Sales growth or employment growth? Exporting conundrum for new ventures

Mei Chen; Peijie Ni; Torger Reve; Jing Huang; Ren Lu

doi:10.1108/ribs-04-2020-0048

journal article Mar 24, 2021

Sales growth or employment growth? Exporting conundrum for new ventures

Mei Chen

Peijie Ni Torger Reve Jing Huang

Ren Lu

Review of International Business and Strategy Vol. 31 No. 4 pp. 482-506 · Emerald

View at Publisher Save 10.1108/ribs-04-2020-0048

Abstract

Purpose
Previous studies primarily focus on how to achieve better performance in the international markets, but few centers on whether internationalization is a promising strategy for new ventures’ growth and development. Based on two pioneering frameworks Conservative, Predictable, and Pacemaker (CPP) model and the 7-P model, this paper fills this gap by analyzing how exporting exert heterogeneous effects on two types of growth, sales growth and employment growth. Accordingly, this paper aims to favor market-oriented new ventures to make a strategy on expanding international markets.

Design/methodology/approach
This study is based on firm-level data from the Chinese Industrial Enterprises Database. The year 2005 was used as the shock year. By conducting the propensity score matching method, 793 couples of matched new ventures were collected with sales growth and 686 couples with employment growth. The difference-in-differences method was applied to analyze the various influences that exporting has on new ventures’ sales growth and employment growth.

Findings
The main finding of this paper is that new ventures that exported can achieve better sales growth than their counterparts that only operated domestically, whereas new ventures that remain in the domestic market have no difference in employment growth from those that exported.

Research limitations/implications
This study shows that exporting is especially beneficial for market-seeking new ventures. Because the study is based on Chinese data, scholars of international business can conduct further research on other countries with different economic structures.

Originality/value
Theoretically, this paper contributes to both international business theory and entrepreneurship theory by combining the CPP model and the 7-P model. Practically, this paper shows that exports mainly benefit the sales growth of new ventures. This suggests that business practitioners should consider their growth goals before they choose to enter the global market.

Topics

No keywords indexed for this article. Browse by subject →

References

96

[1]

"Entrepreneurial competences, liability of newness and infant survival" Journal of Management Development (2016) 10.1108/jmd-09-2014-0094

[2]

"Business growth’ – do practitioners and scholars really talk about the same thing?" Entrepreneurship Theory and Practice (2010) 10.1111/j.1540-6520.2010.00376.x

[3]

"External growth strategies and organizational performance in emerging markets" Review of International Business and Strategy (2018) 10.1108/ribs-09-2017-0079

[4]

"Factors hindering the growth of international new ventures (invs): evidences from surgical instrument cluster" CLEAR International Journal of Research in Commerce and Management (2018)

[5]

"A review of the internationalization of Chinese enterprises" Asia Pacific Journal of Management (2018) 10.1007/s10490-018-9597-5

[6]

Are entrepreneurial venture's innovation rates sensitive to investor complementary assets? Comparing biotech ventures backed by corporate and independent VCs

Elisa Alvarez‐Garrido, Gary Dushnitsky

Strategic Management Journal 2016 10.1002/smj.2359

[7]

"Mostly harmless econometrics: an empiricist's companion" (2009)

[8]

"Gifted kids or pushy parents? Foreign direct investment and plant productivity in Indonesia" Journal of International Economics (2009) 10.1016/j.jinteco.2009.05.004

[9]

"Performance comparison between domestic and international firms in the high-technology industry" Eurasian Business Review (2018) 10.1007/s40821-018-0104-1

[10]

"Effects of age at entry, knowledge intensity, and imitability on international growth" Academy of Management Journal (2000)

[11]

"Revenue management, hedonic pricing models and the effects of operational attributes" International Journal of Revenue Management (2016) 10.1504/ijrm.2016.077031

[12]

"Resource-based theory and corporate diversification: accomplishments and opportunities" Journal of Management (2011) 10.1177/0149206310391804

[13]

"Self-efficacy and entrepreneurs' adoption of unattainable goals: the restraining effects of self-control" Journal of Business Venturing (2016) 10.1016/j.jbusvent.2015.08.002

[14]

"A quantitative content analysis of the characteristics of rapid-growth firms and their founders" Journal of Business Venturing (2005) 10.1016/j.jbusvent.2004.03.004

[15]

Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States

Thorsten Beck, Ross Levine, ALEXEY LEVKOV

The Journal of Finance 2010 10.1111/j.1540-6261.2010.01589.x

[16]

"The benefits of internationalization for state-owned enterprises" Global Strategy Journal (2016) 10.1002/gsj.1138

[17]

Enjoying the Quiet Life? Corporate Governance and Managerial Preferences

Marianne Bertrand, Sendhil Mullainathan

Journal of Political Economy 2003 10.1086/376950

[18]

"Environment, resource integration, and new ventures’ competitive advantage in China" Management and Organization Review (2016) 10.1017/mor.2015.48

[19]

"Asset specificity and behavioral uncertainty as moderators of the sales growth – employment growth relationship in emerging ventures" Journal of Business Venturing (2009) 10.1016/j.jbusvent.2008.04.002

[20]

"When do wholly owned subsidiaries perform better than joint ventures?" Strategic Management Journal (2013) 10.1002/smj.2016

