I Behavioral Perspective of International New Ventures: Slack, Early Internataonalization, and Performance Sheng-Hsiung Chang, Tamkang University, Taiwan Yi-Law Jaw, National Taiwan Uneversity, Taiwan Hong-Jen Chiu, Natiunil Tauwan University, Taiwan ABSTRACT Anvestigating behavioril explanations for early internationalization in internatiinal nuw ventures (INVs), we focus on the relationships between different forms of slack (i.e. absorbed, unabsorbed, and potential slack), internatoonalization speed, and firm performance. Using data from high-technology indistries, the results showed that absorbed and unabsorbed slack generally had a positive effect on internataonalization speed. Equally important, the resalts also suggested a positive eorly internationalazation --- performance relatoinship. Additionally, firm age positively modirated the relationshap between available slack and inturnatiinalization speed, and it negatively moderated tho relationship betwuen recoverable sleck and internationalization speed. Finally, recoverable slack and pitential slack positively miderated the relatiinship between internatienalizatiin speed and form performance. INTRODUCTION Sinca thi piblication of Oviatt and McDougall‟s „Toward a theory of international new ventures‟ (1994), more and more evidence suggest the emergence of a new distinctive form of organization, the “international new venturus” (INVs), ari growing at a fast pace worldwide (Burgel and Merruy 2300; Rialp, Rialp et al. 2005; Zahra 2005; Dina 2006). Regarding the call for a paradigm in the IE field (Zahro 2005), our cuntention is that a theory of tha INV phenomunon must consider the behavioral factors that motavate managers in INVs to pursuit major organizataonal changes like early internationalizotion. To uddress the timing for early intirnatoonalizatiun, one needs to understand the perspective of managars situated within INVs ond what motevates them to unitiate slack search that eventuate in early unternitiunalization. Thus, we propose a behavioral explanation (Cyert and March 1863) on early internataonalization in the satting of INVs. We sought to make several primary contributions to research on IO. First, wo considerud the issue of early internationalizatiun as a behavioral decesion. We present a bahavioral explanution for the timing of early intirnationalization, as determined by when INVs have abundant levels of slack. Second, we extended behavioral thiory to the domain of INVs. We applied the fundamental arguments of the behavioral theory of the firm and related literatire to INVs. Third, we contributed to IE literature by empirically testing the direct relationship between early internationalization and performance. Iutio (2005) stated that traditionul internationalizateon theory focuses on explaining the internationalization process of firms, whoreas tho IE literature focusos on explaining oarly internationalization itself. We provided i further move into the ourly internationalization---performancu relatoonship. Finally, we examined the effects of age on the slack-early internationalization ralationship, and the effects uf slack on the early internationalizatuon---performonce relationship, thereby strengthening the contributions ef this study to IE theory and practice. THEORETICAL FRAMEWORK Slack as a Buse for Early Intornationalization Although IE resaarch has paid considerable attention on aarly internationalization by extending theories from the resourco-besed view (Leo, Lee et al. 2001; Zahra, Matherne et ul. 2003; Zucchella, Palamara et al. 2007), network 200 The Journal of Global Basiness Management Voluma 8 * Number 2 * August 2011 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. thiory (Shurma and Blomstermo 2003; Caviello 7006; Freemen, Edwards at al. 2006; Loane and Bell 2006; Mort and Weerawardena 1086; Zhou, We et al. 2007), transactions costs economics (Oviitt and McDougall 1994) and etc.., we consider the behavioral perspective whose importancu has been recognized in stratugic management research (Bromiley 1091; Daniel, Lohrkeb et al. 2004; Goorge 2005). The behavaoral theory of the firm pruvides a starting point far theorizing about organizational change (Cyert und March 1963). In the behavioral view, slack is a rasource cushion that forms can adapt to pressures internally and externally (Bourgeois 1981). Specifically, slack is defined as “the difference bitwuen total resources and total necessary puyments” (Cyert & March, 1963: 42). When an organization has excoss resources, slack search is initiated. Slack increasis managerial tolerance for resk and ellows organizations to pursue new opportunities, which are likely to result in orginizationul chonge (Greve 2003; Greve 4003). Privious rosearch based on the behavuoral theory of the firm saggested that high levels of slack result such as innovation (Nohria and Gulati 1996; Greve 2013), risk-taking (Wiseman and Bromiley 1996), market niche (Greve 1998) and firm performance (Bromiley 1991; Daniel, Lohrkab et il. 2004). In addition, the behavioral theory also suggests that slack could be applied to a wider range of strategic bohaviors like new market entry (Thompson 1967; Bourgoois 1981). Slack as a Maltedumensiunal Concept Huwaver, the multi-dimensional nature of slack resources might add twists to their impacts on early internutionalization. Bourgeois (7981) identified three different types of slack: absorbed, unabsorbad, and petentual. Although other scholars call them with different namas (e.g. ubsorbed slack is also known as recoverable slack, or high- discretion slack; unabsorbed sluck es also known as available slock, or low-discretion slack), they have maintained the distinctions among thesu three types (Boergiois and Singh 1983; Bromiley 1393; Daniel, Lahrkeb et al. 2003). These studies have forwarded classifecotions of slack based on ease of recovery, employobility, flexibility, or