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Pathway to international growth in the
digital age An examination of the internationalization process of
International New Ventures in the digital service industry
M.F.G. Tromp 10003215
10-07-2016 – Second Draft
Master Business Administration – International Management Track University of Amsterdam
First supervisor: E. Dirksen MSc. Second supervisor: Dr. C. Gelhard
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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Statement of originality This document is written by Student Marjoleine Tromp who declares to
take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original
and that no sources other than those mentioned in the text and its references
have been used in creating it.
The Faculty of Economics and Business is responsible solely for the
supervision of completion of the work, not for the contents.
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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Table of contents
Table of contents ...................................................................................................................................... 3
List of tables and figures .......................................................................................................................... 4
1. Introduction .......................................................................................................................................... 6
2. Theoretical Framework ........................................................................................................................ 8
2.1 Internationalization process ................................................................................................... 8
2.2 Traditional view of the internationalization process ............................................................. 9
2.3 The International New Venture ........................................................................................... 10
2.4 Changes in the international environment ........................................................................... 12
2.5 INVs from an International Entrepreneurship perspective .................................................. 15
2.6 Performance in relation to the INV ..................................................................................... 18
3. Hypothesis development .................................................................................................................... 21
3.1 Conceptual framework ........................................................................................................ 25
4. Data & method ................................................................................................................................... 26
4.1 Sample ................................................................................................................................. 26
4.2 Method ................................................................................................................................. 28
4.2.1. Independent variable ............................................................................................... 28
4.2.2 Dependent variable .................................................................................................. 29
4.2.3 Control variables ...................................................................................................... 30
4.2.4 Homogeneity and sphericity .................................................................................... 31
5. Results ................................................................................................................................................ 33
6. Discussion ........................................................................................................................................... 45
7. Limitations and recommendations ..................................................................................................... 46
9. Conclusion .......................................................................................................................................... 48
Literature ................................................................................................................................................ 49
Appendix ................................................................................................................................................ 54
Appendix A: Descriptive statistics of dependent variables ....................................................... 54
Appendix B: Normality tests for 15 variables with 3 categories ............................................... 55
Appendix C: Skewness and Kurtosis scores for 15 variables with 3 categories ....................... 57
Appendix D: Descriptive statistics of dummy variables home countries .................................. 62
Appendix E: Matrices of variance ratios ................................................................................... 63
Appendix F: Pairwise comparison of years for turnover categorized by industry .................... 64
Appendix G: Pairwise comparison of years for assets categorized by industry ........................ 65
Appendix H: Pairwise comparison of years for employees categorized by industry ................ 66
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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List of tables and figures
Table 1: Types of International New Ventures ........................................................................ 11
Table 2: Triggers of INV’s rapid internationalization process ................................................ 17
Figure 1: Conceptual framework .............................................................................................. 25
Figure 2: Histogram of variable turnover 2014 before and after transformations ................... 29
Table 3 : Information country of origin of INV in the sample ................................................. 31
Table 4: Indicators of Years used in pairwise comparison tables ........................................... 34
Figure 3: Graph of interactions for turnover ............................................................................ 35
Table 5: Turnover - Pairwise comparisons for Industry categorized by Years. ....................... 36
Table 6: Turnover - Pairwise comparisons Years (shortened) ................................................. 37
Table 7: Turnover - Pairwise comparisons Years categorized by Industry (shortened) .......... 37
Figure 4: Graph of interactions for assets ................................................................................ 38
Table 8: Assets - Pairwise comparisons for Industry categorized by Years ............................ 40
Table 9 Assets- Pairwise comparisons for Years (shortened) .................................................. 41
Table 10: Assets- Pairwise comparisons for Years categorized by Industry (shortened) ........ 41
Figure 5: Graph of interactions for employees ......................................................................... 42
Table 11: Employees - Pairwise comparisons for Industry categorized by Years ................... 43
Table 12 Employees - Pairwise comparisons for Years (shortened) ........................................ 44
Table 13: Employees - Pairwise comparisons for Years categorized by Industry (shortened) 44
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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Abstract
This study investigates International New Ventures (INVs) and their internationalization
process in relation to the natures of their services. More precisely the primary objective of this
thesis is to examine the pathway to growth of digital service INVs and how this differs from
the growth patterns of non-digital INVs. It is predicted that due to the intangible nature of
digital services and the subsequent drop in coordination costs, international expansion will be
more efficient and faster. Three mixed design repeated measure ANOVAs are performed to
examine the growth of different INVs in terms of turnover, assets and employees over five
recorded time periods. The sample consists panel data of European INVs operating in the
service and manufacturing industry. The results indicate the digital service INVs do not differ
significantly from non-digital INVs. Implications and recommendations for future research
are discussed.
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1. Introduction Globalization processes changed the international business (IB) field drastically.
Technological advancements are the driving force behind these increasingly globalized
markets and have established new foundations for Multinational Enterprises (MNEs)(Garrett,
2000). Since the 1980s a new form of MNE achieved growing attention in the IB literature
because it was able to operate internationally very rapidly and early from existence (Cavusgil
& Knight, 2015). These international new ventures (INVs) were able to operate in
international markets without undergoing the gradual learning and exploration processes like
their mature peers. Today, INVs have appeared in abundance all around the globe. However,
there is still a long way to go before we truly understand the dynamics of this relatively new
type of firm (Zander, McDougall-Covin, & Rose, 2015).
INVs follow a different pathway to international growth compared to large established
MNEs. The traditional MNE internationalizes through small incremental steps, by slowly
gaining (foreign) market knowledge and reducing the risk of operating abroad (Johanson &
Vahlne, 1977). Entering new international markets is an important strategic option for a firm
in order to obtain a fast pathway towards growth and performance (Lu & Beamish,
2001)(Hennart, 2007). In the new digital economy information, communication and
computation technologies have changed and many products have become non-physical and
knowledge-based (Tapscott et al., 2000)(Brynjolfsson, 2002). These intangible, knowledge-
based goods can be distributed for almost zero marginal costs (Schmid, 2001), which has
consequences for the total costs of doing business abroad.
This thesis examines the relationship between the digital nature of an INV’s services
and the consequences for its internationalization process. Services are the most suited for
examination because they have the ability to be completely digitally produced (Schmid,
2001). The contributions of this paper to the gaps in the existing literature are twofold. First, it
provides insight in the under-researched area of the internationalization process of firms in the
service industry (Zander et al., 2015)(Cavusgil & Knight, 2015). Second, by explicitly
separating digital services, it provides initial research on the influence of digitalization of the
value chain on the internationalization process of businesses. With the predicted growth of
technological advancements in every aspect of the organization, it is important to understand
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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the influence of digitalization of products and services on a firm’s strategy and performance
in the international field (Helbing, 2014)(Zander et al., 2015).
Cavusgil and Knight suggest that in the future the concept of an INV might even
become outmoded because operating internationally from the start might become self-evident
(2015). Since technology enables small virtual firms to coordinate their value chain through
the World Wide Web and different hardware devices, like smartphones, tablets, watches, and
maybe even fridges or streetlights, entrepreneurs might not need to pay attention anymore to
the location of their firm (Cavusgil & Knight, 2015). Naturally, these suggestions are major
jumps to conclusions, however, they do exemplify the importance of understanding the global
presence of the INV as an important factor in assessing the current and prospected global
economy.
This thesis is build up in the following way. First, the literature review discusses the
traditional view of the internationalization process, the changes in the international
environment and the emergence of the INV. The transition towards a digital and globalized
economy has led to increasing numbers of global entrepreneurs who have experience
operating in the international field (Oviatt & McDougall, 2005b). This is why International
Entrepreneurship (IE) became an important new perspective in the literature. The findings and
implications of this theoretical lens are also discussed in the literature review. Subsequently,
the development of several hypotheses about the expected pathway to growth of the digital
service INV is discussed. The hypotheses are followed by a description of the data collection
and the method. Panel data are used to investigate the longitudinal process of
internationalization. Finally, results are presented followed by the discussion, limitations and
recommendations for future research.
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2. Theoretical Framework This literature review examines the existing literature on INVs and the different theoretical
perspectives used to research the phenomenon. First, the internationalization process is
discussed from a general viewpoint. Subsequently, the literature on internationalization is
considered from a traditional perspective where internationalization happens in gradual
sequential steps (Zander et al., 2015). This is followed by a detailed description of the INV
and the reasons why the INV does not fit in the traditional view of internationalization.
Subsequently, the international business context and the different theoretical lenses that have
been used to study INVs are discussed. Lastly, the findings on the relationship between
operating internationally and performance is considered. This part leads to the formulation of
the hypotheses and the conceptual framework.
2.1 Internationalization process In this research, the term internationalization process will be used to refer to the extension of
a firm's operations into foreign countries. It entails an outward movement of the firm' s
operations and increased involvement in international operations (Araujo & Rezende, 2003)
(Buckley & Ghauri, 1999). Internationalization process of a firm has many consequences for
its organizational strategy and has been studied extensively in the IB field (Rugman, Verbeke,
& Nguyen, 2011).
The motives for getting involved in international operations are the key material for
international business studies. They all involve strategic capabilities, like achieving
economies of scale and scope, use the best technology and talent that is available worldwide
and enable organizational learning on a worldwide basis (Bartlett & Ghoshal, 2003)(Lu &
Beamish, 2004). However, there are also strong discouraging factors for internationalization,
for example, the liabilities of foreignness and newness. The first refers to the impact of
various forms of distance that a firm faces in a foreign market, which lead to disadvantages
and extra costs compared to domestic firms (Rugman et al., 2011). These distances can be
geographical, economical, institutional or cultural, usually summarized in the umbrella term
‘pshychic distance' (Hutzschenreuter, Kleindienst, & Lange, 2015). The latter liability refers
to the additional costs that can derive from poorly understood market conditions due to their
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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newness (Rugman et al., 2011). These strategic considerations for firms to internationalize are
the key topic of discussion in research on the internationalization process.
