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Internationalization Revisited: The "Big Step" Hypotheses


  • Pedersen, Torben

    (Department of International Economics and Management, Copenhagen Business School)

  • Shaver, J. Myles

    (New York University)


We refine the prominent of the process by which firms expand internationally - internationalization theory. By argumenting the behavioral theory of the firm (which is the basis of internationalization theory) with theories of foreign direct investment, we argue that international expansion is not a gradual incremental process as argued by internationalization theory. Rather, we hypothesize that international expansion is a discontinuous process characterized by an initial "big step." We expect that the differences of operating in one`s home country versus abroad are the major difficulties faced by foreign firms, and subsequently the differences between foreign countries are only marginal. As a result, we hypothesize that the internationalization process will be characterized by the following observations: (a) firms take a long period of time to make their first international investment; (b) firms take shorter but constant periods of time for subsequent investments; (c) no relationship between time to expansion and the cultural distance of the target country will exist. We examine the international expansion activities of 176 Danish firms over 150 years and find support for these arguments.

Suggested Citation

  • Pedersen, Torben & Shaver, J. Myles, 2000. "Internationalization Revisited: The "Big Step" Hypotheses," Working Papers 5-2000, Copenhagen Business School, Department of International Economics and Management.
  • Handle: RePEc:hhb:cbsint:2000-005

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    References listed on IDEAS

    1. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
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    4. Shawna O'Grady & Henry W Lane, 1996. "The Psychic Distance Paradox," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 309-333, June.
    5. Gabriel R G Benito & Geir Gripsrud, 1992. "The Expansion of Foreign Direct Investments: Discrete Rational Location Choices or a Cultural Learning Process?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(3), pages 461-476, September.
    6. William H Davidson, 1980. "The Location of Foreign Direct Investment Activity: Country Characteristics and Experience Effects," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 11(2), pages 9-22, June.
    7. Kent Eriksson & Jan Johanson & Anders Majkgård & D Deo Sharma, 1997. "Experimental Knowledge and Costs in the Internationalization Process," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(2), pages 337-360, June.
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    Cited by:

    1. Wei, Yingqi & Zheng, Nan & Liu, Xiaohui & Lu, Jiangyong, 2014. "Expanding to outward foreign direct investment or not? A multi-dimensional analysis of entry mode transformation of Chinese private exporting firms," International Business Review, Elsevier, vol. 23(2), pages 356-370.
    2. 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.

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