Early internationalizing firms' capabilities - Classification, configurations, and effects on international performance
Due to the COVID-19 crisis measures the PhD defence of Shuijing Jie will take place online in the presence of an invited audience.
The PhD defence can be followed by a live stream.
Shuijing Jie is a PhD student in the Department for Entrepreneurship, Strategy, and Innovation Management (NIKOS-ESIM). His supervisor is prof.dr. A.J. Groen from the Faculty of Behavioural, Management and Social Sciences (BMS).
Internationalization has been a beneficial strategic option for some young and entrepreneurial firms. However, these early internationalizing firms (EIFs) encounter specific challenges to engage in international competitions. These challenges relate to the liabilities of foreignness and outsidership, as well as EIFs’ smallness and newness. Scholars argue that EIFs can evade these challenges with their capabilities. Capabilities are firms’ learned and stable pattern of collective activities. Young firms employ capabilities to develop unique products for international markets, and adapt to dynamic international environment under conditions of resource deficiency to create competitive advantages.
However, the proliferation of capability-based research has caused an ambiguity in capabilities’ conceptualization. Such ambiguity hinders the development of capability research and provides vague practical implications. Furthermore, existing capability-based literature assumes that one specific capability can determine EIFs’ performance. In contrast, literature shows evidence that EIFs perform well in international markets with the combination of several capabilities, which implies capability configurations. This research aims to categorize the existing studied capabilities in EIFs research, and to provide suggestions on how EIFs can improve international performance through the combination of capabilities. Therefore, the research question that guides this research is: What capabilities do young entrepreneurial firms need and how do these firms configure capabilities to achieve high international performance?
This research consists of two systematic literature reviews and two empirical studies. The first literature review (Chapter 02) takes stock of existing EIFs literature regarding the context of China. It identifies several knowledge gaps comparing the Chinese EIFs literature with a general IE research framework. We found that the Chinese research cluster studied the antecedents, elements, and outcomes of early internationalization. Besides, these studies mainly focus on outcome-driven topics: the majority of these studies focus on analysing the influences from the elements (53.3%) and antecedents (22.2%) to outcomes. This literature review provides suggestions to fill the knowledge gaps and derives a research agenda.
The second literature review (Chapter 03) inventories the existing literature on the topic of capability-international performance in IE research. Based on which, this study provides a categorization model to classify studied capabilities relate to EIFs’ international performance. We found that, within these 73 specific capabilities have been studied capabilities, 41 of them deal with dynamic capabilities, and 13 of them deal with substantive capabilities. Most of the dynamic capabilities were related to international market observation and evaluation, while most of the substantive capabilities relate to international market operation. This review study contributes to the knowledge of capability-based perspective by providing the foundation of capability configurations.
The research setting for the first empirical study (Chapter 04) is the high-tech industry in China. This study adopts the set-theoretical perspective to study the capability configuration in Chinese EIFs. A survey is administered on the top management team to assess the capability level among 88 Chinese technology-based EIFs. The data is analyzed with fuzzy-set qualitative comparative analysis (fsQCA). This study has two significant findings. The first significant finding is that the dynamic bundle of capabilities contributes to EIFs’ international performance. The second significant finding is that we found several pathways to achieve high international performance in terms of capability configurations.
The research setting for the second empirical study (Chapter 05) is the undergraduates in the University of Twente in the Netherlands. This study applies the theory of planned behaviour framework to study the extent of individual capabilities influencing students’ international entrepreneurship intention. A questionnaire survey is conducted among 120 university students. Data is analysed using OLS regression. Results show that there are no significant direct effects from cultural intelligence and global mindset on international entrepreneurial intention. Moderation analyses suggest a negative, significant moderating effect of cultural intelligence on the relationship between personal attitude and international entrepreneurial intention, and on subjective norms and international entrepreneurial intention.
This dissertation extends and refines international entrepreneurship literature and capability-based literature in three ways. First, this research highlights the significant relevance of dynamic bundle of capabilities to EIFs’ international performance. Second, this research refines the capability-based literature by providing a capability categorization model. Moreover, this research lays a foundation for the configuration among capabilities. Third, this dissertation adds to the capability-based literature by adopting the set-theoretical perspective. Furthermore, equifinality in configurations of these capabilities highlights the causal complexity of capability-performance relationship in international entrepreneurship research, which has implications for future conceptual and empirical studies.
For practitioners, this dissertation provides suggestions on how to achieve high international performance through the configuration of capabilities. Two pathways of capability configuration are suggested. The first one is to combine at least two of the marketing, technological, and networking dynamic bundles. The second one is to build a strong dynamic bundle of international networking capabilities, however, with reliable big foreign customers. Technology-based EIFs are suggested to invest in the development of international marketing and international networking capabilities to build corresponding dynamic bundles.