Born Global Founder CEOs' Intention to Early Internationalization
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Lasse Ihalainen
Born Global Founder CEOs’ Intention to Early
Internationalization
a qualitative study on the cognitive antecedents
Master’s Thesis in International Marketing
Supervisor: Dr. Irene Kujala
Faculty of Social Sciences, Business and
Economics
Åbo Akademi University
Åbo 2021Subject: International Marketing Author: Lasse Ihalainen Title: Born Global Founder CEOs’ Intention to Early Internationalization - A qualitative study on the cognitive elements Supervisor: Dr. Irene Kujala Born global is a phenomenon of “early and rapid internationalization among young, entrepreneurial firms”. Born global firms are central actors in ecosystems that support larger enterprises, create radical innovation, and contribute to the development of national economy by enabling international knowledge transfer. There is an increased demand for a better understanding of the born global phenomenon as countries have embraced entrepreneurship as an important economic engine. Despite born globals’ growing importance, our current understanding of their international behaviour remains incomplete. A better understanding of the determinants of early internationalization is valuable in order to enhance the early internationalization of start-ups. One important facet of internationalization is individuals making strategic decisions, which are often made by the founder CEO especially in smaller firms. In addition, the growth of born globals is often championed by the founder CEO. This study contributes to the growing stream of research on the determinants of early internationalization by exploring the cognitive antecedents influencing founder CEOs’ intention to early internationalization. The cognitive elements are studied by applying the Theory of Planned Behaviour (TPB), which has shown to be a promising approach to explore the underlying cognitive foundation of an individual’s intention to a specific behaviour. Designed as a qualitative multiple case study, five case companies were studied by conducting in-depth interviews with their founder CEOs. The case companies are fast-growing Finnish born globals which have expanded to international markets within three years of their founding. The content analysis was done by using the directed content analysis approach and the cognitive elements of an expanded model of TPB served as pre-set categories for the analysis. Based on the findings, the founder CEO is indeed in a central role in the early internationalization of born globals. The findings suggest that founder CEOs’ favourable attitude towards growth, a positive attitude toward risks and challenging situations, and a positive perceived behavioural control act as cognitive antecedents to early internationalization. In addition, several other potential cognitive antecedents were observed and discussed considering the founder CEOs’ role. Keywords: international entrepreneurship, born global start-up, early internationalization, cognitive antecedents, theory of planned behaviour Date: 1.3.2021 Number of pages: 66
TABLE OF CONTENTS
TABLE OF CONTENTS..................................................................................................II
1 INTRODUCTION.....................................................................................................1
1.1 Problem area....................................................................................................3
1.2 Objective and research questions...................................................................4
1.3 Methodology.....................................................................................................5
1.4 Delimitations and limitations..........................................................................6
1.5 Research outline...............................................................................................7
1.6 Definitions........................................................................................................7
2 LITERATURE REVIEW..........................................................................................9
2.1 Internationalization.........................................................................................9
2.2 Internationalization literature......................................................................10
2.3 International entrepreneurship....................................................................13
2.4 Born Global research....................................................................................15
2.5 Theory of Planned Behaviour and Born Globals.......................................18
3 METHODOLOGY..................................................................................................24
3.1 Qualitative research method........................................................................24
3.2 Data collection method..................................................................................26
3.3 Sampling.........................................................................................................27
3.4 Data analysis method....................................................................................29
3.5 Validity and reliability..................................................................................30
4 RESULTS................................................................................................................33
4.1 The role of founder CEO in early internationalization.............................35
4.2 Attitude...........................................................................................................36
4.3 Experience related to the subject.................................................................37
4.4 Knowledge related to the subject.................................................................38
4.5 Perceived behavioural control......................................................................39
4.6 Subjective norm.............................................................................................41
5 DISCUSSION AND ANALYSIS...........................................................................43
6 CONCLUSION.......................................................................................................51
7 SUMMARY IN SWEDISH....................................................................................54
REFERENCES................................................................................................................59APPENDICES.................................................................................................................65
Lasse Ihalainen
1 INTRODUCTION
Internationalization is a phenomenon which is generally well-examined and has been
discussed widely with different viewpoints and perspectives (Sommer 2010). For more
than 50 years, researchers have examined the factors affecting the success of an
internationalization process (see e.g. Johanson & Vahlne 1977; Johanson & Matsson
1988; Håkansson & Snehota 1989; Ahokangas 1998). However, the marketplace is
changing, which constantly calls for new research in order to understand the
international behaviour of companies. Internationalization has been defined in several
ways, but according to Ruzzier, Hisrich and Antoncic (2006: 477), it is simply a
synonym for international expansion of a company’s economic activities over a national
country’s border.
Research on international business and entrepreneurship is increasingly intersecting, as
the marketplace is internationalizing and the entrepreneurial companies’ importance in
the economy grows (McDougall & Oviatt 2000). Due to the nature of markets, many
companies are facing a situation where they cannot operate without paying attention to
the risks and opportunities presented by global competition (Ruzzier et al. 2006). As
enterprises face increasing competition, their growth often depends on international
expansion (Matiusinaite & Sekliuckiene 2015). This has led to a situation where some
companies are expanding their activities over national country’s borders at very early
stages.
