Firm Performance and Early Internationalisation
The crucial question for firm managers, owners, investors, employees and policy makers alike is whether or not the early internationalisation of start-ups enhances the performance of firms. Despite their common focus on the performance of the firm, their interests are best viewed from different perspectives . Employees and policy makers are more focused on the employment generating effects of internationalisation. Firm owners and investors are primarily concerned with the impact of internationalisation on sales, profits, and the enterprise’s ensuing market value. However, these different interests are neither exclusive nor independent from one another. The growth of employment, sales and market values are likely to be highly correlated with each other — at least in the long run. For example, it is well known that larger firms face lower default risks and are able to negotiate more favourable conditions in the markets for (financial) resources. They are also more likely to enjoy larger productivity gains due to minimal efficient scale considerations and/or the exploitation of scale economies . Thus, sales and employment growth, which results in larger firms, is highly likely to be positively associated with a growth in profitability and market value.
KeywordsVenture Capital Firm Growth Sales Growth Investee Firm Financing Constraint
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