Sapienza, Autio, George, Zahra (2006)

Question 1

PTI (process theory of internationalization)

Answer 1

assumes internationalization as a process in which firms incrementally increase international involvement

Question 2

INV (International new venture theory)

Answer 2

specific new ventures do not follow incremental internationalization patterns. Some derive competitive advantages from the use of resources and the sale of outputs in multiple countries

Question 3

Propositions:

Answer 3

P1: internationalization decreases a firm’s probability of survival following initial foreign market entry.
P1a: the younger a firm starts going international, the more negative the effect of internationalization will be on the probability of the firm’s survival.
P1b: Managerial experience with internationalization decreases the negative effects of internationalization on the probability of firm survival
P1c: Fungibility of the firm’s resources decreases the negative effects of internationalization on the probability of firm survival

P2: internationalization generates new opportunities for a firm and increases its probability of growth following foreign market entry
P2a: the younger a firm starts going international, the more positive the effect of internationalization will be on the probability of the firm’s growth.
P2b: Managerial experience with internationalization increases the positive effects of internationalization on the probability of firm growth
P2c: Fungibility of the firm’s resources increases the positive effects of internationalization on the probability of firm growth

Question 4

Key message

Answer 4

• Internationalization frameworks emphasize the importance of experience, learning and knowledge
  o PTI: constraining factors (leading to gradual int)
  o INV: enablers for early int
• Differentiation between growth and survival outcomes of young firms int
  o Early: cost of developing necessary capabilities and the lack of positional advantage threaten firm survival
  o Later: Capabilities developed during the int process create an organizational imprint for adaptability and growth
• Early capability development and imprinting enable rapid growth:
  o Managerial experience substitutes for organizational experience

Early internationalization, if successful, improves the chances of building a great venture, however it’s very hard. Failures do provide learnings/experience before creating a winner.

Older firms are disadvantaged due to structural inertia and rigidities hampering learning and changing systems. Managerial experience however enhances venture growth prospects