Born globals from emerging economies: Reconciling early exporting with theories of internationalization

Abstract

AbstractResearch SummaryWhat explains born global firms who internationalize very early through exports, when theories of internationalization recommend they focus on domestic markets first? While prior research suggests a number of factors that enable exporting by new ventures, empirical tests of these theories have not evaluated if these factors uniquely explain new venture exporting. We propose and empirically test hypotheses that exporting by young (relative to established) emerging‐economy firms increases when they tap into the drivers of modern globalization (Internet technologies, global talent flows) and overcome home‐country institutional constraints (government inefficiencies, location), all of which have bigger impacts on exporting by young firms than established ones. Understanding these unique drivers of born global emerging‐economy firms is critical for reconciling this phenomenon with traditional theories of firm internationalization.Managerial SummaryOur research finds that exporting by young firms are enabled to a greater extent (than established firms) when they use Internet technologies and tap into mobile talent (such as cross‐national entrepreneurs and leaders with international experience), which helps to overcome key constraints in tapping into international markets. We also found that young firms overcome home‐country institutional and infrastructure deficiencies in emerging economies, specifically, by receiving efficient government services and strategically locating in well‐resourced centers such as capital cities, which helps them more in exporting as compared to established firms. Our findings help to explain the modern phenomenon of “born global” firms, who have broken away from the traditional path of focusing first on domestic markets and then engaging in incremental international expansion.A video abstract is available at https://youtu.be/QPIR0CRazgw.