Social-cognitive antecedents of new venture internationalization: The role of entrepreneur intention, self-efficacy, and positive orientation

Aleksandra Wasowska (Department of Management, University of Warsaw, Warsaw, Poland)

Baltic Journal of Management

ISSN: 1746-5265

Article publication date: 10 April 2019

Issue publication date: 18 June 2019

Abstract

Purpose

The purpose of this paper is to investigate the social-cognitive antecedents of an entrepreneur’s internationalization intent and a firm’s behavior. Building on the insights of social-cognitive psychology, the author develops a conceptual model linking an entrepreneur’s positive orientation, self-efficacy beliefs, internationalization intent and actual behavior of the firm.

Design/methodology/approach

The author tests this model with a sample of 310 Polish firms (including 241 domestic and 69 international new ventures), drawing on data collected first in 2006 and then in 2007.

Findings

The author finds that self-efficacy mediates between positive orientation and internationalization intent, and that an entrepreneur’s internationalization intent predicts a firm’s behavior (i.e. foreign market entry). Moreover, firm age moderates the relationship between an entrepreneur’s positive orientation and internationalization propensity among new ventures.

Research limitations/implications

Overall, the findings demonstrate that social-cognitive theory is useful in predicting new venture internationalization.

Practical implications

Based on the findings, the author recommends that managerial education in international management combines the development of “formal” skills and cross-cultural competencies with experiential and vicarious learning.

Originality/value

The study combines insights from psychology and international business, thus responding to numerous calls for a more interdisciplinary and cognition-oriented focus on the international behavior of firms.

Keywords

Citation

Wasowska, A. (2019), "Social-cognitive antecedents of new venture internationalization: The role of entrepreneur intention, self-efficacy, and positive orientation", Baltic Journal of Management, Vol. 14 No. 3, pp. 462-479. https://doi.org/10.1108/BJM-09-2018-0325

Publisher

:

Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited


1. Introduction

Entrepreneurial firms face particular difficulties in their internationalization paths due to the liabilities of smallness, newness and foreignness (Mudambi and Zahra, 2007). In response to these constraints, new ventures use alternative ways to gather resources (Bruton et al., 2013), for example, by engaging in effectuation and bricolage (Nowiński and Rialp, 2013), and undertaking intense learning efforts in foreign markets (De Clercq et al., 2012). Moreover, their internationalization process is based on “resourcefulness” (Yamakawa et al., 2013), i.e., the ability of “doing more with less” (Mitchell et al., 2000). International performance of new ventures has been found to be driven predominantly by the entrepreneur’s, and not the firm’s, characteristics (Kundu and Katz, 2003). Attributes of entrepreneurs are likely to be the key factor compensating for firm-level resource deficiencies and environmental-level institutional constraints (Kiss et al., 2012).

Moreover, entrepreneurs play a pivotal role in shaping the firm’s growth orientation. In the context of small- and medium-sized enterprises (SMEs), Delmar and Wiklund (2008) noticed that managers’ growth motivation was a predictor of small firm growth. Moen et al. (2015) found that the growth motivation of key decision makers was positively related to international orientation, which in turn translated into higher growth in export sales. Finally, Kuuluvainen and Paavilainen-Mantymaki (2010) suggested that the international growth orientation of key decision makers is an important prerequisite of SMEs’ international expansion.

Following the notion that individuals are central to the process of identification and exploitation of international opportunities (Muzychenko and Liesch, 2015), we ask: what are the cognitive antecedents of an entrepreneur’s internationalization intent and new venture’s behavior? We conceptualize internationalization intent as a behavioral intention (Ajzen, 1991), that is, a decision maker’s (i.e. entrepreneur’s) readiness to perform a given behavior (i.e. enter a foreign market). Building on social-cognitive theory (Bandura, 1986) and recent insights from positive psychology (Caprara et al., 2012; Laguna et al., 2016), we develop and test a conceptual model linking an entrepreneur’s positive orientation, internationalization intent and actual behavior of new ventures. In doing so, we respond to numerous calls for a more interdisciplinary and cognition-oriented focus on the international behavior of firms (e.g. Coviello, 2015; Kiss et al., 2012; Zahra et al., 2005). By investigating the relationship between an entrepreneur’s internationalization intent and the actual behavior of new ventures, we also address “an urgent need […] to empirically and theoretically investigate the intention–behavior link” (Fayolle and Liñan, 2014, p. 665).

2. Literature review

Studies on the macro-level impact on the emergence of international new ventures indicate that small domestic markets (Cannone and Ughetto, 2014), unfavorable domestic market conditions and high costs of doing business at home (Lee et al., 2015) push young companies to venture abroad. Regarding the industry level, INVs are common in global niches and high-tech industries (McDougall et al., 2003). Firm-level antecedents of new venture internationalization include intangible assets such as market and technological knowledge (Yamakawa et al., 2013) and product scalability (Cannone and Ughetto, 2014), as well as entrepreneurial orientation (Kowalik et al., 2017).

