The effects of past satisfaction and commitment on the future intention to internationalize

Purpose - – The purpose of this paper is to provide evidence that firms that are more committed to internationalization, systematically differ from firms that are less committed to internationalization in their future intention to engage in foreign direct investment (FDI). The authors analyzed data from 42 large Brazilian multinational enterprises (MNEs) and found that results support previous research on the degree of satisfaction with prior internationalization efforts and future intent to internationalize, such that the relationship between the two is positive. Yet contrary to existing literature, the degree to which a firm was committed to internationalization has a negative influence on the positive relationship between satisfaction and intent. Design/methodology/approach - – All Brazilian firms that have entered foreign markets via FDI were surveyed to measure the firm’s: intent to internationalize; satisfaction with prior internationalization; and commitment to internationalization. Intent to internationalize is future based while both satisfaction and commitment reflect previous year’s activities. The potential response pool included publically traded companies listed on the Bovespa (São Paulo Stock Exchange) and private limited companies (Ltda.). The authors conducted a hierarchical moderated regression analysis to test the moderating effect of commitment to internationalization on the relationship between international satisfaction and intent to internationalize. Findings - – This study adds to the literature by examining how past international satisfaction and commitment affect the future intent to internationalize for large Brazilian MNEs. The results confirm that the degree of past satisfaction regarding a firm’s international business is positively related to the firm’s future intent to internationalize. However, the results diverge from past research in two important ways. First, contrary to the organizational behavior literature, past commitment to internationalization does not have a significant relationship with future intention to internationalize. Second, the results show the relationship between satisfaction and intent is weakened by a high degree of international commitment. Research limitations/implications - – A limitation of this study is the small sample size. While it encompasses the vast majority of large MNEs in Brazil, the authors still do not have enough data points to test more hypotheses such as the effects of firm size, number of countries the firm is in, and age of the firm. Future studies should attempt to expand the work done here by examining these effects. Another limitation of this study is that it is based on solely one country; Brazil. Future studies should attempt to replicate these findings in other emerging market countries. Practical implications - – These results have three main managerial implications. First, international strategists analyzing the trajectory of a firm’s future intentions to internationalize should focus on how satisfied the firm has been with its past efforts. Second, managers should not assume that just because their firms have a large presence abroad that this will subsequently lead to future plans to internationalize. Finally, for emerging market MNEs in a period of the financial crises, committing more to internationalization may reduce the positive relationship between satisfaction and intention. Originality/value - – The purpose of this study is to add to the small but growing work on large MNEs from Brazil in order to better understand their internationalization strategies. While there are literally hundreds of articles investigating the individual-level relationship between satisfaction and the intent to do something, there are a dearth at the firm level (see Woodet al., 2011, as a notable exception). The authors therefore attempt to extend the literature on internationalization by discussing how satisfaction at the firm level affects a firm-level decision.