Heliyon 5 (2019) e02688 Contents lists available at ScienceDirect Heliyon journal homepage: www.heliyon.com Research article Born global: the influence of international orientation on export performance Diana Escandon-Barbosa a, *, Josep Rialp-Criado b, Sascha Fuerst c, Augusto Rodriguez-Orejuela d, Geovanny Castro-Aristizabal a a Pontificia Universidad Javeriana, Colombia b Autonoma of Barcelona University, Spain c Eafit University, Colombia d Universidad Del Valle, Colombia A R T I C L E I N F O A B S T R A C T Keywords: New international enterprises that are referred to as Born Globals have become the subject of research due to the Business success of their global operations, despite their early internationalization and limited resources. Given the Market dynamism importance of analyzing the characteristics that contribute to the success of Born Globals, our study examines the Export performance influence of international orientation on export performance. Additionally, we consider internal and external Innovative capacity International orientation drivers for early and accelerated internationalization such as the Born Global's innovative capacity, the dynamism of the market and the favorability of the environment. By estimating a structural equation model, the results show that international orientation is a strong driver of the export performance of Born Globals. However, this rela- tionship is moderated by innovative capacity and the dynamism and favorability of the environment, thus achieving a greater effect on export performance when international orientation is complemented by these variables. 1. Introduction Lopez et al., 2009; McDougall et al., 1994). It is therefore important to ask, what are the characteristic of BGs that Born Globals (BGs) are defined as “entrepreneurial start-ups that, distinguish them from firms that follow the gradual and incremental path from or near their founding, seek to derive a substantial proportion of of internationalization? These characteristics relate to internal and their revenue from the sale of products in international markets.” (Knight external factors or drivers for early and accelerated internationalization and Cavusgil, 2004, p. 124). This type of firm contrasts companies that (Hagen and Zucchella, 2014; Madsen and Servais, 1997; Rialp et al., follow a gradual path of internationalization often related to the so-called 2005). One of the internal key drivers relates to the founder's experience internationalization process theory (Johanson and Vahlne, 1977). The and background (Loane et al., 2007; Madsen and Servais, 1997; internationalization process theory describes an approach to interna- McDougall et al., 1994). The founder's global vision at the firm's incep- tional markets whereby firms gradually increase their international tion and his or her commitment towards international markets is an involvement by entering foreign markets initially through independent important predictor for the early and rapid internationalization of BGs. representatives before subsequently establishing their own sales and The external factors that contribute to the born global phenomenon are production facilities. Firms reduce their perceived uncertainty about associated, one the one hand, with the globalization of production and operating abroad mainly through a process of experiential learning markets, and, on the other hand, with technological advances in infor- entering nearby and culturally familiar markets first before conquering mation and communication technologies that enable innovative business geographically and culturally distant markets. This gradual path of models targeting international or global markets near inception of the internationalization contrasts the early international market entry and firm (Knight and Cavusgil, 2004; Knight and Liesch, 2016; Mathews and rapid pace of internationalization of BGs (Paul and Rosado-Serrano, Zander, 2007). Hence, BGs often target niche markets with innovative 2019). Therefore, the internationalization process theory is not able to products to globally dispersed clients using internet-enabled distribution explain the accelerated internationalization of BGs (Freeman et al., 2010; methods. BGs are thereby active in technology and knowledge-intensive * Corresponding author. E-mail address: dmescandon@javerianacali.edu.co (D. Escandon-Barbosa). https://doi.org/10.1016/j.heliyon.2019.e02688 Received 26 February 2019; Received in revised form 27 August 2019; Accepted 15 October 2019 2405-8440/© 2019 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 industries compared to gradual internationalizer that often operate in for many firms’ growth and survival, there is an increasing interest in traditional manufacturing industries or labor-intensive or small-scale understanding the drivers for export performance (Chen et al., 2016). industries (Paul and Rosado-Serrano, 2019). Studies on the export performance in BGs focus on capabilities for The internal capabilities and competences are the most important entering and operating in international markets that include entrepre- aspects for small firms to succeed in international markets (Knight and neurial skills to exploit resources and capacities, acquiring new tech- Cavusgil, 2004; Wu et al., 2007; Zahra et al., 2000). This is due to their nologies and entering new markets, and adapting such resources and lack of tangible resources compared to their more resource-rich, larger capabilities to take advantage of market opportunities (Gerschewski counterparts. Considering the salience of the firm's vision and commit- et al., 2015; Holmqvist, 2004; Jin et al., 2018; O'Reilly and Tushman, ment towards international market as a key driver for BGs, we choose the 2008; Teece, 2007). construct of international orientation (Knight and Kim, 2009; Sorensen Taking into consideration that we are interested in understanding and Madsen, 2012) in order to research its relationship to export per- how BGs achieve superior international performance, we are adopting a formance. Managements' international orientation has been researched capability perspective. Earlier research shows that internal capabilities in many studies focusing on export behavior and several literature re- are able to offset the resource-disadvantage of smaller firms for achieving views point out that this strategic orientation is positively related to early and rapid internationalization particularly regarding tangible re- export success (Aspelund et al., 2007; Knight and Kim, 2009; Leonidou sources (Autio et al., 2000; McDougall et al., 1994; Zahra et al., 2000). and Katsikeas, 1996; Sorensen and Madsen, 2012). However, the This perspective is rooted in the resource-based view of the firm (Barney, construct has not been applied in the context of BGs. This is surprising 1991; Wernerfelt, 1984). A reviewer of this article points to the owner- since the international orientation of the founders of the BG is considered ship advantage of Dunnings's eclectic paradigm (Dunning, 1980) as an important characteristic that differentiates this type of firm from preceeding the resource-based view of the firm by Wernerfelt. We agree gradual internationalizers. with it but also acknowledge that the ownership advantage as the Considering both the internal push and the external pull effects of competitive advantage of the firm rather explains the motivation for an internationalization (Mathews and Zander, 2007), we are also interested enterprise to engage or increase its existing foreign direct investment, in exploring the moderating effects on the relationship between inter- whereas, we are rather interested in explaining the expansion of firms national orientation and export performance. As previously mentioned, through the export mode of foreign market entry. BGs often operate in technology and knowledge-intensive industries According to the