New ventures are increasingly internationalizing from emerging economies, but the role of their home country and any associated within-country regional differences are not well understood. In this article, we look at a new venture in China and how its headquartered region promotes its internationalization. We present empirical evidence that shows the interrelatedness between a venture’s region and internationalization: When institutional development in a region is strong, the impact of foreign firm presence on venture internationalization becomes even stronger. We discuss implications for managers of multinational enterprises and new ventures operating in emerging economies as well as policymakers in these economies.

Are regional differences affecting new venture opportunities?

Emerging economies are becoming increasingly important sources of outward foreign direct investment and exporting (Ramamurti & Williamson, 2019; UNCTAD, 2015). This appears to be a trend for not only existing, large firms in emerging economies (e.g., Li, Li, Lyles, & Liu, 2016; Ramasamy, Yeung, & Laforet, 2012) but also new ventures (Li, 2013; Lin, Mercier-Suissa, & Salloum, 2016; Manolova, Manev, & Gyoshev, 2014). In exploring the antecedents of new venture internationalization from emerging economies, existing research has focused on entrepreneurial characteristics (e.g., Sekliuckiene, 2017), firm-level factors such as networks (e.g., Yamakawa, Peng, & Deeds, 2008) and capabilities (e.g., Yamakawa, Khavul, Peng, & Deeds, 2013), and industry linkages (Gashi, Hashi, & Pugh, 2014). Despite the external environment being a defining aspect of emerging economy new ventures, little is known about the role of any within-country differences in these ventures’ internationalization. To unravel the effects of the external environment within a new venture’s headquartered region of an emerging economy on venture internationalization, this study draws on institutional theory as well as the foreign direct investment (FDI) spillover literature. First, we consider the uneven development of institutions within an emerging economy. Prior research showed that institutions influence entrepreneurial behaviors and entrepreneurial strategies (Batjargal et al., 2013; Hitt, Li, & Xu, 2016). The institutional environment in emerging economies is typically transitional in nature; the transition takes time and is often gradual (Child & Tse, 2001; Lu, Xu, & Liu, 2009), with some regions catching up with developed economies quickly and others laggingbehind(Luo &Chung,2013;Miller, Lee, Chang, & Le Breton-Miller, 2009).