up has formed, a combination of the entrepreneur’s willingness and ability to internationalize determines the likelihood that an entrepreneur will in fact internationalize. Even before a venture is launched, entrepreneurs already have an internationalization mindset that influences their engagement in internationalization activities later on in the entrepreneurial process. Two hundred and thirteen early-stage entrepreneurs in a business accelerator participated in this research. Using intake data, we mapped their entrepreneurial internationalization mindset profiles. Two years after intake, we observed the actual internationalization behavior of the firms. We discuss the implications of our research for entrepreneurship policy makers, support organizations, business accelerators, and entrepreneurs.

KEYWORDS:

• Early internationalization
• entrepreneurship
• mindset

Introduction

Michael looked at the flyer again. He had an idea to start a business in the wind turbine industry, and he knew that there were wind turbines all over the world, not just in the Netherlands. So Michael knew that he wanted to internationalize his business and he had some idea of which countries he wanted to do business in; he knew he wanted to internationalize but did not know how to do so. Should he “seize his ambition” and join a start-up accelerator? Michael turned to his computer and began his application for an accelerator program dedicated to developing his business idea and his competencies as an entrepreneur.

Why do some entrepreneurs focus on local markets and others, like Michael, take their firms into foreign markets during the start-up phase? This question has attracted much attention from researchers (for example, Hughes et al., 2019) who typically refer to three types of explanations about internationalization intention and behavior.

1. Environmental factors are one of the reasons that researchers have used to explain internationalization activities. For example, pressures in current markets or other aspects of the current business context of an entrepreneur/firm can lead to internationalization (for example, Cesinger et al., 2012; Kamakura et al., 2012)

2. Characteristics of the firms, capabilities, and the resources, such as groundbreaking technologies (Frederiks et al., in press) that firms control, are also pointed to as factors affecting internationalization decisions (for example, Lin & Si, 2019; Monaghan et al., 2020).

3. A third explanation for internationalization activities are the characteristics of the entrepreneurs themselves. For instance, the entrepreneurs’ cognitive processes are likely determinants of a firm’s internationalization engagement (for example, Bringmann & Cleyn, 2018; Zahra et al., 2005).

However, even after a long history of research, we still do not know exactly which cognitive characteristics influence internationalization behavior. This hinders the development of ways of helping entrepreneurs to internationalize their businesses (for example, competencies-focused trainings, or building awareness of intention and motivations to internationalize).

First, we propose the existence of an internationalization mindset: the combination of individuals’ ability and willingness to internationalize at the prestart-up phase. Second, we propose that the internationalization mindset triggers actions toward different internationalization behaviors. To explore this, we first uncover different categories of internationalization mindsets by surveying entrepreneurs about their abilities and willingness to internationalize before the start-up phase. Then, we follow up with the entrepreneurs and their firms after 2 years and observe how different types of internationalization mindsets have led to later internationalization behaviors (or lack thereof).

Explaining differences in internationalization behavior

Our definition of the internationalization mindset stems from the way that the entrepreneurial mindset is defined: “ … the ability and willingness of individuals to rapidly sense, act, and mobilize in response to a judgmental decision under uncertainty about a possible opportunity for gain” (Shepherd et al., 2010, p. 62). Similar to general entrepreneurial activity, internationalization activities are also often made under conditions of uncertainty (Alimadadi et al., 2018) and mostly with the goal of financial gain. Additionally, the ability and willingness to internationalize are central factors of behavior. Therefore, we consider these to be key elements in the entrepreneurs’ internationalization mindset (Asadi, in press; Pulino, 2021).

In the early stages of a start-up, there is an overlap between the values and goals of the founders/owners/managers and those of their businesses; the entrepreneurs’ values and goals represent the intent behind firms’ behavior (Miller & Toulouse, 1986). Thus, the cognitive processes of the founder (Costa et al., 2016, 2018; Frederiks et al., 2019) may promote or hinder internationalization behaviors and decisions (Gupta & Govindarajan, 2002). For instance, when an entrepreneur shows a willingness to cooperate with others under informal agreements (the notion of self-commitment) and demonstrates trust, it is likely that this firm will engage in cooperative activities with other small and medium-sized enterprises (SMEs), especially in internationalization contexts (Fink & Kraus, 2007). Similarly, perceived risks, such as those related to location and distance of international markets, play an important role in entrepreneurs’ early assessment of risks linked to internationalizing (Kraus et al., 2015). These are among the prominent cognitive processes of the entrepreneur that are key to explaining internationalization behavior (for example, McDougall et al., 1994).

