Master Thesis MSc International Business & Management
Faculty of Economics and Business
University of Groningen
The influence of individual entrepreneurs’ personal
characteristics on the decision of new ventures to engage
Abstract
In the present master’s thesis, we extend the literature on internationalization of new ventures by exploring the influence of three personal characteristics of entrepreneurs (proactiveness, innovative orientation and self-efficacy) on their decision to engage in exporting. We used a sample of 3,800 entrepreneurs from 53 countries obtained from the Global Entrepreneurship Monitor (GEM) database for the year 2011. The results of our logistic regression provide significant evidence for the positive effect of proactiveness and innovative orientation on the entrepreneur’s export propensity. However, self-efficacy proved to have no significant influence on this decision. Overall, our findings point to the importance of entrepreneur’s personal characteristics when deciding to operate in new international markets.
TABLE OF CONTENT
Abstract………...
1. Introduction………. 5
2. Literature review……….... 9
2.1 Theoretical perspectives on Internationalization……… 9
2.2 Exporting……… 11
2.3 Entrepreneur’s personal characteristics………... 12
2.3.1 Proactiveness………. 13
2.3.2 Innovative orientation……… 15
2.3.3 Self-efficacy……… 17
2.3.4 Conceptual model………. 18
3. Methodology………. 20
3.1 Sample selection and Data collection……… 20
3.2 Variables……….... 21
3.2.1 Dependent variable……… 21
3.2.2 Independent variables………... 22
3.2.3 Control variables……… 23
3.3 Method……… 25
3.3.1 Binary logistic regression……….. 25
3.3.2 Assumptions………...… 26
4. Results……….. 26
5. Analysis and discussion………. 30
6. Conclusion………... 33
1. Introduction
Over the past few decades, a great amount of attention has been given by researchers from all around the world to the development of some grounded theory in the academic field of entrepreneurship. In addition, rising number of articles are published with the aim of identifying the main research areas within entrepreneurship (e.g. Shane 2012). Accordingly, it appears one of the most promising research areas is that of new ventures’ internationalization. In this regard, researchers have drawn on theories from different academic fields, such as e.g. strategic management, international business, and entrepreneurship as to explain the motives of entrepreneurs to internationalize their new businesses. However, what Bergmann, Mueller and Schrettle (2013) found in a systematic review study of the existing literature on international entrepreneurship, is that the particular topic of what drives new ventures to become international remains under-investigated. Therefore, it is in need of more theoretical and empirical research and analysis, if to be understood better. In this master’s thesis, we use the terms ‘new ventures’, ‘new firms’ and ‘new businesses’ interchangeably, while referring to those firms which exist and operate for not more than three and a half years.
(2000) assert, the entrepreneur should be regarded as crucial for the company’s international strategies because of his/her substantial role in shaping the firm’s international behavior. As such, entrepreneurs possess individual assets that help them identify new opportunities and assemble the necessary resources for growing their businesses in foreign markets (Zahra, Korri and Yu, 2005). Once engaged in the exploitation of these opportunities, entrepreneurs become responsible for many additional tasks related to internationalization. For example, as key decision-makers, they are responsible for setting the appropriate objectives, collecting important foreign market information, and mobilizing resources for the implementation of an internationalization strategy (Ruzzier et al., 2007). However, in view of these arguments, it is bizarre the scarcity of studies on how specific personal characteristics of entrepreneurs affect their ventures’ internationalization. In addition, some of the few notable exceptions to this matter (e.g., see Muñoz-Bullón and Sanchez-Bueno, 2013; Ruzzier et al., 2007) provide mixed results, which further hinders one’s ability to draw meaningful conclusions.
with MNEs), nor do they aim at becoming international right from inception (likewise ‘born globals’). Thus, there is a call for further examination of the international activities of new ventures (Amoros, Basco and Romani, 2016). Second, according to our knowledge, little to no efforts have been made to understand what is the role of individual entrepreneurs in deciding if the venture should reach out to new international markets (Ganotakis and Love, 2012). More precisely, one’s personality traits, as believed to be an important determinant of the international activity of new ventures, are currently being given too little attention and should thus be further examined and supplemented with additional entrepreneurial data (Ruzzier et al., 2007).
