How does the size of the home country economy influence the
equity or non-equity entry mode decisions born globals face?
Author: Max van Heydoorn Student number: 10657649 Supervisor: E. Dirksen MSc. Second supervisor: Dr. J. Lindeque Track: International Management Date: 14-April–2015
Abstract
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1 Introduction
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2 Literature review
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2.1 Internationalization & the traditional internationalization theory
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2.2 Born Globals and their internationalization process
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2.3 Entry mode decision and the home economy
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2.4 CEOs and the entry mode decision they face
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3 Conceptual framework
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4 Research design
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4.1 Methodology and Data collection
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4.2 Data collection
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4.3 Country selection
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4.4 Selection of Born Globals
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4.5 Selection of CEOs
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5 Results
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5.1 Variable analysis
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5.1.1 Frequencies
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5.1.2 Descriptives
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5.2 Regression analysis
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6 Discussion & conclusion
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6.1 Discussion
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6.2 Implications
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6.3 Limitations & recommendations
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6.4 Conclusion
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Reference list
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Appendix
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Abstract
This study attempts to investigate the relationship between the size of the home country economy, measured by the level of economic development, and the equity or non-equity entry mode decision made by Born Global firms. More accurately, it investigates whether the higher the level of economic development, the more risky the internationalization strategy of a Born Global firm becomes, and CEOs opt for equity involved entry mode decisions. In contrast, when a country’s economy is less developed, CEOs tend to be more risk averse and opt for non-equity entry modes. Furthermore, this research attempts at investigating whether or not specific variables from the CEOs background, such as education and amount of international experience, have a moderating effects on the type of entry mode decision that is made. This study uses Red Herring Europe award winning 1 Born Global companies from 2013 and 2014, based on the definition that they have internationalized within the first three years after inception and generate a minimum of 25 percent of their sales from international activities. This because the Red Herring Award is an esteemed prize awarded to companies that have proven to be innovative and fast growing in their field of operation. A total of 134 Born Globals were analyzed to take part in this study and from all these firms their CEOs were researched to establish their
educational background and level of international experience. The analysis does not provide substantial evidence to support its hypotheses, but does generate interesting insights for future research.
Red Herring is a media company that publishes an innovation magazine, an online daily
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technology service, technology newsletters and hosts events for technology leaders. The company is best known for its Red Herring Top 100 technology awards and the annual international
conferences it hosts to highlight innovative and fast growing startup companies in Asia, Europe and the Americas (Red Herring, 2014).
1 Introduction
Born global firms are a type of MNE known for internationalizing very rapidly and therefore facing entry mode decisions directly at or shortly after inception (Oviatt & McDougal,
1995). The distinction between equity or non-equity entry mode decisions, as described by Pan & Tse (2002) for the traditional MNE, based on level of (financial) commitment,
investment and risk, had not yet been made for born globals. Furthermore, same as for traditional MNEs, the home country economy plays a large role in the firm’s
internationalization pattern. A well-developed home economy would offer sufficient resources for growth but not necessarily stimulate fast international growth. However, it does also offer the resources for a young firm to invest in global expansion more rapidly than firms from less developed economies. Therefore, this study will illustrate the
relationship that exists between the size of the home economy and the type of entry mode born globals will decide upon. Extensive research has been conducted to analyze the effect of the CEOs background on the entry mode decisions for traditional MNEs, to illustrate the effect certain aspects (i.e., education, age, experience, social status, etc.) have on the decision making process. It is known that born global’s CEOs are very
internationally oriented, making it interesting to see what the moderating effect of a CEOs educational background and international experience might be on a born global’s equity or non-equity entry mode decision. This research will contribute to the current knowledge by providing an insight on and illustrating the effect of the home country economy size on the entry mode decision of born global firms and the moderating effect on this relationship of the CEO’s international experience and educational background. A current shortage of relevant research on these aspects of born globals’ entry mode decisions and CEO make this an interesting topic for further research.
2 Literature review
In the first part of the literature review a general introduction of the internationalization process of firms will be discussed. This will be followed by an elaboration on the
differences between the internationalization paths of regular multinationals (MNEs) and born globals. In the second part the relationship between the size of the home country and the type of entry mode decision the CEOs of born globals make will be discussed. Both sections are based on previous research and empirical findings, and will help to explain the influence the size of the home country economy, and specifically its level of
development, has on the type of entry mode decisions born globals face. Following this the moderating effect of a CEOs educational background and level of international experience will be introduced by using past research and empirically acquired data. This part will then in turn lead to an introduction of the main research question and the
hypotheses, followed by the introduction of the conceptual framework. Since the 1980s, the international business environment has gained momentum, speed and high complexity (Knight, 2010). This change in activities is facilitated by the growing economic globalization and integration of markets, the interdependency of countries worldwide and the incredibly fast growing modern information and communication technologies and transportation systems. All these factors contribute to facilitating international business for all firms. According to Knight (2010), thanks to these facilitating factors, a new type of multinational companies defined as born globals are revolutionizing the traditional character of
international business. International business is no longer dominated by large MNEs, and companies of all sizes are regular and important players in the international business environment. In the international business literature these born global companies have been referred to in several ways; „global start-ups“ (Oviatt & McDougall, 1995), „instant internationals“ (Fillis, 2001), and „international new ventures“ (Oviatt & McDougall, 1994).
2.1 Internationalization & the traditional
internationalization theory
Welch & Luostarinen (1988), describe the internationalization process as the outward movement in an individual firm’s or larger grouping’s international operations, but factors such as inward activities and cooperation are also part of this entire process. According to Casson (1992), internationalization can be seen as the international expansion of firms, which in turn provides new and potentially more profitable markets. But it also helps
increase the firm’s competitiveness, facilitates access to new product ideas, manufacturing innovations and the latest technology (Hollensen, 2008). The entire process exists out of a correlation of the increasing commitment of resources to international markets and also the development of knowledge about those foreign markets (Moen & Servais, 2002).