Born global is a phenomenon of “early and rapid internationalization among young,
entrepreneurial firms” (Cavusgil & Knight 2015: 3). Such behaviour might be expected
in countries with smaller domestic markets, but born global firms began emerging from
countries with large markets as well (Cavusgil & Knight 2015). Evidence of born global
phenomenon was observed after globalization accelerated in 1980s. At the time when
Cavusgil and Knight began their research on born globals in early 1990s, born globals
were still a novel concept. However, such companies are relatively mainstream today.
In Europe, approximately one-fifth of new enterprises are thought to be born globals
(Cavusgil & Knight 2015).
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In this thesis, born globals will be defined according to Knight & Cavusgil (2004: 124),
who define born globals as “entrepreneurial start-ups that, from or near their founding,
seek to derive a substantial proportion of their revenue from the sale of products in
international markets”. This definition emphasizes that born globals are young
companies that pursues internationalization mainly through exporting as their main
entry mode. It also emphasizes the fact that the start-ups seek to derive a substantial
proportion of their revenue from international markets, and not limiting the behaviour
by the number of markets they have internationalized to or specific percentage of sales
that needs to be derived from international markets. Therefore, it is in line with the
objective of this study.
There is an increased demand for a better understanding of the born global phenomenon
as countries have embraced entrepreneurship as an important economic engine. Born
globals are important contributors to many economies, as they often are central actors in
ecosystems that support larger enterprises (Zander, McDougall-Covin & Rose 2015).
Large and small firms complement each other as multinationals often have better
resources, e.g. market access, to internationalize innovations but small firms can often
be better at creating those innovations (Acs et al. 2001). In addition, born globals are
believed to contribute to the development of national economy by enabling international
knowledge transfer and fostering a country’s reputation as an attractive place for
investment and trade (Cavusgil & Knight 2015). Increased internationalization can lead
to economic growth as companies are able to utilize international markets in addition to
local markets, employ more employees and bring revenue to the country’s economy.
We have now more than two decades of research on firms internationalizing at early
stages, yet much work is still needed (Zander, McDougall-Covin & Rose 2015). In the
field of research, born globals are central to the international entrepreneurship domain.
Cavusgil and Knight were among the first to study born global firm in 2004 when they
provided a framework for the phenomenon in an award-winning article. In 2015, they
did a reflection on the topic and stated that many unresolved research questions still
remain, including the issue of why some firms internationalize early and others late in
their evolution (Cavusgil & Knight 2015). It has been postulated that the sooner a firm
expands internationally, the sooner it will grow more quickly (Autio, Sapienza &
Almeida 2000). This study aims to contribute to these unsolved research questions.
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1.1 Problem area
The higher-level problem area is that earlier internationalization theories (see e.g.
Johanson & Vahlne 1977; Johanson & Matsson 1988; Håkansson & Snehota 1989;
Ahokangas 1998) cannot explain the international behaviour of born globals that we are
observing today. As Cavusgil and Knight (2015: 5) state: “The phenomenon of early
and accelerated internationalization contrasts with the conventional pattern of gradual,
incremental internationalization”. This call for new research has resulted in a growing
interest in born globals during the last few decades. Zander, McDougall-Covin and Rose
(2015) argue that despite born globals growing importance, our understanding of such
international behaviour, how and why these firms implement their internationalization
strategies, and the factors behind their success, remains incomplete. Even if born
globals were one of the first research topics to emerge in the research domain of
international entrepreneurship, little research into the determinants of early
internationalization has been done (Ricard & Saiyed 2015). Thus, more research to
better understand the determinants for early internationalization is needed.
As Cavusgil and Knight (2015) argue, the founding and growth of born global firms are
often championed by founders or managers. One important facet of internationalization
is individuals making strategic decisions (Sommer & Haug 2010). These arguments
highlight the role of founder CEOs (Chief Executive Officer) as individuals in the
process of making a decision of early internationalization. Decision-making processes
have been investigated from a cognitive perspective (eg., Busenitz & Barney 1997;
Haley & Stumpf 1989) where intention models have shown to be a promising avenue.
According to the Theory of Planned Behaviour (TPB), intentions are influenced by
attitudes, subjective norms and perceived behavioural control (Ajzen 1991; Ajzen 2011;
Kautonen, van Gelderen & Tornikoski 2013). By exploring individuals’ beliefs, we can
gain understanding of the underlying cognitive foundation of the intention to a specific
behaviour. In addition, TPB helps us to explore why people hold these beliefs and what
factors have affected the formation of them. Krueger and Carsrud (1993) were the first
to apply TPB in entrepreneurship, and their encouraging results suggested that the
theory holds great potential for future research. However, only few applications of TPB
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to the internationalization issue exist (see e.g. Sommer 2010; Sommer and Haug 2010;
Pauwels, Patterson, Ruyter & Wetzels 2009; Ricard & Saiyed 2015; Game &
Apfelthaler 2016) and even fewer specifically focusing on early internationalization
among born globals. More research at the individual level, e.g. the role of leaders and
CEOs, has been argued to have the potential to enrich the understanding of a firm’s
internationalization processes (see e.g. Griffith & Cavusgil 2008; Chittoor, Aulakh &
Ray 2017). Furthermore, Sommer (2010) argue that the intersection of international
entrepreneurship and entrepreneurial cognition deserves more attention, as cognitive
approaches have shown to be promising within the field.