explained earlier, represents a promising yet little explored area for research (Bergmann, Mueller and Schrettle, 2013). Furthermore, distinction will be made from previous studies that approach internationalization at either the firm or country level. As such, we analyze entrepreneurship at the individual level and concentrate on the entrepreneur’s personality traits as explanatory factors for the propensity of these entrepreneurs to engage in international activity. To the extend of our knowledge, there is no such study that incorporates this particular set of characteristics as determinants for the internationalization of new ventures. As such, this master’s thesis will add unique value to the existing literature, by examining a large sample of entrepreneurs across 54 countries, and hopefully identifying patterns in their international approach. Consequently, we will be guided by the following research question, central to this master’s thesis:
Does the personal characteristics of entrepreneurs influence their decision to internationalize through exporting?
2. Literature review
In this master’s thesis, we discuss the internationalization of new ventures within the broader theoretical field of international entrepreneurship. Even though scholars offer multiple definitions of international entrepreneurship, we accord to that recently formulated by McDougall and Oviatt (2005b), derived from their revision and evaluation of prior research findings. Hence, we define international entrepreneurship as “the discovery, enactment, evaluation and exploitation of opportunities across national borders to create future goods and services” (McDougall and Oviatt, 2005b). While referring to this definition, it now becomes possible to investigate why new ventures might initiate international activity and what role does the entrepreneur play in this decision. In the next section, we first present some theoretical perspectives on internationalization, followed by a close examination of the entrepreneurial characteristics and their influence on internationalization, and conclude with the development and presentation of our conceptual model and working hypothesis.
2.1 Theoretical perspectives on Internationalization
well matured and there is a cost-based incentive to do so. Another explanation lies within the Stage Theory of internationalization, introduced later on by Johanson and Vahlne (1977). In its essence, the theory states that the motivation of firms to internationalize is reflected in their gradually increasing commitment to foreign markets. As such, while often beginning with exports, firms progressively gain more experience in the international arena. Consequently, at some point, this enables them to further increase the scope of their international operations, as well as develop and implement some more complex foreign governance structures. Finally, Dunning (1988) provided scholars and managers with the Eclectic Theory which stresses the importance of a firm’s ownership, location and internalization advantages as a major source of motivation in exploiting foreign markets. The above mentioned theories offer valuable insights into the wide range of factors that might propel firms to move beyond the boundaries of their home markets. However, as many researchers affirm, there are numerous obstacles and risks associated with internationalization that firms have to account for, especially in the case of new ventures (Ruzzier et al., 2007).
new firms is the liability of newness, and this issue grows bigger when the company decides to operate abroad (Neubaum, Mitchell and Schminke, 2004). As such, shortcomings may occur because of scarce resources, lack of standard routines and stable social ties in the foreign country. Respectively, this can place significant constraints around the new venture and hinder the transition from domestic markets into potentially more challenging foreign markets (Zhou, Barnes and Lu, 2010). Moreover, according to Liesch, Welch and Buckley (2011), some firms in their early stages of internationalization do not posses key information and knowledge about the foreign environment, as well as international experience. As a consequence, entrepreneurs may face difficulties, such as obtaining financial resources, building new structures and processes, and creating stable ties with stakeholders in the foreign market (Neubaum, Mitchell and Schminke, 2004). Thus, careful planning and decision making with regard to the most suitable mode of internationalization becomes essential for entrepreneurs that want to succeed in their efforts.
2.2 Exporting
export as an initial step in their international expansion (Muñoz-Bullón and Sanchez-Bueno, 2013). Exporting is associated with a high degree of international business flexibility. As such, entrepreneurs can switch between different strategies and approaches more quickly and with less resources in hand (Knight and Cavusgil, 2004). Consequently, new ventures may favor exporting because it minimizes the hurdles associated with their lack of resources and efforts to overcome the liability of foreignness (Knight and Cavusgil, 2004). Furthermore, compared to foreign direct investments (FDI), export involves significantly less commitment and associated risk, as companies are not facing additional complexities of establishing and managing a foreign organizational unit (Lu and Beamish, 2006). Therefore, in view of those arguments and resembling the approach of previous studies (Muñoz-Bullón and Sanchez-Bueno, 2013), this master’s thesis finds it most suitable to investigate the export activities of new ventures.
