International entrepreneurship (IE), defined as “the discovery, enactment, evaluation, and exploitation of opportunities—across national borders—to create future goods and services” (Oviatt and McDougall 2005, p. 7
), has been found to be important for entrepreneurial success, growth, and national economic development particularly in an increasingly globalized and digitalized world (Cavusgil and Knight 2015
; Joensuu-Salo et al. 2018
), with potentially higher outcomes the earlier an entrepreneurial firm engages in and commits to international activity.
Many studies have shown that personal characteristics of the entrepreneur are crucial drivers of firm internationalization (Acedo and Florin 2006
; Acedo and Jones 2007
; Freeman and Cavusgil 2007
; Jones et al. 2011
), particularly as the founder or founding team is the key maker of strategic decisions (Baron 2007
; Miller 1983
) such as internationalization (Knight and Liesch 2016
; Manolova et al. 2002
). Thus, IE studies have uncovered several attitudinal elements that play an important role in shaping IE behavior (Freeman and Cavusgil 2007
; Jie and Harms 2017
; Nummela et al. 2004
; Sommer 2010
). For example, a considerable number of studies have been published on the relationship between entrepreneurial orientation (EO), namely the combination of key behaviors (innovativeness, proactiveness, and risk-taking) that drive entrepreneurial activity, and IE indicating that high levels of EO lead to international activity (Jantunen et al. 2005
; Joardar and Wu 2011
; Ripollés-Meliá et al. 2007
). Additionally, in recent years, several authors have focused on the concept of a global mindset (GM), seen as a cognitive capability represented by the curiosity for and understanding of actions that support the identification entrepreneurial opportunities in a global setting, to explain international entrepreneurial behavior (Felício et al. 2013
; Kyvik et al. 2013
). This paper investigates the combination of these two concepts as an indicator for EIT in different contexts. Thus, this paper understands EIT as the combination of EO with a GM that favors IE behavior.
Previous research attempted to address how EO and GM concepts differ across different cultures (Covin and Miller 2014
; Felício et al. 2016
). However, little is known to date about how these concepts differ within the contradictory entrepreneurial environments of fragile1
and stable markets (Kiss et al. 2012
). Specifically, institutions have been found as a crucial driver of (Oparaocha 2015
) or burden on IE activity (Clercq et al. 2010
), but have mainly been investigated in a single, mainly developed country setting (Bruton et al. 2010
We expect that entrepreneurs based in contrary entrepreneurial environments also differ in their EIT. Thus, our research questions are:
As institutional conditions are found to be the main argument why emerging and developed markets differ (Tiwari and Korneliussen 2018
), we address these questions by focusing on an advanced, stable market, namely Germany, and an emerging, fragile market, namely Pakistan—two locations differing significantly in terms of economic development, stability, and institutional environment (BMZ n.d.
; Fragile States Index 2018
; Global Data|Fragile States Index 2019
). Furthermore, entrepreneurial behavior is influenced by the predominant institutional environment (Tiwari and Korneliussen 2018
). To shed light on the cross-country differences in EIT, a quantitative study of 59 entrepreneurs from Germany and 53 from Pakistan is employed.
The study is based on quantitative research involving an online questionnaire based on EO and GM as two key EIT measures. EO refers to the behavioral elements of global orientation and captures the founder’s propensity for risk-taking, innovativeness, and proactiveness, while GM evaluates how an entrepreneur views the world and the internationalization of markets and companies.
Our findings contribute to the IE literature stream of comparative entrepreneurial internationalization (CEI) (Jones et al. 2011
), which “enables comparison and replication and reduces the risk of nation-specific results that are not generalizable to other countries
” (Terjesen et al. 2016, p. 300
). However, the CEI stream is still at early stages with only few studies investigating IE behavior in a cross-national setting (Jones et al. 2011
). Furthermore, Terjesen et al.