resource-based view of the firm (Barney, 1991; compared to gradual internationalizer. Innovation becomes a tenet in Wernerfelt, 1984), in order for a firm to create a competitive advantage it these markets in order to achieve sustainable, superior performance needs resources that are valuable, rare, inimitable, and non-substitutable. (Efrat and Shoham, 2012; Knight and Cavusgil, 2004). We therefore In our research we focus on intangible resources due to their difficulty to consider the BG's innovative capacity (Luo et al., 2005) as a moderator imitate by competitors and due to their relevance for achieving sustained between the firm's international orientation and its export performance. competitive advantage and, therefore, superior performance (Hall, External pull effects within the environment of the BG are also able to 1993). moderate this relationship. We therefore take into account the market Among the strategies that are adopted by BGs in order to achieve dynamism (Jaworski and Kohli, 1993) and the favorability of the busi- early and rapid internationalization, an international orientation is a ness environment (Sutcliffe and Huber, 1998) as moderators. Consid- critical factor as it represents the mentality and the attitude of the ering these moderators, we also answer calls for more research on the entrepreneur and decision-maker for international expansion (Dahms, effects of variables related to the environment and context of BGs (Knight 2015; Jin et al., 2018; Knight, 2000; Reuber and Fischer, 2002). An in- and Liesch, 2016). ternational orientation is considered to be a strategic orientation that is Altogether, in this study we are interested in exploring how BGs used by firms that seek to improve international performance (Sorensen achieve superior international performance from a capability perspec- and Madsen, 2012). Other strategic orientations include market focus tive. We thereby focus on international orientation and its relationship to (Ahimbisibwe et al., 2013; Cadogan et al., 2006; Kohli and Jaworski, export performance considering the impact of internal and external 1990; Narver and Slater, 1990; Olimpia et al., 2006; Zhou et al., 2005), drivers on this relationship. Doing so, we answer calls for more research entrepreneurial focus (Str€ omberg and Bindala, 2012; Okpara, 2009; Patel that relates to: 1) Providing explanations of how BGs are able to achieve & D'Souza, 2009; Str€ omberg and Bindala, 2012), learning focus precocious internationalization and superior international performance (Andersson, 2004; Moen et al., 2004; Weerawardena et al., 2007; Wu, (Knight and Liesch, 2016); 2) Analyzing the effects of variables related to 2007), and innovation focus (Cadogan et al., 2003; Kirbach and the environment and context of BGs (Knight and Liesch, 2016); 3) Schmiedeberg, 2006; Wagner, 2001). Contribute research in the context of a developing country (i.e. International orientation refers to entrepreneurs' attitudes and the Colombia) (Baier-Fuentes et al., 2019; Oyna and Alon, 2018; Paul and assignment of resources to international activities (Sorensen and Madsen, Rosado-Serano, 2019). 2012). International orientation has been studied in various empirical In the following section we derive the conceptual model based on the research on internationalization processes (Knight and Cavusgil, 2004; review of literature. This is followed by a description of the methodology Knight and Kim, 2009; Madsen, 1989) and is considered to be a part of in section 3. In section 4 we present the results of the main effects and the management's mentality. This is because an international orientation moderating effects following Aiken and West (1991). For the discussion depends on seeing the world as one's market within which to create the in section 5, we first summarize the results before elaborating on the motivation to negotiate with international clients (Sorensen and Madsen, theoretical contributions of our findings. Subsequently, we present the 2012). Jantunen et al. (2008) argue that firms with an international managerial implications. We conclude with an acknowledgment of the orientation search for new methods of market entry that can allow them limitations of our study and the directions for future research. to expand and they are therefore willing to invest more resources to achieve this goal. Moreover, Heinonen et al. (2004) note that an inter- 2. Hypothesis national orientation allows firms to be differentiated according to their motivation for expansion in international markets. Exporting remains an important strategic option for firms to inter- Shoham (1998) brings together different conceptualizations of export nationalize and is the most frequently used entry method due to its cost- performance, highlighting authors, such as Aaby and Slater (1989), effectiveness and high flexibility as compared to other foreign market Madsen (1987) and Shoham (1991), who in their definition include the entry modes such as foreign direct investments (Sousa et al., 2008). effectiveness and efficiency of exports and the continued commitment of Exporting also serves as the major foreign entry mode for firms from enterprises to export activities. Moreover, Cavusgil and Nevin (1980) developing countries (Singh, 2009). Due to the importance of exporting note that the analysis of export performance should not only include the 2 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 performance that is generated but also all of the decisions that are made according to Sutcliffe and Huber (1998), the favorability of the envi- regarding international activities. Cameron (1986) finds four aspects that ronment also affects export performance, which represents the avail- should be considered in evaluating a firm's export performance: the in- ability of the resources that exist in the environment that can be used by ternational strategy that is used, sales performance, the impact of the companies. This variable assesses the potential growth of organizations, internal activities of the firm, and the environment in which the firm given the greater availability of resources (provided by a favorable operates. Subsequently, Zou et al. (1998) argue that export performance environment) and greater opportunities to access international markets refers to the level of satisfaction with export operations as an indication with better results for the firm (Wan and Hoskisson, 2003). Based on the of the international activity's success. Other studies define export per- findings of previous studies that have found the business environment to formance as the results of a firm's activities in international markets be a moderating factor in export success and the different associated (Cadogan et al., 2003). Leonidou et al. (2002) suggest the following strategic foci (Zhou, 2006), we consider that the strategies that are export performance indicators: export intensity, growth of international adopted by firms to become international should factor into how such sales, export profit level, volume of international sales, and market share. firms can adapt to their business environment. Therefore, the present In addition to these indicators, Olimpia et al. (2006) opt to use subjective study focuses on the moderating effect of the environmental attributes of measures in relation to firm expectations. market dynamism and the favorability of the business environment. In our study, we adopted the definition by Zou et al. (1998) to analyze Fig. 1 shows the conceptual model that has been developed in the present export performance. We choose this definition because it focuses on the study. joint action that concerns the export product and the market, thus overcoming various difficulties in measuring export performance by 2.1. International orientation and export performance integrating the three criteria that have been used in other studies: financial performance, strategic