Regulatory environments and the location decision: evidence from the early foreign market entries of new-technology-based firms

Régis Coeurderoy and Gordon Murray
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Régis Coeurderoy: CRECIS, Louvain School of Management, Université catholique de Louvain, Louvain- La-Neuve, Belgium
Gordon Murray: School of Business and Economics, University of Exeter, Exeter, England

Journal of International Business Studies, 2008, vol. 39, issue 4, 670-687

Abstract: New-technology-based firms (NTBFs) embarking on a strategy of rapid internationalisation choose foreign market entries that minimise transaction costs and the related risks of failure. Means to reduce the young firms' vulnerability to the appropriation of intellectual capital are particularly important influences on early foreign market choices. We explore the effect of the institutional dimension, specifically the national regulatory environment, on the location choices and the speed of internationalisation by British and German NTBFs. We provide evidence that entrepreneurial young firms choose to enter country markets offering better regulatory protection for their intellectual property. This decision is moderated by a home regulatory regime bias. In contrast, we observe that the speed of internationalisation is influenced less by the foreign regulatory regime and more by industry and firm characteristics. We also observe that managerial experience influences the location choices of NTBFs facing regulatory hazards. Journal of International Business Studies (2008) 39, 670–687. doi:10.1057/palgrave.jibs.8400369

Date: 2008
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