February 2014 IE Publications

In this paper we address three challenges. First, we discuss how international new ventures (INVs) are probably not explained by the Uppsala model as there is no time for learning about foreign markets in newly born and small firms. Only in the longer term can INVs develop experiential learning to overcome the liability of foreignness as they expand abroad. Second, we advance theoretically on previous research demonstrating that the multinationality-performance relationship of INVs follows a traditional S-shaped relationship, but they first experience a ‘born global illusion’ which leads to a non-traditional M curve. Third, using a panel data analysis for the period 1994-2008 we find empirically that Spanish INVs follow an inverted U curve in the very short term, where no learning takes place, but that experience gained over time yields an M-curve relationship once learning takes place.

This paper makes several contributions to the emerging literature on the post-entry behavior of international new ventures. Based on an extensive longitudinal data set, we investigate the dynamics of commitment, growth and survival of different types of newly internationalizing Belgian firms. Global start-ups have the highest initial and rapidly rising export commitment per market and are also more likely to continue exporting over time than geographically focused start-ups, and traditional staged exporters. However, global start-ups also display the highest failure rate. This high failure rate appears to result primarily from the ‘liability of newness’ and less from the added complexity associated with rapid and wide scope internationalization.