1.2 Objective and research questions
The objective of this study is to explore born global founder CEOs’ intention to early
internationalization by focusing on the cognitive elements’ role as antecedents to their
intention. The cognitive elements are studied by applying the Theory of Planned
Behaviour (TPB), which has shown to be a promising approach to explore the
underlying cognitive foundation of an individual’s intention (see e.g. Sommer 2010).
Intention represents the motivation that an individual has to perform a specific
behaviour (Ajzen 1991). As the founder CEO is often a central factor in the
internationalization process of a born global, a better understanding of the cognitive
antecedents of their intention to early internationalization can be used to enhance the
internationalization of start-ups.
This study is among the early research applying the TPB to early internationalization
within born globals. Thus, it contributes to a better understanding of the determinants
behind early internationalization and can be categorized under the research domain of
international entrepreneurship. This study will be focusing on founder CEOs of Finnish
born global start-ups, who have expanded the economic activities of their companies
into international markets within three years of their founding.
The following research aims are reviewed and examined:
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Theoretical research aim is to provide a conceptual understanding of the cognitive
foundation of born global founder CEOs’ intention to early internationalization, and to
motivate its relevance in the research domain of internationalization.
Empirical research aim is to get a better understanding of the cognitive elements
influencing born global founder CEOs’ intention to early internationalization and how
those have influenced the early internationalization of their start-up.
Normative research aim is to identify priority areas within founder CEO’ cognitive
elements that could be supported in order to enhance early internationalization of
Finnish start-ups.
The following research questions will be examined in order to answer the research aims:
Q1: What is the relevance of born global founder CEOs’ cognitive
antecedents to early internationalization?
Q2: What are potential cognitive antecedents influencing born global
founder CEOs’ intention to early internationalization? How do those
factors influence the early internationalization?
Q3: Considering founder CEOs’ role in early internationalization, what are
the most relevant cognitive antecedents that could be supported in order to
enhance early internationalization of Finnish start-ups?
1.3 Methodology
To meet the objective, a qualitative research approach was chosen. The research was
designed applying a multiple-case study strategy. The primary data was collected by
conducting five semi-structured interviews with founder CEOs of Finnish born global
firms. All of the interviewees have been founding or co-founding their firms and are
acting as CEO currently. The case firms are briefly introduced later in the study. The
collected data was analysed using content analysis. An expanded model of TPB
provided the constructs utilized for analysing the data. The methodology chosen for this
study will be further discussed and motivated in the methodology chapter.
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1.4 Delimitations and limitations
As the objective and research questions suggest, this study is delimited to early
internationalization within Finnish born global companies. Internationalization can be
seen as a complex process, suggesting that multiple factors affect it. This study focuses
on the founder CEOs of Finnish born global start-ups, to understand their role in the
early internationalization and the cognitive foundation behind their intention to early
internationalization. The geographic scope is limited to Finnish start-ups. All of the case
companies can be seen as fast-growing start-ups, which should be treated as a
delimitation. Especially in Finland, there is a lot of start-ups that do not strive for such
fast growth.
A research model (figure 3) is used to meet the objective of this study, which limits the
focus of the findings to be relevant to that model. The use of a research model comes
with its own limitations, even if the original Theory of Planned Behaviour has been one
of the most promising models and applied by numerous authors. The Theory of Planned
Behaviour does not e.g. take into account the economical or environmental factors,
which might influence an individual’s intention to the behaviour. Similarly, it does not
address the time between the intention and the actual behaviour. The qualitative
approach chosen for this study sets its own delimitations, which are discussed further in
the methodology chapter. These main limitations were chosen based on
- the author’s own fields on interest (born globals, internationalization,
entrepreneurship),
- the limited resources allocated for this study,
- the fact that traditional internationalization theories cannot explain the
international behaviour of today’s born globals,
- other authors’ suggestions regarding the potential of applying TPB in
entrepreneurship and internationalization, and
- the importance of start-ups and internationalization for economies.
The interviews were conducted during July 2020 and therefore, the results might be
affected by factors influencing this specific time period, e.g. the operations of society.
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The number of interviews and the purposive sampling procedure decrease the
generalizability of findings. An assumption is that the interviewees were honest and
truthful as respondents. The reliability and validity will be further discussed in chapter
3.5.
1.5 Research outline
This study is divided into six chapters. The first chapter is an introduction chapter in
which the research background, research objective and questions, methodology, and
delimitations and limitations are presented. The second chapter consists of a literature
review, giving the reader a brief overview of traditional internationalization theories,
proceeding into born global research and the role of founder CEOs, and finally
presenting the research model used in this research. In the third chapter, the
methodology chosen for this study will be discussed and motivated, concluded with a
discussion of the validity and reliability of the research. The fourth chapter presents the
results from the collected data. In chapter five, the analysis of the findings will be
discussed. Chapter six will conclude the study with recommendations and future
research suggestions. Chapter seven is a Swedish summary of the thesis.
1.6 Definitions
Antecedents: This study focuses on five groups of antecedents for early
internationalization: experience, attitude towards the object, perceived behavioural
control, subjective norm, and knowledge. These antecedents were chosen based on an
extended research model of the Theory of Planned Behaviour (figure 3).
Born globals are “entrepreneurial start-ups that, from or near their founding, seek to
derive a substantial proportion of their revenue from the sale of products in international
markets” (Knight & Cavusgil 2004: 124).