When focussing on the internationalization pattern of MNEs and their operations, traditionally two important models were provided for explanation. In both of these models the globalized environment plays an important role. Both theories were derived from substantial research and observations of large Nordic/Scandinavian MNEs, but they were very much able to explain international behavior of MNEs from other countries successfully as well (Axin & Matthyssens, 2001). Firstly, Johanson and Vahlne (1977) introduced the „Uppsala model“ of internationalization. This model has a corresponding American theory called the innovation-related internationalization model (Cavusgil, 1980). However,
according to Andersen (1993), even though both these models see the internationalization process as a gradual process , and therefore both are called „stages models“, the Uppsala model is more frequently used (Chetty & Campbell-Hunt, 2004). According to Johanson and Vahlne (1997), firms built their international presence incrementally, basically using „market commitment“ and „market knowledge“ as two variables. After their market knowledge has increased, organizations invest more resources and become more
internationalization starts with irregular exports, followed by export through independent sales channel, the establishment of an overseas sales subsidiary and eventually the establishment of full-functioning manufacturing subsidiaries. Every one of these consecutive stages means an increase in resource commitment and finally market commitment. Thus, Johansson and Vahlne (1977) show that in this process an organization enters a foreign market with the lowest commitment possible and starts growing from this stage on. Furthermore, in this traditional view, organizations only start to export after having a vast and strong position in their domestic market (Chetty & Campbell-Hunt, 2004). Deciding upon which market to enter also follows certain stages.
Organizations tend to prefer to enter familiar and similar markets, and try and gain sufficient knowledge to enter less familiar markets. This „foreigness’’ of a market is measured by „psychical distance“, which represents all determinants that negatively influence information flows between the market and the organization and includes factors like culture, language, and the political, legal and educational systems (Andersson & Wictor, 2003). The further the organizations are in terms of the psychic distance, the less resources an organization is willing to commit to those markets ( Anderson & Wictor, 2003). Recently, international markets have become more easily accessible for SMEs (Reynolds, 1997). This is accompanied by growing criticism on these stages models. Concerning the Uppsala Model some criticism comes from different scholars. Firstly, the model seems to be too deterministic (Melin, 1992; Bell, 1995 and Anderson & Wictor, 2003). Secondly, it seems as if organizations are skipping stages (Oviatt & McDougall, 1994). Thirdly, the Uppsala Model oversimplifies a very complex process. Finally, according to Andersson & Wictor (2003) and Madsen & Servais (1997), if organizations are evolving according to these models, single entrepreneurs will not have any strategic options and choices to make. However, entrepreneurs do have the option to be global and internationalize much quicker directly or soon after inception (Rennie, 1993; Knight &
Cavusgil, 1996; Madsen & Servais, 1997). One important influence that the Uppsala model does not include is that it only looks at the individual firm and does not include the effect of networks. This is where Johansson and Mattson (1988) developed the network theory. The network theory looks to investments in networks as assets that determine future strategic development (Axinn & Matthyssens, 2001). This traditional view
acknowledges the importance networks of business relations have for internationalizing organizations. It posits that organizations use intermediaries in the early stages of
internationalization because the knowledge base and the needed resource commitment is smaller that if the firm should establish its own subsidiary (Chetty & Campbell-Hunt, 2004).
2.2 Born Globals and their internationalization process
The feature that distinguishes the born global firms from other internationalizing firms is that born global firms’ origin is international, their management’s focus is global and they steer their core business activities internationally and to certain types of resources. The emphasis is not on the size of the firm but rather the age at which it ventures into foreign markets. In direct contradiction to the more traditional pattern of internationalizing MNEs, operating in their home country for many years before gradually engaging in international trade, born global companies begin with an international mindset and develop thestrategies and capabilities to internationalize either directly after of very shortly after the firm’s founding. It seems more and more that these distinctive companies are gradually becoming a norm in the international business environment (Tamur Cavusgil & Knight, 2009). Born global companies, despite having a scarcity of financial, human, and tangible resources which characterize most new business ventures, manage to achieve
considerable successes in international business very early in their development. In contrast to regular MNEs a born global’s internationalization process passes its stages relatively rapidly. For example, the period between the establishment of the firm and the
initial foreign market entry in most cases isn't larger than 3 years ( Autio, Sapienza & Almeida 2000, McDougall& Oviatt 2000, OECD 1997, Rennie 1993). However, there is published research that proposes different opinions on how quickly and to what extent a firm must internationalize in order to be a categorized a born global. These opinions differ from internationalizing within two to eight years after inception and in more general
literature, two to six years after inception. Generally assumed is the fact that Born Globals tend to export at least a quarter of total sales in this period (Coviello and Munro, 1995; Andersson & Wictor, 2003). These companies are mainly successful international small and medium-sized enterprises (SMEs, which are defined as being firms with 500 or less employees). But similar to regular MNEs, born globals have also been seen to be active in all major trading countries, across industry sectors (Knight & Cavusgil, 2004), and in both high- and low-tech industries (Madsen & Servais 1997, Rennie 1993). Furthermore, Born Globals possess the following characteristics: highly active in international markets from or near founding, said to have significant global network relationships (Bell 1995, Covielle & Munro 1995, Rasmussen, Madsen & Evangelist 2001), and are often active in global niche markets occurring simultaneously in several countries (Dalgic & Leeuw 1994, Oviatt & McDougall 1995).
The traditional theories of internationalization suggest that firms pass through certain stages as they progress and become truly international (Lopez et al., 2009). But then in contrast there are the born globals, firms that are generally assumed to
internationalize almost from the moment of inception. It is customary for „regular“ MNEs when entering new international markets to start off with low resource commitment modes such as exporting (Johanson & Vahlne, 1977, 1990; Root, 1987). When the firm acquires more knowledge and experience it will assume a higher level of recourse commitment, risk, control and profit. This process is know as gradual incremental involvement.
According to Hashai & Amor (2002), even though born globals firms are seen as a contradiction to the current stages theory, the internationalization process of this type of firms may still be characterized by gradual increased commitment to foreign markets, just not according to the predictions of the classic stages theory. Born globals seem to pursue an internationalization pattern that looks like this: 1) exports are employed initially in order to serve customers in geographically close foreign markets, 2) subsequently, greenfield marketing subsidiaries are established in these markets, and 3) finally, firms engage in mergers and acquisitions to create subsidiaries that incorporate several value-adding activities and penetrate geographically distant foreign markets (Hashai & Almor, 2002). However, according to Weerawardena, Sullivan, Liesch & Knight (2007), the existing literature does not fully comprehend the learning process that is undertaken by these firms and especially their founders before the firm’s legal establishment. The authors propose that a set of dynamic capabilities are built and nurtured by highly internationally oriented entrepreneurial founders that enable these firms to develop cutting-edge knowledge intensive products, paving the way for their accelerated market entry.
