International Expansion Success Through Vicarious Learning: Evidence from Korean Start-up Firms

Although start-up firms are relatively insufficient in resources such as knowledge about potential host countries that can be acquired from experiential learning, some start-up firms have successfully expanded their businesses into foreign markets. Advocating the idea that vicarious learning can contribute to explaining this phenomenon, the authors attempted to examine whether and how learning from competitors, network relationships, and leaders enables start-up firms to successfully expand their operations into international markets. Using the knowledge-based view and the contingency theory as underlying frameworks, the authors developed a model that may predict the effects of vicarious learning and contingency factors on international expansion success. The model was empirically tested using a comprehensive dataset containing Korean start-up firms’ international accounting information. The sampling frame was Korean start-up firms’ international expansion events from 1998 to 2014. Empirical evidence presents that start-up firms’ vicarious learning from competitors, network relationships, and leaders positively affect their international expansion success. In addition, both market type and expansion strategy moderate some of the effects. The results of the study suggest that a start-up firm should try to learn not only from foreign, domestic, and global competitors experienced in the host-country economy but also from its network relationships and its leaders in order to succeed in the economy. Furthermore, the results suggest that both developed economy institutions and indirect expansion can reduce the importance of vicarious learning in facilitating ventures’ international expansion success. The present study contributes to knowledge extension of two research streams-international business and organizational learning—by emphasizing the importance of vicarious learning in the context of start-up firms’ international expansion success. This article is concluded with a discussion of further implications for theory and practice and the directions of future research in addition to the limitations of the current research.