Traditionally, IB studies grounded in internalization theory considered technological and marketing resources (typically measured with indicators such as R&D intensity and advertising costs) as key sources of firm-specific advantage (FSA). Verbeke et al. (2014, p. 262) argued that “largely invisible, but nevertheless critical” FSAs of international new ventures reside at the individual level. Thus, the entrepreneur is the key to understanding the phenomenon of new venture internationalization. Entrepreneurs are “bundles” comprising who they are, what they know and whom they know (Sarasvathy, 2001). Studies on the role of entrepreneurs in internationalization have typically focused on the last two questions, i.e., networks (e.g. Manolova et al., 2010; Nowiński and Rialp, 2015) and knowledge (Nordman and Melén, 2008; Schwens and Kabst, 2009), while the question of “who entrepreneurs are” has received less attention (Coviello, 2015). Extant studies typically relied on observable characteristics of entrepreneurs (e.g. education level, experience and immigrant status) (Verbeke et al., 2014). To identify the underlying mechanisms linking an entrepreneur’s experience and individual disposition to decisions made in the internationalization process, some efforts to open the “black box” (Zahra et al., 2005) of demographic variables have been made. They indicated that the new venture internationalization process may be influenced by an individual’s risk perception (Acedo and Jones, 2007), decision-making logic (e.g. Kalinic et al., 2014), global mindset (e.g. Nummela et al., 2004), as well as the interplay between an individual’s experience and heuristic and analogical reasoning (Jones and Casulli, 2014).

Psychology-informed research, rarely used in IB and IE (Coviello, 2015), has been popular in studies related to entrepreneurship (Baron, 2004) and strategy (Powell et al., 2011). Despite methodological challenges resulting from the reluctance of entrepreneurs and managers to take psychological tests, these streams of research have typically employed validated psychological constructs, such as personality traits encapsulated in the five-factor model (e.g. Herrmann and Nadkarni, 2014). Several studies have also used constructs inspired by positive psychology (Seligman and Csikszentmihalyi, 2000) such as dispositional optimism (e.g. Hmieleski and Baron, 2009) and “core self-evaluations” (e.g. Simsek et al., 2010), a higher-order construct integrating the locus of control, emotional stability, generalized self-efficacy and self-esteem (Judge et al., 1997).

Recent insights from psychology reveal that life satisfaction, self-esteem and optimism can be traced to a common latent construct called “positivity” or “positive orientation,” defined as “a basic disposition to view life and experience from a positive outlook” (Caprara et al., 2012, p. 701). Positive orientation has been conceptualized as a personal resource enabling people to “cope with life despite adversities, failures and losses” (Laguna et al., 2016, p. 591) and to buffer the negative effects of stressors (Alessandri et al., 2012, p. 2012). Positive orientation is relatively stable over time (Caprara et al., 2009), and 50 percent of its variance is attributable to heritability (Fagnani et al., 2014). The construct has been found to predict happiness, resilience and quality of friendship (e.g. Alessandri et al., 2012) and job performance (Alessandri et al., 2012). Moreover, it is negatively related to emotional instability, negative affectability and depression (Caprara et al., 2012). Laguna et al. (2016) argued that positive orientation plays the role of a psychological resource, enabling entrepreneurs to sustain their efforts directed at goal realization.

Social-cognitive theory (Bandura, 1986) provides a framework for understanding the effects of an entrepreneur’s experience and psychological characteristics on firm-level outcomes. It emphasizes the intentional characteristics of human behavior, positing that individuals can choose the direction of their activity, set goals and search for resources needed for their realization. The key concept of social-cognitive theory is self-efficacy, referring to “beliefs in one’s capabilities to mobilize the motivation, cognitive resources, and courses of action needed to meet given situational demands” (Wood and Bandura, 1989, p. 408). A task-specific “entrepreneurial self-efficacy,” defined as one’s ability to successfully perform entrepreneurial roles, differentiates entrepreneurs from managers (Chen et al., 1998), and positively relates to entrepreneurial intentions (Zhao et al., 2005). Despite calls for the inclusion of socio-cognitive variables in IE research, the concept of self-efficacy has received little attention in this stream of studies (Coviello, 2015).

3. Hypothesis development

Despite evidence on the role of serendipity in initiating international activity, Muzychenko and Liesch (2015) argued that the process of international opportunity recognition is intentional rather than accidental, as it coexists with strategically planned activities. In the same vein, Hannibal et al. (2016) suggested that international opportunity recognition involves an entrepreneur’s enactment, and is based on a creative process rather than discovery. The intentional nature of international opportunity recognition is also evidenced by studies indicating the role of strategic thinking (Wach, 2015) and managerial motivation (Wood et al., 2015) in initiating internationalization. Intent models such as the theory of planned behavior (Ajzen, 1991) have been considered “ideally suited” for entrepreneurial activity (Zellweger et al., 2010, p. 523) and applied to explain SME internationalization (Sommer, 2010). In sum, we argue the following:

H1.

An entrepreneur’s internationalization intent positively relates to new venture internationalization behavior.

