Expanding onto foreign markets and being successive abroad is often considered as the peak of business success of a firm. Unsurprisingly, the process of firm internationalization received a lot of attention from scholars. A major influence to the pace and pattern of firm internationalization is international experience and resulting knowledge. In fact, knowledge is considered to be a main driver for competitive advantages. However, in spite of its identified importance, literature has yet to present a unifying theory which explains its exact role and impact to the process of internationalization. This noble aim may be aggravated by the fact that different types of firms appear to be effected dissimilarly by accrued international experience. Moreover, international experience is gained, processed and exploited in various ways resulting in diverse firm specific advantages. These differences in experiential learning further contribute to the complexity on grasping the issue. Finally, the process of internationalization itself includes many different aspects and hence does the effects of international experience to such. Just to name a few, scholars reviewed the role of international experience to the choice of entry mode, establishment mod, market selection or pace of internationalization. The resulting assumptions regarding international experience are broad and, unfortunately, often contradicting.
This paper attempts to review selected deviating effects of international experience from the traditional frameworks and analyze their specifications. By doing so, one may be able to bridge gaps to traditional models or further highlight insufficiencies of such. When referring to the traditional framework of firm internationalization, this paper refers to the seminal work of Johanson and Vahlne (1977), as well as supporting models, and their theory regarding the role of knowledge development and market commitments in the process of internationalization. Furthermore, more recent studies regarding the role of knowledge on the choice of entry mode are being reviewed. The reviewed literature covers a time span of almost 40 years and opposes scientifically established work to most recently published articles from renowned outlets.
Table of Contents
1 Introduction
2 Literature review on international experience
2.1 Terminology
2.2 Decomposition
2.3 Multidimensional construct
3 The traditional model: the role of international experience in the Uppsala internationalization
4 The role of international experience on the choice of entry mode
5 Analysis of deviating phenomena: Born Globals and the soft service sector
5.1 Born Globals
5.2 Soft service sector
6 Conclusion
Objectives and Research Themes
This paper aims to review the role and impact of international experience on firm internationalization by analyzing established traditional frameworks in contrast to specific deviating phenomena. It explores how international experience, viewed as experiential knowledge, influences the pace of international expansion and the choice of entry modes in different business contexts.
- The role of experiential knowledge in firm internationalization processes.
- Traditional assumptions of the Uppsala model regarding slow and incremental internationalization.
- The impact of international experience on entry mode selection and resource-augmenting strategies.
- Deviations from traditional models, specifically focusing on Born Global firms and the soft service sector.
- Qualitative and quantitative dimensions of international experience in modern business environments.
Excerpt from the Book
2.1 Terminology
First and foremost, it is of note to differentiate the terms of international experience, experiential knowledge and experiential learning in the setting of firm internationalization, which are all relevant to this study. According to Penrose (1995), knowledge derives from learning. In that sense, she differs between two different types of knowledge: objective (1) and knowledge through experience (2). Although the line between these both forms of knowledge is blurry, she attempts to distinguish them by the fact that objective knowledge is transmittable whereas experience is not. However, the gained or „learned“ knowledge from experience may be transformed to objective knowledge, to a certain degree, and hence transmitted (Penrose, 1995, pp. 51-56). Penrose (1995) further describes the effects of gaining experience as following: „Increasing experience shows itself in two ways - changes in knowledge acquired and changes in the ability to use [existing as well as future] knowledge.“ (ibid., p.53). Experiential knowledge therefore contributes to objective knowledge and vice versa (ibid., pp. 51-56).
Although her implications originally meant to describe the growth of managerial services, Johanson and Vahlne (1977) identified this experiential knowledge as crucial for firm internationalization as it cannot be acquired as easy as objective knowledge and has to be successively increased, e.g. through operations abroad (Johanson and Vahlne, 1977, p. 28). To conclude this terminology, one could state that experiential knowledge is processed international experience, where the processing can be defined as experiential learning. Therefore this study employs, at later paragraphs, the term experiential knowledge as a result of international experience. However, literature offers further refinement to the concept of international experience and the resulting experiential knowledge.
Summary of Chapters
1 Introduction: This chapter defines the significance of international experience for business success and introduces the study's objective to examine deviations from traditional internationalization frameworks.
2 Literature review on international experience: This section provides essential definitions and conceptual frameworks, distinguishing between terminology, the decomposition of knowledge, and the multidimensionality of international experience.
3 The traditional model: the role of international experience in the Uppsala internationalization: This chapter outlines the seminal work of Johanson and Vahlne, focusing on how experiential knowledge serves as a catalyst for reducing market uncertainty and psychic distance.
4 The role of international experience on the choice of entry mode: This section reviews resource-based views on how firms decide between knowledge-augmenting and knowledge-exploiting entry strategies based on their existing experience.
5 Analysis of deviating phenomena: Born Globals and the soft service sector: This chapter critically analyzes how Born Globals and the hotel industry challenge traditional slow-paced internationalization models through faster adaptation and complex service requirements.
6 Conclusion: The concluding chapter synthesizes the study's findings, highlighting that while traditional models remain relevant, they require revision to account for the dynamic and accelerated nature of internationalization in specific sectors.
Keywords
Internationalization, International Experience, Experiential Knowledge, Uppsala Model, Born Globals, Soft Service Sector, Entry Mode, Market Commitment, Psychic Distance, Resource-Augmentation, Experiential Learning, Firm Internationalization, Knowledge Development, Market Uncertainty, Competitive Advantage
Frequently Asked Questions
What is the core focus of this research paper?
The paper examines the role of international experience in the internationalization of firms, specifically looking at how this experience influences growth patterns and entry mode decisions.
What are the primary thematic areas covered in the study?
The study covers the Uppsala model of internationalization, the impact of experiential knowledge, entry mode strategies, and the specific cases of Born Global firms and the soft service sector.
What is the primary objective of this work?
The objective is to analyze whether traditional internationalization frameworks accurately explain current business phenomena or if they face limitations that require re-evaluation.
Which scientific method is utilized in this paper?
The paper employs a comprehensive literature review, synthesizing research spanning forty years to compare seminal theories with recent findings from renowned academic outlets.
What topics are discussed in the main body?
The main body treats the conceptualization of international experience, its role in the Uppsala model, its effect on entry mode choices, and its divergence in the context of Born Globals and service firms.
Which keywords best characterize this research?
Key terms include internationalization, experiential knowledge, Uppsala model, Born Globals, and soft service sector.
How do Born Global firms specifically challenge the Uppsala model?
Born Globals challenge the model by demonstrating a very rapid internationalization process, whereas the Uppsala model suggests a slow, incremental, and time-consuming progression.
Why is the hotel industry a significant example for the soft service sector?
The hotel industry is significant because it requires a physical presence, meaning the product cannot be exported, which necessitates a unique approach to experiential knowledge and entry modes.
Does the paper conclude that traditional models are obsolete?
No, the paper does not conclude that they are obsolete but rather suggests they need revision to incorporate modern dynamics like faster knowledge accrual and different risk tolerances.
- Quote paper
- Anonym (Author), 2015, Reviewing the Role of International Experience to Firm Internationalization. Traditional Assumptions and Selected Deviations, Munich, GRIN Verlag, https://www.grin.com/document/303538