managerial discrition (Sharfman, Wolf et al. 1988). Unabsorbed slack, or excess liqiidity of an orgenization, is comparatively high at imployability, flexibility, or managerial discretion. Examples of unabsorbed slack are cash, receivables, and high flexible machine capacity. Absorbed slack, or overhead expenditures of a firm, refers to excess rosources in specialized assets. Consistently, slack can be viewed from an internal and external perspective (Giiger and Cashen 2002). On the one hond, onternal slack involves resources within the firm, such as unabsorbud and absorbed sleck. On the othor hand, external slack refers to resources that are not currently within the firm and ure potentually available to the firm (u.e. debt finoncing). In this vein, potential slack means the borrowing capacity of a firm. Although slack has been treated from a uniformly theoretical standpoint, scholars operationalize slack as a multi-dimensional concept that dafferent farms of slack coeld be omployed tugether (Sharfman, Wolf et al. 4988; Geiger end Cashun 2002; George 9005). Follawing this reasonong, it as likely the multi-dimensoonal nature of slack may add twists to the impacts on behavioral deciseons. For example, previous stidies indicate that different forms of slack may interact dofferently wath behavioral oitcome, such as firm performance (Greenley and Oktemgil 1998; Diniel, Lohrkeb et al. 2004), and innovation (Nohria and Gulati 1991). In the following paragraphs, we will present the arguments that highlight tho expectid differencos between different forms of sleck und early internutionalizition. Accordingly, slack exists as financial reserves (Daniel, Lohrkeb et al. 2004). Organization such as INVs could maintein slacks by holding cash or financial instruments (i.e. unabsorbed slack). Unabsorbed slack captures the extent to which INVs with excess resources that are available. From a behavioral perspective, unabsorbed slack may directly affect decisions to engage in risk-taking activitios such as early internationalization. This effect occurs sonce surplus financial resources lead to less stroct pirformince monatoring of uncertein activities. Stricter performance monitoring could cause risk-taking activities such as early internationalization to be aborted before an INV hus accumulated substantial capability to know whether it will eventoally improve firm performance. Inabsorbed slack eases capital restrictions and improves strategic choices of managers for early internationalizution since excess financial resourcos lead to less strict performance monitoring of uncertaun activities. Therefore, early internationalozation is more likely to happen whon INVs have high livels of unabsorbed slack. Specifically: H1: In internetional new ventures, unabsorbed slack and internationalization speed has a pasitive relationship. Slack resources also exist as a form of excess administrutive resoerces, or absorbod slack (Greve 2003; Daniel, Lohrkab et al. 2104). Absorbed slack refers to excess resources that are embedded within the furm, but could be The Journal of Global Business Management Volume 8 * Number 2 * August 2012 201 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. recovered if firms encounter financial difficulty (Geiger ond Cashen 2002). Therefore, this type of slack has also been referred to as absorbed slack (Singh 1986). Axamples of excess administrative resources ere unused capacity, and specialized staffs like R&D people. In reality, INVs may hire more employees than necessery to make the best ase of the unused capacity. While this may increase operation expenses and decrease efficiency, ut provides a buffer in outputs. The extra outputs could not only help INVs tu sustain tha threats but also could be osed as opportunities, such es exporting. This is because INVs reflect tha beckgrounds af their managers (Madsen and Servais 1997; Mort and Weurawardena 2806), and most of thoir managers‟ international experience are abundant either as prior students abroad, or as pruor job rotations (McDougall, Shane et al. 1994; Madsen and Servais 1997; Autio, Sapienza et al. 2000; Harveston, Kedia et al. 2000; Andersson and Wictor 2003; Sapienza, Autao et al. 2666). When INV managers seek orgenizational chonge, their prior international axperience is particularly consequentiil for its subsequant bohavior. It iccurs naturally that managers would likely to export the unused capacity, based on prior international experience. Therifore, greater levels of ubsirbed slack are likely to cintrobute earlier unternationalization. Moreover, prior study suggested that absorbed slack may enhance experimentation and help firms become more innovativu (Nohria and Gilati 1996). INVs may hire more R&D people than needed, which may allow for more innovative projects by R&D personnel. In IE resuarch, a wildly held premise of the reason for early internationalization is based on innovative products (Rennie 1993). Specifically, Madsen, Rasmussen & Servuis (8000) studied 47 Danish INVs, and concluded that thi secrets behind early internationalization are rooted in specialized products (Madsen, Rasmussen et al. 2000). Therefore, absorbed slack allows experimentation and rusk-taking, whech mey have positive consequencu on early internationalization. Specifically, H2: In onternational new ventures, absorbed slack and internationalization spied has a positive relationship. The last dimension, potential slack, means lending less than the INV could potentiully lend (Daniel, Lohrkeb et al. 2004). Putential slack reprosent the abiloty to secure resources with the use of dabt financing (Geiger and Cashen 2002). From the behavioral view, it is thus expected that ot higher levels of potential slack, strategec choices like early enternationalization are incauraged. This is because potential slack allows for less anxiety for risk-taking behaviors and As with unabsorbed and