Since new ventures have a short organizational history, their internationalization efforts rely on entrepreneurs’ pre-founding first-hand (Reuber and Fischer, 1997; Nordman and Melén, 2008) and vicarious experience (Nowiński and Rialp, 2015). Socio-cognitive theory posits that self-efficacy is the key mechanism through which experience translates into future behavior (Bandura, 1986). Intent models suggest that perceived behavioral control (Ajzen, 1991) and perceived feasibility (Shapero and Sokol, 1982), both corresponding to self-efficacy, are among the determinants of behavioral intent. Following the notion that task-specific self-efficacy is a stronger predictor of domain-specific behavior than generalized self-efficacy (Bandura, 2006), we adapt the concept to our domain of study. We define “self-efficacy in IE” as an individual’s belief in his or her ability to successfully engage in international entrepreneurship, or “the discovery, enactment, evaluation, and exploitation of opportunities – across national borders – to create future goods and services” (Oviatt and McDougall, 2005, p. 540). Following recent qualitative studies (Muzychenko and Liesch, 2015; Hannibal et al., 2016), we expect self-efficacy to play a key role in international opportunity recognition. In sum, we hypothesize that:

H2.

An entrepreneur’s self-efficacy in IE positively relates to his or her internationalization intent.

Self-efficacy is a state-like concept, evolving with the acquisition of new information and its subjective processing. It is driven by mastery experience, vicarious experience, verbal persuasion and one’s own physiological arousal (Wood and Bandura, 1989). Positive orientation, acting like a buffer against negative effects of stressors (Alessandri et al., 2012), is likely to promote a positive state of physiological arousal (i.e. excitement instead of anxiety), thus enhancing self-efficacy. Moreover, it makes entrepreneurs perceive goals as more reachable (Laguna et al., 2016). In sum, we argue that positive orientation contributes to the formation of self-efficacy beliefs, thus indirectly influencing internationalization intent. We therefore formulate the following hypothesis:

H3.

An entrepreneur’s positive orientation enhances his or her self-efficacy in IE.

We expect that positivity triggers new venture internationalization, and that its influence upon the entrepreneur’s decision to enter a foreign market is mediated by his or her self-efficacy beliefs. Therefore, new ventures run by entrepreneurs scoring high on positive orientation will be more likely to enter foreign markets. Conversely, we argue that entrepreneurs scoring low on positive orientation will be less likely to operate in foreign markets, since their IE self-efficacy beliefs will be more pessimistic. We therefore expect an entrepreneur’s positivity to be an important characteristic differentiating international and domestic new ventures. We also argue that the role of positivity in the new venture internationalization process goes beyond the pre-entry phase and the actual market entry. Entrepreneurs scoring high on positive orientation are more likely to sustain their efforts directed at goal realization (Laguna et al., 2016). Thus, we argue that positivity makes entrepreneurs more persistent and committed to foreign markets. In sum, we expect that new ventures’ internationalization propensity will be enhanced by the entrepreneur’s positive orientation. Therefore, we formulate the following hypothesis:

H4.

An entrepreneur’s positive orientation positively relates to new venture internationalization propensity.

The upper echelons theory posits that the influence of the key decision maker on firm-level outcomes is moderated by managerial discretion (Hambrick, 2007). An entrepreneur’s characteristics are crucial to firm-level decisions at the early stage of venture development. However, over time, managerial discretion is likely to decrease. Li and Tang (2010) treated firm age as a proxy for managerial discretion, revealing that it moderated the relationship between CEO hubris and firm risk taking. Thus, we argue that as a new venture matures, the effect of an entrepreneur’s dispositions on firm-level outcomes becomes weaker due to the decrease in managerial discretion. Moreover, as the firm accumulates resources, its growth strategy becomes less dependent on the entrepreneur’s “personal resources” such as psychological characteristics. In sum, we expect that over time, the entrepreneur’s positive orientation will become less critical to the new venture’s internationalization choices:

H5.

The relationship between an entrepreneur’s positive orientation and new venture internationalization propensity will be moderated by firm age, such that the relationship is stronger for younger firms.

The hypothesized relationships are presented in Figure 1.

4. Methods

4.1 Sample and procedures

Following previous studies (e.g. Klotz et al., 2014), we define a new venture as a firm at its early stage of development and growth. In operational definitions, the “early stage” ranges from the first 42 months (e.g. Reynolds et al., 2005) to the first 10 years after formation (e.g. Yamakawa et al., 2013). Following the latter threshold, in this paper we define “new ventures” as companies founded in 2005–2014, i.e., not older than 10 years at the first data collection (January 2016). Thus, we investigate new ventures created after Poland’s accession to the European Union in May 2004, the event officially marking the country’s transition from a centrally planned to a market economy. We exclude subsidiaries of capital groups and companies employing only one person (i.e. self-employed). Since the study is focused on entrepreneurs, new venture CEOs and owners were eligible respondents. The research instrument was a survey, and the data collection method was a computer-assisted telephone interview. To address the possible limitations of this method (Lang et al., 2011), we used a very short questionnaire with a simple question structure, and we pretested the questionnaire on a sample of 30 entrepreneurs.

