The internationalization and performance of INVs: Liability or learning advantages of newness?

Apalak Khatua (), Arindam Mondal () and Supria Dhanda ()
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Apalak Khatua: XLRI
Arindam Mondal: XLRI
Supria Dhanda: XLRI

Journal of International Entrepreneurship, 2024, vol. 22, issue 4, No 5, 514-540

Abstract: Abstract The extant literature on international new ventures (INVs) has primarily focused on the emergence of INVs, leaving a research gap regarding their performance consequences. INVs face challenges associated with foreignness and newness but also benefit from the learning advantages of newness, enabling them to adapt and perform better in new markets. Only a handful of studies probed the performance consequence of early internationalization by INVs, and empirical evidence has yielded inconclusive results. Existing literature also points out that emerging market firms encounter an additional hurdle due to their country of origin, but prior INV literature is mostly from advanced economies. Therefore, this study investigates whether early internationalization of emerging market INVs positively or negatively impacts their overall financial performance. Our findings, derived from the Indian context, reveal a nonlinear S-shaped relationship, whereby INVs initially experience a performance decline, followed by improvement, and ultimately a negative impact with excessive internationalization. Furthermore, we explore the contingent effect of the industry sector (manufacturing versus services) on performance and find that the S-shaped relationship is more accentuated for service sector INVs. In summary, this study contributes to our understanding of the internationalization-performance relationship for emerging market INVs, sheds light on the concept of learning advantages of newness, and examines the moderating effect of the industry sector.

Keywords: International new ventures; Emerging markets; Learning advantages of newness; Internationalization-performance relationship; S-shaped curve; Industry effects; India; Internationale Neugründungen; Schwellenländer; Lernvorteile der Neuheit; Internationalisierungs-Performance-Beziehungen; S-förmige Kurve; Brancheneffekte; Indien (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s10843-023-00345-2

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