Internationalisation knowledge and market expansion: how Korean firms grow in foreign markets

It is widely accepted that a key driver of a firm's international growth is its knowledge about how to compete in foreign markets. Such knowledge is often accumulated through direct experience. Many firms, however, have attained substantial growth in foreign markets although they have had little prior direct experience there. Depending on the knowledge-based view and the organisational learning theory, we developed a model explaining and predicting the effects of indirect learning from the experience of other firms as well as the effects of direct learning of culture and economy in other countries on firms' success in foreign markets. Using a uniquely complied archival dataset regarding Korean firm's foreign direct investments, we empirically tested the model. We indicated that experiential knowledge of culture and economy positively moderates the effects of those drivers on the success. In addition, the importance of indirect learning is highlighted in explaining firms' international growth.