Born Local: Two Avenues to Internationalization

19 Pages Posted: 5 Oct 2007

See all articles by Zoltan J. Acs

Zoltan J. Acs

Schar School of Policy and Government

Siri A. Terjesen

Norwegian School of Economics (NHH); American University

Date Written: June 2007

Abstract

Are firms born Global? Because knowledge spillovers that lead to new venture creation are geographically constrained we believe that firms are born local. It follows that the decision to create sustainable new ventures is independent from the decision to internationalize, even if that is the ultimate goal of the firm. We explore two avenues to internationalize new ventures, a direct path described in much of the extant literature and an intermediated one. New ventures face high entry barriers and intellectual property rights protection to internationalization, which are circumvented by intermediating activities using existing multinational enterprises as facilitators of internationalization. However, new ventures using the intermediated mode of internationalization face transaction costs and rent extraction from multinational enterprises. Therefore, sustainable new ventures face a strategic decision on how to internationalize.

Keywords: International Entrepreneurship, Multinational Enterprises, Knowledge Spillovers, Intermediated Internationalization, International New Ventures, Foreign Direct Investment

JEL Classification: L26, F23, M13, M16

Suggested Citation

Acs, Zoltan J. and Terjesen, Siri A., Born Local: Two Avenues to Internationalization (June 2007). Jena Economic Research Paper No. 2007-022. Available at SSRN: https://ssrn.com/abstract=1019435 or http://dx.doi.org/10.2139/ssrn.1019435

Zoltan J. Acs (Contact Author)

Schar School of Policy and Government ( email )

Founders Hall
3351 Fairfax Dr.
Arlington, VA 22201
United States
703-993-1780 (Phone)

HOME PAGE: http://home.ubalt.edu/zacs

Siri A. Terjesen

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

American University ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States

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