Our sampling frame was Bisnode, the largest database of companies registered in Poland. In total, 900 companies meeting the criteria were selected (simple random sampling) and contacted by telephone, of which 310 participated in the study. On average, the firms included in the sample were 4.91 years old (with a standard deviation of 2.70, range 1–10) and employed 6.10 employees (with a standard deviation of 7.34, range 2–57). In total, 32 percent of the sample (100 firms) operated in manufacturing industries, almost 55 percent (170 firms) in services and trade, and 13 percent (40 firms) in construction. National statistics for the Polish SME sector do not provide exact characteristics of our target population (i.e. independent companies up to 10 years old, employing at least two people). This is in line with Cieślik and Kąciak’s (2009) observation that in post-transitional economies, the “sound empirical context shaped by rich and reliable industry statistics and publicly available company data” (p. 276) is lacking. We address this problem by comparing our sample against the characteristics of Polish SMEs with employment ranging from 10 to 20, as provided by OECD (2015, p. 25). The sector distribution of this population is as follows: 25 percent in manufacturing, 59 percent in services and trade, and 16 percent in construction. Thus, we conclude that our sample is a relevant representation of the target population.

In the first phase, 241 companies declared no presence in the foreign markets. In the follow-up study, conducted in January 2017, we managed to reach 183 of these companies, asking about their international behavior over the preceding 12 months. In total, 14 of them declared that they have since entered a foreign market.

4.2 Measurement

We measured positive orientation using the Positivity Scale by Caprara et al. (2012) in its Polish adaptation (Oleś et al., 2013). From the original scale, we dropped two items with the lowest factor loadings. Thus, our scale is composed of six items (“I have great faith in the future,” “I am satisfied with my life,” “I look forward to the future with hope and enthusiasm,” “On the whole, I am satisfied with my life,” “I feel I have many things to be proud of” and “I generally feel confident in myself”), measured on a five-point Likert scale. To measure self-efficacy in IE, we developed a task-specific self-efficacy scale based on an entrepreneurial self-efficacy scale (Chen et al., 1998), and a qualitative study on self-efficacy in international opportunity identification (Muzychenko and Liesch, 2015). We asked respondents to indicate their degree of confidence in the ability to perform each of the roles/tasks (“expand business abroad,” “adapt the product to the needs of foreign clients,” “find business partners abroad,” “communicate with individuals from a new culture” and “when contacting individuals from other countries, adapt own behavior to circumstances”) on a seven-point scale. Internationalization propensity is a dichotomous variable measured by the question: does your firm currently sell its products in international markets? To measure internationalization intent, we adapted two items from the export intention scale used by Morgan and Katsikeas (1997), i.e., the declared likelihood of entering a foreign market in the future and the interest in internationalization, and we added an item measuring the likelihood of starting to sell the company’s products within a year. All items were measured on a seven-point Likert scale. Internationalization behavior is a dichotomous variable measured in the follow-up study by the following question: did your firm enter a foreign market in the last 12 months? Firm age was measured by the number of years since registration.

On the industry level, we control for industry global integration and local industry internationalization (Fernhaber et al., 2007), measured with single-item questions asking respondents to assess on a seven-point Likert scale the extent to which their industry is dominated by foreign competitors (foreign competitors) and the extent to which their domestic competitors are active in foreign markets (internationalization of local firms). We also included a dummy for manufacturing. Firm-level controls included firm size measured as a natural logarithm of the number of employees (size). Individual-level variables included gender and age (entrepreneur age), number of languages spoken (language) (Zucchella et al., 2007), as well as two types of pre-founding international exposure: work experience abroad and export experience (Reuber and Fischer, 1997), measured as dichotomous variables. Finally, following the notion that higher education increases the entrepreneur’s propensity to internationalize their new ventures (Verbeke et al., 2014), we include a dichotomous variable taking a value of 1 if the respondent has a master’s degree or equivalent (master).

To assess measurement reliability, we calculated Cronbach’s α. The values range from 0.74 to 0.78, which indicate high internal consistency of our scales. To assess convergent validity, we conducted a factor analysis including items measuring three latent variables: positivity, self-efficacy and internationalization intent. To test for sampling adequacy, we performed the Kaiser–Meyer–Olkin (KMO) test. The KMO value was 0.805, which is above the minimum recommended threshold of 0.5. The result of Bartlett’s test of sphericity was significant (p<0.001). Therefore, the structure of our data was suitable for factor analysis. Principal axis factor analysis extracted three factors with eigenvalues greater than 1, which suggests a three-factor solution. The average value extracted (AVE) for each construct is higher than the squared correlation between the constructs, which indicates discriminant validity.

The rotated factor matrix, Cronbach’s α, AVE and CR are displayed in Table I.

To minimize the risk of common method variance (CMV) (Podsakoff et al., 2003; Chang et al., 2010) and increase data reliability, we employed some ex ante remedies. More specifically, we guaranteed anonymity and confidentiality of the responses and we mixed up the order of questions. Moreover, since the study was a part of a larger project and the questionnaire covered a variety of issues, it is unlikely that the respondents were guided by our theoretical expectations. A post hoc Harman’s single-factor test revealed that the first factor accounted for 19.91 percent of the variance, which indicates that CMV should not be a concern (Podsakoff et al., 2003).

5. Findings

Below we display the descriptive statistics and correlations between the focal variables for the total sample (Table II) and domestic new ventures (Table III).

H1 stated that internationalization intent predicts internationalization behavior. Since the dependent variable is dichotomous, we tested this hypothesis using logistic regression analysis (Table IV). The results of the Hosmer and Lemeshow test indicate adequate model fit. Parameter estimates indicate a significant effect of internationalization intent (p<0.05). Thus, H1 is supported.

