Initial entry speed and international performance of INVs: The moderating roles of executive’s learning orientation and sub-national institutions

Abstract

Purpose

In the literature concerning international new ventures (INVs), there has been a tension between the learning advantages of newness and absorptive capacity perspectives for explaining the performance influence of initial entry speed. To address this tension, this paper, through integrating both the motivation and ability to acquire foreign knowledge, proposes a theoretical model about the nonlinear relationship between INVs’ initial entry speed and international performance. Drawing upon upper echelons theory and the institution-based view, this study aims to extend the literature by developing two boundary conditions for this relationship: the moderating role of executives’ individual learning orientation and sub-national institutions.

Design/methodology/approach

The authors used the latent moderated structural equations approach specific to Mplus to test the hypotheses with data on 322 Chinese INVs.

Findings

The findings indicate that INVs’ international performance will increase initially and then decrease, as they accelerate initial entry speed (an inverted U-shaped relationship), and that INVs managed by executives with a higher learning orientation and located in better sub-national institutional environments achieve greater international growth gains from moderate initial entry speed.

Originality/value

This study mainly makes contributions to the INV literature by integrating the motivation and ability to acquire foreign knowledge to offer full understanding of the effect of initial entry speed on international performance, and by elaborating on the moderating effects of executives’ individual learning orientation and sub-national institutions on this relationship.

Citation

Huang, S., Ye, G. and Shen, S. (2020), "Initial entry speed and international performance of INVs: The moderating roles of executive’s learning orientation and sub-national institutions", Chinese Management Studies, Vol. 14 No. 1, pp. 297-323. https://doi.org/10.1108/CMS-03-2019-0115