The Role of Home Country Demand in the Internationalization of New Ventures

58 Pages Posted: 22 Mar 2015

See all articles by Johann Peter Murmann

Johann Peter Murmann

University of St. Gallen; UNSW Australia Business School - AGSM

Salih Zeki Ozdemir

UNSW Australia Business School

Deepak Sardana

University of South Australia Business School

Date Written: January 15, 2015

Abstract

International new ventures (INVs) have been documented to exist all around the world, but the literature is silent on the frequency of such companies in different countries. We contend that the propensity of new ventures to internationalize by forming international partnerships is higher in small-domestic demand countries because they have a greater motivation given their limited local demand. After discussing the methodological challenges in testing this hypothesis, we do such a test by studying alliances in the health segment of the biotech industry in relatively small-domestic demand countries (Australia, Israel, Taiwan) and by comparing the results with five large-domestic demand countries (UK, Germany, France, US, and Japan). We find that young firms in the countries with lower domestic demand are at least 3 times more likely to enter into international partnerships than their counterparts in countries with greater domestic demand. We further demonstrate that this difference can primarily be explained by the difference in the size of domestic healthcare markets rather than other underlying opportunity structure related factors.

Keywords: International New Ventures, Internationalization, small versus large demand countries, young biotechnology firms, international partnerships, business development partnerships

JEL Classification: L24, L26, L65, M13, M16

Suggested Citation

Murmann, Johann Peter and Ozdemir, Salih and Sardana, Deepak, The Role of Home Country Demand in the Internationalization of New Ventures (January 15, 2015). UNSW Business School Research Paper No. 2015 MGMT 01, Available at SSRN: https://ssrn.com/abstract=2580833 or http://dx.doi.org/10.2139/ssrn.2580833

Johann Peter Murmann (Contact Author)

University of St. Gallen ( email )

Dufourstrasse 40a
Institute of Management and Strategy
St.Gallen, 9000
Switzerland
+41 71 224 23 64 (Phone)

HOME PAGE: http://professor-murmann.net

UNSW Australia Business School - AGSM ( email )

UNSW Sydney, NSW 2052
Australia
+61-2-9385-9733 (Phone)

HOME PAGE: http://professor-murmann.net

Salih Ozdemir

UNSW Australia Business School ( email )

UNSW Business School
High St
Sydney, NSW 2052
Australia

Deepak Sardana

University of South Australia Business School ( email )

Adelaide, SA 5000
Australia

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
37
Abstract Views
633
PlumX Metrics