performance and satisfaction of the en- Previous research proposes a positive relationship between interna- terprise export activities. Although the purpose of this investigation does tional orientation and export performance (Behyan et al., 2015; Jantunen not involve the decomposition of these three criteria for the purposes of et al., 2008; Knight and Kim, 2009; Sorensen and Madsen, 2012; Martin analysis, conceptualization and measurement scale, Zou et al. (1998) et al., 2018; Racela and Thoumrungroje, 2014), suggesting that the way considers all three criteria of export performance for a company because that managers think reflects the international strategies that have been successful performance is achieved through the analysis of sales growth adopted by their firms. Furthermore, the international orientation of the without neglecting the strategic objectives of export companies. These firm can lead to the promotion of opportunity-seeking in foreign markets objectives include the strategic position and the market share. Addi- among employees. tionally, a firm's satisfaction with export results indicates a higher Studies find that an international orientation provides the ability of a perceived success. Therefore, the firm's satisfaction with export results is firm to enter international markets (Michel and Hambrick, 1992). Sor- able to reinforce its attitudes towards export and increases its propensity ensen and Madsen (2012) conclude that an international orientation to expand its international operations (Zou et al., 1998). leads to a greater capacity to compile and interpret key information on Innovative capacity is considered to be a strategic element in firms as international markets that can be used to make decisions to enter such it allows the development of practices that are able to promote innova- markets. In the case of BGs, Knight (2000) notes that an international tive activities among employees (Atuahene-Gima and Ko, 2001). Inno- orientation allows these firms to develop strategic initiatives that are vative capacity is considered an ability to produce a new process, aimed at improving organizational performance. The author also argues product, or idea within an organization (Damanpour, 1991; Hult et al., that experience with internationalization and expansion to different 2004; Hurley and Hult, 1998) by involving different agents in the orga- markets allows a firm to learn more about foreign markets and therefore nization through a process of cultural change. In our study, innovative ensure a greater possibility of success. In other words, the rapid inter- capacity is considered an internal driver that enhances the effects of in- nationalization of BGs demonstrates that their employees know the ternational orientation on the export performance of BGs. This capacity is environment in which they operate. Therefore, their operations in export considered an intangible resource and key driver for generating a markets become routines. competitive advantage for the firm. The international orientation of the founders, managers and em- Related to the external drivers for firm performance, Shoham (1999) ployees of BGs allows them to acquire the abilities that are necessary to points to the need to assess changes in business conditions in environ- maintain their competitive advantage. This makes them more willing to ments where national and international markets interact. Therefore, a assume risk when they expand into new markets and improves their clearer understanding of the relationship between export performance export performance (Kuivalainen et al., 2007; Martin et al., 2018). Given and an international orientation can be obtained by analyzing factors that the literature's emphasis on the importance of an international orienta- are related to the business environment. Two factors affect the quantity tion, we hypothesize: and complexity of the market information that is needed for managers with an international outlook: Market characteristics and industry Hypothesis 1. An international orientation has a positive effect on the characteristics (Lorhke et al., 1999). Markets change constantly, there- export performance of BGs. fore, obtaining the required information for a firm that attempts to enter new international markets can be difficult due to an increased uncer- 2.2. Moderating effects tainty (Johanson and Vahlne, 1977). According to Sutcliffe and Huber (1998), the market dynamism is a 2.2.1. International orientation and innovative capacity condition of the environment that affects corporate behavior and is The resource-based view proposes that the importance of internal defined as the rate of change and instability of the environment in which resources is a key factor for achieving a competitive advantage. Barney the organization operates (Dess and Beard, 1984). This includes the ac- (1991, 2001) discussed the impact of innovation capacity on export tions of entrepreneurs, customers, suppliers, partners and the community performance. At the company level, Teece (1996) argues that innovative in general that over time can affect the decision-making of an organi- companies have greater incentives to enter new international markets, zation. This study adopts the concept of market dynamism that Jaworski thereby generating increased profitability. and Kohli (1993) defined as market changes that are caused by customers Knight and Cavusgil (2004) find that BGs are characterized by a and competitors. Therefore, given the existence of a dynamic interna- strong innovative capacity and a tendency to search for new markets, tional market, a firm should analyze the needs and preferences of its which leads them to become international at an earlier stage. This clients. Thus, firms operating in dynamic international environments innovative capacity, in addition to generating new products and pro- tend to promote a high degree of international focus. Moreover, cesses, should also facilitate the acquisition of new knowledge, which can 3 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 Fig. 1. Conceptual model. then lead to a greater capacity to obtain improved firm performance. dynamic because firms must adapt their processes to the regulatory Therefore, the export performance of BGs is the result of their interna- framework of each country and the varying preferences of consumers tional focus, which refers to their knowledge of the international market (Shoham, 1999). In this context, one of the characteristics of the business and their international operations (Autio et al., 2000; Boso et al., 2013; environment that greatly affects firms’ struggle to adapt to international Cavusgil and Knight, 2015). Such a focus often has a greater impact on markets and remain in these markets is the favorability of the business performance when the firms simultaneously develop processes that environment, which is often considered to be an indicator of the stability incentivize innovation by providing greater capacity to their employees and ability for growth for organizations in different international settings to compete in and understand international markets (Autio et al., 2000; (Sutcliffe and Huber, 1998). Kraus et al., 2017; Zahra et al., 2000). Consequently, the following hy- Previous research identified that favorable environments mean better pothesis is proposed: access for firms to international markets. Firms often promote strategies that focus on obtaining better results because managers’ positive per- Hypothesis 2. Innovative capacity positively moderates the relation- ceptions about their business environment can help them to acquire new ship between an international orientation and export performance in commitments and to create better conditions within which to improve BGs. management practices in international activities (Elbanna, 2009; Elbanna and Alhwarai, 2012; Elbanna and Child, 2007). Thus, it