Firms’ degree of born-globalness, international entrepreneurial orientation and export performance

www.socscinet.com/bam/jwb

Journal of World Business 42 (2007) 253–267

Firms’ degree of born-globalness, international entrepreneurial

orientation and export performance

Olli Kuivalainen a,*, Sanna Sundqvist a,1, Per Servais b,2

a School of Business, Lappeenranta University of Technology, P.O. Box 20, FI-53851 Lappeenranta, Finlandb Department of Marketing and Management, University of Southern Denmark, Campusvej 55, DK-5230 Odense M., Denmark

Abstract

Despite the recent increase in ’born-global’ studies, there has been little research on how the scale and scope of being a born-

global firm affects performance: most of the earlier research takes no account either the number of or the distances between the

countries on firm or export performance. This article begins with a review of the existing literature on born-globals, and

subsequently explores the relationship between entrepreneurial orientation (EO) and two different born-global strategies, namely

true born-global and apparently born-global (born-international), and the effectiveness of these two born-global pathways. The

results of our empirical study on 185 Finnish exporting firms show that those that qualified as true born-globals had better export

performance. Furthermore, depending on the degree of born-globalness, different dimensions of EO were of importance.

# 2007 Elsevier Inc. All rights reserved.

Keywords: Born-globals; Degree of internationalization; Entrepreneurial orientation; Performance

1. Introduction

The emergence of firms variously referred to as born-

globals, international new ventures or global start-ups

has been the focus of increasing interest over the last

decade (Knight & Cavusgil, 1996, 2004; Madsen &

Servais, 1997; Moen, 2002; Oviatt & McDougall, 1994;

Rennie, 1993). There is an increasing amount of

evidence that entrepreneurial firms, which despite being

small or at an early stage in their development and

possessing limited resources, are aiming at rapid

internationalization. The existing literature adequately

* Corresponding author. Tel.: +358 50 541 9766;

fax: +358 5 621 7299.

E-mail addresses: [email protected] (O. Kuivalainen),

[email protected] (S. Sundqvist), [email protected]

(P. Servais).1 Tel.: +358 5 621 7232; fax: +358 5 621 7299.2 Tel.: +45 65503266; fax: +45 66155129.

1090-9516/$ – see front matter # 2007 Elsevier Inc. All rights reserved.

doi:10.1016/j.jwb.2007.04.010

covers ‘what type of firms tend to become born-

globals’: they are often influenced by the globalization

of markets and customer needs, for example, and by the

impact of new communication and transportation

technologies that make international operations less

costly than before (Knight & Cavusgil, 1996, 2004).

Despite the recent increase in born-global studies,

there are areas of research that have not been

comprehensively addressed. To us it seems that the

most striking shortcoming of the extant research is that

there has been little research on how the scale (extent)

and scope of being a born-global firm affects

performance. It is important to note that even though

Oviatt and McDougall (1994, p. 49) use the wording

‘multiple countries’ in their definition of international

new ventures, most of the earlier research on early and

rapid internationalization takes no account of either the

number of or the distances between the countries on

firm performance. For example, we do not have much

knowledge if is it better for a born-global firm to aspire

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http://dx.doi.org/10.1016/j.jwb.2007.04.010

O. Kuivalainen et al. / Journal of World Business 42 (2007) 253–267254

to go to multiple markets and distant markets or whether

it is better to focus and stay closer at home. One of the

main reasons for this unanticipated lack of research is

the fact that there is no clear definition – neither

theoretical nor empirical – of what it means to be a born-

global firm (Rasmussen & Madsen, 2002). Another

culprit may be that many authors have used the born-

global criteria presented by Knight (1997) and Knight

et al. (2004) as a basis for their large-scale empirical

research. Researchers have defined a born-global firm

by stating only that 25 percent of its total sales should

come from exporting and it has to have internationa-

lized within a few (most often three) years after its

inception, the scope or the ‘market effect’ has been

excluded or not analyzed thoroughly.3

Although we know that rapid internationalization

from or near founding can yield positive returns, some

of the findings are contradictory or ambiguous (for

different results, see Aspelund & Moen, 2005; Autio,

Sapienza, & Almeida, 2000; Bloodgood, Sapienza, &

Almeida, 1996; McDougall & Oviatt, 1996; Zahra,

Ireland, & Hitt, 2000). Part of this ambiguity in the

relationship between internationalization of born-

global firms and performance again stems from the

conceptual confusion. It is not easy to distinguish what

are the performance consequences of the internatio-

nalization strategy if firms which have been labeled as

early internationalizing firms or born-globals differ

from each other in many extant studies regarding scale

and scope of their internationalization, the only

common factor being the early internationalization.

Zahra et al. (2000) studied ‘new ventures’ and used the

following criteria in defining their sample: firms had to

be less than six years old, and only 5 percent of their

sales had to come from abroad. As these firms were

young the actual mean of their measure for the number

of foreign markets within the respondent firms was just

above two (2.17). These criteria and accordingly the

sample differ notably from the earlier mentioned

criteria associated with Knight and his colleagues. For

example, the respondent firms in the study conducted

by Knight and Cavusgil (2004) targeted approximately

20 countries at the median and were notably larger and

more mature than the firms in the sample of Zahra et al.

(2000).

3 An additional criterion in many studies is firm age. In Knight

(1997) the firms were founded after the year 1976. The cut-off year for

the earliest year of establishment is different in many other studies

(see, e.g. Moen & Servais, 2002). We assume that this criterion is

often defined on the basis of the data available.

An investigation focusing on the importance of

scale and scope of internationalization among born-

global firms is overdue. As a starting point, we define

born-global firms as rapidly internationalized firms

(within three years from the foundation) with a high

share of foreign sales out of the total turnover (more

than 25 percent). This definition is consistent with

Knight et al. (2004). However, even this group of born-

globals can include firms with different internationa-

lization strategies depending on the level of the degree

of internationalization (DOI) and markets served.

Certain differences may exist among the antecedents

or drivers of the chosen strategy among different types

of born-global firms; it may be that the management of

the firm which follows market diversification strategy

is more entrepreneurially oriented, for example, as

internationalization can be seen as an entrepreneurial

activity per se (McNaughton, 2003; Zahra & George,

2002).

