Navigating liminality in new venture internationalization

Abstract

Prior research describes international expansion as a series of discrete steps and notes that taking them threatens new ventures' survival, especially due to unexpected setbacks. Seen through the lens of social science, the source of such threat becomes clearer. In this paper, we argue that internationalization in new ventures involves what social anthropologists call a liminal transition – a betwixt-and-between period lying between the intent to internationalize and the realization of a stable internationalized state. The ambiguous and transitory nature of this liminal transition has the potential to increase the odds of overreach (e.g. a high-cost market entry without sufficient resources). Avoiding the negative influence of liminality – and instead harnessing its positive effect – relies on three sources of support that we refer to as opportunity scaffolding: self-reflective learning, peer learning and consultative learning. We argue that entrepreneurs with personality profiles high in levels of core self-evaluation (CSE) are more likely to utilize the scaffolding like that available in business incubators effectively. This leads to the development of a more reflective mindset, making capability learning more likely, preventing decisions that lead to overreach and reducing the threat to INV survival. However we also strike a note of caution in that at excessive (hyper) levels of CSE, the internationalizing new venture could become the victim of hubris. Emboldened with unrealistically high self-confidence, hubristic entrepreneurs are more likely to rebuff use of scaffolding, leading to a more reactive mindset, increasing the probability of liminal overreach and threatening INV survival. Executive summaryInternationalization represents an important pathway to growth for new ventures. At the same time, the burden of internationalization is considerable since new ventures must learn new capabilities under severe resource constraints to succeed in international markets. Thus we have a tension: internationalization increases the odds of growing rapidly and lowers the odds of survival for new ventures. Therefore, it is important for new ventures' capability learning process to be effective through harnessing network ties and entrepreneurial cognition.However, although we know a lot about what makes international new ventures (INVs) successful, there is a surprising lack of detailed understanding of the transition that these firms make during the internationalization process. Becoming a stable INV involves making sense of new environments and improvising in the face of unexpected setbacks. Previous work has focused more on how INVs fare while pursuing identified opportunities during initial or post-entry internationalization but not as much on how they cope in the transition to becoming a stable INV over time.To address this deficiency we draw upon an underutilized theoretical lens from social anthropology: liminality. Liminality describes the “betwixt-and-between” condition that is experienced during a transition when one is no longer in the original state but hasn't quite reached the new one. This perspective draws attention to both a vulnerability and an opportunity that are simultaneously heightened during transitions: the novelty of the situation can be cognitively confounding and liberating. If a new venture's entrepreneur is overwhelmed by distorted thinking during this liminal period, he or she may lead the INV to take fatal missteps, including overreaching. On the other hand, if the confusion inherent in this process can be contained and the potential creativity of this stage harnessed, then new capabilities can be learned and the potentially treacherous liminal period successfully navigated. Thus liminality theory helps to distinguish between measured and reckless improvisation.Liminal theory also helps us to identify opportunity scaffolding as an important way of avoiding liminality's negative effects by facilitating reflective learning, peer learning and consultative learning in conjunction with mentors. A practical manifestation of such support is the use of business incubators. Where these are not available, entrepreneurs may avail of mentors and peers through other means such as advisory boards or education. Furthermore, entrepreneurial personality in influences entrepreneurs' propensity for using such scaffolding: those with high levels of core self-evaluation (CSE) – confident of their abilities – are more likely to use scaffolding whereas those with low or excessive levels of CSE will tend to rebuff the use of scaffolding.Overall, our conceptualization complements previous work on capability learning with the notion of “transitioning capability” – which is the ability to harness the creativity of liminality while avoiding its confounding potential. This is a theoretical advance over how INV research views the capability learning process. And it has strong practical implications for how international entrepreneurs can thoughtfully navigate liminality, by taking advantage of opportunity scaffolding, being self-aware of limitations and strengths and avoiding overreach.