Bachelor Thesis
A springboard to foreign markets
A multi-case study on Swedish international new ventures
Authors:
Sophie Furest
sf222mn@student.lnu.se Nathalie Tägt Ljungberg nt222bz@student.lnu.se Ann Kristin Van
av222gn@student.lnu.se Semester: VT17
Subject: International Business Level: Degree of Bachelor Course code: 2FE51E
Supervisor: Dr. Rosalina Torres Ortega Examiner: Dr. Susanne Sandberg
Abstract
Internationalization is a strategy which is regarded as a trend where firms expand their business globally to achieve competitive advantages, especially for firms with limited resources. International new ventures are firms that are international from inception, con- nected to them is a certain failure rate. Further, entrepreneurial orientation is seen as a strategy for firms to implement risks-taking attitudes, proactiveness and innovativeness within such firms. Different scholars also show the importance of strong personal and business networks for international new ventures. The three dimensions of international entrepreneurial orientation can aid a firm to prepare themselves to the international envi- ronment.
The purpose of this thesis is therefore to analyze the influence of international entrepre- neurial orientation and networks on the performance of international new ventures. How- ever, emphasis on specific kinds of networks or performance has been left out. The dif- ferent theories have been investigated separately and in correlation to each other to pre- sent what research has shown so far. To portray how the different theories are correlated a conceptual framework derived from the literature has been developed.
This research has been conducted following the abductive approach, since there is a short- age of research concerning the Swedish context and the combination of the three theories.
To enable the investigation of these relationships, semi-structured interviews with differ- ent Swedish international new ventures operating in different industries have been con- ducted. In order to be able to see similarities and differences between the cases a cross- case analysis has been applied.
One of the results of the study have found that the effect of networks on performance of international new ventures come in different forms. The findings also show that interna- tional entrepreneurial orientation has a mostly positive impact to different extends on performance. However, the outcomes in relation to international entrepreneurial orienta- tion have presented other factors, which are not included in the concept of international entrepreneurial orientation, having a positive impact on performance. The study under- lines the importance of having both constructs in order to enhance the performance of international new ventures.
Keywords: International New Ventures, International Entrepreneurial Orientation, Net- works, Performance, International Business, Entrepreneurial Orientation, Sweden, Small and medium enterprises, internationalization
Acknowledgments
We would like to express our most sincere gratitude to David Linell, Karin Horisaki, Stefan Bengtsson, Helen Van, Johan Malmquist and our two anonymous interviewees that were willing to participate in this study. The information you provided was invaluable to our study.
Additionally, we wish to thank, our supervisor, Dr. Rosalina Torres Ortega for her sup- port, help and guidance during the process. Further, we wish to forward our gratitude towards our examiner Dr. Susanne Sandberg, for her valuable inputs during the different seminars. Lastly, we would like to further thank our fellow students for the constructive criticism given at the oppositions, which enabled us to raise the quality of our thesis.
Kalmar, 2017
Sophie Furest Nathalie Tägt Ljungberg Ann Kristin Van
Contents
Introduction _______________________________________________________ 1 1.1. Background ___________________________________________________ 1 1.1.1. Internationalization __________________________________________ 1 1.1.2. International new ventures ____________________________________ 2 1.1.3. International Entrepreneurial orientation _________________________ 3 1.1.4. Networks __________________________________________________ 4 1.1.5. Performance _______________________________________________ 6 1.2. Problematization ________________________________________________ 7 1.3. Purpose ______________________________________________________ 11 1.4. Research questions _____________________________________________ 12 1.5. Delimitations _________________________________________________ 12 1.6. Outline ______________________________________________________ 13 Literature Review _________________________________________________ 14 2.1. International New Ventures ______________________________________ 14 2.1.1. Success factors for INVs _____________________________________ 14 2.1.2. Definition of international new ventures ________________________ 15 2.1.3. International new ventures theoretical framework _________________ 16 2.2. International Entrepreneurship ____________________________________ 17 2.2.1. EO and IEO _______________________________________________ 18 2.2.2. Composite qualities of EO/IEO _______________________________ 20 2.2.3. The importance of IEO for INVs ______________________________ 21 2.3. Networks ____________________________________________________ 22 2.3.1. The many definition of a network ______________________________ 22 2.3.2. The usage and significance of networks _________________________ 24 2.3.3. Networks and international new ventures ________________________ 26 2.4. Online Social networking ________________________________________ 29 2.5. Performance __________________________________________________ 30 2.5.1. The different measurements of performance _____________________ 30 2.5.2. Correlation between EO/ IEO and performance ___________________ 33 2.5.3. Correlation between networks and Performance: __________________ 34 2.6. Conceptual framework __________________________________________ 35 Methodology _____________________________________________________ 37 3.1. Research approach _____________________________________________ 37 3.1.1. Abductive approach ________________________________________ 37 3.2. Research methods ______________________________________________ 38 3.2.1. Qualitative data ____________________________________________ 38 3.3. Research design _______________________________________________ 40 3.3.1. Multiple Case studies _______________________________________ 41 3.3.2. Purposive sampling _________________________________________ 41
3.4. Data Collection ________________________________________________ 43 3.4.1. Semi- structured interviews __________________________________ 44 3.4.2. Transcription ______________________________________________ 45 3.5. Operationalization _____________________________________________ 46 3.6. Method of data analysis _________________________________________ 48 3.6.1. Cross-case analysis _________________________________________ 48 3.7. Quality of research _____________________________________________ 48 3.7.1. Reliability ________________________________________________ 48 3.7.2. Validity __________________________________________________ 49 3.8. Method criticism ______________________________________________ 50 3.9. Ethical considerations __________________________________________ 51 Empirical findings _________________________________________________ 52 4.1. Cases ________________________________________________________ 52 4.1.1. Divvit AB ________________________________________________ 52 4.1.2. Horisaki AB ______________________________________________ 52 4.1.3. Swecarb AB ______________________________________________ 52 4.1.4. Aimn Sportswear AB _______________________________________ 52 4.1.5. Addi AB _________________________________________________ 53 4.1.6. Company A _______________________________________________ 53 4.1.7. Company B _______________________________________________ 53 4.1. International New Ventures/Internationalization ______________________ 53 4.2. International Entrepreneurial Orientation ___________________________ 54 4.2.1. Proactiveness ______________________________________________ 54 4.2.2. Innovativeness _____________________________________________ 55 4.2.3. Risk-taking _______________________________________________ 55 4.2.4. Opportunities ______________________________________________ 56 4.2.5. Networks _________________________________________________ 57 4.3. Performance __________________________________________________ 60 Analysis _________________________________________________________ 62 5.1. International Entrepreneurial Orientation ___________________________ 62 5.1.1. Proactiveness ______________________________________________ 62 5.1.2. Risk-taking _______________________________________________ 63 5.1.3. Opportunities ______________________________________________ 64 5.1.4. Innovativeness _____________________________________________ 65 5.2. Networks ____________________________________________________ 66 5.3. Performance __________________________________________________ 71 5.3.1. EO and Performance ________________________________________ 71 5.3.2. Networks and Performance ___________________________________ 72 5.3.3. IEO, networks and performance _______________________________ 73
Conclusion _______________________________________________________ 74 6.1. Answering the research question __________________________________ 74 6.2. Managerial implication and recommendations _______________________ 76 6.3. Theoretical implications _________________________________________ 76 6.4. Limitation ____________________________________________________ 77 6.5. Further research _______________________________________________ 77 References _______________________________________________________ 78 7.1. Oral sources __________________________________________________ 78 7.2. Written sources ________________________________________________ 78 Appendix __________________________________________________________ I
Figure 1: Own Conceptual Framework ... 36 Table 1: Presentation of Cases, Own ... 43 Table 2: Operationalization Model, Own ... 47
Introduction
The following chapter presents and introduces the background of the chosen topic. It considers and exemplifies the topics and meaning of internationalization and interna- tional entrepreneurship. The chapter continues with highlighting the significance of small and medium sized enterprises (SMEs) in relevance to the economy. This will then be fol- lowed by an account of the problematization together with the addressed interest and gaps, from practical implications and the academic sphere. Lastly, the chapter will end with a summary of the purpose, research questions and the considered delimitations for the study.
