Skip to main content
SpringerLink
Log in

The Performance of Decision-Making Strategies in SME Internationalization: The Role of Host Market’s Institutional Development

  • Research Article
  • Published:
Management International Review Aims and scope Submit manuscript

Abstract

The possibility that small and medium-sized enterprises (SMEs) mix and match prediction and non-prediction while making decisions during internationalization remains a highly unaddressed scenario. The rare studies considering it do not go beyond domestic effects when contextualizing the decisions that guide SMEs’ foreign expansion. This study links SMEs’ decision-making strategies to performance and suggests that such a relationship is moderated by the host market’s institutional development and the associated institutional voids. The analysis combines primary survey data from 851 SMEs in Brazil, China, Italy, Poland, and Sweden with secondary data retrieved from the World Bank. Besides supporting both independent and synergistic performance effects of predictive and non-predictive strategies, the results indicate that foreign market institutions affect these effects differently and suggest firm size effects worth consideration. Contributions include the expansion of the debate on the relationship between prediction and non-prediction beyond the either-or reasoning that prevails in existing research and the contextualization of SMEs’ decision-making strategies in terms of the institutional dynamics that SMEs encounter abroad.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

References

  • Adomako, S., Opoku, R. A., & Frimpong, K. (2017). The moderating influence of competitive intensity on the relationship between CEOs’ regulatory foci and SME internationalization. Journal of International Management, 23(3), 268–278.

    Article  Google Scholar 

  • Adomako, S., Amankwah-Amoah, J., Dankwah, G. O., Danso, A., & Donbesuur, F. (2019). Institutional voids, international learning effort and internationalization of emerging market new ventures. Journal of International Management, 25(4).

  • Adomako, S., Frimpong, K., Amankwah-Amoah, J., Donbesuur, F., & Opoku, R. A. (2021). Strategic decision speed and international performance: The roles of competitive intensity, Resource Flexibility, and Structural Organicity. Management International Review, 61(1), 27–55.

    Article  Google Scholar 

  • Ahi, A., Baronchelli, G., Kuivalainen, O., & Piantoni, M. (2017). International Market Entry: How do small and medium-Sized enterprises make decisions? Journal of International Marketing, 25(1), 1–21.

    Article  Google Scholar 

  • Aldrich, H., & Ellen, A. R. (1986). Even dwarfs started small: Liabilities of age and size and their strategic implications’ in Research in organizational behavior. Research in Organizational Behavior, 8, 165–198.

    Google Scholar 

  • Alsos, G. A., Clausen, T. H., Mauer, R., Read, S., & Sarasvathy, S. D. (2020). Effectual exchange: From entrepreneurship to the disciplines and beyond. Small Business Economics, 54(3), 605–619.

    Article  Google Scholar 

  • An, W., Rüling, C., & Zheng, X. (2020). Configurations of effectuation, causation, and bricolage: Implications for firm growth paths. Small Business Economics, 54(3), 843–864.

    Article  Google Scholar 

  • Andersen, O., & Buvik, A. (2002). Firms’ internationalization and alternative approaches to the international customer/market selection. International Business Review, 11(3), 347–363.

    Article  Google Scholar 

  • Andersson, U., Forsgren, M., & Pedersen, T. (2001). Subsidiary performance in multinational corporations: The importance of technology embeddedness. International Business Review, 10(1), 3–23.

    Article  Google Scholar 

  • Ansoff, H. I. (1979). Strategic Management. Wiley.

  • Armstrong, J. S. (1982). The value of formal planning for strategic decisions: Review of empirical research. Strategic Management Journal, 3(3), 197–211.

    Article  Google Scholar 

  • Armstrong, J. S., & Overton, T. S. (1977). Estimating nonresponse Bias in Mail surveys. Journal of Marketing Research, 14(3), 396.

    Article  Google Scholar 

  • Bai, W., Johanson, M., Oliveira, L., & Ratajczak-Mrozek, M. (2021). The role of business and social networks in the effectual internationalization: Insights from emerging market SMEs. Journal of Business Research, 129, 96–109.

    Article  Google Scholar 

  • Bai, W., Johanson, M., Oliveira, L., Ratajczak-Mrozek, M., & Francioni, B. (2022). Where business networks and institutions meet: Internationalization decision-making under uncertainty. Journal of International Management, 28(1).

  • Bailey, N. (2018). Exploring the relationship between institutional factors and FDI attractiveness: A meta-analytic review. International Business Review, 27(1), 139–148.