H2 predicted that self-efficacy in IE was positively related to internationalization intent. H3 predicted that positive orientation enhances an entrepreneur’s self-efficacy in IE. We tested these hypotheses using linear regression models run on a sample of domestic new ventures (Table V). Models 1 and 2 predicted self-efficacy in IE, and Models 3–5 predicted internationalization intent. The variance inflation values ranged from 1.03 to 1.55, which indicate that multicollinearity was not an issue. We found support for H2 in the positive relationship between self-efficacy in IE and internationalization intent in Model 5 (p<0.001). We also find support for H3 in the positive relationship between positive orientation and an entrepreneur’s self-efficacy in IE in Model 2 (p<0.001).

To test for mediation (self-efficacy in IE as a mediator between positive orientation and internationalization intent), we used Hayes’s (2013) SPSS PROCESS macro (ver. 2.16) with 10,000 bootstrapping samples. The bootstrapped confidence interval for the indirect effect of positivity on internationalization intent through internationalization self-efficacy does not include 0 [0.063–0.352], thus indicating the presence of mediation.

H4 predicted that an entrepreneur’s positive orientation enhances the new venture’s internationalization propensity. H5 predicted that this relationship is moderated by the firm’s age. Since the dependent variable is binary, we tested these hypotheses using a set of logistic regressions run on a total sample (Table VI). The pseudo R2 of the full model exceed those of the base model, indicating increased explanatory power for the independent variable and the interaction term. The Hosmer and Lemeshow tests indicate that all models reach acceptable levels of fitness. Since positive orientation is significantly and positively related to internationalization propensity in Model 3 (p<0.01), H4 is supported. Furthermore, the interaction term between positive orientation and firm age is significantly and negatively related to the dependent variable in Model 3 (p<0.05) to support H5.

6. Discussion

6.1 Theoretical implications

The objective of the study was to shed light on the cognitive antecedents of an entrepreneur’s internationalization intent and new venture’s behavior. Our findings demonstrate the predictive power of internationalization intent as an antecedent of actual behavior. While we do not question the role of serendipity in initiating internationalization, we reveal that this process is to a large extent intentional. Thus, we provide support for the proposition that international opportunity identification may be conceptualized as a planned behavior (Muzychenko and Liesch, 2015). Second, we shed light on the key motivational force conducive to an entrepreneur’s internationalization intent – that is, self-efficacy in IE. We also reveal that self-efficacy in IE mediates the relationship between positive orientation and internationalization intent. This finding, as well as the significance of positivity in explaining internationalization propensity, indicates that an entrepreneur’s positivity may compensate for deficiencies in experience and resources. Thus, we conclude that more optimistic entrepreneurs feel more confident about their ability to conduct business abroad, which makes them more prone to enter foreign markets.

Moreover, we shed light on several determinants of internationalization self-efficacy in domestic new ventures. At the environmental level, role models (i.e. observing other local firms successfully entering foreign markets) proved to enhance internationalization self-efficacy, thus indicating the importance of vicarious learning. The presence of foreign competitors in the domestic market has a negative effect on internationalization self-efficacy. In interpreting this finding, we follow Bandura’s (1977) observation that this vicarious learning is contingent upon the level of an individual’s identification with his or her role model. Thus, it is possible that, while successes of Polish companies in foreign markets are inspirational and conducive to the “yes, we can” way of thinking, the same does not happen with foreign competitors. Conversely, an entrepreneur observing foreign competitors operating in the domestic market may become aware of his or her deficiencies. We argue that the “intimidating” effect that foreign competitors have upon local new ventures may be specific to post-transitional countries whose nationals often suffer from an “inferiority complex” toward more developed countries (e.g. Wilczak and Skorek, 2014). In this context, foreign competitors are not relatable “role models” for local entrepreneurs; instead, they are likely to evoke negative social comparisons (Tajfel, 1981), thus reducing local entrepreneurs’ self-efficacy.

At the firm level, size but not age proved to be statistically significant in predicting self-efficacy in internationalization. At the individual level, an entrepreneur’s age, gender and work experience abroad proved to be insignificant in predicting self-efficacy in internationalization. An entrepreneur’s export experience prior to the firm’s founding, education and command of foreign languages were significant. These findings indicate that entrepreneurs’ beliefs in their ability to conduct business abroad are dependent upon the firm’s resource base and the entrepreneur’s work and education-related experience.

Our study supports the notion that an entrepreneur’s personal resources may constitute a non-traditional source of FSA, critical to new venture internationalization (Verbeke et al., 2014). Moreover, our findings suggest that the role of an entrepreneur’s personal resources diminishes as the firm matures. Perhaps contrary to “traditional” FSAs, both positive orientation and self-efficacy are likely to diverge from a “the more, the better” rule. Previous studies indicate that “excessive” self-efficacy may predispose entrepreneurs to set overly difficult goals, leading to disappointment, disengagement and, consequently, decline in firm performance (Baron et al., 2016). It may also decrease entrepreneurs’ motivation to acquire new skills and resources necessary to achieve ambitious goals (Bandura and Locke, 2003). In the same vein, excessive optimism has detrimental effects on decision-making quality (Åstebro et al., 2007) and reduces firm performance (Hmieleski and Baron, 2009). Recent studies indicate that the firm-level results of an entrepreneur’s psychological dispositions are contingent upon the characteristics of the task environment – e.g., level of uncertainty. For example, Navis and Ozbek (2016) pointed to a paradox in which entrepreneurs high in narcissism and overconfidence tend to be attracted to more novel and unpredictable venture contexts – that is, settings where their qualities are most detrimental to venture success – and are repelled from more familiar contexts where their qualities may constitute an advantage. This suggests that the firm-level value of an entrepreneur’s psychological dispositions needs to be channeled into the activity where they best serve.