1.1. Background
1.1.1. Internationalization
Internationalization is a strategy for companies who want to play a role on the global market (Businessgoon, 2017). Internationalization of firms can be seen as a process where the firms incrementally increase their involvement on the international market (Johanson
& Vahlne, 1977). Within this process several modes have been established on how firms are able to internationalize, amongst them are exporting and manufacturing subsidiaries for example (Melén & Nordman, 2009). In the article “Importance of internationalization for businesses: why this can’t be ignored?” Bahl (2015) explains that internationalization is regarded as one of the most promising trends as it offers countless of opportunities for start-ups. There is a likelihood for start-ups to face risks that are costly and harmful if it intends to expand internationally before the business model matures, however, the firm also risks wasting resources to stay competitive if the firm expands later (Bahl, 2015).
As explained by Karadag (2015) a substantial measure of the contribution to the economy is derived from SMEs. Additionally, SMEs are the force behind the evolution related to economic and social progress within a nation (Karadag, 2015). According to Karadag (2015) SMEs do not only contribute to advancements economically in a nation they are also responsible for developing and offering jobs which in turn reduce unemployment and poverty. Furthermore, they have the ability to be adjustable in entering smaller mar- kets or being able to withdraw if needed (Karadag, 2015). Even with that essentialness to an economy that SMEs contribute with, the concepts of SMEs and conducted research related to them is derived from an interest that has arrived as of late (Karadag, 2015).
Achtenhagen (2011) places emphasis on the importance of international trade for the Swedish national economy growth, yet the opportunity for internationalization is not uti- lized enough.
As an illustration, one can mention the fact that in countries that are members of the OECD more than 95 percent of companies can be placed within the framework labelled as SME (Karadag, 2015). As of late SMEs are regarded as the most essential aspect of an economy both for countries with a developing economy as the already developed (Kar- adag, 2015). This is also derived from the fact that the world today operates within a worldwide business environment and great technological progress (Karadag, 2015).
However, SMEs are not without their struggles (Karadag, 2015). Among them reasons such as not having a clear enough strategy, a lack of sufficient economic accuracy and faults relating to management can be found (Karadag, 2015). The most crucial aspect of not succeeding with your business is derived from insufficient regulation by the manage- ment in the company (Karadag, 2015). As emphasized by Persson and Broman (2012) the significance and substantiality of the state of the economy in Sweden, have come to depend more and more on SMEs. The rate of the level of employment is furthermore an added parameter to the essentialness derived from the companies (Persson & Broman, 2012). Statistics shows that 99.8 percent of all companies in Sweden are classified as SMEs, whereas 65,4 percent are employed within SMEs (EC Europe, 2016). Statistics also show that 16 percent of total SMEs in Sweden are operating internationally, in the field of export (Tillväxtverket, 2015).
1.1.2. International new ventures
International new ventures (INVs) are described as ventures that from the beginning re- gard the entire world as a marketplace and a source to admit resources (Andersson &
Berggren, 2016). Ripollés and Blesa (2012) exemplify INVs as new firms that interna- tionalize from the very inception, hence the interest for this phenomenon has been signif- icantly reflected within the field of international entrepreneurship. INVs have during re- cent decades attracted substantial interest among international business scholars (Anders- son, Everns & Kuivalainen, 2014). This venture has also been established by researchers to be a phenomenon, a growing and important one (Oviatt & McDougall, 1994; 2004).
Zettinig and Benson-Rea (2008) add further to the importance of INVs, as they are stating that this form of venture has attracted interest from different domains such as being ben- eficial of establishment of framework for international entrepreneurship. The authors also argue that INV represents a positive phenomenon emerging within globalization, and the consequential approach of developing insights that will influence strategic thinking for firms when they internationalize and provide new models for policy makers. INVs are significant in the global economy due to their organizational existence of being a business that from inception, seeks to gain substantial competitive advantage from utilizing re- sources and sales in multiple countries (Mudambi & Zahra, 2007; Oviatt & McDougall, 1994). INVs are however limited in resources due to the firm size and new establishment therefore, additional sources are needed in order to gain competitive advantage (Oviatt &
McDougall, 1994). Zahra (2005) underlines that INVs are recognized to have superior prominence in the economy of the world, the author continues to highlight the element that INVs are not obligated to own their assets to be able to internationalize. The neces- sities to achieve different resources that the INV do not own are abilities within these firms to acquire means to create value beyond its rivals (Zahra, 2005). INVs inimitable intangible resources are needed to be established and protected in order to create value (Zahra, 2005).
