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Internationalization speed and performance outcomes of international new ventures in the medical technology sector

Laurell, Hélène, Gabrielsson, Jonas
2018

Conference paper (Refereegranskat)

Abstract:

The demand for medical technology innovations for improving and managing human health is global. Many players in markets for medical technology are new ventures operating in relatively small niches (Altenstetter, 2003) and struggling to build capabilities and develop internationalization strategies to scale up production and sales. However, the regulation and financing of the healthcare sector are to a large extent country specific. For example, the healthcare sector in the UK is financed through taxes, while US healthcare is primarily financed through insurance systems (Donaldson et al., 2004). Such differences affect the processes of valuing, buying and paying for medical technology innovations across the different healthcare systems and complicate procurement and reimbursement procedures for new ventures engaged in the commercialization of medical technology innovations. 

The development and commercialization of medical technology innovations are embedded in institutionally complex markets, in which layers of regulative, normative and cultural-cognitive elements (e.g. Scott, 2014) vary significantly across countries. Research that investigates the institutional environment is a promising direction to build theoretical explanations of the impact of heterogeneous markets on international entrepreneurial activities (Etemad, 2013; Jones et al., 2011a, 2011b). However, the international entrepreneurship literature has largely failed to address how institutional cross-country heterogeneity affects the sales and marketing strategies of new ventures (cf. Coeurderoy and Murray, 2008). In addition, only recently has the literature begun developing frameworks that shed better light on the impact of different customer and product types when penetrating new markets (Hennart, 2014; Onetti et al., 2012). 

The global demand for medical technology innovationscalls for better understanding of how differences across national healthcare organizations influence the international performance of medical technology ventures.Against this, in this paper we aim to develop a theoretical framework that explains the relationship between internationalization speed and performance outcomes of international new ventures (INVs) when commercializing medical technology innovations across institutionally heterogeneous markets. Our theory and logic emphasizes factors such as industry conditions, foreign market knowledge and network intensity (Oviatt and McDougall, 2005).In this vein, we acknowledge that it is critical to understand how different actors in the healthcare value chain influence INVs’ choice of countries to enter and whether their existing knowledge bases and networks are aligned with industry- and/or country-specific requirements (e.g. regulations, health economics, clinical trials). However, we also complement and extend general models of international entrepreneurship by identifying institutional healthcare dimensions (i.e. regulative, normative and cultural-cognitive) as moderating forces that explain either the acceleration or deceleration of international sales of medical technology innovations, depending on each country’s institutional healthcare setting. Thus, we suggest that a country’s healthcare setting also affects the sales process of INVs and how quickly they can get medical technology innovations adopted in the healthcare system. Building on our theory and logic, we formulate propositions and illustrate relationships among different constructs. 

This paper contributes to theory and research on international entrepreneurship field. Its main contribution is to better understand the relationship between internationalization speed and performance outcomes for INVs when operating in institutionally heterogeneous healthcaremarkets. Informed by this reasoning, we therefore introduce a conceptual model that specifies different factors that influence internationalization speed and subsequent performance outcomes.

Cite: Laurell, Hélène & Gabrielsson, Jonas, Internationalization speed and performance outcomes of international new ventures in the medical technology sector, 2018