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Explaining gradually increasing resource commitment to a foreign market

  • Pedersen, Torben
  • Petersen, Bent
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    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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    File URL: http://www.sciencedirect.com/science/article/pii/S0969593198000122
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    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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    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. 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.
    3. 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.
    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. Calof, Jonathan L. & Beamish, Paul W., 1995. "Adapting to foreign markets: Explaining internationalization," International Business Review, Elsevier, vol. 4(2), pages 115-131, June.
    6. 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.
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