Global start-ups are the most significant manifestation when it comes to INVs (Oviatt &
McDougall, 2004). This type of venture is operating on a global basis as they sell their products where they have the greatest value; their organizational activities are therefore geographically unlimited (Oviatt & McDougall, 2004). Global start-ups may however be the most difficult INVs to improve because of the required skills to for instance, coordi- nate activities (Oviatt & McDougall, 2004). There is statistical evidence of high failure rate for start-ups, as much as 90 percent of all start-ups are prospected to fail (Leary, 2016). Compiled data of failed start-ups shows that their survival period is 20 months after acquired financial resources (CBinsights, 2017a). There are several reasons for why start-ups fail, there is however rarely one reason for the failure (CBinsights, 2017b). The most common reasons for the letdown are: no market need, met with financial shortcom- ings, poor management team, get outcompeted and no usage of networks or advisors (CBinsights, 2017b). International start-ups do not only need to consider these traps but also additional issues that rise if the firm is global (Leary, 2016). Leary (2016) emphasizes that it is getting less rare for start-ups to have a home base, the founders and actors might well be in different places due to today’s connected world. There are numerous benefits of being global, whether it is a team or idea; nonetheless there are several causes that may put global start-ups amongst the 90 percent of failed new ventures (Leary, 2016). One of the triggers for global start-ups failure is that these ventures need to authenticate their market two - three times more compared to other start-ups (Leary, 2016). Another reason is that the firm cannot measure on an international level, for example the start-ups over- estimate the international market and giving up control of the firm by handing it over to another actor abroad (Leary, 2016). The third cause is that global start-ups do not pivot based on the demands from the market, to change the firm to meet the market demands on an international basis can become an essential success factor for the new venture even though it is challenging (Leary, 2016).
1.1.3. International Entrepreneurial orientation
Entrepreneurial Orientation (EO) was first evaluated by Miller (1983) when analyzing the entrepreneurial activity of a firm. The three dimensions of EO are; risk-taking, proac- tiveness and innovativeness (Miller, 1983). In addition, Miller (1983) claims that these actions are usually undertaken by a central actor, the entrepreneur, or by different depart- ments within a firm. The author further highlights the importance of the process of entre- preneurship and the factors which advance or hinder it rather then who is the actor. EO can be divided into two categories namely firm and individual level (Joardar and Wu, 2011). However, the authors point out that current studies have not shown a clear distinc- tion between these two bases. Bolton and Lane (2012) argue that the three dimensions of EO can be discussed on a firm level, but are also applicable on an individual level, since the entrepreneur has those attributes.
These dimensions aid to prepare an enterprise to compete in a dynamic competitive envi- ronment and adapt quicker (Romero, Solìs & Monroy, 2014). Lumpkin and Dess (1996) state that EO aids to enter new markets by using processes, decision-making activities and practices. Covin and Miller (2013) state that international entrepreneurial orientation
(IEO) derives from EO. Knight (2001) defines IEO as something that shows aggressive- ness and proactiveness of an enterprise when venturing into international markets. Glavas and Mathews (2014) further argue that IEO enables businesses to pursue opportunities in an international environment. In addition, the authors state that IEO involves taking risks in and advantages of international environments. Covin and Miller (2013) state that IEO is a characteristic of international entrepreneurs, that drives them to penetrate foreign markets.
Kowalik, Danik and Sikora (2017) state that EO is positively related to learning and mar- keting capabilities of an owner or a manager of INVs. Knight and Cavusgil (2004) also argue that INV’s performance is influenced by EO and that this strategic orientation is important for their success in the foreign market, especially for smaller firms. Frishammar and Andersson (2008) stress that IEO is important for INVs since they should exploit the first-mover advantage to ensure success in an uncertain environment.
1.1.4. Networks
According to Costa, Breda, Costa and Miguéns (2008) the notion and theory of the phe- nomenon that is networking have its roots in research that emerged around the later stage of the 1950s and beginning of the 1960s. However, the greatest emphasis and interest connecting actions performed in a business sense with networks, surfaced in the latter state of the 1980s and the beginning of the 1990s (Costa et al. 2008). Around this time the topic attracted interest from the political sphere, economists, individuals who studied sociology, planners as well as persons working or studying geography (Costa et al. 2008).
The authors continue to explain that the importance of networks is realized within both the academic sphere as well as with practitioners. According to Casson (2010) the shapes and forms of networks come in various forms, the concept additionally plays a significant part related to the long set out to explain entrepreneurship. For entrepreneurship the net- works are a source on which one can capture information, so that one can uncover a chance to make a profit, this information can be derived from various sources (Casson, 2010). The author continues to explain that the notion and structure in which networks take shape varies, making networks complex. The several types of networks include var- ious dissimilar notions of relationships and embodying unlike features linked in various ways, it has been shown that several disciplines have labeled the identical concept, but have applied another name for it (Casson, 2010). The author explains that even though there are many different names mentioned, they all refer to the act of being connected (Casson, 2010).If one mentions the topic of who takes part in a network, the labels have for instance been nodes; additionally, it has been elements as well as points (Casson, 2010). The author continues with the explanation that the word vertices have also been applied to the concept. Casson (2010) continues to state that if one instead mentions the connections amongst them, the labels have instead been for instance linkages, it has also been paths as well as edges to name a few.
As explained by Coviello (2006) to a broad notion networks in their shape are firmly known as influential given the process of internationalizing. Symeonidou, Bruneel and Autio (2017) underline the need of network relationships especially for internationalizing ventures, which need to have networks abroad which will influence the firm’s strategic decisions. Further, the authors state that it is important to build diverse networks abroad, for instance with customers, competitors, governments and suppliers. Dubini and Aldrich (1991) who emphasized personal networks present an example on the topic of a network and the use of that network, in the sense of personal connections derived from outside of the firm enabling connections, guiding the entrepreneur towards assets and possibilities of interest for the entrepreneur’s company. If one had not been placed in contact with them through a personal nature and instead had to use platforms of organizational nature, the process could be costlier and more time- consuming (Dubini & Aldrich, 1991). Ac- cording to Evers and O’Gorman (2011) the social network on a personal basis of the entrepreneur has been labelled as the most meaningful resource tied to the firm.
According Parida, Westerberg, Ylinenpää and Roinen (2010) regarding their study exam- ining network configuration they explain it is apparent that companies of smaller size and the status of a new venture, have a shortage in internal assets. The authors further explain that in being viewed regarding more established firms they endure difficulties in obtaining a competitive advantage, due to this shortage. Within the context, they emphasize the reason for smaller firms having a more difficult time surviving as being in line with this (Parida et al. 2010). The authors further stress that prior research, showing that these smaller firms can maneuver this threat by taking networking activities, within the net- works, they can access the sought-after qualities, know-how and assets they are in short- age of internally (Parida et al. 2010). As explained by Evers and O’Gorman (2011) within the framework of INVs different set of connections within the network have emphasized the notion of being able to influence for instance selection of markets, as well as entry mode. Additionally, the decision of exchange partners has been influenced (Evers &
O’Gorman, 2011).
