422 Part 3: Strategic Actions: Strategy Implementation
setting is challenging and not without risks, including risks of unstable foreign currencies,
market inefficiencies, insufficient infrastructures to support businesses, and limitations
on market size.^46 Thus, the decision to engage in international entrepreneurship needs to
be a product of careful analysis.
Even though entrepreneurship is a global phenomenon, meaning that it is practiced
throughout the world, its rate of use differs within individual countries. For example, a new
report ranking the most entrepreneurial countries showed that the 10 most entrepreneurial
countries in 2014 were (from the most to the least entrepreneurial): India, Turkey, United
States, Brazil, China, Iceland, Ireland, Russia, Estonia, and Austria. The report showed that
many of the most entrepreneurial countries were emerging economies. It also showed that
personal and national wealth experienced the highest rates of growth in the most entre-
preneurial countries.^47 Thus, as argued by others, there is a strong positive relationship
between the rate of entrepreneurship and economic development within a country.
Culture is one reason for the different rates of entrepreneurship among countries
across the globe. Research suggests that a balance between individual initiative and a
spirit of cooperation and group ownership of innovation is needed to encourage entre-
preneurial behavior. This means that for firms to be entrepreneurial, they must provide
appropriate autonomy and incentives for individual initiative to surface while simulta-
neously promoting cooperation and group ownership of an innovation as a foundation
for successfully exploiting it. Thus, international entrepreneurship often requires teams
of people with unique skills and resources, especially in cultures that place high value on
either individualism or collectivism. In addition to a balance of values for individual ini-
tiative and cooperative behaviors, firms engaging in international entrepreneurship must
concentrate more than companies engaging in domestic entrepreneurship on building
the capabilities needed to innovate and on acquiring the resources needed to make stra-
tegic decisions through which innovations can be successfully exploited.^48
The level of investment outside of the home country made by young ventures is also
an important dimension of international entrepreneurship. In fact, with increasing global-
ization, a larger number of new ventures have been “born global.”^49 One reason for this is
likely because new ventures that enter international markets increase their learning of new
technological knowledge and thereby enhance their performance.^50 They increase their
knowledge through the external networks (e.g., suppliers, customers) that they establish
in the new foreign markets including strategic alliances in which they participate.^51
The probability of entering and successfully competing in international markets
increases when the firm’s strategic leaders, and especially its top-level managers, have
international experience.^52 Because of the learning and economies of scale and scope
afforded by operating in international markets, both young and established internation-
ally diversified firms often are stronger competitors in their domestic market as well.
Additionally, as research has shown, internationally diversified firms are generally more
innovative.^53
The ability of a firm to develop and sustain a competitive advantage may be based
partly or largely on its ability to innovate. This is true for firms engaging in interna-
tional entrepreneurship as well as those that have yet to do so. As we discuss next, firms
can follow different paths to innovate internally. Internal innovation is the first of three
approaches firms use to innovate.13-5 Internal Innovation
Efforts in firms’ research and development (R&D) function are one primary source of
internal innovations. Through effective R&D, firms are able to generate patentable pro-
cesses and goods that are innovative in nature. Increasingly, successful R&D results from