Explaining the international intensity and global diversity of early-stagetechnology-based firms

Early-stage technology-based firms are confronted with the complexity of fo reign markets and global competition Sram their earliest stages of developm ent. Not only must technology entrepreneurs keep pace with ever-changing te chnology-based product offerings, but they must also simultaneously stay ab reast of competitors and industry trends in multiple countries. We surveyed 75 small technology-based firms in Ontario to evaluate their international activities and try to explain both the intensity of their foreign sales (t he percent of total sales coming from foreign sources), as well as the glob al diversity of the markets in which they operate (the number of major regi onal areas from which they derive revenue). Our findings suggest that resources necessary to pursue international sales have an important impact on both foreign market intensity and diversity. I n contrast, however, attitudes towards foreign markers helped to explain in ternational intensity but not global diversity. Additionally, firm age was positively associated with global diversity but not international intensity . These findings support the notion of small technology firms being "instan t internationals" but suggest that proceeding to the next step-achieving gl obal diversity-requires significantly greater time and resources. In line with prior empirical research, these firms tended to increase their international intensity and diversity as they became larger In contrast wi th what the literature suggests, however,firms utilizing strategic alliance s were no more active internationally than those not using strategic allian ces. Finally, government assistance helped to explain the international int ensity of these firms, but not the global diversity. These results help managers, researchers and shapers of public policy bette r understand the international activities of early-stage technology firms. Given the relationship between attitudes and international intensity there appears to be some opportunity associated with trying to influence the atti tudes of CEOs regarding initial expansion into international markers. For f irms to become globally diverse, however, there is a greater dependency on the availability of resources as well as accumulated business experience. M anagers should recognize the pattern this suggests and perhaps be leery of becoming too globally diverse too quickly. Overall, the relationship betwee n size an dfo reign activities suggests that growth opportunities are linke d to international markets. Although some broad relationships are suggested regarding the need for coll aboration and government support, further research is necessary to understa nd the use of strategic alliances as well as government assistance in both international market intensity and global diversity. (C) 1998 Elsevier Scie nce Inc.