Since internationalization stems often from an intentional and planned decision (Krueger Jr. et al., 2000), we used the principles of intention–behavior theory (such as the theory of planned behavior (TPB; Ajzen, 1991) to formulate our notion of internationalization mindset. This theory asserts that the stronger an individual’s intention to engage in a certain behavior, the more likely they are to do it. In a way, intention is the best predictor of behavior, and intention is influenced by attitudes (the way individuals feel about a behavior), subjective norms (the way individuals perceive that relevant others think about the behavior), and PBC (individuals’ perceived ability to engage in the behavior; Ajzen, 1991). Some studies (for example, Sommer & Haug, 2010) demonstrate that this link between intention and behavior is crucial to a better understanding of how internationalization intentions are formed.

Of course, there are occasions when the decision to internationalize may not always be intentional and planned. Accidental or nonintentional internationalization can happen in some firms (Galkina & Chetty, 2015). For example, a firm that receives purchase requests from customers abroad that cause the firm to internationalize without a prior intention to do so (Hennart, 2014). However, we focus on instances where internationalization behavior is intentional (for example, Dasí et al., 2015), and rely on the principles of intention–behavior theory to conceptualize different internationalization mindsets and subsequent behaviors.

Willingness to internationalize

Willingness to internationalize refers to a combination of individuals’ attitudes, ambition, and intention to internationalize. It is important that internationalization is perceived as something desirable (Ajzen, 1991), for individuals to develop the intention to engage in it. Having a global mindset (Harveston, 2000) is a representation of this attitude, for example. Having the ambition to see the business grow internationally is an important element of intention as well (Hermans et al., 2015).

Ability to internationalize

The ability to internationalize refers to the perceived capability one has to participate in internationalization behavior. The notion of perceived behavior control (PBC) is important here: PBC refers to the perception individuals have about their capacity to engage in and succeed in a given action. In the case of internationalization, the perceived ability to identify opportunities to internationalize (Filser et al., 2020) and to be able to manage effectively the resources necessary to internationalize (Alayo et al., 2021) are particularly important.

Internationalization mindset and actual internationalization behavior

Following up on the interest in understanding the intention–behavior link (Tornikoski & Maalaoui, 2019), in our research we want to observe both the internationalization mindset before start-up (intention) and the internationalization activities 2 years later (behavior).

Methodology

Research approach

Following the approach by Khelil (2016), we developed a data-driven taxonomy based on empirical data of those cognitive antecedents of internationalization inspired by the components of TPB.

Sample

In line with earlier studies on antecedents of internationalization behavior (for example, Cumming et al., 2015), we collected data in a business accelerator in the Netherlands. Our sample consists of 213 entrepreneurs in the early stages of business development. Participants were on average 45 years old (min. 23 and max. 63 years), and they varied in their level of international experience (M = 3.32 international experiences; SD = 0.93). Approximately half of the participants were launching their venture alone, whereas the remainder worked with an entrepreneurial team. The firms were spread over 13 different main industry-classification categories.

Measures

To build the taxonomy, we used cognitive antecedent variables related to the willingness and ability to internationalize. We used data that were collected by the accelerator at two different time points: all variables, besides internationalization behavior, were collected when the entrepreneurs entered the accelerator program (t = 0 years), and internationalization behavior was collected 1 year after the entrepreneurs left the 1-year accelerator program (t = 2 years). Variables on which the taxonomy is based included Global MindSet, International Ambition (desire to have the business known worldwide), Intention to Internationalize, and PBC. The taxonomy was validated using the observed Internationalization Behavior of the firms 2 years after the entrepreneurs had first entered the accelerator. We controlled for firm size and international experience. (For additional detail concerning the measures used in the present study, see Costa et al., in press, on which this article is based.)

Results

A multiple correspondence analysis (MCA) (Ramos & Carvalho, 2011; Van de Geer, 1993a, 1993b) distinguished between three distinct entrepreneurial internationalization mindsets based on measures of Global Mindset, International Ambition, Intention to Internationalize, and PBC. Using the origin points of the two dimensions that emerged in the analysis, we found one dimension that captured willingness (intention, attitudes, and subjective norms) and a second that reflected ability (PBC, team size, and international experience). This resulted in four quadrants: low ability and low willingness (Quadrant 1); high ability and low willingness (Quadrant 2); low ability and high willingness (Quadrant 3); and high ability and high willingness (Quadrant 4) to internationalize. The data are plotted in these two dimensions as shown in Figure 1.

Figure 1. Internationalization mindsets.

Note. Figure adapted from Costa et al. (in press). For a full display of the analysis based on the MCA profiles, please refer to the original publication.

