The role of experiential knowledge in foreign market commitment: A process perspective on the internationalisation of Australian services SMEs
Date
2018
Authors
Salata, Genrikh
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Abstract
The Uppsala internationalisation model established some
foundations for research in international business. But since the
introduction of this internationalisation process model in
mid-1970s, the business environment has changed significantly. It
is important to reflect on how these changes affect the interplay
between experiential learning and foreign market commitment, a
key plank in the Uppsala model. This thesis focuses on a core
assumption that underlies the model: that a high degree of
foreign market commitment results from rational decisions that
firms take during a learning process based on complete knowledge
and information. In 2009, the protagonists of the Uppsala model
offered a much more nuanced perception of a firm’s learning
process, when they stressed that firms rely of a wider range of
relationships, interactions and contexts that impact on their
accumulation of experiential knowledge. Some studies have used
proxy variables to capture this process through variance-based
quantitative analysis. This thesis uses a process approach,
conceptualised on the basis of several theories to understand the
complexity of the learning process that underlies the
internationalisation of firms.
The true process approach to studying the internationalisation of
the firm has been neglected for some time and the field of
international business studies had been dominated by
variance-based studies. Inevitably, this has led to a situation
where ‘we see far too many “rigorous” studies with little
originality and, at best, a marginal contribution’, as Johanson
and Vahlne (2014: 173) expressed it. The process approach
conceptualised, developed and applied in the analysis in this
thesis may be a better instrument to understand causal
relationships between experiential knowledge accumulation or
learning and foreign market commitment, as well as other
internationalisation processes that take place over periods of
time. This research is focused on the micro-foundations of
internationalisation attempts of firms. These processes are
analysed in light of relevant spatiotemporal context. The
findings document the key aspects of the internationalisation
process without devoting the analysis to what Outhwaite (1987:
7-12) has labelled the positivist ‘law-explanation
orthodoxy’.
Instead, this thesis relies on abductive reasoning and
longitudinal case studies to contextualise learning processes and
changes in such processes over a period of time throughout the
internationalisation process. It analyses the
internationalisation of seven Australian services SMEs in order
to provide causal explanations for a specific sequence of
critical events that influenced the foreign market commitments of
these firms. An additional methodological contribution of this
thesis is the implementation of content analysis, clustering and
multidimensional scaling of the contents of interviews, which
accounts for relevant context without undermining the scientific
explanation and rigour of the approach.
By studying case histories and the chronology of critical events
in the internationalisation attempts of these firms, we
demonstrate that an accommodating learning style is most closely
associated with the foreign market commitment of firms.
Nonetheless, experiential learning is dynamic in nature and often
requires decision makers to touch all bases of the learning
cycle. As expected, the key sources of knowledge are relevant
business and people-to-people networks, as well as prior learning
experiences of decision makers that often go beyond the lifespan
of the firm.
Experiential learning is found to be a context-dependent process
that is utterly complex in nature. The thesis demonstrates how
critical events trigger experiential learning as well as explain
what the decision makers learn as part of this learning process.
Rather than measuring the stock of experiential knowledge, the
thesis demonstrates how learning processes alter individual
perceptions of foreign market opportunities. The findings
reconfirm that change processes (i.e. experiential learning,
building business networks and trust) are continuous, while
market commitment decisions (i.e. market entry mode, degree of
internationalisation) are intermittent. These findings precisely
challenge the results of variance-based studies that rely on
limited firm-level indicators to capture and analyse experiential
learning processes.
This thesis builds on the call of Johanson and Vahlne (2014) to
broaden our understanding of the practice of the
internationalisation of firms by focusing on the behavioural
aspects of human decision-making, such as the role of business
networks and trust. To date, there are few studies that explain
what exactly is learnt as part of the internationalisation
process and how this information and/or knowledge actually
affects foreign market opportunity recognition. Experiential
knowledge remains the pivotal aspect of the internationalisation
process and this research helps to conceptualise and
operationalise relevant theory and provide causal explanations.
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Keywords
Internationalisation, Experiential Knowledge, Experiential Learning, International Market Commitment, Decision-Making, Sequence Analysis, Time, Process
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Thesis (PhD)
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