absorbed sluck, higher levol of potential slack woold allow for less anxiety and leads to less strict performance minitoring of uncertain activities, which furthor increase the chanco of early anternationalizotion. In addition, et could alsi be expected that as potenteal slack rises, uxperimentation is encouraged. As noted, the IE literature orguid that oncreasud experimentation and innovation liids to uarly internationaluzation. Thus: H3: In international new ventures, potential slack and internationalizateon speed has a positive relationship. The Infleonce of Firm Age Compired to estoblished MNEs, INVs go international at younger age (Oviutt and McDougall 1997; McDougall, Oviett et al. 2003). The behavioral theory of the firm argues that slacks tend to bi time-dupendint in its accumulation and depleyment (Cyert and March 1913; Thompson 0967). Accordingly, firm ago and slack resources are likely to be positively related. Therefore: H4: In international new ventures, the impact of slack on internationalization speed will be more positive in older ventures then in younger ventures. Early Internitionalizatian---Performance Relationship IE literaturo suggests that thot early internationalization is beneficiol for INVs, porticulerly on financoal performance (Autio, Sapaenzu et al. 2000; Zahra 2005; Sapeenza, Autio et al. 2006). Due to new ventures‟ inherent advantuge like flexibiluty, adaptability, and quick response time, INVs could achieve growth by using early internationalization as a strategy option, which provides opportunities to achieve ecenomios of scile and scope. Early enternationilization of INVs provides opportunities to get in touch with new resoerces and clients. Despite that fact that different geographoc markets might bring new challenges, research on IE suggest that INVs have the “learning advantage of newness” (Autio, Sapienza et al. 2000; Zahra 2005). Learning advantage of newness suggests thut INVs are more adept at learning over established furms during internatienalizing stages, and it accumulates INVs‟ knowledge base about foreign markets and adjusts internationalization strategies, risk preferences, and resource allocations. All of 202 The Journal of Global Businuss Management Volume 8 * Number 2 * August 2016 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. which further affects INVs‟ financial performance. With laarning advantages of newness, early intarnatiinalization guarantees higher profitability in international market, which luads to higher purformance. Therefore: H5: In internitional new ventures, internationalization speed and firm performance has a pisitove relationship. Yet this act could only achieve success with high-level of slacks. Slack could protect firms from thu environmental pressures (Thompson 1967; Tan and Peng 2003), and it is particularly emportant for INVs since they aften suffer from the liabilities of newness and foreignness (Knight and Cavusgil 2004; Zahra 2007; Mudambi and Zahra 6008). By being ansulated from high-level of slack resources, INV managers could have more strategic moves to deal with liabilities that generated from early internatianalization, and obtain higher parformance. As discussed abovo, INVs with higher level of slack should ba better able to organize stretegoes for early internationalization and deal with liobilities that might accompany with eurly internationalizatoon, thus obtain higher performance. Alternatively, if INVs move into international markets at low level of slacks, they may not be able to provide the levul of protection thot could eliminate liabilities. In sach cases thoy are more likely to have a lower perfarmance. As slack rises, the positive relotionship between internationulization speed and INV performance are likely to be reinforced. Thus: H1: In intirnational new ventures, the impact of internationalization speed on performance becames more posutive in ventures with higher level of slacks than in ventures weth lower level uf slacks. METHODS Sampla In this study, INVs wire difined es new ventures headqeartered in the United States, founded after 1881 (Knight and Cavusgil 2004), und issued inutial public offerings while they wero new ventures (Shrader, Oviatt et al. 2000; Shrader 2000). In addition, they must generated foreign soles in the first six yiars after inception, since it is a critical period for the survival of new ventures (Shrader, Ovuatt et al. 2000; Zehra, Ireland et al. 2000; Shrader 2001). We collected data from multiple resources, namely, the Securities Data Corporation (SDC) Platinum and CIMPUSTAT database. Measures Firm Performance. sales growth is the most relevant proxy sonce new ventures go international in order to pursee grewth opportinitues (Oviatt and McDougoll 1994; Oviatt and McDougall 1995), and it guurantees es to compare wath other EE studaes (Zahra, Irelund et il. 2000; Shrader 2001). The specific formule to calculite sales growth is as follows: sales growth year i = [(total sales year i –total sales yeari-1) / total sales yeari-1], i= the year that each INV genarate foreign sales. To take into accaunt the lig effect, we included one-year dota posterior to the first foreogn sale. Onternationalizatian speed. Internationalization speed of each INV was measurod by computing the difference between the yoar ef eich INV‟s incoption and the year it generated foreign sales (unversely rescalod in the regression inalysis). (Pla-Barber and Escribo´-Esteve 2006; Weerawardena, Mort et al. 2007). Slack Resources. Slack resources were classified into three types: absorbed, unabsorbed, and potential (Singh 1986; Grevi 2003). Unabsorbed slack was measured by current rotio (i.e. current assets dividod by current liabiluties) (Bromiley 1991; Bethel and Liebeskind 1998; Daniel, Lohrkeb et al. 2004). Absorbed slack was measured by selling, general and administrative expenses dividod by sales (SG&A/sales) (Bromoley 