In the traditional view of IB literature, the internationalization process does not happen
overnight. It is thought to be a gradual process with a learning curve that happens in
sequential steps (Zander et al., 2015). Many scholars have discussed the gradual learning
process of the firms when operating abroad. The following section discusses the traditional
approaches used to interpret and understand the firm's internationalization process.
2.2 Traditional view of the internationalization process
The internationalization process has been discussed widely in the existing IB literature. In the
traditional view, the MNE originates from large and mature domestic firms that are able to
take the extra risk of going abroad, due to the great amount of resources they build up as they
matured over the years (Oviatt & McDougall, 2005b). The large size of the MNE was thought
to be a requirement for doing business abroad.
There have been different approaches to internationalization in the past that can be
distinguished in two broad perspectives: the Uppsala model and the innovation-related
approaches. The first is one of the most widespread concepts to theorize internationalization
and owes its name to the University where was developed. The Uppsala model describes the
pattern of firms operating and developing in their domestic market for (many) years and
gradually internationalize through small steps (Johanson & Vahlne, 2009). Johanson and
Vahlne found strong empirical support for their model of the gradual process of
internationalization (Moen & Servais, 2002). The model is based on the concept that firms
always need to assess the potential risk of doing business abroad and the costs of learning to
operate in an unknown foreign country against the potential benefits of exploiting their firm-
specific advantages in another country (Rugman et al., 2011). Typically, firms start by
making a non-equity investment in a foreign country, for example through exporting. In a
later stage, the firm establishes a subsidiary and optionally begins production in the foreign
country (Johanson & Vahlne, 1977).
The process as described in the Uppsala model is moderated by the important factor of
psychic distance, which is defined as ‘the sum of factors preventing the flow of information
from and to the market’ (Johanson & Vahlne, 1977, p. 24). Psychic distance can be caused by
various differences between countries that cause distance. The concept is closely related to the
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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liability of foreignness, however, according to the literature review by Hutzschenreuter,
Kleindienst, & Lange on the use of the concept of distance in IB literature, psychic distance is
most used in the literature as an umbrella term (2015). Psychic distance could cover all kinds
of distances including culture distance, institutional distance, geographic distance and
economic distance (Hutzschenreuter et al., 2015). The internationalization process, according
to the Uppsala model, is a gradual learning process that helps a firm to overcome psychic
distance, through the use of knowledge about foreign markets, integration, increasing
commitment and resource allocation to the foreign markets (Johanson & Vahlne, 1977)
(Johanson & Vahlne, 2009).
The second stream of research comprises the innovation-related internationalization
models (Moen & Servais, 2002)(Madsen & Servais, 1997). The two streams of research seem
quite similar, however, there are some key differences. The innovation-related models present
different development stages focused on the export behavior of the firm (Bilkey & Tesar,
1977). The process is viewed as a step-by-step development, in contrast with the Uppsala
model that treats the internationalization process as a dynamic model with an obligatory
learning curve (Andersson, 2000). The innovation-related model views the process as
innovative and discovering new ways of doing business, while the Uppsala model views the
process as a time-consuming organizational learning process (Madsen & Servais, 1997).
Changes in the international environment have put the Uppsala model and the
innovation-related internationalization models to the test. Empirical evidence shows that there
are companies that overcome their psychic distance very quickly and internationalize from
inception, without having to go through step-by-step development or learning stages. These
rapidly internationalizing companies are defined as International New Ventures or Born
Globals on which this paper will now elaborate further (Cavusgil & Knight, 2015) (Oviatt &
McDougall, 2005b) .
2.3 The International New Venture
In the following section, the definition of the International New Venture firm is given and
explained in context with another definition of the phenomenon: Born Global. The difference
between the two terms is discussed. This leads to the argumentation why the INV does not fit
the traditional view of the Uppsala model or innovation-related models.
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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By definition, the International New Venture and Born Global firm differ from each
other. Born Global firms focus much more on export sales and foreign sales, rather than the
coordination of activities op the value chain in foreign countries, such as production
subsidiaries (Coviello, 2015) The International New Venture as first described by Oviatt &
McDougall in 1994 purposefully encompasses four different forms of INVs in order to cover
the different forms (Oviatt & McDougall, 1994). Not every INV chooses the same pathway to
growth (Zander et al., 2015). There are two nuances to be made in the classification of the
INV based on a sliding scale: the coordination of value chain activities and the number of
countries entered. According to these nuances, Oviatt & McDoughall divide these different
forms of INVs into the following categories: Export/Import Start-up, Geographically Focused
Start-up, Multinational Trader and the Global Start-up (2005b) (see Table 1). When
consulting these two sliding scales depicted in Table 1, it becomes clear that many firms do
not fit in the bottom right category of Global Start-up and do not have a truly global focus.
Therefore, many studies erroneously use the termination ‘born global’(Coviello, 2015). The
word ‘global’ is perhaps misplaced, because international or regional might be better suited.
Most firms that have been given the name ‘born global’ are actually born regional (Rugman
& Verbeke, 2007). Table 1: Types of International New Ventures
Number of countries involved
Few Many
Coordination
of value
chain
activities
Few
Export/Import Start-up
Multinational Trader
Many
Geographically Focused
Start-up
Global Start-up
Source: Oviatt and McDoughall, 2005b, p. 37
As a result this study uses the term international new venture (INV) in accordance
with the definition coined by Oviatt & McDougall, to refer to a company that, ‘from
inception, seeks to derive significant competitive advantage from the use of resources and the
sale of outputs in multiple countries’ (Oviatt & McDougall, 1994, p. 31). It is important to
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notice that the size of the INV does not matter, as long as it operates internationally at a very
early age (Oviatt & McDougall, 2005b).
Being an international new venture essentially indicates that the first steps of the
traditional internationalization models are skipped. The firm does not go through progressive
accumulation of resources and capabilities (Lopez, Kundu, & Ciravegna, 2008). It follows a
different path than the traditional globally operating MNE that internationalizes through small
and incremental steps gaining market knowledge and reducing risk (Johanson & Vahlne,
1977). Instead, the firm enters a foreign market soon after inception and might not even have
the first sales in the home country (Chetty & Campbell-Hunt, 2004). It also entails that the
firm is able to enter markets that have a great psychic distance in relation to the home market,
despite having limited resources and organizational knowledge (Lopez et al., 2008).
When designing the Uppsala model, Johanson and Vahlne, include three exceptional
conditions that might allow a firm to internationalize earlier in the process without having to
go through the incremental learning steps of doing business abroad (1977). Firms could
internationalize sooner when they possess large resources because it reduces the risk of
internationalizing drastically. Or when the foreign market conditions are extremely favorable
in the sense that they are stable and similar to their market conditions in the home country. Or
lastly, when the foreign markets are similar to an already entered market, because the
previous experience might be applicable to the new market (Oviatt & McDougall,
2005b)(Johanson & Vahlne, 1977). However, empirical observations of INVs proved that
they did not fit in any of these three exceptional conditions formulated by Johanson and
Vahlne and thus that there must be other causes for the rapid internationalization INVs (Oviatt
& McDougall, 2005b).
In summary, the INV is a firm that does not follow the predicted gradual learning
steps and its internationalization might not occur in stages at all (Oviatt & McDougall,
2005b). The following section looks into more detail how the international business
environment changed and developed the right circumstances for INVs to originate and
develop new capabilities.
2.4 Changes in the international environment
The following section takes a closer look at the changes in the business environment that
made it possible for INVs to emerge. These changes include the technological advancements
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and the globalization of the international markets, which is a process that is still going on
today. First, this literature review provides some historical context on the first description of
the international business environment of the INV. Next, it takes a closer look at the global
economy today and the developments that are influential for the INV.
From the start of the 1990s, it was clear that these empirical observations of the INVs
and their internationalization were incongruent with the traditionally expected pattern of
internationalization, as described by Johannson & Vahlne (1977)(2009). Several authors
researched this phenomenon in order to provide some new insights, both internally and
externally, on the causes of the rapid internationalization of these firms. The first attempts to
summarize the literature up to that date were done by (Oviatt & McDougall, 1994) (Moen &
Servais, 2002). According to this literature review, written in 1994, the international
environment changed in its economical, social and technological conditions, which provided
firms with the opportunity to create new sources of sustainable advantages (1994). Due to the
rapid growth of communication and transportation technologies, transaction costs of
international operations had decreased dramatically (Oviatt & McDougall, 1994) (Porter,
1990).
Now, more than twenty years later, technological advancements have developed
exponentially (Chien & Karamcheti, 2013), with great consequences for the further
globalization process of international markets. Globalization is understood as ‘the growing
interdependence of national economies’ (G. Knight, 2000, p. 12). It is associated with of
homogenization of markets, reduced trade and investment barriers and the distribution of the
production process across multiple countries (G. Knight, 2000). The exponential growth of
technology is one of the main driving factors of globalization, because it makes the world
smaller by enabling real-time communication all across the globe (Garrett, 2000).
Globalization is indissolubly connected to technological advancements. Other scholars have
described the globalization of international markets as a transition to the ‘digital economy’
(Brynjolfsson, 2002)(Schmid, 2001)(Tapscott et al., 2000). Digital economy can be
understood as the overall change in the economy due to the changing features of information,
communication and computation technologies in which many products have become non-
physical and knowledge-based (Tapscott et al., 2000) (Brynjolfsson, 2002). Moreover, with
the Internet, this knowledge has become accessible for anyone and the developments in
information technology have changed the way products and services are produced
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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(Brynjolfsson, 2002). For example, it is now possible for consumers to be involved in the
production process of knowledge-based goods and services. These consumers co-create the
product or service that they buy. In other words, they have become ‘prosumers’, producers
and consumers at the same time (Helbing, 2014)(Ritzer & Jurgenson, 2010).