We propose that there are differences not only

between firms following the incremental ‘traditional

internationalization pathway’ (Johanson & Vahlne,

1977) and born-globals which fulfill the above-

mentioned criteria of Knight et al. (2004), but also

between different types of born-global firms. Globality

or globalness can be seen as a continuous variable

(Govindarajan & Gupta, 2000); consequently, Servais,

Madsen, and Rasmussen (2007). There are different

types of born-globals according to their degree of

involvement in international sourcing and selling

activities. In this paper we will separate between those

born-global firms following an ‘apparently born-

global’, that is a ‘born-international pathway’ (export-

ing only to close markets with an export ratio close to

the arbitrary 25% cut-off rate) and those on the ‘true

born-global pathway’ (i.e. genuine born-globals oper-

ating in distant markets and multiple regions, fulfilling

more or less the definition of the global firm, Levitt,

1983). These two born-global pathways can be seen as

two different outcomes of born-global internationali-

zation strategy and although their existence has been

recognized (the typology of Oviatt & McDougall,

1994) the effectiveness of these paths remains largely

un-researched.

Our aim in this study is to fill this gap by studying

differences among born-global firms regarding their

entrepreneurial orientation (EO) and export perfor-

mance. The focus is on mature born-global firms that

have a track record of exporting over a number of

years. In order to make a distinction between the two

mentioned born-global pathways and subsequent

strategies, we introduce the concept ‘degree of

O. Kuivalainen et al. / Journal of World Business 42 (2007) 253–267 255

born-globalness’ (DBG).4 By this we mean the DOI of

rapidly internationalizing firms, i.e. firms which have

internationalized within three years from their

foundation.

2. Conceptual foundations

An internationalization strategy of the firm can be

defined in terms of scale and scope of its international

operations (Tallman & Li, 1996). DOI of the firm, in its

turn, is a snapshot of the firm’s situation at a specific

moment of time. By studying a firm’s DOI at certain

time sequences and events which occur at specific

points in time, we can study its internationalization

behavior or strategy. Sullivan (1994) noted that

researchers conceptualize firms’ DOI on three dimen-

sions: the structural, the financial and the psychological.

Some of the commonly used measurement criteria

include foreign sales, time, the firm’s attitudes towards

foreign operations, its type and organizational structure,

its entry mode and development of operations, the scope

of the operations (e.g. the number of markets and

customers served and target-market/country character-

istics) (Welch & Luostarinen, 1988). Sullivan (1994)

also pointed out that single-item measures may be less

suitable than multi-criteria components. It could thus be

argued that multi-criteria measures should be used to

describe and study born-global phenomena.

A paper by Oviatt and McDougall published in 1994

offers us a good starting point. Back then they presented

a typology of small, rapidly internationalizing firms

based on the number of countries involved and the

amount of coordination of value-chain activities.

Although they did not give detailed criteria for

empirical studies in this seminal paper, they character-

ized some possible pathways of rapid internationaliza-

tion. Some young internationalizing firms quickly

diversify geographically, and could be seen as either

‘multinational traders’ or more committed ‘global start-

ups’, while others have operations in only a few

carefully chosen countries (Oviatt & McDougall, 1994).

In line with Oviatt and McDougall (1994), three key

4 It is important to note that our definition of ‘degree of born-

globalness’ differs from the construct ‘born globalness’ presented by

Knight and Cavusgil (2005). Their measure concerned rapidity, i.e.

‘the difference between the firm’s founding year and the year it first

went international’ (Knight & Cavusgil, 2005, p. 25). In our study we

focus on the scale and scope of internationalization, especially on

differences in export turnover and operations in distant markets, i.e.

‘global operations’ among firms which fulfill the common rapidity

and foreign turnover criteria set for born-global firms.

dimensions in this study are scale (the most common

indicator being export intensity, i.e. share of turnover

from foreign markets out of total turnover), scope

(possible indicators are, e.g. market distance or number

of markets) and time (speed of internationalization;

criteria to define a born-global sample) of internatio-

nalization. Using these dimensions different strategies

involved in being a born-global can be defined. Judging

by this, it seems to us that there can be ‘true born-

globals’, which operate in multiple and distant markets,

and apparently born-globals, that is ‘born-interna-

tionals’ that fulfill Knight and Cavusgil’s (1996)

criteria. For example, generating more than 25 percent

of their sales from exporting but firms do not have a

global geographic spread or scope. In other words, the

DBG varies among born-global firms.

It is important to note though, that if we follow the

working definition of born-globals presented earlier,

firms belonging to both groups have internationalized

early after their foundation. Continuing from this idea,

for the purposes of the subsequent analysis, we can

simplify the framework by making a time dimension a

constant factor: in the matrix found in Fig. 1 the focus is

only on firms which have internationalized rapidly

within three years from their foundation. Correspond-

ingly, one should be able to determine where a

particular born-global firm falls in the matrix and the

DBG is highest in the ’far-high’ quadrant among true

born-globals.

In Fig. 1, market distance is a measure used for the

scope of internationalization, whereas export turnover is

a measure used for scale. In the following sections, we

briefly introduce these and other dimensions that have

either been used earlier or that could be used in future

research on early and rapidly internationalizing firms.

While not explicitly explored in the matrix, also

psychological measures in the form of antecedent or

drivers of born-global strategy and international

performance are briefly discussed, as true born-globals

and born-internationals may differ from each other

within these dimensions.

Fig. 1. A typology of born-globals based on both turnover from

foreign markets and market distance.


2.1. Time measures

Time is a key element that distinguishes studies

focused on born-globals from studies focusing on

internationalization of traditional SMEs. Two major

issues are the time lag between the founding of a firm

and the beginning of its international operations, and the

speed of a firm’s subsequent international growth and

development (Autio et al., 2000; Jones & Coviello,

2005). In studies focusing on early and rapid

internationalization there is variation both in terms of

speed or the time lag between the foundation of the firm

and its first foreign sale. It seems that in those studies

which utilize the term born-global, the time lag between

foundation and internationalization has received more

rigorous attention. Most of the measures used are rather

similar: Rennie (1993) and Moen and Servais (2002)

use the time span ‘‘two years from the foundation’’,

whereas Madsen, Rasmussen, and Servais (2000) and

Knight and Cavusgil (2004), for example, define born-

globals as firms that start export activities ‘‘within three

years after their birth’’. Bell, McNaughton, and Young

(2001) have contributed to this debate by researching

firms that are typically well-established in their home

markets, and have suddenly embraced rapid interna-

tionalization. However, as these firms do not fulfill the

time lag criterion, they named such firms ‘born-again

globals’ (Bell et al., 2001).