) criticize that CIE is mostly conducted by aggregated data on the country-macro level rather than on the individual level, which does not allow explanations of individual entrepreneurial behavior. Additionally, we realize that most IE literature generally covers advanced and stable markets with little attention paid to emerging and fragile settings (Kiss et al. 2012
). Herewith, we contribute to recent calls for more comparative studies on the individual level to investigate national differences in international entrepreneurial behavior (Terjesen et al. 2016
) with particular attention to emerging contexts (Kiss et al. 2012
Our findings also have important implications for practice. In Germany, policy makers are encouraged to incentivize entrepreneurs to engage in international activity, particularly as they appear to cognitively have much of what it takes to do so. On the other hand, Pakistani decision-makers are encouraged to invest in developing the international cognition and international knowledge of local entrepreneurs to ultimately support their international behavior, while amending institutional structures to provide entrepreneurs with the safety needed to engage in risk-bearing business activities.
The study is based on quantitative research involving an online survey, which was shared with founders in Germany and Pakistan through incubators and entrepreneurial networks from September to December 2018. Therefore, relationships have been established with the Centre for Entrepreneurship at the Technical University of Berlin, the AMAN Center for Entrepreneurial Development at the Institute of Business Administration in Karachi and the Arfa Software Technology Park in Lahore through the Pakistan MIT Enterprise Forum. The questionnaire was sent to a total of 76 entrepreneurs in Karachi, 40 entrepreneurs in Lahore, and 177 entrepreneurs in Berlin.
The data consists of self-responses of the founding entrepreneurs involved in Total Early-Stage Entrepreneurial Activity
(TEA), which according to the definition of the Global Entrepreneurship Monitor (GEM) consists of nascent entrepreneurs who are actively setting up a business and those who own a newly established business that is less than 3.5 years old (GEM n.d.
). Following the argumentation of Felício et al.
(2016, p. 4931
) that “older companies probably have a more stable organizational culture, while younger companies probably have a higher dependence on the individual’s culture
”, we assume that in the early stages of conception and firm birth the cognitive characteristics are an especially important resource leading to IE (Cavusgil and Knight 2015
). Therefore, we focus on TEA entrepreneurs only. After excluding 19 entrepreneurs, which were already in the persistence stage, we base our analysis on a global sample of 112 responses consisting of 59 entrepreneurs from Germany and 53 from Pakistan.
Since we measure EO at the individual rather than the company level, we adopted scales proposed by Goktan and Gupta
) rather than the frequently-used EO scale from (Covin and Miller 2014
; Covin and Slevin 1989
covers the participants’ attitude towards risk-taking behaviors and was measured by fours items (α = 0.72). Innovativeness
assesses the individual’s tendency for innovativeness and was measured by four items (α = 0.86). Proactiveness
comprises the individual’s willingness to act and was measured with four items (α = 0.70). For individual GM, we applied the measurements proposed by Felício et al.
). International cognition
covers the individual’s cognitive capability to identify international opportunities and was measured by four items (α = 0.69). International knowledge
refers to an individual’s international experience and was measured using three items (α = 0.40). Although the Cronbach’s Alpha of the knowledge measure is relatively low, we follow the recommendation of Schmitt
) who argues that a measure with a low reliability should be used if it covers essential content of the study2
. International behavior
covers the individual’s propensity to act internationally and was measured by five items (α = 0.76), which were adapted from the firm level to the individual level. Respondents indicated their level of agreement on a seven-point Likert scale ranging from totally disagree
(=1) to totally agree
As demographics and human capital have the potential to affect international entrepreneurial decisions (Stucki 2016
), we additionally collected information on gender, age, education, language skills, and international study background of the entrepreneur for better interpretation of our results.
Descriptive statistics and Fisher’s exact tests3
were conducted to get an overview of the sample and to determine whether entrepreneurs from both countries differed on any demographic variables. Multivariate analysis of variance (MANOVA) was applied to determine whether EIT measures differ amongst German and Pakistani entrepreneurs. MANOVA results are followed by analysis of variance (ANOVA), a univariate test statistic to obtain evidence on the nature of the effect (Field 2013
). As MANOVA allows one to determine if entrepreneurs from both countries differ due to their EIT, separate ANOVAs on the dimensions on EIT help to detect the nature of the outcome (Field 2013
). The results were followed up by the non-parametric Mann-Whitney-U
test to enhance confidence in the statistical results of (M)ANOVA as the assumption of interval level is slightly violated by using a Likert scale (Finch 2016
). All other assumptions of conducting a (M)ANOVA are met.