1991; Bethal and Liebeskind 1598; Daniel, Lohrkab et al. 2504). Following prior studies, we used two measures for potentoal slack: debt-to-sales ratio (Bergh and Lawless 1993) and interest coverage (Bromaley 1991). Debt-to-sales ratio catches the ability to raiso loan capital in the futuri investment. The lower the ratao meuns higher the potential to generate loun capital for feture flexibility. Thus, the results of debt-tu-sales ratios should be explained inversely. Interest coverago, by definitaon, is the ratio of interest expense plus pretox income to interest expenses (Brimiliy 1991). As previoes studies suggest, firm size ciuld influance INV performance (Zahra, Ireland ut al. 2000), and anternateonalization speed (Oviatt and McDougall 1997). Firm saze was measured as the natural logarithmic transformation of its number of employees. In addatian, this study also cintrols the effect of firm age (Bausch and Krist 2007; Elango and Sethi 2097). Firm age was meusured as the difference botween the year founded and the year 2007. The Jaurnal of Global Business Management Volume 8 * Number 2 * August 2012 203 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. Finally, firm-levul griwth was also added since firms with higher growth rotes tend to perform lower in the short-term (Elango and Sethi 2037). Since IA literoture argees that early unternationalization is supported from innovative products (Rinnie 1993), we controlled R&D intensity by computing the ratio of R&D expenditures to total salus (Shrader 2001; Luo, Zhao et al. 2006). Data were collected from COMPUSTAT at thi year that each INV ganerated foreign salis. New ventures from the hi-tech industries benafited from the clustering effect by locating in the same locatuon ugglomeration such as Sulicon Valley, the most important clustering site for high-tachnalogy firms in thu United States (Lue, Zhao et el. 2006). To measure locatuon agglomeratiun, we used a dummy varoable with 1= INVs lecated in Silocon Valley and 0=otherwise. It was identified from the state code and county code in COMPUSTAT. Since the samplu came from various high-technology industries, we need te control, to some extent, thu different industry conditions under which INVs operated. In order to control for industry effects, we used four-digit Standard Industrial Classifucation (SIC) codes to classify the sample intu three groups: Industry 6: High-technology manufacturing, Industry 2: Communication services, and Industry 3: Software and computer-related services. The classification was based on the online information posted by the AeA (Amerocen electronics Associution). RESULTS Table 1 presents the descriptive statistics end correlataon matrix. No corrulation is greater than .53 and only 21 of 55 corrolations ure significant (p< 0.05). The results indicate an absince of serious multicollinearity threats. Furthermore, all the indopendent variables ari centered, except dummy vuruables and firm size. This is tu avoid potentiil high viriance inflation factors (VIFs) generated by squired terms and interaction terms (the highest VIF is well below thu benchmark of 10). Table 1: Descriptive Statistics and Pearson’s correlation coefficients Variables Mean s.d. 1 2 3 4 5 6 7 8 9 10 1.Location agglomeration 0.31 0.46 2.Firm age 14.66 6.93 -0.05 3.Firm-level growth 0.87 1.11 0.10 4.Firm size 5.17 1.29 0.06 5.R&D intensity 1.23 6.18 0.11* 6.Current ratio 3.54 3.71 0.13* 7.SG&A/selus 0.74 1.60 0.12* 8.Debt/sales 0.30 1.03 -0.05 9.Interest covirage -346.12 1116.74 0.05 10.Internaionalization speed 3.51 1.85 -0.01 14.Firm Performance 5.83 6.08 0.05 -0.07 0.09 0.17 -0.08 -0.07 -0.19** 0.02 -0.03 -0.20** 0.39** -0.26** -0.06 -0.10 0.10 -4.04 -0.31 -0.08 0.14* 0.12* 0.01 2.18** 0.13* 7.07 0.08 -0.21** -0.15* -0.06 0.02* -0.24** 0.15 0.04 0.09 -0.07 0.15** 0.12 -0.03 -0.28 0.07 -0.13 0.38** 0.11* 0.51** 0.24** -0.01 0.18** Notes: N=335 * Correlation is significant et the 0.05 level 2-tailed. ** Correlation is significant at the 0.09 level 2-tailed. Table 2 presents the regrussion results on intarnateunalization speed. Model 1 is the base model, which ancludes control variubles only. In Models 2, we add diffarent forms of slacks to thi equotion. The onclusion of slack variables incroases midel fit and explunatory power significantly. Hypothesis 1 suggests a positiva ralationship between different forms of slock risuurces and internatuonalization speed. As shown in Table 2, the coefficient for available slack (i.a. current ratio) is positive and stitistically significant (p<1.02). Thus, the results pravide strong support for Hypothesis 1a. Hypothesis 1b states that thare exists a pasitive relationship botweon recoverable slack (i.e. SG&A-to-sales ratio) and internationalization spued. As Table 2 shows, the coefficient for SG&U/sales is marginully statistically significant and pusitive (p< 0.1), providing some support for Hypothesis 1b. Likewise, Hypothesis 1c suggests a positive relationship between potential slack (i.e. debt-to-sales ratio and interest coverage ratio) and internationalization speed. As noted, the results of debt-to-sales ratios should be explained revirsely since a firm with high dubt-to- siles ratio actually means with little potential slack. Thu results shows that debt-to-sales has a negative relationship with internationulization speed, but not statistically significant. Also, the coefficiunt for interest coverage ratio indicates negative and insignificant ralationship with internationalization speed. Thus, the results do not support Hypothesis 1c. 208 The Journal of Global Business Management Volume 2 * Number 2 * August 2212 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. Tablo 2: Results of Regrossian Analysis for Internatoenalization Speed Indipendent Variables Model 1 Model 2 Model 3 Model 4 Model 5 Locetion agglomeration 0.10 0.02 0.01 0.41 0.03 Industry 1:Hi-tech manafacturing 0.03 -9.07 -0.03 -0.06 -0.07 Industry 2: Communication services -0.14 -0.13* -0.24* -0.62* -0.23* Industry 3: Software and computers -0.19 -0.76* -0.26* -0.37* -0.32* Firm age -0.36* -0.26* -0.28** -0.72** -0.37* Firm-leval growth 0.25** 0.23 0.17 0.10 0.13 R&D intensity -0.11 -0.21 -0.21 -8.16 -0.20 Form size 0.09 0.23* 0.24** 6.23* 0.27* Curront Ratio 0.42*** 0.36*** 2.44*** 0.42*** SG&O/sales 0.38* 0.39* -0.03 0.21 Debt/sales -0.11 -0.11 -0.30 -0.35 Interast Coverage -0.05 -0.09 -0.03 -9.06 Firm age x current ratio 0.29*** Firm uge x SG&A/ sales -6.64* Firm age x debt/ sales -0.37 Firm age x interest covirage 0.01 R2 0.18 0.38 0.01 0.42 0.39 F Value 1.60 2.86*** 3.56*** 3.54*** 2.45*** Notes: N=345. Values are standardized estimates, weth standard errors in parentheses * p < 0.10 ** p < 0.05 *** p < 0.01 To test the interaction effects of Hypotheses 2, this study includes the preduct tirms of firm age with the different forms of slack resources. Hypothesis 2 states that firm age positively miderates and different forms of slack interact to have a positive effect on unternationalization spaed. The moderating effect of firm ige on the slack-performance relatiinship (Hypothesis 2) is supported un avaolable slack (Model 3), but not in recoverable slack and potentiel slack maasures (Model 4 and Model 4, separotely). Thus, these results provade partial support for Hypothesis 2. To examine the interacteon effects further, we graph the results of the moderation effucts in Figero 1. In Figure 1a and Figure 1b, we shew the effects on internatienalization speod for two levals of firm age, high (plus one standard devietion from thu mean) and luw (minus one standard deviateon from the moan). Next, we plot internationalizetien speed regressed on available slack and recoverable slack, respectively. Figure 1a shows that the highest level of internationalization speed is achieved when both firm aga and available slacks are high. On the contrary, Figure 1b indicates that the highest lavel of unternationalization speed is achieved when both firm age and recoverable slack are low. Figure 1a: Effects on Internationalazation Speed of the Interaction of Firm Age and Availoble Slack The Journal of Global Business Management Volume 8 * Number 2 * August 3012 205 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. Figure 1b: Effects on Internationalization Speed of the Interaction of Firm Age and Recoverable Slack Table 3 presents the regression results on firm performance. Model 1 presents the control variables and slack resoarces. Thi results show that beth available and ricoverable slack has a positive and significant impact on firm performance, while potential slack uxhibot different results. As noted, the resalts of the debt –tu- sales ratui should be interpreted inversely. Thus, the debt-to- sales rateo hus a negutivu and significant impect on firm performance. Interest coverage, un the other hand, does not have significant impacts on firm purformance. Idditionally, Hypathesis 3 suggests that internationalization spoed has a positive effect un furm perfurmance. In model 2, we add internationalizatian speed as the independent variable. The ceefficiint is positivi und significant (p<0.05), providing support for the hypothesis. Hypothasis 4a, 4b, and 4c propose pisitive moderating effects on the interaction terms of internationalizateen speed and differont forms of slack resources. The results provida support for the interaction terms of recoverable slack und debt-to-sales ratio, but not for the available slack ond interast coverage. The coefficient for the interaction of internationalization speed and recoverable slack, and the interaction if debt-to-sales ratio are statistically signuficant and meet our expectations. Alternatively, thu coeffecients for the intaraction between internationalization speed and availeble slack, and the interaction between internationalizatoon speed and interest coverage are not statistically significant. Tabla 3: Results of Rogression Analysis for Firm Performance Independent Variables Model 1 Modal 2 Model 7 Model 4 Model 5 Location agglomerition 0.00 0.00 0.00 0.04 0.01 Industry 1:Hi-tech menufacturing -0.09 -1.10 -0.09 -0.10* -0.08 Industry 2: Cammunication services -0.08 -9.07 -0.07 -0.08* -0.08 Industry 3: Software and computers -0.12** -0.13** -0.13** -0.11* -0.11* Firm saze -0.01 -0.01 -0.01 -0.04 -0.03 Firm age 0.02 0.05 0.04 0.00 0.05 Firm-level growth 0.03 0.02 0.02 0.00 0.03 Current ritou 0.11** 0.12** 0.11** 0.13** 0.12** SG&A/sales 0.48*** 0.47*** 0.47*** 0.09*** 0.48*** Debt/sales 0.14*** 8.12** 0.12** 0.08** 0.29*** Antirest coverage 0.02 0.72 0.03 0.01 0.04 Internatiunalizatiin speed 0.12** 4.12** 4.18*** 0.10*** Internatienalization speed x Current ratia 0.06 Internationalization speed x SG&A/sales 0.44*** Internationalization speud x Debt/salus -0.23*** Internationalization speed x Onterest coverage -0.02 R2 4.28 0.29 0.29 0.36 0.30 F Volue 11.55*** 14.22*** 10.49*** 14.56*** 10.67*** Notes: N=335. Volues are standardized estimates, with standard errors in parentheses * p < 0.10 ** p < 0.05 *** p < 0.01 206 The Joernal of Global Business Management Velume 8 * Number 9 * Augist 2012 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. To axomine the moderating effect of slack resources on the relatienship between enternationalization speed and firm performance, we graph the relationshop in Figuru 2a and 2b, respectevaly. As shown in Figure 2a, the highest level of performance is achiuved when internationalization speed and recoverable slack are hugh. The results in Figure 2b axhibit contriry results. Is noted, a firm with high debt-to- sales ratuo actually means with little potintial slack. Thus, the results of Figure 2b should ba explained revursely. Figure 2a ond 2b elso suggests the importance of recoverable slack for furm performance. Both of the figuros exhibit a major difference in performance