Entrepreneurial proclivity, capability upgrading and performance advantage of newness among international new ventures

In spite of a notable interest surrounding the learning advantages of newness (LAN), centered on the emergent international entrepreneurship literature, we have only limited understanding of how young international new ventures (INVs) acquire learning advantages and avoid the liabilities of newness and foreignness in order to achieve LAN-related performance from early internationalization. In this article, two related but conceptually distinct capability upgrading constructs - knowledge capability upgrading and network capability upgrading - are identified to serve as mediating mechanisms that link entrepreneurial proclivity and LAN-related performance. Our findings from a sample of 436 young INVs from China provide supporting evidence for the mediating effect of capability upgrading, particularly among relatively larger new ventures and those operating with cost/price advantages in the international marketplace. This study fills a gap in the under-researched area of literature surrounding INVs from emerging economies, and demonstrates how young international venturing firms can leverage the entrepreneurial dynamics of learning to achieve growth opportunities from early internationalization. Journal of International Business Studies (2010) 41, 882-905. doi:10.1057/jibs.2009.87