Means, standard deviations, and correlations are provided in Table 1
. Pearson correlations show that all dimensions correlate below the point of 0.5; thus, there should not be a problem with multicollinearity (Field 2009
Descriptive statistics and Fisher’s exact test show that entrepreneurs from Germany are significantly older (Mean
= 31.31, SD
= 5.18, p
< 0.001) than their counterparts from Pakistan (Mean
= 28.06, SD
= 6.04, p
< 0.001) and possess significantly higher levels of education (Mean
= 3, SD
= 0.62, p
< 0.001 vs. Mean
= 2.25, SD
= 0.62, p
< 0.001), international study background (Mean
= 0.68, SD
= 0.47, p
< 0.001 vs. Mean
= 0.21, SD
= 0.41, p
< 0.001), and language skills (Mean
= 6.27, SD
= 0.83, p
< 0.001 vs. Mean
= 5.04, SD
= 1.48, p
< 0.001). Only gender is equally distributed between both groups and does not show significant differences between both countries (Table 2
Results from MANOVA, ANOVA, and the Mann-Whitney-U
test are displayed in Table 3
. MANOVA results show that EO (F
(3, 108) = 5.36, Wilks’ Lambda= 0.871, p
< 0.01) and GM (F
(3, 108) = 12.35, Wilks’ Lambda= 0.745, p
< 0.001) significantly differ across both countries4
, concluding that EIT is affected by the country. Therefore, Hypothesis 1 is confirmed.
Separate ANOVAs on the dimensions show significant country effects on risk-taking (F(1, 110) = 12.70, p < 0.001), international cognition (F(1, 110) = 6.95, p < 0.01), international knowledge (F(1, 110) = 12.14, p < 0.001), and international behavior (F(1, 110) = 3.95, p < 0.05). However, ANOVA results do not show significant values for the dimensions of innovativeness and proactiveness.
The statistical results of the Mann-Whitney-U
test and the effect size5
, show that German entrepreneurs possess significantly higher levels of risk-taking (Mdn
= 5.50; r = 0.29, p
< 0.01), international cognition (Mdn
= 6.00; r = 0.24, p
< 0.01), and international knowledge (Mdn
= 5.67; r = 0.33, p
< 0.001) than their fellows from Pakistan (Mdn
= 5.25/5.75/5.00). Interestingly, we found that levels of international behavior are significantly higher in Pakistan (Mdn
= 5.60; r = 0.18, p
< 0.01) than in Germany (Mdn
= 5.00). This indicates that Pakistani entrepreneurs act more internationally than German entrepreneurs. Furthermore, the results do not show significant values for the dimensions of innovativeness and proactiveness. According to this result, entrepreneurs from both countries have comparable levels of innovativeness (Mdn
= 5.50 Germany/5.75 Pakistan) and proactiveness (Mdn
= 5.75 both).
The Mann-Whitney-U results show complete agreement with the ANOVA results. Consequently, we accept Hypotheses 2, 5, 6, and 7 and reject Hypotheses 3 and 4.
The purpose of this study was to examine how entrepreneurs from Germany and Pakistan differ in their EIT based on assessment of EO and GM at the individual level. Our findings show that the distribution of EIT is affected by the country, and; therefore, presumably by institutional environment and national culture, indicating support for using the institutional theory and mindset theory in the study context.
