IS INTERNATIONALIZATION
ASSOCIATED WITH INVESTMENTS
IN HRM? A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING
MARKETS
S U S A N N A K H AV U L , G E O R G E S . B E N S O N , A N D
D E E PA K K . D AT TA
This study investigates how internationalization is associated with investing in
HRM within entrepreneurial firms from emerging markets. Using a sample of
171 firms from India, China, and South Africa, we show that when firms internationalize either into more economically developed countries or into countries
with stronger employment regulations, they also invest more in HRM practices.
Moreover, firms led by CEOs with general management experience and those
more concerned with meeting international standards invest more in HRM
practices. Finally, HRM investments are also greater in entrepreneurial firms
characterized by extensive international partnerships. Overall, our findings suggest that internationalization by entrepreneurial firms in emerging markets is
associated with developing HRM practices. © 2010 Wiley Periodicals, Inc.
Keywords: internationalization, emerging markets, entrepreneurship
Introduction
ntrepreneurs and start-up firms worldwide face inherent challenges of building organizations from the ground up.
Not only must managers in such firms
create new products, obtain financing,
and build a customer base, they also must recruit, develop, and manage a talented and
motivated team of employees. Entrepreneurial firms face many of the same human resource management (HRM) issues as larger
firms, but without the same training, resources, or formal policies to guide them. In
E
such firms, HRM is often ad hoc and is typically a reflection of the backgrounds of founders (Cardon & Stevens, 2004; Mayson &
Barrett, 2006). This is particularly true among
firms in emerging markets such as India,
China, and South Africa (Saini & Budhwar,
2008; Shen, 2008). In these countries, liberalized trade policies in recent decades have
resulted in significant economic growth.
Much of the growth has come from the
exports of small entrepreneurial firms, which
represent a potentially significant and understudied catalyst for changing traditional employment practices in these countries.
Correspondence to: Susanna Khavul, Department of Management, The University of Texas at Arlington,
701 S. West St., Suite 231, Arlington, TX 76019, Phone: 817-272-3868, E-mail: [email protected].
Human Resource Management, July–August 2010, Vol. 49, No. 4, Pp. 693– 713
© 2010 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com).
DOI: 10.1002/hrm.20367
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HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
In this study, we investigate the relationships between firm internationalization and
HRM investments. We seek to understand
how internationalization by small, entrepreneurial firms in emerging markets is associated with investing in HRM practices. Research
on HRM practices in small, entrepreneurial
firms has typically been conducted in developed countries (e.g., Cardon & Stevens, 2004;
Heneman, Tansky, & Camp, 2000). Our study,
therefore, represents an original effort at examining the relationships between internationalization and HRM practices in relatively
small, entrepreneurial firms in emerging
economies. In the process, it addresses an important gap in the
This study was
international, entrepreneurship,
and HRM literatures.
motivated by
Understanding how internationalization motivates small
our desire to
firms in emerging markets to inunderstand the
vest in HRM practices provides
insight into the impact of trade
factors associated
liberalization around the world.
Strong evidence exists that interwith investing
nationalization is a catalyst for
in HRM in small
organizational change and adopting new business practices (Henentrepreneurial
dry, 1996; Som, 2007). Research
has shown that HR practices
firms that cross
around the world are spread
national borders.
through trade (Zeynep, 2005),
joint ventures (Yan, 2003), and
multinational operations (Ferner,
Quintanilla, & Varul, 2001). Our study adds
to this research by exploring conditions
under which internationalization is associated with investing in HRM in small entrepreneurial firms from emerging markets.
While our research design precludes us from
drawing prescriptive inferences or causal attributions, our findings do suggest that internationalization by entrepreneurial firms is
accompanied by concomitant investments in
the HRM function.
Our study is based on 171 small, entrepreneurial firms (with a median size of 50
employees) in three key emerging markets:
India, China, and South Africa. In designing
the study, we intentionally selected China,
India, and South Africa because each had
implemented aggressive liberalization in the
ten years between 1992 and 2003, and over
the same period, these countries had become
important in global trade (Luo & Tung, 2007).
Drawing on relevant theoretical and empirical literature, we develop hypotheses on how
HRM investments in internationalizing entrepreneurial firms are associated with the
economic development of the countries
where they do business, the regulatory
regimes they encounter, and expectations
related to meeting rigorous international
standards. In addition, we examine how the
characteristics and backgrounds of CEOs are
associated with the willingness of firms to
make such investments. Finally, we examine
how using expatriates and the prevalence of
international partnerships are associated with
investments in HR.
HRM in Emerging Economies
While emerging markets have received greater
attention in the management literature in
recent years (Wright, Filatotchev, Hoskisson,
& Peng, 2005), studies of practices adopted
by small entrepreneurial firms remain relatively scarce (Bruton, Ahlstrom, & Obloj,
2008). In the context of established firms,
research has suggested that national cultures,
local business practices, and government
regulations significantly influence HRM practices (Ryan, McFarland, Baron, & Page, 1999;
Yan, 2003). For smaller firms in emerging
markets, research has suggested that HRM
practices often undergo rapid transition (Saini
& Budhwar, 2008; Shen, 2008). This study
was motivated by our desire to understand
the factors associated with investing in HRM
in small entrepreneurial firms that cross national borders. Although our study is not a
cross-national comparison, we briefly review
the evolution of employment relations in
India, South Africa, and China to build a
foundation for understanding the nature of
HRM in emerging markets in general.
HRM practices in India have developed
over centuries; now spurred by recent internationalization and economic growth, they
are evolving rapidly. Ancient roots of HRM in
India can be traced to the Arlhasastra, a 4thHuman Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
century BC document that offers guidance
on administration and managing people. The
influences of Islamic rulers and British colonial administrations over the past millennium have also left their imprints on Indian
employment law and HRM practices (Chatterjee, 2007). More recently, in post-independence India, industrial relations that focused
on maintaining employment-income protection and industrial peace have been valued
(Budhwar, 2003; Frenkel & Kuruvilla, 2002;
Ramaswamy & Schiphorst, 2000; Sakar, 2007).
With the advance of globalization, the influences of India’s historical traditions remain
but are now subject to the push of international competitive pressures and to the pull
of international HR standards (Pio, 2007;
Som, 2007).
The volume of research on HR practices
in India has increased significantly over the
past decade. Singh (2003) observed that Indian firms, like their Western counterparts,
perform better when HRM practices align
with corporate goals. This was particularly
true for larger, established firms focused on
foreign customers. Some of this research suggested that India is moving rapidly toward
adopting modern, integrated HRM practices.