The phenomenon of the born globals is considered to be a direct result of the fact that the world has become, and is still becoming, increasingly global with is paired with the
accelerating change in the global economy. There are several interrelated trends mentioned with globalization that have given way to the occurrence of this new type of MNE and therefore changed the means of internationalization. Firstly, new market
conditions occur in which specialized niche markets play in increasing role in business. A second major trend is the increase of influential technological developments in areas ranging from communication to transportation and production. Thirdly, and a trend this research will take a closer look at, is the increasingly more developed and elaborate knowledge and capabilities of people, and specifically the founder/CEO starting a born global firm ( Madsen & Servais, 1997).
Many different industries have all been exposed to the change in market conditions over the past decades. Changes in which the specialization is rapidly increasing and therefore leads to an increase in the number of niche markets created, which has created
internationalization opportunities for highly niche oriented firms, a commonly used
characterization of born globals ( Madsen & Servais, 1997). These firms are then more or less forced to look to penetrate international markets for the simple reason that, even in the larger well developed economies, the demand in their home country market is too small. As a mechanism for survival the born globals have adapted and innovated a lot faster to this change in dynamics in the international business environment. This has lead to them being more flexible and innovative than the older, regular MNEs. However,
another occurrence that facilitates the quick internationalization of born globals is that through the global networks and global sourcing, which allows for a quick spread of innovative products to country markets all over the world, the interests and demands of customers become more homogeneous (Madsen & Servais, 1997).
The second trend is responsible for removing the international cost barriers since it has simultaneously facilitated the ease, reliability and frequency of the transportation of people and goods. As a results the liberalization of trade made increasing
interdependencies between countries, governments and organizations possible.
Furthermore, the advancement in technology, especially in areas of telecommunications and the internet, provide firms with access to a worldwide network of customers, partners, distributors, suppliers, etc. (McDougall & Oviatt, 2000). This all leads to the fact that international markets have become more accessible and creates the possibilities for firms to internationalize their operations faster than previously would have been the norm. „Market opportunities, critical resources, cutting-edge ideas, and competitors lurk not just around the corner in home markets, but increasingly in distant and often little-understood regions of the world as well“ (Gupta & Govindarajan, 2002, p.125)
The third trend that is at the origin of these influential changes in the global market conditions which in turn caused the whole phenomenon that is the born global firm, and plays a large part in this research, are the growing and more elaborate capabilities of people and especially the founder/CEO of the born global. An increasing number of people have gained international experience during and before their professional career. More and more universities offer the possibility for their students to take part in an exchange program with a foreign university or offer assistance in partaking in international
internships, traineeships, and volunteer and humanitarian programs which all adds to a person’s international experience. This without a doubt affects a firm’s internationalization opportunities since it creates a higher number of people with acquired experiences and competences to communicate with, understand and operate in foreign cultures (Madsen & Servais, 1997). Such capabilities are a clear prerequisite for exploiting the opportunities offered by the new technologies in production, communication, and transportation
(Madsen & Servais, 1997). This leads to the statements that prior international experience and education is very important in increasing the firm’s speed of learning and
internationalization (Oviatt & McDougall, 1997).
The process of internationalization of born globals is a relatively fast process compared to regular MNEs and it can be said that it therefore needs a more holistic view and approach of internationalization in its explanation as opposed to the standard stage model. A holistic process can be described as a process in which interrelated and even integrated decisions and processes are combined to accomplish and portray a firm’s internationalization pattern (Jones, 1999). The internationalization path of born globals is indeed a complex process, even more so in its early stages. In these primal stages the amount of influential variables involved in the decision making process, that variety of motives and the heterogeneity of the firm’s characteristics make it impossible to describe this process using incremental step-based models. Even though the internationalization of
born globals can still be viewed as a process, it entails a great deal of variety in definitions, time periods, and also types of international activity amongst these born global firms.
What can be said according to Sharma & Blomstermo (2003), is that born globals lack fixed routines to select and enter foreign markets and that they evaluate each proposition and decision individually. This leads to the fact that, especially in the early stages of international growth, many of these decisions are entrepreneurial decisions and are based upon the capabilities and resources the decision maker holds. Therefore, it is of importance to understand what shapes the decision maker’s, or CEO/founder, capabilities and resources.
2.3 Entry mode decision and the home economy
Entry mode choice has been defined as a „frontier issue“ in international business (Anderson & Gatignon, 1986) and a very important if not critical strategic decision
(Agarwal & Ramaswami, 1992, p.2). According to Pan & Tse (2000), entry mode decisions start with a choice between equity or non-equity entry modes. Also, the level of risk and commitment differs between the two types of entry modes. Entry modes that require capital and resource investments abroad, and thus involve equity, are considered to involve higher risk because the stakes in case of negative results are higher. Entry modes that involve lower levels of resources and commitment subsequently involve a lower level of risk. The authors also state that there are several home and host country factors that affect this decision. Furthermore, their study also shows that several country-specific factors are relevant in their proposed hierarchy. The influence of the home country culture and economic market influences the entry mode choice of an MNE into a host country to avoid making sub-optimal decisions. The motivations for choosing wholly owned
operations over equity joint ventures are mostly defined by micro-level factors (Vanhonacker, 1997).
According to Gabrielsson, Manek Kirpalani, Dimitratos, Solberg & Zucchella (2007) successful born globals pass through three phases. Namely: the introductory phase, growth phase and the resource accumulation phase, and the phase in which they break-out to independently grow as a major player. The authors found that risks, resource development, channels/networks and organizational learning of born globals develop during all these three phases adding to the success of born globals. However, this three-phased process deviates considerably from the path traditional internationalizing small and medium-sized enterprises follow and studying these differences could add to the
knowledge of global entrepreneurs and academics. Fan & Phan (2007) add to the current literature on the entry pattern into international market by born globals by stating the important influence of the size of its home market, its production capacity and therefore the accessibility of resources and the need to analyze the effect of these in international markets separately. The larger and more developed a firm’s home country economy is, the less urgent it might seem for firm’s to move to an international market. However, this also means that the production capacity and home market is larger and better developed. These in turn generate more resources the firm can use to create a solid base and make larger investments upon deciding to internationalize. According to Laanti et al. (2007), the greater the resources of born globals, the more rapid their internationalization process takes place and their presence in the global market increases. Following this critical point the size of the home country economy plays in the access to valuable resources needed for a starting firm to grow, the following hypotheses were formed.
H1: Firms coming from a well developed home economy, tend to enter new markets by opting for equity-entry modes.