In the digital economy, knowledge-based goods and services can be distributed for
almost zero marginal costs via new information technologies, this has great consequences for
the further globalization of international markets (Schmid, 2001). This transition in the global
economy led to three different conditions for internationalization: homogenization of markets,
the appearance of global niche markets and the presence of increasing numbers of global
entrepreneurs who have experience operating in the international field (Oviatt & McDougall,
2005b). First of all, markets have become more liberal in the past years in order to stimulate
trade (Garrett, 2000). Globalization is a push factor for the convergence of markets
worldwide, because the technological developments have increased the potential revenue of
opening up the economy to worldwide trade. Or in other words, technology increased the
‘opportunity costs of closure’, which can be understood as the potential loss that a certain
country faces when it does not open up the economy to (free) trade (i.e. remains a closed
economy) (Garrett, 2000). As a result, economic policies have become more liberal and trade
barriers have been reduced. This process also goes hand in hand with the homogenization of
consumers worldwide, which have been exposed to the same products and services. Firms
have the opportunity to offer products worldwide without having to make major changes on
the national level (Camuffo, Romano, & Vinelli, 2001)(Madsen & Servais, 1997). In
summary, these new conditions of increasingly homogenous markets and consumers, caused
by globalization, are strong pull-factors for firms to enter foreign markets.
Next to these homogenization processes, globalization also allowed firms to specialize
themselves in international niche markets (Madsen & Servais, 1997). The existence of the
MNE was generally explained by their large size (Oviatt & McDougall, 2005b). The small
firms operating in international niche markets proved the opposite: that is possible for small
players to act in the international field as well. At the same time, these relatively small
international firms had to become more flexible and responsive in order to reduce the amount
of risk they faced when operating abroad. More homogeneous niche markets in combination
with the innovative quick-response mentality in companies made operating internationally
more accessible for smaller companies (Covin & Miller, 2014).
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The third important development in the context of INVs is the increasing number of
people that have elaborate experience in the international field (Oviatt & McDougall, 2005b).
As discussed previously, small firms were now able to internationalize but also had to be
flexible, responsive and innovative in order to survive. Therefore, INVs needed employees
with and international entrepreneurial orientation, with characteristics like opportunity
seeking, risk taking, proactivity and innovative behavior (Covin & Miller, 2014). In fact, this
entrepreneurial orientation became so important, that it signaled a turn in conversation in the
IB literature, which will be discussed in the following section.
2.5 INVs from an International Entrepreneurship perspective
Essentially, back in 1994, the world had gotten smaller through the use of new
communication technologies. The need to understand their internationalization process grew,
because INVs were appearing in increasing number worldwide and these small international
firms were apparently not simply smaller versions of large MNEs and could not be treated as
such (Lu & Beamish, 2001). At that time, INVs started to not only emerge from countries
with a small home market as expected, but also started emerging from countries with big
internal markets, for example, the United States (Cavusgil & Knight, 2015).
An influential and award-winning paper by Knight and Cavusgil from 2004 signaled a
turn in conversation in the discussion of quickly internationalizing young companies and
provided a new empirical and theoretical exploration of INVs because it highlighted the role
of innovative and entrepreneurial company founders (Zander et al., 2015) (Cavusgil &
Knight, 2015). The new turn indicated a combination of two research fields: IB research and
entrepreneurship research. IB researchers could not ignore the growing presence of
entrepreneurial firms in the international field and on the other hand entrepreneurship-
researchers could not ignore the globalization or internationalization of the market
(McDougall & Oviatt, 2000a). Hence, a new research combination was made between an IB
view and an entrepreneurial view: International Entrepreneurship (IE) (Zander et al., 2015).
This combined the theoretical lenses to understand a phenomenon (Coviello, 2015).
IE entails ‘the discovery, enactment, evaluation, and exploitation of opportunities—
across national borders—to create future goods and services’ (Oviatt & McDougall, 2005,
p.40). The shift to an entrepreneurial perspective of the quickly internationalizing firms
provided fundamental new points of departure when trying to understand the
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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internationalization process of INVs. Since understanding the logic and reasoning of the
international entrepreneur started to become so important, scholars started to emphasize two
aspects of entrepreneurship: the role of the individual and treating uncertainty and resource
constraints that this individual faces as a given fact (Covin & Miller, 2014)(Zander et al.,
2015). In the early development stage of the INV, resource constraints are the most difficult
problem to overcome. Compared to larger MNEs, INVs have relatively less access to
financial markets and do not have the option to relocate resources internally. The IE approach
takes the entrepreneur and the uncertainties he or she faces as a fundamental point of
departure to examine how the INV deals with such resource constraints.
More than two decades later, INVs are still emerging in substantial numbers
worldwide (Zander, et al., 2015) (Knight & Cavusgil, 2004). While the emergence of INVs
was something very novel twenty years ago, today they are found in abundance all around the
globe (Cavusgil & Knight, 2015). The research on INVs has grown along with the
phenomenon and research from an IE perspective emerged in great numbers (Zander et al.,
2015)(Cavusgil & Knight, 2015)(Covin & Miller, 2014). As a result, the IE perspective has
been used in many different disciplines. It draws from various different perspectives like
international business, entrepreneurship, strategic management and marketing (Peiris,
Akoorie, & Sinha, 2012).
The Resource Based View (RBV) was also added to the list of theoretical lenses that
are now merged into the multidisciplinary IE approach. From this perspective, the INV's
international competitive advantage comes from the ability of the firm to leverage unique tacit
knowledge about global opportunities (Peiris et al., 2012)(Peng, 2001). The international
entrepreneur is the embodiment of this knowledge. According to a literature review of Peng
on the usage of the RBV in IB literature, the RBV provides a powerful theoretical
perspective, because it presents a unifying framework. The IE theoretical field benefits
because diverse research lenses can be unified through the RBV (Peng, 2001).
Overall scholars found enough evidence to reach consensus about certain triggers of
internationalization of INVs. These include multiple factors, from different economic
perspectives, which have been summarized in Table 2 (Cavusgil & Knight, 2015). First, from
an industry-based perspective researchers confirmed the following triggers of INVs: size of
the firm's home market, the appearance of global niche markets, technological developments
in production, the emergence of global networks and alliances of firms. Second, from a firm-
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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based perspective scholars have reached consensus on multiple organizational capabilities, for
example, experience in the international field, innovativeness and entrepreneurial attitude of
the firm (Cavusgil & Knight, 2015). Furthermore, the environmental changes that enabled this
rapid expansion of young firms (globalization and technological advances) developed
exponentially over the last years (McKinsey, 2013)(Chien & Karamcheti, 2013). From a
managerial perspective, advances in technology literally make the world smaller for the
entrepreneur with quick access to key information on global opportunities (Cavusgil &
Knight, 2015) (Peiris et al., 2012). All these findings have in common that they all have the
potential to increase the speed of internationalization and therefore enabling the company to
operate internationally from a young age. Table 2: Triggers of INV’s rapid internationalization process
Industry-based perspective - Size of home market
- Appearance of global niche markets
- Technological developments in production
- Emergence of global networks
- Alliances
Firm-based perspective - Experience in the international field
- Innovativeness
- Entrepreneurial attitude
Managerial perspective - Access to key information
Source: Cavusgil & Knight, 2015
This section explored the theoretical lenses through which internationalization process
of young, rapidly internationalizing firms are understood and provided insights into the
potential causes for the existence of the INV. These accelerating factors are all components of
the ultimate goal for INVs to reach the best possible firm performance by exploiting
international markets. The following section will elaborate on the relationship between INVs
and performance.
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2.6 Performance in relation to the INV
In the past decades academic literature on internationality and performance has occurred in
abundance (Covin & Miller, 2014). Performance is a broad term that can be interpreted from
multiple perspectives (Lu & Beamish, 2006). In the following chapter, the different findings
on he performance of international firms are discussed with a specific focus on the findings
on commonly used indicators of performance: profitability and growth.
In the IB field, the multinationality-performance relationship is widely discussed. On
the one hand, it is an accepted view that increased multinationality increases performance,
because it makes it possible for firms to achieve higher profits and benefit from a larger
number of market imperfections all across the globe (Lu & Beamish, 2001). According to a
literature review of more than 100 empirical studies by Hennart, there are three main causes
for better performance when a firm operates internationally (2007). Firstly,
internationalization makes it possible to exploit economies of scale. Secondly, the
organizational learning process goes faster and lastly, it gives the firm access to resources,
which it would not have in its home market (Hennart, 2007). However, internationalization is
also always associated with additional costs, like liabilities of foreignness and newness,
overcoming psychic distance and increased coordination costs (Hennart, 2007). Many
scholars have researched internationalization in relation to performance, with mixed results.
Until today there is no universal, positive relation found between operating in multiple
countries and performance. Some found a linear relationship (e.g. Pangarkar, 2008), others
found multiple moderating factors of the multinationality-performance relationship (Hennart,
2007). This resulted in many different theories on curvilinear models that take the different
costs at different stages of international operations into account (Contractor, Kundu, & Hsu,
2003). For example, the U-shaped relationship (Ruigrok & Wagner, 2003) and an inverted U-
shaped relationship (Gomes & Ramaswamy, 1999).