is 2.2.2. International orientation and market dynamism assumed that all types of firms, including BGs, promote a greater inter- Besides the resource-based view that focuses on the internal factors national orientation if they recognize a high likelihood of obtaining su- that drive export performance, our study also considers institutional perior yields from export activities. Therefore, the following hypothesis theory. We postulate that the influence of environmental factors on the is proposed: BG's behavior is based on the influence of market dynamics and the favorability of the environment in the relationship between international Hypothesis 4. The favorability of the business environment positively orientation and export performance. The social, economic and political moderates the relationship between an international orientation and factors that frame society determine the survival of companies in the export performance in BGs. market and their decision-making processes (DiMaggio and Powell, 1983). Thus, market dynamism depends on a set of factors, results, and 3. Methodology conditions at the firm level. BGs can be confronted with greater problems in dynamic markets 3.1. Sample selection and data collection because such firms may not have yet developed response mechanisms to changes due to their recent creation and early internationalization. These Our study focuses on 112 exporters in major cities in Colombia (South problems may also stem from the fact that they are still at the stage of America). The firms were classified based on three requirements for BGs learning about the market (Rodriguez Serrano et al., 2012; Welter and defined by Escand on (2009) and Escand on and Hurtado (2012). The first Smallbone, 2011; Zhang et al., 2013). Given these circumstances, market criteria relates to a founding year of no more than seven years, that is, its dynamism tends to promote a higher degree of international orientation year of creation was subsequent to 2007 (Jolly et al., 1992; Shrader et al., among BGs because of their need to frequently analyze their clients and 2000; Zahra et al., 2000). Second, firms should be exporters and they competitors' actions and to develop organizational capacities that favor should manage to achieve more than 25% of annual sales abroad or international activities. In line with Dimitratos and Plakoyiannaki through consolidated international presence (Jantunen et al., 2008; (2003), BGs develop an international orientation that directs their Kuivalainen et al., 2007; Milanov and Fernhaber, 2009; Taylor and Jack, attention to external market opportunities and the need to adapt to 2013). The third criteria, although in the case of Colombia does not show changing market conditions. Thus, BGs push strategic actions through any results, relates to not include subsidiaries of foreign firms (Iborra their managers’ commitment to promoting various firm processes among et al., 1998; Knight et al., 2004; Madsen and Servais, 1997). employees and investing the resources that are necessary to initiate these processes and to generate a positive impact on export performance 3.1.1. Variable measurement (Madsen, 1989). Therefore, the following hypothesis is proposed: To collect the data, a questionnaire was developed that consisted of a set of general information questions on the firms, followed by the mea- Hypothesis 3. Market dynamism positively moderates the relationship surement scales that were taken from the literature. To measure inter- between an international orientation and export performances in BGs. national focus, we considered the scale that was developed by Sorensen and Madsen (2012), which was inspired by the multi-purpose indicator 2.2.3. International orientation and a favorable business environment that was proposed by Knight and Cavusgil (2004) and Knight and Kim As noted previously, markets are subject to constant change and firms (2009), which has been used widely in other research. To measure export must evaluate their capacity to adapt to these changes. In international performance, we adapted the scale that was developed by Zou et al. business environments, changes in global markets tend to be more (1998) to create a scale called EXPERF, which consists of three types of 4 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 performance: Financial performance, strategic performance, and export 4. Results satisfaction. To measure innovative capacity, we adapted a scale that was developed by Luo et al. (2005) that was based on the propositions of To rule out the presence of multicollinearity in the indicators that Hurley and Hult (1998) in which innovation is taken into account as an make up each construct value's factor inflation variance (VIF), condition indispensable element for firm success. To measure the business envi- indices that are well below the threshold of 10 and not as close to 0 are ronment variables, we used the Jaworski and Kohli (1993) scale to used (greater than 0.1); they indicated no multicollinearity problems measure market dynamism, and we filtered five items that measured (Hair et al., 1999). Additionally, the bi-variate correlations with values changes in the market that were due to changing client preferences or well below the critical value for the presence of multicollinearity (0.8) competitor behavior. For the measure of favorability of the business were obtained, allowing us to infer that they measured different environment, we adapted the scale that was developed by Sutcliffe and concepts. Huber (1998) that indicates to what extent a business environment favors A Harman factor was used through the potential barrier of common the stability and growth of firms. These scales were measured using a method variance, which is a frequent problem when all of the variables seven-point Likert scale (1 ¼ completely disagree, 7 ¼ completely agree). are measured with the same instrument (questionnaire), which can Details on the items in each scale are presented in Appendix 1. potentially lead to the variance being attributed to the method and not Independent of the described variables, the other specific character- the constructs (Podsakoff et al., 2003). Therefore, a factor analysis was istics of a firm can also assert an impact on export performance. There- developed and confirmed that the eigenvalues of all of the factors were fore, we used firm size and international experience of the firm as control greater than one and represent more than 68% of the total variance. variables. We assumed that both variables positively affect export per- Moreover, it is important to note that the survey respondents formance. Firm size was measured using the number of employees, and expressed interest in the study and its subsequent results, and therefore international experience was determined using the number of years that their responses may prevent response bias. Additionally, a high response a firm has operated in international markets. For the regression analysis, rate was achieved due to the development of surveys and forecasts some we used a logarithmic scale to transform these variables and to correct respondents found to be personally unacceptable or they were unable to asymmetries (Hair et al., 1999). answer or they simply were not available to respond. In this sense, a subset of the companies that met the conditions of being born global was selected. 