In contrast, it could be argued that when a firm’s home country economy is considerably smaller and less developed than previously mentioned, specific resources might be harder
to acquire and customer bases are more limited as well. Production options might be limited in which case research and development might have to be located internationally to be successful. Although this would not necessarily impact the speed of internationalization, since the firm decides upon looking for other markets to drill into for resources and
customers, it does signify that the firm makes investments that call for little resources and are more risk averse.
H2: Firms coming from a less developed home economy, tend to enter markets by opting for non-equity-entry modes.
2.4 CEOs and the entry mode decision they face
In the traditional internationalization theory it is said that the entrepreneur does notnecessarily has prior international experience because it is believed that they focus on the learning aspect within the firm(Chetty & Campbell-Hunt, 2004). Entrepreneurs are said to learn gradually within the internationalizing pace of the regular MNE (Chetty & Campbell-Hunt, 2004). However, the academic interest in international entrepreneurship has
increased substantially in the past years (McDougall & Oviatt, 2000, p. 903). Even though the born global literature also acknowledges the learning effect, it is stressed by Chetty & Campbell-Hunt (2004) that learning occurs more rapidly and that the entrepreneur, in most cases the CEO/founder, possesses superior international experience and knowledge. McDougall (1995) also stresses that the global vision and international background of a CEO plays a vital role in the internationalization process in BGs. According to Oviatt & Mcdougall (1995) another aspect that is of vital importance and of great influence is educational background.
As has been previously researched by Herrmann & Datta (2002), certain characteristics of a firm’s CEO have a noticeable influence on a MNEs entry mode decision. Factors such as educational and functional background and international
experience, as defined by Finkelstein & Hambrick (1996), have an important influence on the formulation of international strategies (Black, 1997; Daily, Certo & Dalton, 2000; Sambharya, 1996). In the introductory phase a born global is said to have limited
resources and an underdeveloped organizational structure. Its principle resources mainly come from the founder’s background and experience. The upper echelon theory
(Hambrick & Mason, 1984) suggests that the organizational strategic decisions are a function of organizational dominant coalition’s background compositions. The
compositions of a CEO’s observable characteristics, such as their education and built up experience, influence the performance of outcomes forthcoming from their strategic choices (Zhou, 2009). Mintzberg (1979) also stated that the structure of most small firms also centralized the role of CEOs and executive officers in the critical strategic decision making process. A direct consequence is that characteristic and historic aspects of the decision maker play a large role in the decision making process.
It is argued that people with a tertiary education, such as bachelor, master graduates and PhD candidates, are more likely to analyze all their decisions more
thoroughly and therefore do not resort to high-risk investments as quickly as people who have not enjoyed an education of that caliber. In support of this, Gabrielsson et al. (2008) state that especially in the introductory phase a Born Global has limited resources and an underdeveloped organizational structure and that the firm builds on experience and knowledge. In the current age of intricate communication networks and large information flows, a Born Global depends on the unique and often tacit knowledge of entrepreneurs to sustain its advantage (Barney, 1991; Schoemaker, 1990). Therefore its resources consist mainly of the founder’s and other creative individuals’ resources. Gabrielsson et al. (2008) further mention that the a CEOs unique skills combined with a high level of
entrepreneurship make out to be the basic set of human resources that lead to the development of unique products with global market potential. According to Andersson et
al. (2006), studies of born global firms display a wide variety of entry mode decisions. These decisions do not seem to be in accordance with the step-wise pattern such as the Uppsala model discussed in the earlier literature. As mentioned earlier it was
acknowledged in articles by Johanson & Vahlne (1977) and Schweizer et al (2010), born globals do not follow the internationalization pattern concerning the psychical distance and the step-wise entry mode pattern such as regular MNEs might. However, they do mention that the core of their theory still stands and that the occurrence of these new patterns can be explained by the access the founding entrepreneur has to knowledge, experience and relationships from their professional past.
H3: Highly educated CEOs are more risk averse and tend to opt for non-equity entry mode decisions.
Furthermore, another aspect that plays an important role in the decision making process of a CEO according to Finkelstein & Hambrick (1996), is the amount of international
experience a person has gathered in his career. It is said that CEOs of born globals in general tend to have more international experience than other CEOs. Also, it is insinuated by the authors that CEOs with a higher amount of international experience tend to go for more risky decisions in the form of equity involved entry mode decisions.
H4: A CEO or founder that has accumulated substantial international experience is less risk averse and tend to opt for equity entry mode decisions
This leads to the following research question on how certain factors such as the size and level of development of the home country economy influence regular MNEs entry mode decisions also influence these decisions for born globals and whether or not these
influences are moderated by the CEO’s educational background and accumulated international experiences.
How does the size of the home country economy influence the equity of non-equity entry mode decisions of born globals?
3 Conceptual framework
Figure 1: Conceptual framework; Model illustrating dependent and independent variable relationship and moderating factors
As can be derived from figure 1, the conceptual framework depicts the predicted relationship between the independent variable, being the home economy size and the dependent variable, being the entry mode decision. The entry mode decision portrays the type of investments the born global’s CEO decides upon making when the firm first enters international markets. The hypotheses described earlier are also portrayed in the
framework. The model includes the four variables established for this research. The size of the home country economy, measured by the level of economic development (1), the type of entry mode decision (2), the CEO’s educational background (3), and the CEO’s level of international experience (4). Specifically, the model portrays the influence the size of the home country economy has on the type of entry mode decision the born global’s CEO decides upon. The framework also portrays the moderating effects of the two variables concerning the CEO’s background might have upon this decision. The level of education has a big influence on how a CEO looks to and acts in critical professional moments. Also,
the level of international experience a CEO has accumulated during their professional career can also moderate this decision making process. One’s experience can very well serve as guidance in further international endeavors and work as a removal of barriers in the view of a firm’s market and possibilities. However, it could also cloud a person’s vision and create the trap of falling back one a person’s previous habits and actions. It is
predicted in this study that the higher the level of economic development in the home country of the Born Global, the more developed the resources of the born global are and hereby the means to opt for equity involved entry mode decisions. It will then seem more likely for a firm to opt for equity entry modes, since this more rapidly increases a firm’s international presence and penetrates foreign markets more effectively.