    Article  Google Scholar 

  • Batjargal, B., Hitt, M. A., Tsui, A. S., Arregle, J. L., Webb, J. W., & Miller, T. L. (2013). Institutional polycentrism, entrepreneurs’ Social Networks, and New Venture Growth. Academy of Management Journal, 56(4), 1024–1049.

    Article  Google Scholar 

  • Begley, T. M., Tan, W. L., & Schoch, H. (2005). Politico-economic factors associated with interest in starting a business: A multi-country study. Entrepreneurship: Theory and Practice, 29(1), 35–55.

    Google Scholar 

  • Beugelsdijk, S., Ambos, B., & Nell, P. C. (2018). Conceptualizing and measuring distance in international business research: Recurring questions and best practice guidelines. Journal of International Business Studies, 49(9), 1113–1137.

    Article  Google Scholar 

  • Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning-performance relationship in small firms. Journal of Business Venturing, 25(1), 24–40.

    Article  Google Scholar 

  • Brouthers, L. E., & Nakos, G. (2005). The role of systematic International Market Selection on small firms’ export performance. Journal of Small Business Management, 43(4), 363–381.

    Article  Google Scholar 

  • Brozovic, D. (2018). Strategic Flexibility: A review of the literature. International Journal of Management Reviews, 20(1), 3–31.

    Article  Google Scholar 

  • Cai, L., Guo, R., Fei, Y., & Liu, Z. (2017). Effectuation, exploratory learning and new Venture performance: Evidence from China. Journal of Small Business Management, 55(3), 388–403.

    Article  Google Scholar 

  • Campbell, J. T., Eden, L., & Miller, S. R. (2012). Multinationals and corporate social responsibility in host countries: Does distance matter? Journal of International Business Studies, 43(1), 84–106.

    Article  Google Scholar 

  • Cantwell, J., Dunning, J. H., & Lundan, S. M. (2010). An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies, 41(4), 567–586.

    Article  Google Scholar 

  • Chandler, G. N., DeTienne, D. R., McKelvie, A., & Mumford, T. V. (2011). Causation and effectuation processes: A validation study. Journal of Business Venturing, 26(3), 375–390.

    Article  Google Scholar 

  • Chandra, Y., Styles, C., & Wilkinson, I. (2009). The recognition of first time international entrepreneurial opportunities: Evidence from firms in knowledge-based industries. International Marketing Review, 26(1), 30–61.

    Article  Google Scholar 

  • Chetty, S., Ojala, A., & Leppäaho, T. (2015). Effectuation and foreign market entry of entrepreneurial firms. European Journal of Marketing, 49(9/10), 1436–1459.

    Article  Google Scholar 

  • Child, J., & Hsieh, L. H. Y. (2014). Decision mode, information and network attachment in the internationalization of SMEs: A configurational and contingency analysis. Journal of World Business, 49(4), 598–610.

    Article  Google Scholar 

  • Child, J., & Rodrigues, S. B. (2011). How organizations engage with external complexity: A political action perspective. Organization Studies, 32(6), 803–824.

    Article  Google Scholar 

  • Cohen, J. (1992). Quantitative methods in psychology: A power primer. Psychological Bulletin, 112(1), 155–159.

    Article  Google Scholar 

  • Cohen, B., & Winn, M. I. (2007). Market imperfections, opportunity and sustainable entrepreneurship. Journal of Business Venturing, 22(1), 29–49.

    Article  Google Scholar 

  • Cowden, B., Karami, M., Tang, J., Ye, W., & Adomako, S. (2024). The spectrum of perceived uncertainty and entrepreneurial orientation: Impacts on effectuation. Journal of Small Business Management, 62(1), 381–341.

    Article  Google Scholar 

  • Crick, D., & Spence, M. (2005). The internationalisation of high performing UK high-tech SMEs: A study of planned and unplanned strategies. International Business Review, 14(2), 167–185.

    Article  Google Scholar 

  • Csaszar, F. A. (2018). What makes a decision Strategic? Strategic representations. Strategy Science, 3(4), 606–619.

    Article  Google Scholar 

  • Cuervo-Cazurra, A., Luo, Y., Ramamurti, R., & Ang, S. H. (2018). The impact of the home country on internationalization. Journal of World Business, 53(5), 593–604.

    Article  Google Scholar 

  • De Maeseneire, W., & Claeys, T. (2012). SMEs, foreign direct investment and financial constraints: The case of Belgium. International Business Review, 21(3), 408–424.

