The standalone and resource-bundling effects of government and nongovernment institutional support on early internationalizing firms’ performance

Abstract

Purpose: This study aims to analyze the individual and joint effects of institutional support by government and nongovernment institutions on early internationalizing firms’ (EIFs) performance. It also investigated the moderating impact of firm age and size on the institutional support-firms’ export performance relationships.

Design/methodology/approach: Data were collected from 705 EIFs in the apparel industry of Bangladesh and analyzed with hierarchical regression.

Findings: The positive influence of institutional support on exporting firms’ financial performance is stronger for the joint effect of government and nongovernment assistance than the individual impact. Firms’ size positively moderates the impact of individual government and nongovernment assistance, while age positively moderates their resource-bundling effect.

Research limitations/implications: The findings suggest the necessity of integrating resources from diverse but complementary sources of institutional support for superior export performance. The findings also show the presence of the liability of smallness and liability of newness in the standalone and joint influence of institutional support, respectively.

Practical implications: Firms need to bundle resources obtained from the government (unrequited) and nongovernment (reciprocal) institutional support to overcome the liability of smallness they might encounter while availing of support from only one source.

Originality/value: Distinguishing between government and nongovernment institutional support, this paper sheds light on exporting firms’ resource-bundling mechanism for these two sources of support in the backdrop of an emerging economy. It also offers fresh insights into the critical role of the liabilities of newness and smallness in early internationalization, especially with regard to the home-country institutional environment.