4 Research design
This research will be constructed as an explanatory study designed as a quasi experiment to shed light on the topic of born globals’ entry mode decisions. It will build to establish a causal relationship between the size of the home country economy and the effect this independent variable has on the dependent variable that is the entry-mode decision of the born global company. This study will also investigate the moderating effects that the
variables CEO’s international- and educational background might have on this relationship. Mixed methods will be applied to gather the necessary data to answer the research
question. Quantitative data is gathered to collect firm specific information on the entry mode strategies of different firms. This includes historical data such as the nature and flow of FDI at firm level and the GDP at country level to establish the type of investments most commonly made in large and small home country economies. To be able to illustrate the moderating effect of the CEO’s international- and educational background, data will be collected such as their level of education and the years of international experience a person has.
4.1 Methodology and Data collection
In the following chapter the research method and the data collection is discussed as well as how the variables were established and which techniques were used to answer the hypotheses and the main research question. This research will be constructed as an explanatory study and a linear regression analysis will be used to establish a causal relationship between the size of the home country economy and the effect this
independent variable has on the dependent variable that is the entry-mode decision of the born global company. This study will also investigate the moderating effect that the CEO’s international- and educational background might have on this relationship.
4.2 Data collection
A quantitative approach was applied for data collection because this seems most suitable as it aims to gather facts and identify the relationship between one set of facts to another (Bell, 1993, p.5). Data is gathered to collect firm specific information on the entry mode strategies of different firms. This includes historical data from the selected firms’ first international activity and the nature of this activity. Sources used include corporate
information publicly available from websites and annual reports. These foreign market entry mode decisions are categorized in either equity involved entry mode decisions or non-equity entry mode decisions. In each category, several types of entry mode decisions are placed. Entry modes such as greenfield investments, minority or majority subsidiaries and acquisitions are categorized as equity entry modes since these require investments of substantial financially based resources. These entry mode decisions also entail a higher level of risk. Non-entry mode decisions include direct and indirect export, alliances and licensing and do not require an immediate resource demanding commitment and therefore entail a lower lever of risk for the firm.
Furthermore, to establish a country’s level of economic development the World Bank recommends using the GNI per capita at country level. This gives an estimate of what the average person can spend on goods and services in the case of an even income distribution. This information is then used to test and establish the influence of the size of the home country economy on the type of FDI most commonly made by born global companies. The distinction was made between developed and developing economies based on their respective GNI per capita, similar to how the World Bank makes the distinctions. Even though developed economies continue to develop further in the future, this is the distinction The World Bank uses to define well developed economies and less developed economies. Many economist indicate that the level of economic development is quantifiably assessed by several indicators. Such indicators include but are not limited to
the GDP per capita, a country’s income distribution, literacy and education and modern transportation. However, to make a fairly general assessment The World Bank indicates the GNI per capita is sufficiently accurate. To be able to illustrate the moderating effect of the CEO’s international- and educational background, data such as their educational background and work related history was gathered to illustrate the moderating effect of the CEOs educational background and experiences.
A quantitative approach was used to collect archival data. According to Bell (1993), this approach is most suitable because it aims to gather facts and identify relationships between one set of facts to another. In this research the relationship between the size of the home economy and the type of entry mode decision.
4.3 Country selection
The focus in this study lies on European countries because Europe and the European Union provide a rather unique environment for researching a company’s internationalization pattern and since Europe is home to well and less developed economies it provides the right aspects to establish a relationship between the home country economy size and the internationalization activities. Also, the European Union should very much stimulate the concept of born global companies. Even more so,
according to research, it has shown that European firms operate at a much higher degree of internationalization than firms from for example the USA (UNCTAD, 2004). Born globals MNEs are said to be emerging on a quick pace during the past couple of decades and it is anticipated that they will continue to grow. According to Madsen & Servais (1997 p.556), „it must be expected that the phenomena of born globals will become more widespread in the future and become of more importance because of various reasons’’. Firstly, the growing number of countries becoming a member of the European Union will create new
service capital, and labour can move freely across EU member states. Thirdly,
developments between member countries will create opportunities such as the availability of cheaper labour and the increase in their GDP (Hessels, 2004).
Countries are selected based on the criteria The World Bank uses to establish a country size by establishing their level of economic development. One of those criteria used is a country’s GNI (Gross National Income) per capita. The GNI per capita, formerly known as the GNP per capita, is defined according to The World Bank as being a country’s gross national income, converted to U.S. dollars using the World Bank Atlas method and then divided by the midyear population. More accurately; the GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the valuation of output, plus net receipts of primary income (compensation of employees and property income) from abroad.The GNI, which is often calculated in a country’s national currency, is usually converted to U.S. dollars at official exchange rates for comparisons across economies. In some cases an alternative rate is used, for example when the official exchange rate is judged to diverge by an exceptionally large margin from the rate actually applied in international transactions. To even out fluctuations in prices and exchange rates, the Atlas method of conversion is used by the World Bank. This entails applying a
conversion factor that takes an average of the exchange rate for a given year and the two preceding years, which in turn is adjusted for differences in rates of inflation between the country, and the G-5 countries (France, Germany, Japan, the United Kingdom, and the United States) (The World Bank, 2014).
As can be seen in table 1 below, economies are divided by The World Bank in four income groupings: low, low-middle, upper-middle and high, based on a country’s GNI per capita. The table shows the cut-off points for these categories defined by the World Bank and calculated each fiscal year based in historical economical country data collected in the
Table 1: Income groupings
Source: The World Bank, 2014
2 years preceding the World Banks fiscal year. Each year the cut off points are redefined and calculating using the commonly used and preciously described Atlas Method.
For this research these four categories are coded 1, 2, 3, and 4, each indicating low, low-middle, upper-middle and high respectively. To group economies, a country’s GNI is used because it follows the same methodology that is used by the World Bank to determine it’s operational lending policy.
It is said that the GNI per capita does not to the full extent summarizes a country’s level of development, but it has proven to be a variable that is extremely useful and easily available. It is closely correlated to non monetary variables such as measurements for the quality of life. This for example includes life expectancy at birth, mortality rates of children, and level of education.
The independent variable used for testing looks as follows:
-Home country size: home country of the born global firm (HC) LI= Low Income
LMI= Low Middle Income UMI= Upper Middle Income HI= High Income
The World Bank’s fiscal year 2015
Classification GNI/capita (USD)
Low income <= 1,045
Lower middle income 1,046-4,125
Upper middle income 4,126-12,745
4.4 Selection of Born Globals
In a matter of purposive sampling, multiple european companies were selected for archival data collection. The sample in this study consists of 136 successful Born Global companies from well developed and less developed european countries, their level of development defined by their country’s GNI per capita in 2014. For example, The Netherlands and France are categorized as high income countries whereas Turkey and Hungary are categorized as upper middle income countries. See the full table in appendix for the full ranking. According to the World Bank (2014), this is the most generally
assumed measurement variable to determine a country’s level of development.
