G. Cannone, A. Pisoni, A. Onetti. Born global companies founded by young entrepreneurs. A multiple case study. International Journal of Innovation and Entrepreneurship Management (forthcoming).
This paper provides further evidence of the phenomenon of Born Globals through an exploratory multiple case studies of eight born global companies founded by young entrepreneurs. The study is based upon an in-depth qualitative analysis on eight start-ups founded by Italian young entrepreneurs that showed an early internationalization towards the United States.
This paper contributes to the entrepreneurship literature by exploring the born global phenomenon under the young entrepreneurship lenses through an exploratory multiple case studies of eight BGs founded by Italian entrepreneurs.
Results show that the lack of financial resources for young entrepreneur seems to be a triggering factor for starting a born global company since the paucity of financial resources spur young entrepreneurs to move to those countries where there is a larger availability of equity capital for start-ups (specifically United States and in particular the Silicon Valley). Indeed results confirm that young entrepreneurs are perceived as less reliable from financial actors since they lack a track record as entrepreneurs (Stevenson, 1987) or collateral assets. However they seem to be aware they need to compensate credibility by showing investors they believe in the company and they have the ability to
47 execute the project. Moreover, the lower risk perception and the lower commitment towards family seem to facilitate the ability to start born globals, by allowing young entrepreneurs to be more prone to mobility.
The access to different business networks and previous knowledge and experience accumulated by the entrepreneurs seem to be the real enablers of born global companies. All the entrepreneurs interviewed stressed the relevance of leveraging a wide and qualified business network and the prior experience they accrued, both as entrepreneurs, students and workers. Periods of study/training (Fludimesh, Funambol, Hyperfair, Spreaker, and Risparmio Super) and working abroad (Funambol, Twimbow) is frequently mentioned. The previous knowledge and experience of the founders in the same business segments is not confirmed as equally important. This factor is mentioned by some firms (Twimbow, Hyperfair, Fluidmesh), but they refer mostly to a generic experience in the industry and not to a specific knowledge of the business. Hence a prior experience abroad (not necessarily as entrepreneur in the same business/segment) seems to trigger a venture with a stronger and earlier internationalization. Moreover, there is a strong correlation between the place where the prior experience took place and the areas of internationalization of the firms (Fluidmesh, Funambol, Hyperfair, Risparmio Super, Spreaker, and Twimbow). An important finding, for the perspective of the young entrepreneurship is that, although young, entrepreneurs seem to be willing to heavily invest and capitalize on building their own network; this result may be explained by the urgency and the relevance to access to external resources through business networks since they lack internal assets (McDougall et al., 1994; Zain and Ng, 2006; Laanti et al., 2007).
Concluding, the multiple case analysis highlights how the limited financial resources for young entrepreneurs seem to be a triggering factor for them to adopt a born global approach. It confirms that the paucity of owned assets spurs young entrepreneurs to access to resources in those places/countries where there is a more developed venture capital industry.
Moreover, results highlight the importance of professional networks built by entrepreneurs before establishing the company. In particular, consistently to McDougall et al. 1994, the study points out how networks helped founders of born globals to recognize and exploit international business opportunities. Most importantly, although social capital increases with age, given the relevance of this factor to start a BGs, young entrepreneurs seems to invest heavily into widen their social network and countervail the young age effect. Moreover, the prior experience abroad (either as entrepreneur or as employee or as undergraduate or graduate student) triggers and shapes the internationalization process of a company. The complete details of results are presented in the first appended paper.
48 4.2 Paper 2: Born globals: a cross-country survey on high-tech start-ups
G. Cannone, E. Ughetto (2014). Born globals: a cross-country survey on high-tech start-ups.
International Business Review, 23(1) 272-283.
The paper empirically investigates what drivers affect the decisions of high-tech start-ups to internationalize from the outset, and their degree of born-globalness. The present study is a first attempt to perform multi-level research, by examining to what extent the decision to internationalize from the inception, as well as a firm’s degree of born-globalness, is the result of factors that occur at firm, individual and country level. The results (see Appendix 7.3.2 and 7.3.3) of a survey on internationalized high-tech start-ups operating in the ICT and electronics sectors and located in different countries throughout the world have confirmed that the presence of a small domestic market and the scalability of the product have a positive effect on the probability that a start-up internationalizes from its inception. It has also been observed that the niche strategy and the network relationships built by the entrepreneur are key drivers for both early internationalization and the scope of international expansion. The ability of the entrepreneur to recognize and exploit opportunities largely depends on his/her entrepreneurial orientation, capabilities and experiential knowledge. In particular, proficiency in foreign languages has proved to matter more than education or age in the decision to internationalize early, while it is not a discriminating factor on a born global’s degree of born-globalness. The entrepreneur’s experiential knowledge and international commitment, as well as the diversity of team competences and organizational flexibility of a firm have a significant impact on a born global’s degree of born-globalness, although it is not a fundamental precondition for early internationalization. The overall picture obtained from the empirical analysis has highlighted that the choice of the internationalization pathway for a firm is the result of a complex mix of firm, environmental and individual factors. The implications for managers and policy makers are therefore numerous. First, the entrepreneurs with aspirations of early internationalization should be well aware of the importance of consolidated network relationships if they want to achieve internationalization rapidly. The adoption of a strategy of focalization is relevant for those firms that wish to address several markets at once in their early internationalization process. Second, another prerequisite for aspiring global entrepreneurs is the knowledge of foreign languages, which also helps them to shape an international mindset. Third, experience is crucial when the focus is on large scale internationalization and on the opening up of new geographical markets. International commitment and the experiential knowledge of the entrepreneur are in fact of paramount importance in forging the scope of early internationalization.
While born globals are rapidly expanding worldwide, as advances in telecommunication,
49 transportation and technology at large are shrinking physical and cultural distances and facilitating human capital mobility, the extent of their diffusion largely depends upon whether certain conditions are in place. A deeper understanding of the conditions under which born globals are likely to prosper could stimulate policy makers to sustain a firm’s early internationalization through appropriate support programs.
4.3 Paper 3: Internationalization flows of high-tech start-ups: a gravity model