Lastly given the topic of networks Casson (2010) underlines that the word network is still applied by various disciplines in many contrasting ways. In order to comprehend net- works better in the academic community, one has to create a better notion of applying the same terminology; this relates to disciplines in general (Casson, 2010). In line with the notion explained by Casson (2010) this thesis will adapt the label networks in general, in relation to the presented complexity. It will therefore not make a distinction between net- works but instead place emphasis on the usage of networks, which in their sense includes more than one type of network.
1.1.5. Performance
According to Devine (2010) the interest to assess and evaluate performance is an interest that lies not only within the research community but also with policy –makers, as well as the audience that seek it from a practical point of view. The interest concerns both the positive and the negative aspects of a company’s performance (Devine, 2010). Gerschew- ski and Xiao (2014) emphasize that the topic of aspects related to performance has been targeted as a promising sphere of research, related to internationalization in an entrepre- neurial context. Additionally, Gerschewski and Xiao (2014) explain that with considering the extensive array of ways to measure performance antecedents, as well as effects that could be assessed as vital for international entrepreneurship.
Performance in a past sense has sometimes been evaluated applying two parameters of data that is objective and subjective, other voices emphasize that while trying to under- stand performance for firms related to strategies for entering markets, both economic fac- tors should be considered as well as non-economic (Devine, 2010). Another assessment of performance is derived from understanding performance on three different parameters namely performance that is related to finances, performance that is regarded as opera- tional and lastly effectiveness on an organizational level (Devine, 2010). The author con- tinues to explain that to summarize the notion and assessment for performance, it can be in a financial environment as well as a non-financial. Additionally, it can be viewed both from a subjective angle as well as an objective (Devine, 2010). In relation to this, scholars who chose in regards to preference how they apply performance to their studies, a con- sensus can thus be detected stating that to assess performance one should look at it from different angles and apply more than one notion of variable to the study (Devine, 2010).
With the basis in the argumentation above and the emphasized need to include more than one measurement related to performance, this thesis will utilize the term performance throughout. This to ensure no exclusion relevant to the measurement of performance is taken out. However, emphasis will be placed on the non-financial measurement related to the companies that took part in the study.
1.1.5.1. IEO, networks and performance
Babakus, Yavas and Haahti (2006) explain that their study addresses the issue as to de- scribe the opportunities for SMEs to be capable of developing network relations both domestic and foreign. The result concluded that the SMEs who have relations with foreign entities display better export performance. The finding regarding firm size, have a posi- tive direct impact on the export performance as SMEs have to find alternative sources and develop foreign relationships as the resource base is limited compared to bigger firms (Babakus, Yavas & Haahti, 2006). The most significant finding in the study is the con- nection with foreign network influence export activities, as result to encourage the SMEs in Finland, Sweden and Norway to strengthen and develop relations with foreign entities through trade missions to network (Babakus, Yavas & Haahti, 2006). The study also sug- gests that the managers/owners should be more proactive when establishing foreign net- work to improve their export performance (Babakus, Yavas & Haahti, 2006).
Symeonidou, Bruneel and Autio (2017) support this statement by saying that the lack of
knowledge about a foreign market is connected to the lack of business relationships net- works abroad and that it consequently can decrease international performance. The study by Parida et al. (2010) conducted result, from Swedish firms, that state a strong connec- tion between performance and EO. In which Su, Xie and Wang (2015) agree upon, the pursuit of high degree of EO enhance the performance, however the authors add that it is not sufficient for new ventures to create wealth.
Parida et al. (2010) explain how former research advocate the importance of network for new ventures as it provides a tool and access to entrepreneurial prospects to enhance per- formance in firms. There are identified findings that are not unanimous when it comes to the linkage between networking, EO and performance (Parida et al. 2010). Babakus, Ya- vas and Haahti (2006) state that past research support the hypothesis of increased net- working in relation to uncertainty is associated with performance on a positive note. The decision makers who have connections in foreign countries are better positioned for suc- cess when it comes to export (Babakus, Yavas & Haahti, 2006). Within the article, the authors argue that firm size has impacted the level of interactions and cooperations among firms (Babakus, Yavas & Haahti, 2006).
1.2. Problematization
As emphasized by Knight (2015) the companies labelled as born-globals or SMEs are defined by the notion of having restricted resources of a tangible nature as well as finan- cial. Given that appealing questions for research surrounding the essence of how these companies obtain success in business conducted in international settings, given the fact that they have restricted resources (Knight, 2015). According to Onkelinx, Manolova and Edelman (2016) amounting to success in international markets is a necessity for all firms, and even more so for SMEs. This is derived from the conclusion that statistically they are on average in a shortage of international experience from a manager perspective, as well as in position of the essential resources for such an endeavor (Onkelinx, Manolova &
Edelman 2016). The different aspects are considered essential to be able to challenge the international business environment (Onkelinx, Manolova & Edelman, 2016). Previous research conducted by for example Hilmersson and Papaioannou (2015) state that the discovery of possibilities internationally, can be considered the core of international ven- tures by SMEs. Within this field there is an area that has yet to be thoroughly researched and that is the sphere of finding out what drives the discovery of these opportunities (Hilmersson & Papaioannou, 2015).
Oviatt and McDougall (1994, 2004) conclude that INVs are a growing phenomenon and studies have indicated the importance of INVs. The authors, further state that the for- mation of this phenomenon will lead to development in the global market and suggesting that these ventures are able to appear in a broader range of industries. Rialp, Rialp and Knight (2005) add to this by stating that this phenomenon will increase in the future as most industries and business will be affected by this. Rialp, Rialp and Knight (2005) con- cluded ten factors that stimulate or facilitate the essence of INVs, these triggering ele- ments have been identified and consistent hence unanimous among researchers in this
field of study. Nevertheless, Mudambi and Zahra (2007) explain that scholars have advo- cated that probability of failure is the highest in a firm in their early years but as it ages the failure declines. However, Mudambi and Zahra (2007) explain that there is not enough knowledge about the survival rates of international new ventures, considering their liabil- ities of newness and foreignness. Nummela, Saarenketo and Loane (2016) state that there are limited and inconclusive research of critical analysis on long-term performance and survival of international new ventures. Nummela, Saarenketo and Loane (2016) also con- firm that there is a consensual view on that these ventures suffer from high failure rates.
Considering the liabilities INVs experience, the failure risk is predicted to be higher among these firms (Nummela, Saarenketo & Loane, 2016; Mudambi & Zahra, 2007).
On one hand, Miller (1983) sees EO as a unidimensional concept and on the other hand, Lumpkin and Dess (1996) find EO as being a multidimensional construct. These two re- searchers started the debate of EOs dimensions being dependent or independent. Glavas and Mathews (2014) agree on EO being a multidimensional framework. Similarly, Koll- man, Christofor and Kuckertz (2007) stress that entrepreneurship needs to be seen as a multidimensional concept.
