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The effect of experience and absorptive capacity on foreign market knowledge

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  • Eriksson, Kent
  • Chetty, Sylvie
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    Abstract

    Learning about foreign markets often occurs through collaboration with other firms who have this knowledge. In this paper, we focus on one aspect of foreign market knowledge, which is the knowledge a partner in a dyadic relationship, has of the other partner and of their respective business network relationships. The concept 'absorptive capacity' [Admin. Sci. Q. 35 (1990) 128] is used to describe the firm's ability to use its prior related knowledge and diverse background to identify the value of new information and to develop this into something creative. We develop and empirically test a model of how depth and diversity of experience affect absorptive capacity, and how this absorptive capacity affects the way a lack of foreign market knowledge is perceived as an obstacle in carrying out the ongoing business activity. The results show that the lack of foreign market knowledge in the ongoing business is determined both by the firm's absorptive capacity generated in dyadic relationships with foreign customers and the customer's network. The dyadic and network absorptive capacities, however, appear to be used differently in the ongoing business. Dyadic absorptive capacity seems to decrease the lack of foreign market knowledge, whereas customer network absorptive capacity seems to increase it.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 12 (2003)
    Issue (Month): 6 (December)
    Pages: 673-695

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    Handle: RePEc:eee:iburev:v:12:y:2003:i:6:p:673-695

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    Keywords: Business network Dyadic relationship Foreign market knowledge Absorptive capacity;

    References

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    Cited by:
    1. Thuc Anh, Phan Thi & Christopher Baughn, C. & Minh Hang, Ngo Thi & Neupert, Kent E., 2006. "Knowledge acquisition from foreign parents in international joint ventures: An empirical study in Vietnam," International Business Review, Elsevier, vol. 15(5), pages 463-487, October.
    2. Carlsson, Johan & Nordegren, Axel & Sjöholm, Fredrik, 2004. "International Experience and the Performance of Scandinavian Firms in China," EIJS Working Paper Series, The European Institute of Japanese Studies 188, The European Institute of Japanese Studies.
    3. Tuppura, Anni & Saarenketo, Sami & Puumalainen, Kaisu & Jantunen, Ari & Kyläheiko, Kalevi, 2008. "Linking knowledge, entry timing and internationalization strategy," International Business Review, Elsevier, vol. 17(4), pages 473-487, August.
    4. Tsai, Ming-Tien & Huang, Yen-Chih & Ma, Rong, 2009. "Antecedents and consequences of global responsiveness: An empirical examination of MNCs in the global sourcing context," International Business Review, Elsevier, vol. 18(6), pages 617-629, December.
    5. Liu, Chia-Ling (Eunice) & Ghauri, Pervez N. & Sinkovics, Rudolf R., 2010. "Understanding the impact of relational capital and organizational learning on alliance outcomes," Journal of World Business, Elsevier, vol. 45(3), pages 237-249, July.
    6. Schwens, Christian & Kabst, Ruediger, 2011. "Internationalization of young technology firms: A complementary perspective on antecedents of foreign market familiarity," International Business Review, Elsevier, vol. 20(1), pages 60-74, February.
    7. María Ripollés-Meliá & Martina Menguzzato-Boulard & Luz Sánchez-Peinado, 2007. "Entrepreneurial orientation and international commitment," Journal of International Entrepreneurship, Springer, vol. 5(3), pages 65-83, December.
    8. Yeniyurt, Sengun & Tamer Cavusgil, S. & Hult, G. Tomas M., 2005. "A global market advantage framework: the role of global market knowledge competencies," International Business Review, Elsevier, vol. 14(1), pages 1-19, February.
    9. Garcilazo Lagunes Sergio, 2012. "El Outsourcing en el desempeño de las exportaciones de las empresas," Contaduría y Administración:Revista Internacional, Accounting and Management: International Journal, vol. 57(2), pages 135-158, abril-jun.
    10. Huang, Tai-Yuan & Hu, Jer-San & Chen, Kuo-Chia, 2008. "The influence of market and product knowledge resource embeddedness on the international mergers of advertising agencies: The case-study approach," International Business Review, Elsevier, vol. 17(5), pages 587-599, October.
    11. Andreu Blesa & Diego Monferrer & Ysabel Nauwelaerts & Maria Ripollés, 2008. "The effect of early international commitment on international positional advantages in Spanish and Belgian international new ventures," Journal of International Entrepreneurship, Springer, vol. 6(4), pages 168-187, December.
    12. Nordman, Emilia Rovira & Tolstoy, Daniel, 2014. "Does relationship psychic distance matter for the learning processes of internationalizing SMEs?," International Business Review, Elsevier, vol. 23(1), pages 30-37.
    13. Prashantham, Shameen & McNaughton, Rod B., 2006. "Facilitation of links between multinational subsidiaries and SMEs: The Scottish Technology and Collaboration (STAC) initiative," International Business Review, Elsevier, vol. 15(5), pages 447-462, October.
    14. Freeman, Susan & Hutchings, Kate & Lazaris, Miria & Zyngier, Suzanne, 2010. "A model of rapid knowledge development: The smaller born-global firm," International Business Review, Elsevier, vol. 19(1), pages 70-84, February.
    15. Javalgi, Rajshekhar (Raj) G. & Deligonul, Seyda & Dixit, Ashutosh & Cavusgil, S. Tamer, 2011. "International Market Reentry: A Review and Research Framework," International Business Review, Elsevier, vol. 20(4), pages 377-393, August.
    16. Hong, Jacky Fok Loi & Snell, Robin Stanley & Easterby-Smith, Mark, 2009. "Knowledge flow and boundary crossing at the periphery of a MNC," International Business Review, Elsevier, vol. 18(6), pages 539-554, December.
    17. Li, Shenxue & Scullion, Hugh, 2010. "Developing the local competence of expatriate managers for emerging markets: A knowledge-based approach," Journal of World Business, Elsevier, vol. 45(2), pages 190-196, April.
    18. Gunawan, Janti & Rose, Elizabeth L., 2014. "Absorptive capacity development in Indonesian exporting firms: How do institutions matter?," International Business Review, Elsevier, vol. 23(1), pages 45-54.
    19. Lindstrand, Angelika & Melén, Sara & Nordman, Emilia Rovira, 2011. "Turning social capital into business: A study of the internationalization of biotech SMEs," International Business Review, Elsevier, vol. 20(2), pages 194-212, April.
    20. Alvaro, Cuervo-Cazurra, 2011. "Selecting the country in which to start internationalization: The non-sequential internationalization model," Journal of World Business, Elsevier, vol. 46(4), pages 426-437, October.
    21. Yamin, Mohammad & Sinkovics, Rudolf R., 2006. "Online internationalisation, psychic distance reduction and the virtuality trap," International Business Review, Elsevier, vol. 15(4), pages 339-360, August.
    22. Bertha Jimenez & Bojan Angelov & Bharat Rao, 2012. "Service Absorptive Capacity: Its Evolution and Implications for Innovation," Journal of the Knowledge Economy, Springer, Springer, vol. 3(2), pages 142-163, June.

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