For example, research by Budhwar and Boyne
(2004) and Budhwar and Baruch (2003) indicated that using advertising, assessment, and
psychometrics is increasingly common for
professional and white-collar positions. On
the other hand, Paul and Anantharaman
(2004) found that the style and influence of
the owner-manager remain dominant to the
extent that they overshadow the performance
predicting effects of formal HR practices.
Moreover, in a study of small Indian manufacturing firms, Saini and Budhwar (2008)
found that HRM is still informal and achieved
through ongoing interpersonal relationships
among owners, managers, and workers. Saini
and Budhwar (2008) also observed, however,
“Due to pressure from global buyers … SME[s]
have begun to realize the need to give primacy to employee competencies and professionalism of their mindsets over the earlier
focus on loyalty” (p. 420). In general, small,
entrepreneurial firms in India are seeking the
benefits of internationalization, and many
Human Resource Management DOI: 10.1002/hrm
are finding that investing in HRM may be the
cornerstone of continued competitiveness.
A somewhat different scenario exists in
South Africa. Although it shares a British colonial past with India, South Africa’s recent
history of apartheid brings into sharp relief
how past conflicts over employment practices affect current HRM trends (Grobler,
Warnich, Carrell, Elbert & Hatfield, 2006;
Sakar, 2007; Jackson, 1999). During apartheid, South African employment practices
were linked directly to government policy
related to population segregation. HR policies
both institutionalized and legally enforced
discrimination based on race. Although
“ubuntu (humaneness) underlies traditional
group-decision making” (Horwitz, 2002, p.
217), “with some exceptions, managerial and
human resource practices were paternalistic
and behind those in developed economies”
(Horwitz & Smith, 1998 p. 590). Righting the
historically coercive and underdeveloped
labor practices of the past remains a central
focus in the post-apartheid South Africa. Historical injustices are also the motivation for
much reform in employment law and diversity management (Horwitz, Bowmaker-Falconer, & Searll, 1996). Since 1994, foreign
investment has returned to South Africa, and
with it has come foreign competition for domestic industries that were protected for decades. Not surprisingly, investment in HRM
has become an agenda item for South African
firms.
Empirical research on South African firms
is sparse, and that on HR practices in small,
entrepreneurial firms is virtually nonexistent.
A few studies, however, offer some perspective on the changing nature of HRM in South
Africa (Menon & Kotze, 2007). Studies by
Horwitz et al. (1996) and Appiah-Mfodwa,
Horwitz, Kieswetter, and Solai (2000) and
Kraak (2005) all indicated that greater emphasis on competitiveness and the need to
retain skilled workers is forcing South African
firms to invest in training and development.
Given the lack of research, calls to take HRM
more seriously abound in South Africa (Cunningham, Lynham, & Weatherly, 2006).
Investing in modern HRM practices is critical
for domestic firms and, if implemented
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HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
properly, has the capacity to enhance the
country’s economic competitiveness significantly.
Chinese labor and employment practices
are without a doubt culturally and structurally distinct; however, they share some commonalities with both the Indian and the
South African experience with HRM (Warner,
2008). Pre-reform Communist rule in China
emphasized employment stability and allocating social welfare through the workplace.
Allocating, selecting, and training workers
took place at the point of entry into the
workforce, and labor mobility was geographically restricted through a residency system.
Tight government control of large, stateowned enterprises combined with traditional
Confucian values that emphasized loyalty,
respect for hierarchy, and harmony led to a
consistency in HRM practices in pre-reform
China (Ding, Goodall & Warner, 2000; Warner, 2004; Zhu, Thomson, & De Cierri, 2008).
Following a series of market-oriented reforms
in the 1980s, however, and aggressive integration with the global economy in the
1990s, competitive pressures have forced significant changes in employment practices.
Lifetime employment guarantees were abandoned in favor of short-term contracts; social
benefits ceased being tied to the workplace;
dismissal on economic and performance
grounds entered as a practice; and decisionmaking power devolved to the regional and
enterprise levels (Ngo, Lau, & Foley, 2008;
Shen, 2008; Warner, 2008).
Of the three developing economies
examined in this study, HRM in China has
received by far the most attention from researchers, ranging from small case studies to
large-scale surveys (see Zhu et al., 2008, for a
review). Research by Warner (1986, 1993,
1996) documented early changes in HRM
following China’s market liberalization and
proliferation of privately owned enterprises.
More recently, researchers have addressed
HRM in large Chinese multinationals (Shen
& Edwards, 2004), large state-owned and
privately owned firms (Deng, Manguc, &
Benson, 2003), foreign joint ventures and
subsidiaries (Bjorkman & Fan, 2002; Law,
Tse, & Zhou, 2003; Takeuchi, Wakabayashi,
& Chen, 2003), township and village enterprises (Ding, Ge, & Warner, 2004), and small
micro-enterprises (Cooke, 2005). Research
on small firms has indicated a wide variation in HR practices with a significant transition taking place between traditional
practices and Western practices such as
selection based on job-person fit and managerial capabilities (Cooke, 2005; Ding, Goodall, & Warner 2000; Ngo et al., 2008; Shen,
2008). For example, job interviews and
achievement-based performance evaluations
are much more common across China today
than a decade ago (Shen & Edwards, 2004).
Shen (2008) found, however, that adopting
HRM in China in small firms was “uneven
and fragmented” (p. 101). Enterprise managers tend to have wide discretion with few
professional associations and little regulatory guidance. Similarly, Cooke (2005) found
that employment practices in small commercial businesses in China were distinct
from large businesses and MNCs in China
and shared many characteristics with other
small, growing businesses around the world.
Zhu and Warner (2004) found that HR practices varied significantly in China by sector,
ownership structure, and company size.
Based on a series of case studies, they concluded that modern “Western-style” HRM
practices are much more likely to be adopted
in “high-value-added sectors” with greater
exposure to international markets and competition. Wang, Bruning, and Peng (2007)
found similar results in a larger survey study.
Although mostly conducted in the context
of large firms, the recent study by Akhtar,
Ding, and Ge (2008) indicated that adopting
Western-style “high performance” HRM in
Chinese firms was positively related to performance similar to that in developed nations. In addition, a recent study of 600
Chinese firms by Ngo et al. (2008) found
that HRM in Chinese organizations has a
positive impact on firm operational and
financial performance. Shen (2008) and others concluded that small firms that chose to
invest in HRM were likely to derive performance advantages from enhanced employee
motivation, superior selection, and longterm strategic vision.
