How does managerial experience predict the internationalization type of a young firm?

Abstract

This study aims to find out how useful managers' past general and export experience is in predicting whether young manufacturing firms become fast internationalizers. Extant literature about the role of managerial experience in determining young firms' internationalization type is scant. This paper fills this gap by providing systematic evidence on which kinds of general and export experience can be used for accurate predictions of two firm types: born globals and general fast internationalizers. Our dataset encompasses information about managerial experience of the whole population of young Estonian manufacturing firms. Based on using four different prediction methods (logistic regression, rough sets, decision tree, neural networks) and a large variety of variables reflecting managers' past experience, the results indicate that in prediction models, export experience variables are more valuable than general experience variables. Born globals can be predicted with an accuracy of at least 90% in case of all applied machine learning methods, while the precision is lower in case of general fast internationalizers. The study leads to important implications for international business theory and practice.