There are more differences in the speed of

international growth. In cross-sectional studies, the

measurement point for the speed of internationalization

often relates to the time period between the inter-

nationalization and data collection date of the firms

within the sample. Furthermore, many researchers have

decided certain maximum ages for firms to be eligible to

take part in a study (Knight, 1997; Moen, 2002).

However, there is a large variation within the measures,

and in general, the time characteristics have not been

fully examined in the literature (Autio et al., 2000;

Jones & Coviello, 2005).

2.2. Scale measures

Scale of internationalization measures relate to the

extent of a firm’s international operations. Most of the

studies focusing on born-globals most often assess DOI

studying only a ‘scale dimension’ by measuring only

the amount of turnover derived from international

operations. This criterion has often been 25 percent of

the total turnover (see Knight & Cavusgil, 1996, 2004;

Madsen et al., 2000; Moen, 2002). The criterion seems

to be widely accepted in the field, although Knight and

Cavusgil (2004, p. 133) note in their more recent article

that the 25 percent cut-off ratio for exports is

‘‘somewhat arbitrary’’ and ‘‘. . . established in light

of the exploratory goals of the research . . .’’. As

emerging research suggests, that the cut-off point is low,

particularly in small countries in which many small

knowledge-intensive firms could be expected to follow

global niche strategies. For example, Moen (2002), in

his study among exporting manufacturers with less than

250 employees, found that the export intensity of newly

established Norwegian firms (establishment date post-

1990) which had started exporting about the same time

they were established was 65 percent on average.

Madsen et al. (2000) found in their study of small

exporting Danish firms that 57% of the ones surveyed

and established after 1976 could be labeled born-

globals according to a definition along the criteria of

Knight (1997). The average export intensity (percent of

foreign sales out of total sales) of these firms was 69%.

Thus, the use of Knight and Cavusgil’s criteria for US

firms does not capture the whole phenomenon in the

European setting, or in small countries in general. It is

possible that a firm could qualify as a born-global even

though its export sales derive only from a single

neighboring country, and there may be an enormous

variety among born-globals.

If the foreign sales as a percentage of total sales

and other turnover measures are mostly performance-

related financial measures of DOI (Sullivan, 1994),

there are also structural scale measures. For example,

studies on multinational corporations have tradition-

ally used entry mode as the key variable in classifying

the DOI. However, in the case of rapidly inter-

nationalizing firms, this approach may be proble-

matic. It has been found in a number of studies that

small firms are unlikely to make use of FDIs (Dalli,

1994). This may reflect scarce resources and knowl-

edge intensity – characteristics that fit many born-

global firms – but it could also relate to attitudes

towards risk. Miller (1992) suggested that multiple

risks could be managed by trading off one against

another. For example, the chosen entry mode may be

a less risky one if there are other risks which need to

be considered; using a high-commitment entry mode

would be a gamble and additional risk for a born-

global firm, especially if this firm had already taken

other risks in the role of the resource commitment to

rapid internationalization to multiple markets. Thus,

we do not utilize entry mode as a criterion, and only

the export turnover is used as a scale measure in this

paper. However, there is a need for multiple criteria to

study the DBG of the firm, and we turn our focus on a


surprisingly grey area in born-global research, i.e. the

scope of the markets.

2.3. Market scope measures

In terms of market scope, two types of generic

internationalization strategies are commonly discussed

in the literature, a market concentration strategy

(narrow geographic scope) and a market diversification

strategy (broad geographic scope) (Ayal & Zif, 1979).

The traditional incremental internationalization models

(Johanson & Vahlne, 1977) suggest that a firm starts its

international operations in nearby countries and

implicitly begins first with a narrow scope strategy.

As it gains market knowledge it increases its commit-

ment as well as the number of target markets. On the

other hand, it is implicit in a born-global strategy that a

firm following it must begin to operate in multiple

countries on international markets almost from incep-

tion (Oviatt & McDougall, 1994). However, in the case

of born-globals, as mentioned above, there are no exact

definitions. In their seminal 1994 article, Oviatt and

McDougall define an international new venture as ‘‘. . .a business organization that, from inception, seeks to

derive significant competitive advantage from . . . the

sale of outputs in multiple countries’’ (Oviatt &

McDougall, 1994, p. 49). Thus, they do not specifically

define the number of countries or where they are

located, in other words the global reach a firm has in its

operations, and the extant research using the term born-

global has mostly followed their example.

The few studies that have examined the role of

countries or regions in the internationalization process

of small entrepreneurial firms include Zahra et al.

(2000) and Reuber and Fischer (1997). In many cases,

the measures used have been rather limited: Reuber and

Fischer, for example, focused on Canadian software

firms and considered DOI to some extent by delineating

just three export regions: Canada, North America and

‘outside North America’. Zahra et al. (2000) utilized a

multidimensional ‘international diversity’ measure

which, in addition to a number of foreign countries,

consisted of a number of market segments, technolo-

gical, cultural and geographic diversity. The results are

only partially useful for the purposes of this study as the

DOI of their sample was rather low. For example, most

of the firms did not fulfill the turnover criteria of Knight

and Cavusgil (1996) and, as mentioned earlier, the

actual mean for their measure of the number of foreign

markets within the respondent firms was just above two.

All in all, it is important to note that the measure used

by Zahra et al. (2000) included another essential scope

dimension of internationalization, the place or country

of transference (Jones & Coviello, 2005). The

characteristics of the chosen target market have been

seen as an evidence of internationalization behavior.

This aspect has traditionally been included in the

concept of social or cultural distance in the literature on

networks, and has been referred to as psychic distance

(Hallen & Wiedersheim-Paul, 1979), or cultural

distance (Kogut & Singh, 1988), or market or country

distance (Jones & Coviello, 2005), for example. Jones

and Coviello (2005) note that country distance could be

an indicator of country diversity and the intensity of a

firm’s internationalization activities.

The concept of distance implies that the greater the

difference in language, consumer behavior, cultural

standards, legal framework or purchasing power, for

example, the greater the distance (Stottinger &

Schlegelmilch, 1998). The logic is that the greater

the distance, the greater the difficulties in communica-

tion between the parties. This distance and the problems

it may bring would eventually lead to below-the-

average export performance before a firm has learnt the

culture of the target market and correspondingly, the

psychic distance has diminished over time. Moreover, it

is argued that a sense of cultural proximity, and thus a

low(er) psychic or country distance toward a foreign

market would encourage firms to penetrate the chosen

market (Stottinger & Schlegelmilch, 1998).

