Venture adolescence

Abstract

PurposeThe purpose of this paper is to investigate how early internationalization and the use of generic strategies by new ventures affect the performance and internationalization efforts of those ventures as they move beyond the period of initiation.Design/methodology/approachA total of 37 venture capital backed new ventures within the USA were studied from 1991 to 1999. Annual 10‐K filings were used as sources for financial and management data about the new ventures. Industry data were collected from Dunn's Industry Ratios.FindingsResults suggest that ventures which internationalize early are more likely to continue internationalizing at a higher rate as they mature. Early internationalization did not affect sales growth or financial performance of new ventures in the period after initiation. In addition, generic strategies of these ventures affected internationalization and financial performance differently.Research limitations/implicationsThe importance of venture strategy and prior internationalization effort should be considered when investigating the internationalization patterns and outcomes of new ventures. The small size of the sample and the focus on a limited number of variables limit the generalizability of this study.Practical implicationsNew venture managers should consider the role of generic strategy and prior internationalization efforts when planning future internationalization.Originality/valueThis research provides an initial understanding of what happens to new ventures as they begin to mature and in particular, the effects of early generic strategy and internationalization on later venture performance are identified.