International Business Seminar: Maria Rumyantseva & Catherine Welch

The Internationalisation Process of Startups Revisited: A Heritage Theory Alternative

We revisit a popular research topic in international business and entrepreneurship: the phenomenon of the early internationalizing startup. We return to the empirical origins of this research stream: a survey of ‘born globals’ conducted by McKinsey in 1993, and the ‘international new venture’ case studies in McDougall, Shane and Oviatt (1994). By means of a qualitative case study, we reexamine the origins of the firms in this combined dataset, and trace their internationalization trajectories over time. On the basis of our case study revisit, we propose a heritage theory of the internationalization process of startups. According to heritage theory, the development of a startup cannot be understood without reference to its origins. We find that the internationalization process of the startup is shaped by three factors: the nature of the parenting it receives, the conditions in the startup’s local cluster, and the global industry niche in which it seeks to establish itself. Our analysis suggests that only when all three conditions were favourable was the startup able to achieve a sustainable competitive position globally. The quintessential born global – the truly independent start-up which internationalizes on the basis of the resources and capabilities of its founder – was in fact the notable exception. Our study shows how applying a historical methodology can generate new theoretical insights in existing research fields.