In addition, a research by Lu & Beamish argued that the relation between
internationalization and performance is S-shaped, consisting of three distinct phases ( Lu &
Beamish, 2004). This study suggests that the relationship with performance is moderated by
the different costs of internationalization. In phase one, internationalization is not yet
profitable, because the costs of expanding abroad are still very high compared to formerly
discussed benefits of internationalization. However, as the liabilities of newness and
foreignness decrease, the total benefits of internationalization become profitable and the total
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gains of internationalization become profitable in phase two. As the firm keeps expanding, the
total coordination costs will also rise significantly. This is the point where the firm enters
phase three of the process, where the coordination costs become higher than the total benefits
of internationalization, making the net gains not profitable anymore ( Lu & Beamish, 2004).
The study by Lu and Beamish is exemplary for the complicated relationship that exists
between the internationalization process and performance. More support for the complex
relationship was found by Vermeulen & Barkema, who found strong support for the
moderating effect of expansion patterns in the form of pace, rhythm, and scope that influence
the international performance (2002).
The literature that focuses on the growth of the MNE has produced less ambiguous
findings. Growth is an important aspect of the firm's performance, since the most prominent
goal of expanding abroad is gaining economies of scale, organizational learning and access to
more resources (Hennart, 2007). A second study by Lu and Beamish shows that exporting
internationally had a significant positive effect on an INV's growth even when the effect on
profitability was found to be negative (Lu & Beamish, 2006). When an INV grows fast,
liabilities of foreignness and newness can be quickly overcome. The existence of the MNE is
usually explained due to their large size. However, scholars recognize that large size may be
both cause and effect of operating internationally (Oviatt & McDougall, 2005b).
It is important to note here that most theories about the multinationality-performance
relationship are generally dealing with large MNEs and not INVs. Even though INVs are
MNEs, not all MNEs are INVs. When considering INVs another discussion arises in relation
to performance: what parameters distinguish an INV from an MNE. Controversy exists
around the timeframe in which the INV is established. This deals with two exact moments
that need to be decided upon: when is the firm established and when is it considered to
operate internationally. Controversies include the debate about this exact moment of inception
of the INV. For example, the gestation time of every company needs to be taken into account.
Additionally, some INVs exist which are a spin-off of a larger existing company, which gives
them an unfair head start in the international market with consequences for their performance
(Zahra, 2005). In the past years of INV research, most scholars have relied on the claim made
by Oviatt & McDoughall back in 1994, that researchers should rely on ‘observable resource
commitments’ to determine the exact moment of inception of the INV (Oviatt & McDougall,
1994)(Oviatt & McDougall, 2005b)(Zahra, 2005). In other words, the first observable
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commitment to engagement in foreign activities is considered to be the starting point of the
internationalization process.
In conclusion, it can be stated that the research on the performance measurement of
MNE is inconclusive. Many studies have found multiple moderating factors that influence the
international performance of a firm. In addition, the growth of the MNE has been reported as
a more robust performance measurement in the internationalization process. From the
perspective of an INV growth makes sense as primary objective because of the great risk and
uncertainty the INV is facing compared to the larger MNEs. This means that in the starting
phase of the firm the entrepreneur of an INV might choose to maintain a growth strategy,
rather than a strategy to maximize profit in order to achieve economies of scope and scale as
fast as possible (Gabrielsson & Pelkonen, 2008). Building on this conclusion, this research
will examine the internationalization process of the INV with a focus on growth since growth
is expected to show the most change in the first stage of the internationalization process of the
young international firms. The hypothesis development will elaborate further on this
viewpoint.
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3. Hypothesis development This chapter discusses the existing gaps in the literature, which this research will address with
a focus on international performance measured in firm growth. There is still a long way to go
before we truly understand the internationalization process of INVs (Zander et al., 2015). In
this study will contribute to the existing literature by addressing the research gaps concerning
the internationalization process of the digital service industry.
Many studies have been conducted on the influence of a firm’s products as a
moderator on its internationalization process. Firms can benefit especially of their
internationalization by exploiting firm-specific assets when these assets are intangible and
information intensive (Lu & Beamish, 2004). Intangible assets tend to be transferrable to
different markets, but on the other hand are costly to produce. Hence, exploitation of
intangible assets on a large scope in different international markets is simply more efficient
and profitable (Lu & Beamish, 2004). Taking this one step further, the increased potential
profitability of intangible assets can be better understood within the context of discussed
digital economy. Knowledge-based goods, like software or digital music production, can be
distributed for almost zero marginal costs (Schmid, 2001) (Tapscott et al., 2000). The
potential consequences that these digital products and services have on the
internationalization process remains an understudied field in the IB literature (Zander et al.,
2015) (Cavusgil & Knight, 2015).
In accordance with this presented research gap, this study focuses on the performance
of INVs with intangible, digital products. In order to uncover the effect of exploiting a value
chain that consists only digital processes, this research focuses on INVs that operate in the
digital service industry. More precisely, it will research how and to what extent the
international market expansion strategies of digital service INVs deviates from the
internationalization patterns of non-digital INVs. Firms that deliver their services virtually
might allow them to expand more effectively due to a significant reduction of their
coordination costs (Lu & Beamish, 2004)(Zander et al., 2015). With this research gap, this
study aims to provide more insight on the influence of the nature of the service on the
internationalization process. Hence, the following research question is addressed: How does
the digital nature of the INV’s services affect its internationalization process in terms of
growth?
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Services are the perfect products that allow a company to deliver online, for example,
data storage services (e.g. Dropbox), data transfer services (e.g. WeTransfer) or digital
entertainments services (e.g. Spotify). This research will focus on digital services for two
different reasons. First, it allows for an examination of an internationalization process that has
the potential to have a completely digital value-chain. It is important to make this distinction
because digital advancements are going on in almost all areas of the economy (Brynjolfsson,
2002), think for example of computer integrated manufacturing or automatization of back
office processes (Schmid, 2001). In order to draw conclusions about the influence of the type
of products that a firm produces and its internationalization process, this study will make a
clear distinction between firms with a digital value chain and firms that have a non-digital or
semi-digital value chain (Brynjolfsson, 2002).
Another reason this study focuses on digital services is to clearly distinguish between
goods and services. This seems obvious, however, digital nature of products and services have
started a whole different debate. Services have been used and described extensively in
economic literature and are usually defined as ‘immaterial goods’ (Hill, 1977). Consequently,
how do we define digital products, like digital books and music? The question arises what
makes these good tacit or immaterial and to what extent digital products differ from digital
services. As a result of this debate, this research will focus only on the internationalization
process of firms that deliver digital services, immaterial goods that can be delivered virtually
to the consumer (Schmid, 2001). This way, any ambiguities concerning the definition of a
digital product is avoided.
In order to draw conclusions about the different internationalization processes, the
digital service based firm will be compared to firms operating in the traditional service
industry (tertiary industry) and the manufacturing industry (secondary industry). Although it
will be discussed as distinct categories, in reality, service industry and manufacturing industry
also deal with digitalization (Schmid, 2001). For the purpose of this research, it is expected
that the impact of information technologies is less prominent in internationalization process of
the service industry and even more for the manufacturing industry because the tangible assets
will still cause for higher costs (Miozzo & Soete, 2001)(Gabrielsson & Pelkonen, 2008).
These costs include all activities that involve the coordination of business activities across
countries, for the simple reason that tangible assets are less efficiently transferred than digital
business activities.
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This research on the influence of disruptive technological change of the INV's value
chain on its internationalization process is relevant because the digital economy is changing
the international market at a rapid pace (Schmid, 2001)(Zander et al., 2015). Predicted
technological developments substantially pressure the need for more understanding in this
field. At the same time, the risk for firms to operate internationally from their birth still is
enormous (Zander et al., 2015). In a future business environment, where technological
advances keep developing exponentially (Chien & Karamcheti, 2013), firms need to become
more innovative along the value chain (Zander et al., 2015) and understand more about the
influence of a firm's products (goods and services) on their short- and long-term success in the
internationalization process (Javalgi, Griffith, & White, 2003).
As discussed in the literature review, growth is a relatively constant factor of
international performance. Additionally, INV's existence is generally thought to be a product
of their optimistic and aggressive strategies to achieve growth and market power in multiple
countries (Gabrielsson & Pelkonen, 2008). Therefore this study will focus on the growth of
the INV measured in total turnover (sales), total assets and number of employees. Based on
the assumptions that digital services are intangible and knowledge-based and have almost
zero distribution or coordination costs, it is expected that digital service INVs will
internationalize with a different growth rate than INVs from other sectors when considering
the first stage of their internationalization process. The following hypothesis is formulated:
Hypothesis 1: In their internationalization process, INVs operating in the digital service
industry will grow significantly different than INVs operating in the general service industry
and manufacturing industry.
Due to the predicted lower coordination costs of business activities, it is predicted that digital
service INVs that have a completely digital value chain will grow not only different but also
faster than their peers from the general service industry and the manufacturing industry. The
following hypotheses are addressed concerning the direction of the comparison of the three
industries:
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Hypothesis 2a: In their internationalization process, INVs operating in the digital service
industry will grow faster than INVs operating in the general service industry in terms of
turnover (sales).
Hypothesis 2b: In their internationalization process, INVs operating in the digital service
industry will grow faster than INVs operating in the manufacturing industry in terms of
turnover (sales).
Hypothesis 3a: In internationalization process, INVs operating in the digital service industry
will grow faster than INVs operating in the general service industry in terms of assets.
Hypothesis 3b: In their internationalization process, INVs operating in the digital service
industry will grow faster than INVs operating in the manufacturing industry in terms of
assets.
Considering the developments of knowledge-based products and services in the digital
economy, the development of the number of employees is predicted to grow differently.