Entrepreneurs in the low ability and low willingness quadrant (Quadrant 1) are characterized by low PBC, little ambition to internationalize, and an unfavorable global mindset. We label this group “Localists.” Participants in the high ability and low willingness quadrant (Quadrant 2) are characterized by high PBC for economic management, risk taking, and opportunity recognition. Because this group includes entrepreneurs who indicated that they have the intention of having their company present in two countries, we decided to label this group of entrepreneurs “Incrementalists.” Because the categorical levels of the variables in each of the high willingness quadrants cluster around the ability dimension’s origin, the variables’ categorical levels cannot be distinguished clearly as either high ability or low ability. Hence, we clustered the variables’ categorical levels from Quadrants 3 and 4 as medium ability and high willingness to internationalize and view them as one distinctive entrepreneurial internationalization mindset. We label this group the “Globalists.”

We were able to collect internationalization behavior for 98 of 213 early-stage entrepreneurs after 2 years to test the predictive power of our taxonomy. Of these 98 firms, there were 14 Localists, 22 Incrementalists, and 62 Globalists (see Table 1). Entrepreneurs with a Globalist internationalization mindset were most likely to have internationalized after 2 years (81 percent had done so). In contrast, Localists had the lowest degree of internationalization behavior (43 percent). Fifty percent of the Incrementalists had internationalized 2 years later.

Table 1. Contingency table of entrepreneurial internationalization mindsets with international involvement.

	International involvement		No international involvement		Total
Globalists	50*	80.6 %	12	19.4 %	62
Incrementalists	11	50.0 %	11*	50.0 %	22
Localists	6	42.9 %	8	57.1 %	14
Total	67		31		98

Note. χ²(2, N = 98) = 11.97, p < .01, w = .35.

*Observed frequency is significantly greater than the expected frequency at the .05 level based on the z-scores.

Discussion

We developed a data-driven taxonomy of distinct internationalization mindsets of entrepreneurs based on cognitive characteristics of entrepreneurs that are known to influence internationalization behavior. Our goal was to better understand how cognitive factors in the early start-up stage influence start-up internationalization. We analyzed and tested the predictive abilities of this taxonomy of internationalization mindsets through the existing theoretical lens of the internationalization behaviors’ typology (that is, born globals, Uppsala model, and domestic firms). We demonstrated that distinct internationalization mindsets (that is, the willingness and ability to internationalize in the early start-up phase) predict different internationalization behaviors 2 years after having entered the accelerator. Through this process, we were able to identify three types of entrepreneurial internationalization mindsets: Localists, Incrementalists, and Globalists. These mindsets are characterized by different levels of ability and willingness to internationalize the start-up in an early phase.

We found the highest level of internationalization behavior for Globalists, followed by the Incrementalists, whereas the Localists showed the least internationalization behavior. To understand the results, we thought it would be useful to provide an example of each type of firm and how willingness and ability to internationalize played a role in the firm’s subsequent international expansion.¹

Localists. Marianne is an expert in building and restoration. Marianne saw a problem with short-term solutions to historical building preservation. She knew how to apply her results-based construction and restoration methods to really focus on what the client wants. Marianne said, “In the long term, result-based working clearly saves the client money … talk about a value proposition.” International expansion never crossed her mind. She was very focused on developing her ideas, getting organized, and working in the local/national market. Her first project after finishing the accelerator program was the maintenance and restoration of the typical T-shaped farms in the Netherlands. In terms of ability to internationalize, Marianne’s extensive knowledge and experience with Dutch historical maintenance and restoration had some potential to leverage across borders, but this was limited to nearby countries with similar architecture. Her willingness to internationalize and engage with international activities and other cultures was very low.

Incrementalists. Before entering the program, Raymond was willing to look beyond current borders if the opportunity made sense and he maintained control of his company. During the program, his coach told him that instead of trying to generate more revenue from current clients, he should expand his customer base. Something clicked and this made sense for Raymond. He started looking for international opportunities that were highly specialized and narrow—opportunities that made sense. His firm developed the technology for secure telephone and e-mail communication that meets requirements of specific countries. One of his clients in a nearby foreign market was a head of government. Raymond’s firm had the ability to internationalize through their specialized technology that met the strict requirements of the foreign market. He also had some willingness to internationalize and to engage with international activities and cultures to close markets.

