Performance of New Ventures in Korea: Modeling Product and Process Improvements Based on Choice of Foreign Market Entry Mode

Abstract

The purpose of this study is to analyze if product or process improvement play mediating roles in the performance of new ventures in Korea from a resource-based view. It further examines whether there is a difference between the non-equity entry mode and equity entry mode of a foreign market. In accordance with this purpose, data were collected from surveys on venture enterprises in Korea and analysis was done using a structural equation model. The results of this study found that innovation (product and process improvement) is affected by internationalization, entrepreneurship, and hostile environment. SMEs and/or new ventures (NVs) tend to make efforts to improve their products in order to create competitive advantage in their target markets when they advance into new foreign markets. Entrepreneurship was verified to be a vital factor in innovation. The hostile environment of a foreign market was found to have a significant effect on process improvement. Analysis showed that innovation played a partial mediating role between independent variables and management performance. In addition, structural relationship among them exhibited partial differences depending on the foreign market entry mode.