The Impact of Home Country Determinants onthe Internationalization of New Ventures:A Review and Prospects

Abstract

Home country determinants are considered important driving factors pertaining to the internationalization of new ventures. Prior research on how home country environment influences the internationalization of new ventures has identified a number of challenges faced by the literature of international new ventures. This stream of research has enriched the body of knowledge for international entrepreneurship literature to a great extent. Our study provides a systematic review on the literature addressing the phenomenon of international new ventures and born global firms from a home country perspective. Our framework considers three sets of home country factors – network, industrial, and institutional. We introduce the effects of domestic business networks, social networks and institutional networks on the international behavior and performance of international new ventures. We emphasize the role of different characteristics of the whole domestic industrial environment and specific industrial clusters using an industry-based view. Also, formal and informal domestic institutions and how they enable new ventures to expand to international markets are discussed. By reviewing the relevant studies published in leading journals in the past two decades, we offer new insights of the three mechanisms（escape, capability building and organizational learning）as building blocks for the internationalization of new ventures. Each set of home country factors（network, industrial and institutional）and their mechanisms are discussed respectively. We draw the conclusion that the role of country origin and interaction or substitute effects of existing mechanisms are understudied, and a cognitive perspective could also be adopted in future research considering the effects of home country determinants. Our review presents critical implications for future research directions in international entrepreneurship.