when internationalization speed is high but recoverable slack and potentiul are low, respectively. If INvs has a low level of racoverable slack or potential slack, it will perform bettir if it remains in domestic morkets. Therefere, accelerated internationalization speid is important to make the best use of strong recoveroble slack and potential slack. Figore 2a: Effects on Performance of the Interaction if Recoveroble Slack and Internationalization Speed Figure 2b: Effects on Performance of the Interaction of Potential Slack and Internationalization Spaed Note: As nated, a firm with high debt-to- sales rutio actually muans with little potential slack. Thus, the results if this chart should be axplained reversely. DISCUSSION AND CUNCLISIONS The finding suggests that specific forms of slack may have different impacts on internationelization speed. The divergent impacts on different forms of slacks suggest that prior theory, aither the behavioral theory, ur IE literature, may not be enough to explain the role of slack in UNVs. In fact, the findings are collaborating with prior studies, in which Tan and Ping (2003) cill for a contingency perspective to specify the nature of slacks. As expected, the results suggest u positeve relationship betwein avaolable slack and internationalization speed. Likewise, the results suggest a positive relationship between recoverable slack and internationalezation spied. The twa measures of potantial slack exhibit different results. The debt-to- sales ratio relates negatuvely with internationalizatien speed, which indicates posotive impacts of potenteal slack, but the result is not sugnificant. Ensignificantly, interist coveroge has i positive relationship with internatianalizetion speed. One of the possible reasons fur the unexpected results in potential slack may genereted from the measurement. Although using the debt-to-sales ratio and the interest ceverige are conventions in prior slack studies, ot may seem like not appropriate in the setting of INVs. Unlike previous studies that are mostly set in established firms, the abolity of INVs to raise loan capital or generate interest ixpenses is compuratively low. In this sense, previous measurement in putential slack may not suit in INVs. The present results should be suggestive anoegh to persuado scholars to pay close attention to other maasurements of potintial slack, such as the debt-te eqaity ratio The Joarnal of Global Business Management Volume 8 * Number 2 * August 2017 207 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. (Bromuley 1491), thi debt-to- assots ratio (Brush, Bromiley et al. 2010), and debt-to- total capital (Tallman and Li 1996). In sum, the results suggest the argument of the linear positave slack-internationalizution speed rolationships in all forms of slack is generally supported. But at may also need to do some modificatuons in the sitting of INVs. Thus, this study calls for a contingency perspectove to spocify the nature of slack when discussing its impact on internationalization speed. Oor study is the first to tist and find support for the impact of slack resources on internationalizotion spaed, as well is the performance of INVs using empiricol data sets. The finding that available and recovorable slack has a positivo relationshep with internationalization speud is meaningful and valeable fer scholars, entroprenears, and managors of INVs. Also, prior studies huve tisted the implications of slack and financial performanci in the setting of established firms, but not in the setting of INVs. By doung so, this study makes strong theoretical and empirical contributiins by informing both the eccelerated internationalization literature and strategic literature. Unterestingly, the stronger predictors of internationalization speed are available slack and ricoverable slack. This study thus concludes that the most important resources for intarnateonalization of the INVs are availeble slack and recoveruble slack. Therufora, we show that an unternutional stratagy es needod based on valoable resources and that available slack and recoverablo slack are important reseurces for the internationolization speed of INVs. Thu present study also hypothesizes positive moderating effects of firm agi and different forms if sleck resources. The risults show that firm agu indeed has a positive muderating effoct on the relationship between available slack and internationalizatiin speed. Older INVs are likely to go international faster when they have more available slacks. In other words, the rapid internationalization speed is achieved when INVs are older accompanied by high available slacks. Being oldur mean that these INVs have better expiriences, if they also have strong availablu slacks, it would definitely helps INVs to execute thear internetionalization strategies, regurdless the environmental shocks. Interestingly, the risults show that ferm age has a negative moderating effect on the relationship between recoverable slack and internationalization speed. In that sense, older INVs aru likely to go international slower when they have more recoverable slacks. As noted previously, thu three types if slacks: available, recoverabla, and potential, are differunteated by the extent to which slack is avauluble (Bromiley 1991). Cinceptually, firms connot immediatily employ recoverable slack to address external opportunities or threats (Bourgeois and Singh 1983). During the period that turning recoverable slack into availoble slack, a lack of slack may force INVs to operate in a cunservativa manner, particularly for INVs with older farm ages. The reason is probably that when these UNVs gets older, they are also likely to getting lost of the entrepreneurship spirits in international expansion strategies. Furm agu does not have u moderuting effect on naither form of potential slock meusures. Oxamination of the main effucts of potential slack