Globalists. Francesco knew that when disasters happen, mobile networks get overloaded and emergency workers cannot communicate. Francesco and his colleagues wanted to change this. They knew this was an important problem as evidenced by what often happens during humanmade (for example, plant explosions) or natural disasters (for example, hurricanes). They thought the solution to this complex problem had to be simple and one that they could implement on a global scale. After going through the accelerator program, they were able to launch their company. Their solution uses their equipment to automatically switch overloaded networks to satellites during high demand periods and then automatically switch back to local when the demand is reduced. This effectively solved the problem and prevented communication blackouts. The ability to internationalize was at the heart of their simple but highly technical solution to a global problem. The willingness to internationalize and engage with international activities and cultures was at the heart of why Francesco entered the accelerator program.

When reviewing these cases, the differences between the types of entrepreneurs and the firms they established are very clear—ability and willingness to internationalize affect subsequent firm behavior.

Practical implications

Our study has implications for entrepreneurs, business accelerators, entrepreneurship support organizations, and entrepreneurship policy makers. First, for entrepreneurship policy makers, we believe that these results can be used to develop policies that take into account the different ways in which businesses can grow and internationalize. For policy makers, it is important to consider that not all entrepreneurs have the goal to internationalize their business, and the ones who do may not have the goal to internationalize their business from the outset. Localists are a very important part of the economic landscape, providing many jobs to local communities and providing solutions to local problems. However, our study shows that the entrepreneurs’ prestart-up internationalization mindset influences the internationalization decision and the extent to which the entrepreneur will internationalize. Therefore, entrepreneurship support organizations and policy makers should adjust their programs and policies so they are well-suited to the entrepreneurs’ preferences. This could be done, for example, by not always using internationalization as a success criterion for a business, or not requiring internationalization as a default assessment criterion in subsidies and grants. Rather, paying attention to the entrepreneurs’ preferences and internationalization mindsets can result in better support.

Second, for support organizations, we think that accelerators that have ambitions to launch high-growth firms need to be sensitive to entrepreneurial mindsets. Our model may serve as a selection tool to screen applicants that match a program’s goals. The results could also help staff understand what the applicants’ trajectories may be and specifically what kind of training or networking will be most useful to help them realize their ambitions. For example, Localists may benefit from receiving training and networking to develop the business within the country (McDonald, 2020). Incrementalists and Globalists, on the other hand, may benefit from receiving training about internationalization and international networking.

Third, entrepreneurs have a multitude of motivations to internationalize and grow their venture (for example, economies of scope, economies of scale), but staying local and small also has advantages (for example, focusing on a [geographical] niche, keeping all equity, maintaining decision power and freedom). However, if you are a Localist and you decide to internationalize, then you may need someone else on the team who has an internationalization mindset. For those that do choose to internationalize or have a mindset that supports internationalization, the way you think about your business now will affect where you get to when you launch your business. It may also benefit entrepreneurs to be conscious of their own internationalization preferences, as that may be helpful when they need to make decisions about their future internationalization activities. Not only willingness but also one’s internationalization ability is key to internationalization success. Therefore, entrepreneurs need to be aware of their internationalization skills and competencies and focus on improving these skills and competencies that are important for internationalization success.

On a final note, entrepreneurs may consider participating in accelerator programs to develop such competencies and to internationalize their businesses (Taufiq & Yesseleva-Pionka, 2021). More than 70 percent of the firms in our sample internationalized as compared to the 30 percent of Dutch SMEs that export and the 12 percent of Dutch SME companies that import (CBS, 2019). Although these numbers should be interpreted with caution due to potential selection effects and effects due to COVID-19 (Kahiya & Delaney, in press), the higher internationalization rates in our dataset suggest an effect of participating in an accelerator on internationalization behavior.

Conclusion

This study deepens our knowledge of the individual-level predictors and antecedents of internationalization behavior. We developed a taxonomy of entrepreneurial prestart-up internationalization mindsets based on different configurations of willingness and ability to internationalize and tested whether it is predictive of actual internationalization behavior 2 years later. Our study shows that individual-level internationalization variables that exist even before the venture is launched can predict internationalization behavior. Therefore, our study contributes to the literature in showing that internationalization behavior is not only the result of factors that are in existence at the time that the firm is established but also of individual-level factors that exist well before the venture has been launched. Our research has several important implications for entrepreneurs, business accelerators, entrepreneurship support organizations, and entrepreneurship policy makers.

Acknowledgment

This article is a JICSB Translation article of Costa S., Frederiks, A. J., Englis, P. D., Englis, B. G., & Groen, A. J. (in press). Pre-start-up internationalization mind-sets trigger action. Journal of Small Business Management. https://doi.org/10.1080/00472778.2022.2056607

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The examples provided herein are based on actual start-ups that participated in the accelerator program from where our data came. The identities of the entrepreneurs, their company names, and other details of their circumstances are disguised.