2.3 Entrepreneur’s personal characteristics
After we have identified some possible reasons as to why new ventures may engage in internationalization and most specifically exporting, we now move on to discuss the influence of certain entrepreneurial characteristics on this decision. Hence, in what follows, the relevant theory on each characteristic is discussed in the context of internationalization, and hypotheses are generated with regard to our main research question.
some entrepreneurial characteristics. In addition, Ricard, Pennec and Reynaud (2016) point out that decisions regarding internationalization are often made in the absence of thorough international analysis. Consequently, the decision-making process tends to be biased and the decision-maker (i.e. the entrepreneur) is likely to be significantly influenced by his/her personal characteristics. In light of these arguments and following the call for further investigation of possible determinants of internationalization at the individual level, this master’s thesis examines the effect of three personal characteristics of entrepreneurs – proactiveness, innovative orientation and self-efficacy, on the propensity of new ventures to become international. These characteristics are consistently attributed by scholars to individuals who show entrepreneurial intents and who are prone to become entrepreneurs (Miller, 1983; Baum and Locke, 2004). Accordingly, this master’s thesis endeavors to prove that they may also affect the willingness of entrepreneurs to internationalize. More precisely, we argue that each one of the identified personality traits (i.e. proactiveness, innovative orientation and self-efficacy) will, to some extent, affect the entrepreneur’s motivation to initiate export activity. Throughout the rest of the literature review section, we discuss each characteristic separately and derive conclusions as to formulate our hypothesis and develop a conceptual model.
2.3.1 Entrepreneur’s Proactiveness and the decision to internationalize
to achieve higher goals and earn awards for their accomplishments. As a result, such individuals will be actively involved in improving their firm’s competitive position, but also in attracting new customers, launching new products and exploring new business opportunities (Kammerlander et al., 2015).
Therefore, we argue that the more proactive the entrepreneur is, the more efforts will be made in identifying and seizing opportunities beyond the home market. As such, this master’s thesis builds on previous arguments of scholars regarding the potential link between proactiveness and internationalization (Dana, Hamilton and Wick, 2009; Muñoz-Bullón and Sanchez-Bueno, 2013), that all suggest a positive relationship between them. Therefore, we posit that opportunity seeking entrepreneurs that show higher proactive behavior will be more likely to internationalize through exporting. To put it more formally, we propose the following hypothesis:
Hypothesis 1: Higher entrepreneurs’ proactiveness will be positively related to the decision to internationalize through exporting.
2.3.2 Entrepreneur’s Innovative orientation and the decision to internationalize
market conditions and ultimately explore opportunities in overseas markets (Kaleka, 2012).
In the international context, individuals who want to internationalize their new ventures have to collect key information as to develop a successful internationalization strategy. For instance, such individuals would consider the market size, potential operational and marketing expenditures, different export procedures and techniques, but also new ways to attract customers and overcome existing competition (Kaleka, 2012). Consequently, innovativeness, as a way for firms to better assess foreign market preferences, can play an instrumental role in the adaptation of new and existing products to foreign markets (Dai et al., 2014). Likewise, Filatotchev and Piesse (2009) state that firms can leverage their innovation capabilities across several foreign markets and thus achieve higher demand for their products when compared to purely domestic firms. Cassiman and Golovko (2011) investigated the relationship between innovation and exports in a sample of Spanish manufacturing SMEs, and found a direct positive effect. The main arguments of the authors are that firms may start exporting in search for greater demand for their newly developed products, or with the intention to spread out the research and development (R&D) costs over a larger sales volume. Moreover, several other studies derive empirical evidence to show that differences in innovativeness could significantly influence a firm’s export behavior (Basile, 2001; Wakelin, 1998; Dai et al., 2014).
Hypothesis 2: Higher entrepreneurs’ innovative orientation will be positively related to the decision to internationalize through exporting.