Born-global literature has, in general, emphasized

the experience of the founder or the management team

of the venture (Madsen & Servais, 1997; Oviatt &

McDougall, 1994). Although all organizations and

societies develop methods for handling the anxiety

created by uncertainty (Hofstede, 1991), it seems that

born-global firms should possess more or different

organizational capabilities and specific knowledge. For

example, network connections and customer informa-

tion are salient because these firms often have limited

resources to serve multiple and diverse international

markets (Knight & Cavusgil, 2004). These capabilities

or skills are needed to overcome the psychic or country

distance. Furthermore, although the link between

country distance and market diversification among

born-globals has not been studied in a detailed manner,

it seems to us that if true born-globals have a more

diverse market strategy and their internationalization is

‘more radical’ (Jones & Coviello, 2005) than the

internationalization of born-internationals and tradi-

tionally internationalized firms, there has to be some-

thing within these firms which leads to such a behavior.

This idea leads us to study certain antecedents and

drivers of two different born-global pathways.


2.4. Antecedents and drivers of born-global

strategy

DOI can also be measured with attitudinal or

psychological measures (Sullivan, 1994). Vermeulen

and Barkema (2002) suggest that the extent to which

firms are able to realize the benefits of rapid

internationalization is constrained by their capacity to

handle and absorb complexities that accompany this

expansion. Accordingly, a number of studies have

focused on internal antecedents or drivers of the born-

global phenomenon and most of the findings are

consistent: born-globals are seen as entrepreneurial, and

as possessing a global mindset and specific compe-

tencies and capabilities to overcome the liability of

newness and other entry barriers (see Knight and

Cavusgil, 1996). Both home-country and an interna-

tional entrepreneurial orientation (EO and IEO,

correspondingly) could be seen as antecedents that

explain growth strategy and performance differences in

firms. An EO is normally seen as a fundamental

philosophy in a firm and it has been conceptualized

along various dimensions (Lumpkin & Dess, 1996). On

the international level, it applies to its international

operations. In this paper we focus on the three

dimensions of EO, risk taking, proactiveness and

competitive aggressiveness, as they are the character-

istics closely related to the competitive situation in

which the firm may have to operate. Risk taking

demonstrates management willingness to pursue

opportunities that carry a reasonable risk of costly

failure. This would also mean that the firm is willing to

invest resources in projects even if there is high failure

potential (Miller & Friesen, 1982). Proactiveness could

be seen in terms of anticipating and acting on future

wants and needs in the market, which would enable the

firm to gain first-mover advantage vis-a-vis the

competition (Lumpkin & Dess, 1996). Competitive

aggressiveness, in turn, refers to the intensity of a firm’s

efforts to outperform its rivals within the industry. The

characteristics of this type of behavior are evident in

how it responds to competitors’ actions (Lumpkin &

Dess, 2001).

In an international context, there are several studies

which support the role of entrepreneurial behavior. In

his study Madsen (1989) notes that when a firm exports

to distant countries, top management support and

commitment have a positive impact on export

performance. In general IEO ‘appears to drive key

strategic initiatives intended to enhance organizational

performance’ (Knight, 2001, p. 165). Given a certain

pace of internationalization, a higher geographic spread

or dispersion to more distant markets implies that a firm

following the ‘true born-global’ pathway has to learn

more about unique target-market settings and, if more

successful, it has to possess more born-global qualities.

In other words, qualities that are normally associated

with born-global firms, such as competitiveness and

aggressiveness. Eventually, a high-level of IEO should

lead to various expansion activities.

We propose that there are differences between true

born-globals and born-internationals (apparently born-

globals) in terms of their EO. As rapid geographical

dispersion increases commitment to international

operations, and subsequently increases risks, we

hypothesize that true born-globals are more entrepre-

neurially oriented than born-internationals with lower

DOI

H1a. True born-globals with a high degree of born-

globalness are more willing to take risks than born-

internationals

H1b. True born-globals with a high degree of born-

globalness are more proactive than born-internationals

H1c. True born-globals with a high degree of born-

globalness compete more aggressively in their export

markets than born-internationals.

2.5. Consequences of born-globalness

Performance-related consequences or outcomes of

born-globalness, which a sustainable competitive

advantage may bring, include financial and non-

financial (e.g. learning, Zahra et al., 2000) gains that

these rapidly internationalized firms seek from inter-

nationalization. The effect of DOI and multinationality

of the firm on performance is one of the core areas of

international management research (Li, 2005; Tallman

& Li, 1996). However, it is important to remember that

in many studies focusing on born-globals the DOI was

measured only with scale measures (Zahra & George,

2002).

On the basis of the several studies focusing on large

multinational corporations, we believe that the relation-

ship between multinationality and performance is

complex. Earlier research has shown that a firm’s

multinationality could be either positively or negatively

or insignificantly associated with performance, and that

the relationship may be curvilinear (Li, 2005).

However, in general, the situation may be simpler

among born-global firms in comparison to larger more

established firms. The reasoning behind this claim can

be based on the work of Oviatt and McDougall (1995)


Fig. 2. The framework to study internationalization of born-global firms and the hypotheses.

who note that rapidly internationalizing small firms

often can and must increasingly serve global niche

market segment; for many born-global firms inter-

nationalization is a necessity. Limited resources

available for this endeavor mean that international

operations are often conducted with flexible organiza-

tional arrangements, e.g. exporting in the form of

partnerships and networks which do not escalate

corporate administrative costs. Thus, in many cases,

the extra costs related to foreign direct investments,

which weaken the relationship between multination-

ality/DOI and performance benefits, do not materialize.

Furthermore, even most of the true born-globals are still

‘in the middle range of internationalization’, which is

the level of DOI that can be seen being positively

associated with performance (Li, 2005).

The nature of born-global firms may also support the

positive relationship. Many firms which fulfill true

born-global criteria are either knowledge or technology-

based (Oviatt & McDougall, 1994). They should have

an intangible knowledge-based advantage if interna-

tionalization can successfully occur, and if such an

advantage exists, should be able to establish itself in

foreign markets in a relatively short time. This is related

to the niche focus and specific customer needs served.

