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Explaining gradually increasing resource commitment to a foreign market

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  • Pedersen, Torben
  • Petersen, Bent

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.

Suggested Citation

  • Pedersen, Torben & Petersen, Bent, 1998. "Explaining gradually increasing resource commitment to a foreign market," International Business Review, Elsevier, vol. 7(5), pages 483-501, October.
  • Handle: RePEc:eee:iburev:v:7:y:1998:i:5:p:483-501
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    References listed on IDEAS

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    1. Warren J Bilkey & George Tesar, 1977. "The Export Behavior of Smaller-Sized Wisconsin Manufacturing Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 8(1), pages 93-98, March.
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    Citations

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    Cited by:

    1. Petersen, Bent & Welch, Lawrence S., 2002. "Foreign operation mode combinations and internationalization," Journal of Business Research, Elsevier, vol. 55(2), pages 157-162, February.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. repec:pal:jintbs:v:48:y:2017:i:9:d:10.1057_s41267-017-0119-3 is not listed on IDEAS
    7. Oxelheim, Lars & Randøy, Trond & Stonehill, Arthur, 2001. "On the treatment of finance-specific factors within the OLI paradigm," International Business Review, Elsevier, vol. 10(4), pages 381-398, August.
    8. Petrou, Andreas P. & Thanos, Ioannis C., 2014. "The “grabbing hand” or the “helping hand” view of corruption: Evidence from bank foreign market entries," Journal of World Business, Elsevier, vol. 49(3), pages 444-454.
    9. 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.
    10. 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.
    11. 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.
    12. Mikael Hilmersson & Stylianos Papaioannou, 2015. "SME international opportunity scouting—empirical insights on its determinants and outcomes," Journal of International Entrepreneurship, Springer, vol. 13(3), pages 186-211, September.
    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.
    14. Drogendijk, H.J., 2001. "Expansion patterns of Dutch firms in Central and Eastern Europe : Learning to internationalize," Other publications TiSEM 18571cef-0dd0-46ff-82aa-3, Tilburg University, School of Economics and Management.
    15. 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.
    16. Crick, Dave, 2004. "U.K. SMEs' decision to discontinue exporting: an exploratory investigation into practices within the clothing industry," Journal of Business Venturing, Elsevier, vol. 19(4), pages 561-587, July.
    17. repec:spr:manint:v:47:y:2007:i:2:d:10.1007_s11575-007-0011-7 is not listed on IDEAS
    18. Martin Johanson & Igor Kalinic, 2016. "Acceleration and Deceleration in the Internationalization Process of the Firm," Management International Review, Springer, vol. 56(6), pages 827-847, December.
    19. 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.
    20. Anja Schmiele, 2008. "Drivers and Effects of Internationalising Innovation by SMEs," Working Papers id:1547, eSocialSciences.
    21. repec:spr:manint:v:57:y:2017:i:5:d:10.1007_s11575-017-0313-3 is not listed on IDEAS

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