Is Geographic Diversity Good for International Young Ventures? An Internal Social Capital Perspective

Abstract

An increasing number of young ventures are internationalizing their business early in their life cycles and expanding their scope of international activities into dispersed geographic locations. Yet, the performance implication of geographic diversity strategy for international young ventures remains to be studied. This thesis aims to analyze the link between geographic diversity and international performance, as well as the mediating mechanism of internal social capital and contingent effects of organization structure. This study synthesizes the social capital and exchange perspective with the learning advantages of newness view. The hypotheses are tested with an empirical dataset collected in Zhejiang, China. The results indicate that young ventures going into diverse geographic regions accrue superior international market performance and international investment return, and the mediating mechanism of internal social capital is supported for two of the three dimensions. Furthermore, the indirect effects are moderated by the formality and role concentration within the venture. This study contributes to the theoretical development of the burgeoning field of international entrepreneurship.