Technological advancements in communication and transportation have drastically changed
the international infrastructure for INVs. When knowledge has been codified, it can be
transferred more efficiently than ‘traditional' knowledge. When uncodified knowledge is
transferred, loss of information is inevitable due to transmission and interpretation errors
(Teece, 1998). Codified communication of information between computers is economically
beneficial for firms because it makes these processes less costly and less ambiguous. With
this background information, it makes sense for INVs that operate in with knowledge-based
products (digital services) to leave a lot of work in the hands of computer code. Hence, INVs
operating in the digital service industry could be productive with a smaller workforce (Peiris
et al., 2012)(Helbing, 2014).
A second phenomenon that supports this hypothesis is the prosumer trend. As shown
in the literature review, prosumers are involved in both consumption and production (Helbing,
2014)(Ritzer & Jurgenson, 2010). Digital services are very suited outputs that could be
simultaneously produced and consumed (Gabrielsson & Pelkonen, 2008). These trends add to
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the hypothesis that digital service INVs will show a different growth pattern concerning their
number of employees. Therefore the following hypothesis is formulated:
Hypothesis 4a: In their internationalization process, INVs operating in the digital service
industry will grow slower than firms operating in the general service industry in terms of
employees.
Hypothesis 4b: In their internationalization process, INVs operating in the digital service
industry will grow slower than firms operating in the manufacturing industry terms of
employees.
3.1 Conceptual framework
The formulated hypotheses are depicted in Figure 1: the conceptual framework. The first
hypothesis predicts a moderating relationship between digital service INVs and their growth.
The second, third and fourth hypothesis look in more detail at the growth of the INV. The
second and third consists of two positive predicted relationships between the moderating
digital service INV and their growth in assets and turnover. The fourth relationship is
predicted to be a negative one and predicts that digital service INVs will grow slower in terms
of employees compared to general service industry and the manufacturing industry. Figure 1: Conceptual framework
H1
Digital Services
Growth Assets
Turnover
Employees
H2a+
H2b+
H3a+
INV
H3b+
H4a- H4b-
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4. Data & method In the following chapter, the data collection method is presented. Since the
internationalization process is a longitudinal process, a repeated measure method is used
using panel data. The sample selection procedure is described in detail for iteration purposes.
In the last part of this chapter a description of the variables and the statistical method is
presented. This thesis uses three mixed design repeated measure ANOVAs because this
method can compare several means when there are two or more independent variables which
have been measured using different entities (Field, 2013).
4.1 Sample
In order to draw a generalizable conclusion, a representative sample was drawn from the
population with non-probability sampling technique, because the complete population is
unknown (Saunders & Lewis, 2012). Europe has been chosen as the geographical focus,
because the sizes of the home markets are all relatively small. Therefore firms from these
countries face stronger push factors to internationalize early (Zander et al., 2015) (Garrett,
2000). Additionally, all countries in the sample are a member of the European Union and
based on an open economy (Ruigrok, Amann, & Wagner, 2007) and all countries can be
considered developed or western, which indicates a highly developed service sector (Javalgi
et al., 2003). Hence, these two factors increased the probability of finding suitable digital
service INVs.
For this research, a sample is selected consisting of young and small companies,
because this amount of data on small international companies has not been used often before,
simply because it used to be unavailable. As a consequence, the companies used for this
analysis are likely to be unlisted (Zander et al., 2015) (Lu & Beamish, 2001). Therefore the
secondary dataset is collected through Bureau van Dijk’s database Orbis, a worldwide
database with information on almost 180 million companies. This database offers the most
information on unlisted companies worldwide and detailed information on companies starting
from the year 2006 (“Orbis | Detailed global private company information,” 2016.).
Since we are only interested in the INVs it is necessary to explicate what is considered
an INV. There are different parameters known for identification of INVs. The most supported
parameters are: the period between inception and internationalization is not longer than three
years and degree of internationalization (DOI) of the company needs to be at least 25% of its
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export as percentage of their total revenue (McDougall & Oviatt, 2000b) (Autio, Sapienza, &
Almeida, 2000). These parameters have been used successfully in the past (Knight, 1997)
(Madsen et al., 2000) (Fan & Phan, 2007) (Peiris, Akoorie, & Sinha, 2012). Exporting is
generally regarded as the first step into an international market. In addition, it is most likely to
signal the earliest sign of an INV because it lacks the resources to immediately engage in
other forms of entry modes into a foreign market that requires more equity (Lu & Beamish,
2001)(Rugman et al., 2011). To determine if firms met the INV criteria two different criteria
were used:
1. Year of incorporation 2004-2012
2. Export Revenue/ Operating revenue (%) (2006-2014)
In this sampling procedure the year of incorporation is considered to be the first year of
existence (e.g. if a firm was incorporated in 2004, it needed to have at least a DOI of 25% in
2006). Consequently, considering the three-year-range, 2004 and 2012 were the most logical
cut-off points for the year of incorporation since Orbis offers financial data from the year
2006 and financial data of the year 2015 was not yet available. Additionally, criterion two
refers to the availability of the ratio of export revenue/operating revenue % in the database.
Missing data on such an important selection criterion would undermine the robustness of the
analysis (Zhang & Shaw, 2012).
Filtering the results in Microsoft Excel based on the INV criteria, resulted in a list of
INVs that had a DOI > 25% within the first three years of their existence. In addition,
companies deriving from a country that was not or had only just become, a member of the
European Union were removed (e.g. Croatia and Bosnia-Herzegovina). This way, potential
biases due to significant differences in the openness of economies between non-EU members
and EU-members are avoided (Javalgi et al., 2003).
In addition to the two selection criteria for INV, firms were selected from Orbis using
their Standard Industrial Classification (SIC) code. Contrary to other classification codes, SIC
codes explicitly distinguish service industries and therefore it is considered the most suited
identifier (SICCODE.com, 2016). With every additional number, the industry classification
gets more precise. It is important to note that the classification codes are not mutually
exclusive, which was considered during the selection procedure. The description of the
variables will go into more detail about the selection procedure for the three different
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industries. This sampling method resulted in a sample of 508 suited INVs categorized by SIC
codes.
4.2 Method
Three mixed design repeated measure ANOVAs are run to test the proposed moderating
effect of INV with digital services on the change in growth between 2010-2014. It is a
mixture of repeated measure design and a between groups design (Field, 2013). The data in
this study are analyzed with Statistical Package for Social Sciences (SPSS) software. In this
section, the different variables are presented followed by a description of the normal
distribution of the variables, homogeneity of variance and sphericity, which are assumptions
of the mixed design repeated measures ANOVA (Field, 2013).
4.2.1. Independent variable
The independent variable is a categorical variable with three nominal measurement levels.
Hence, in this mixed design repeated measures ANOVA, the independent data is treated as
three different independent variables. The category ‘Computer Programming, Data
Processing, And Other Computer Related Services’ was identified using the industry SIC
code 737 (“SICCODE.com - The Leader in SIC and NAICS Codes, Company Search,
Business Lists,” 2016). This industry will be referred to as ‘digital service industry.
The next measurement level of INVs consists of observations that operate in the
broader service industry. SIC codes classification system labeled SIC codes starting with 70
until 89 as ‘Service Industry'. For example, they include industries with SIC codes ranging
from number 701 ‘hotels and motels' and 874 ‘Management and Public Relations Services’
(“SICCODE.com - The Leader in SIC and NAICS Codes, Company Search, Business Lists,”
2016). Excluding companies within industry 737, constructed the second measurement level,
which will be referred to as ‘general service industry. The last measurement level was
constructed in a similar way, using the SIC codes 20-39, which are companies operating in
the manufacturing industry. For example, this sample included companies from industry
232‘Men's and Boys' Furnishings, Work Clothing, and Allied Garments’ and 349
‘Miscellaneous Fabricated Metal Products’ (“SICCODE.com - The Leader in SIC and NAICS
Codes, Company Search, Business Lists,” 2016). INVs operating in one of these industries
will be labeled as ‘manufacturing industry.
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4.2.2 Dependent variable
In total three different dependent variables are used with five observations (years) per n firms.
The performance of the INV is measured based on their growth in turnover (1), assets (2) and
employees (3). The sampling procedure described the sample of 508 companies, which led to
a total of 2540 observations to be examined. The dependent variables are all continuous
variables and have a ratio measurement level. From the Orbis database, all absolute numbers
were returned per company per year per growth measurement. The normality checks and
transformations of the dependent variables will now be discussed.
The normality of the distribution of the dependent variables is checked via histograms
and boxplots. The shape of the distributions and the skewness and kurtosis scores showed that
the variables were not normally distributed. To overcome the non-normal distribution, all
variables were transformed using a natural logarithm (ln logarithm with base e). Figure 2
below shows an example of one of the 15 variables before and after transformation. This
specific transformation was chosen because it mathematically enhances the impact of the
small values in the sample. Or in other words, it puts the focus on the smaller companies. This
is especially interesting for this research in accordance with the IE view as it tries to
specifically look at those small firms that internationalize while taking a much greater risk
than their bigger peers would when they perform the same internationalizing steps. Figure 2: Histogram of variable turnover 2014 before and after transformations
Source: SPSS
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After the transformation, the outliers are spotted using boxplots and removed. The
descriptives of the dependent variables can be found in Appendix A. To determine that there
were not any outliers for specific industries, the distributions of the outcome variables
categorized by industry were also checked. In total the distributions of 45 variables were
checked: three variables (turnover, assets, employees) with five measurement levels (2010,
2011, 2012, 2013, 2014) in three different categories (digital service industry, general service
industry, and manufacturing industry). Since a secondary dataset is used the inevitable
missing values for every variable are reported to SPSS as missing. Further tests were
performed in order to check if the data was normally distributed.