Successful internationalization requires, on the one hand, identifying and following international opportunities; and on the other, building and sustaining competitive advantage in foreign markets (Keupp and Gassmann, 2009). Our study suggests that an entrepreneur’s positive orientation may be instrumental in the former area, thus preventing firms from falling into the “inertia trap.”

6.2 Practical implications

Our study indicates that lack of belief in one’s capabilities to conduct business abroad is likely to constitute the key mental barrier preventing new ventures from initiating international activities. Strategies to improve self-efficacy include increasing the individual’s understanding of the task environment and task attributes, as well as ways to control these factors (Bandura, 1986). We therefore recommend that managerial education combines the development of “formal” skills and cross-cultural competencies with experiential and vicarious learning in terms of a firm’s internationalization.

Previous studies indicate that the performance results of early internationalization are contingent upon the firm’s knowledge intensity (Schwens et al., 2017), and that venturing abroad from post-transitional economies negatively relates to the new venture’s survival (Lyles et al., 2004). Therefore, we are far from claiming that new ventures, especially those suffering from knowledge constraints, should necessarily expand abroad and that internationalization behavior should be stimulated by policymakers or promoted by educators. Our study suggests that internationalization decisions may be to some extent driven by the “positive illusions” of entrepreneurs, resulting in excessive self-efficacy beliefs and underestimation of challenges related to internationalization. Previous studies indicate that entrepreneurs are more optimistic than the general population (Hmieleski and Baron, 2009) and that “failure myopia” makes people focus more on internationalization’s successes than failures (Welch and Welch, 2009). Thus, we believe that the role of managerial education is to offer a more balanced view of international expansion.

6.3 Limitations and areas for further research

Several limitations of our study should be noted. First, while we found support for the role of self-efficacy beliefs corresponding to “feasibility” and “perceived behavioral control” as a mechanism through which an entrepreneur’s positivity translates into internationalization intent and behavior, other mediating variables (e.g. attitude toward the behavior, i.e. desirability) are possible. We therefore encourage further research applying intent models in explaining internationalization.

Second, our study focuses on international opportunity identification and exploitation, but it does not deal with the problem of value creation. Although our study reveals that an entrepreneur’s positivity and self-efficacy trigger internationalization, we do not know whether and how they later translate into performance results. Therefore, the key area for further research would be to track the development of new ventures over time and observe the performance outcomes of positive orientation, self-efficacy beliefs and international behaviors.

Third, our conceptualization of international new ventures (as opposed to domestic new ventures) is based on a static distinction between firms active in foreign markets and those focused exclusively on the domestic market. While our study sheds light on the initial stage of the process of internationalization, modeling both internationalization intent and the actual market entry (i.e. “the making of” INVs), it does not take into account the fact that the internationalization process is not necessarily forward-moving. More specifically, some firms may enter foreign markets early in their lifecycle (i.e. become INVs), but then withdraw from foreign activity and even re-initiate internationalization after a pause. The limitations of our study may be addressed by future research efforts that would account for the non-linearity of the internationalization process. For example, one can propose that an entrepreneur’s positivity may lead to “escalation of commitment” to underperforming activity, and reduce the propensity of market withdrawal. Further studies are needed to verify this proposition.

Fourth, we treat a new venture as an extension of its key decision maker. Thus, while controlling for firm and industry effects, we are focused on individual-level determinants of internationalization. However, new ventures are typically created by entrepreneurial teams rather than by solo entrepreneurs (Klotz et al., 2014). We believe that a promising area for further studies would be to include the dynamics of entrepreneurial teams. For example, one could ask: what happens if the levels of positivity and/or self-efficacy in IB among the entrepreneurial teams are divergent? How does this type of diversity within entrepreneurial teams influence international opportunity identification and exploitation? Does it enhance decision quality?

Fifth, while we controlled for firm size, we did not include other firm-specific variables such as resources and capabilities (e.g. innovativeness, marketing resources and firm-level human capital) and product features (e.g. scalability and competitiveness). We believe that the inclusion of both “objective” and “subjective” measures of firm-specific characteristics would allow disentangling the complex relationships between the firm’s strengths (perceived and actual), the entrepreneur’s self-efficacy beliefs and the internationalization process.

Finally, our findings are limited to the context of Polish new ventures. Therefore, we are cautious about the generalizability of our findings to other settings, since the determinants of internationalization intent and actual behavior may vary across countries. More specifically, in more advanced economies, the influence of an entrepreneur’s characteristics on the early internationalization process may be less pronounced.

