Home Country Institutions and International Entrepreneurship

Abstract

The extent of internationalization by early-stage entrepreneurial firms may depend upon home country institutional conditions. Using insights from institutional theory, this chapter suggests that national-level institutional conditions facilitate or constrain the efforts made by early-stage entrepreneurs to internationalize. Given the strong linkages between entrepreneurs and the enterprises they drive, the multi-level framework proposed in this study suggests that a strong national system of innovation and better regulatory quality, which supports early internationalization by new entrepreneurial firms. Smaller domestic markets induce such firms to explore overseas markets for their products. The framework also suggests that a strong regulatory environment positively moderates the effects of national innovation systems and domestic market size on the extent of early internationalization. While implications for the internationalization process are discussed, specific reference to the importance of policy to support internationalization by early entrepreneurial firms is made.