3.2. Measurement analysis However, although we made a great effort to avoid problems of bias, it is clear that these challenges are inherent in studies of this nature, but To analyze the psychometric properties of the scales that were used in they do not invalidate the results. this study, we conducted a correlation analysis and an exploratory factor The model estimation was performed using a hierarchical linear analysis for each scale to identify its fit and unidimensionality. We then regression (see Fig. 2). Before estimating the model, the independent conducted a confirmatory factor analysis to assess the convergent and variables were mean centered to reduce the multicollinearity that results discriminate validity of the constructs. The factor analysis indicates that from the presence of the multiplication terms that are used to estimate the data have a reasonable fit, and all of the measures show adequate the moderating effects (Aiken and West, 1991). We started by estimating reliability as measured by compound reliability indices (SCR) that exceed the model with the control variables, and subsequently, we estimated a 0.6 (Bagozzi and Yi, 1988) and average variance extracted (AVE) mea- model including all of main effects. Next, we estimated a second model, sures that exceed 0.5 (Fornell and Larcker, 1981). The first indicator including the moderating effects. This form of model estimation complies allows us to analyze the levels of reliability of all of the constructs that with the parsimony principle that establishes the introduction of belong to a scale and level of contribution (Fornell and Larcker, 1981) higher-order terms only if they significantly improve a model's explan- and the AVE captures the ratio of the variance that is associated by a atory capacity (Aiken and West, 1991), i.e., the estimated main effects factor and the variance that is due to measurement error. We have model explained a significant amount of variance (F ¼ 30,20; p < 0.001; concluded that the scales have the necessary reliability criteria (SCR and R2 ¼ 0,28; R2 adjusted ¼ 0,28). When we included the moderating ef- AVE). In addition, all of the loads correspond to their hypothetical fac- fects, the R2 value increased by 8,9% (p < 0.001). The results of the final tors, and the estimates are significant given their high t-values, thus model that includes the main effects and the moderating effects are providing evidence of convergent validity (Bagozzi and Yi, 1988). presented in Table 2. Discriminant validity is confirmed in all of the scales by verifying that the Hypothesis 1 proposes that an international orientation has a positive value “1” is not present in the confidence intervals that were calculated effect on the export performance of BGs, and the results support this between each of the construct pairs (Anderson and Gerbing, 1988). We prediction (β ¼ 0.62; p < 0.05). Hypothesis 2 proposes that an innovative also confirmed discriminate validity because we obtained in each scale capacity positively influences the effects of an international orientation an average variance that was extracted by the underlying construct that is on export performance, and Table 2 shows a significant, positive inter- greater than the variance shared with another latent construct (Her- action effect in line with this hypothesis (β ¼ 0.153; p < 0,05). Hy- nandez-Espallardo et al., 2010). The resulting fit statistics are as follows: pothesis 3 proposes that market dynamism positively influences the χ2(485) ¼ 799.82; GFI ¼ 0.88; RMSEA ¼ 0.041; SRMR ¼ 0.047; CFI ¼ effects of an international orientation on export performance, and a 0.95; TLI (NNFI) ¼ 0.95. Table 1 presents the descriptive statistics, the significant, positive effect is obtained (β ¼ -0,106; p < 0,001). Finally, correlation coefficients, and the compound and average reliability of the according to Hypothesis 4, a favorable business environment should variance that was extracted for each measurement scale. positively influence the effects of an international orientation on export Table 1 Descriptive statistics, correlation matrix, and compound and average reliability of the variance extracted. Mean SD 1 2 3 4 5 SCR AVE 1 International orientation (IO) 4.39 0.31 0.51 0.80 0.51 2 Export performance (EP) 5.25 0.05 0.40 0.70 0.92 0.70 3 Innovative capacity (IC) 5.14 0.13 0.42 0.27 0.5 0.75 0.51 4 Market dynamism (MD) 4.28 0.54 0.35 0.19 0.24 0.51 0.76 0.51 5 Favorability of business environment (FE) 4.39 0.43 0.24 0.30 0.38 0.22 0.6 0.83 0.61 6 Size of firm 31.2 41.1 0.19 0.68 0.57 0.41 0.51 7 Experience of firm 4.65 0.04 0.35 0.51 0.61 0.69 0.38 5 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 Fig. 2. Model. Table 2 Results of the estimated model. Variable Coefficient Control Model Main Effects Model Theoretical Model Standardized Coefficient P-Value Standardized Coefficient P-Value Standardized Coefficient P-Value Constant b0 2.57 0,000 2.20 0,000 2.29 0,000 Size of firm b1 0,15 0,000 0,078 0,048 0,369 0,000 Experience of firm b2 0,48 0,000 0,399 0,000 0,079 0,043 IO b3 0,086 0,180 0,234 0,451 IC b4 0,136 0,003 0,142 0,002 MD b5 0,229 0,000 0,239 0,000 FE b6 -0,017 0,765 -0,017 0,765 IO*IC b7 0,070 0,058 IO*MD b8 0,116 0,041 IO*FE b9 -0,182 0,000 R2 (R2 Adjusted) 0,28 (0,28) 0,369 (0,357) 0,41 (0,391) F value (F-probability) 62.75 (0,000) 30,20 (0,000) 23,44 (0,000) R2 Changes (R2 adjusted) - 0,089 (0,357) 0,041 (0,391) performance, and the results support this prediction because a signifi- innovative capacity, market dynamism, and favorability of business cant, positive interaction coefficient is obtained (β ¼ 0,192; p < 0.05). environment. The Y-axis of each graph represents the values that were To interpret the results of the main effects and the moderating effects, obtained for export performance (EP) when different values of innovative we followed the procedures that were proposed by Aiken and West capacity (IC) (Fig. 3), market dynamism (MD) (Fig. 4), and favorability of (1991) and graphically represented the interactions for which the high- business environment (FE) (Fig. 5) are introduced into the estimated and low-level values of the variables included in the interaction were regression function. On each X-axis, we present the different values of an estimated. For the low values, we defined a standard deviation that is international orientation (IO). lower than the mean, and for the high values, we defined a standard Fig. 3 shows the moderating effect of innovative capacity, which deviation above the mean. To estimate the results, the effects of the other demonstrates that the positive impact of an international orientation on variables were maintained constant. export performance is subject to high innovative capacity in a firm. At Figs. 3, 4, and 5 show the effect of an international orientation on low IO levels (-1.4), when IC also has low levels (-1.039), the effect of IO export performance for different values of the moderating variables of on EP is 0.622 with a standard error of 0.747 and a t-value of 0.863 (P > Fig. 3. Moderating effect of international orientation x innovative capacity. 6 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 Fig. 4. Moderating effect of international orientation x market dynamism. Fig. 5. Moderating effect an international orientation x favorable business environment. 