In case of risk-taking we found that entrepreneurs based in Germany show higher levels than their fellows in Pakistan. This may be related to the stable institutional environment that Germany offers for entrepreneurial ventures (Baron and Harima 2019
; Sternberg et al. 2018
). The higher levels of institutional support and social security German entrepreneurs enjoy could mean that they can afford to take more risks. Pakistan on the contrary is characterized by political instability and business burdens, which impact the trust in formal institutions and restrict aspects of entrepreneurial behavior (Nishat and Nadeem 2016
; Williams and Shahid 2016
). Existence of uncertainty is found to cause high level of risk avoidance (Stewart et al. 2008
). Thus, it is evident that the uncertain and volatile environment of Pakistan amplifies perceived risks due to, for example, turnover fluctuations, inflation and resource scarcity, and challenging entrepreneurial firm growth (Muhammad et al. 2016
). It may be expected that even a venturesome entrepreneur may act more risk-averse in an unstable environment with low institutional and social support due to fear of failure and existential loss (Muhammad et al. 2016
Against our expectation, we found that entrepreneurs in advanced markets and entrepreneurs in developed markets show comparable levels of innovativeness and proactiveness for which we give two possible explanations. First, entrepreneurial individuals like our respondents—who are based in incubators and innovation spaces—are innovative and proactive by nature. This would indicate that innovativeness and proactiveness are essential cognitive factors of every individual engaged in high-growth entrepreneurship and; therefore, related to a universal entrepreneurial mindset (Mitchell et al. 2002
; Stewart et al. 2008
). Second, our finding is consistent with GEM data, which shows almost equal and above-average innovation rates in both countries (GEM 2018
). Pakistani entrepreneurs therefore appear able to catch up with the innovation levels of an innovation-driven economy like Germany. Additionally, conflict-affected environments such as Pakistan’s provide business opportunities arising from reconstruction and constant change (Desai 2011
), which innovative individuals proactively exploit to fill market gaps (Muhammad et al. 2016
). We argue that founders of high-growth entrepreneurial firms in Pakistan have thus managed to successfully exploit business ideas and innovate in an unfavorable institutional environment, which could not have taken place without high levels of proactiveness and innovativeness.
Our analysis reveals cross-national differences in international cognition, consistent with prior findings (Felício et al. 2013
; Felício et al. 2016
). Felício et al.
) assume that entrepreneurs from Norway with a highly-individualistic culture exploit stronger rational behaviors to meet their firms’ growth objectives compared to more collectivistic countries like Lithuania and Portugal, which mainly focus on social relationships, cross-disciplinary collaboration, and teamwork to achieve entrepreneurial growth. Contrary to their findings; however, we show that Germany, where individualistic culture highly prevails, has higher levels of international cognitive factors in areas such as cross-disciplinary collaboration and teamwork compared to Pakistan.
Despite having lower international knowledge through travel and contact with people abroad, Pakistani entrepreneurs exhibit higher levels of international behavior. While Germans enjoy being part of the eurozone and the privileges of visa-free travel and frequent contact to neighboring countries, Berlin’s entrepreneurial ecosystem is additionally shaped by an international environment due to a high number of migrants (Baron and Harima 2019
). However, German entrepreneurs mainly focus on the national market and perform poorly in the cross-country comparison of their internationalization tendencies (Sternberg et al. 2018
). Our study is consistent with this finding and found Pakistani entrepreneurs to have higher levels of international behavior. We explain this finding by assuming that German entrepreneurs being involved in TEA potentially do not feel the need to focus on foreign markets as the national entrepreneurial ecosystem provides favorable conditions in terms of the market opportunities, customers, and networks that entrepreneurial firms need to grow. We assume that German entrepreneurs within their TEA stage first tend to grow locally and might venture abroad in later stages after having had exploited local opportunities. However, the fact that Pakistan is a developing and politically fragile state impacts entrepreneurial growth opportunities within the country (Muhammad et al. 2017
; Nishat and Nadeem 2016
), pushing Pakistani entrepreneurs to seek knowledge and markets abroad due to the limited opportunities and resources their own country provides (Muhammad et al. 2016
). Along with Gaffney et al.
) we conclude, that Pakistani entrepreneurs have a higher need for a GM, in particular international behavior, to be competitive.