The esteemed Red Herring Top 100 list was used to develop a list of european countries and successful companies originating from these countries in 2013 and 2014. This list includes winners of this esteemed award and will therefore help locate successful european companies. The Red Herring award is offered to companies that are considered to be the most exciting and innovative privately held start-ups in Europe. This award is widely recognized as one of the industry’s most prestigious recognitions.
From each country the companies were selected for analysis based on the
definitions that these are companies with the period between establishment and their first international foreign market entry not being longer than three years ( Autio, Sapienza & Almeida 2000, McDougall & Oviatt 2000, Rennie 1993) and that they at least have 25% of exports over their total sales in this same period of three years after inception (Andersson & Wictor, 2003; Autio et al., 2000; Knight, 1997; Knight & Cavusgil, 1996; McDougall & Oviatt, 2000). Furthermore, Gabrielsson et al (2008) maintained certain criteria to define born globals used for their research. First, they should be SMEs with a global vision at inception. Second, their products should be unique and have a global market potential. Third, they should be independent firms and finally, they should have demonstrated the capability for accelerated internationalization. After selection all selected Born Globals
were analyzed to establish the type of foreign direct investment that was made. In other words, what was their first entry mode decision that has made the firm be qualified as a born global. The distinction between equity and non-equity entry mode decisions, as described by Pan & Tse (2002) can be seen in figure 2
Figure 2: The hierarchical model of entry mode decision
Source: Pan & Tse, 2002
As was mentioned earlier, the distinction between non-equity and equity entry modes, even though both generate international growth and exposure, also entail different levels of risk and commitment for a company. Therefore, it is of importance for this research and its main research question to establish the type of entry mode decision the selected Born Globals from the sample made. The dependent variable for research looks as follows:
Entry Mode: The Born Global’s equity or non-equity entry mode decision (EM) -Non-Equity entry mode decision=EM1
4.5 Selection of CEOs
From all these 136 companies the founders, the entrepreneur who is often also functioning as the CEO, were located and were further investigated to find information such as their educational background and international experience. This was necessary in order to be able to set up a profile of the CEO’s background and the mediating role this is
hypothesized to play in their entry-mode decision making process. It was necessary to find information from at least 70 CEOs in total to be able to test the mediating effect and for the test to be representative of the population. Fortunately for all firms selected, enough
information was found regarding the CEOs to include all CEOs in this research. This was helpful to establish the influence of the mediating factor of the CEO’s background on the causal relationship for this research. In order to find the required information the selected companies were approached and in most cases a thorough profile of the founder/CEO was available, in other cases their LinkedIn profile proved to be extremely useful to acquire the missing information. In order to establish the influence of a CEO’s educational
background the ISCED levels of education were used. The International Standard Classification of Education was designed in the early 1970s to serve as an instrument suitable for assembling, compiling and presenting statistics of education, both within individual countries and internationally (UNESCO, 2006). The classification table was updated in 2011, increasing the number of levels from 7 to 9. The ISCED 2011 table 2 is depicted.
Table 2: level of education
Source: ISCED, 2011
In order to effectively categorize and code a CEO’s educational background, the education levels were grouped and coded as a dummy variable as follows: level 01, 02, and 1 were categorized into one group named group 1 because these levels all describe a form of primary education. Level 2 and 3 were categorized as group 2 because they describe secondary education. In the same manner, level 4 and 5 are grouped together as group 3 describing education that is qualified between secondary and tertiary level. Finally level 6, 7, and 8 representing tertiary education form group 4. The educational background is, statistically speaking, an ordinal variable since there is an evident order to these categories.
Level ISCED Classification 2011 Description
0.1 Early childhood education (01 early childhood educational development)
Education designed to support early development in preparation for participation in school and society. Programmes designed for children below the age of 3.
0.2 Early childhood education (02 Pre-primary education)
Education designed to support early development in preparation for participation in school and society. Programmes designed for children from age 3 to the start of primary education.
1 Primary education Programmes typically designed to provide students with fundamental skills in reading, writing and mathematics and to establish a solid foundation for learning.
2 Lower secondary education First stage of secondary education building on primary education, typically with a more subject-oriented curriculum.
3 Upper secondary education Second/final stage of secondary education preparing for tertiary education and/or providing skills relevant to employment. Usually with an increased range of subject options and streams.
4 Post-secondary non-tertiary education
Programmes providing learning experiences that build on secondary education and prepare for labour market entry and/or tertiary education. The content is broader than secondary but not as complex as tertiary education.
5 Short-cycle tertiary education Short first tertiary programmes that are typically practically-based, occupationally-specific and prepare for labour market entry. These programmes may also provide a pathway to other tertiary programmes.
6 Bachelor or equivalent Programmes designed to provide intermediate academic and/or professional knowledge, skills and competencies leading to a first tertiary degree or equivalent qualification.
7 Master or equivalent Programmes designed to provide advanced academic and/or professional knowledge, skills and competencies leading to a second tertiary degree or equivalent qualification.
8 Doctoral or equivalent Programmes designed primarily to lead to an advanced research qualification, usually concluding with the submission and defence of a substantive
The moderating variable educational level for research looks as follows: Educational level: a CEO’s level of education (EL)
-Group 1=1 -Group 2=2 -Group 3=3 -Group 4=4
To categorize international work experience, the number of years a person has been professionally active in a country other than their country of origin have been added. In order to rate the level of experience the table below was used:
Table 3: level of international experience
Level 1 through 4 are also considered to be ordinal variables and coded as a dummy variable respectively.
The moderating variable international experience for research looks as follows: International experience: A CEO’s level of international experience (IL)
-Entry level =1
-Professional level =2 -Mid Level management =3
-Executive and senior level management=4
Level Description
Entry level Students, recent graduates, less than 2 years
Professional level / first-level management 2-10 years of experience
Mid-level management 10-15 years of experience
A complete overview of the different variables used for testing in this research is depicted in the table 4.
Table 4: Overview of variables used for testing
For the practical part in this study SPSS was used to test the previously determined variables in this study in order to generate results necessary to analyze the linear relationship between the size of the home country economy and the type of entry mode decision made by Born Globals. SPSS is chosen as it is one of the most useful, effective and easy to use tools for managing and analyzing collected data.