    Article  Google Scholar 

  • de Vasconcellos, S. L., Garrido, I. L., & Parente, R. C. (2019). Organizational creativity as a crucial resource for building international business competence. International Business Review, 28(3), 438–449.

    Article  Google Scholar 

  • Dekel-Dachs, O., Najda-Janoszka, M., Stokes, P., Simba, A., & Tarba, S. (2021). Searching for a new perspective on institutional voids, networks and the internationalisation of SMEs in emerging economies. International Marketing Review, 38(5), 879–899.

    Article  Google Scholar 

  • Deligianni, I., Dimitratos, P., Petrou, A., & Aharoni, Y. (2016). Entrepreneurial orientation and international performance: The moderating effect of decision-making rationality. Journal of Small Business Management, 54(2), 462–480.

    Article  Google Scholar 

  • Deligianni, I., Voudouris, I., & Lioukas, S. (2017). Do effectuation processes shape the relationship between product diversification and performance in New Ventures? Entrepreneurship: Theory and Practice, 41(3), 349–377.

    Google Scholar 

  • Denicolai, S., Zucchella, A., & Magnani, G. (2021). Internationalization, digitalization, and sustainability: Are SMEs ready? A survey on synergies and substituting effects among growth paths. Technological Forecasting and Social Change, 166.

  • Dess, G. G., & Robinson, R. B. (1984). Measuring organizational performance in the absence of objective measures: The case of the privately-held firm and conglomerate business unit. Strategic Management Journal, 5(3), 265–273.

    Article  Google Scholar 

  • Dieleman, M., Markus, S., Rajwani, T., & White, G. O. (2022). Revisiting institutional voids: Advancing the international business literature by leveraging social sciences. Journal of International Management, 28(3).

  • Dimitratos, P., Petrou, A., Plakoyiannaki, E., & Johnson, J. E. (2011). Strategic decision-making processes in internationalization: Does national culture of the focal firm matter? Journal of World Business, 46(2), 194–204.

    Article  Google Scholar 

  • Donbesuur, F., Zahoor, N., & Boso, N. (2022). International network formation, home market institutional support and post-entry performance of international new ventures. International Business Review, 31(3).

  • Dunning, J. H., & Lundan, S. M. (2010). The institutional origins of dynamic capabilities in multinational enterprises. Industrial and Corporate Change, 19(4), 1225–1246.

    Article  Google Scholar 

  • Ebben, J. J., & Johnson, A. C. (2005). Efficiency, flexibility, or both? Evidence linking strategy to performance in small firms. Strategic Management Journal, 26(13), 1249–1259.

    Article  Google Scholar 

  • Eisenhardt, K. M. (1989). Making fast Strategic decisions in high-velocity environments. Academy of Management Journal, 32(3), 543–576.

    Article  Google Scholar 

  • Eisenhardt, K. M., & Zbaracki, M. J. (1992). Stratgic decision making. Strategic Management Journal, 13(S2), 13–37.

    Article  Google Scholar 

  • Elbanna, S. (2006). Strategic decision-making: Process perspectives. International Journal of Management Reviews, 8(1), 1–20.

    Article  Google Scholar 

  • Elbanna, S., Hsieh, L., & Child, J. (2020). Contextualizing internationalization decision-making research in SMEs: Towards an integration of existing studies. European Management Review, 17(2), 573–591.

    Article  Google Scholar 

  • Eriksson, K., Majkgård, A., & Sharma, D. D. (2000). Path dependence and Knowledge Development in the internationalization process. Management International Review, 40(4), 307–328.

    Google Scholar 

  • European Commission. (2005). The new SME definition. Dictorate-General for Enterprise and Industry.

  • Evers, N., & Andersson, S. (2021). Predictive and effectual decision-making in high-tech international new ventures– A matter of sequential ambidexterity. International Business Review, 30(1).

  • Evers, N., & O’Gorman, C. (2011). Improvised internationalization in new ventures: The role of prior knowledge and networks. Entrepreneurship & Regional Development, 23(7–8), 549–574.

    Article  Google Scholar 

  • Fernhaber, S. A., & Patel, P. C. (2012). How do young firms manage product portfolio complexity? The role of absorptive capacity and ambidexterity. Strategic Management Journal, 33(13), 1516–1539.

    Article  Google Scholar 

  • Fey, C. F., Hu, T., & Delios, A. (2023). The measurement and communication of effect sizes in management research. Management and Organization Review, 19(1), 176–197.