0.1). For high values of IC (þ1.039), the effect increases to 6.174 with a 0.22 with a standard error of 0.944 and a t-value of -0.23 (P > 0.1). In all standard error of 1.26 and a t-value of 4.9 (P < 0.01). For high levels of IO of the IO levels are considered, we obtain a difference in the effect of IF (þ1.4), when IC has a low value (-1 standard deviation, -1.039), the ef- on EP between the low levels and high levels of MD. This difference is fect of IO on EP is -2.276 with a standard error of 1.415 and a t-value of 3.14, and t ¼ 3.309 (P < 0.01). This result allows us to confirm Hy- 2.916 (P < 0.01). This effect increases to 1.426 (t ¼ 1.769; P < 0.10) pothesis 4, i.e., market dynamism moderates the relationship between IO when IC has high levels. and EP. This moderation is present for low values of MD and both high The results show that IO is more effective on EP when it is accom- and low values of IO. However, for small MD values with high IO values, panied by high levels of IC. Thus, the variables seem to complement each the relationship with export performance is improved, but when the other, as postulated in Hypothesis 2. Nevertheless, we needed to prove values of IO are high, a saturation process begins that affects the rela- that the moderating effect of IC is significant. To do so, using prior values, tionship with export performance in a significant but negative way. we obtain a jumping effect of IO on EP that equals 5.554 (t ¼ 5.554; P < However, although the moderating effect of market dynamism is not 0.01) when we went from low IC values to high IC values. Thus, we can significant at high levels of MD and high levels of IO, the change in the conclude that IO is more effective in the presence of high levels of effect when passing from low levels to high levels of MD is significant and innovative capacity. Innovative firms will therefore have a greater allows us to confirm that there is a moderating effect of market dyna- chance of obtaining better results. When the managers of BGs have an mism on the relationship between IO and export performance. international orientation but innovative capacity is not a feature of their Finally, according to Fig. 5, the more favorable the business envi- organization, the firms are less likely to achieve good export ronment in which BGs operate, the greater the positive influence of an performance. international orientation on export performance. For low IO values (-1 Fig. 4 shows that the positive implications of an international orien- standard deviation, -1.4), the change of the effect of IO on EP in low tation on export performance are subject to the high market dynamism of values of FE (-1 standard deviation, -0.957) is 1.945 with a standard error BGs. For low values of IO (-1 standard deviation, -1.4), the change of the of 0.58 and a t-value of 3.353 (P < 0.01). For high values of FE (þ0.957), IO effect on EP in low values of MD (-1 standard deviation, -0.862) is the effect is 5.86 with a standard error of 0.946 and a t-value of 6.194 (P 1.826 with a standard error of 0.49 and a t-value of 3.727 (P < 0.01). For < 0.01). high values of MD (þ0.862), the effect is 4.97 with a standard error of Moreover, for high values of IO (þ1.4) and low values of FE (-0.957), 0.924 and a t-value of 5.38 (P < 0.01). the effect of IO on EP is -3.045 with a standard error of 1.46 and a t-value Moreover, for high values of IO (þ1.4) and a low MD (-0.862), the of -2.08 (P < 0.05). For high values of FS (þ0.957), the effect of IO on EP effect of IO on EP is -2.924 with a standard error of 1.23 and a t-value of is 0.55 with a standard error of 0.996 and a t-value of -0.55 (P > 0.1). At -2.38 (P < 0.05). For high values of MD (þ0.862), the effect of IO on EP is all of the IO levels considered, we obtain a difference in the effect of IO on 7 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 EP between low levels and high levels of FS. This difference is 4.15, t ¼ confirm the moderating effect of all internal and external variables on the 3.819 (P < 0.01). This result allows us to confirm Hypothesis 4, i.e., a relationship between international orientation and export performance. favorable business environment moderates the relationship between IO and EP. This moderation is present with low values of FE and both high 5.2. Theoretical contributions and low values of IO. However, for low FE values with high values of IO, the relationship with export performance is improved, but if the values of Our results confirm the findings of literature that establish a strong IO are high, a saturation process is generated that affects the relationship and positive relationship between the firm's capabilities and its export with export performance in a significant but negative way. Moreover, performance (Jantunen et al., 2008; Knight and Cavusgil, 2004; Knight although the moderating effect of a favorable business environment is and Kim, 2009; Sorensen and Madsen, 2012). To the best of our not significant at high levels of FE and high levels of IO, the fact that the knowledge, our study is the first to apply the construct of an international change in the effect from low levels of FE to high levels is significant orientation (Knight and Kim, 2009) to the context of BGs. We therefore allows us to confirm that there is a moderating effect of a favorable provide explanations of how BGs are able to achieve precocious inter- business environment on the relationship between IO and export nationalization and superior export performance based on the mindset of performance. their managers towards international markets (Knight and Liesch, 2016). In summary, this study contributes to the literature because it en- Or as Sorensen and Madsen (2012, p. 426) puts it: “International orien- riches our knowledge of BGs and export performance and their deter- tation is a question of mindset (whether managers see the world as their mining factors. Additionally, the study allows us to shed light on other market place as well as their motivation to deal with international cus- research that assumes that an international orientation is a strategy tomers and partners), but it is also critical that top management has a (Jantunen et al., 2008; Knight and Kim, 2009). It furthermore allows us clear commitment of resources and develops an organizational culture to examine the various variables that affect the impact of international that motivates employees' behavior in the direction of international ac- orientation on export performance by demonstrating that there are both tivities. […] [T]he mindset of the managers should reflect the interna- internal and external factors that influence this relationship (Hagen and tional strategies of the firm, implying that top management encourages Zucchella, 2014; Madsen and Servais, 1997; Rialp et al., 2005). employees to actively explore possibilities in foreign markets, and stresses that organizational agility and adaptability is crucial to compete 5. Discussion successfully in foreign markets.” The international orientation of the BG therefore constitutes an The purpose of our study consisted in exploring empirically how BGs important intangible resource that contributes to the sustained compet- achieve superior international performance from a capability perspec- itiveness of the firm (Barney, 1991). Furthermore, we show that inter- tive. Particularly we were interested in the relationship between the BGs national orientation is indeed an important internal capability for the BG international orientation and its export performance mediated, on the able to offset the lack of tangible resources in order for the smaller firm to one hand, by its innovation capacity (internal factor), and, on the other achieve early and rapid internationalization (Autio et al., 2000; Cavusgil hand, by the market dynamism and the favorability of the business and Knight, 2015; Zahra et al., 2000). In their recent review of the environment (external factors). literature on BGs, Paul and Rosado-Serrano (2019), consider the inter- Through the conceptual model we have chosen and the empirical national orientation of the entrepreneur as one of the important char- context of our research, we make the following contributions to research acteristics that differentiate gradual internationalizing firms from BGs. on the phenomenon of BGs. Firstly, our research is the first to use the Therefore, it is therefore surprising that no previous empirical research construct of international orientation in the context of BGs. We therefore looked at the international orientation-performance relationship in the provide important explanations of how BGs are able to achieve superior context of BGs. export performance through particular capability antecedents (Knight Besides, establishing the international orientation as an important and Liesch, 2016). Secondly, we contribute to a better understanding of internal capability able to contribute to superior export performance of the effects of variables related