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Born global founder CEO is both a founder (or co-founder) and a Chief Executive
Officer of a company that fits the definition of born globals (by Knight & Cavusgil).
Chief Executive Officer is the highest-ranking individual in a company.
Early internationalization is an international expansion of a firm that has started
within three years of their founding, following the time frame proposed by Knight,
Madsen and Servais (2004).
Intention represents the motivation that an individual has to perform a specific
behaviour (Ajzen 1991).
Internationalization has been defined in several ways, but according to Ruzzier,
Hisrich and Antoncic (2006: 477), it is simply a synonym for international expansion of
a company’s economic activities over a national country’s border.
International Entrepreneurship (IE) is “a combination of innovative, proactive, and
risk-seeking behaviour that crosses national borders and is intended to create value in
organizations” (McDougall & Oviatt 2000: 903).
Theory of Planned Behaviour (TPB) is a theory proposed by Icek Ajzen (1991) which
states that an individual’s intention to a specific behaviour is shaped by attitude,
subjective norms and perceived behavioural control.
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2 LITERATURE REVIEW
This chapter will provide the reader with a theoretical background and a literature
analysis with the aim of giving theoretical insights on the research subject. The
literature review will begin with briefly introducing the earlier internationalization
theories upon which the more recent literature on international entrepreneurship and
born globals are built. Later in the chapter, the founder CEO’s role and the relevance of
cognitive antecedents will be discussed. Lastly, the research model applied in this study
will be presented.
2.1 Internationalization
In this paper, the concept of internationalization is used according to the definition by
Ruzzier et al. (2006: 477): “Internationalization is a synonym for the geographical
expansion of economic activities over a national country’s border”. Economic
internationalization phenomenon accelerated after the second world war, but the term
has been used already in 1920s (Ruzzier et al. 2006). Internationalization characterizes
today’s business world, meaning that different markets are internationally connected,
and national economies are interdependent of each other (Acs, Morck & Yeung 2001).
This connectivity means that companies can find competitors, suppliers and customers
all over the world (Acs et al. 2001).
As the internationalization of companies has increased and the business landscape has
become more global, research has been done in order to understand the factors behind
these phenomena. According to Acs et al. (2001) most observers agree upon three
forces which are driving the globalization of business. The first one is the explosive
growth in low-cost technology which enables the connection between people and
locations. Availability of better information and communication technologies increases
the awareness and knowledge of economic opportunities abroad. At the same time,
companies are able to divide their production processes more by the use of such
technologies. The steady dismantling of trade barriers is a second driving force behind
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the globalization of business. This has resulted in a more wide-open business field
creating room for innovative companies on the global markets. A third force is the
widespread economic restructuring that started after the fall of socialism in Eastern
Europe and Russia. These areas are becoming new markets and therefore, new
opportunities for investment and growth are opening. (Acs et al. 2001).
Furthermore, a reason for the increasing internationalization of SMEs could lie in
several countries’ interest of boosting economic growth and cutting unemployment by
attempting to increase the international expansion of their companies (Ruzzier et al.
2006).
2.2 Internationalization literature
Initially the focus of research on internationalization was on large companies, but more
recently the internationalization of SMEs has attracted a growing interest (Ruzzier et al.
2006). The traditional theories of internationalization have acted as a basis for research
in the field of SME internationalization and therefore, an understanding of these
theories is important in order to understand the current state of research.
Literature on the internationalization can be divided in different ways, but this paper
follows the categorization by Sommer (2010) presented in figure 1. He divides the
literature more specifically than e.g. Andersson (2000), who divides the
internationalization theory broadly in just two currents: the economic and the process
approaches. In this chapter, a brief introduction will be provided to some of the most
relevant frameworks in each of the field of SME internationalization research. Research
related to entrepreneurship can be subsumed under the international entrepreneurship
theory, which will be discussed more closely in its own chapter, as it is of high
relevance for this paper. International entrepreneurship theory explicitly addresses the
role of the entrepreneur in the internationalization process (Sommer 2010).
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Figure 1. SME internationalization theories (Based on Sommer 2010: 290)
Stage models
A well-known stage model of a company’s internationalization process was proposed
by Johanson and Vahlne (1977) which was based on their empirical research on four
Swedish manufacturers and previous research done in the field of internationalization.
This so-called Uppsala Internationalization Model (figure 2) has its focus both on how a
company gradually acquire, integrate and use the knowledge of foreign markets, and
how a company gradually increase its involvement in the foreign country (Johanson and
Vahlne 1977; 1990). These researchers argue that knowledge about foreign markets and
operations is needed in order to develop a company’s international operations and that
such knowledge can mainly be acquired by operating abroad (Johanson and Vahlne
1977; 1990). According to Johanson and Vahlne (1977), internationalization can be
seen as a product of a series of incremental decisions.
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Network approaches
The network approach model to internationalization was developed by researchers of
the Industrial Marketing and Purchasing (IMP) group, namely Johanson and Matsson
(1988). At that time, earlier internationalization theories had been focusing on a single
company’s perspective on how it develops its international operations autonomously.
