The Interaction Effects of Innovation, Business Relations, and the Country Context with Firm Age on Entrepreneurial Internationalization

Abstract

The accelerating rate of technological progress and the increasing number of people having international experiences resulted in the emergence of entrepreneurial internationalization. Internationalization is challenging for entrepreneurs as they have limited resources to compete with large multinationals. We explore how entrepreneurs benefit from the unique individual-level resources and the country's innovation at a macro level on internationalization pursued by exports. We develop a research model to test the direct effects of innovation, business relations, and the contextual framework conditions of country innovativeness as well as their interactions with firm age on export performance. We construct a data-set covering 72 economies over the globe drawn from GEM data and test our research model using multiple and hierarchical linear regressions. We find that innovation and country innovativeness interact with firm age on export performance when controlled for various entrepreneurial and business level characteristics. Our research contributes to the literature offering important implications for entrepreneurs and policymakers. At the entrepreneurial level, innovation is a unique resource that an entrepreneur can get the most benefit out from it in the early stages of foundation. At the country level, developing policies supporting a favorable innovative environment is crucial, particularly in low innovative countries, to boost entrepreneurial internationalization in their early stages.