Human Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
Investing in HRM in Entrepreneurial
Firms
As the historical and empirical evidence presented indicates, firms in emerging markets
often lack HRM expertise, regulatory environments, established communities of practice, and managerial experience that make
implementing modern HRM practices possible. Investment in HRM in these countries is
critical, however, because of the potential relationship between developed HRM practices
and business performance. Studies of large
U.S. and European companies have consistently demonstrated the positive effects of
HR across different types of businesses
(Combs, Liu, Hall, & Ketchen, 2006; Datta,
Guthrie, & Wright, 2005). Evidence is also
accumulating that a positive relationship between HRM and organizational performance
is being observed in emerging economies
(e.g., Bae & Lawler, 2000; Singh, 2003). Likewise, recent research has indicated that there
are significant payoffs in terms of both
growth and survival for small firms in Europe
that invest in HRM (Rauch, Frese, & Utsch,
2005; Sels, De Winne, Maes, Faems, Delmotte,
& Forrier, 2006). Descriptive studies have
found, however, that HR in small, entrepreneurial firms is ad hoc and informal (Cardon
& Stevens, 2004; Heneman et al., 2000; Saini
& Budhwar, 2008). While such firms may
have the customary HR functions, they are
often underdeveloped because firms with
fewer than 100 employees are unlikely to
have dedicated HR staff (Mayson & Barrett,
2006).
While size, age, and national origin all
suggest that entrepreneurial firms in emerging markets will have underdeveloped HRM
practices and capabilities, this also means
that firms that invest in HRM are likely to
have a competitive advantage over those
that do not. Formal HRM practices and developing human capital allow small firms
to mature and grow more quickly (Hayton,
2003). Firms in emerging markets with
well-developed HR systems use targeted
recruiting and job advertising rather than
word of mouth, structured interviewing
and selection testing rather than referrals
Human Resource Management DOI: 10.1002/hrm
and personal contacts (Ryan et al., 1999),
formal rather than on-the-job training,
and market-based pay and performance
evaluations (Huo, Huange, & Napier, 2002;
Keating & Olivares, 2007). In addition,
they pay greater attention to selecting and
training expatriates (Welch & Welch, 1997).
Finally, small firms that invest in HRM
practices are more likely to implement
integrated high performance work systems
that are popular in developed countries
(Ciavarella, 2004; Ordiz-Fuertes & Fernandez-Sanchez, 2003).
Evidence from studies undertaken in
developed countries has indicated that
adopting HRM practices early has long-term
effects on organizational growth and survival. For example, investments in HRM
have been shown to impact employment
growth in small firms in Germany (Rausch,
Frese, & Utsch, 2005), organizational performance in the United States (Hayton, 2003),
and employee productivity in the Netherlands (De Grip & Seiben, 2005). Sels et al.
(2006), however, provided the strongest evidence. Based on data from 416 small firms
in Belgium and Luxembourg, they found
that HRM intensity (measured by the development of systems for training, selection,
compensation, career management, performance management, and participation)
reduced voluntary turnover and had a positive relationship with employee productivity
and firm profitability in firms with fewer
than 100 employees.
We believe that start-up firms in emerging markets, however, have several distinct
disadvantages in their ability to leverage HR
for organizational success. First, these firms
tend to be both young and small, which
means that they are less likely to have formal HRM practices. Second, HRM in emerging markets tends to be idiosyncratic to national norms and culture. All of this suggests
that internationalization may be associated
with investment in HRM in order to enhance overseas competitiveness. In the following paragraphs, we argue that several
important factors will be associated with the
size of a firm’s investment in people and HR
practices.
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HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
Research Hypotheses
We predict that small firms in China, India,
and South Africa competing internationally
will invest in HRM based on three factors.
First, the extent of investment in HRM by
firms in emerging markets depends on the
countries where they do business and the requirements of competing successfully in these
markets. In other words, the external pressures of competing in more developed markets, complying with international employment laws, and meeting international
standards for quality, speed, and professionalism drive investments in HR. Second, HR
investments are likely to be a function of the
characteristics of managing CEOs. They play
a key role in decision making in small entrepreneurial firms, and we expect their backgrounds and experiences to be associated
with the level of investments in HRM following internationalization. Finally, internationalization drives changes in HR practices
because it creates opportunities to learn
about HRM in other countries. This learning
can occur through individual contacts between the founder and international partners, expatriate employees, or business partners in other countries. The following sections
develop a set of hypotheses for these three
drivers of HRM investments following internationalization.
Host Country Development and
Labor Regulation
Theory suggests that human capital and HR
practices are a source of competitive advantage (Barney & Wright, 1998; Wright & McMahan, 1992). This means that entrepreneurial firms are likely to seek and implement the
HR practices that their competitors are using
successfully. Firms regularly adopt innovative
HR practices to improve performance or
maintain legitimacy with their competitors
(Sherer & Lee, 2002; Subramony, 2006), or
simply because everyone seems to be investing in similar practices (Gibson & Tesone,
2001). These competitive and institutional
pressures are likely to be more relevant for
emerging market companies competing in
international markets. Trade liberalization
and stiff international competition mean
that the ability to change and adopt competitive business practices (including HR
practices) is imperative for entrepreneurial
firms from emerging markets to grow and
survive (Som, 2007).
Changes in HR practices can reflect a strategic choice to develop human capital and
capabilities or simply be a reaction to the requirements of doing business in other countries. Regardless, we argue that investments
in HR by entrepreneurial firms in emerging
markets are likely to be a function of the
characteristics of countries targeted for international expansion. First, developed economies are typically characterized by greater
competition and demanding customers.
Doing business in developed markets also
exposes such firms to well-developed HR
practices in partner firms and competitors,
providing opportunities for replication. Second, competing in countries with different
employment regulations requires firms to
invest in HR practices to comply with laws.
This is particularly true for firms that send
expatriates abroad. Finally, when firms from
emerging markets have to meet international
standards for manufacturing quality or environmental, health, and safety requirements,
they are more likely to invest in HRM to develop employees with the requisite expertise
in these areas.
The above arguments that link HRM
investments by entrepreneurial firms in
emerging markets to the characteristics of international markets where they compete lead
to the following three related hypotheses:
Hypothesis 1a: In emerging markets, entrepreneurial firms that internationalize to more economically developed countries will invest more in
HRM practices than those that internationalize
to less economically developed countries.