to the environment and context of BGs in the BG, we provide insights into its moderating effects. Moderating ef- order to achieve superior export performance (Knight and Liesch, 2016). fects are important as both internal and external drivers are found to Thirdly, we focus on BGs from Colombia and therefore contribute to impact the early and accelerated internationalization of new ventures research from a developing country perspective (Baier-Fuentes et al., (Hagen and Zucchella, 2014; Madsen and Servais, 1997; Mathews and 2019; Oyna and Alon, 2018). Zander, 2007; Rialp et al., 2005). In the following we present a summary of the results, followed by a In line with previous export literature (Pla-Barber and Alegre, 2007; discussion of the theoretical contributions, and conclude with the Filatotchev et al., 2009) and BGs (Cavusgil and Knight, 2015; Knight and managerial implications of our findings. Cavusgil, 2004), our results confirm the importance of innovative ca- pacities for early internationalization. Particularly, our results indicate 5.1. Summary of results that international orientation is more effective in the presence of high levels of innovative capacity. However, our results also show an effect of We predicted a positive relationship between the BGs international diminishing return of export performance for high levels of innovative orientation and its export performance and the result supports this pre- capacity once a certain level of international orientation is achieved (see diction. The results further show that international orientation has a Fig. 3). In other words, beyond a certain point, the additional exploration greater effect on export performance through the internal and external of new business opportunities for export markets, the additional devel- mediator variables introduced into the model. Related to the innovative opment and adaptation of products for exports, and the additional pro- capacity of the BG as an internal firm capability, our results indicate that motion of export activities among employees, does not add as much value international orientation is more effective on export performance when it as their associated costs for investing in an innovative capacity. is accompanied by high levels of innovative capacity. Related to the The effect of a diminishing return is most evident for high levels of market dynamism as an external market factor, our results indicate that international orientation at high levels of market dynamism (see Fig. 4). the positive relationship of the international orientation on export per- This means that beyond a certain point and at high levels of market formance are subject to the high market dynamism where BGs operate in. dynamism, it does not justify to dedicate additional resources to increase Related to the favorability of the business environment as an external the firm's international orientation as it does not contribute to an increase factor, our results show that the more favorable the business environ- in export performance. This effect is less pronounced for operating in ment in which BGs operate, the greater the positive influence of an in- favourable business environments (See Fig. 5). In favourable business ternational orientation on export performance. Hence, the results environments, an additional increase in the BG's international 8 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 orientation still leads to a significant increase in its export performance. The development of an international orientation as a firm capability The differences in these diminishing effects is best explained by the should most probably be one of the most important development ob- nature of markets where BGs are operating in. Market growth is generally jectives for export promotion agencies in Colombia as it helps to offset considered to have a positive impact on the firm's international perfor- the resource scarcity of these small and medium-sized firms in order to mance (Whitelock, 2002). A favourable business environment facilitates make these firms more competitive in export markets. the BG to establish its market niche and to become a dominant player in a However, the sole commitment towards export markets is not suffi- less competitive environment. Research found that BGs are able to cient. The firm also needs to develop an innovative capacity and target benefit from their niche's growth potential especially in the short-term appropiate markets. Compared to the external factors of the environ- (Efrat and Shoham, 2012). Therefore, BGs operating in favourable, ment, the development of a capability for innovation is more challenging growth markets, are still able to experience increased export performance for the BG. It is similar to the international orientation, an intangible while increasing their committment towards these international markets. resource that needs to be developed over time and requires constant BGs are also characterized for being active players in turbulent markets attention in order to be maintained as a capability. The environmental where they are able to exploit technological trends for creating their drivers are easier to control. Nevertheless, spotting attractive interna- niche offer (Knight and Cavusgil, 2004). Frequent changes, however, tional markets requires significant and constant attention on behalf of the require a constant adaptation to new trends. The BGs in our sample seem managers of BGs. Policy makers can assist firms by providing necessary to reach a saturation point regarding their capability to continuously market intelligence in order to survey international markets for their adapt to market trends, so that, an increase in their international orien- trends and growth potential. tation does not lead to a significant increase in export performance at Due to the diminishing effects on export performance we observed in high level of market dynamism. These diminishing effects, to a lesser our results, founders and managers of Colombian BGs should be aware extend for innovative capacity and favourable business environments that the development of an international orientation reaches a saturation and to a greater extend for market dynamism, have important managerial point. Beyond that point, the contribution of additional international implications as we will explain below. orientation does not contribute significantly to more export performance. Our current understanding on BGs focuses largely on the description Hence, the development of an international orientation reaches a tipping of their formation and to a lesser extent on the determinants of their point and no further investments for strengthening the international performance (Gerschewski et al., 2015; Rialp et al., 2005). Our research orientation are necessary. provides much needed insights into the determinants of international Our study, like all empirical quantitative research, is subject to lim- performance of BGs (Knight and Liesch, 2016; Oyna & Alon, 2018; Paul itations. We are recognizing that our quantitative method have two main and Rosado-Serrano, 2019). Our results emphasize the importance of an limitations. First, hierarquical model is a transverse method and does not international orientation as a decisive capability for the BG in order to include a dynamic behavior for our variables and this information might achieve a sustained competitive advantage. This resembles the general be associated a punctual economic effect. Other hand, this method has a view of the importance of intangible resources for the likelihood of early high tendency to increase our results, especially R2 adjust, due to it has internationalization. However, the possession of a strategic international more variables. orientation alone does not explain the superior export performance of our Future research should consider the following aspects building on the BGs. Both