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Fast and slow resource commitment to foreign markets: What causes the difference?

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  • Petersen, Bent
  • Pedersen, Torben

Abstract

Apparently, the pace by which companies commit resources to foreign markets differs significantly. We test six propositions that potentially explain why some companies undertake faster foreign market commitment than others. Suggested factors discriminating between a fast and a slow foreign market commitment are (1) whether the company is producing manufactures or services; (2) foreign market entry motives; (3) company size; (4) foreign market stability; (5) experience with foreign markets similar to the entered; and (6) degree of globalization in the industry. Using multiple regression analysis on Danish MNE data, we obtain supportive empirical evidence for all propositions, except for number 5, experience with similar markets. The results indicate that resource commitment to stable, foreign markets undertaken by small, market-seeking, manufacturing companies operating in domestic industries is slow relative to the commitment of resources to unstable markets made by firms with other attributes (large firms, service firms, and motives other than market seeking) operating in global industries. The study suggests that a globalization of industries since the 1970s has prompt companies to increase the pace by which they commitment resources to foreign markets.

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  • Petersen, Bent & Pedersen, Torben, 1999. "Fast and slow resource commitment to foreign markets: What causes the difference?," Journal of International Management, Elsevier, vol. 5(2), pages 73-91.
    • Handle: RePEc:eee:intman:v:5:y:1999:i:2:p:73-91
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    2. Figueira-de-Lemos, Francisco & Hadjikhani, Amjad, 2014. "Internationalization processes in stable and unstable market conditions: Towards a model of commitment decisions in dynamic environments," Journal of World Business, Elsevier, vol. 49(3), pages 332-349.
    3. Zorzini, Marta & Stevenson, Mark & Hendry, Linda C., 2014. "Coordinating offshored operations in emerging economies: A contingency-based study," International Journal of Production Economics, Elsevier, vol. 153(C), pages 323-339.
    4. Kostadin Kolarov & Yordanka Ivanova & Branimir Yordanov & Krasimira Shindarova & Nedialko Nestorov, 2021. "Determinants and Models of Competitive Performance of SMEs in an International Business Environment: Combining Macro-Level and Firm-Level Analyses," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 6, pages 106-125.
    5. Nicolai Pogrebnyakov, 2017. "A Cost-Based Explanation of Gradual, Regional Internationalization of Multinationals on Social Networking Sites," Management International Review, Springer, vol. 57(1), pages 37-64, February.
    6. Tongurai, Jittima & Vithessonthi, Chaiporn, 2022. "Learning, foreign operations and operating performance," Global Finance Journal, Elsevier, vol. 52(C).
    7. Elg, Ulf & Ghauri, Pervez & Sinkovics, Rudolf R., 2004. "A market and network based model for retailers’ foreign entry strategies," Working Paper Series 2004/3, Lund University, Institute of Economic Research.
    8. Hsu, Chin-Chun & Pereira, Arun, 2008. "Internationalization and performance: The moderating effects of organizational learning," Omega, Elsevier, vol. 36(2), pages 188-205, April.
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    11. 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.
    12. Amdam, Rolv Petter & Benito, Gabriel R.G., 2022. "Temporality and the first foreign direct investment," Journal of World Business, Elsevier, vol. 57(5).
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