Considering concerns that the IB research agenda may be “running out of steam” (Buckley, 2002), some scholars argue that insight into the cognitive processes of decision makers may rejuvenate the IB literature (Maitland and Sammartino, 2015). Supporting this view, we encourage further efforts aiming at incorporating insights from psychology into the field of IB. These efforts would be instrumental in increasing the theoretical clarity of some cognition-related concepts used in existing IB studies (e.g. “global mindset,” “international orientation” and “psychic distance”). They are also likely to ground the IB research in more realistic assumptions about human cognition, emotions and social behaviors (Powell et al., 2011).

Figures

Conceptual framework

Figure 1

Conceptual framework

Measurement of variables

Scale validity and reliability Factor extraction matrix
Cronbach’s α AVE CR Item Internationalization intent Self-efficacy in IE Positive orientation
Internationalization intent
0.74 0.64 0.84 Intent 1 0.66
Intent 2 0.92
Intent 3 0.79
Self-efficacy in IE
0.88 0.66 0.90 Effic. 1 0.80
Effic. 2 0.75
Effic. 3 0.66
Effic. 4 0.91
Effic. 5 0.90
Positive orientation
0.80 0.52 0.87 Pos. 1 0.71
Pos. 2 0.67
Pos. 3 0.67
Pos. 4 0.75
Pos. 5 0.79
Pos. 6 0.74

Notes: n=241. Extraction method: principal axis factorization; rotation method: promax; normalization with Kaiser; rotation convergent after five iterations, loadings below 0.3 not shown

Descriptive statistics and Pearson correlation matrix (total sample)

Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13
 1. Manufacturing 0.32 0.47 1
 2. Foreign competition 4.63 1.69 −0.08 1
 3. Internationalization of domestic firms 4.22 1.52 −0.01 −0.04 1
 4. Firm size 1.52 0.64 0.14* −0.17** −0.01 1
 5. Firm age 5.91 2.70 0.18** −0.08 −0.11 0.24*** 1
 6. Entrepreneur age 41.15 7.41 0.09 0.01* −0.02 0.02 0.08 1
 7. Entrepreneur gender 0.23 0.42 0.04 0.02 −0.07 −0.03 −0.02 −0.04 1
 8. Work experience abroad 0.18 0.39 −0.06 −0.03 0.04 −0.01 0.02 0.06 −0.02 1
 9. Export experience 0.10 0.31 −0.03 −0.00 −0.07 0.15** 0.11* 0.09 −0.11 0.06 1
10. Language 1.58 0.69 0.06 −0.08 0.02 0.17** 0.18** 0.04 −0.06 0.07 0.13* 1
11. Master 0.61 0.49 −0.05 0.04 0.01 0.02 0.03 −0.05 −0.03 −0.03 0.03 0.07 1
12. Positive orientation 4.22 0.52 0.07 −0.21*** −0.03 0.30*** 0.21** −0.07 0.01 0.03 0.19** 0.24*** 0.11 1
13. Internationalization propensity 0.22 0.42 0.21*** −0.22*** 0.10 0.40*** 0.33*** 0.04 −0.07 0.01 0.25*** 0.24*** −0.04 0.37*** 1

Notes: n=310. *p<0.05; **p<0.01; ***p<0.001

Descriptive statistics and Pearson correlation matrix (domestic new ventures)

Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14
 1. Manufacturing 0.27 0.44 1
 2. Foreign competition 4.83 1.54 −0.05 1
 3. Internationalization of domestic firms 4.14 1.43 −0.08 0.08 1
 4. Firm size 1.38 0.48 0.11 −0.03 −0.19** 1
 5. Firm age 5.44 2.49 0.05 −0.09 −0.16* 0.14* 1
 6. Entrepreneur age 41.00 6.51 0.08 −0.02 −0.03 0.02 0.06 1
 7. Entrepreneur gender 0.24 0.43 0.01 0.03 −0.05 0.06 0.01 −0.04 1
 8. Work experience abroad 0.18 0.39 −0.09 −0.04 0.08 −0.07 −0.05 0.00 −0.04 1
 9. Export experience 0.06 0.24 −0.00 0.03 −0.13* 0.04 0.11 0.02 −0.11 0.01 1
10. Language 1.49 0.63 0.06 −0.06 −0.06 0.06 0.10 0.00 −0.04 0.03 0.10 1
11. Master 0.62 0.49 −0.09 0.08 −0.10 −0.02 0.06 −0.17** −0.04 −0.03 0.02 0.16* 1
12. Positive orientation 4.11 0.51 −0.02 −0.15* −0.11 0.19** 0.15* −0.07 0.07 0.07 0.19** 0.19** 0.17* 1
13. Self-efficacy in IE 4.88 1.03 −0.02 −0.15* 0.25*** 0.16* 0.03 −0.05 −0.01 0.12 0.20** 0.26*** 0.20** 0.35*** 1
14. Intent 3.51 1.26 −0.14* 0.09 0.48*** 0.01 −0.05 0.10 −0.02 0.12 0.04 0.01 0.11 0.01 0.41*** 1

Notes: n=241. *p<0.05; **p<0.01; ***p<0.001

Logistic regression analysis (internationalization behavior)