internal and external drivers impact on this relationship and findings of our study. First, we researched capabilities and external are able to enhance its effects: 1) The innovative capacity is an important drivers applying a static perspective. The survey instrument we used characteristic that defines a BG (Cavusgil and Knight, 2015; Knight and allowed us to construct a one-shot image of the current relationship be- Cavusgil, 2004) and our results indicate that it also enhances the export tween international orientation ad export performance. However, we performance of the BG; 2) BGs are known to operate in turbulent markets were not able to provide insights into the dynamics of capabilities. Ca- and high-growth environments (Efrat and Shoham, 2012; Knight and pabilities are subject to change and development (Al-Aali and Teece, Cavusgil, 2004). Our results show that BGs are not only active in these 2014). Future research should consider the changing and dynamic nature markets but that their operations in these markets also contribute to an of capabilities by capturing their differences over time. This also applies increased performance. Hence, we also contribute to extant research by for the evolving nature of the markets and environments the BGs operate analyzing the effects of variables related to the environment and context in. of BGs (Knight and Liesch, 2016). Second, the focus of our research has been on a particular capability – The country context of our BGs also contributes to a better under- the international orientation of the BG. Other capabilities such as a standing of this type of firm from a developing country perspective (i.e. learning orientation, market orientation, international entrepreneurial Colombia). As noted by many (Baier-Fuentes et al., 2019; Oyna and Alon, orientation, and international growth orientation have shown to be 2018), we lack an understanding about the characteristics and perfor- positively related to the international performance of BGs (Gerschewski mance drivers of BGs from Latin America. According on Barbosa and et al., 2015). These capabilities should be taken into consideration along Ayala (2017) Born global had been studied in Latinoamerican countries, international orientation for future research on BGs as possible intangible especially in Brazil, Colombia and Chile, but it tried to analyze and resources allowing a sustained competitive advantage. contributed in Born global definition. Other hand, it researcher had Third, our sample consists of BGs from Colombia. In Latin America, emphasis in tech sector and qualitative methods to analyze internation- Colombian and Chilean entrepreneurs particularly show a high interna- alization behavior, role of networks and speed of internationalization (De tional orientation (Amoros et al., 2015). Therefore, comparing the results Mello et al., 2019). of the Colombia study with other countries would be useful in order to derive more generalizable findings. 5.3. Managerial implications Finally, the institutional environment is important to keep into consideration for the study of BGs (Szyliowicz and Galvin, 2010). The Developing a global vision, where the firm sees the world, not just impact of institutional forces on entrepreneurship is particularly Colombia, as its market, is most probably the most important determi- heightened in emerging economies (Gupta et al., 2014; Kiss et al., 2012; nant for export success of Colombian BGs. Founders and managers of Peng et al., 2008) and different formal and informal institutional envi- these firms are advised to develop a global outlook for their operations ronments seem to impact the performance of BGs in Latin America and to promote vigorously the exploration of new business opportunities (Alvarez et al., 2014; Torkkeli and Fuerst, 2018). Future studies should on export markets. Policy makers can contribute to the development of therefore keep in mind the impact of the institutional environment on the an international orientation by promoting exports and facilitate inter- export performance of BGs. national trade fair participation and export missions to potential firms. 9 D. Escandon-Barbosa et al. Heliyon 5 (2019) e02688 Declarations in the public, commercial, or not-for-profit sectors. Author contribution statement Competing interest statement D. Escandon-Barbosa, J. Rialp-Criado, S. Fuerst, G. Castro-Aristizabal: The authors declare no conflict of interest. Conceived and designed the analysis; Analyzed and interpreted the data; Wrote the paper. Additional information A. Rodriguez-Orejuela: Contributed analysis tools or data. No additional information is available for this paper. Funding statement This research did not receive any specific grant from funding agencies Appendix 1 Items Standardized Loading t value Reliability SCRa AVEb International Orientation (adapted from Sorensen and Madsen, 2012) 0.64 11.95 SCR ¼ 0.80 The desire for growth is a strong motive for the expansion of international activities 0.68 12.93 AVE ¼ 0.51 The possibility of increased profits is a strong motive for international expansion 0.75 14.57 We see the world, not just Colombia, as our firm's market 0.77 15.25 We find it better to expand our export activities cautious and gradually 0.71 14.30 Active exploration of new business opportunities on export markets 0.70 14.26 Strong capability to develop and adapt new and existing products/services 0.69 14.20 Our priority is success with export activities 0.70 14.26 Development of human and other resources that may contribute to successful export Export Performance (adapted from Zou et al., 1998) 0.74 14.93 SCR ¼ 0.89 has been very profitable 0.73 14.63 AVE ¼ 0.66 has generated a high volume of sales 0.90 20.15 has achieved rapid growth 0.87 18.92 has improved our global competitiveness 0.77 15.25 has strengthened our strategic position 0.81 has significantly increased our global market 0.83 has been very satisfactory 0.82 has had been very successful 0.79 has exceeded our expectations Innovative Capacity (IC) (adapted from Luo et al., 2005) 0.72 14.24 SCR ¼ 0.88 Technical innovations based on research, are easily accepted 0.76 15.40 AVE ¼ 0.59 The company leads actively seeks new ideas 0.78 15.95 The staff of the company easily accepts innovation company 0.75 15.48 The staff is rewarded for new ideas, even if they do not work 0.82 17.18 Innovation is perceived as an opportunity, not as a risk Market dynamism (MD) (adapted from Jaworski and Kohli, 1993) 0.60 10.35 SCR ¼ 0.76 In our kind of business, costumers' product preferences change quite a bit over time 0.85 14.67 AVE ¼ 0.51 Our customers tend to look for new products all the time 0.68 11.88 Our customers are very price-sensitive, but on other occasions, price is unimportant 0.75 12.15 Demand for our products and services from customers who never bought them before 0.69 12.18 New customers tend to have product-related needs that are different of our customers We cater to many of the same customers that we used to in the past Favorability of Business Environment (FS) (adapted from Sutcliffe and Huber, 1998) 0.76 14.55 SCR ¼ 0.83 The demand in international markets is growing and will continue to grow 0.74 14.06 AVE ¼ 0.61 Investment or marketing opportunities for firms are very favorable at the present time 0.85 16.84 There are great opportunities for businesses to expand their international markets 0.72 15.22 There are available resources for further growth in these markets Adjustment stadistics with 5 constructs:: χ2(485) ¼ 799.82; GFI ¼ 0.88; RMSEA ¼ 0.041; SRMR ¼ 0.047; CFI ¼ 0.95; TLI (NNFI) ¼ 0.95. a Scale composite reliability P P P P P P (ρc¼( λi)2 var (ξ)/[( λi)2 var (ξ) þ θii]; (Bagozzi and Yi, 1998)).b Average variance extracted (ρc¼( λi2 var (ξ))/[ λi2 var (ξ) þ θii]; (Fornell and Larcker, 1981). c anchors: 0 ¼ Totally disagree; 7 ¼ Totally agree. 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