Growth of born globals: the role of the entrepreneur’s personal factors and venture capital

Article

Abstract

This paper examines to what extent the human capital of entrepreneurs and the receipt of venture capital (VC) financing affect the growth of born globals (BGs). The study analyzes a sample of 242 BGs resulting from a survey on high-tech start-ups operating in the ICT and electronics sectors, located in different countries throughout the world. A multivariate explorative analysis controlling for the endogenous nature of VC is conducted. The results indicate that the experience of the entrepreneur in having previously established another entrepreneurial firm positively affects the growth of BGs. A negative effect is associated with the presence of heterogeneity in the management team in terms of education background. With regard to the linkage between financial capital and growth, it is found that both VC financing and the number of founders (a proxy for the availability internal capital) positively influence the growth of BGs.

Keywords

Born globals Growth Venture capital Human capital 

References

  1. Almus, M., & Nerlinger, E. (1999). Growth of new technology-based firms: which factors matter? Small Business Economics, 13, 141–154.CrossRefGoogle Scholar
  2. Andersson, S. (2000). The internationalization of the firm from an entrepreneurial perspective. International Studies of Management & Organization, 30(1), 63–93.CrossRefGoogle Scholar
  3. Armstron, J. S., & Overton, T. S. (1977). Estimating non-response bias in mail surveys. Journal of Marketing Research, 14(3), 396–402.CrossRefGoogle Scholar
  4. Autio, E., Sapienza, H. J., & Almeida, J. G. (2000). Effects of age at entry, knowledge intensity, and imitability on international growth. The Academy of Management Journal, 43(5), 909–924.CrossRefGoogle Scholar
  5. Bagozzi, R. P., & Yi, Y. (2012). Specification, evaluation, and interpretation of structural equation models. Journal of the Academy of Marketing Science, 40(1), 8–34.CrossRefGoogle Scholar
  6. Barney, J. A. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120.CrossRefGoogle Scholar
  7. Baronchelli, G., & Cassia, F. (2014). Exploring the antecedents of born-global companies’ international development. International Entrepreneurship and Management Journal, 10(1), 67–79.CrossRefGoogle Scholar
  8. Baum, J., & Silverman, B. (2004). Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups. Journal of Business Venturing, 19, 411–436.CrossRefGoogle Scholar
  9. Becker, G. S. (1975). Human Capital. Chicago: Chicago Univ. Press.Google Scholar
  10. Bloodgood, J. M., Sapienza, H. J., & Almeida, J. G. (1996). The internationalization of new high potential U.S. ventures: antecedents and outcomes. Entrepreneurship: Theory and Practice, 20(4), 61–76.Google Scholar
  11. Bosma, N., Van Praag, M., Thurik, R., & de Wit, G. (2004). The value of human capital and social capital investments for the business performance of start-ups. Small Business Economics, 23, 227–236.CrossRefGoogle Scholar
  12. Cannone, G., & Ughetto, E. (2014). Born globals: a cross-country survey on high-tech start-ups. International Business Review, 23(1), 272–283.CrossRefGoogle Scholar
  13. Cannone, G., & Ughetto, E. (2015). Internationalization flows of high-tech start-ups: a gravity model. European Business Review, 27(1), 60–79.CrossRefGoogle Scholar
  14. Carpenter, R., & Petersen, B. (2002). Capital market imperfections, high-tech investment and new equity financing. Economic Journal, 112, 54–72.CrossRefGoogle Scholar
  15. Chandler, G. N., & Jansen, E. (1992). The entrepreneur’s self-assessed competence and venture performance. Journal of Business Venturing, 7, 223–236.CrossRefGoogle Scholar
  16. Colombo, M. G., & Grilli, L. (2005). Entrepreneurs’ human capital and the growth of new technology-based firms: a competence-based view. Research Policy, 34, 795–816.CrossRefGoogle Scholar