The Shapiro-Wilk test returned non-significant values (p > 0.05), indicating no
significant deviation from normal for almost all of the variables (see Appendix B). In total 9
variables returned a significant value for the normality test, indicating that the distribution
deviated significantly from normal. The Shapiro-Wilk tests need to be approached with
caution when the sample size is large (Field, 2013). Therefore the skewness and kurtosis
scores were consulted in combination with the Q-Q plots and histograms. The skewness and
kurtosis scores were all between 1 and -1 indicating a normal distribution for all 45 variables
(see Appendix C) (Field, 2013).
4.2.3 Control variables
The IE stream of research has determined multiple factors that influence the
internationalization process of the INV from and industry-based perspective. One of the most
important factors that might influence the analysis ate the home-market conditions (Cavusgil
& Knight, 2015). Table 3 shows the division of the different countries of origin of the INVs.
This exploratory table already shows an unequal division of countries. In order to be sure that
the variance in the dependent variables is not caused by any home-market conditions, all
firms in the sample are controlled for their country of origin. The control variables are
constructed as dummy variables using 0 and 1. The descriptive statistics of the dummy
variables is available in Appendix D.
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Table 3 : Information country of origin of INV in the sample
Country EU Membership
Abbreviation
Digital General Services
Manufacturing
Total
Germany 1958 DE 3 7 6 16
France 1958 FR 17 32 38 87
United Kingdom 1973 GB 33 109 132 274
Greece 1981 GR - - 37 37
Hungary 2004 HU 1 5 83 89
Ireland 1973 IE - 3 2 5
Total 508
Source: “Orbis | Detailed global private company information,” 2016
4.2.4 Homogeneity and sphericity
This analysis deals with three different mixed design repeated measure ANOVAs, which
means we have to deal with the assumption of sphericity in addition to the assumption of
homogeneity of variances. Levene’s test of equality of error variances was significant for
every dependent variable, which means that the assumption of homogeneity of variances was
violated. However, Levene's test needs to be treated with caution when sample sizes are large
because in large samples Levene's test can be significant even when group variances are not
very different (Field, 2013) (Zimmerman, 2004). Therefore it should be interpreted with the
variance ratios of the dependent variables. The variance ratios show that the variances
between groups are homogeneous for all three dependent variables (see Appendix E). In
addition, the large sample in combination with equal group sizes per dependent variable
(n=497) makes violation of the assumption less important, because chances of Type I error
are already very small (Field, 2013).
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Sphericity refers to the equality of variance of differences between treatment levels
(Field, 2013). Since this research measures more than three treatment levels, namely five
different years, sphericity needs to be assessed using Mauchly’s test. Mauchly’s test of
sphericity indicated that the assumption of sphericity has been violated (χ²(9) = 589.365, p <
.001)( χ²(9) = 549.710, p < .001) (χ²(9) = 645.116, p < .001). Therefore the null hypothesis
that the ‘variances of differences between conditions are equal' (Field, 2013, p. 546) is
rejected for the 3 models. This outcome was expected since the change of violation sphericity
increases with every extra repeated measure (Field, 2013).
As a result, the F-ratios cannot be consulted, because they might be biased, increasing
the risk of a Type I error. Therefore corrections must be applied to the F-ratios with the
epsilon statistic (ε), which represents the degree to which sphericity is present. Greenhouse-
Geisser correction is chosen to correct for sphericity (ε = 0.551) (ε = 0.478) (ε = 0.582). This
correction is the most conservative and is the most appropriate for a violation of sphericity
below ε = 0.75 (Field, 2013).
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5. Results The main goal of this analysis is to examine the relationship between INVs and their growth
and how this relationship is moderated by the niche sector of the digital service industry.
Multiple dependent variables are considered concerning the growth of the firms in its
internationalization process. The research specifically looks at growth and not profit, because
it is argued that small international firms will show more change in terms of growth than in
terms of profit in the first stage of their internationalization process (Lu & Beamish, 2006).
This chapter deliberates on the results of the three mixed design repeated measure ANOVA
models.
Three separate mixed repeated measures ANOVAs are performed to examine the three
different outcome variables turnover, assets, and employees. They are executed separately in
order to provide a clear overview of the interactions we are interested in for this analysis. The
between-subject factor ‘Industry’ contains three levels: digital, general service and
manufacturing and the within-subject factor ‘Time’ is measured on five different occasions:
2010, 2011, 2012, 2013 and 2014. All analyses are corrected for the country of origin, using
the described dummy variables DE, FR, GB GR, HU and IE as covariates. After the removal
of outliers, a total of n = 497 INVs were left in the sample. Underneath the results are
described.
Starting from the first hypothesis the mixed repeated measures ANOVA analysis
returns the test of between-subject effects. On other words the effects of the three levels of the
between-subject factor Industry. Across industries the group differences in turnover averaged
across five years is not significant (F(2, 383) = 1.419, p = 0.243, ηp2 = .007). The same is the
case for the differences in employees (F(2, 311) = 0.723, p = 0.486, ηp2 = .005). However, the
same test of between-subject effects for the assets was significant (F(2, 343) = 3.600, p =
0.28, ηp2 = .021), so the differences in assets averaged across the five time points are
significantly explained by the type of industry. Therefore, H1 is not definitely answered yet.
The test of between-subject effect gives a general idea of the interactions found in the three
analyses. Specifically, it does not deal with the digital service INVs separately. In order to
have a better understanding of what causes the between-subject effect, the within-subject
effects, graphs, and pairwise comparisons are used. The pairwise comparisons tables use
numerical indicators for the different time points, which are displayed in Table 4.
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
34
Table 4: Indicators of Years used in pairwise comparison tables
Indicator Corresponding year
1 2010
2 2011
3 2012
4 2013
5 2014
In the first model, the outcome variable turnover is examined. The test of between-
subject effects was found to be not significant, however, the within-subject effect of the
interaction years*industry is significant (F(4.412, 844.858) =7.007, p < 0.001, ηp2 = .035).
This indicates that the changes in turnover across the five years are not equivalent across
industry groups for the interaction years*industry. To get a better idea of what the interactions
mean, they are displayed in a graph in Figure 3. Using this graph, the different interactions
can be interpreted using pairwise comparisons with a Bonferroni adjustment (Field, 2013).
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
35
Figure 3: Graph of interactions for turnover
Source: SPSS Even though the graph shows a steeper plot for digital service INVs than for general
service and manufacturing INVs, the pairwise comparisons of turnover show that there are no
significant differences between the industries across time points (see Table 5). Table 5 shows
that all pairwise comparisons of the different industries separated by years are not significant
for turnover. However, since the interaction effect of years*industry is significant, the
pairwise comparison between the different years is also examined (see Table 6). As shown in
Table 6, turnover significantly grew across the different time points. This significant change
is broken down into the different industry categories in the pairwise comparison Table 7 (see
for the extended pairwise comparisons of years Appendix F). It is visible that the INVs in all
industries showed a significant growth in turnover from time point 1 to 2 (2010 to 2011) (p <
.001 for all three industries). After this first growth spurt, the increase in turnover slowly
starts to decline for every industry. In conclusion, there is no significant difference found
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
36
between digital service INVs and general service or manufacturing INVs for turnover.
Subsequently, the direction of this relationship, which was predicted to be faster in H2b and
H2a is also found to be insignificant.
Table 5: Turnover - Pairwise comparisons for Industry categorized by Years.
Source: SPSS
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
37
Table 6: Turnover - Pairwise comparisons Years (shortened)
Source: SPSS
Table 7: Turnover - Pairwise comparisons Years categorized by Industry (shortened)
Source: SPSS
Next, the interactions with the outcome variable assets are examined similarly. Contrary to
turnover, the test of between-subject effect was significant for assets indicating that Industry
significantly explains the variance in assets averaged over the five time points. The test of
within-subject effects shows a significant interaction effect of years*industry (F(3.878,
665.039=4.208, p = .003, ηp2 = .024). The graph for assets is plotted underneath in the graph
depicted in Figure 4. The pairwise comparison of Industry separated by Years shows that not
all interactions are significant (Table 8). The only significant differences are found between
general service industry and the manufacturing industry. All comparisons with the digital
service industry are not significant (see Table 8). Therefore no evidence has been found for
H2a and H2b. In addition, this has definitive consequences for H1. Since all tests of between-
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
38
subject for turnover and employees are not significant, and the between the between-subject
effect (Industry) for assets is only significant between general service and manufacturing
INVs, it can be concluded that digital service INVs do not significantly differ in their
internationalization process from general service and manufacturing INVs. In other words, the
lack of significant difference between digital service INVs and the two other types of INVs in
all three types of growth measurements rejects H1. Figure 4: Graph of interactions for assets
Source: SPSS In addition to the difference between industries, the pairwise comparisons of years are
examined for assets. The difference between 2011 and 2012 for digital service INVs catches
the eye in the graph because it slopes downwards between 2011-2012. However, the pairwise
comparison shows that this change in assets is not significant (p = 1.000) (Table 9). The other
comparisons of the different years are significant (see Table 9). The pairwise comparisons
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
39
between the years are further broken down by separating the year comparisons per industry in
Table 10 (the complete list of pairwise comparisons is available in the Appendix G). In these
comparisons, a growth pattern is visible which is similar to turnover. The difference between
time point 1 (2010) and time point 2 (2011) is the most significant for all three industries.
Furthermore, the interesting change, as spotted in the plot between 2011 and 2012, turns out
to be insignificant for every industry. Both digital service INVs and manufacturing INVs also
experience a significant growth in assets between time point 3 and 4 (2012-2013) and time
point 4 and 5 (2013-2014). The general service INVs do not grow significantly after the first
recorded years. In conclusion, it can be stated that digital service INVs do not grow
significantly faster in terms of assets compared to the general service INVs (H3a) or
manufacturing INVs (H3b).
