Pre-entry internationalisation speed: Earliness

international events). International entrepreneurship research considers time as an explicit concept and pays more attention to the timing of internationalisation in relation to the date a firm was founded. Accordingly, these two research streams focus on different stages of the internationalisation process. Internationalisation process theory focuses more on the post-entry stage, while international entrepreneurship theory focuses on the pre-entry stage. In order to reconcile conflicting views regarding the performance effect of internationalisation speed, it is necessary to make a clear distinction between earliness and post-entry internationalisation speed.

2.3.2 Pre-entry internationalisation speed: Earliness

As the first temporal concept to capture the temporality of internationalisation in the literature of international entrepreneurship, earliness has received a significant amount of research attention. It is measured through the time elapsed between a firm’s foundation and its first international venture (Oviatt & McDougall, 2005c). The concept of earliness was proposed to distinguish a specific type of firm, usually labelled Born Global or International New Ventures’, from those that follow an incremental internationalisation process. International new ventures seek to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries right from their inception (Oviatt & McDougall, 2005c). Existing research on early internationalisation mainly focuses on its antecedents, while research on its performance implications is fragmented. More details are provided in the following two subsections.

Antecedents to early internationalisation

Early internationalisation is considered as an entrepreneurial process, which is inspired by entrepreneurs’ prior international experience (Autio et al., 2000; Oviatt &

McDougall, 2005b; Zucchella, Palamara, & Denicolai, 2007). Entrepreneurs’ prior experience may serve as a firm’s initial knowledge base, upon which the firm can leverage to efficiently absorb new knowledge (Bruneel, Yli-Renko, & Clarysse, 2010).

Thus, entrepreneurs’ prior international experience enhances a firm’s ability to learn (Cohen & Levinthal, 1990). In addition, entrepreneurs’ prior international experience affects their alertness to opportunities. The entrepreneurship literature suggests that

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opportunities exist due to information asymmetry. Discovery of opportunities is through recognition of the value of new information, rather than systematic searches (Shane, 2000). Entrepreneurs’ prior international experience affects their alertness to international opportunities through directing attention to specific fields (Evers &

O'Gorman, 2011). Moreover, entrepreneurs’ prior international experience influences their ability to assemble resources to explore opportunities in markets (Arentz et al., 2013; Shane, 2000). This is consistent with the findings of Helfat and Lieberman (2002) that entrepreneurs’ prior experience can reduce the gap between pre-entry resources and the required resources for foreign market entry, which subsequently affects the likelihood and success of entry.

Prior research also suggests that entrepreneurs’ social ties tend to contribute to early internationalisation. Entrepreneurs’ social ties provide information and resources that are necessary for market entry, thereby reducing entrepreneurs’ concern about feasibility and desirability of market entry and accelerating the entry process (Domurath

& Patzelt, 2016). The more heterogeneous entrepreneurs’ social ties, the more diverse information about foreign markets can be acquired through networks, and the more likely entrepreneurs will initiate early internationalisation (Lans, Blok, & Gulikers, 2015). In addition, with the help of entrepreneurs’ social ties, early internationalisers are able to quickly and proactively build and exploit relationships with the right business partners (Johanson & Vahlne, 2009; Schwens & Kabst, 2009). First foreign market entry, especially at a young age, has inherent liabilities of foreignness and outsidership (Muzychenko & Liesch, 2015). Being embedded in networks increases the firm’s international exposure by providing opportunities for observing others in the field and imitating their international behaviours (Fernhaber & Li, 2013). Prior studies suggest that firms tend to follow their network relationships when entering foreign markets (Holm, Johanson, & Kao, 2015; Yu, Gilbert, & Oviatt, 2011) and even imitate the entry modes of the peers in their network (Oehme & Bort, 2015). Moreover, learning through observing the actions and results of others can be less costly and quicker in comparison to learning from one’s own experience (Casillas, Barbero, & Sapienza, 2015; Huber, 1991).

In addition, strong entrepreneurial orientation displayed by firms also stimulates early internationalisation (Knight & Cavusgil, 2004), since it empowers the firms with

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entrepreneurial capabilities to pursue opportunities in foreign markets (Brouthers, Nakos, & Dimitratos, 2015; Engelen, Gupta, Strenger, & Brettel, 2015) and balance the costs and risks associated with foreign market entry. Entrepreneurial orientation refers to a set of entrepreneurial behaviours characterised as being innovative, risk-taking and proactive (Dai, Maksimov, Gilbert, & Fernhaber, 2014). Innovation in technology and business model enhances the firm’s learning ability (Rhee, Park, & Lee, 2010), productivity (Siedschlag & Zhang, 2014), and subsequently the performance (Camisón

& Villar-López, 2014). Proactive firms are more likely to pursue first-mover advantages (Morgan, Anokhin, Kretinin, & Frishammar, 2015) and be more sensitive to changes in customer demands (Morris, Webb, & Franklin, 2011). Risk-taking propensity improves firms’ tolerance of risks and uncertainty, subsequently influencing firms’ commitment to international markets (Pérez-Luño, Wiklund, & Cabrera, 2011).

Performance implications of early internationalisation

The performance implications of early internationalisation has become a central topic in international entrepreneurship research (Oviatt & McDougall, 2005a; Zahra, 2005).

However, it is interesting to find that most studies applied the concept of earliness as a sampling criterion to identify their research targets and rarely considered it as an explicit variable in the modelling analysis of interest (Hilmersson et al., 2017; Zhou &

Wu, 2014). Moreover, the international entrepreneurship literature is inconclusive regarding the criteria for earliness (Baum et al., 2015), which hampers theoretical advancement in research on early internationalisation. The thresholds for early internationalisation vary extensively from one year, three years (Knight & Cavusgil, 2004), to six years (Fernhaber, Gilbert, & McDougall, 2008).

In order to explore the performance effect of being born global, some studies include the age at foreign entry as a variable in their models and test its role in heterogeneous samples including both Born global/International new venture and traditional/gradually internationalising firms. However, the findings remain inconclusive. Some researchers stated that early internationalisation positively contributes to firm performance (Zhou &

Wu, 2014). Early entry empowers firms with first- and fast- mover advantages in terms of choosing a good location, establishing a customer base that is unclaimed by competitors, and developing relationships with local suppliers (Autio et al., 2000; Lu &

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Beamish, 2006). In contrast, other studies argued for the wisdom of delaying internationalisation, which allows firms to assemble resources and experience (Khavul, Pérez-Nordtvedt, & Wood, 2010). Entry into a foreign market requires an irreversible commitment of resources. Early internationalising firms have to make decisions with a high level of uncertainty due to the limited information and learning opportunities (Sapienza et al., 2006). The success of early foreign market entry depends on the firm’s ability to balance the associated costs and benefits (Hawk, Pacheco-De-Almeida, &

Yeung, 2013), which is determined by the heterogeneous intrinsic resources and capabilities. The inconclusive results regarding the performance effect of early internationalisation echo theoretical conflicts between internationalisation process theory and international entrepreneurship research (Oviatt & McDougall, 2005a; Zahra, 2005). The internationalisation process theory argues for a slow and gradual internationalisation process because of its emphasis on path-dependent learning, while the international entrepreneurship research suggests that managerial prior experience, social and business ties, and international orientation can act as the alternatives to organisational learning that could be rather time-consuming.