T1. International Entrepreneurship (IE): an introduction, framework and research agenda MAREB (Research on) International Entrepreneurship 2nd term 2014-2015 Prof.: Alex Rialp

Overview An introduction to the field of IE Definition and key concepts in IE (Evolving) Research domain in IE A framework for the study of SME and new venture internationalization Avenues for future research

Introduction to IE (i) IE as a field of research involves: Research into entrepreneurship in multiple countries (cross-country comparisons of the nature and extent of entreprenerurial activity) AND Research into cross-border entrepreneurship (international activites of SME and new ventures). Entrepreneurship, and cross-border entrepreneurship in particular, contributes to value or wealth creation both at the firm-level and at the economy-wide level. Considerable differences exist between countries in the extent to which entrepreneurship contributes positively to national economic development (generation of employment and innovation). Cross-border entrepreneurship activities (involvement of SMEs and new ventures in the international economy) allow small and new ventures to create value, to generate growth and to access new knowldege and technologies abroad. Definició Qualsevol individu, empresa u organització distinta del venedor i comprador que permeti les transaccions entre ambdós

Introduction to IE (ii) Cross-border entrepreneurship has become a more widespread phenomenon in the past decades. A growing number of firms are undertaking international activities, not only large firms, but also (and increasingly) small and new ventures. Traditionally, firm were mainly internationalizing incrementally (from lower to higher levels of risk and commitment of resources in foreign markets) => Gradual internationalization (Johanson & Vahlne, 1977) . Firms, even small and new ventures, are currently internationalizing at an earlier and/or faster pace. Nowadays the internationalization of SMEs and new ventures is both expanding and accelerating. This is due to: Reduction of transaction costs to undertake IB Establishment of regional economic cooperation agreements (i.e. UE) Technological advancements (IT) Falling transportation costs Enhanced information flows between countries Diminished barriers which facilitate new and small venture internationalization Definició Qualsevol individu, empresa u organització distinta del venedor i comprador que permeti les transaccions entre ambdós

IE: defining the key concepts (i) Entrepreneurship: “the creation of new economic activity” (Davidsson et al., 2006) Includes new venture creation activity, but also new economic activity of established firms. Defined in terms of opportunity recognition and exploitation. Key entrepreneurial features: innovativeness, proactiveness and risk-taking. Internationalization: “a process of increasing involvement in international operations.” (Welch and Luostarinen, 1988) May involve various modes or activities (inward modes, outward modes and linked modes). Often viewed as a process-based activity that is dynamic and evolutionary in time (process or stage theory of internationalization). Offers potential for organizational learning: about foreign markets, technologies, and new ways of doing things. Is “entrepreneurial”. Definició Qualsevol individu, empresa u organització distinta del venedor i comprador que permeti les transaccions entre ambdós

IE: defining the key concepts (ii) INV: “... a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and/or the sale of outputs in multiple countries” (Oviatt and McDougall, 1994:49). BGs: “business organizations that, from or near their founding, seek superior international business performance from the application of knowledge-based resources to the sale of outputs in multiple countries” (Knight & Cavusgil, 2004: 124). IE: “(...)THE DISCOVERY, ENACTMENT, EVALUATION, AND EXPLOITATION OF OPPORTUNITIES –ACROSS NATIONAL BORDERS- TO CREATE FUTURE GOODS AND SERVICES” (Oviatt & McDougall, 2005: 540). Includes both cross-country comparisons of entrepreneurship as well as SME and new venture internationalization. Firms that are international (with international operating domains) at or near inception –often 3 years or less- are commonly labeled INVs or BGs. There is evidence of widespread emergence of INVs/BGs in different countries around the globe. Definició Qualsevol individu, empresa u organització distinta del venedor i comprador que permeti les transaccions entre ambdós

Oviatt and McDougall (2005, ETP) IE: “…the discovery, enactment, evaluation, and exploitation of opportunities—across national borders—to create future goods and services” (p.540) McDougall and Oviatt (2000, AMJ) IE: “…a combination of innovative, proactive and risk-seeking behavior that crosses (or is compared across) national borders and is intended to create value in organizations.” (p. 903) Oviatt and McDougall (1994, JIBS) INV: business organizations “that, from inception, [seek] to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries” (p. 49) McDougall (1989, JBV)

