^aKorea University Business School, Anam-dong, Sungbuk-gu, Seoul, Korea. E-mail: jayrhee@korea.ac.kr

Received 26 February 2007; Revised 4 June 2007; Accepted 15 August 2007.

Abstract

This study seeks to advance the state of our theoretical as well as empirical understanding of the determinants of entry mode choice and internationalization performance of new ventures. Based on three leading theoretical perspectives — transaction costs, social networks and absorptive capacity — we develop hypotheses focusing on the role of technology-based advantage, the social networks of start-up team members and the absorptive capacity of employees in predicting entry mode choice and new venture internationalization performance. Using data on the internationalization of new Korean ventures, we find evidence that social network and absorptive capacity theories have considerable explanatory power beyond that of transaction cost theory in predicting entry mode choice and the internationalization performance of new ventures.