Hypothesis 1b: In emerging markets, entrepreneurial firms that internationalize to countries
with stronger employment regulations will invest
more in HRM practices than those that internationalize to countries with weaker employment
regulations.
Human Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
Hypothesis 1c: In emerging markets, entrepreneurial firms that are concerned about meeting
international standards will invest more in HRM
practices than those that are less concerned about
meeting international standards.
Founder Characteristics
Research on small and medium-sized enterprises (SMEs) has suggested that management
practices and internationalization are related
to founder characteristics (Ruzzier, Antoncic,
Hisrich, & Konecnik, 2007). Founders are particularly important in newer firms or firms
still in the process of shaping their strategies.
Founders’ backgrounds and experiences are
likely to have important implications for decision-making processes and performance.
For example, Andrews and Welbourne (2000)
examined IPOs and found that firms with
CEOs having a finance background were less
likely to value employees as a source of competitive advantage.
Similarly, we expect the nature of entrepreneurial firms’ investments in HRM to be
related to founder characteristics. Formalization of HR policies should follow growth
and internationalization in an entrepreneurial firm; however, this requires recognition
and support from the founder (Ordiz-Fuertes
& Fernandez-Sanchez, 2003; Rauch et al.,
2005). Founders must be willing to hire HR
expertise and allocate the resources required
to establish HR systems (Mayson & Barrett,
2006). We argue that founders will be more
willing to invest in HRM if they have
a general management background and
when they themselves have international
experience.
Strategic management research has consistently demonstrated that firm strategic
choices and organizational outcomes are in
part a function of the background characteristics of top managers (Hambrick &
Mason, 1984). Backgrounds and experiences are an important indicator of the
cognitive orientation and knowledge base
that managers bring to their jobs. Such orientations and knowledge influence their
perceptions on what they see as being important in achieving competitive advantage.
Human Resource Management DOI: 10.1002/hrm
699
In an early study on the role of such experience, Dearborn and Simon (1958) concluded that managers with different background experiences are likely to differ in
their attitudes, knowledge, and perspectives and, consequently, make different
choices. More recent studies (e.g., Guthrie
& Datta, 1997; Thomas, Litschert,
& Ramaswamy, 1991) have indiWe argue that
cated that managers who have a
“throughput” background (i.e.,
founders will be
operations, accounting, and/or
process R&D) possess a control
more willing to
and efficiency orientation, while
invest in HRM if
those with an “output” background (i.e., marketing, sales,
they have a general
product R&D) generally exhibit
a preference for new products,
management
new markets, and new opportubackground
nities. In other words, managers
are more likely to see greater
and when they
value in investments that fit
their backgrounds than in other
themselves have
areas.
international
Significant variability exists in
the backgrounds of SME founders
experience.
in emerging markets. While some
have spent a majority of their careers in functional areas such as R&D, manufacturing, marketing, or finance, others have
general management experience with exposure to multiple areas and broader perspectives. We suggest that SME founders in
emerging markets with a general management background will be more predisposed
to make investments in HRM practices than
those with technical or financial backgrounds. They are more likely to recognize
that HRM practices can be the source of sustained high productivity and competitive
advantage in foreign markets. As such, they
can be expected to emphasize recruiting and
training high quality employees that help
meet international needs. Thus,
Hypothesis 2a: In emerging markets, entrepreneurial firms whose founders have general
management background will invest more in
HRM than those entrepreneurial firms whose
founders do not have general management
background.
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HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
The international management literature
also increasingly recognizes that managerial
mindsets and backgrounds influence internationalizing firms’ strategic choices (Herrmann
& Datta, 2002). Process models of internationalization (Johanson & Vahlne, 1977; Murtha,
Lenway, & Bagozzi, 1998) suggested that the
managerial experience is critical to making
international investments. Studies have found
that international experience leads to increased confidence in international markets
(Kedia & Mukherji, 1999), enhanced organizational effectiveness in such markets (Athanassiou & Nigh, 2000), greater international diversification (Herrmann & Datta, 2005), and
the choice of foreign market entry modes
(Herrmann & Datta, 2002). Similarly, we expect the international experience
of founders to be associated with
Firms in emerging
the willingness to invest in HRM
following internationalization.
markets with
Founders with international
experience are more likely to ininternational
vest in HR for several reasons.
partnerships often
First, such founders have experienced HRM in global environrealize significant
ments (Kets de Vries & Mead,
benefits by adopting 1992; Roth, 1995). In particular,
we can expect founders with sigthe knowledge and
nificant international experience
to ensure that their own HR pracbusiness practices
tices reflect those prevailing in
key overseas markets. Second,
of their overseas
they are also likely to value the
partners.
role of the HRM function and appreciate the importance of shaping their HRM practices in a way
that is consistent with the expectations and
demands of their markets. Thus:
Hypothesis 2b: In emerging markets, entrepreneurial firms whose founders have international
experience will invest more in HRM than entrepreneurial firms whose founders do not have international experience.
Opportunities for HRM Knowledge
Transfer
While multiple motives underlie firms’ desire to engage in international partnerships,
inter-organizational learning represents one
of the most important reasons (Hamel,
1991; Lyles, 1988, Parkhe, 1991). Firms in
emerging markets with international partnerships often realize significant benefits by
adopting the knowledge and business practices of their overseas partners. In developed
countries, the number of foreign partnerships has been shown to influence firm capabilities and organizational performance
(Granovetter, 1985; McEvily & Zaheer, 1999).
Closely associated firms often emulate each
other’s behaviors and practices (Rosenzweig
& Nohria, 1994).
Internationalization provides entrepreneurial firms in emerging markets with specific learning opportunities through international networks with other firms (Yan, 2003)
and the use of expatriates (Hocking, Brown,
& Harzing, 2004). These represent the two
most important mechanisms for transferring
knowledge of HRM practices across national
boundaries in emerging markets. Strategic
partnerships are effective ways to exchange
knowledge (Inkpen & Tsang, 2005), with repeated interactions motivating freer and
more frequent exchanges (Levin & Cross,
2004). Through their relations with international partners, firms are likely to be exposed
to new HRM practices that can be applied in
their own organizations. The same is true for
expatriate employees who transfer knowledge related to business practices when they
return (Vance & Paik, 2005).
