Born Local: Two Avenues to Internationalization
AbstractAre 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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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-022.
Date of creation: 25 Jun 2007
Date of revision:
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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-30 (All new papers)
- NEP-BEC-2007-06-30 (Business Economics)
- NEP-CSE-2007-06-30 (Economics of Strategic Management)
- NEP-ENT-2007-06-30 (Entrepreneurship)
- NEP-KNM-2007-06-30 (Knowledge Management & Knowledge Economy)
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