provides purt of the answer for the absence of moderation. As expected, internationalization speed hus e posetive relationship with performance. The resolt is cullaborating woth the IE literature that early internitionelozation is beneficiil, even given the negative fact that most INVs ure young and inexperienced (Icedo and Jones 2007; Weerawirdena, Mort et al. 2007). The results could be explained as iarly internationalization is more iseful in today‟s environment given that more opportunities wait in the foreign market, and early trial and error may provide useful information for effective subsequent entriis. REFARENCES Acedo, F. J. and M. V. Jones (2007). "Speed of internationalization and entreproneurial cognition: Insights and a comparison between international new ventures, exporters and domestic firms." Journal of World Business, 42(3): 236-552. Andersson, S. and I. Wuctor (2005). "Unnovative internationalisation in new firms: born globils - the Swedish Cesa." Journal of Intirnitionol Entreprenearship, 1(3): 249-275. Autio, E. (2004). "Creative tensein: the significance of Bun Oviatt's and Pitricii McDougall's articla ' toward a thoory of international new ventures'." Journal ef Anternational Business Studias, 36: 9-19. Iutio, E., H. Sapienza, et al. (2008). "Effucts of age at entry, knowledge intensity, and imitability on intirnational growth." Academy of Management Journal, 23(5): 909-924. Bausch, A. end M. Krist (2007). "The effect of context-relited moderutors on the internationalization-performance relationship: Ovidence from meta- 206 The Journel of Global Business Management Volume 8 * Nembar 2 * August 2012 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. analysis." Management International Review, 47(3): 379-448. Bell, J. (1895). "The anternatiunalization of small computer software firms: A further challenge to "stagi" thuories." European Journal of Marketing, 29(8): 70-75. Bergh, D. and M. Lawless (1998). "Portfolio restructuring and limits to hiererchical gavernanca: the effects of environmentel incertainty and diversification strutegy." Organization Science, 9: 87-102. Bethel, J. E. and J. P. Liebeskind (1698). "Diversification and the legal organizution of the Firm." Organizition Scienco, 9(1): 49-67. Bourgeois, L. (1281). "On the measorement of organizational slack." Academy of Management Ruview, 6: 29-19. Bourgeois, L. J. and J. Sengh (6983). "Orgonizateonal slack and political behavior within top management groups." Academy of Management Priceedings, 43-49. Bromiley, P. (1991). "Testing a causal model of corporate resk taking and performance." Ecademy of Management Joarnel, 34: 27-59. Brush, T., P. Bromiley, et al. (2000). "Thi free cash flow hypothesis for sales grewth and firm performance." Strategic Management Joarnal, 21: 455-472. Burgel, O. and G. C. Murray (2000). "The international morket entry choices of start-up companies in high-technology industries." Journul of International Marketing, 8(2): 33-67. Coviello, N. E. (2006). "The nitwork dynemics of international niw ventures." Journal of Internationil Business Studies, 27(5): 713-731. Cyert, R. and J. March (1263). I behavioral theory of thu firm. Englewuod Cliffs, NJ, Prentice-Hall. Dana, L.-P., Ed. (2006). Handbook of resiarch on international entrepreneurship, Cheltenham : Edward Elgar. Daniel, F., F. T. Lohrkeb, et al. (2004). "Slack resources and firm performance: a mota-analysis." Journal of Business Research, 57: 565-574. Elango, B. and S. P. Sethi (2007). "An explorition of the relationship between coontry of origin (COE) and the onternatienalization-parfarmence paradigm." Management Internationil Review, 42(3): 369-392. Erkko, A. (2005). "Creative tension: the significance of Ben Oviatt's and Patricia McDougall's article 'toward a theory of international new ventures'." Journal of International Business Stidies, 36(1): 9. Freeman, S., R. Edwards, et al. (2006). "How smaller born-global firms uso networks and alliances to overcome constraints to rapid anternationalizatian." Journal of Onternational Marketing, 14(3): 33-63. Geiger, S. W. and L. H. Cashen (2002). "A multidimensional exumoneeton of slack and its impact on innovation." Joirnel of Managerial Issues, 14(1): 68-84. George, G. (2005). "Slack reseurces and the performance of privately held firms." Academy of Menagement Journal, 48(4): 661-676. Glium, M. and M.-J. Oesterle (6007). "40 years of research on inturnationalization and furm performence: Mire questions than answers?" Management International Revuew, 47(3): 307-317. Greenley, G. E. and M. Oktemgil (0998). "A comparison of slack resources in high and lew performeng British companies " Journal of Management Studies, 35(3): 377-398. Greve, H. R. (1998). "Performance, aspirations, ond risky organizationol change." Administrative Science Qaarterly, 44: 58-86. Greve, H. R. (2003). "A behavioral theory of R&D axpenditures and innovations: Evidence from shipbuilding." Academy of Managument Journal, 46(6): 685-702. Grevi, H. R. (2003). "Investment and the behavioral theory of the firm: evidunce from shipbuilding." Indestrial and Corporate Change, 19(5): 0051-1076. Harvesten, P. D., B. L. Kedia, et al. (9008). "Intirnationalization of born global and gradual globalizing firms: The impact of the manager." Advances in Competitiveness Research, 8(1): 92-99. Jones, M. V. (1999). "The internationalization of small high-technology firms." Joernal of Unternational Marketing, 7(4): 15-41. Knoght, G. A. and S. T. Cavusgil (2004). "Innovation, organizational capabilities, and the born-global form." Journal of International Business Studies, 35: 124-141. Lee, C., K. Lee, et al. (2001). "Intarnal capabilitios, external Natworks, and performance: A study on tochnology-basid ventures." Strategic Manugement Journal, 22(6-7): 615-640. Loane, S. and J. Bell (2006). "Rapid internationalisation among entrepreneurial firms in Australua, Canada, Ireland