Oviatt and McDougall (1994, p. 60) also suggest that

among rapidly internationalized firms, those which

operate in multiple countries and have many activities

across countries ‘. . . may be the most difficult

international new ventures to develop because they

require skills at both geographic and activity coordina-

tion’. However, they also see that once these types of

operations are developed, these firms appear to have the

most sustainable competitive advantages (Oviatt and

McDougall, 1994). This would imply that a variation

among scale and scope measures of internationalization

or DBG, in the case of born-global firms, would have its

positive performance implications, especially among

more mature born-globals who have gained experience

and have been operating internationally for some years.

Accordingly, there is some existing support for the

afore-mentioned positive and simple relationship

between DBG and performance. Cooper and Kleinsch-

midt (1985) found out as early as the mid-80s, that so-

called ‘world marketers’ who were young and

entrepreneurial and had least export experience

achieved considerable gains. These firms were technol-

ogy intensive and had extensive export planning

systems, high export expectations, and exceptional

growth in exports and many export countries. Zahra

et al. (2000) found out in their study focusing on new

ventures that the number of foreign countries entered

and the cultural diversity of these countries were

positively related to international performance. Knight

and Cavusgil (2005) found out that born-globals which

have strong strategic and entrepreneurial focus (H1)

have superior international performance. McDougall

and Oviatt (1996) observed that the higher the level of

international sales among new ventures at time1 the

higher the performance at time2 in the form of higher

relative market share. Thus, we hypothesize:

H2. True born-globals have better export performance

than born-internationals.

Our empirical research questions are exploratory to

some extent; their role in the suggested research

framework is shown in Fig. 2. In the following part of

the paper we present empirical results from Finland in

an effort to develop our understanding of the born-

global phenomenon. The issues specifically addressed

in this study concern the differences between firms

fulfilling different criteria for ‘born-globalness’ and the

possible performance effect of the DBG.

3. Methodology

3.1. Sample and data collection

The sample for the study was drawn from the

Kompass Finland database (SKOD, 1998). Since we


Table 1

Market distance–export volume matrix

Export turnover

Low Medium High

Market distance Far 13 (3) 78 (34) 108 (42)

Medium 80 (7) 225 (53) 83 (25)

Near 103 (3) 80 (13) 13 (5)

The figures in parentheses are born-global companies as defined by

Knight (1997) and Knight et al. (2004).

were interested in studying firm-level phenomena, firms

practicing export and employing more than 50 persons

were chosen (see Cadogan, Cui, & Li, 2003; Jantunen,

Puumalainen, Saarenketo, & Kylaheiko, 2005 for

similar procedures). This cut-off rate of 50 employees,

although somewhat arbitrary, was used to avoid non-

industrial firms (e.g. carpenters and plumbers) with no

strategic commitment to international operations.

Each firm in the original sample of 1.205 firms was

contacted by telephone in order to determine eligibility,

and a questionnaire was sent to those that fulfilled the

criteria. Ten days after the first mailing, a reminder card

was sent to each non-respondent. Another questionnaire

was mailed seven days later to all the remaining

non-respondents. Of the 1.205 firms contacted, 237

were ineligible because they had never exported, no

longer exported, or were listed more than once. Of the

968 questionnaires mailed, we obtained 783 usable

responses, thus giving a response rate of 81%. The

informants were export directors/managers or other

persons who were considered to have the best knowl-

edge about the export function.

From the sample of 783 firms, we first subtracted a

sub-sample using Knight and Cavusgil’s (1996) and

Knight’s (1997) recommendation since we were

interested only in born-global firms and their DBG.

The firms which derived at least 25% of their sales from

international markets, and which had internationalized

within three years from their establishment were

selected. Under these two criteria, 185 firms were

identified. These firms are referred as born-global firms.

In order to identify different types of born-global firms,

we applied the DBG measure on the sub-sample of

born-global firms.

3.2. Measures

3.2.1. Degree of Born-globalness

To be able to measure DBG of born-global firms we

first studied the DOI of the firms within our sample. The

scope of international operations was measured based

on the market/country distance between the home

and export countries, and the scale of international

operations was measured based on export turnover.

Respondents were asked to list their export countries

so that we could measure the market/country distance.

Hofstede’s cultural-distance scores were then applied to

calculate market/country distance from Finland for each

export country reported by the respondent. Market/

country distance was then calculated as the sum of the

cultural distances of each reported export country. The

scale of international operations in the form of export

turnover was calculated using two self-reported figures:

the percentage of total turnover derived from export

markets, which was then multiplied by the self-reported

annual turnover.

To be able to find out the firms with the high DOI both

market/country-distance and export-turnover measures

were then classified into three groups based on the upper

and lower quartiles. Firms with a market/country distance

of below 11.08 were classified as exporting only to

culturally close markets, and those with a market/country

distance of above 39.63 were classified as operating in

culturally distant markets. Similarly, firms reporting an

export turnover of below s2.69 m were labeled modest

exporters, whereas those with an export turnover of over

s33.64 m were classified as ‘heavy’ exporters. As

Table 1 reveals, of the total 783 firms in the sample, 108

could be classified as firms with high DOI having both

high scale and scope of internationalization scores.

These first figures do not take into consideration the

time dimension. To be able to find out the how the born-

global firms within our sample position themselves in

the matrix, a new DBG measure had to be created based

on both the distance-volume matrix and the rapidness of

internationalization. As Table 1 shows, 185 born-global

firms within the sample are not homogeneous in their

DBG within our sample as they can be identified in each

cell. There were 42 firms in the dataset that fulfilled the

criteria set for being a ‘true born-global’ firm with high

DOI and time lag of three years or less between the

foundation and internationalization. The 143 apparently

born-global firms with lower DOI were labeled as born-

international firms.