IE evolving domain Contemporary IE is at the complex interface of ‘international’ + ‘entrepreneurship’ (+ ’strategic management’). The field of IE has gradually broadened from its early focus on small/new-young ventures internationalization (international start-ups, BGs or INVs) to curently include the international behavior of larger, more established, and even mature firms also developing international entrepreneurial ventures/business projects (international corporate entrepreneurship) (Zahra 2005). Also found in the domain of IE are comparisons of entrepreneurial behavior in multiple countries/cultures and institutional settings (see Coviello and Jones 2004; Oviatt and McDougall 2005).

The research domain of IE: at the intersection between IB and E Entrepreneurship (in general) Cross-border entrepreneurship (internationalization of entrepreneurial new ventures/SMEs) SCOPE Multiple-country/ies I: Cross-country entrepreneurship : Determinants and economic consequences of levels of entrepreneurship measured across countries (international comparisons of entrepreneurship in multiple countries). II: Comparative international entrepreneurship: International comparisons of entrepreneurial internationalization across borders/countries (lacks further research: greatest opportunity window for future research). A single-country IV: Domestic entrepreneurship: determinants and consequences of entrepreneurship activity in one single country. III: Entrepreneurial internationalization: Determinants of entrepreneurial international activities at the micro-level, generally focusing on firms from only one country.

Antecedents and outcomes of cross-border entrepreneurship (SME and new venture internationalization) SMEs and young/new ventures are typically more resource-constrained than larger firms (liabilities of smallness). Are also more likely to suffer from liabilities of newness and liabilities of foreignness as compared to larger firms (but learning advantages of newness?). Key role of the owner-manager in SME and/or new venture internationalization. Diminishing relevance of the stage theory (gradual internationalization process long after domestic establishment) in a world in which even new and small firms are internationalizing earlier and at a faster pace. Antecedents and outcomes (faciliting and inhibiting forces) of cross-border entrepreneurship are both divided into 3 broad subcategories: Individual-/entrepreneur-specific factors Firm-specific factors Environment-specific factors It is unclear yet to what extent the determinants for new venture internationalization differ from those of SME internationalization. Definició Qualsevol individu, empresa u organització distinta del venedor i comprador que permeti les transaccions entre ambdós

Antecedents and outcomes of cross-border entrepreneurship (Hessels, 2008) Individual-specific (e.g. demographics, knowledge, experience) Firm-specific (e.g. firm size, age, resource base) Environment-specific (e.g. home/host market characteristics, policy) Cross border entrepreneurship Individual-level (e.g. human capital, social capital) Firm-level (e.g. profits, employment, innovation) Macro-level (e.g. employment, innovation, economic development and growth)

Key dimensions, phases and processes in IE (Zucchella et al., 2007) Key actors: entrepreneurs-managers (global mindset) Key phases: exploration, assessment and exploitation of international opportunities Key processes/structures: social and inter-organizational networks, business modelling (internationally/globally scalable)

Research agenda: Avenues for future research Direct and indirect effects of small and new ventures’ international operations on firm-level economic performance (growth and profitability) and macro-economic development (innovation, employment growth, knowledge spillovers, competitiveness). Innovativeness as both an antecedent and an outcome effect of a firm’s internationalization (two side linkages innovation-internationalization). The role of formal and informal institutions (labor market, educational or capital market arrangements), their interrelationships and their impact (enabling or constraining) upon founder-level and firm-level internationalization. Also, entrepreneurs and ventures can shape the institutional environment. How can resource-constrained SMEs and new ventures create value and be able to access resources (e.g. skilled human capital, knowledge and new technologies) through international networking activities? International SMEs and new ventures mainly but not only export. How does firm-level internationalization process start and develop? How are the various modes/activities related? Do they complement each other? Adding a perspective on cross-border activities researching on entrepreneurship in multiple countries and a multiple country perspective to research on cross-border entrepreneurship. Definició Qualsevol individu, empresa u organització distinta del venedor i comprador que permeti les transaccions entre ambdós