  17. Colombo, M. G., & Grilli, L. (2010). On growth drivers of high-tech start-ups: exploring the role of entrepreneurs’ human capital and venture capital. Journal of Business Venturing, 25(6), 610–626.CrossRefGoogle Scholar
  18. Cooper, A. C., & Bruno, A. V. (1977). Success among high-technology firms. Business Horizons, 20, 16–22.CrossRefGoogle Scholar
  19. Cooper, A. C., Gimeno-Gascon, F. J., & Woo, C. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9, 371–395.CrossRefGoogle Scholar
  20. Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), 301–331.CrossRefGoogle Scholar
  21. Davila, A., Foster, G., & Gupta, M. (2003). Venture capital financing and the growth of start-up firms. Journal of Business Venturing, 18, 689–708.CrossRefGoogle Scholar
  22. Eisenhardt, K. M. (2013). Top management teams and the performance of entrepreneurial firms. Small Business Economics, 40, 805–816.CrossRefGoogle Scholar
  23. Eisenhardt, K. M., & Schoonhoven, C. B. (1990). Organizational growth: linking founding team, strategy, environment and growth among U.S. semiconductor ventures, 1978–1988. Administrative Science Quarterly, 35, 504–529.CrossRefGoogle Scholar
  24. Engel, D., & Keilbach, M. (2007). Firm level implication of early stage venture capital investment: an empirical investigation. Journal of Empirical Finance, 14, 150–167.CrossRefGoogle Scholar
  25. Feeser, H. R., & Willard, G. E. (1990). Founding strategy and performance: a comparison of high and low growth high tech firms. Strategic Management Journal, 11, 87–98.CrossRefGoogle Scholar
  26. Gabrielsson, M., Kirpalani, V. H., Dimitratos, P., Solberg, C. A., & Zucchella, A. (2008). Born globals: propositions to help advance the theory. International Business Review, 17, 385–401.CrossRefGoogle Scholar
  27. Gimeno, J., Folta, T. B., Cooper, A. C., & Woo, C. Y. (1997). Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming firms. Administrative Science Quarterly, 42, 750–783.CrossRefGoogle Scholar
  28. Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: the organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206.Google Scholar
  29. Heckman, J. (1990). Varieties of selection bias. American Economic Review, 80, 313–318.Google Scholar
  30. Hellmann, T., & Puri, M. (2002). Venture capital and the professionalization of start-up firms: empirical evidence. Journal of Finance, 57(1), 169–197.CrossRefGoogle Scholar
  31. Herrmann, P., & Datta, D. (2002). CEO successor characteristics and the choice of foreign entry mode: an empirical study. Journal of International Business Studies, 33(3), 551–569.CrossRefGoogle Scholar
  32. Hoyle, R. H. (1995). Structural equation modeling. Concepts, issues and applications. California: Sage Pulications Inc.Google Scholar
  33. Jantunen, A., Nummela, N., Puumalainen, K., & Saarenketo, S. (2008). Strategic orientations of born globals. Do they really matter? Journal of World Business, 43, 158–170.CrossRefGoogle Scholar
  34. Javalgi, R. G., & Todd, P. R. (2011). Entrepreneurial orientation, management commitment, and human capital: the internationalization of SMEs in India. Journal of Business Research, 64, 1004–1010.CrossRefGoogle Scholar
  35. Johanson, J., & Vahlne, J. E. (1977). The internationalization process of the firm. A model of knowledge development and increasing foreign market commitments. Journal of International Business Studies, 8(1), 23–32.CrossRefGoogle Scholar
  36. Johnson, J. E. (2004). Factors influencing the early internationalization of high-technology start-ups: US and UK evidence. Journal of International Entrepreneurship, 2, 139–154.CrossRefGoogle Scholar
  37. Jones, M. V., Coviello, N., & Tang, Y. K. (2011). International Entrepreneurship research (1989–2009): a domain ontology and thematic analysis. Journal of Business Venturing, 26, 632–659.CrossRefGoogle Scholar
  38. Kiss, A. N., Danis, W. M., & Cavusgil, S. T. (2012). International entrepreneurship research in emerging economies: a critical review and research agenda. Journal of Business Venturing, 27, 266–290.CrossRefGoogle Scholar