The network approach stresses the importance of interactions and relationships a
company has with other actors in its network, underlining that “No business is an
island” (Håkansson & Snehota 1989). Johanson and Matsson (1988) applied the
network approach to the Uppsala Model, which resulted in the network model of
internationalization. According to their model, a company achieves international
expansion through establishing relationships in other countries (international extension),
developing the relationships in those new networks (penetration) and connecting the
networks a company has in different countries (international integration) (Johanson and
Matsson 1988).
Resource based approaches
The resource-based approach on internationalization emerged within the field of
strategic management, basing on the existing models of internationalization (Ruzzier et
al. 2006). This approach has its focus on the unique attributes of a company, which are
seen as “the fundamental drivers of the performance and sustainable competitive
advantage needed for internationalization” (Ruzzier et al. 2006: 486). A company’s
success in the market depends on its advantageous positions regarding the resources that
are relevant for the company, and how the company can gain and defend those positions
(Conner 1991). Besides of emphasizing the importance of intangible knowledge-based
resources, resource-based approaches address also the ability for developing new
resources through organizational learning (Ruzzier et al. 2006). One of the most
promising resource-based models is the model by Ahokangas (1998), which suggests
that key factors in SME internationalization is the development of internal and external
resources, and the adjustment of these resources both within the company and within
other companies in the network.
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Theories focusing on MNE
The “eclectic” or “OLI” paradigm, which was developed by John Dunning (1980), is a
theoretical approach focusing on MNEs. The abbreviation OLI stands for Ownership,
Location and Internationalization, which are suggested to be potential sources of
advantage when a company is deciding of becoming a multinational. This approach
focuses on the need of information of both incentives and attraction for production in
the foreign market, which is then used to evaluate whether or not it is cost-effective.
Dunning’s approach has been a helpful and inspiring framework for studies in foreign
direct investment (FDI). (Dunning 1980).
Many of these earlier explanations asserted that international business is only something
for the large companies with a lot of resources, and which have already thoroughly
established itself in its domestic markets (Cavusgil & Knight 2015). As born global
firms clearly do not follow these patterns, some researchers argue that the phenomenon
of born global cannot be explained by traditional internationalization models. Axinn and
Mathyssens (2002: 436) explored the drawbacks of the traditional internationalization
theories and state that “… existing theory in internationalization is insufficient to
explain the currently observed behaviours of firms in the international business
marketplace”. Cavusgil and Knight (2015) argue that born global firms stand in sharp
contrast to the earlier internationalization theories (e.g. Cavusgil 1980; Johanson &
Vahlne 1977) as the incremental internationalization view cannot explain the rise of
born global firms. As the number of studies among international entrepreneurship has
emerged, it has been shown that today’s companies can be global at early stages (e.g.
McDougall et al. 2003; Kuemmerle 2002). However, the above-mentioned
internationalization theories have formed a basis for the emerging research among
international entrepreneurship and born globals.
2.3 International entrepreneurship
International entrepreneurship (IE) as a research domain focuses on “entrepreneurial
aspects of doing business across borders, in the context of both small and large firms”
(Zander, McDougall-Covin & Rose 2015: 27). Cavusgil and Knight (2015: 4) state that
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international entrepreneurship “describes the process of creatively discovering and
exploiting opportunities that lie outside a firm’s domestic markets in pursuit of
competitive advantages”.
When considering the existing internationalization theories, the role of decision-makers
is considered in international entrepreneurship literature (Ruzzier et al. 2006).
McDougall and Oviatt (2000: 903) proposed a nowadays commonly used definition,
which states that: “International entrepreneurship is a combination of innovative,
proactive, and risk-seeking behaviour that crosses national borders and is intended to
create value in organizations”. This definition was formed in 2000, basing on prior
efforts and previous submissions to the forum of international entrepreneurship.
International entrepreneurship is an emerging research area, and the concept evolved in
1990s as academic interest in the topic grew (McDougall & Oviatt 2000). It integrates
the entrepreneurship perspective to internationalization (Ruzzier et al. 2006). Therefore,
the concept of entrepreneur and entrepreneurship will be briefly discussed firstly.
In this paper, the term “founder CEO” is used instead of “entrepreneur”, “decision-
maker”, or “owner-manager”, which are other terms used among research in this
domain. The term entrepreneur seems to be the most widely used, but founder CEO was
chosen as this study focuses specifically on entrepreneurs who are acting in the role of a
CEO and have been founding their company. CEO alone would be insufficient, as many
of the CEOs are acting in that role without being part of founding the company.
According to Andersson (2000), an entrepreneur is an individual who carries out
entrepreneurial actions. These entrepreneurial actions include following qualities:
- the ability to see new combinations,
- the will to act and to develop these new combinations,
- the view that acting in accordance with one’s own vision is more important than
rational calculations,
- the ability to convince others to invest in entrepreneurial projects, and
- proper timing. (Andersson 2000: 67).
Stevensson and Jarillo (1990) divide studies on entrepreneurship into three main
categories: how people act, why they act and what happens when they act. The first
question examines how to succeed in entrepreneurship. The second question explores
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with the help of psychological factors why entrepreneurs act. The third question
connects the entrepreneur with processes within a company and explores the effect of
the entrepreneur. This particular study is focuses on the second question: “why
entrepreneurs act?” as it further investigates the role of born global CEOs’ cognitive
antecedents to early internationalization.
