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Explaining gradually increasing resource commitment to a foreign market

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  • Pedersen, Torben
  • Petersen, Bent
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    Abstract

    A large number of studies has examined the pattern of firms' internationalization in terms of the sequence by which a firm introduces various operation methods to a foreign market. With few exceptions, the studies seek to establish whether or not the observed patterns of internationalization are 'incremental'. Looking at the internationalization process in relation to the firms' resource commitment to foreign markets, the point taken in this study is that the internationalization process of any firm will display some element of 'incrementalism'. However, the pace by which firms commit resources may differ substantially. By looking at the pace of commitment instead of the pattern ('the establishment chain') the study leaves behind the crude dichotomy of incremental-versus-instantaneous resource commitment to a foreign market. Instead, the focus of the study is on the factors which hold the potential of explaining the pace of resource commitment to a foreign market. LISREL algorithm results, based on retrospective observations of 165 Danish companies' involvement in one specific foreign market, confirm that the companies' internal accumulation of foreign market knowledge is a determinant of pace of commitment. But the empirical analyses also suggest that the inclusion of other internal and external factors provide a more complete explanation of the pace by which a firm commits resources to foreign markets.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Business Review.

    Volume (Year): 7 (1998)
    Issue (Month): 5 (October)
    Pages: 483-501

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    Handle: RePEc:eee:iburev:v:7:y:1998:i:5:p:483-501

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    Related research

    Keywords: Pace of internationalization Resource commitment Foreign markets;

    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Andrea Bonaccorsi, 1992. "On the Relationship Between Firm Size and Export Intensity," Journal of International Business Studies, Palgrave Macmillan, vol. 23(4), pages 605-635, December.
    2. Michel Ghertman, 1988. "Foreign Subsidiary and Parents' Roles During Strategic Investment and Divestment Decisions," Journal of International Business Studies, Palgrave Macmillan, vol. 19(1), pages 47-67, March.
    3. Warren J Bilkey & George Tesar, 1977. "The Export Behavior of Smaller-Sized Wisconsin Manufacturing Firms," Journal of International Business Studies, Palgrave Macmillan, vol. 8(1), pages 93-98, March.
    4. Roland Artle & Sture Berglund, 1959. "A Note on Manufacturers' Choice of Distribution Channels," Management Science, INFORMS, vol. 5(4), pages 460-471, July.
    5. W Chan Kim & Peter Hwang, 1992. "Global Strategy and Multinationals' Entry Mode Choice," Journal of International Business Studies, Palgrave Macmillan, vol. 23(1), pages 29-53, March.
    6. Calof, Jonathan L. & Beamish, Paul W., 1995. "Adapting to foreign markets: Explaining internationalization," International Business Review, Elsevier, vol. 4(2), pages 115-131, June.
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    Citations

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    Cited by:
    1. Papadopoulos, Nicolas & Martín Martín, Oscar, 2010. "Toward a model of the relationship between internationalization and export performance," International Business Review, Elsevier, vol. 19(4), pages 388-406, August.
    2. Petersen, Bent & Welch, Lawrence S., 1999. "Foreign Operation Mode Combinations and Internationalization," Working Papers 6-1999, Copenhagen Business School, Department of International Economics and Management.
    3. Schmiele, Anja & Rammer, Christian, 2008. "Drivers and Effects of Internationalising Innovation by SMEs," ZEW Discussion Papers 08-035, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Petersen, Bent & Pedersen, Torben & Sharma, Deo, 2001. "The Role of Knowledge in Firms’ internationalization Process: Wherefrom and Whereto," Working Papers 17-2001, Copenhagen Business School, Department of International Economics and Management.
    5. Forsgren, M., 2002. "The concept of learning in the Uppsala internationalization process model: a critical review," International Business Review, Elsevier, vol. 11(3), pages 257-277, June.
    6. Oxelheim, Lars & Randøy, Trond & Stonehill, Arthur, 2001. "On the Treatment of Finance-Specific Factors Within the OLI Paradigm," Working Paper Series 554, Research Institute of Industrial Economics.
    7. Hadjikhani, Amjad & Hadjikhani, Annoch Isa & Thilenius, Peter, 2014. "The internationalization process model: A proposed view of firms’ regular incremental and irregular non-incremental behaviour," International Business Review, Elsevier, vol. 23(1), pages 155-168.
    8. Anja Schmiele, 2008. "Drivers and Effects of Internationalising Innovation by SMEs," Working Papers id:1547, eSocialSciences.
    9. Swoboda, Bernhard & Olejnik, Edith & Morschett, Dirk, 2011. "Changes in foreign operation modes: Stimuli for increases versus reductions," International Business Review, Elsevier, vol. 20(5), pages 578-590, October.
    10. Forsgren, Mats, 2001. "The concept of learning in the Uppsala internationalization process model : a critical review," Occasional Papers 2001/1, Uppsala University, Department of Business Studies.
    11. Petersen, Bent & Welch, Lawrence S., 2002. "Foreign operation mode combinations and internationalization," Journal of Business Research, Elsevier, vol. 55(2), pages 157-162, February.
    12. Buck, Trevor & Liu, Xiaohui & Ott, Ursula, 2010. "Long-term orientation and international joint venture strategies in modern China," International Business Review, Elsevier, vol. 19(3), pages 223-234, June.
    13. Araujo, Luis & Rezende, Sergio, 2003. "Path dependence, MNCs and the internationalisation process: a relational approach," International Business Review, Elsevier, vol. 12(6), pages 719-737, December.

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