In sum, when firms have extensive exposure to the business practices of other organizations, they reap significant benefits associated with accelerated learning (Autio,
Sapienza, & Almeida, 2000). Through foreign
partnerships and expatriates, small firms in
emerging economies accumulate foreign market knowledge, including information on effective HR practices. For these reasons, we
suggest that firms with a greater number of
partnerships and expatriates will be more
likely to invest in HRM. Thus,
Hypothesis 3a: In emerging markets, entrepreneurial firms who send expatriates abroad will
invest more in HRM than those entrepreneurial
firms that do not.
Human Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
Hypothesis 3b: In emerging markets, entrepreneurial firms in emerging markets with a higher
number of foreign partnerships will invest more
in HRM practices than entrepreneurial firms with
fewer foreign partnerships.
Method
Sample and Data Collection
This study used a sample of 171 independent new ventures from three emerging
markets: China, India, and South Africa.
Data were collected between November 2002
and May 2003 in India and South Africa and
between September and December 2003 in
China. Sampling criteria required firms to be
independent new ventures, be under ten
years of age, and have current international
sales (Oviatt & McDougall, 1994). Such
firms, on average, entered international markets two years after founding and derived
nearly 48% of their revenue from international sales. Ten percent of the firms had no
domestic sales. Consistent with early internationalization of entrepreneurial firms,
most ventures in our sample (84%) either
exported directly or used intermediaries.
Fifty-eight percent of the firms fell in knowledge-intensive industries (ITC hardware,
software, pharmaceuticals).
Collecting data in emerging markets presents a challenge for multiple reasons. Lists of
firms from which one could build samples are
not easily available; moreover, available data
often suffer from errors and inaccuracies. To
solve this problem, in each country, we collated multiple lists of firms and then verified
the information they contained by directly
telephoning the companies. Once we established the sampling frame, we administered
the surveys in person. Our method of sample
construction (multiple sources) and data collection (in person) was meticulous and superior to the snowball samples usually employed
in emerging markets (Hitt, Boyd, & Li, 2004).
In China, the data were collected in Beijing and Shanghai based on lists of firms
obtained from both government and
non-government sources. A total of 610
entrepreneurial firms satisfied our sampling
Human Resource Management DOI: 10.1002/hrm
criteria, and 144 agreed to be interviewed. Ultimately, we used 92 surveys, yielding an effective response rate of 16.5%. The Indian sample
came from firms in Bangalore, Mumbai,
Chennai, Hyderabad, Ahmedabad, New Delhi,
and Calcutta. As in China, in India we used
multiple lists and industry directories, which
we then collated, cross-referenced, and verified via phone. A total of 593 firms satisfied
our sampling criteria. Of these, 166 participated in the survey, yielding 140 usable surveys and an effective response rate of 24.7%.
In South Africa, data were collected in the
Western Cape area using lists of exporter databases, again verified for accuracy. A total of
219 firms fit the sampling criteria, 103 participated, and 76 were usable. The effective response rate in South Africa was 39.6%. In
South Africa, we were restricted to a smaller
geographic area, which made follow-up more
efficient. The survey response rates in each
country were well within the standards for
data collection efforts in emerging markets
(Aulakh, Kotabe, & Teegen, 2000).
We matched firms across countries by
industrial groupings, which included ITC
hardware, software products, biotechnology
and pharmaceuticals, machinery and equipment, traditional chemicals, and management services. For additional comparability
across countries, we excluded South African
and Indian firms in crafts, apparel, and food.
After accounting for missing values, a usable
sample of 171 firms emerged, with 79, 52,
and 40 from China, India, and South Africa,
respectively.
The in-person data collection approach
adopted allowed us to interact with the respondents in ways that a mail or online survey does not. We resolved ambiguities on the
spot, further enhancing the data’s validity
(Aulakh et al., 2000; Lane, Salk, & Lyles,
2001). In South Africa and India, we administered the survey in English, which is the
dominant business language. In China, we
translated the instrument into Mandarin and
back-translated for accuracy. The survey was
pre-tested in each country. The respondents
were primarily CEOs and firm founders, 96%
of whom had university degrees. Given each
respondent’s position in his firm, we believe
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HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
they had the appropriate firm-specific knowledge to respond to questions we posed.
Measures
Dependent Variable
Consistent with a configurational approach
to measuring HRM, we developed and used
an index comprising the following six common HRM practices: recruiting, hiring, training, developing, compensating, and motivating employees (Delery & Doty, 1996; Guest,
1997). To assess the firms’ extent of investment in these HRM practices, respondents
were asked, “To what degree has your company invested in the following to meet the
demands of international customers?” A
5-point response scale ranged from “not at
all” to “very aggressively.” Principal component analysis showed that the 6-item index
loaded on one factor with an eigenvalue of
3.59, with individual factor loadings between
0.63 and 0.85. Cronbach’s alpha for the index
was 0.89. Both the factor structure and the
reliability measures are within acceptable
norms.
dismissal procedures (Botero et al., 2004). Following Botero et al. (2004), we tested the aggregation properties of this index for the
countries represented in our sample. In addition to the environmental measures of economic development and labor regulation, we
added a self-reported measure that asked the
respondents to indicate, on a 5-point Likert
scale, the extent to which they considered
their firm’s ability to meet international standards before internationalizing. This measure
reflects the firm’s extent of awareness regarding the environment into which they would
be internationalizing.
Founder Characteristics
We captured both the founders’ prior general
management and international experience
with two dummy variables. In the context of
experience, general management experience
was coded as 1, while functional experience
was coded as 0. Likewise, when founders had
prior international experience, this was coded
as 1 and 0 when they did not. Twenty-five
percent of the founders in our sample firms
had general management, while 58% had
international experience.
Target Country Characteristics
We operationalized the host country’s level
of economic development using the World
Bank’s classification of countries based on
their income levels and membership in the
Organization for Economic Co-Operation
and Development (OECD). We dichotomized
this variable into host countries that the
World Bank considered high income and
were members of the OECD versus those that
were not. The former was coded 1 and the
latter 0. Descriptive statistics show that 79%
of the internationalization by firms in the
sample involved OECD countries. We operationalized the host country’s level of employment regulation using the scoring system presented in Botero, Djankov, La Porta,
Lopez-de-Silanes, and Shleifer (2004). We created a scale based on their Index of Employment Laws including (1) alternative employment contracts, (2) cost of increasing hours
worked, (3) cost of firing workers, and (4)
Opportunities for Learning
The final set of arguments examines how opportunities for organizational learning affect
HRM investments by using expatriates and
international partnerships. Firms reported each
of these measures, which we coded as dichotomous for expatriates abroad, where 1 reflects
their presence and 0 otherwise. Although it
would be preferable to measure the magnitude
of expatriate deployment, the data were
skewed, with 64% of firms sending no expatriates. The number of international partnerships
respondents reported averaged slightly fewer
than four per firm. Each measure reflects the
extent to which firms are embedded in international markets.