Entrepreneurs’ role in the internationalization process has been studied by several
researchers in different settings. According to a framework proposed by Andersson
(2000), the entrepreneur is in a central role in the internationalization as the process will
not start without entrepreneur wanting and triggering the process. Alvarez and Busenitz
(2001: 755) applied the resource-based theory on an individual level, and state that
“Entrepreneurs have individual-specific resources that facilitate the recognition of new
opportunities and the assembling of resources for the venture”. These individual
resources, e.g., relationships, entrepreneurial knowledge, ability to coordinate resources,
add value to the company as such resources cannot be simply created nor easily imitated
(Ruzzier et al. 2006). Sommer (2010) highlights decision-makers’ role by stating that
analysing the factors preventing SME from international business should deal with the
decision-makers who are behind the corresponding decisions. SME’s decisions made in
strategic fields such as internationalization are very often handled by one single
decision-maker; the Chief Executive Officer (CEO) (Westerberg et al. 1997). With
regard to international activities of SMEs, the CEO is widely recognized as a crucial
factor and one of the main variables (see e.g., Miesenbock 1988; Bell et al. 2003). Saeed
and Ziaulhaq (2018) studied the impact of CEOs’ demographic characteristics on the
internationalization of SMEs and argue that CEOs’ political connections and
educational level positively relate to firm internationalization, while age might
negatively influence it. These findings suggest that the CEO indeed is in a central role in
the internationalization process.
2.4 Born Global research
Born Global research can be subsumed under the research domain of International
Entrepreneurship. It will be briefly discussed in its own chapter as it is of high relevance
for this study.
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Studies focusing on early internationalized firms have used different concepts, e.g.
International new ventures (e.g. McDougall et al. 1994), Born Globals (e.g. Moen 2002;
Cavusgil & Knight 2004), Global-Start-ups (e.g. Oviatt & McDougall 1994) and Instant
exporters (e.g. McAuley 1999). Out of these alternatives born globals is probably the
most common concept (Andersson & Evangelista 2006) and therefore, it will be used in
this study. As can be seen in figure 1, born global research can be categorized under the
research domain of international entrepreneurship. Knight and Cavusgil (2004: 124)
define born globals as “entrepreneurial start-ups that, from or near their founding, seek
to derive a substantial proportion of their revenue from the sale of products in
international markets”. Early internationalization within such companies has been
defined with different time frames. In this study, early internationalizers will be defined
according to Knight, Madsen and Servais (2004), who define them as firms that start
international expansion within three years of their founding.
Evidence of the born global phenomenon was observed after the globalization
accelerated in 1980s. At the time when Cavusgil and Knight began their research on
born globals in the early 1990s, born globals were still a novel concept. Their
conceptualization of born global firms emphasized companies that soon after their
founding made a significant portion of their revenue from sales outside their domestic
market. The rise of born globals has been facilitated by technological advances,
affordable and efficient logistics, increasingly homogenous global demand, and
widening networks of suppliers and customers. What often characterizes born global
firms is that although they have limited tangible resources, they are usually endowed
with great intangible resources and they appear adept at allocating their resources. Due
to limited tangible resources, born global firms usually tend to choose exporting as the
primary entry mode to international markets. Typically, the growth of born global firms
is championed by founders or managers with distinctive entrepreneurial prowess.
(Cavusgil & Knight 2015).
Even if the antecedents of early internationalization among born globals have received
some attention, they still remain a subject of debate among scholars (Cavusgil & Knight
2015; Ciravegna, Kuivalainen & Lopez 2018). Irrespective of the contextual sitatution,
it is suggested that certain motives, such as the desire to achieve extra sales, reducing
home market dependence, and unsolicited orders might encourage small firms to
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internationalize (Leonidou, Katsikeas, Palihawadana & Spyropoulou 2007). According
to Cavusgil and Knight (2015), the entrepreneurial motives, such as risk taking, and the
fundamental international orientation are commonly seen as key factors behind early
internationalization. Some authors argue that external factors such as the availability of
opportunities abroad and the domestic market size help explain early
internationalization (Dimitrators, Liuokas & Carter 2004; Fan & Phan 2007).
Baronchelli and Cassia (2014) argue that product innovation, market knowledge and
operating in a niche market might increase early internationalization. Scholars
approaching the issue from the entrepreneurship literature highlight the internal factors’
role in shaping firm-level decisions regarding e.g. internationalization (see e.g. Sommer
& Haug 2010). Ciravegna et al. (2018) studied attitudinal elements role in early
internationalization and concluded that becoming an early internationalizer is often a
combination of reasons rather than one specific attitudinal element alone.
The importance of the entrepreneur or the CEO and entrepreneurial behaviour is
probably the most common denominators regarding to research among Born Globals
(Andersson & Evangelista 2006). Existing research within Born Global entrepreneurs
and entrepreneurial behaviour has focused on e.g., the networks of entrepreneurs
(Freeman et al. 2006), entrepreneurial behaviour of companies (McDougall & Oviatt
2000) and the characteristics of entrepreneurs (Gartner 1988). According to Andersson
& Evangelista (2006), the individual entrepreneur of a Born Global is not studied in
depth as the majority of research has been on entrepreneurial behaviour on company
level. In addition, Ricard and Saiyed (2015) state that there is little research into
determinants of early internationalization.