Frishammar and Andersson (2008) state that there is little known about SMEs’ strategy choice and international performance. According to Wiklund and Shepherd (2005) opin- ions differ on this matter. The authors stress that some researchers found positive rela- tionships, other negative and few found no significant relationship. Some researchers agree on a curvilinear association between IEO and performance (Su, Xie & Wang, 2015;
Chin, Tsi, Fang, Zhu, Zang, Liu & Tsuei, 2016). Etemad (2015) states that researchers have been using EO as a whole concept and others have used one or a combination of the dimensions of EO to measure the impact on performance. Further they explain that the way in which the dimensions of EO are or should outline a unified concept of EO is not clear, namely in an international context. According to Schillo (2011) there remains much to do in order to be able to translate the existing insights into management recommenda- tions. The author states that EO is seen as having a curvilinear effect on performance which managers have to consider and be warned about (Schillo, 2011). Schillo (2011) states that the literature provides only restricted guidance for managers to how they should combine the dimensions of EO in order to increase performance. According to Martin and Javalgi (2016) research has doubts about if high levels of EO are profitable for all INVs, in any circumstance. The authors further mention that recent research has found EO to be a key factor for INVs to be able to succeed. Martin and Javalgi (2016) further emphasize that published research also has shown dubiety regarding if increased levels of EO are needed for an increase in performance, or if on the other hand it can lead to poor performance of these firms in some circumstances. Kowalik, Danik and Sikora (2017) state that some research has shown the importance of EO for INV in the creation stage, but that it may harm the firm’s growth at a later stage.
Covin and Miller (2013) state that the majority of the literature on IEO is conducted in a quantitative manner. The authors emphasize that fine-grained qualitative studies are miss- ing, since those could help to understand the concept related to different national contexts and could disclose the concept of IEO. Frishammar and Andersson (2008) further state that additional research should look at entrepreneurs and individuals rather than looking at the aggregated aspects.
As emphasized by Nowinski and Rialp (2016) research conducted in the past have em- phasized a somewhat scare interest concerning the enactment, as well as development of possibilities relating to international business. The authors explain that these possibilities are many times exploited in relevance to surroundings that can be considered risky. Ad- ditionally, these surroundings are in general somewhat troublesome regarding being able to control, as well as foresight, this if you compare it to surroundings of a local notion (Nowinski & Rialp, 2016). With this background Nowinski and Rialp (2016) emphasize the interest related in assessing the way entrepreneurs proceed to venture in an interna- tional context. Evers and O’Gorman (2011) mention that the network connected to the founder has the ability to supply information as well as resources regardless if the founder himself has displayed no exertion to attract deals, which further enabled the creation of the firm.
As additionally explained by Evers and O’Gorman (2011) under the actions in which the venture was developed there are certain critical stages, the collection of resources as well as the alertness to possibilities in markets abroad, takes place within the network of the entrepreneur. Laurell, Achtenhagen and Andersson (2016) mention that when interna- tionalizing, the essentialness for companies concerning networks has been emphasized for a long time. Even so there is today a scarcity, in relevance to understanding the notion of what characteristics are created through the act of networking, in addition, the notion of uncovering how as well as when these networks are utilized with the ambition related to growth (Laurell, Achtenhagen & Andersson, 2016).
Shneor, Jenssen and Vissak (2016) published an article emphasizing the significant aspect of operating as an entrepreneur within the Nordic and Baltic region of Europe, entrepre- neurs are regarded as a substantial part of economic success for the time to come. More- over, for economic success to occur in the Nordic countries the environment that sur- rounds the possibilities to operate a business matter (Shneor, Jenssen & Vissak, 2016).
According to Knight (2015) who explains that as a company shape the born-globals are prone to adapt and apply the most recent ways to communicate, as well as apply the most up to date information. More than before this is assisting the topic of international busi- ness (Knight, 2015).
Shneor, Jenssen and Vissak (2016) present a section exemplifying potential future re- search that there is a shortage of, but with a predicted impact on the entrepreneurial con- text in the region. A common denominator for the topics is the significant effect networks have on entrepreneurship (Shneor, Jenssen & Vissak, 2016). According to Shneor,
Jenssen and Vissak (2016) the implications on the effects the internet has on entrepre- neurs is an area of high relevance in the world today, elements such as working together and providing ideas in-between different individuals.
As explained by Knight (2015) the form of the internet is by born-globals used as a means to communicate and handle relationships with consumers. Additionally it can be utilized for purposes as marketing, conducting and maintaining sales processes as well as keeping in contact with different associations in the value - chain (Knight, 2015). Given the fact that the Nordic and Baltic region is known for great access to communication, adds to the interest related to the topic (Shneor, Jenssen & Vissak, 2016). Here the interest is in- creased for trying to understand how these conditions are used and harvested by entrepre- neurs as well as how the context is changing (Shneor, Jenssen & Vissak, 2016). This falls in line with what the Honeycutt (2017) states as they put emphasis on how important face- to-face networking is in the digital world, this type of networking has value in being an influential tool to increase the exposure of oneself and create significant relationships that can aid growth opportunities both personally and professionally.
Devine (2010) states to be able to explore and conclude what is performance for compa- nies, it is a topic where the aim of strategy is connected. The author explains that under- standing performance related to this has been a prime interest for a long time. The interest is derived from the notion that performance is an outcome of a chosen strategy, which leads one to conclude that to be able to evaluate that strategy performance is a good meas- urement tool (Devine, 2010). As further emphasized by Devine (2010) measuring perfor- mance for SMEs that choose to venture abroad, is a topic that has been more densely researched. This is in line with what is explained by Gerschewski and Xiao (2014) that the notion of assessing performance for INVs is a topic that’s been neglected earlier in general within the research community.
Devine (2010) explains that understanding the notion of firm performance, is not without its problems, one example is that many times performance is assessed as past performance while harvesting data among the management within a company. One implication then is the notion that these managers often incorporate ideas and results from a current status what is included in the study then inconsistency occur (Devine, 2010). Additionally, Devine (2010) argues that the situation should be approached by thoroughness in choos- ing how the assessing of performance will occur, to handle such a complication.
Meutia (2013) conducted a study that shows that entrepreneurial social competence has a substantial impact on business networks, while there is non-meaningful impact on busi- ness networks by EO even though EO impacts the competitive edge on SMEs. Boso, Story and Cadogan (2013) affirm that scholars have stressed the importance of having both business- and social networks to increase the benefits of performance for strategic orientations. Parida et al. (2010) continue to state that the outcome that derives from the network ties are distinctive competitive advantages that advance the overall performance
in the company. Su, Xie and Wang (2015) complement this statement by stating that net- works are the factor forming the relation between EO and performance in new ventures.