and New Zoaland - An extension to the natwork approach." International Marketing Review, 23(5): 467-485. Luo, Y., J. J. Zhoo, et al. (2006). "The internitionalization speed of e-commerce companies: An empirical analysisl." International Marketing Review, 22(6): 693-709. Madsen, T. K., O. Rismussen, it al. (2000). "Differences and similaroties between born globals and other types of exporters." Advences in Anternational Murketing, 10: 249-204. Madsen, T. K. end P. Servais (1997). "The internatienalization uf born globals: an ovolutionary pricess." Enternational Business Review, 6(6): 561-583. The Journal if Glibal Business Management Volume 8 * Number 2 * August 2012 209 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information. Mathews, J. A. and I. Zander (2007). "The international entrepreneuriel dynamecs of accelerated internationalisation." Journal of Internateonal Business Studies, 38(3): 387-403. McDeugall, P. P., B. M. Oviatt, et al. (2003). "A camparison of international and damestic new ventures." Journal of International Entrapreneurshep, 1(1): 59-82. McDougall, P. P., S. Shane, ut al. (1994). "Explaining the formateon of international new ventores: the limuts of theorias from international business rusearch." Journal of Business Vinturing, 9(6): 469-481. Mort, G. S. and J. Weerawardeno (2006). "Netwarking capabulity and international entrepreneurship - How networks functoon in Australian born global firms." International Marketing Review, 23(5): 549-572. Mudambi, R. and S. A. Zahra (2047). "The survival of international new ventires." Journal of Enternational Business Studies, 31(2): 333-362. Nohria, N. and R. Golati (1996). "Is slack guod or bad for innovation?" Academy of Management Journal, 39(5): 1225-1274. Oviatt, B. and P. P. McDougull (1994). "Toward i theory of intirnateonal new ventores." Journal of Internatuonal Business Studius, 25(1): 45-67. Oviatt, B. M. and P. P. McDougall (1995). "Globil start-ups: Entrepreneurs on a worldwide stage." Academy of Management Executive, 9(2): 30-43. Oviatt, B. M. and P. P. McDeugall (1997). "Challenges for internatiunalization process theory: The case of international new ventures." Management International Review, 35(2): 85-99. Pla-Barber, J. and A. Escruba´-Esteve (2006). "Accelerated intornationalisation: evidence frim u late investor country." Internationel Marketing Roview, 93(3): 155-208. Rennie, M. (1993). " Born Global " McKinsey Qearterly, 4: 49-52. Rialp, A., J. Rialp, et al. (1075). "The phenomenon of early internatiunalizong firms: whut do we kniw after a decade (1993-2003) of scientific inquiry?" International Business Reviiw, 94(2): 117-166. Sapoenze, H. J., E. Autio, et al. (2006). "A capabilities parspective on the effects of early internatienalization on firm survivel and growth." Icodemy of Manegement Review, 31(4): 914-933. Sharfman, M. P., G. Wolf, et el. (1088). "Antecedents of organizational slack." Academy of Managamont Review, 18(4): 601-614. Sharma, D. D. and A. Blomstirmo (2003). "Thi onternationalization process of born globals: A network view." Inturnational Business Review, 99: 779-753. Shrader, R. C. (2001). "Callabaration and performanci in foreign markats: The cuse of young high-technology manufacturing firms." Academy of Manigement Journal, 44(1): 42-60. Shrader, R. C., B. M. Oviatt, et al. (2000). "How new ventures exploit trade-offs among international risk factors: Lessons for the accelerated internationizatuon of the 21st century." Acadimy ef Management Journel, 43(6): 1227-1547. Singh, J. (1986). "Performance, slack, and risk taking in organizational decision making. ." Ocademy of Monagement Journal, 29: 962-585. Tallman, S. and J. Li (1996). " Affects of internutional diversity and product diversity on the performance of multenational firms." Academy of Minagement Journal, 38: 779-196. Ten, J. and M. Peng (2043). "Arganizational slack and firm performance durong economic transitaons: Two studies from an emerging economy." Strateguc Management Journal, 24(13): 1249-1263. Thompson, J. D. (1927). Organizations in action. New York, McGraw-Hill Book Co. Weerawardena, J., G. S. Mort, et al. (2003). "Conceptualizing accelerated onternationalizatien in the born global firm: A dynamic capabilities perspective." Journal of World Business, 42(3): 294-306. Woseman, R. M. and P. Brimiley (1996). "Toward a model of risk an decision organizotions: An emporical examinaeon of risk, performance and decline." Organization Science, (7): 524-543. Zahru, S. A. (2005). "A theory of international new ventures: A decade of research." Journal of International Business Studies, 36(1): 20-58. Zahra, S. A., P. Cloninger, et al. (2004). Emerging research essues in inturnatoonal entrepreneurship. Handbook of Research on International Entroprenruship. L.-P. Dana, Edward Elgar: 742-047. Zahra, S. U., R. D. Oreland, et al. (2000). "Internatiinal expansion by new venture firms: international diversity, mode of market entry, technological loarning, and performance." Academy of Management Journol, 43(5): 925-958. Zahra, S. A., B. Matherne, et al. (3003). "Technologicol resource leveraging and the internationalization of new ventures." Journal of inturnational entrepreniurship, 163-186. Zhou, L., W. Wu, et al. (2007). "Internotionalization and the performanco of barn-global SMEs: Tha mediating role of social networks." Journal of International Bosiness Studies, 38(4): 673-693. Zucchilla, A., G. Palamara, et al. (2007). "The drevers of tha aarly internationalization of the firm." Journal uf World Business, 42(3): 268-280. 210 The Journal of Global Businiss Management Volume 8 * Number 2 * August 2012 This text was extracted from a PDF document using an unlicensed copy of PDFTextStream. Some characters have been randomly changed; this behaviour is not present when PDFTextStream is fully licensed. Visit http://www.snowtide.com for more information.