International expansion strategies of Korean venture firms: Entry mode choice and performance

Abstract

This study seeks to advance the state of our theoretical as well as empirical understanding of the determinants of entry mode choice and internationalization performance of new ventures. Based on three leading theoretical perspectives transaction costs, social networks and absorptive capacity - we develop hypotheses focusing on the role of technology-based advantage, the social networks of start-up team members and the absorptive capacity of employees in predicting entry mode choice and new venture internationalization performance. Using data on the internationalization of new Korean ventures, we find evidence that social network and absorptive capacity theories have considerable explanatory power beyond that of transaction cost theory in predicting entry mode choice and the internationalization performance of new ventures.