Parida et al. (2010) also mention that previous studies have concluded that network ties are possible to act as a source for reaching increased levels of EO and performance. Ba- bakus, Zavas and Haahti (2006) state that replications of their study need to be validated which implies there is still not sufficient findings regarding network implications in rela- tion to export performance. Further they state that the relationship between networking and export performance is understudied. Parida et al. (2010) explain that there are no unanimous results concerning the relationship between networking, EO and performance.
However, the authors argue that there is on one hand a positive linkage between network- ing, EO and performance within small firms, on the other hand no evidence has been found for the same relationship in new ventures. Gunawan, Jacob and Duysters (2015) imply that there is sufficient studies on the impact network relations have on innovative performance and much research on local networking and how important it is, however, there are fewer studies and evidence on the preeminence of non-local network relations.
Su, Xie and Wang (2015) additionally state that managerial networking is important for new ventures to admit resources, consequently control the relation between EO and per- formance. Su Xie and Wang (2015) imply that there is insufficient research when it comes to how different types of a manager’s network affects the relation between EO and per- formance within new ventures. Other scholars have emphasized how little studies there has been within this area and that this is a serious gap within academia (Su Xie & Wang, 2015).
1.3. Purpose
The purpose of this thesis is to uncover how the effects of IEO, as well as the usage of networks impact the performance of INVs. As accounted for in the background SMEs in general are important for the economy of a country such as Sweden that highly depends upon export. As has additionally been presented in the introduction there is a certain fail- ure rate consistent within these types of firms, the INVs. We argue that this has laid the foundation for an interesting phenomenon to further explore, how the usage of networks as well as the notion of IEO is reflected within these companies and ultimately influences the performance of these firms. This will be assessed by incorporating the theories of network and IEO in relation to performance. Through these two parameters we will assess our chosen topics and aim to target the previously presented research gaps within the existing literature.
1.4. Research questions
In order to achieve the above mentioned purpose, we formulated one main research ques- tion and two sub-research questions.
How do international entrepreneurial orientation and networks influence the performance of Swedish international new ventures?
How has the usage of networks influenced the performance of INV?
In what way does IEO of the founders influence the performance?
1.5. Delimitations
This study will not take into account the age of the firm. In addition, it will not focus on investigating specific types of performance nor networks. The study is not concentrated to a specific industry.
1.6. Outline
Introduction
• The following chapter presents and introduces the background of the chosen topic. It considers and exemplifies the topics and meaning of internationalization and international
entrepreneurship. The chapter continues with highlighting the significance of small and medium sized enterprises (SMEs) in relevance to the economy. This will then be followed by an account of the problematization together with the addressed interest and gaps, from practical implications and the academic sphere. Lastly the chapter will end with a summary of the, purpose, research questions and the considered delimitations for the study.
Literature Review
• The literature review will account for the chosen main theoretical concepts presented, the topics are perceived as the frameworks on which this thesis rests. The chapter will start off presenting the chosen type of companies namely the international new ventures, as well as an account of the topics international entrepreneurship and international entrepreneurial orientation. This will be followed by a presentation of the topic networks and performance, the chapter will end with the presented model of the theoretical synthesis that has been applied to this thesis.
Methodology
•The methodology chapter will account for the chosen methods included and adapted in this thesis. The chapter will start off by accounting for the notions and explanations to why certain methods have been chosen, as well as how they have been implemented. A thorough operationalization connecting theory with empery is presented in the chapter as well as an argumentation concerning ethical considerations and the measures of qualities
Empirical Findings
•The empirical findings will present the data gathered for the purpose of this study. The chapter will start off by introducing the interviewed respondents and their firms. The chapter will continue by presenting the collected data on the basis of the chosen theoretical concepts, as well as presenting the chapter by following the structure of the literature review..
Analysis
•The analysis chapter will present and account for the empirical data applied in correlation with the theoretical frameworks, as well as the voices of the authors. The chapter aims at explaining and understanding the findings, to further answer the previously presented research questions and create the foundation for which the conclusions are drawn upon..
Conclusion
•The conclusions chapter will present the answers to the research questions by firstly answering them separately as sub –questions which lay the foundation for answering the main research question. The chapter will continue with managerial implications as well as an account for future research as well. The chapter will end with a
presentation for the limitations that have been placed on the study.
Literature Review
The literature review will account for the chosen main theoretical concepts presented, the topics are perceived as the frameworks on which this thesis rests. The chapter will start off presenting the chosen type of companies namely the international new ventures, as well as an account of the topics international entrepreneurship and international en- trepreneurial orientation. This will be followed by a presentation of the topic networks and performance; the chapter will end with the presented model of the theoretical syn- thesis that has been applied to this thesis.
2.1. International New Ventures
Oviatt and McDougall (1994, 2004) explain that the phenomenon of INVs was recog- nized as new in the late 1980s. Several studies agree there is distinctive pattern of the internationalization process when it comes to establishment of INVs, nevertheless the majority have demonstrated that this formation process is capable to compete almost globally from inception (Rialp, Rialp & Knight, 2005). Oviatt and McDougall (1994) explain how easy and effortless it is for new ventures with limited resources, to be inter- nationally successful due to technological innovation. The authors clarify that it is easy for small firms to exploit business opportunities in multiple countries as the use of low- cost technology such as communication and transportation is facile. However, the authors emphasize the constraints on resources INVs have due to the young age and small size.
There have however been studies on that this phenomenon is not necessarily attached into the high-tech sectors (Rialp, Rialp & Knight, 2005). Although Rialp, Rialp and Knight (2005) explain that this phenomenon will increase in the future and more and more in- dustries and business will be affected by this.