Many of the most prominent firms have been or are still being run by founder CEOs,
such as Facebook, Amazon and Google. According to Gavetti (2012), founder CEOs are
often characterized with the ability to not only identify strategic opportunities, but
additionally they can act on, legitimize, and realize such opportunities. During the latest
decades, researchers have tried to understand how the firm-level decisions and
outcomes might be affected by the fact that it is being run by founder CEOs instead of
agent CEOs. Studies have been made e.g., regarding its effects on financial performance
(Fahlenbrach 2009) and investment decisions (Souder, Simsek, & Johnson 2012). One
of the most interesting findings has been regarding founder CEOs risk tolerance.
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Eisenmann (2002) and later Tang, Li, and Liu (2015) studied how founder CEO status
affect firm risk taking and found out that founder CEOs tend to be more risk tolerant
than agent CEOs. As Souder et al. (2012: 24) state, founder CEOs “differ substantially
from agents for the knowledge, values, and attitudes they bring to bear in managing the
firm”. Chittoor, et al. (2019) examined the influence of owner CEOs in firm
internationalization and propose that firms with owner CEOs are likely to engage more
in internationalization as compared to agent CEOs. The founders behind born global
firms tend to view the whole world as their marketplace (Cavusgil & Knight 2015). As
the behavioural strategy suggests, “superior opportunities tend to be cognitively distant,
and critical sources of superior performance lie in strategic leaders’ superior ability to
overcome the behavioural bounds that make it hard for the average firm to pursue”
(Gavetti 2012: 269). Based on these findings, it can be assumed that founder CEOs’
cognitive foundation might indeed play an important role on strategic decisions such as
early internationalization.
2.5 Theory of Planned Behaviour and Born Globals
The decision-making processes have been investigated from a cognitive perspective
(eg., Busenitz & Barney 1997; Haley & Stumpf 1989) where intention models have
shown to be a promising avenue. Even if many authors have suggested that a cognitive
lens would likely extend the understanding of internationalization, cognitive factors
have not received much attention (Sommer & Haug 2010). One of the most promising
cognitive approaches is Ajzen’s (1991) Theory of Planned Behaviour (TPB), in which
intentions are used as a linkage between predictors of intentions and behaviour. TPB is
based on Fishbein and Ajzen’s theory of reasoned action (TRA) from 1975. Intention
represents the motivation that an individual has to perform a specific behaviour (Ajzen
1991). The relationship between intentions and specific target behaviours has been
studied in many disciplines and according to Sommer & Haug (2010: 116), intentions
are said to be “the proximal cognitive state that is temporally and causally next to the
intended behaviour”.
TPB (figure 2) suggests that the three major predictors of intentions are attitudes
towards the behaviour, subjective norm and perceived behavioural control. The model
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has been successfully applied in many different contexts, Krueger and Carsrud (1993)
being among the first ones to apply TPB in entrepreneurship. Their encouraging results
suggested that the theory holds great potential for entrepreneurship research, which has
led to several researchers applying TPB to explain problems within entrepreneurship
(Sommer & Haug 2010). However, only few applications of TPB to the
internationalization issue exist (see e.g., Sommer 2010; Ricard & Saiyed 2015).
Figure 2. Theory of Planned Behaviour (Source: Ajzen 1991: 182).
Sommer and Haug (2010) applied TPB in order to study SME owner-managers’
predictors of intentions to “actively participate in the race for new markets” and their
study showed that TPB indeed is applicable to the internationalization field. Due to the
complicated and highly dynamic nature of internationalization, Sommer and Haug
added two additional predictors of intentions to the TPB model: experience and
knowledge. These new elements stem from research made in the field of international
entrepreneurship. Attitudinal elements proved to have significant predictive power with
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regard to owner-managers’ intention to behave as an international entrepreneur. In
addition to this, the study showed that perceived behavioural control (entrepreneur’s
perception of their ability to perform a given behaviour), knowledge, and experiences
with the object of attitude proved to have a major impact. As the additional elements to
TPB, international experience and knowledge, proved to have a positive correlation
with the intention to “actively participate in the race for new markets”, they will be
included in this study. The research model by Sommer and Haug is presented in figure
3, after which each predictor of intention will be briefly discussed. (Sommer & Haug
2010).
Figure 3. Sommer & Haug’s research model based on TPB. (Source: Sommer & Haug 2010: 124)
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Experience
Experience can be understood as “a person’s observation of and/or interaction with
objects, entities, and/or events in her/his environment” (Lombard and Synder-Duch
2001, cited in Sommer & Haug 2010). Sommer & Haug’s research model suggests that
the experiences of an individual not only have a direct effect on intentions but also a
moderating effect on attitudes, subjective norm and PCB. The influence of experience
has been studied in different contexts and e.g. a study by Magnusson and Boggs (2006)
showed that there is a positive correlation between CEO’s international experience and
foreign sales. Arte (2017) studied the role of experience in early internationalization of
Indian new ventures and the findings suggest that the entrepreneur’s experience is an
essential resource but in an indirect way. He argues that knowledge is accumulated by
experiences, which then leads to the motivation to internationalize. Zucchella, Palamara,
and Denicolai (2007) studied the drivers of early internationalization by analysing 144
SMEs and argue that entrepreneur’s experience, and especially international experience,
was found positively influencing the early internationalization. These findings suggest
that experience indeed might influence the intention.
