Transforming Emerging International Ventures into Major Competitors in Foreign Markets

Jun 20, 2014, 15:07 ET from American Marketing Association

CHICAGO, June 20, 2014 /PRNewswire-USNewswire/ -- This article identifies international learning effort as a key mechanism by which the entrepreneurial character of international young ventures can be converted into a competitive advantage in foreign markets, as well as the circumstances under which this conversion is more likely to occur.

The emergent phenomenon of early and rapid internationalization has received considerable attention since the mid-1990s, based on observations which many firms do international business at or near their founding. These international young ventures tend to be highly entrepreneurial and are well positioned to develop an organizational capacity for capitalizing opportunities abroad. However, the short organizational life, small size, resources constraints, and the pressure to learn quickly to survive are likely to also present challenges in a highly competitive global marketplace.  

The research findings of this study—which appear in the June 2014 issue of the American Marketing Association's Journal of International Marketing—indicate that to reap the benefits from their entrepreneurial posture in foreign markets, international young ventures must consider both the external context in which they compete and their internal organizational context, if the advantages of this posture are to outweigh the costs.

In particular, the research indicates that the performance benefits that entrepreneurial ventures enjoy through their international learning efforts are highest to the extent that the ventures' external competitive environment is more hostile—in which case undertaking complex and costly learning activities becomes more important—and when its managers maintain close relationships with one another, whereby foreign knowledge can be more effectively integrated in the venture. According to Dirk De Clercq and Lianxi Zhou, both professors at the Goodman School of Business at Brock University in Canada,  international new ventures should thus try to match their actual investments in learning activities with appropriate external and internal circumstances.

In sum, a venture's top management must make senior managers aware of the hostility that may characterize their competitive markets, which in turn should motivate these managers to leverage foreign knowledge acquired through intensive learning efforts into outcomes that benefit the entire venture. International ventures that exhibit an entrepreneurial posture can also benefit more from their international learning endeavors if they promote informal communication in their intra-firm exchanges. When managers share a wide set of foreign knowledge with one another through their close personal relationships, the contribution of their venture's entrepreneurial strategic posture to its performance increases dramatically.

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SOURCE American Marketing Association