Scaling Up Business Models Across Foreign Markets

Abstract

What is the role of business models in new ventures’ international expansion? Drawing upon up the international entrepreneurship literature and the activity-system perspective of business model, we theorize that business model scalability is a key driver of foreign market entry. It is easier for new ventures with more scalable business models to be replicated and reconfigured across national borders, because the core activities of more scalable business models do not need changes; only the peripheral activities need to be adjusted. In comparison, both the core and peripheral activities of less scalable business models need to be modified. Using disruptive business model as a representative business model of high scalability, we further explore the boundary conditions and find that information infrastructure of the host country and venture capital support strengthen the relationship between business model scalability and foreign market entry likelihood, while venture age weakens it.