2.3.3 Entrepreneur’s Self-efficacy and the decision to internationalize
The concept of self-efficacy refers to the general belief in one’s ability to accomplish goals and achieve high levels of performance in various tasks (Bandura, 1977). Accordingly, self-efficacy is found to reflect not only the individual’s previous experience and attainment, but also the conclusions and assertions drawn about one’s capacity for future performance (Baum and Locke, 2004). When referring to entrepreneurs, DeNoble, Jung and Ehrlich (1999) argue that “by definition, an entrepreneur with a high level of self-efficacy, who truly believes in his or her capability to execute all of the requirements to perform a task successfully is more likely to see the positive potential outcomes that might accrue from a new venture”.
self-efficacy could lead entrepreneurs into perceiving new challenges and opportunities as to be learned or experienced, rather than to be avoided. Finally, Baum and Locke (2004), tested the effect of entrepreneurial self-efficacy on the subsequent growth of new ventures, and found evidence for a significant positive relationship. Hence, the findings of these previous studies suggest that entrepreneurs scoring high in self-efficacy would be more inclined to pursue challenging growth opportunities for their new ventures, but also persevere until they accomplish their goals. In view of this argument, we suggest that self-efficacy would be a strong determinant for the decision to engage in international activity. In particular, we expect owners of new ventures who feel more confident about their skills and capabilities for taking entrepreneurial actions to also be more willing to embrace the risk and uncertainty associated with internationalization (Lu and Beamish, 2001). Since self-efficacy can determine motivation and behavior (Bandura, 1977), but also generate actions (Baum and Locke, 2004), we posit that entrepreneurs with high perceived self-efficacy will be more inclined to engage in exporting than those with low self-efficacy. Hence, the following final hypothesis is proposed:
Hypothesis 3: Higher entrepreneurs’ self-efficacy will be positively related to the decision to internationalize through exporting.
2.3.4 Conceptual model
and country). The lines represent direct effects on the dependent variable, while the signs point to the positive influence of all three independent predictors.
Figure 1: Conceptual model of the relationship between proactiveness, innovative orientation
3. Methodology
3.1 Sample selection and Data collection
proclaimed entrepreneurial intents may not reflect real follow up actions. Moreover, according to some authors (Amoros, Basco and Romani, 2016), nascent entrepreneurs are still in the process of formalizing their new business. We also differentiated from established firms, due to their broader set of capabilities and resources, which might serve as compensating advantage when deciding to internationalize (Hitt and Hoskisson, 1997). Finally, in order to obtain more representative and generalizable results, we decided not to confine our analysis to specific countries or country clusters. Instead, we used data on all 53 countries1 participating in the GEM Adult Population Survey for the year 2011. Overall, from a total of 90,769 respondents, we identified 4,333 entrepreneurs who were currently owners of new businesses, based on our previous assumptions and selection criteria. Hence, our final sample consisted of those 4,333 respondents.
3.2 Variables
In this section we elaborate on how we conceptualize and measure our dependent, independent and control variables.
3.2.1 Dependent variable
Export. Resembling the conceptualization and measurement of internationalization done in previous research papers (Filatotchev and Piesse, 2009), this master’s thesis focused on export as our dependent variable. Thus, we investigated the entrepreneur’s likelihood of starting internationalization by means of exporting. According to Cassiman and Golovko (2011), exporting is a suitable proxy for measuring internationalization in the context of young firms, because such firms
usually undertake exporting as their initial and preferred step in international markets. Altogether, we were surprised to discover a variety of definitions and measurements of internationalization used in previous studies. It appears there is a lack of clear agreement on when should firms be regarded as international (Lu and Beamish, 2001), as some studies have used a mix of different combinations between year and percentage of export, such as exporting at least 10% in the first year, 25% of exports by the third year, or even 50% of exports by the eighth year (Federico et al., 2009). However, given that this master’s thesis is build on arguments with regard to the entrepreneur’s export willingness per se, it is beyond our scope to explore the extent to which that happens. Therefore, we considered new business owners to begin internationalizing, when they achieved at least a percentage of sales made to foreign customers. We measured this by the following question: “What proportion of your customers will normally live outside the country?”. Based on the answers of respondents, we created a dummy variable and assigned it the value 0 if the venture is “exporting”, and 1 if there is at least a percentage of customers that are non-resident.