3.2.2. Entrepreneurial orientation

Since we were interested to study the effect of

separate EO dimensions (proactiveness, risk taking and

competitive aggressiveness) Jambulingam, Kathuria,

and Doucette (2005) scale was applied. This scale offers

(a) multi-item measures for each dimension separately,

and (b) sound psychometric properties (e.g. scale

reliabilities (a’s = 0.85 or above). First, we used


Jambulingam et al.’s (2005) proactiveness scale,

adapted for the international business [exporting]

context and extended to identify which managers

seized the opportunities in the anticipation of future

market conditions. We then assessed the degree to

which managers took risks using items drawn from

Jambulingam et al.’s (2005) risk-taking scale, again

adapted to gauge the role of risk taking as part of the

firm’s internationalization strategy. The competitive

aggressiveness measure was based on items from

Narver and Slater’s (1990) competitor orientation scale,

and Jaworski and Kohli’s (1993) market responsiveness

scale. In order to test for unidimensionality, all of the

EO items were subjected to an exploratory factor

analysis. Those that cross-loaded above the .40 level, or

that did not load on any factor above that level, were

eliminated from the scale. The final score for each EO

scale was an average of all the items included in it. The

reliability assessments showed that the all scales

exceeded the level of .70 recommended by Nunnally

(1978).5

3.2.3. Export performance

Following the recommendations of Cavusgil and

Zou (1993) and Matthyssens and Pauwels (1996),

among others, we measured aspects of the firm’s export

sales and export profits. Our ‘sales performance’

measure contained items designed to capture the firm’s

(a) sales growth relative to the industry average, (b)

degree of satisfaction with the export volume, (c) degree

of satisfaction with the market share in its export

markets, and (d) degree of satisfaction with its rate of

new market entry. Our ‘profit performance’ measure

assessed (a) its degree of satisfaction with its export

profits over the last three years, and (b) the overall

profitability of its exporting operations during the

previous financial year. The third performance measure,

‘sales efficiency performance’, captured (a) the ratio of

the firm’s total annual export sales turnover to the total

number of employees working in it, and (b) the ratio of

its total annual export sales turnover to the total number

of countries it exported to.

3.2.4. Control variables

Regardless of firm’s internationalization strategy or

strategic orientation, other firm-specific factors may

have an effect on firm’s DBG. We therefore, controlled

5 Details of the scales and scale reliability statistics are available

upon request from authors.

for resources (firm size) and firm experience in the

analyses.

Firm size. Firm size is thought to be an approxima-

tion of firm resources which also relate with the

probability of international activity (Aaby & Slater,

1989). It is generally believed that larger firms possess

more resources, achieve higher levels of scale

economies, and tend to be associated with lower levels

of perceived risk in export market activities (Bonac-

corsi, 1992).

Firm experience. The role of firm’s experience has

been long acknowledged in theories of experiential

learning and stages theories of internationalization

(Johanson & Vahlne, 1977; Welch & Luostarinen,

1988). Thus, we expect that more experienced firms

have higher DBG. Firm’s experience was measured by

the years in business.

3.3. Analyses and results

The born-global firms in our sample were relatively

large and mature firms (with an average turnover of

almost s380 million, 38 years in business, and 1.600

employees). As explained previously, for further analysis

the firms were divided into those that were born-

international firms (N = 143), and those that were true

born-global firms (N = 42), based on their DBG (see

Table 2). Those in the former group were younger (had

been in business for 33 years on average) and smaller

(with a turnover of s125 m) than the latter (54 years in

business and s1.200 m turnover). However, as expected,

the true born-global firms were more international with

an average of 60 export countries and almost 85% of their

turnover derived from export markets, compared to the

26 export countries and 72% of foreign turnover reported

by the born-international firms.

To confirm that age and size are not the decisive

factors in separating true born-globals and born-

internationals, analysis of variance with firm descriptive

statistics and entrepreneurial variables was conducted.

As Table 3 reveals, true and ‘apparently’ born-global

firms differ also in other dimensions, i.e. our

categorization is not only a function of firm resources

and experience.

A hierarchical linear regression analysis was carried

out in order to study the antecedents of DBG (Cohen &

Cohen, 1983). The use of the hierarchical model shows

directly the increase in predictive power that can be

attributed to the hypothesized variables over and above

the effects of the control variables. Only the control

variables (resources and experience) were entered into

the regression model at the first stage, and the


Table 2

Descriptive statistics of true born-global firms and born-international firms

Mean Median Standard deviation

Born-international firms (N = 143)

Turnover (million s) 124.59 18.50 858.53

Experience (years in business) 32.58 20.00 40.14

Full-time employees 860.71 120.00 4720.82

International experience (years exporting) 32.15 20.00 40.23

Share of foreign turnover (%) 71.87 80.00 22.70

Number of countries exported to 25.72 20.00 25.44

True born-globals (N = 42)

Turnover (million s) 1218.91 168.18 2767.26

Experience (years in business) 54.48 30.00 48.29

Full-time employees 4117.34 830.00 9057.04

International experience (years exporting) 54.33 30.00 48.33

Share of foreign turnover (%) 84.33 90.00 16.78

Number of countries exported to 60.41 50.00 32.63

Table 3

Analysis of variance of descriptive statistics and entrepreneurial

orientation construct between true born-global firms and born-inter-

national firms

F Sig.

Turnover (ms) 16.633 .000

Experience (years in business) 8.779 .003

Size of firm (full-time employees) 9.542 .002

International experience (years exporting) 8.978 .003

Share of foreign turnover (%) 10.901 .001

Number of countries exported to 51.902 .000

Proactiveness .618 .433

Risk taking 7.033 .009

Competitive aggressiveness 3.657 .057

Table 4

Antecedents of the degree of born-globalness

Step 1

Independent variable B

Experience (years in business) .007

Size of the firm (number of employees) .000

R2 = .140 Adj. R2 = .131

Step 2

Independent variable B Beta

Experience (years in business) .006 .258

Size of the firm (number of employees) .000 .164

Risk taking �.084 �.149

Proactiveness �.003 �.004

Competitive aggressiveness .200 .195

R2 = .201 Adj. R2 = .178

Notes: *p < .05; ***p < .001.

hypothesized independent EO variables were added at

the second stage. The hypothesized effects would then

be significant only if the increase in the coefficient of

determination after the first stage was statistically

significant and the regression coefficients of the

hypothesized variables in the second model (step 2)

were significant. The regression results (see Table 4)

revealed that (1) control variables were positively

related to DBG as expected, and that (2) not all

dimensions of EO were significant predictors of the

firm’s DBG. Results revealed that proactiveness was not

a driver of DBG (i.e. H1b is rejected) and risk taking had

even a significant and negative impact, which contra-

dicts our H1a. However, competitive aggressiveness

had a significant and positive effect on DBG, supporting

our hypothesis H1c.

Beta T Sig.