2.1.1. Success factors for INVs
Rialp Rialp and Knight (2005) state that the emergence of new firms that are international at founding where mostly from a decade ago, which also shows the evolvement of the internationalization process that are important dimensions. Some of the reports show that this kind of ventures form because entrepreneurs that are internationally experienced and alert, are able to connect resources from numerous of countries to meet the demand of markets that are international inherent (Oviatt & McDougall, 1994; 2004). Other research reports that success of INVs derive and depend on having an international foresight of the business from inception, the firm should have an innovative product or service that is marketed through strong networks and strong management focusing on sales growth in- ternationally (Oviatt & McDougall, 1994; 2004). Oviatt and McDougall (1994; 2004) conclude that collectively all these studies indicate the important phenomenon of INVs, and the formation of this phenomenon will lead to development in the global market and suggesting that these ventures are able to appear in broad range of industries. Zettinig and Benson-Rea (2008) highlight the important role of personal and earlier professional net- work with business members, how these social relationships are evolving over a period of time to become significant in the development of INVs. The authors emphasize that among these relations there are some that turn into important source for the INVs survival
in the long run and growth. Rialp, Rialp and Knight (2005) concluded ten factors that stimulate or facilitate the phenomena of INVs, these triggering elements have been iden- tified and consistent hence unanimous among researchers in this field of study. The first element is that the global vision is from inception in a managerial perspective, secondly is the managers should have high degree of earlier international experience and thirdly, the management commitment (Rialp, Rialp & Knight 2005). The author continues with the fourth element, strong utilization of personal and business networks, fifth have knowledge about the market and market commitment and sixth, have unique intangible assets that are knowledge management based. Rialp, Rialp and Knight (2005) explain that the seventh element is to have high value creation through product differentiation, tech- nology products that are leading-edge and innovativeness in technology, additionally have quality leadership. The eight is to focus on niche markets, having proactive interna- tional strategy in a geographical sense lead to spread of markets all around the world from inception (Rialp, Rialp & Knight, 2005). The ninth is to be strongly customer oriented and have close customer relationships which is also known as having narrowed defined customer group and lastly, to have flexibility in order to adapt rapidly to external circum- stance when it changes (Rialp, Rialp & Knight, 2005).
2.1.2. Definition of international new ventures
There are infrequencies when it comes to what age of an organization is when it interna- tionalizes (Oviatt & McDougall, 1994; 2004). Hewerdine and Welch (2013) stress the debate whether the earlier days of firms going international is from one, three or eight years after founding. Research has shown that start-ups have more problems when ex- porting compared to mature small firms (Oviatt & McDougall, 1994). Manolova, Manev and Gyoshev (2013) emphasize that the start-up costs new ventures exporters deal with are substantial in order to do market research about foreign markets, how to proceed with bureaucratic procedures and adapt the products to foreign needs. However, there are more frequent papers which report exceptionality results of new ventures that were interna- tional or near inception (Oviatt & McDougall, 1994; 2004). INVs are defined as “a busi- ness organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries” (Oviatt & McDou- gall, 1994: p. 49). The reason INVs internationalizes is to acquire access to resources that are value-creating abroad (Autio, 2005).
As INVs are international from inception, the emergence of this venture needs to be de- fined (Oviatt & McDougall, 1994; 2004). Hewerdine and Welch (2013) argue that the inception should be abstracted as a process that appears over time; the authors propose it should be regarded as the internationalization of the firm is during instead of upon emer- gence. The authors continue by claiming that when this approach is recognized, it will become an essential feature of INVs, to be a natural process of the organization instead of the speed of internationalization. There is no consensus regarding time of emergence as it has been discussed to be different from researcher to researcher, however Oviatt and McDougall (1994, 2004) argue for that “researcher should rely on observable resource commitments to establish a point of venture inception” (Oviatt & McDougall, 1994:
p.49). The authors exemplify it by stating that new ventures who do not have any sales due to their product or service development, there has to be a demonstrated commitment to sell the product or service in several countries upon accomplishment of development.
However, Manolova, Manev and Gyoshev (2013) claim that age and size for a firm is significant in global competition as it has shown to have a positive relation to market power and exclusive advantage. Autio (2005) continues to argue that by early establishing an international position, INVs might possess internationalization competitive advantage which might counterbalance the different liabilities, hence extend long-term competitive advantage. Oviatt and McDougall (1994; 2004) further identify another key feature that distinguish new ventures from established ones, which is the minimal use of internation- alization and more use of network structure as it is a powerful resource-conserving alter- native. Manolova, Manev and Gyoshev (2013) state that an important way to overcome the disadvantages of newness and foreignness, is that through network contacts raise fi- nancial aid. Autio (2005) further states that these INVs are possible due to the entrepre- neurs that have ability and willingness to make strategic choices, also accept the risks that comes with hostile international expansion. Growth opportunities in INVs are possible due to the international competence, vision and awareness of opportunities across borders the entrepreneur possess (Autio, 2005).
2.1.3. International new ventures theoretical framework
Oviatt and McDougall (1994) present their developed theoretical framework explaining INVs, as it integrates a theory in multinational enterprises (MNE). Manolova, Manev and Gyoshev (2013) explain this framework as an integration of entrepreneurship, strategic management and international business to be able to clarify the INV phenomenon. Alt- hough it studies in relation to MNEs, this framework is conceptualized utilized and awarded (Autio, 2005). The model of INV focuses primarily on explaining how early and fast internationalization of these ventures is possible (Autio, 2005). Oviatt and McDou- gall (1994, 2004) identify four necessary and sufficient elements for sustainable INVs and conditions for the existence of these ventures.
The first element, internationalization of some transactions talks about economic trans- actions: the organization’s assets and the use of exchange in an economic transaction (Oviatt & McDougall, 1994). This is the most basic element in internationalization, the second element alternative governance structures explain the lack of sufficient resources for new ventures and the entrepreneur’s alternative modes to control important assets (Oviatt & McDougall, 1994). Resource-conserving alternative to internationalization for a new venture is the network structure, which is regarded as quite powerful, the third element, foreign location advantage discusses the advantage of firms being international by transferring movable resources across national borders (Oviatt & McDougall, 1994).
The authors continue to state when it comes to INVs, they have to rely on resources such as private knowledge and as with today’s technology valuable knowledge is able to travel effortlessly and be reproduced. The fourth element, unique resources cover the most es- sential element for sustainable competitive advantage for INVs, meanwhile the other el- ements cover the necessary conditions for their existence (Oviatt & McDougall, 1994).
Oviatt and McDougall (1994) explain that it is required for any firm that its resources are unique to have a sustainable competitive advantage. In order for knowledge to have com- mercial values abroad INVs need to limit the use of this resource by outsiders, the limi- tations consist of keeping it proprietary, imperfect imitability and network governance structures (Oviatt & McDougall, 2004).
These elements manifest themselves in various ways according to published paper’s de- scription (Oviatt & McDougall, 1994; 2004). Some of the INVs coordinate the transfor- mation of resources from different ends of the world for their products or services that sells where they are the most valued, while other ventures add value by transferring the products or services to the needed locations (Oviatt & McDougall, 1994; 2004).
2.2. International Entrepreneurship
Scholars have discussed that the declare of international entrepreneurship (IE) was first used in 1988, in an article where the term IE was used to enlighten the recent advances in technology and the realization for culture that was recognized for new ventures when entering unexploited overseas markets (Oviatt & McDougall, 2005). Jones and Coviello (2005) underline that there has been sufficient research on internationalization. However, studies on IE might necessitate to be revitalized to be able to get an insight in which manner international companies establish competitive edge through entrepreneurial prac- tices, and in what way entrepreneurial companies can perform across borders (Jones &
Coviello, 2005).