The first phase of testing was the preliminary phase of the analysis where a frequency test was performed to examine possible errors in the data entry. Following, a descriptive analysis was performed where information such as the mean value, minimum, maximum, and the standard deviation of the variables in the study will be identified. This is also the phase in which recoding had taken place in order to prepare variables for testing. Further part of this phase is the necessity to identify and prepare the data for further
testing, check the reliability of the data and find the outliers and extreme values and define
Variable Description Measurement
Home country economy size (ordinal)
depicts the level of development of the home country economy
GNI per capita Low = 1 Low middle = 2 Upper middle = 3 High = 4
Entry mode decision (categorical / nominal)
depicts the type of entry mode decision first made by the Born Global
Dummy variables:
Non-equity entry mode =1 (EM1) Equity entry mode = 2 (EM2)
Educational level (ordinal) The CEO’s level of education Dummy variables:
Group 1 = 1 Group 2 = 2 Group 3 = 3 Group 4 = 4 International experience (ordinal)
The CEO's level of international experience based on the sum of the professionally active years internationally Dummy variables: Level 1 = 1 Level 2 = 2 Level 3 = 3 Level 4 = 4
whether or not the variables are normally distributed. Variables that are not normally distributed are „log“ transformed and after transformation outliers that are three standard deviations from the mean are removed. However, in this case the sample of the variables used in this research is larger than n=30 (n=140) and therefore according to the „central limit theorem“ the variables could be considered to be normally distributed. During this first phase, several cross tabs were generated to provide an overview of the division of the variables compared to the dependent variable „entry mode decision“.
Following this, the subsequent phase includes analyzing the data using correlation analysis where a correlation matrix is developed and a regression analysis is performed to explore the relationships between the variables in this study. A multiple logistic regression analysis is done to assess the relationship between the size of the home country economy and the type of entry mode decision the born globals make.
To test the moderating effect the educational level and the level of international experience have on the main relationship, the SPSS add-on PROCESS is used. This because it is an easy to use specifically designed for statistically testing mediating, moderation and conditional process analysis. PROCESS uses an ordinary least squares or logistic regression-based path analytic framework for estimating direct and indirect effects in simple and multiple mediator models, two and three way interactions in moderation models along with simple slopes and regions of significance for probing interactions, conditional indirect effects in moderated mediation models with a single of multiple mediators and moderators, and indirect effects of interactions in mediated moderation models also with a single or multiple mediators. Bootstrap and Monte Carlo confidence intervals are implemented for inference about indirect effects, including various measures of effect size. PROCESS can estimate moderated mediation models with
multiple mediators, multiple moderators of individual paths, interactive effects of
5 Results
In this chapter the statistical results of the tests and analysis performed that were
explained in the previous chapter, will be summarized in detail. After this these results will be analyzed and discussed in line with the hypotheses which will prelude the conclusions that were drawn based on these results. The analyses are conducted using SPSS 22.0.
5.1 Variable analysis
5.1.1 Frequencies
The frequency distribution gives an overview of how many times each of the values occurs in the data collected and put into SPSS, which is useful to find and console errors in the data entry process. The results of this test show that each variable, entry mode decision, level of economic development, level of international experience and level of education, all contain 134 entries in total.
The entry mode variable indicated that 59% of the entries were non-equity entry mode and the remaining total was equity entry mode. The frequency table for the level of economic development, which in this study indicated the size of the home country
economy, indicated that only 3% of the entries indicated upper-middle size economies and the rest highly developed economies. The frequency table for the level of international experience of the CEO indicated that 22.4% of the entries fell in level 2, 17.2% in level 3 and 60.4% in level 4. The table for the level of education indicated that 0.7% of the entries fell into level 2, 8.2% fell into level 3 and the remaining 91.0% fell into level 4.
5.1.2 Descriptives
One of the matters discussed and tested here is the normality of the distribution and the description of the variable with information such as the mean, maximum and minimum value and the standard deviation. After testing the following information was found on the
data entered: the dependent entry mode variable had a statistic mean of 1,4104, a standard deviation(SD) of and a minimum and maximum value of 1.00 and 2.00. The variable does however display a slight positive skewness (.368) and negative
kurtosis(-1.893).
The independent variable level of economic development had a statistic mean of 3.9701, an SD of .17081, a minimum and maximum value of 3.00 and 4.00. This variable does display severe negative skewness (-5.588) and extreme positive kurtosis (29.971).
The independent variable level of international experience’s statistical mean is 3.3806, SD is .82985, minimum and maximum value are 2.00 and 4.00. The variable does portray negative skewness (-.814) and negative kurtosis (-1.055).
The independent variable level of education has a statistical mean of 3.9030, and SD of .32140, a minumum and a maximum value of 2.00 and 4.00. This value also portrays severe negative skewness (-3.421) and severe positive kurtosis( 11.997).
According to the standard rule of thumb a normal distribution shows skewness and kurtosis close to 0, and you can define the skewness by maintaining either one of the following two rules. Either the variable can be considered skewed when the skewness exceeds 1 of -1, or the skewness exceeds two times the standard error of skewness. Since for two out of four variables these rules apply, these two variables were transformed. The variables „level of economic development“ and „level of education" were transformed according to variable transformation techniques based on the variables skewness to normalize the distribution (see table 5).
In order to transform the skewed variables there are a couple of assumptions to take into consideration. The first is that there is actually a positive or negative skewness and another assumption is there can be no negative values or values equal to zero in the dataset. In order to verify this, the minimum and maximum value are checked and for all three skewed variables these assumption were met.
Table 5: variable tranformation methods*
*K= a constant from which each score is subtracted so that the smallest score is 1; in this case the largest score +1
There are four main assumptions in multiple regression testing that have to be met in order for data to be eligible for effective testing and to avoid either ineffective or even biased results. The first is indeed the normality of the distribution. However, since we are testing a multiple logistic regression and the sample size is quite large, the normality of the
distribution is an assumption of lower importance in this research (Statistical Solutions, 2014).
The second assumption entails that the there exists a linear relationship between the independent and dependent variables (Cohen & Cohen, 1983). The third assumption is that the variables are measured reliably and without error (Pedhazur, 1997). With each independent variable added to the regression equation, the effect of the reliability of the method of measurement becomes more complex and influential on the outcome of the test. According to Nunnally (1978) and Osborn, Christensen & Gunther (2001), a Cronbach’s alpha of .7-.8 is acceptable.