Control Variables
We employed several controls including
country of origin, firm characteristics, indusHuman Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
try, and degree of internationalization. We
controlled for country effects associated with
the new venture’s country of origin with two
dummy variables, one for China and one for
South Africa. To account for heterogeneity in
firm size and growth, we controlled for initial
employment, measured at the end of the first
year of operation, and for overall growth in
employment from the end of the first year of
operation. We used a log transformation for
initial employment and growth in employment to correct for data skewness. To control
for industry, we divided the firms into two
categories: knowledge intensive industries
(e.g., information telecommunications hardware, software products, biotech and pharmaceuticals, information technology services,
and management services), and traditional
manufacturing industries (e.g., machinery
and equipment and traditional chemicals).
The former was coded 1 and the latter 0. In
addition, we controlled for the degree of internationalization using three measures: time
since international entry (Luo, 1999), number of domestic partnerships, and international diversification measured as international sales as a percentage of total sales
(Calof, 1993; Calof & Viviers, 1995; Gray,
1997). The literature on international diversification has suggested that the relationship
between international diversification and
performance is non-linear and is instead Ushaped (Hitt, Tihanyi, Miller, & Connelly,
2006). We take note of these findings and in
ratio form use a quadratic specification to
partial out the possible association of international diversification and investment in
HRM.
Analyses and Results
Table I presents the means, standard deviations, and zero-order correlations of study
variables, while Table II provides the regression results. We used robust regression to test
our hypotheses because OLS regression has
been shown to perform poorly when used
with cross-national data (Dietz, Frey, & Kalof,
1987). A number of the variables in our
model suffer from skewness, which persisted
after log transformations. Robust regression
Human Resource Management DOI: 10.1002/hrm
resists the pull of outliers and produces more
efficient standard errors than would OLS for
a similar regression. The interpretations of
robust regression coefficients, standard errors, and measures of fit are identical to those
of OLS.
We also tested the data for multicollinearity and common method bias. The correlations between independent variables are relatively low, and VIF tests confirmed that
multicollinearity is not a major concern. To
assess the degree to which common method
variance is a problem in our data, we used the
single, unmeasured latent factor approach
(Podsakoff, MacKenzie, Lee, & Podsakoff,
2003). Widaman (1985) introduced and outlined the procedure, which Williams, Cote,
and Buckley (1989) subsequently demonstrated. The model containing the latent
method factor fit the data better than the
hypothesized measurement model according
to the chi-square difference test (⌬␹(6) = 34.66,
p < .01); however, the average proportion of
variance ascribable to measurement factors
was appreciably larger than the variance related to the method factor (82% compared to
44%). The substantially higher proportion of
variance associated with the predicted a priori factors suggests substantive relationships
are largely responsible for the observed relationships rather than merely common
method bias. Based on this result, we are
comfortable that common method bias is not
a problem in our study.
Model 1 in Table II represents the regression model that incorporates only the control variables. The model R-square is 0.24.
Three of the control variables are significant
at least at p < .05. Specifically, South African
firms appear to invest less in HRM practices
than do Chinese and Indian firms. In addition, as expected, there is a U-shaped relationship between international diversification and investments in HRM. Furthermore,
initial employment is associated with investment in HRM, whereas growth in employment is significantly and positively associated with HRM investments. Likewise, firms
in knowledge-based industries, as opposed to
those in manufacturing industries, are more
likely to invest in HRM. Finally, our results
703
I
Expatriates abroad
Number of foreign
partnerships
15
16
3.82
0.36
0.58
0.25
3.77
0.32
0.79
0.48
4.61
4.80
0.58
0.24
28.9
0.23
0.46
3.58
7.87
0.48
0.49
0.44
1.14
0.18
0.41
0.35
2.93
9.80
0.49
0.30
33.15
0.42
0.50
0.97
SD
0.18
0.10
0.04
⫺0.07
⫺0.06
⫺0.24
⫺0.06
0.11
⫺0.16
⫺0.19
⫺0.03
⫺0.03
0.14
0.00
0.05
⫺0.10
0.08
0.14
0.01
0.10
0.19
0.09
⫺0.20
0.10
⫺0.06
0.01
⫺0.04
⫺0.08
0.02
0.01
0.02
⫺0.01
0.04
⫺0.03
⫺0.01
0.29
⫺0.15
⫺0.04
⫺0.03
0.26
0.27
⫺0.15
⫺0.25
4
⫺0.08
⫺0.46
3
0.16
0.38
⫺0.51
2
0.02
0.01
0.18
0.26
⫺0.34
0.23
1
Notes: N = 171; r > .15 is significant at p < .05.
* Means and standard deviations are for un-logged variables.
Founder international
experience
14
International diversification ratio
9
Founder general
management
background
Time since
international entry
8
13
Domestic partnerships
7
Firm’s ability to meet
international standards
Knowledge industry
6
12
Growth in
employment
5
Regulation of
employment in host
country
Initial employment
4
11
South Africa
3
Host country
member of OECD
China
2
10
Investment
in HRM
1
Mean*
Means and Correlations
Variables
TABLE
0.12
0.04
⫺0.09
⫺0.01
0.04
⫺0.07
⫺0.05
0.02
⫺0.29
0.09
⫺0.02
5
0.22
0.10
0.05
0.05
⫺0.15
⫺0.06
0.09
0.00
⫺0.10
0.10
6
0.48
0.07
⫺0.07
0.15
⫺0.14
⫺0.04
⫺0.06
⫺0.27
⫺0.17
7
⫺0.20
⫺0.04
0.07
0.09
0.00
⫺0.06
0.09
0.23
8
0.03
0.28
0.07
⫺0.06
0.11
⫺0.03
0.21
9
0.16
0.14
0.14
0.03
⫺0.08
⫺0.13
10
⫺0.07
⫺0.11
⫺0.04
⫺0.06
0.03
11
0.01
0.06
0.04
0.08
12
0.09
⫺0.06
0.03
13
0.03
0.11
14
0.24
15
704
HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
Human Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
TABLE
II
Robust Regression on Investment in HRM
Model 1
Model 2
B
SE
B
SE
China
⫺0.07
(0.16)
0.05
(0.16)
South Africa
⫺0.76
(0.19)
***
⫺1.04
(0.18)
***
Initial employment
0.15
(0.07)
*
0.12
(0.12)
+
Growth in employment
0.96
(0.40)
*
0.73
(0.37)
*
Knowledge industry
0.24
(0.14)
+
0.24
(0.13)
+
Domestic partnerships
0.02
(0.05)
⫺0.11
(0.06)
+
⫺0.03
(0.02)
⫺0.03
(0.02)
International diversification ratio
0.29
(0.21)
0.17
(0.19)
International diversification ratio squared
1.24
(0.74)
1.32
(0.66)
*
Host country member of OECD
0.30
(0.15)
*
Regulation of employment in host country
0.26
(0.13)
*
Firm’s ability to meet international standards
0.13
(0.05)
**
Founder general management background
0.44
(0.14)
**
Founder international experience
⫺0.01
(0.12)
Expatriates abroad
⫺0.09
(0.14)
0.25
(0.08)
***
3.46
0.26
***
Time since international entry
+
Number of foreign partnerships
Constant
3.33
0.18***
Model F
5.80***
6.92***
Model R-squared
0.24
0.42
Model Adjusted R-squared
0.20
0.36
Change in R-squared
0.18***
Notes: N = 171
+ p < .1; *p < .05; **p < .01; ***p < .001.
