Born globals from emerging economies: Reconciling early exporting with theories of internationalization

• DOI: http://doi.org/10.1002/gsj.1368
• Published date: 01 May 2020
• Date: 01 May 2020
• Author: Marleen McCormick,Deepak Somaya

RESEARCH ARTICLE

Born globals from emerging economies:

Reconciling early exporting with theories of

internationalization

Marleen McCormick

1

| Deepak Somaya

2

1

Lacy School of Business, Butler University, Indianapolis, Indiana

2

Department of Business Administration, Gies College of Business, University of Illinois at Urbana-Champaign,

Champaign, Illinois

Correspondence

Deepak Somaya, Department of Business

Administration, Gies College of Business,

University of Illinois at Urbana-

Champaign, Champaign, Illinois.

Email: dsomaya@illinois.edu

Abstract

Research Summary: What explains born global firms

who internationalize very early through exports, when

theories of internationalization recommend they focus

on domestic markets first? While prior research sug-

gests a number of factors that enable exporting by new

ventures, empirical tests of these theories have not eval-

uated if these factors uniquely explain new venture

exporting. We propose and empirically test hypotheses

that exporting by young (relative to established)

emerging-economy firms increases when they tap into

the drivers of modern globalization (Internet technolo-

gies, global talent flows) and overcome home-country

institutional constraints (government inefficiencies,

location), all of which have bigger impacts on exporting

by young firms than established ones. Understanding

these unique drivers of born global emerging-economy

firms is critical for reconciling this phenomenon with

traditional theories of firm internationalization.

Managerial Summary: Our research finds that

exporting by young firms are enabled to a greater extent

(than established firms) when they use Internet tech-

nologies and tap into mobile talent (such as cross-

national entrepreneurs and leaders with international

experience), which helps to overcome key constraints

Received: 5 June 2018 Revised: 13 September 2019 Accepted: 24 September 2019

DOI: 10.1002/gsj.1368

Global Strategy Journal. 2020;10:251–281. wileyonlinelibrary.com/journal/gsj ©2020 Strategic Management Society 251

in tapping into international markets. We also found

that young firms overcome home-country institutional

and infrastructure deficiencies in emerging economies,

specifically, by receiving efficient government services

and strategically locating in well-resourced centers such

as capital cities, which helps them more in exporting as

compared to established firms. Our findings help to

explain the modern phenomenon of “born global”

firms, who have broken away from the traditional path

of focusing first on domestic markets and then engag-

ing in incremental international expansion.

KEYWORDS

born globals, emerging market firms, globalization, international new

ventures, theories of internationalization, young exporting firms

1|INTRODUCTION

Since the early 1990s, the international entrepreneurship (IE) literature has been studying the

phenomenon of new ventures conducting business internationally from an early phase of

growth (Cavusgil & Knight, 2009), a process of early internationalization that typically begins

with exporting (McNaughton, 2001). Prior research has shed considerable light on the drivers of

exporting by young firms, especially in comparison with other nonexporting young firms and in

developed country contexts (Zander, McDougall-Covin, & Rose, 2015). What remains largely

unanswered is how drivers of exporting by young firms are different from the drivers of

exporting more generally (e.g., by established firms), and how they affect exporting by young

firms from emerging and developing countries. Highlighting the importance of these research

gaps, a leading recent retrospective on early internationalization has called for research to rec-

oncile this “born global”phenomenon with traditional theories of firm internationalization and

to explain exporting by young firms from emerging economies (Cavusgil & Knight, 2015, p. 11).

In the current article, we respond to these calls by combining insights from theories of interna-

tionalization (e.g., Johanson & Vahlne, 1977; Zaheer, 1995) and the institutional context of

emerging economies (e.g., Yamakawa, Khavul, Peng, & Deeds, 2013) to propose and test a theo-

retical framework that explains exporting by young firms as compared to established firms, in

emerging-economy settings.

Specifically, we examine the following research question: What factors differentially affect

exporting by young emerging-economy firms relative to exporting by more established firms

from emerging economies? Prior research has proposed several factors that are responsible for

early-exporting firms, such as unique network relationships (Chetty & Campbell-Hunt, 2004),

limited size of domestic markets (Fan & Phan, 2007), and focus on niche products (Hennart,

2014). However, these propositions have largely been tested empirically by comparing young

exporting firms with young firms that do not export. It is important to ask and empirically eval-

uate what is distinctive about exporting by young firms relative to established firms because this

question goes to the heart of whether existing internationalization theories need to be revised

252 MCCORMICK AND SOMAYA