1. ¹CRECIS, Louvain School of Management, Université catholique de Louvain, Louvain- La-Neuve, Belgium
2. ²School of Business and Economics, University of Exeter, Exeter, England

Correspondence: R Coeurderoy, CRECIS, Louvain School of Management, Université catholique de Louvain, Place des Doyens, 1, B-1348 Louvain-La-Neuve, Belgium. Tel: +32 10 47 84 24; Fax: +32 10 47 83 24; E-mail: regis.coeurderoy@uclouvain.be

Received 26 July 2005; Revised 20 July 2007; Accepted 31 August 2007; Published online 21 February 2008.

Abstract

New-technology-based firms (NTBFs) embarking on a strategy of rapid internationalisation choose foreign market entries that minimise transaction costs and the related risks of failure. Means to reduce the young firms' vulnerability to the appropriation of intellectual capital are particularly important influences on early foreign market choices. We explore the effect of the institutional dimension, specifically the national regulatory environment, on the location choices and the speed of internationalisation by British and German NTBFs. We provide evidence that entrepreneurial young firms choose to enter country markets offering better regulatory protection for their intellectual property. This decision is moderated by a home regulatory regime bias. In contrast, we observe that the speed of internationalisation is influenced less by the foreign regulatory regime and more by industry and firm characteristics. We also observe that managerial experience influences the location choices of NTBFs facing regulatory hazards.