indicate that firms with a higher number of
domestic partnerships are less likely to invest
in HRM. Model 2 in Table II tests our hypotheses. Overall, the model explains a significant
proportion of the variance, with model Rsquare being .42. The change in R-square between Models 1 and 2 is significant at
p < .001.
Our results indicate that entrepreneurial
firms in emerging markets that internationalize to more developed countries invest
more in HRM practices than firms that
internationalize to less economically developed countries, supporting Hypothesis 1a
(p < .05). Likewise, we find that internationalization involving countries with more
stringent labor regulations is positively
associated with investments in HRM
Human Resource Management DOI: 10.1002/hrm
practices, providing support for Hypothesis
1b (p < .05). Hypothesis 1c, which states
that entrepreneurial firms in emerging markets that are concerned about meeting international standards will invest more in
HRM practices, is also supported (p < .01).
Our analysis indicates that entrepreneurial firms from emerging markets led by
founders with general management background will invest more in HRM practices
than firms whose founders have other functional experience. In other words, Hypothesis
2a is supported (p < .01). We observed no significant relationship, however, between the
international experience of CEOs and firm
HRM investments. In other words, Hypothesis 2b is not supported. Likewise, Hypothesis
3a, which states that the use of expatriates
705
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HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
will be related to investment in HRM, is not
supported. Entrepreneurial firms from emerging markets that send expatriates abroad do
not invest more in HRM practices than those
firms that do not. We find strong support for
Hypothesis 3b (p < .001). When entrepreneurial firms from emerging countries have
more foreign partnerships, there is a greater
propensity on their part to invest in HRM
practices.
Discussion and Conclusions
This study finds partial support for our hypothesized relationships with our data supporting five of the seven hypotheses. In general, we find that internationalization is
strongly related to the investment
that entrepreneurial firms in
Our results support
emerging economies make in
HRM practices. This investment,
the argument
however, is associated with a
number of critical factors. First,
that when
the stage of development and ementrepreneurial
ployment regulation of the country into which entrepreneurial
firms in emerging
firms internationalize appears to
be associated with such investeconomies seek
ments. Our results support the
international
argument that when entrepreneurial firms in emerging economarkets in
mies seek international markets
developed countries, in developed countries, they also
invest in HRM practices. We also
they also invest in
observed that entrepreneurial
firms in emerging economies were
HRM practices.
more inclined to invest in HRM
when they internationalized into
countries with more stringent employee regulations and where the firms are concerned
about meeting international standards.
We attribute these findings to the competitive pressures of doing business in more
developed countries and the need to navigate
regulations and standards that vary across
countries. Investing in HRM in this case may
also reflect the firms’ desire to maintain legitimacy in the eyes of both their competitors and customers in foreign markets by
adopting HRM practices that are deemed
world class. This is especially true when their
primary foreign markets are more economically developed or have more stringent employment regulation. In addition, it is apparent from our results that the prevalence of
stringent employee regulations in other countries puts additional pressure on firms in
emerging economies to invest in the HRM
function and forces them to adapt their own
practices to conform to those prevalent in
the country of their trading partners. Potentially, this may reflect an effort on the part of
the firms in our sample to address possible
concerns among their international customers related to lax HRM policies in emerging
markets. Finally, as our results indicate, the
willingness of emerging economy firms to
invest in HRM is positively associated with
the extent to which they feel they need to
meet international standards in business
practices.
Second, we find that the founder’s background is associated with the firm’s willingness to invest in HRM. As anticipated, we
find that founders with general management
experience were more inclined to invest in
HRM in response to firm internationalization
but observed no such relationships with respect to their international experience. In
other words, while we had expected founders
with international experience to be more
supportive of HRM investments in the internationalization process, this is not the case.
While we found this result somewhat surprising, it may be due in part to the relatively
extensive international experience reported
by 58% of the CEOs sampled.
Third, we find mixed results for our hypotheses regarding expatriates and international partnerships as drivers of investment
in HRM. Surprisingly, we did not find a relationship between the use of expatriates and
investment in HRM practices. Our findings
with respect to foreign partnerships, however, do highlight the importance that network embeddedness and absorptive capacity
have on decisions that entrepreneurial firms
make about the level of investment in HRM
practices. This suggests that the context in
which they are embedded influences the
firms in our sample. Firms that have close ties
to foreign partners are more likely to perceive
Human Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
the importance of HRM investments in
achieving the desired goals in their international endeavors. The greater willingness to
invest in HRM might also be a function of
partnership-related learning involving global
HRM practices. When entrepreneurial firms
in emerging economies have international
partners, they are more likely to absorb new
knowledge pertaining to HRM practices, and
then apply those practices in the context of
their own organizations. Notably, we controlled for the firm’s domestic partnerships.
Although the coefficient was significant only
at p < .1, its sign is negative, which further
supports our arguments regarding the association of network embeddedness with investing in HRM practices. Taken together, our
findings suggest that future research should
consider whether the learning mechanisms
for entrepreneurial firms in emerging markets differ from those of established firms. It
appears that international partnerships are
substantially more influential than expatriate
placements in the context of investing in
HRM practices.
