Paper short abstract:

Our study of IT start-ups in Japan reveals that most of these firms do not internationalize successfully. We find similary results for China and Korea. We identify a variety of factors that deter Japanese and East Asian start-ups from internationalizing.

Paper long abstract:

Rapid technological progress and globalization of markets have lowered international market entry barriers and reduced investment requirements for internationalizing firms, particularly in Information Technology (IT) and internet-related products and services. As a result, the internationalization of start-ups, understood as small, newly founded firms that are designed to grow, has intensified in recent years. There

are now numerous 'born globals': entrepreneurial start-ups that derive a substantial portion of

their revenues from international markets at the point of, or near, their founding. However, empirical research on born globals is predominantly based on the study of Western country firms. Our study of 40 IT start-ups in Japan, China and Korea reveals that most of these firms do not internationalize successfully. We identify a variety of factors that deter East Asian start-ups from internationalizing, including large domestic markets, general resource and capability shortages, insufficient international market knowledge, international adaptation costs, and unfavorable home

and host country policies. Findings suggest that start-ups in East Asia may not necessarily face lower internationalization barriers than established firms. We observe across our three focal East Asian countries, many IT products and services are strongly customized to national markets, especially in the early stages of

technology life cycles. While such customization may enhance domestic performance, it also results in major adaptation cost when internationalizing. A shortage of international networks and overseas market knowledge is also a frequent and important bottleneck for the internationalization of start-ups, as we can see for the case of East Asian new ventures.

Paper short abstract:

Previous research suggests small and medium-sized retailers can survive by specializing. However, it is difficult to do so since their resources are limited. This study shows one way of becoming specialized through the case of shoe industry in Japan; shoe retailers learned internationally together.

Paper long abstract:

Research suggests three ways for small and medium-sized retailers to survive: (1) joining franchised chains or the Keiretsu distribution system, (2) becoming large by staying independent and developing chain stores, and (3) specializing, staying independent and relatively small.

When such retailers pursue the third strategy, how they can become specialized enough to satisfy certain consumer needs? Since their resources are limited, this is difficult for them. Through a case study of the shoe industry in Japan in the 1990s and 2000s, this study examines one way small and medium-sized retailers can specialize and survive. This study contributes to the research on the survival strategy of such retailers by demonstrating how they can specialize.

The case study reveals two points. (1) Specialized knowledge that does not exist within the country can be learned from other countries. Small and medium-sized retailers do not necessarily create specialized knowledge themselves. (2) The cost of learning can be shared by forming a group. They do not necessarily do it alone.

About 30 small and medium-sized shoe retailers in Japan survived in the 1990s and 2000s, though the competitive environment was severe. The bubble economy collapsed in 1991, and the shoe retail market did not grow. The competition increased against large chain stores, department stores, supermarkets or general merchandise stores (GMS), and "roadside shops," which are comparable to category killer discount stores in the suburbs. Small and medium-sized shoe retailers cooperated and imported specialized knowledge and techniques for foot health and comfort shoes from Europe, especially Germany. Therefore, they were able to offer comfortable and properly fitted shoes, and those met the potential needs of consumers.

This study provides a detailed description of the process through which small and medium-sized shoe retailers became specialized stores, and survived by triangulating primary and secondary sources. Data were obtained from interviews with 12 shoe retailers, magazine and newspaper articles, and books on the shoe industry.

Paper short abstract:

I propose a methodological concept of enacted measures of entrepreneurial ecosystems, and examine it empirically in Tokyo and Bangalore. I explain variation in the substance and sequence of enacted measures by identifying underlying interaction of old economy factors and transnational connectedness.

Paper long abstract:

To contribute to the understating of how local entrepreneurial ecosystems (EEs) can be compared and measured in a way that pays attention to context and time, this paper uses a bottom-up approach anchored in organisation theory (institutional work, practice) to propose a concept of enacted measures. This is a methodological contribution, which allows to find out what elements of local EEs their stakeholders care about in a given phase of EE development, and can also be used to compare across locations in a more contextualised way.

This paper examines enacted measures in a longitudinal perspective, through a qualitative inductive study in two relatively advanced but contextually different EEs - Tokyo in Japan and Bangalore in India. The data is based on approximately 11 months of fieldwork research that generated a matched sample of over 80 semi-structured interviews with various types of EE stakeholders (entrepreneurs, investors, other startup supporters), supplemented by participant observation of events and spaces, and by archival sources. The dataset is constructed in a way that allows the capturing of changes over time by incorporating EE stakeholders who were active in various stages of EEs' evolution, spanning approximately past 30 years.

The findings indicate that while broad types of enacted measures related to elements of EE institutional infrastructure are similar, many specific instances vary (in both substance and sequence) due to differences in underlying substitutable interaction of old economy factors and transnational connectedness of the locations. Moreover, the study reveals that evaluations of enacted measures are not always positive but can also be disputed. This happens not only due to different agendas among EE stakeholders but also when the actions relate to elements of EE institutional infrastructure perceived as either not developed enough and not building on proven or potential strengths of the local EEs, or too developed already.

Overall, the insights of this paper can be conceptualised as a bottom-up framework for comparing sub-national EEs over time, the Varieties of Entrepreneurial Ecosystems, which is anchored in organisation theory but sensitised by insights from comparative frameworks like Varieties of Capitalism. Implications for research and for policy are proposed.