Overcoming "liability of newness" of international new ventures : the role of flexibility

  • Yuqing CHEN

Student thesis: MPhil Thesis (Lingnan)


Riding on the trend of globalization, a large number of new ventures have emerged deploying resources in multiple country markets so as to arrive at a competitive advantage. Studies that focus on such international new ventures grew to become a distinct research area: international Entrepreneurship that attracts much research attention but leaves a core issue namely liability of newness unaddressed. About 50 years ago, Stinchcombe (1965) coined this term to explain that most new ventures fail because their founders cannot switch their roles quickly enough to adapt to the changing environment. Although previous empirical studies have examined the entrepreneurial firms from the knowledge based view and organizational learning theory and tried to account for the varied ability of these entrepreneurial firms in switching roles in accordance of circumstances, little or no extant studies employs a Resource-based View (RBV) approach. This study will focus on INVs from emerging economics, trying to examine how INVs overcome liability of newness through “flexibility” to gain good performance during their internationalization. Based on the RBV of the firm, this study will address flexibility in form of a flexible configuration of firm resources consisting of cognitive, structural, and strategic flexibility as the predictors, arguing that these flexibilities would help INVs cope with liability of newness by fostering various dynamic capabilities that have been found to improve INVs’ performance. In addition, this study will focus on those INV firms located in industrial clusters, and examine how an INV's network ties within an industrial cluster moderate the relationships among flexibility and the involved dynamic capabilities. This study collected a sample of 192 Chinese international new ventures, and structural equation modeling was used to test the full model. The findings demonstrate that: (1) all the three dimension of flexibilities have positive impact on international performance; (2) exploratory learning capability and adaptive capability mediate flexibility-international performance relationship while information acquisition capability does not; and (3) an INV’s network ties positively moderates both cognitive flexibility-information acquisition capability relationship and information acquisition capability-exploratory learning capability relationship while negatively moderates information acquisition capability-adaptive capability relationship. On the basis of current findings, implications and future research directions are drawn.
Date of Award2015
Original languageEnglish
Awarding Institution
  • Department of Marketing and International Business
SupervisorLing Yee Esther LI (Supervisor)

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