Liabilities, Advantages and Buffers of Newness: How Young Age Makes Internationalization Possible

Abstract

This paper presents a conceptual discussion and a theoretical framework explaining how the liabilities of newness, which are traditionally thought of as disadvantages that young companies face, contribute to early firm internationalization. Through a systematic analysis of the liabilities that international new ventures face, as well as the liabilities and the advantages that a young age provides, we are able to integrate findings from the existing body of diffuse research on newness and internationalization, and develop propositions for future empirical research. Based on previous liabilities of newness and foreignness research, our study provides a novel theoretical model that explains early internationalization over and beyond existing internationalization models.

Keywords: Liability of newness, Liability of foreignness, International new ventures

JEL Classification: L26, F23