3.2.2 Independent variables
variable that was equal to 1 if respondents said ‘yes’ and 0 when they responded with ‘no’.
Innovative orientation. There is considerable evidence for the effect of innovation on export behavior (Cassiman and Golovko, 2011; Dana, Hamilton and Wick, 2009). In our master’s thesis, we wanted to check whether entrepreneurs’ innovative orientation, conceptualized here as the introduction of new products or services, will affect their export intents. In order to capture this, respondents were asked the following question: “Will all, some, or none of your potential customers consider this product or service to be new?”. Accordingly, even though it is not possible due to data limitations to investigate the actual novelty of the products, we presume this question to be a fair measure of one’s innovativeness. Consequently, we created a dummy variable and assigned it the value 1 if ‘all’ or at least ‘some’ of the customers thought the product is new, and 0 otherwise.
Self-efficacy. As previously noted, self-efficacy refers to the individual’s belief in his/her ability to accomplish goals and achieve high levels of performance (Bandura, 1977). As such, when entrepreneurs feel confident and perceive themselves as having the needed skills, knowledge and experience to realize a business idea, they are more likely to take real actions as to pursue this idea. Therefore, respondents were presented with the following question: “Do you have the knowledge, skill and experience required to start a new business?”. We then created a dummy variable that took the value 1 if the answer to the question is ‘yes’, and 0 otherwise.
3.2.3 Control variables
Number of owners. Because internationalizing firms usually face more challenges due to the increased risks and uncertainty (Wiedersheim-Paul, Olson and Welch, 1978), we expect new ventures to benefit from having more than one owner. In particular, when the venture has several owners, they should all be able to contribute with their own resources (e.g. capital and network ties), thus making the internationalization more feasible. Moreover, albeit the chance of a negative outcome, ventures may still be inclined to go international when the eventual losses are “absorbed” by all co-owners. In our model, we checked if there is one (coded as 0) or more owners (coded as 1).
Venture size. Despite the different ways of measuring firm size done in previous research, we considered the number of employees as a suitable proxy for venture size (Amoros, Basco and Romani, 2016). Bigger companies differ from smaller ones in that the former usually have the ability to draw on more extensive set of assets and resources (Zahra, Korri and Yu, 2005). Therefore, we expect bigger in size ventures to be more inclined to export compared to smaller ones. A four-category dummy variable was constructed for ventures with: ‘no employees’, ‘one to ten employees’, ‘eleven to twenty employees’, and ‘more than twenty employees’. The first category (i.e. ‘no employees’) was used as our reference category.
education’. Respectively, we used the first two categories (i.e. ‘no education’ and ‘secondary education’) as our reference categories.
Gender. We controlled for the respondents’ gender by including a dummy variable and coding males as 1 and females as 0. In general, the results of many empirical studies show that male individuals are more likely to become entrepreneurs, and this can partially be attributed to their higher predisposition to bear risk and uncertainty (Amoros, Basco and Romani, 2016). For this reason, besides becoming entrepreneurs, we expected male entrepreneurs to also be more willing to engage in international activity.
Country. Finally, we included a control variable for the country of origin of the new venture.
In order to make it more convenient to the reader, we summarized all variables and their respective measures ina table, which can be seen in the Appendices section.
3.4 Method
3.4.1 Binary logistic regression
3.4.2 Assumptions
In order for our analysis to be valid, certain assumptions of logistic regression had to be met beforehand. The first assumption is that the dependent variable is measured on a dichotomous scale. This assumption was clearly met as we had two categories for our dependent variable – non-exporting (coded 0) and exporting (coded 1). The second assumption is that there are one or more independent variables, either categorical or continuous. Considering that we had three independent variables and five control variables, all of which were categorical, we did not violate this assumption. The third assumption concerns the independence of observations and the condition that all categories of the dependent variable are mutually exclusive and exhaustive. Both conditions were met as each respondent had a personal identification number (ID) which assured there were no duplicating cases, and data was collected at a single point in time (i.e. for the year 2011). Finally, the last assumption is about the absence of multicollinearity. We tested for this assumption by performing a simple linear regression using the same set of dependent and independent variables. As commonly accepted, the tolerance coefficient should not be smaller than 0.1, and the variance inflation factor (VIF) should not exceed the threshold of 10 used to indicate problems with multicollinearity. The results showed that the obtained values for these coefficients did not violated the assumption and no collinearity was detected. A table with all the Tolerance and VIF scores is presented in the Appendices section.