.307 4.293 .000***

.151 2.106 .037*

DR2 = .140 (Sig. .000)

T Sig. H Results

3.595 .000*** �2.318 .022* ��2.148 .033* H1a Not supported

�.049 .961 H1b Not supported

2.555 .011* H1c Supported

DR2 = .061 (Sig. .005)


Table 5

Comparison of export performance

Born-international firms True born-global firms ANOVA

N Mean Standard deviation N Mean Standard deviation F Sig.

Sales performance 136 6.65 1.53 38 7.42 .96 8.79 .003

Profit performance 142 6.96 1.71 41 7.56 1.21 4.37 .038

Sales efficiency performance 139 .08 .74 40 .61 1.28 10.88 .001

Based on the earlier research (see Knight &

Cavusgil, 2005; McDougall & Oviatt, 1996; Zahra

et al., 2000), we hypothesized (H2) that true born-global

firms have superior international performance when

compared to born-international firms.

As Table 5 reveals, there were significant differences

in export performance between these two types of born-

global firms. Variance analysis indicates that the true

born-globals have significantly better sales, profit and

sales efficiency performance than born-international

firms, supporting our hypothesis H2.

4. Discussion and conclusions

Earlier studies have shown that there is enormous

variability among internationalizing firms regarding

their patterns or pathways of internationalization

(Jones, 1999). The literature has studied the differences

between traditional and born-global firms in a detailed

manner (Rialp, Rialp, & Knight, 2005) However, it has

mostly ignored the differences among the born-global

firms, although the typology of Oviatt and McDougall

(1994) gives us a description of four types of

international new ventures. Partially this lack of

research can be seen based on the conceptual disarray,

‘what a born-global firm is’.The framework presented

in this paper emphasizes the three dimensions which

have an uttermost importance if the intention is to seek a

coherent perspective of the internationalization of born-

global firms, i.e. scale, scope and time of internatio-

nalization. Although these dimensions can be found

from the earlier work of Oviatt and McDougall (1994)

and from the conceptual review of Zahra and George

(2002), they are often studied separately in the papers

which have utilized a survey method (McNaughton,

2003), or they have not been linked with performance

implications (Preece, Miles, & Baetz, 1999). The most

common born-global definition is based on the work of

Knight and Cavusgil (1996) and is commonly used in

the large empirical surveys emphasizes the scale

dimension by giving an export-turnover criterion and

by not giving any detailed criteria for the scope. Thus,

the market scope dimension is less studied and the

importance of it should be highlighted, given the fact

that research regarding scope mostly concerns estab-

lished multinational enterprises (Rugman & Verbeke,

2004) and not born-globals. In this, our DBG measure

which includes both scale and scope measures, and as

the scope measure is a market/country-distance

measure containing also the cultural-distance dimen-

sion and not just number of regions/countries, could be

useful.

Furthermore, the findings in this study make a

contribution to the theoretic discussion on the inter-

nationalization process by presenting and targeting two

distinctive categories of born-globals: true born-globals

that operate in more distant markets, and apparently

born-globals, so-called born-internationals firms, which

go into culturally closer markets and follow strategies

which resemble more the traditional incremental

internationalization pathway. This distinction was made

regarding the scale and scope of internationalization; in

contrast there was no difference regarding the timing of

internationalization: all the firms in our sample had

internationalized rapidly after the foundation and

fulfilled the earlier working definition of born-globals.

This type of congruence hopefully enables future

comparative studies in the field.

4.1. Entrepreneurial orientation

It is evident that born-globals from different parts of

the world have many things in common: an international

mindset (i.e. an IEO), and management and personnel

motives have been emphasized in many studies (Knight,

2001). We measured the differences between true born-

globals and born-internationals along the three dimen-

sions of EO: risk taking, proactiveness and competitive

aggressiveness. Risk taking was higher among the born-

internationals. Although this result contradicts our

hypothesis H1a, there are some possible reasons for

this. For one thing, as our true born-globals possess

already a high DBG, that is they are operating in many

markets (on average in more than 60 countries) and

receiving a large share of their turnover from these

markets, they may no longer qualify as ‘risk takers’.


Their management knows the environment they operate

in and many of the market’s operations are routine.

Employees have mastered the skills and capabilities

needed to sustain their competitive advantage. The risk-

taking behavior is not seen as a necessary part of the job

of export managers.

It could also be discussed why the smaller and less

diverse born-internationals were found to be higher risk

takers. Many rapidly internationalized small firms could

be considered niche firms. There may be some

customers in regions and markets that these apparently

born-global firms have not yet reached. Thus, they may

be more willing to take risks targeted for further market

expansion. This type of geographical-market-spread

strategy could be seen as a wise move for smaller firms.

Madsen (1989) found that it would actually be better for

very small firms to spread their efforts over several

markets as they may not have the resources to follow a

concentration strategy successfully.

On the other hand, the larger and more mature true

born-global firms in our sample may be more satisfied

with their current market scope. This could be one

possible explanatory factor in the non-supportive result

regarding proactiveness (H1b). However, although they

are not proactively looking for new opportunities and

markets, they may compete in a more aggressive

manner in their present markets and subsequently may

follow a market-penetration strategy. If a firm is

operating globally it possesses qualities of competitive

aggressiveness. This, in turn, may explain the support

found in our sample for hypothesis H1c. Thus, although

our results are limited and only partially supportive of

our hypotheses related to EO in born-globals, it is of

note that its various dimensions had different effects on

the firms in our sample. This type of result supports the

argument of Lumpkin and Dess (1996) who argued that

the dimensions of EO may vary independently of each

other in a given context. In line with this, it can be that

the younger and smaller born-internationals may be

better able to benefit from the other type of EO than

larger firms and vice versa.

4.2. Export performance

There should be many potential benefits for a firm

following a born-global pathway to internationaliza-

tion, such as increased sales, profits and market

presence. However, the relationship between interna-

tional expansion/DOI and performance is often context-

specific and there are contradictory results (Grant,

1987). Furthermore, we do not know much about the

performance consequences of the true born-global

strategy based on the earlier research as some extant

studies which have focused on scope of internationa-

lization among rapidly internationalized firms have not

taken performance effects into consideration

(McNaughton, 2003; Preece et al., 1999). However,

in this study, there were significant differences in export

performance between the true born-global and the born-

international firms: the former performed better than

their less international counterparts on all three

measures (sales, profit and sales efficiency). These

results support the notion that increased multination-

ality is for most of the time beneficial for a firm in the

form of superior performance (Contractor, Kundu, &

Hsu, 2003).