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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Table 8: Assets - Pairwise comparisons for Industry categorized by Years
Source: SPSS
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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Table 9 Assets- Pairwise comparisons for Years (shortened)
Source: SPSS
Table 10: Assets- Pairwise comparisons for Years categorized by Industry (shortened)
Source: SPSS
Lastly, the effect of digital service INVs on the growth in employees will be examined.
As shown by the insignificant test of between-subject effects, there was no significant
difference found in employees between the three different industries averaged across time
(F(2, 311) = 0.723, p = 0.486, ηp2 = .005). Contrary to the results for turnover and assets, the
within-subject effect of years*industry is not significant for employees (F(4.990, 776.010) =
1.421, p = 0.214, ηp2 = .009). Therefore it is assumed that the changes in employees across the
three different categories are not significantly different (H4a and H4b). This is confirmed by
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
42
the pairwise comparison of the different industries across all five time points shown in Table
11, which shows no significant comparisons across industries. Figure 5: Graph of interactions for employees
Source: SPSS
The plot of employees does show an interesting development of digital service INVs
over the five different years (see Figure 5). However, Table 12 reveals that there is only a
significant change in employees found between time point 1 and 2 (2010 and 2011). Closer
examination shows that this was only the case for manufacturing and general service INVs
(Table 13) (the complete list of this pairwise comparison is available in the Appendix H). No
significant difference between time points was found for the digital service INVs. Still, it is
important to notice that only the digital service INVs show a small decline from 2013-2014 as
depicted in the graph (Figure 5). This change in employees is however not significant (p =
1.000) (see Table 13 comparison between time point 4 and 5).
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
43
Table 11: Employees - Pairwise comparisons for Industry categorized by Years
Source: SPSS
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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Table 12 Employees - Pairwise comparisons for Years (shortened)
Source: SPSS
Table 13: Employees - Pairwise comparisons for Years categorized by Industry (shortened)
Source: SPSS
In summary, these results suggest that the different industry types do not have an effect on the
three dependent variables. Even though the plots of the dependents depict a different slope for
digital service INVs, the comparison with other industries was found to be not significant
using the pairwise comparison tables. In the following chapter, the results and implications of
these findings are discussed.
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
45
6. Discussion This research examined the internationalization process of INVs operating in the digital
service industry by comparing their pathway to growth with service and manufacturing INVs
in terms of turnover, assets and employees using a mixed design repeated measures ANOVA.
Since not many scholars have focused on the internationalization process of firms in the
increasingly digital service industry (Zander et al., 2015), this research contributes by
providing initial insights the influence of technological advancements in the service industry
on the internationalization process of INVs. In addition, this research also contributes to the
under-researched area concerning the internationalization process of service firms (Zander et
al., 2015).
The results from this study are incongruent with the expectations that followed from
the literature review, which suggested that specialization in digital services allows a firm to
expand more efficiently and obtain economies of scope and scale within a shorter time-span.
This was predicted due to expected reduction of coordination costs caused by advancements
in information technologies. However, no evidence was found that digital service INVs differ
significantly from their non-digital peers in their pathway to international growth in terms of
turnover, assets and employees over the scope of the five recorded years. Only assets showed
a significant effect of the between-subject factor Industry, which was caused by the difference
between general service industry and the manufacturing industry. In short, the answer to the
posed research question ‘how does the digital nature of the INV’s services affect its internationalization process in terms of growth?’ remains unanswered.
An explanation for the absence of an effect of digital service INVs could be that
technological developments are happening in all parts of the digital economy (Brynjolfsson,
2002)(Cavusgil & Knight, 2015). The decreased coordination costs due to the transferability
of codified knowledge could affect all industries in equal amount. Or, alternatively, the
separation of firms by industry might be a too rough method to effectively uncover the true
effect of deeply embedded technological advancements on an INV's internationalization
process.
In addition to the technological advancements in production, the identified drivers for
internationalization, as found in the literature review, could also interfere with the effect of
digital services. The results of this study indicate that the successful exploitation of
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
46
knowledge-intensive products and services could depend in greater amount on other firm
capabilities than the ones considered in this thesis. For example, from an industry-based
perspective a firm’s presence in a global network and its alliances could be better indicators
of a firm’s international growth than its digital value chain.
Furthermore the results show that INV's growth in assets and turnover slowly declines
as the company matures. However, the number of employees did not change significantly
after the first recorded year, while assets and turnover did grow significantly. From an IE
perspective, this could provide a new point of view that could further emphasize the role of
the entrepreneur because maintaining a growth rate with the same amount of employees might
require more international experience and more risk taking from the entrepreneur (Oviatt &
McDougall, 2005b).
Additionally, the curve of the digital service INVs showed an interesting development
in terms of employees. Even though this result was insignificant, it showed a decline in
employees as the company matured. Worldwide there is a trend towards short-term
employees and fractured work (Helbing, 2014). It would make sense for a digital service INV
to first attract employees to build the digital product, but when the algorithm works the INV
could, theoretically, manage with fewer employees. Knowledge intensity can now be
incorporated in the non-physical product. In other words, computer code can execute the
service instead of an employee. This means that when the computer code is done, it will only
need maintenance and requires less human capital (Peiris et al., 2012). This study did not
provide definite proof of such a relation between the number of employees and
internationalization process of digital service INVs. However, it would be an interesting topic
for future research.
In summary, the results of this study of the influence on digital service INVs on their
internationalization process are inconclusive. In the following chapter, the limitations of this
study are discussed in combination with recommendation for future research.
7. Limitations and recommendations This research has several limitations. The first limitation deals with the identification of INVs.
Constructing the DOI measurement of just one variable has received critique in the literature
because the measurements have a tendency to be chosen based on data availability
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
47
(Ramaswamy, Kroeck, & Renforth, 1996). In future research, a solution could be to construct
the DOI of multiple variables, optimizing the validity. A second limitation entails the usage of
the SIC code to identify the different industry types. The SIC code is a slightly older
identification code and might, therefore, be considered a rough method to identify different
industries, because of extensive number of niche industries that are present nowadays
(Miozzo & Soete, 2001) (SICCODE.com, 2016). In addition, the separation of manufacturing
and service industry might also be considered a problematic aspect. Since in reality firms are
involved in business practices that include elements of both categories. Therefore future
research should always use caution when separation different industries (Miozzo & Soete,
2001).
In addition, a third, related limitation deals with the measurable impact of technology.
As stated earlier, technological advancements are happening all across the value chain. The
cost reduction both manufacturing and service activities. The embeddedness of technology
across the value chain makes it difficult to measure the impact of technological advancements
independently (Miozzo & Soete, 2001). Lastly, due to the geographical focus of this study on
European economies that are a member of the European Union, it is difficult to generalize the
results of digital service INVs. For example, because entrepreneurs from developing
economies might not have access to technology that is necessary for the production of digital
goods (Kiss, Danis, & Cavusgil, 2012).
Generally, the results of this study imply that there are still a lot of opportunities for
future research on the relationship between digital services and the internationalization
process of INVs. Future research might consider to provide a more detailed selection method
for INVs that measures the exact moment of internationalization and takes additional entry
modes than exporting into account. Furthermore, a broader or different geographical focus
could also add to more understanding of the INV phenomenon.
Future research could also focus on a specific digital service: the service firms that
function solely as a peer-to-peer platform. These international firms are unique because they
sell products that they do not own as assets. Delineating examples of such firms are Airbnb
and Uber. These young digital peer-to-peer firms cleverly jump to the trend of the digital
economy by enabling the 'prosumers' to share resources with each other. The rapid growth of
these peer-to-peer platforms and the accompanied technological advancements might show a
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
48
more significant effect on the internationalization process than the rough method of separating
INVs by SIC codes, as presented in this study.
9. Conclusion This research has examined INVs operating in the digital service industry in order to identify
INVs that have a completely digital value chain. The pathway to growth of this type of INV
was investigated and to what extend this pathway differed from other non-digital INVs. The
total turnover, total assets, and number of employees were measured over the time period of
five years between 2010-2014. All interactions were corrected for the country of origin of the
firm. The results of this study were inconclusive and did not provide evidence for a significant
different pathway to growth of the digital service INV compared to their peers from the
service and manufacturing industry. Furthermore, the results show that the growth of INV
slowly declines as they mature. The growth of number of employees differed because it only
showed a significant change in the first recorded year for every INV.
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
49
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Appendix Appendix A: Descriptive statistics of dependent variables
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation Variance
LN2014Employees 383 1,61 6,87 4,2894 1,25978 1,587
LN2013Employees 380 1,61 6,67 4,2040 1,25002 1,563
LN2012Employees 385 1,39 6,83 4,1502 1,33839 1,791
LN2011Employees 369 1,39 6,84 4,1077 1,34321 1,804
LN2010Employees 367 1,10 6,79 3,9757 1,37050 1,878
LN2014Turnover 451 11,76 20,59 16,2211 1,84080 3,389
LN2013Turnover 469 11,14 20,60 16,0317 1,89200 3,580
LN2012Turnover 460 11,26 20,21 16,0046 1,84221 3,394
LN2011Turnover 450 11,30 20,61 15,9131 1,89016 3,573
LN2010Turnover 425 11,10 19,96 15,7868 1,85475 3,440
LN2014Assets 363 13,61 18,38 16,1019 1,17059 1,370
LN2013Assets 370 13,60 18,35 15,9475 1,18991 1,416
LN2012Assets 371 13,50 18,24 15,8769 1,19459 1,427
LN2011Assets 351 13,57 18,19 15,8309 1,18309 1,400
LN2010Assets 341 13,24 18,16 15,7181 1,20702 1,457
Source: SPSS
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Appendix B: Normality tests for 15 variables with 3 categories
Normality tests IndustryType Kolmogorov-Smirnova Shapiro-Wilk
Statistic
df Sig. Statistic
df Sig.