4. Results
represented outliers (i.e. those more than two standard deviations away from the mean). Thus, the total number of cases included in the analysis was N=3800. We used a level of significance of .05 (95% confidence level).
Several regression models were constructed (imposing a stepwise approach of gradually including the predictors), which all yielded values for overall model fit that were not that different from one another. Consequently, the model that included all of the independent and control variables together (Model 5) was the one that showed the highest overall fit and was therefore included in the analysis. Full comparison between the different models is available in the Appendices section.
Next, we move on to analyze the results of our main model. First we check to what extent is the model capable of explaining the export behavior of respondents. SPSS provides two different indicators for explaining the overall variation in the dependent variable – Cox & Snell R Square and Nagelkerke R Square. These are also referred to as pseudo R Square values, which is the equivalent of R Square used in multiple regression analysis. We considered the Nagelkerke’s R Square indicator, which ranges from 0 to 1, as the most suitable2 for explaining the variance. According to the results, the explained variation in the dependent variable based on the model was .356. In other words, 35.6% of the variation in export activity was explained when we included all our independent and control variables in the regression. Although the number may not appear that high, it is still statistically significant (p<.001). Moreover, SPSS generates a classification table which compares the predicted with the observed values for the dependent variable, i.e. the percentage of cases that were correctly (or falsely) classified. Regarding the sensitivity of prediction, 54.6% of the respondents
were correctly classified as exporters, while 84.4% were correctly classified as non-exporting (i.e. the specificity of prediction). This resulted in an overall success rate of correct predictions of 74.5%. On the other hand, we calculated a false positive (Type 1 error) rate of 36.6% and a false negative (Type 2 error) rate of 21.1%.
Table #: Results of the binary logistic regression
Variables Main model
(all variables included)
Wald df Sig. Exp(B)
Proactiveness 6.85 1 .009** (.090) 1.26 Innovative orientation 25.82 1 .000** (.092) 1.60 Self-efficacy 2.54 1 .111 (.114) 1.20 Number of owners 7.26 1 .007** (.090) 1.27
Current no. of employees: 1-10 7.51 1 .006**
(.094) 1.29
Current no. of employees: 11-20 10.01 1 .002**
(.242) 2.15
Current no. of employees: >20 15.05 1 .000**
(.296) 3.15 Post-secondary education 7.96 1 .005** (.089) 1.08 Male 4.42 1 .036** (.086) 1.20 Constant 1.88 1 .171 (.254) .71 Observations (N) 3 800 Chi-square (df=63, p<.001) 1125.12 -2 Loglikelihood 3701.69
First, we look at the control variables included in our model. Employing a .05 criterion of statistical significance, we observed statistical significance for all our control variables. New ventures with more than one owner (p=.007) were 1.27 times more likely to export than those with only one owner (i.e. our reference category), holding all other variables at their mean. The number of employees was also found to be relevant for the decision to export, as both the odds for exporting and the level of significance increased with the increase in employees. Thus, compared to having no employees, ventures with ‘1-10 employees’ (p=.006), ‘11-20 employees’ (p=.002) and ‘more than 20 employees’ (p<.001) were respectively 1.29, 2.15 and 3.15 times more likely to be exporters. Furthermore, even though respondents with higher level of education were just .817 more likely to export than those with secondary or no formal education (i.e. our reference categories), the result is still statistically significant (p=.005). Finally, with regard to the respondents’ gender, we found that the odds of men engaging in export (compared to women) increase by a factor of 1.20 with each additional respondent included.
innovative orientation resulted in 1.60 times higher odds of exporting, compared to those respondents that do not consider their products to be new or unfamiliar to the clients. Therefore, the results provided significant evidence to support Hypothesis 2. Our third hypothesis posited a positive association between the entrepreneur’s self-efficacy and the probability of exporting. However, the model revealed that there was no significant impact (p=.111) on the dependent variable. Hence, we failed to provide support for Hypothesis 3 and this hypothesis was rejected.