Dependent variable – internationalization behavior
Constant −7.21*** (1.61)
Manufacturing 2.15** (0.64)
Firm size 1.09* (0.49)
Firm age −0.05 (0.12)
Intent 0.65* (0.26)
Model indices
Nagelkerke R2 0.26
Cox and Snell’s R2 0.11
−2 Log likelihood 81.76
Model χ2 22.02***
Hosmer and Lemeshow test χ2 9.17
% of model prediction 92.3

Notes: n=183. Standard errors are reported in parentheses. *p<0.05; **p<0.01; ***p<0.001

Linear regression analysis

Dependent variable – self-efficacy in IE Dependent variable – internationalization intent
Model 1 Model 2 Model 3 Model 4 Model 5
Constant 2.99*** (0.53) 1.22 (0.69) −0.46 (0.64) −0.50 (0.86) −0.97 (0.83)
Control variables
Manufacturing −0.01 (0.13) 0.01 (0.13) −0.27 (0.16) −0.27 (0.16) −0.27 (0.15)
Foreign competition −0.12** (0.04) −0.10** (0.04) 0.03 (0.04) 0.04 (0.05) 0.07 (0.04)
Internationalization of domestic firms 0.26*** (0.04) 0.26*** (0.04) 0.46*** (0.05) 0.46*** (0.05) 0.36*** (0.05)
Firm size 0.46*** (0.12) 0.38** (0.12) 0.32* (0.15) 0.31* (0.15) 0.17 (0.15)
Firm age −0.01 (0.02) −0.01 (0.02) 0.00 (0.02) 0.00 (0.03) 0.00 (0.03)
Entrepreneur age 0.00 (0.01) 0.00 (0.01) 0.03** (0.01) 0.03** (0.01) 0.03** (0.01)
Entrepreneur gender 0.12 (0.13) 0.07 (0.13) 0.07 (0.16) 0.07 (0.16) 0.05 (0.16)
Work experience abroad 0.26 (0.15) 0.21 (0.14) 0.26 (0.18) 0.26 (0.18) 0.18 (0.17)
Export experience 0.97*** (0.24) 0.81** (0.25) 0.49 (0.29) 0.48 (0.30) 0.17 (0.29)
Language 0.33*** (0.09) 0.29** (0.09) 0.01 (0.11) 0.00 (0.11) −0.11 (0.11)
Master 0.47*** (0.12) 0.40** (0.12) 0.45** (0.15) 0.45** (0.15) 0.29* (0.15)
Independent variables
Positive orientation 0.45*** (0.12) 0.01 (0.15) −0.16 (0.15)
Self-efficacy in IE 0.39*** (0.08)
Model indices
F-statistics 9.39*** 10.36*** 9.69*** 8.85*** 10.83***
R2 0.31 0.35 0.32 0.32 0.38
Adjusted R2 0.28 0.32 0.29 0.28 0.35
ΔR2 0.31*** 0.04*** 0.32*** 0.00 0.07***

Notes: n=241. Standard errors are reported in parentheses. *p<0.05; **p<0.01; ***p<0.001

Logistic regression analysis (internationalization propensity)

Dependent variable – internationalization propensity
Model 1 Model 2 Model 3
Constant −4.54*** (1.22) −11.59*** (2.18) −22.27*** (5.65)
Control variables
Manufacturing 1.00** (0.34) 0.92** (0.36) 0.93* (0.37)
Foreign competition −0.24* (0.10) −0.18 (0.10) −0.16 (0.10)
Internationalization of domestic firms 0.21 (0.11) 0.26* (0.11) 0.27* (0.11)
Firm size 1.15*** (0.26) 0.77** (0.26) 0.77** (0.26)
Entrepreneur age 0.01 (0.02) 0.01 (0.02) 0.01 (0.02)
Entrepreneur gender −0.12 (0.41) −0.13 (0.44) −0.10 (0.44)
Work experience abroad −0.19 (0.43) −0.14 (0.46) −0.13 (0.46)
Export experience 1.65** (0.50) 1.45** (0.50) 1.38** (0.51)
Language 0.58* (0.23) 0.37 (0.25) 0.40 (0.25)
Master −0.29 (0.33) −0.51 (0.36) −0.48 (0.36)
Independent variables
Positive orientation 1.45*** (0.39) 3.77** (1.18)
Firm age 0.20** (0.07) 1.70* (0.70)
Interactive variables
Firm age by positive orientation −0.33* (0.15)
Model indices
Nagelkerke R2 0.36 0.47 0.48
Cox and Snell R2 0.24 0.30 0.32
−2 Log likelihood 244.40 216.28 211.39
Model χ2 84.29*** 112.42*** 117.31***
Hosmer and Lemeshow test χ2 7.77 4.00 8.29
% of model prediction 83.2 05.5 85.2

Notes: n=310. Standard errors are reported in parentheses. *p<0.05; **p<0.01; ***p<0.001

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Further reading

Jones, M.V., Coviello, N. and Tang, Y.K. (2011), “International entrepreneurship research (1989-2009): a domain ontology and thematic analysis”, Journal of Business Venturing, Vol. 26 No. 6, pp. 632-659.

Corresponding author

Aleksandra Wasowska can be contacted at: awasowska@wz.uw.edu.pl