  39. Knight, G., & Cavusgil, S. T. (1996). The born global firm: a challenge to traditional internationalization theory. Advances in International Marketing, 8, 11–26.Google Scholar
  40. Kungwansupaphan, C., & Siengthai, S. (2014). Exploring entrepreneurs’ human capital components and effects on learning orientation in early internationalizing firms. International Entrepreneurship and Management Journal, 10(3), 561–587.CrossRefGoogle Scholar
  41. Loane, S., Bell, J., & McNaughton, R. (2007). A cross-national study on the impact of management teams on the rapid internationalization of small firms. Journal of World Business, 42(4), 489–504.CrossRefGoogle Scholar
  42. Madsen, T. K., & Servais, P. (1997). The internationalization of born globals: an evolutionary process? International Business Review, 6(6), 561–583.CrossRefGoogle Scholar
  43. Moen, O. (2002). The born globals: a new generation of small European exporters. International Marketing Review, 19(2), 156–175.CrossRefGoogle Scholar
  44. Oviatt, B. M., & McDougall, P. P. (1997). Challenges for internationalization process theory: the case of international new ventures. Management International Review, 37(2), 85–99.Google Scholar
  45. Oviatt, B. M., & McDougall, P. P. (2005). Defining international entrepreneurship and modeling the speed of internationalization. Entrepreneurship: Theory and Practice, 29(5), 537–553.Google Scholar
  46. Pennings, J. M., Lee, K., & Witteloostuijn, A. (1998). Human capital, social capital, and firm dissolution. The Academy of Management Journal, 41(4), 425–440.CrossRefGoogle Scholar
  47. Preece, S. B., Miles, G., & Baetz, M. C. (1998). Explaining the international intensity and global diversity of early stage technology based firms. Journal of Business Venturing, 14, 259–281.CrossRefGoogle Scholar
  48. Roure, J. B., & Maidique, M. A. (1986). Linking prefunding factors and high-technology venture success: an exploratory study. Journal of Business Venturing, 1, 295–306.CrossRefGoogle Scholar
  49. Ruzzier, M., Antoncic, B., Hisrich, R. D., & Konecnik, M. (2007). Human capital and SME internationalization: a structural equation modeling study. Canadian Journal of Administrative Sciences, 24, 15–29.CrossRefGoogle Scholar
  50. Sapienza, H. J. (1992). When do venture capitalists add value? Journal of Business Venturing, 7, 9–27.CrossRefGoogle Scholar
  51. Siegel, R., Siegel, E., & Macmillan, I. C. (1993). Characteristics distinguishing high growth ventures. Journal of Business Venturing, 8, 169–180.CrossRefGoogle Scholar
  52. Sleuwaegen, L., & Onkelinx, J. (2014). International commitment, post-entry growth and survival of international new ventures. Journal of Business Venturing, 29(1), 106–120.CrossRefGoogle Scholar
  53. Stuart, R. W., & Abetti, P. A. (1990). Impact of entrepreneurial and management experience on early performance. Journal of Business Venturing, 5, 151–162.CrossRefGoogle Scholar
  54. Vella, F., & Verbeek, M. (1999). Estimating and interpreting models with endogenous treatment effects. Journal of Business and Economic Statistics, 17, 473–478.Google Scholar
  55. Westhead, P., & Cowling, M. (1995). Employment change in independent owner-managed high technology firms in Great Britain. Small Business Economics, 7, 111–140.CrossRefGoogle Scholar
  56. Westhead, P., Wright, M., & Ucbasaran, D. (2001). The internationalization of new and small firms: a resource-based view. Journal of Business Venturing, 16, 333–358.CrossRefGoogle Scholar
  57. Wiersema, M. F., & Bantel, K. A. (1992). Top management team demography and corporate strategic change. The Academy of Management Journal, 35(1), 91–121.CrossRefGoogle Scholar
  58. Williams, D. R. (2013). Human and financial capital as determinants of biopharmaceutical IPO de-listings. Journal of Business Research, 66, 2612–2618.CrossRefGoogle Scholar
  59. Zucchella, A., Palamara, G., & Denicolai, S. (2007). The drivers of the early internationalization of the firm. Journal of World Business, 42(3), 268–280.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Politecnico di TorinoDIGEPTorinoItaly

Personalised recommendations