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Born Local: Two Avenues to Internationalization

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Author Info
Zoltan J. Acs (School of Public Policy, George Mason University, Fairfax, Virginia, USA; Max Planck Institute of Economics, Jena, Germany)
Siri Terjesen () (Brisbane Graduate School of Business, Queensland University of Technology; Max Planck Institute of Economics, Jena, Germany)

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Abstract

Are firms born Global? Because knowledge spillovers that lead to new venture creation are geographically constrained we believe that firms are born local. It follows that the decision to create sustainable new ventures is independent from the decision to internationalize, even if that is the ultimate goal of the firm. We explore two avenues to internationalize new ventures, a direct path described in much of the extant literature and an intermediated one. New ventures face high entry barriers and intellectual property rights protection to internationalization, which are circumvented by intermediating activities using existing multinational enterprises as facilitators of internationalization. However, new ventures using the intermediated mode of internationalization face transaction costs and rent extraction from multinational enterprises. Therefore, sustainable new ventures face a strategic decision on how to internationalize.

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Publisher Info
Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek in its series Jena Economic Research Papers in Economics with number 2007-022.

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Date of creation: 25 Jun 2007
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Handle: RePEc:jrp:jrpwrp:2007-022

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Related research
Keywords: International Entrepreneurship; Multinational Enterprises; Knowledge Spillovers; Intermediated Internationalization; International New Ventures; Foreign Direct Investment;

Find related papers by JEL classification:
L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
M16 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - International Business Administration

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Westhead, Paul & Wright, Mike & Ucbasaran, Deniz, 2001. "The internationalization of new and small firms: A resource-based view," Journal of Business Venturing, Elsevier, vol. 16(4), pages 333-358, July. [Downloadable!] (restricted)
  2. Peter J Buckley, 2002. "Is the International Business Research Agenda Running Out of Steam?," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 33(2), pages 365-373, June. [Downloadable!] (restricted)
  3. Fujita, Masataka, 1995. " Small and Medium-Sized Transnational Corporations: Trends and Patterns of Foreign Direct Investment," Small Business Economics, Springer, vol. 7(3), pages 183-204, June.
  4. Birkinshaw, Julian & Braunerhjelm, Pontus & Holm, Ulf & Terjesen, Siri, 2006. "Why Do Some Multinational Corporations Relocate Their Headquarters Overseas?," Working Paper Series in Economics and Institutions of Innovation 54, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies. [Downloadable!]
  5. Anselin, Luc & Varga, Attila & Acs, Zoltan, 1997. "Local Geographic Spillovers between University Research and High Technology Innovations," Journal of Urban Economics, Elsevier, vol. 42(3), pages 422-448, November. [Downloadable!] (restricted)
  6. Kuemmerle, Walter, 2002. "Home base and knowledge management in international ventures," Journal of Business Venturing, Elsevier, vol. 17(2), pages 99-122, March. [Downloadable!] (restricted)
  7. Keith D. Brouthers & Lance Eliot Brouthers, 2003. "Why Service and Manufacturing Entry Mode Choices Differ: The Influence of Transaction Cost Factors, Risk and Trust," Journal of Management Studies, Blackwell Publishing, vol. 40(5), pages 1179-1204, 07. [Downloadable!] (restricted)
  8. Alex Rialp & Josep Rialp & David Urbano & Yancy Vaillant, 2005. "The Born-Global Phenomenon: A Comparative Case Study Research," Journal of International Entrepreneurship, Springer, vol. 3(2), pages 133-171, June. [Downloadable!] (restricted)
  9. Bruce Kogut & Udo Zander, 1993. "Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 24(4), pages 625-645, December. [Downloadable!] (restricted)
  10. Alan M Rugman & Alain Verbeke, 2003. "Extending the theory of the multinational enterprise: internalization and strategic management perspectives," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 34(2), pages 125-137, March. [Downloadable!] (restricted)
  11. Zvi Griliches, 1979. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 92-116, Spring. [Downloadable!] (restricted)
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  12. Shaker A Zahra, 2005. "A theory of international new ventures: a decade of research," Journal of International Business Studies, Palgrave Macmillan Journals, vol. 36(1), pages 20-28, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Zoltan Acs & Colm O'Gorman & Laszlo Szerb & Siri Terjesen, 2006. "Could The Irish Miracle Be Repeated in Hungary?," Papers on Entrepreneurship, Growth and Public Policy 2005-33, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
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