Conclusions, Implications, and
Future Research
While our study provides interesting insights on HRM investments among entrepreneurial firms in emerging economies,
our findings should be interpreted in the
context of study limitations. The first limitation relates to the cross-sectional nature
of the sample. Research on HRM practices
across emerging markets remains sparse,
with limited opportunities for systematic,
cross-national, and longitudinal research.
Second, there is the potential for retrospective bias on the part of respondents. However, such bias should be limited given that
we relied on informed respondents, whose
responses required them to assess actions
and not recall specific actions tied to calendar-based events. A third limitation of our
study relates to possible survival selection
bias inherent in studies of small and entrepreneurial firms. In the context of this
study’s goals, however, we believe that selection bias plays a relatively minor role.
Human Resource Management DOI: 10.1002/hrm
707
Finally, we had only one respondent from
each new venture, affecting the potential
reliability of survey responses. Unfortunately, collecting data from second respondents is particularly problematic in new
ventures, given that managerial time is
often at a premium and organizational memory resides in the
Adapting to
minds of a few key individuals.
Literature in international
and surviving
business has suggested that internationalization is a major organiin international
zational change for firms in genmarkets require
eral and entrepreneurial firms in
particular. Adapting to and survivsignificant changes
ing in international markets require significant changes to a
to a firm’s policies
firm’s policies and procedures, of
and procedures,
which HRM practices are a part.
Based on the findings from this
of which HRM
study, future research should examine how entrepreneurial firms practices are a part.
in emerging markets modify their
HRM practices in terms of specific
changes to recruitment, training, development, and compensation. Unfortunately, our
research design and sample prevented us
from examining the evolution of specific
practices within a single organization. Future
research using longitudinal and qualitative
designs should reveal a richer understanding
of the process by which firms invest in HRM
and how such investments are associated
with internationalization.
Our study uses a sample of small, entrepreneurial firms in three countries to draw
conclusions about HRM investment in entrepreneurial firms in emerging markets in
general. We found an association between
such investments and host country development and labor regulations, founder characteristics, and opportunities for HRM knowledge transfer. Based on these results, future
research should take a cross-country comparative view of the topic to explore differences in these processes across countries.
Finally, while our study focused on the main
effects for host country development,
founder characteristics, and knowledge
transfer on HRM investments in emerging
markets, it provides a foundation for exam-
708
HUMAN RESOURCE MANAGEMENT, JULY–AUGUST 2010
ining contingent effects in future research.
The field’s understanding of HRM investments in small and medium-sized enterprises in emerging markets is still developing, and we hope that our study
opens the door to hypothesizing
Firms that can
and testing the mechanisms
through which entrepreneurial
compete in more
firms in emerging markets invest
in and develop modern HR pracdeveloped markets
tices.
with more stringent
In undertaking this research
our objective was to contribute
regulations and
to the growing literature on the
standards are likely role of HRM practices as entrepreneurial firms enter the global
to benefit from
economy. Overall, our findings
lend support to the contention
investments in HRM
that internationalization is associated with investing in HRM
that develop the
practices. From a research percapabilities needed spective, our examination of environmental and organizational
to compete in such
factors that influence investments in HRM by entrepreneurmarkets.
ial firms in the emerging economies of China, India, and South
Africa fills an important void in the literature on international HRM and international entrepreneurship. Our results highlight the importance of international
expansion in stimulating investment in
HRM practices in emerging markets. Because most of the employees in the firms we
studied remain in their home countries
within emerging markets, our results indicate potentially important implications for
voluntarily transmitting employment norms
across international boundaries.
Finally, from a managerial standpoint,
our study suggests that the countries’ entre-
preneurial firms target for international expansion, and the types of relationships
formed overseas are likely to be associated
with HRM practices at home. Firms that can
compete in more developed markets with
more stringent regulations and standards are
likely to benefit from investments in HRM
that develop the capabilities needed to compete in such markets. Founders with previous
general management experience and firms
involved in a larger number of international
partnerships facilitate this investment. Future
research will have to determine if these investments translate into superior performance
and survival of entrepreneurial firms in
emerging markets in the long run.
In sum, much work remains in identifying
other organizational and contextual conditions that are associated with the HRM practices among internationalizing entrepreneurial firms, especially those located in key
emerging markets. We hope this study informs
and stimulates further work in this regard.
Acknowledgments
This research was funded through grants to the
first author from the UK Department for International Development, the Centre for New and
Emerging Markets at the London Business School,
and the Merage Foundation. We thank Eric
Wood, Srinivas Prakhya, Raul Velarde, and Congcong Zheng for contributing to this project.
Thanks to Simon Commander and Saul Estrin for
helping start this project. Daniel González, Katie
Pershon, Drake Mullens, and Elena Radeva served
as excellent research assistants. We are grateful to
Marcus Butts for his methodological advice. We
thank two anonymous reviewers and the HRM
special issue editors, Professors Ribeiro, Roig, and
Tansky, for their comments and guidance.
Human Resource Management DOI: 10.1002/hrm
A STUDY OF ENTREPRENEURIAL FIRMS IN EMERGING MARKETS
SUSANNA KHAVUL is an assistant professor in the College of Business, University of
Texas at Arlington. Susanna earned a doctorate in strategic management and entrepreneurship from Boston University. Her current research focuses on explaining the innovative performance of high technology firms operating in a global economy. She is the
winner of the Academy of Management’s Heizer Award for “Outstanding Research in the
Field of New Enterprise Development,” given for the Best Dissertation in Entrepreneurship. Susanna has served as a senior member of a venture capital and investment banking firm and as a director at the Soros Foundation. She also holds a degree in economics
from U.C. Berkeley.
GEORGE S. BENSON is an associate professor at the University of Texas at Arlington.
George earned his Ph.D. from the University of Southern California and completed a
Post-Doctoral Fellowship at the Center for Effective Organizations in the Marshall School
of Business. His current work focuses on HR measurement, employee involvement, strategic management of human capital, and the effectiveness of corporate board practices.
George previously worked as a research analyst at the American Society for Training and
Development in Alexandria, Virginia. He also holds degrees from Washington and Lee
University and Georgetown University.
DEEPAK K. DATTA is professor and the Eunice and James West Chair at the College of
Business, University of Texas at Arlington. He earned his Ph.D. from the University of
Pittsburgh, and his research interests include mergers and acquisitions, CEO selection,
CEO and TMT characteristics, corporate governance, strategic decision processes, strategic human resource management, international entrepreneurship, and international
business strategies.
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