5. Analysis and discussion
After presenting the results of the logistic regression, what follows is a more precise analysis of the findings in order to make valid assumptions and conclusions with regard to our hypotheses. To summarize, we posited three hypotheses for the influence of entrepreneur’s personal characteristics on the new venture’s internationalization intent. More specifically, we provided theoretical argumentation for the supposed positive effect of entrepreneur’s proactiveness, innovative orientation and self-efficacy on the decision to engage in exporting. Accordingly, we were only able to provide statistical evidence for proactiveness and innovative orientation, while self-efficacy was surprisingly found to have no effect on the propensity to export.
context of new ventures’ internationalization. Hence, the results offer support to our previous arguments that more alert and proactive individuals would eventually put more efforts in identifying and seizing opportunities in foreign markets (Bateman and Crant, 1993). The findings also accord with those of Dai et al. (2014), who further asserted that it is the intrinsically aggressive nature of highly proactive entrepreneurs, that drives them to explore new international arenas and achieve greater international presence than the competitors. However, it was beyond the scope and limits of this master’s thesis to investigate the extent to which new ventures internationalize with regard to their proactive stance. We solely confined our attention to proactiveness, along with the other two characteristics, as possible determinants for the decision to engage in exporting. To sum up, while being more sensitive to foreign market needs and opportunities (Ardichvili, Cardozo, and Ray (2003), proactive owners of new ventures were found to show higher likelihood of internationalizing through exports than those who are non-proactive.
internationalization since their primary focus is on satisfying basic needs and making a normal living. Hence, the question of whether entrepreneurial self-efficacy has any effect on export propensity might get a better answer when discussed in the context of two significantly different types of motivation.
Finally, we also controlled for the influence of several other factors – with regard to the entrepreneur (gender, previous education) and the firm (venture size, number of employees, country of origin). The results showed that export activity is predominantly concentrated in certain individuals, more precisely in male entrepreneurs who also have a higher education. This accords to the arguments of scholars that were previously outlined in the Methodology section (Butler, Doktor and Lins, 2010; Amoros, Basco and Romani, 2016). Moreover, new ventures were found to benefit from having more employees and multiple owners, as this progressively increased their likelihood of engaging in exports.
6. Conclusion
The main purpose of this master’s thesis was to investigate the propensity of new ventures to engage in international activity through exporting and how this might be influenced by three personal characteristics of entrepreneurs – proactiveness, innovative orientation and self-efficacy. While conducting an empirical testing on a large sample of entrepreneurs from fifty-five countries included in the GEM database for the year 2011, we sought to find an answer to the following research question:
Overall, we can conclude that there is significant evidence that entrepreneur’s personality traits indeed affect new venture’s export propensity. Our basic premise was that those entrepreneurs who are more proactive, innovation oriented and self-efficacious, would be more prone to consider exporting as their initial step toward new international markets. All things considered, we managed to prove that entrepreneur’s proactiveness and innovative orientation are significantly related to the decision to engage in internationalization through exports. However, entrepreneurial self-efficacy turned out to have no relative importance in that matter.
associated with internationalization, proactiveness and innovativeness may compensate for new ventures’ lack of resources and ultimately increase the probability of exporting.
Finally, some practical implications can be generated as well. For example, companies and managers can use our findings in order to better understand entrepreneurial behavior. As such, the way entrepreneurs behave and make proactive decisions could be a favorable sign for their future intentions and predispositions towards becoming international. Likewise, firms may want to design strategies and practices that would allow a certain entrepreneurial culture to be developed, one that encourages entrepreneurs that are more proactive and innovative to develop their business ideas and steer their new ventures towards new international markets (Ruzzier et al., 2007).
7. Limitations and suggestions for future research
Even though this master’s thesis has made some significant contributions to the existing literature on internationalization of new ventures, findings should nevertheless be interpreted with caution. An important point has to be made about the possible limitations of our research and how these limitations can be overcome in future research on the topic of new ventures’ internationalization.
