The role of experiential knowledge in foreign market commitment: A process perspective on the internationalisation of Australian services SMEs
Creators: name: Salata, Genrikh
Publisher: name: The Australian National University
Year: 2018
Subjects: Internationalisation
Experiential Knowledge
Experiential Learning
International Market Commitment
Decision-Making
Sequence Analysis
Time
Process

description: The Uppsala internationalisation model established some foundations for research in international business. But since the introduction of this internationalisation process model in mid-1970s, the business environment has changed significantly. It is important to reflect on how these changes affect the interplay between experiential learning and foreign market commitment, a key plank in the Uppsala model. This thesis focuses on a core assumption that underlies the model: that a high degree of foreign market commitment results from rational decisions that firms take during a learning process based on complete knowledge and information. In 2009, the protagonists of the Uppsala model offered a much more nuanced perception of a firm’s learning process, when they stressed that firms rely of a wider range of relationships, interactions and contexts that impact on their accumulation of experiential knowledge. Some studies have used proxy variables to capture this process through variance-based quantitative analysis. This thesis uses a process approach, conceptualised on the basis of several theories to understand the complexity of the learning process that underlies the internationalisation of firms. The true process approach to studying the internationalisation of the firm has been neglected for some time and the field of international business studies had been dominated by variance-based studies. Inevitably, this has led to a situation where ‘we see far too many “rigorous” studies with little originality and, at best, a marginal contribution’, as Johanson and Vahlne (2014: 173) expressed it. The process approach conceptualised, developed and applied in the analysis in this thesis may be a better instrument to understand causal relationships between experiential knowledge accumulation or learning and foreign market commitment, as well as other internationalisation processes that take place over periods of time. This research is focused on the micro-foundations of internationalisation attempts of firms. These processes are analysed in light of relevant spatiotemporal context. The findings document the key aspects of the internationalisation process without devoting the analysis to what Outhwaite (1987: 7-12) has labelled the positivist ‘law-explanation orthodoxy’. Instead, this thesis relies on abductive reasoning and longitudinal case studies to contextualise learning processes and changes in such processes over a period of time throughout the internationalisation process. It analyses the internationalisation of seven Australian services SMEs in order to provide causal explanations for a specific sequence of critical events that influenced the foreign market commitments of these firms. An additional methodological contribution of this thesis is the implementation of content analysis, clustering and multidimensional scaling of the contents of interviews, which accounts for relevant context without undermining the scientific explanation and rigour of the approach. By studying case histories and the chronology of critical events in the internationalisation attempts of these firms, we demonstrate that an accommodating learning style is most closely associated with the foreign market commitment of firms. Nonetheless, experiential learning is dynamic in nature and often requires decision makers to touch all bases of the learning cycle. As expected, the key sources of knowledge are relevant business and people-to-people networks, as well as prior learning experiences of decision makers that often go beyond the lifespan of the firm. Experiential learning is found to be a context-dependent process that is utterly complex in nature. The thesis demonstrates how critical events trigger experiential learning as well as explain what the decision makers learn as part of this learning process. Rather than measuring the stock of experiential knowledge, the thesis demonstrates how learning processes alter individual perceptions of foreign market opportunities. The findings reconfirm that change processes (i.e. experiential learning, building business networks and trust) are continuous, while market commitment decisions (i.e. market entry mode, degree of internationalisation) are intermittent. These findings precisely challenge the results of variance-based studies that rely on limited firm-level indicators to capture and analyse experiential learning processes. This thesis builds on the call of Johanson and Vahlne (2014) to broaden our understanding of the practice of the internationalisation of firms by focusing on the behavioural aspects of human decision-making, such as the role of business networks and trust. To date, there are few studies that explain what exactly is learnt as part of the internationalisation process and how this information and/or knowledge actually affects foreign market opportunity recognition. Experiential knowledge remains the pivotal aspect of the internationalisation process and this research helps to conceptualise and operationalise relevant theory and provide causal explanations.