Extensive studies on IE broadened the field it was later on steered to be an incorporative nature of entrepreneurship and international business to have theories and frameworks that reflected upon the interest to be researched within areas like economics, marketing, anthropology, psychology and sociology (Oviatt & McDougall, 2005). Research indi- cated that IE consisted of two main streams, firstly it is to examine the contrast of entre- preneurial manner of conducting oneself in several countries and cultures and secondly, organizational manner in management that extend abroad and that is entrepreneurial (Ovi- att & McDougall, 2005). Oviatt and McDougall (2000) explain that IE is an association between proactiveness, innovativeness and risk-taking tendencies of an organization that seeks value creation, crossing or is confronted across borders. Similarly, Zahra and George (2002) state that one of the definitions of IE is described by scholars as being the study of the consequences and nature of the risk-taking attitude of a firm that enters in- ternational markets. Jones and Coviello (2005) imply the significance of the definition as the specific synthesis of the acknowledged perspective of internationalization as a busi- ness activity with entrepreneurial traits that penetrate markets abroad.
Zahra and George (2002) highlight that their definition of IE includes the discovery and exploitation of opportunities. The authors explain IE to be a creative discovery and to exploit opportunities that will enable a firm to pursuit competitive advantage on foreign markets. Oviatt & McDougall (2005) clarify how other scholars have underlined the abundance of opportunities that lay in the field of IE, the opportunities are apparent when
it comes to cooperation for multidisciplinary and multi country. The authors are empha- sizing the concept of enact and uncover opportunities, which can be explained as when individual perform, the individual make sense of what one’s activities have generated and in some occasions these generated creations are profitable opportunities. Oviatt and McDougall (2005) modified their classification of IE by adding the finding, performing, assessing and acting on opportunities to generate forthcoming goods and services abroad.
Covin and Miller (2013) explain that IE is divided into two main branches one focusing on INV and the second on the activities of established companies.
2.2.1. EO and IEO
Wach (2015) emphasizes that the term entrepreneurship is obscured and versatile, when portraying entrepreneurship broadly, it is recognized as entrepreneurial orientation (EO).
Within the field of IE, the concept EO has been acknowledged by scholars (Covin &
Miller, 2013). Covin and Miller (2013) underline how scholars have investigated and re- lated the notion of EO to concept and practice within IE and examine if EO is able to be established within companies that do business with different cultures. Wach (2015) high- lights the evolvement of academic advancements in international business that eviden- tially states that EO is becoming one of the significant elements to contribute to strength- ening the internationalization process of a company.
Miller (1983) states that previous research defined entrepreneurship as being a concept that is defined as actions that are related to product-market and technological innovation, proactiveness and risk-taking. Lumpkin and Dess (1996) expanded entrepreneurship to a five dimensional concept including autonomy and competitive aggressiveness. Freiling and Schelhowe (2014) furthermore put emphasis on that EO includes the methods, prac- tices and decision-making styles of managers or owners that act entrepreneurially.
Lumpkin and Dess (1996) defined EO for the first time as something that leads to new entries by using processes, decision-making activities and practices, where new entry de- scribes what entrepreneurship includes and EO how new entry is initiated. According to Covin and Miller (2013) the most significant contemplation on EO is in what manner the new entry is portrayed to connect to the phenomenon of the EO. Covin and Miller (2013) display that the new entry is a significant deed within entrepreneurship. It is explained as an entry that is evidential through new market emerging actions, new advances on product activity or development actions on net product-market (Covin & Miller, 2013).
The phenomenon correlated to EO are the elements from the pioneer definition of IE which has become generally recognized, however the latest classification of IE, acting on opportunities on foreign markets is not manifested in the elements of EO (Covin & Miller, 2013). According to Covin and Miller (2013) EO is the concept that clarifies what it means to be entrepreneurial in a behavioral and practical aspect. EO is additionally pro- spected to signify possible entrepreneurial intents and attitudes of a business (Wach, 2015). Wach (2015) implies that there has been much effort into describing EO, nonethe-
less diverse scholars interpret and use it differently, however, the researchers unani- mously consider EO as a phenomenon on a firm-level. Etemad (2015) underline the ne- cessity for a business to incorporate EO proactively in order to continuously innovate to counterbalance the disadvantageous effect to the limited time for the life cycle of the merchandise.
Covin and Miller (2013) describe that EO is portrayed in two different assessments, com- posite or multidimensional. The composite construct involves how EO is characterized by the behavior of being proactive, risk-taking and innovative as well as what they have in common (Covin & Miller, 2013). Meanwhile, EO as a multidimensional construct im- plicates the definition of this conceptual plot where proactiveness, risk-taking, competi- tive aggressiveness, innovativeness and autonomy are regarded as behavioral magnitudes that are independent (Covin & Miller, 2013).
Both concepts of EO are inherent when describing international entrepreneurial orienta- tion (IEO) (Covin & Miller, 2013). Wach (2015) implicate further arguments that IEO is component of the multifaceted structure that encourages and impacts IE from a cross- national and cross-cultural aspect. Knight (2001) defines IEO as something that reflects the overall aggressiveness and proactiveness of a firm when pursuing international mar- kets. Knight (2001) describe IEO as being associated with managerial vision, pro-active competitive posture and innovative in international markets. Glavas and Mathews (2014) similarly summarize IEO as involving taking risks in cross-border environments and ad- vantage of foreign markets, being a multidimensional construct, being considered on an individual and firm level, showing the proactiveness and aggressiveness of firms when seeking international markets and enabling firms to exploit and spot opportunities in for- eign market. Acquiring the EO concept by the manager of the firm, might result in the pursuit of penetrating foreign markets, however due to the act of EO entering markets across borders it has been evident that IEO is a branch of the individual entrepreneur therefore concluded to be portrayed as strategic business (Covin & Miller, 2013).
Presently, the academic research on IEO has been mostly studied empirically on the three components of proactiveness, risk-taking and innovativeness (Covin & Miller, 2013;
Wach, 2015). Covin and Miller (2013) underline that the majority of the research on IEO, is merely studied on EO that engage an approach reliant on the internationalization vari- able, hence it can be explained that IEO derives from EO and is defined as being EO in an international context. Yet, the authors argue that IEO is a subsection of EO which allocate the same core factors of the modified concept of EO, hence it can include either the modified or the original EO measures. Wach (2015) mentions in what way IEO can be regarded as one of the descent to elaborate, in an international setting, the growth strategy and the company's differences in performance. Romero, Solìs and Monroy (2014) explain that EO aids firms to be prepared for the dynamic competitive environ- ments and adapt their operations to it.