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9. Appendices
9.1 Appendix 1:
Table 1: List of countries included in the sample
1. United States 28. Thailand
2. Russia 29. Japan
3. South Africa 30. South Korea
4. Greece 31. China 5. Netherlands 32. Iran 6. Belgium 33. Algeria 7. France 34. Nigeria 8. Spain 35. Barbados 9.Hungary 36. Portugal 10. Romania 37. Ireland 11. Bulgaria 38. Finland 12. Switzerland 39. Lithuania
13. United Kingdom 40. Latvia
14. Denmark 41. Croatia
15. Sweden 42. Slovenia
16. Norway 43. Bosnia and Herzegovina
17. Poland 44. Czech Republic
18. Germany 45. Slovakia
19. Peru 46. Guatemala
20. Mexico 47. Panama
21. Argentina 48. Uruguay
22. Brazil 49. Trinidad and Tobago
23. Chile 50. Jamaica
24. Colombia 51. Bangladesh
25. Malaysia 52. Taiwan
26. Australia 53. United Arab Emirates
9.2 Appendix 2:
Table 2: Variables and measures
Type of variable
Variable Measure
Dependent variable
Export Coded with 1 if at least one percent of firm’s customers live abroad (respondents were asked: “What proportion of your customers will normally
live outside the country?”) and 0 otherwise.
Independent variables
Proactiveness Coded with 1 if the entrepreneur identifies good opportunities to start a new business (i.e. an affirmative answer to the statement: “In the next
six months there will be good opportunities for starting a business in the area where you live”)
and 0 otherwise. Innovative
orientation
Coded with 1 if the firm’s products/services are seen as new to ‘all’ or ‘some’ customers (based on the question: “Will all, some, or none of your
potential customers consider this product or service to be new?”) and 0 otherwise.
Self-efficacy Coded with 1 if the entrepreneur perceives to have the skills, knowledge and experience to realize a business idea (based on the question: “Do you
have the knowledge, skill and experience required to start a new business?”) and 0 otherwise.
Control variables
Number of owners Coded with 1 if the owners are more than one and 0 otherwise.
Venture size Four-category dummy variable (‘no employees’, ‘one to ten employees’, ‘eleven to twenty
employees’, and ‘more than twenty employees’)
Level of education Coded with 1 if the entrepreneur has a post-secondary or a graduate level of education and 0 otherwise.
Gender Coded with 1 for male and 0 otherwise.
9.3 Appendix 3:
Table 3: Linear regression results for Multicollinearity
Variable Collinearity statistics
Tolerance VIF Proactiveness .978 1.022 Innovative orientation .962 1.039 Self-efficacy .988 1.013 Number of owners .968 1.033 No. of employees: 1-10 .890 1.124 No. of employees: 11-20 .928 1.078 No. of employees: >20 .947 1.056 Level of education .972 1.018 Gender .976 1.024 Country .969 1.032
9.4 Appendix 4:
Table 4: Comparison between regression models
Variables Model 1 Model 2 Model 3 Model 4 Model 5
Proactiveness - .002** (.270) - - .009** (.090) Innovative orientation - - .000** (.091) - .000** (.092) Self-efficacy - - - .118 (.123) .111 (.114) Number of owners .005** (.087) .006** (.087) .006** (.089) .006** (.088) .007** (.090) No. of employees (1-10) .002** (.091) .002** (.091) .007** (.093) .002** (.092) .006** (.094) No. of employees (11-20) .001** (.235) .001** (.235) .002** (.239) .001** (.238) .002** (.242) No. of employees (>20) .000** (.286) .000** (.287) .000** (.289) .000** (.292) .000** (.296) Post-secondary education .000** (.086) .001** (.087) .001** (.088) .002** (.088) .005** (.089) Male .032** (.083) .037** (.083) .011** (.085) .093 (.084) .036** (.086)
Country Included Included Included Included Included
Constant .118 -.041 -.055 -.056
Observations (N) 3,800 3,800 3,800 3,800 3,800
Chi-square 1133.8 1143.55 1119.80 1132.60 1125.12
-2 Loglikelihood 3942.03 3932.28 3784.78 3851.79 3701.69