Attitude towards the behaviour
Several studies in the field have made the case that attitudes indeed play an important
role as a predictor of intention and thus, they are probably the least criticized element of
TPB (Sommer & Haug 2010). The complex nature of attitudes in internationalization
context has been emphasized, as international entrepreneurship is a complex behaviour.
This means that attitude toward internationalization might refer to different facets.
McDougall and Oviatt (2000) for example highlight the importance of risk seeking in
international entrepreneurship, which suggests that attitude toward risk might be
relevant. This may also be the case with attitude toward foreign partners, as these
relationships are an entrepreneurial resource (Barney et al. 2001). Ricard and Saiyed
(2015) studied the link between decision-makers attitudes toward internationalization
and early internationalization by applying TPB and found out that decision makers who
are most favourable toward internationalization decide to internationalize earlier than
others. These findings suggest that the overall attitude in this study’s context is a
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combination of attitudes to different objects related to early internationalization. Hence,
several attitudinal elements might play a role.
Subjective norm
Subjective norm, the other major force in TRA, has been found to be a rather weak
predictor of intention in several studies (e.g. Sheppard et al. 1988). This might also be
the case in the setting of early internationalization, as it is hard to see that an
entrepreneur would make decisions regarding early internationalization based on the
expectations of specific societal groups. However, subjective norm might still play a
role in the case of e.g. expectations from family shareholders or behaviour of relevant
competitors (Sommer & Haug 2010).
Perceived behavioural control
Perceived behavioural control can be described as “the extent to which the individual
perceives itself as being able to perform the behaviour” (Sommer & Haug 2010: 116). It
was added to TRA as many behaviours are not fully in the control of the decision-
maker. As can be seen in figure 2, TPB suggests that perceived behavioural control not
only influences intentions, but it also seems to have a direct effect on behaviour, as
opposed to the other elements. Contrary to subjective norms, several studies have shown
that perceived behavioural control is a rather strong predictor of intentions (see e.g.
Sommer 2010). Krueger and Carsrud (1993) argued that this might be the case in
entrepreneurial context as well, as their study showed that perceived behavioural control
is an important antecedent to entrepreneurial intentions.
Knowledge
In the original TPB, knowledge was integrated as a background factor underlying and
influencing beliefs. However, some researchers have found evidence that explicit
knowledge might have a significant effect on intention. Therefore, it is suggested that
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the more an individual has conscious knowledge about a certain behaviour, the higher
his/her motivation to perform that specific behaviour may be. Knowledge can be seen as
personalized information, meaning that it is shaped by an individual’s needs and initial
amount of knowledge (Tuomi 1999, cited in Sommer & Haug 2010). Similar to the
experiences of an individual, the research model suggests that knowledge has a direct
effect on intentions but also a moderating effect on attitudes, subjective norm and PCB.
Sommer and Haug (2010) applied TPB in the internationalization context by examining
knowledge and experience as separate factors and argued that they deserve to be treated
as separate predictor due to the complexity of internationalization. Arte (2017) argues
that entrepreneur’s knowledge influences both the motivation to internationalize but
also the actual internationalization process.
Conclusion
As the previous literature on born globals suggest, founder CEOs’ are a central actor in
the early internationalization. Therefore, it can be assumed that their intention to early
internationalization plays a role in the early internationalization of their firm. TPB has
been widely applied in multiple settings but also within entrepreneurship and
internationalization. It has been argued to be among the most promising cognitive
approaches, which suggests that it should be applicable in this study’s setting as well.
The above-mentioned research model by Sommer and Haug (figure 3) will be applied to
explore the cognitive antecedents influencing founder CEO’s intention to early
internationalization. Therefore, the elements that will be studied are experience, attitude
towards the behaviour, perceived behavioural control, subjective norm, and knowledge.
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3 METHODOLOGY
This chapter will discuss the research methodology chosen for this study and how the
data was collected and analysed. In addition, the validity and reliability of the data will
be discussed.
3.1 Qualitative research method
Qualitative research has been defined by various researchers. According to Nachima
and Worth-Nachima (2008: 257), “Qualitative researchers attempt to understand
behaviour and institutions by getting to know the persons involved and their values,
rituals, symbols, beliefs, and emotions”. Berg (2009: 3) approaches in the similar
fashion, by defining that “Qualitative research refers to the meanings, concepts,
definitions, characteristics, metaphors, symbols, and descriptions of things. In contrast,
quantitative research refers to count and measure of things”. Elliot, Fischer and Rennie
(1999: 215) write that “The aim of qualitative research is to understand and represent
the experiences and actions of people as they encounter, engage, and live through
situations. In qualitative research, the researcher attempts to develop understandings of
the phenomena under study, based as much as possible on the perspective of those being
studied”.
What seems to be mutual with the above-mentioned definitions of qualitative research is
that they all highlight the possibility of understanding things more deeply and on an
individual level, by getting to know the persons involved. The complex nature of
international entrepreneurship, as discussed earlier, suggests that a qualitative approach
would surely be beneficial as it leaves more room for interpretations and is more
suitable for understanding behaviour and beliefs. Eriksson and Kovalainen (2008) seem
to support this view by arguing that qualitative research gives the researcher a
possibility to understand and focus on the complexity of business-related phenomena in
their contexts. As Elliot et al. (1999) point out, a qualitative approach lets the researcher
develop her understanding of the phenomena during the study, which surely is of
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