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Lean Internationalization of High-Tech Startups

Mahmud, Max (2021) Lean Internationalization of High-Tech Startups.

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Abstract:Most startups do not survive for very long after they are founded, therefore the issue that must be answered is, “Which variables account for a company's failure, and most critically, how can a startup prevent that?” One of the most prominent techniques for countering early failures is the lean startup methodology (Ries, 2011), which places a high priority on customer demands and fast iterations. Lean startup gained traction as a pivotal concept for business practice and product management among the academia and entrepreneurial institutions. Despite its critical acclaim, the lean startup approach has received scant attention in the domain of internationalization, particularly in the field of internationalization accomplishment. In terms of profitability and expansion for international businesses, internationalization has become imperative. Presently, internationalization is perhaps one of the most significant elements in a company’s operation. Particularly for startups, thinking globally is a key-rule in starting new businesses nowadays. While many startups know that global thinking and international expansion are necessary conditions to meet, the underpinning actions needed are not always evident. Moreover, while internationalization is critical to business enterprises, it is largely unknown how startups are cultivating processes of quick and lean entry into foreign markets (Thi Thu Phuong, 2019). Prior studies have systematically studied the born global (Cavusgil & Knight, 2014) and international new venture manifestations (Oviatt & McDougall, 1994), the associated field of new technology-based or high-tech ventures and the amalgamation of internationalizations effects have remained untouched, leading to an investigation to fill this void in international business and lean startup literature (Kiederich, 2007). Therefore, the aim of this study was focused on understanding these research strands and also to investigate how the various dimensions of the lean startup methodology affects internationalization’s success of high-tech ventures by providing empirical evidence on the following research question: What is the effect of lean startup methodology on the internationalization’s success of new high-tech ventures? The absence of adequate secondary data sources on the applicability of Lean Startup Methodology, meant the acquisition of primary data via a survey instrument, with regards to the concretization and operationalization of the Lean Startups subconstructs. A quantitative methodology was therefore chosen to test the formulated theories and to draw generalizable conclusions regarding the influence of Lean Startup Methodology (LSM) on the internationalization success. In order to achieve this and also to analyze the adequacy of the LSM – internationalization implication, a type of observational study, more specifically, a cross-sectional survey design was chosen. With the means of a self-administered online survey, fifty-nine high-tech startups, geographically dispersed between North America, Europe and Asia participated in the study. Results that were different from what was anticipated surfaced. Through a moderated regression analysis of the data gathered on high-tech startups, the LSM - internationalization success (linear relationship) link was shown to be extremely robust and very significant. For analyzing the moderation effect, the associations of various uncertainties (market and technology) and inter-firm tie strength (domestic and international network) were regressed on the linear relationship. The conjecture, the higher the technology and market uncertainty, the better is the LSM-internationalization success implication did not hold true. It was hypothesized that, by adhering to the lean startup approach the entrepreneurs are much efficient in acquiring knowledge when uncertainty in the market and technology is high. To put it another way, with every increment in knowledge acquisition, the per unit cost drops. This was a false positive prediction. The circumstances of internationalization and the high-tech context lend itself to the presence of experiment creep, which manifests when an experiment lasts for prolonged periods and is thus costly. In previous research, inter-firm networks were found to have both positive and negative effects on early internationalizers (Coviello & Munro, 1997; Sepulveda & Gabrielsson, 2013), and this thesis builds on that work by embedding the LSM scope and assessing whether inter-firm networks are advantageous or not for the startups' overseas venture effectiveness. According to some studies, stronger ties to inter-firm networks may impede the internationalization of startups because they disrupt information exchange (Sepulveda & Gabrielsson, 2013), limit entrepreneurs' ability to explore opportunities (Mort & Weerawardena, 2006), and have negative reputational impacts (Bembom, 2018; Coviello & Munro, 1997). This study found evidence that the domestic network ties strengthened the linear relationship (partially) and the international ties undermined it. These findings lead to the suggestion that international inter-firm relationships have more disadvantages than domestic ones, and that these drawbacks hamper the success of startups when expanding overseas. To sum it all up, the study revealed fresh insights, such as how lean startup principles may be used outside of its initial scope.
Item Type:Essay (Master)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/88186
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