LN2014Employees
Digital ,095 28 .200* ,977 28 0,782 GeneralService
,055 106 .200* ,983 106 0,177
Manufacturing ,070 289 ,002 ,984 289 0,003 LN2013Employees
Digital ,106 32 .200* ,982 32 0,862 GeneralService
,072 101 .200* ,978 101 0,094
Manufacturing ,063 287 ,008 ,984 287 0,002 LN2012Employees
Digital ,091 33 .200* ,984 33 0,892 GeneralService
,059 100 .200* ,983 100 0,209
Manufacturing ,061 290 ,010 ,988 290 0,014 LN2011Employees
Digital ,102 31 .200* ,977 31 0,710 GeneralService
,098 86 ,039 ,976 86 0,113
Manufacturing ,061 291 ,011 ,988 291 0,017 LN2010Employees
Digital ,095 27 .200* ,961 27 0,398 GeneralService
,107 82 ,021 ,968 82 0,041
Manufacturing ,055 289 ,032 ,990 289 0,045 Digital ,078 36 .200* ,973 36 0,507
LN2014Turnover GeneralService
,078 127 ,053 ,974 127 0,015
Manufacturing ,076 290 ,000 ,983 290 0,001 Digital ,075 47 .200* ,983 47 0,717 GeneralService
,078 134 ,045 ,982 134 0,077
LN2013Turnover Manufacturing ,074 290 ,001 ,985 290 0,005 Digital ,087 46 .200* ,981 46 0,652 GeneralService
,062 131 .200* ,983 131 0,108
LN2012Turnover Manufacturing ,072 290 ,001 ,985 290 0,004 Digital ,068 44 .200* ,985 44 0,832
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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GeneralService
,061 118 .200* ,984 118 0,191
LN2011Turnover Manufacturing ,069 292 ,002 ,988 292 0,014 Digital ,083 36 .200* ,981 36 0,766 GeneralService
,056 107 .200* ,983 107 0,174
LN2010Turnover Manufacturing ,062 290 ,009 ,987 290 0,009 Digital ,128 39 ,106 ,971 39 0,394 GeneralService
,049 125 .200* ,986 125 0,238
LN2014Assets Manufacturing ,042 289 .200* ,991 289 0,077 Digital ,073 45 .200* ,981 45 0,668 GeneralService
,061 138 .200* ,989 138 0,349
LN2013Assets Manufacturing ,042 285 .200* ,987 285 0,009 Digital ,119 44 ,134 ,951 44 0,061 GeneralService
,056 139 .200* ,988 139 0,263
LN2012Assets Manufacturing ,045 286 .200* ,991 286 0,061 Digital ,071 43 .200* ,978 43 0,555 GeneralService
,063 127 .200* ,982 127 0,093
LN2011Assets Manufacturing ,047 287 .200* ,993 287 0,198 Digital ,102 37 .200* ,967 37 0,328 GeneralService
,061 117 .200* ,984 117 0,165
LN2010Assets Manufacturing ,050 291 ,078 ,993 291 0,162 Manufacturing ,050 291 ,078 ,993 291 0,162 Manufacturing ,050 291 ,078 ,993 291 0,162
*. This is a lower bound of the true significance.
Source: SPSS
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Appendix C: Skewness and Kurtosis scores for 15 variables with 3 categories
LN2014Employees Statistic Std. Error
Digital Skewness -,222 ,441 Kurtosis ,021 ,858 GeneralService Skewness -,010 ,235 Kurtosis -,747 ,465 Manufacturing Skewness -,303 ,143 Kurtosis -,120 ,286
LN2013Employees Statistic St.Error
Digital Skewness -,079 ,414 Kurtosis ,224 ,809 GeneralService Skewness ,038 ,240 Kurtosis -,866 ,476 Manufacturing Skewness -,324 ,144 Kurtosis -,148 ,287
LN2012Employees Statistic St.Error
Digital Skewness ,340 ,409 Kurtosis -,108 ,798 GeneralService Skewness ,070 ,241 Kurtosis -,755 ,478 Manufacturing Skewness -,262 ,143 Kurtosis -,138 ,285
LN2011Employees Statistic St.Error
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Digital Skewness ,409 ,421 Kurtosis -,054 ,821 GeneralService Skewness ,200 ,260 Kurtosis -,814 ,514 Manufacturing Skewness -,244 ,143 Kurtosis -,199 ,285
LN2010Employees Statistic St.Error
Digital Skewness -,272 ,448 Kurtosis -,473 ,872 GeneralService Skewness ,389 ,266 Kurtosis -,609 ,526 Manufacturing Skewness -,176 ,143 Kurtosis -,249 ,286
LN2014Turnover Statistic St.Error
Digital Skewness ,283 ,393 Kurtosis -,071 ,768 GeneralService Skewness -,331 ,217 Kurtosis -,690 ,430 Manufacturing Skewness -,352 ,143 Kurtosis -,287 ,285
LN2013Turnover Statistic Std. Error Digital
Skewness ,033 ,347 Kurtosis -,006 ,681
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GeneralService Skewness -,186 ,211 Kurtosis -,800 ,419 Manufacturing Skewness -,302 ,143 Kurtosis -,267 ,285
LN2012Turnover Statistic Std. Error
Digital Skewness ,321 ,354 Kurtosis -,035 ,695 GeneralService Skewness -,205 ,217 Kurtosis -,758 ,430 Manufacturing Skewness -,297 ,143 Kurtosis -,229 ,285
LN2011Turnover Statistic Std. Error
Digital Skewness ,219 ,365 Kurtosis -,431 ,717 GeneralService Skewness -,079 ,225 Kurtosis -,764 ,446 Manufacturing Skewness -,248 ,143 Kurtosis -,217 ,284
LN2010Turnover Statistic Std. Error
Digital Skewness ,117 ,398 Kurtosis -,742 ,778
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GeneralService Skewness -,082 ,241 Kurtosis -,894 ,478 Manufacturing Skewness -,256 ,143 Kurtosis -,199 ,285
LN2014Assets Statistic Std. Error
Digital Skewness ,323 ,378 Kurtosis -,405 ,741 GeneralService Skewness ,080 ,217 Kurtosis -,469 ,430 Manufacturing Skewness -,173 ,143 Kurtosis -,367 ,286
LN2013Assets Statistic Std. Error
Digital Skewness ,111 ,354 Kurtosis -,073 ,695 GeneralService Skewness ,106 ,206 Kurtosis -,373 ,410 Manufacturing Skewness -,191 ,144 Kurtosis -,503 ,288
LN2012Assets Statistic Std. Error
Digital Skewness ,736 ,357 Kurtosis ,061 ,702 GeneralService Skewness ,141 ,206
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Kurtosis -,413 ,408 Manufacturing Skewness -,215 ,144 Kurtosis -,337 ,287
LN2011Assets Statistic Std. Error
Digital Skewness ,264 ,361 Kurtosis -,356 ,709 GeneralService Skewness ,230 ,215 Kurtosis -,535 ,427 Manufacturing Skewness -,151 ,144 Kurtosis -,259 ,287
LN2010Assets Statistic Std. Error
Digital Skewness ,389 ,388 Kurtosis -,341 ,759 GeneralService Skewness ,143 ,224 Kurtosis -,544 ,444 Manufacturing Skewness -,190 ,143
Kurtosis -,107 ,285
Source: SPSS
M.F.G. Tromp - MSc Thesis Business Administration – June 2016
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Appendix D: Descriptive statistics of dummy variables home countries
DE FR GB GR HU IE
N Valid 497 497 497 497 497 497
Missing 0 0 0 0 0 0
Mean ,03 ,17 ,54 ,07 ,18 ,01
Std. Deviation ,166 ,379 ,499 ,263 ,382 ,100
Variance ,027 ,143 ,249 ,069 ,146 ,010
Source: SPSS
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Appendix E: Matrices of variance ratios
Matrix of Variance Ratios
Variances
LN2014
Turnover
LN2013
Turnover
LN2012
Turnover
LN2011
Turnover
LN2010
Turnover
1,684 1,783 1,695 1,761 1,691
1,684
1,783 1,695
1,761 1,691
1,00 1,06 1,01 1,05 1,00 1,783
1,783 1,695
1,761 1,6
91
1,00 0,95 0,99 0,95 1,695
1,00 1,04 1,00
1,761
1,00 0,96 1,691 1,00
Matrix of Variance Ratios
LN2014 Assets
LN2013 Assets
LN2012 Assets
LN2011 Assets
LN2010 Assets
Variances 1,370 1,416 1,427 1,400 1,457 1,370 1,00 1,03 1,04 1,02 1,06 1,416 1,00 1,01 0,99 1,03 1,427 1,00 0,98 1,02 1,400 1,00 1,04 1,457 1,00
Matrix of Variance Ratios
LN2014 Employees
LN2013 Employees
LN2012 Employees
LN2011 Employees
LN2010 Employees
Variances 1,587 1,563 1,791 1,804 1,878 1,587 1,00 0,98 1,13 1,14 1,18 1,563 1,00 1,15 1,15 1,20 1,791 1,00 1,01 1,05 1,804 1,00 1,04 1,878 1,00
Source: SPSS
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Appendix F: Pairwise comparison of years for turnover categorized by industry
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Appendix G: Pairwise comparison of years for assets categorized by industry
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Appendix H: Pairwise comparison of years for employees categorized by industry
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