4.3. Managerial implications

Two main implications for practicing managers can

be highlighted. First, it is clear from the results of our

study that entrepreneurial behavior has an effect on

international strategy of born-global firms. This finding

has also been supported in earlier research (Knight,

2001; Knight & Cavusgil, 2004). However, what the

managers need to realize is that certain types of

entrepreneurial behavior (i.e. various elements of the

EO can be seen as contingent factors, Lumpkin & Dess,

1996) are more important than others in different stages

of the firm’s life cycle. When a firm is smaller and still

focusing on the opening of new geographical markets, it

seems to possess different qualities of EO than a more

mature [born-global] firm. For example, risk taking, in

the form of heavy debt taking or large resource

commitment, seems to be more important for less-

internationalized firms (which may have to take risks to

be able to gain a niche market which is large enough)

than for more global firms. Furthermore, to become a

true born-global, it may be that the entrepreneurial

mindset in general is an important and required element,

but not sufficient alone. This notion is supported by

Preece et al. (1999) who found out that management

attitudes were significant indicators of international

intensity (a construct equivalent to our scale dimen-

sion). In contrast the attitudes did not explain the global

diversity in their study focusing on young technology-

based ventures. They conclude that a shift from

international intensity to more diverse global strategy

requires more (e.g. resources) than an attitude and

desire (Preece et al., 1999).

Second, true born-globals and born-internationals

differ from each other in the case of experience and size

of the firm, with the former being larger and more

experienced. The true born-globals in our sample were


older and had more international operations than the

smaller and younger born-internationals. However, they

had also better export performance; based on our results

the more intensive and diverse internationalization

strategy is something managers of the born-global firms

should aim for. This would mean that the true born-

global strategy enables firms to gain higher sales growth

than the industry average, benefit from economies of

scale through learning, and make them satisfied with

export profits as far as our sample is concerned.

Accordingly, one possible interpretation of the born-

internationals with less turnover from foreign markets

and less target countries is that they may be ‘failed born-

globals’ (Aspelund & Moen, 2005). Such firms can also

be seen as export/import start-ups from the typology of

Oviatt and McDougall (1994). In comparison the true

born-globals could be seen as multinational traders or

global start-ups. Born-internationals, in some cases,

even if they possess a high-level of IEO, may have

failed; they have not have reached their growth

objectives. However, to be able to analyze such firms

in an in-depth manner, the contextual environment and

resources of the firm should also be given more

consideration. Nevertheless our study supports, at least

partially, the findings in previous studies suggesting that

EO is important for internationally growth-oriented

firms (Knight, 2001).

We did not utilize the traditional growth strategies in

this paper, such as market seeking, but it is evident that

EO should lead to higher growth objectives. On the

international level, therefore, it could be an important

antecedent or driver of export performance (Knight &

Cavusgil, 2004). Consequently, practicing managers

should emphasize and nurture this type of behavior.

4.4. Limitations and further research

If the findings of this study are put into their proper

perspective, several limitations need to be pointed out.

First, the study focused on a single-country sample in

that the data was collected in Finland. Second, the fact

that our analysis is based on cross-sectional retro-

spective empirical data consisting of rather mature and

experienced born-global firms could be considered a

limitation due to the loss of institutional memory, for

example: longitudinal data would provide valuable

insights in terms of measuring and analyzing the effects

of internationalization (Jones, 1999). We believe that,

by pursuing certain types of entrepreneurial strategies

and by virtue of experience, born-internationals could

turn out to be the true born-globals of the future. This

notion is in line with Preece et al. (1999) who found out

that global diversity increased over time within their

sample of small technology-based firms. Autio et al.

(2000) also note that due to resource constraints, it is

unlikely that young firms are capable of taking larger,

bolder steps than their older counterparts; they should

be able to take smaller incremental steps more rapidly.

Correspondingly DBG can be seen evolving over time;

a born-global pathway can also be seen as an

incremental process (Madsen & Servais, 1997). How-

ever, as our study was cross-sectional we do not know

the future paths of these firms. Third, a limitation

related to the data and the discussion above is that all the

firms in question have survived the stage of being a

small firm: they are all currently at least medium-sized

and export their products and services to international

markets. Thus, the characteristics of the firms that did

not survive are not taken into account and there may be

a ‘survival bias’ in the sample (see Vermeulen &

Barkema, 2002). One way to counteract this bias would

be to focus on the sub-categories in our sample, such as

including case studies highlighting the differences

between young and old firms.

Fourth, this study is based on the idea that a born-

global firm can be called a mature born-global firm still

after some years after the initial entry and subsequent

international operations. This creates problems with

organizational memory as mentioned previously but

there are also other consequences: partially the extant

research has focused on younger new ventures and

partially older and more mature; these results cannot be

compared with each other without a difficulty (Ras-

mussen & Madsen, 2002; Zahra et al., 2000). However,

as mentioned above, larger and more mature sample,

such as the sample in this study enables a researcher to

have more things to observe, in the role of larger pool of

target markets, for example (Knight & Cavusgil, 2004;

Zahra et al., 2000, and characteristics of their samples).

It would also be of interest to add more variables to

the definition of DBG. For example, if more detailed

measures of geographic scope were used it might be

possible to develop more sophisticated measures of

multinationality and DBG. In particular, there is a need

for integrated frameworks that are better formulated in

the study of rapid internationalization. While acknowl-

edging the importance and usefulness of the born-global

criteria presented earlier by Rennie (1993), Oviatt and

McDougall (1994), Knight and Cavusgil (1996), and

Moen and Servais (2002), among others, we claim that

there is a need to improve our operational indicators in

order to be able to study the born-global phenomenon

more effectively in the future. To be more precise, the

aim of future research should be to determine the


optimal number of measures of ‘born-globalness’, which

should be a trade-off between the number of measures

that are empirically manageable and the number that

gives us a good enough understanding. It is hoped that by

promoting comparison of the consequences of being a

‘different type of born-global firm’ and independent

effects of various EO dimensions on born-global strategy,

this study has opened up new perspectives for further

research. Although discussed partially here, the time

dimension is especially something we should give more

consideration. This type of research could focus, for

example, on questions, such as ‘when does the born-

globalness end,’ and ‘what is the proper speed of

internationalization for a born-global firm’.

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Documents

Firms’ degree of born-globalness, international entrepreneurial orientation and export performance