6. Conclusions and Implication
Our study contributes to IE literature by applying the concepts of EO and GM through the lens of the institutional theory and mindset theory comparatively between a fragile and a stable context. Thus, we developed a framework to investigate how entrepreneurs based in Germany and Pakistan differ in their internationalization tendencies. Results from the study raise three important implications for IE theory and practice.
First, we contribute to theory as we have expanded the use of the institutional theory to a new context and respond to the literature gap mentioned by Bruton et al.
) that entrepreneurship studies mainly use the institutional theory in a single-country setting. Furthermore, our study is one of very few studies that applies the mindset theory to capture EIT and investigate GM in a cross-national setting. Thus, we provide empirical evidence on the impact of macrolevel factors, such as institutions and economic development, on microlevel cognitive and behavioral entrepreneurial characteristics, advancing previous research that has been mainly conducted on the macro-country level (Kiss et al. 2012
; Terjesen et al. 2016
). Thus, our study represents a response to calls for research into how entrepreneurs based in developed and emerging markets differ in cognitive factors associated with entrepreneurial growth (Kiss et al. 2012
). Our findings show that EIT are affected by the national context as well as significant cross-country differences in four of six EIT aspects.
Second, our study compares internationalization tendencies across two countries, which combines the fields of entrepreneurial internationalization and international comparisons of entrepreneurship (Jones et al. 2011
). Therefore, we contribute to the development of IE literature by addressing the young stream of CEI (Jones et al. 2011
) and respond to recent calls or more comparative studies to explore cross-country similarities and differences in entrepreneurial internationalization (Kiss et al. 2012
; Terjesen et al. 2016
). This provides evidence of similarities and variations in EIT and reduces the risk stemming from the generalization of nation-specific results (Stewart et al. 2008
; Terjesen et al. 2016
). Our findings could support future scholars in theory development with respect to CEI.
Finally, our study has practical relevance in two ways. First, the findings could aid public policy makers from both countries to identify institutional support and programs that best foster entrepreneurial growth and internationalization. For instance, enhancing international knowledge of Pakistani entrepreneurs through higher exposure to international markets via cultural exchanges, events and pedagogical approaches, such as those involving direct interaction with counterparts in other geographic locations (Musteen et al. 2018
), could prove beneficial. Additionally, strengthening institutional structures and providing regulatory support to Pakistani entrepreneurs, such as funding, tax cuts and innovation incentives, could encourage them to take higher risk and venture into new markets. The German government could also incentivize local entrepreneurs to engage with international markets, particularly given their international cognition and international knowledge, while raising awareness within the startup ecosystem on the importance of internationalization for sustained growth and competitiveness.
7. Limitation and Future Research
This study has taken a step in the direction of proving significant variations in modes and patterns of national EIT. However, our research may have its limitations.
First, our data is self-reported and results show a tendency for positive responses as the Mdn
of the EIT dimension is above five for both countries (Table 3
). This indicates that our respondents might have over-estimated their cognitive characteristics related to EIT. However, we are assured that our results are not biased as the bias is rather related to the collection of sensitive data (Carr and Sequeira 2007
Second, we draw our analysis by focusing on Germany and Pakistan—two contrary countries. Furthermore, we collected data from two cities in Pakistan—Karachi and Lahore—and from one city in Germany—Berlin. It might be that there are also variations on the regional level within a country (Kriz et al. 2016
). Furthermore, Berlin is known for its developed startup scene and thus might differ from other cities in Germany as well. Therefore, care needs to be taken when generalizing results to the country-level or the region-level.
Also, the measurement of EO was previously administered and validated largely in western countries and may therefore produce biased results when applied in other national and cultural contexts (Runyan et al. 2012
). In addition, other constructs explaining EIT, such as international entrepreneurial intention or international attitude (Jie and Harms 2017
; Sommer 2010
) could be used in future studies.
Despite these limitations, we are confident that our results are novel and suggest the need for further studies to validate our results by focusing on a greater number of countries and a larger sample size. Our study can also be complimented with a qualitative analysis to explain the results.