International experience and growth - and survival-enhancing learning of de novo firms: A study of U.S. dot-com startups, 1994--2007

This dissertation is motivated by the need to investigate the performance-related learning outcomes of de novo firm internationalization more comprehensively. Taking a learning approach, this study explores how organizational experience affects entrepreneurial firm growth and survival over time, in response to a firm's strategic choice to internationalize, the firm's age at the time of international entry, and the firm's organizational IQ. In a departure from the arguments put forth in the extant international entrepreneurship literature claiming that internationalization is an asset to growth but detriment to survival, we first explore the possibility that the accumulation of international experience can simultaneously lead to growth- and survival-enhancing learning outcomes. We postulate that the accumulation of international experience is advantageous to both growth and survival. When a de novo firm enters new international markets, it gains access to many productive opportunities (Brush, 1992) and becomes exposed to the "greatest diversity of knowledge" (Zahra, Ireland, & Hitt, 2000), so that, in combination, the firm has many opportunities to learn, and in a variety of contexts about how to grow and survive. Further, under these conditions, a de novo firm is more likely to simultaneously engage in exploitation and creative-oriented activities, and enact organizational routines that facilitate the behaviors, in a self-reinforcing process. Thus, the more international experience a de novo firm gains, the more adept it becomes at growing and expanding activities, and adapting to changing conditions in order to survive.;However, we also postulate that the age at which a de novo firm initiates the internationalization process and the level of organizational IQ that the firm possesses mitigate the beneficial effects of international experience, insofar that they engender competing considerations for internationalization.;We provide empirical support for our propositions by examining the internationalization processes of U.S. dot com start-ups from 1994-2007. Indeed, the model shows that international experience has a positive relationship with both growth and survival. Further, the results confirm our proposition that an early internationalizing firm would experience a much lower increase in growth due to international experience because the firm would incur heavier opportunity costs associated with routinization. But, contrary to our expectations for international "imprinting" (Hannan, 1998), there was no significant effect on survival. We also obtained confirmation that a high IQ firm would experience a much higher increase in growth due to international experience because the firm's superior ability to interpret international experiences allows it to better capture market opportunities. However, the firm would face a much lower increase in survival, given the possibility that it can become dismissive of new international experiences. I conclude the study with a discussion of the implications of these results for organizational learning and entrepreneurship theories.