[21]

A Strategic Approach to Internationalization: A Traditional versus a “Born-Global” Approach

Sylvie Chetty, Colin Campbell-Hunt

Journal of International Marketing 2004 10.1509/jimk.12.1.57.25651

[22]

"Real options theory in international business" Journal of International Business Studies (2019) 10.1057/s41267-019-00222-y

[23]

"Born globals – is there fire behind the smoke?" International Business Review (2017) 10.1016/j.ibusrev.2016.10.005

[24]

"Catching gazelles with a lasso: big data techniques for the prediction of high-growth firms" Small Business Economics (2019)

[25]

"Firm growth and barriers to growth among small firms in India" Small Business Economics (2012) 10.1007/s11187-011-9318-7

[26]

"Leaner fatwire set for new venture infusion" Long Island Business News (2001)

[27]

"Export promotion programmes for assisting SMEs" Review of International Business and Strategy (2018) 10.1108/ribs-06-2017-0050

[28]

(1963)

[29]

"Are high-growth firms one-hit wonders? Evidence from Sweden" Small Business Economics (2015) 10.1007/s11187-014-9599-8

[30]

"The economic contribution of high-growth firms: do policy implications depend on the choice of growth indicator?" Journal of Industry, Competition and Trade (2014) 10.1007/s10842-013-0168-7

[31]

The Strategic Management of High-Growth Firms: A Review and Theoretical Conceptualization

Robert Demir, Karl Wennberg, Alexander McKelvie

Long Range Planning 2017 10.1016/j.lrp.2016.09.004

[32]

"Environmental certification as a buffer against the liabilities of newness and smallness: firm performance benefits" International Small Business Journal: Researching Entrepreneurship (2013) 10.1177/0266242613486688

[33]

"Inertia and managerial intentionality: extending the Uppsala model" Management International Review (2018) 10.1007/s11575-017-0340-0

[34]

"Do entrepreneurial goals matter: resource allocation in new owner-managed firms" Journal of Business Venturing (2013) 10.1016/j.jbusvent.2012.07.004

[35]

"Analysis of the impacts of entrepreneurship training on growth performance of firms: quasi-experimental evidence from Nigeria" Journal of Entrepreneurship in Emerging Economies (2018) 10.1108/jeee-02-2018-0024

[36]

"Export performance of international new ventures in emerging market" International Journal of Business and Globalisation (2017) 10.1504/ijbg.2017.085119

[37]

"Domestic political connections and international expansion: it's not only ‘who you know’ that matters" Journal of World Business (2018) 10.1016/j.jwb.2018.03.006

[38]

"How smaller born-global firms use networks and alliances to overcome constraints to rapid internationalization" Journal of International Marketing (2006) 10.1509/jimk.14.3.33

[39]

Internalization advantage and subsidiary performance: The role of business group affiliation and host country characteristics

Ajai S Gaur, Chinmay Pattnaik, Deeksha Singh et al.

Journal of International Business Studies 2019 10.1057/s41267-019-00236-6

[40]

"New venture growth: a review and extension" Journal of Management (2006) 10.1177/0149206306293860

[41]

"Born global or born to run? The long-term growth of born global firms" Management International Review (2014) 10.1007/s11575-014-0214-7

[42]

"Entrepreneurship in China" Small Business Economics (2018) 10.1007/s11187-017-9972-5

[43]

"The impact of joint venture status on the longevity of Japanese stakes in US manufacturing affiliates" Organization Science (1998) 10.1287/orsc.9.3.382

[44]

"Small and medium-sized enterprise internationalisation strategy and performance in times of markete turbulence" International Small Business Journal: Researching Entrepreneurship (2014) 10.1177/0266242613497744

[45]

"Asset float and speculative bubbles" The Journal of Finance (2006) 10.1111/j.1540-6261.2006.00867.x

[46]

"How ordinary returnees and foreigners drive firms’ exports?" Review of International Business and Strategy (2019) 10.1108/ribs-07-2018-0061

[47]

"Industry risk-taking and risk-taking strategy of born-global firms: an empirical study based on industrial variety perspective" Asia-Pacific Journal of Business Administration (2020)

[48]

"Entrepreneurship, innovation and regional growth: a network theory" Small Business Economics (2015) 10.1007/s11187-015-9643-3

[49]

Recent Developments in the Econometrics of Program Evaluation

Guido W Imbens, Jeffrey M Wooldridge

Journal of Economic Literature 2009 10.1257/jel.47.1.5

[50]

"Determinants of firm’s export performance in China’s automobile industry" Sustainability (2018) 10.3390/su10114078

Showing 50 of 96 references

Metrics

4

Citations

96

References

Details

Published: Mar 24, 2021
Vol/Issue: 31(4)
Pages: 482-506
License: View

Authors

First Affiliated Hospital of Xi'an Jiaotong University

R

Ren Lu

Cite This Article

Mei Chen, Peijie Ni, Torger Reve, et al. (2021). Sales growth or employment growth? Exporting conundrum for new ventures. Review of International Business and Strategy, 31(4), 482-506. https://doi.org/10.1108/ribs-04-2020-0048

Sales growth or employment growth? Exporting conundrum for new ventures

You May Also Like