Then the fourth assumption is the assumption of homoscedasticity. This entails that the variance of errors is the same across all levels of the independent variables (Berry & Feldman, 1985). However, as Tabachnick & Fidell (1996) also explain, in this type of testing slight heteroscedasticity has little effect on the significance of the test.
Problem Transformation method
Extreme positive skewness (values >2) X*=1/X Substantial positive skewness (values 1 to 2) X*=Log10(X) Moderate positive skewness (values .5 to 1) X*=√X Moderate negative skewness ( values-.5 to -1) X*=√(K-X) Substantial negative skewness ( values -1 to -2) X*=Log10(K-X) Extreme negative skewness (values < -2) X*=1/(K-X)
Table 6 gives an overview of the means, standard deviations, maximum and minimum values and the correlations of the independent and the dependent variables. As can be seen in the table below the highest correlation is remarkably found between a CEO’s level of education and their level of international experience. This indicates a positive correlation between these two variables.
Table 6 correlation matrix and descriptive statistics
Whether or not multicollinearity is an issue amongst the variables was tested as follows. The variance inflation factor and the tolerance level (1/VIF) were checked and the results are shown in table 7.
Multicollinearity exists when a variance has a VIF value which is greater than 10 and a tolerance level lower than 0,1. As can be derived from the results in table 7 below, there exists no multicollinearity issue in this study.
Table 7 Multicollinearity coefficients
5.2 Regression analysis
In order to establish the direct hypothesized effect of the size of the home country economy on the entry mode decision born globals firms face, a multiple hierarchical
regression is used. A multiple hierarchical regression analysis is used because this allows for and makes it possible to incorporate a number of variables and create separate models to test their individual and joint effect on the dependent variable. In this case this would mean the direct effect of the home country economy size and the moderating effects of the CEO’s educational background and level of international experience.
A total of four models are shown that incorporate all variables in the regression. The first model tests the hypothesized direct effect the size of the home country economy has on the entry mode decision born globals face. The second model test whether or not the first moderating factor, the level of international experience acquired by the CEO, has a moderating effect by adding it to the first model. The third model will add the second
moderating factor, the level of education acquired by the CEO, to the first model in order to test its moderating effect on the main hypothesized relationship. Finally the forth and final model will add the both moderating factors to the first model and determine the moderating
Collinearity statistics
Model Tolerance VIF
Level of economic development in home country
0,984 1,017
CEO’s level of international experience
0,953 1,050
CEO's level of education 0,952 1,051
Dependent variable: The type of entry mode decision made by firms
effect both variables have on the relationship between the size of the home country economy and the type of entry mode decision.
As mentioned, a hierarchical multiple regression was executed to establish the influence of the size of the home country economy on whether or not firms internationalize by opting for, more risky, equity involved entry mode decisions or opting for safer, less risk involved, non-equity entry mode decisions. The first model depicts the main hypothesized relationship and as can be derived from table 8, this model was not considered to be significant (F=1, 132)=2,890; p>0.05 (p=0,092) and the model explained 2.1% of the variance in the entry mode decision. After the addition of the level of international experience in the second model, the total variance explained by the model changed to 2.2%, F( 2, 131) =1,445 but however still not significant with p>0.05 (p=0,883). The third model adds the second moderator, the level of education, to the first model. Again as can be derived from the output, the total variance explained changed to 2.3%, F(2, 131)=1,566 but again the effect is not significant with p>0,05 (p=0,612). Finally, model four which includes both moderating variables explains a total variance of 2,4%, F(3,130)=1,058 and does not indicate a significant effect with p>0,05(p=0,852).
From all four of the models it can be derived that none of the predictor variables show sign of significance. However, when looking at the Beta values, the main predictor/ independent variable shows a positive Beta value (β=0,146, p=0,084). This compared to the level of education(β=-0,044, p=0,612) and level of international experience, this variable showing a low Beta(β=0,013, p=0,883). The final model including both the moderating variables also shows no significant effect, but with a Beta comparable to the main relationship. (β=0,152, p=0,852).
Table 8 Hierarchical regression model of dependent variable: the type of entry mode decision made by the firm
Hypothesis 1 states that firms coming from a well developed home economy, tend to enter new markets by opting for equity-entry modes. But from the regression analysis it can be stated that no proof of a significant effect was found and thus there being a positive relationship between the size of the home country economy and the type of entry mode decision made by born global firms. This means that hypothesis 1 cannot be supported based on the data gathered in this research. Therefore, it cannot be said with certainty that large well developed home economies offer firms the means to enter new markets by opting for, higher risk involved, equity entry modes decisions. However, the positive coefficient would have been in support of the hypothesis had it been of significant effect
Hypothesis 2 states that firms coming from a less developed home economy, tend to enter markets by opting for non-equity-entry modes. In line with the lack of support for the first hypothesis, the second hypotheses is unsupported as well. However, had the findings been significant then the relationship between the level of development of the home country economy and the entry mode decision would have been positive and therefore in contradiction with the first hypothesis.
R R2 R2 change B SE Beta t Model 1 0,146 0,021 0,021 Economic development 0,423 0,249 0,146 1,700 Model 2 0,147 0,022 0,001 International experience 0,008 0,052 0,013 0,147 Model 3 0,153 0,23 0,002 Level of education -0,068 0,133 -0,044 -0,508 Model 4 0,154 0,024 0,002 Both moderators -0,90 1,100 0,152 1,742
Hypothesis 3 states that highly educated CEOs are more risk averse and tend to opt for non-equity entry mode decisions. As for the first two hypothesis, there was no support found for the level of education of a CEO having a moderating effect on the main relationship. Furthermore, there was no support found for the level of education having any significant effect on the entry mode decision in any form. Had the findings been significant then the low negative coefficient would have indicated a relationship in the opposite direction. Hereby indicating that highly educated CEOs would be less risk averse and tend to opt for equity entry mode decisions.
Hypothesis 4 states that a CEO or founder with a lot of international experience is less risk averse and tend to opt for equity entry mode decisions. However, again there was no support found for this statement. Therefore it cannot be supported that the level of
international experience a CEO has acquired has a negative influence on the willingness to take risks and opt for equity involved entry mode decisions. Even if the findings would have shown a significant effect, the coefficient indicates a relatively low positive value, indicating that the proposed relationship would have been weak of structure.
