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Article Review

“The Effects of Early Internationalization on performance outcomes in young international ventures: The Mediating Role of Marketing Capabilities” - Lianxi Zhou, Aiqi Wu, and Bradley R. Barnes

Submitted by:
Paridhi Sharma PGDM – Communications Roll no. 28

Here when the mention of Marketing Capabilities is done. It can be said that there exist two major ways for it to do so. may be able to ease the movement of the foreign entity into the group. This. The players existing in the said market can be considered the part of a group. The understanding formulated from the article is that being an outsider proves to be a liability as it can restrain learning among the young entrepreneurial firms and affect the way in which they learn market specific knowledge which will result in rapid international expansion. The article aims at covering the above mentioned gap by looking into the level to which an early international exposure helps young entrepreneurial firms to gather marketing related acumen which further can be used to achieve rapid success. The article talks about “The Liability of Outsidership”. the foreign player takes steps to get acquainted with any of the domestic players. by further extension. in turn. For it to find success in its venture. The second way can be considered in a situation where in the foreign party is not familiar with any of the domestic players. This can be understood with respect to an example comprising of the entry of a foreign player into any market. it requires to find a place in the group.The Article targets the gap that exists in terms of the effect of the time at which an entrepreneurial venture undergoes internationalization on the organizational capabilities and the respective performance outcomes. First could be that the foreign entity be acquainted with any member of the group who. The effect of marketing capabilities of an entrepreneurial firm on its performance becomes more important and standing when the market scenario moves from emerging economies . provides a greater competitive advantage to the firm. it is based on the notion of the ability of a firm to learn about its market environment in such a way that it is able to use the gained acumen towards successful understanding of external market changes in an efficient manner that exercises a component of quick responsiveness. The said “foreign” entity or player is then an outsider to the group. It is believed that the development of market specific knowledge and capabilities is an important aspect to the learning curve that a young entrepreneurial firm or venture undergoes as such. In such a situation. The article gives utmost importance to Marketing Capability as it is believed to play an important role in venture internationalization.

to developed countries. as compared to the ones that undergo internationalization at a later stage. The article effectively defines the notion behind the marketing capabilities. The validity of LAN is put under scrutiny and is backed by certain researches wherein the relationship between the venture age at the time of internationalization and sales growth of the firm is not significant. Thus it is stated that the effect of the type of economy is also a factor that counts. Also necessary to note here is that the article also puts forth the point that firm specific marketing capabilities are adept in identifying and portraying the ability of a firm to link market based processes to financial performance. Having discussed that. The marketing capabilities are driven by the time and pace at which it enters the international market. Having said that. . now stands to be evaluated as such. the initial statement that was made. the sooner it learns and grows with its foreign operations. The LAN theory suggests that the firms that are in the initial stage or are “younger” have a better degree of learning flexibility that is a result of less dependence. It says that the said notion is a firm’s ability to learn about its marketing environment and to utiliz e this knowledge to direct its efforts towards the changes occurring in the external market scenario effectively and in a rapid fashion. So then the basic idea behind LAN can be broken down to the simple idea that the sooner a firm involves itself in cross border activities. LAN has been highlighted finally as a tool that gives the importance of timing of foreign market entry but is inconclusive when keeping performance outcomes under perspective. are less constrained by existing routines and other contingencies that might prove to be a hindrance in their learning in new markets. The article gives points both for and against the LAN or “ Learning Advantages of Newness”. These firms. The given article discusses the research done on the mediating role of marketing capabilities in contributing to international growth among new ventures that have undergone internationalization. When discussing marketing capabilities. it is essential that a definition be provided with respect to which the scope of the research is defined. it can be said that the article captures two major points: 1.

as the developed economies provide an environment of tremendous opportunity for growth and high levels of international growth. Thus it can be seen as a cycle of efforts and its effects. The statement that the managers play an important role in the international growth is elaborated well. In such a case. which is the world's largest and fastest-growing emerging market. A greater effort put into learning about foreign markets leads to a better understanding of the market. The type of International market (emerging economy or a developed country) also plays a role in determining the relationship between marketing capabilities and growth in the international market. young international firms can overcome such deficiencies in their international expansion by . marketing capabilities are seen to play a pivotal role in the betterment of performance of the firms. most Chinese firms lack key resources and knowledge. The Research Model for the hypothesis focuses on young international firms in China. These firms seem to have a striking difference when compared to the older and larger firms in terms of the time of entry into the foreign markets and the attitudinal commitment towards internationalization. Emerging economy firms face cultural issues. scarcity of resources and often highly regulated political environment. Emerging market firms are ones that push hard to enter into the developed markets so as to increase their value and tap resources and skills so as to increase their level of global competitiveness. The article discusses the significance of the type of International market and stresses on the point that the ventures from emerging market economies are likely to face different challenges and come across different growth opportunities when entering the two kinds of markets. Thus the point put forth in the article falls in place perfectly when considering the aggressive push of such firms into the developed economies. However. compared with young firms in developed economies.2. These firms are those that are quite often affected by the drawbacks of their economy being an emerging one as opposed to the developed economies. However. The young firms in China have started expanding rapidly into international markets. better assimilation of knowledge regarding the same and ultimately towards further increase in the level of internationalization. It stands without question that the entrepreneurial orientation and a positive global mindset of the manager are important factors leading to rapid international growth of any internationalized firm.

International firms i. Privately owned. for managers who wish to move towards exports and international marketing opportunities. 2. The article also underlines the fact that the nature of emerging markets is more dynamic and prone to changes when compared with the developed economies. The article has been able to provide a map of sorts to a certain extent. Thus the process of internationalization needs to be done keeping in mind this aspect. As seen. in a nutshell. only 26.enhancing their marketing capabilities. The research findings provide support for the mediating role of the marketing capabilities in determining the impact of early internationalization on the international growth of young business ventures.5%. The two criteria for selection of the firms were: 1. the selection of China in this respect is a useful and apt criterion to test the propositions given in theory in the article. Thus. Thus generalizing the findings to other economies that might vary from that of China might lead to inaccuracies.e. The research has also done well to provide support to the importance of the commitment of the senior management to foreign markets as a contributing factor to the development of marketing capabilities. Another important finding is that a new venture’s marketing capabilities are a better catalyst for the operation of the firm in developed economies rather than the emerging economies. the response rate is low. a significant amount of their turnover was internationally acquired. Thus. the article successfully establishes that a venture’s acquired knowledge when converted to apt marketing capabilities enables it to successfully get ingrained into the new market environment. Valid data was obtained from a total of 159 firms. The aspect that may be a negative one could be the restricted nature of the sample which considered only young entrepreneurial firms based in China. .