Institutional Driving Process And Performance Of New Ventures’ Internationalization Speed

In the context of constructing entrepreneurial economy and open economy, more and more new ventures from China are rapidly integrating global resources and expanding into international markets to develop competitive advantages based on time, namely, the phenomenon of internationalization of international new ventures(INVs). One of the natures of this phenomenon--the speed of internationalization is an important aspect of firms’ internationalization strategy. It is not accidental that the phenomenon appears in China, but most of new ventures have no international clients at all and their internationalization processes are very slow. It means that most of new ventures need to use the successful international experience of few counterparts for reference so as to accelerate their internationalization speed. The speed of internationalization largely determines the international performance of INVs. Therefore, this paper that studies the institution-driving process and performance of INVs’ internationalization speed helps realize strategic goals suggested in the report to the eighteenth national congress of the communist party of China that Chinese companies should expand overseas presence at a faster pace, enhance their operation in an international environment, and develop a number of world-class multinational corporations.What is the institution-driving process of INVs’ internationalization speed and what are the influences of INVs’ internationalization speed on performance?This is the core question of this paper. This article decomposes it into two sub-questions. How do home-country institutional uncertainty and diversity influence the speed of new venture’s internationalization and what is the context under which home-country institutional uncertainty and diversity are more conducive to accelerate the speed of INVs’ internationalization? What level of internationalization speed would be more conducive to improve the performance of INVs under what situations?On one hand, on the basis of conducting a strict definition and scale development of institutional capabilities, integrating the institutional theory, dynamic managerial capabilities theory and upper echelons theory, and taking international new ventures from China as sample data, this paper theoretically constructs and empirically tests a moderated mediation model at the second stage, revealing the internal mechanism and boundary condition that home-country institutional contexts influence the speed of INVs’ internationalization—the mediating role of institutional capabilities and moderating role of international orientation. The results show that home-country institutional diversity is in favor of improving entrepreneur’s institutional capabilities, and institutional capabilities are conducive to accelerate INVs’ speed of initial entry, country scope and international commitment; institutional capabilities play a partial mediating role between home-country institutional diversity and the speed of INVs’ internationalization; the stronger international orientation, the bigger the positive influence of institutional capabilities on the speed of INVs’ internationalization; international orientation positively moderates institutional capabilities’ mediating role played between home-country institutional diversity and the speed of INVs’ internationalization.On the other hand, by applying the latent moderated structural equations approach, this paper theoretically constructs and empirically tests the moderated inverted U-shaped relationships model among internationalization speed, learning orientation and INVs’ performance. The results show that the relationship between initial entry speed and post-entry speed is positively correlated, rather than inverted U-shaped; the speed of initial entry, country scope and international commitment have an inverted U-shaped effect on INVs’ performance on survival and growth; the inverted U-shaped relationships between internationalization speed and INVs’ performance become steeper with the increase in the level of learning orientation of entrepreneurs, except for the relationship between initial entry speed and survival performance.There are several theoretical contributions and main innovations that this paper makes. First, this paper reveals the inherent mechanism and boundary condition that home-country institutional contexts experienced by entrepreneurs influence the internationalization speed of INVs—the mediating role of institutional capabilities and moderating role of international orientation. Second, the paper reveals the relationship forms between the internationalization speed and the survival and growth performance of INVs, and their boundary condition—the moderating role of learning orientation in the inverted U-shaped relationships. Third, this paper digs the influences of institutional characteristics(such as home-country institutional diversity) and entrepreneurial traits(such as institutional capabilities and learning orientation) in emerging economies, on INVs’ internationalization speed and performance. This paper not only makes contributions to the literatures about new ventures’ internationalization, dynamic managerial capabilities and so on, but also has practical implications for Chinese new ventures to rapidly implement “Go Global Strategy” and to improve their international performance.