    Article  Google Scholar 

  • Fiedler, A., Fath, B. P., & Whittaker, D. H. (2017). Overcoming the liability of outsidership in institutional voids: Trust, emerging goals, and learning about opportunities. International Small Business Journal, 35(3), 262–284.

    Article  Google Scholar 

  • Field, A. (2013). Discovering statistics using IBM SPSS statistics (4th ed.). SAGE Publications Ltd.

  • Franczak, J., Lanivich, S. E., & Adomako, S. (2023). Filling institutional voids: Combinative effects of institutional shortcomings and gender on the alertness–Opportunity recognition relationship. Journal of Business Research, 155, Part.

  • Furlotti, M., Podoynitsyna, K., & Mauer, R. (2020). Means versus goals at the starting line: Performance and conditions of effectiveness of entrepreneurial action. Journal of Small Business Management, 58(2), 333–361.

    Article  Google Scholar 

  • Galkina, T., & Chetty, S. (2015). Effectuation and networking of internationalizing SMEs. Management International Review, 55(5), 647–676.

    Article  Google Scholar 

  • Galkina, T., & Jack, S. (2022). The synergy of causation and effectuation in the process of entrepreneurial networking: Implication for opportunity development. International Small Business Journal, 40(5), 564–591.

    Article  Google Scholar 

  • Galkina, T., Atkova, I., & Yang, M. (2022). From tensions to synergy: Causation and effectuation in the process of venture creation. Strategic Entrepreneurship Journal, 16(3), 573–601.

    Article  Google Scholar 

  • Gölgeci, I., Assadinia, S., Kuivalainen, O., & Larimo, J. (2019). Emerging-market firms’ dynamic capabilities and international performance: The moderating role of institutional development and distance. International Business Review, 28(6).

  • Goll, I., & Rasheed, A. M. A. (1997). Rational decision-making and firm performance: The moderating role of the environment. Strategic Management Journal, 18(7), 583–591.

    Article  Google Scholar 

  • Grégoire, D. A., & Cherchem, N. (2020). A structured literature review and suggestions for future effectuation research. Small Business Economics, 54(3), 621–639.

    Article  Google Scholar 

  • Guthrie, A. (2001). Using bootstrap methods with popular statistical programs. Annual Meeting of the Southwest Educational Research Association, 1–25.

  • Hair, J. F., Black, W. C., Babin, B. J., & Anderson, R. E. (2014). Multivariate Data Analysis: Pearson New International Edition (7th ed.). Pearson Education.

  • Harzing, A. W., Reiche, S., & Pudelko, M. (2013). Challenges in International Survey Research: A review with illustrations and suggested solutions for best practice. European Journal of International Management, 7(1), 112–134.

    Google Scholar 

  • Hauser, A., Eggers, F., & Güldenberg, S. (2020). Strategic decision-making in SMEs: Effectuation, causation, and the absence of strategy. Small Business Economics, 54(3), 775–790.

    Article  Google Scholar 

  • He, X., & Wei, Y. (2011). Linking market orientation to international market selection and international performance. International Business Review, 20(5), 535–546.

    Article  Google Scholar 

  • Henderson, A. D. (1999). Firm strategy and age dependence: A contingent view of the liabilities of newness, adolescence, and obsolescence. Administrative Science Quarterly, 44(2), 281–314.

    Article  Google Scholar 

  • Hilmersson, M. (2014). Experiential knowledge types and profiles of internationalising small and medium-sized enterprises. International Small Business Journal, 32(7), 802–817.

    Article  Google Scholar 

  • Hilmersson, M., & Jansson, H. (2012a). International network extension processes to institutionally different markets: Entry nodes and processes of exporting SMEs. International Business Review, 21(4), 682–693.

    Article  Google Scholar 

  • Hilmersson, M., & Jansson, H. (2012b). Reducing uncertainty in the emerging market entry process: On the relationship among International Experiential Knowledge, Institutional Distance, and uncertainty. Journal of International Marketing, 20(4), 96–110.

    Article  Google Scholar 

  • Hilmersson, M., & Johanson, M. (2016). Speed of SME internationalization and performance. Management International Review, 56(1), 67–94.

    Article  Google Scholar 

  • Hilmersson, M., Johanson, M., Lundberg, H., & Papaioannou, S. (2021). Serendipitous opportunities, entry strategy and knowledge in firms’ foreign market entry. International Marketing Review, 38(3), 585–612.

    Article  Google Scholar 

  • Hilmersson, M., Johanson, M., Papaioannou, S., & Lundberg, H. (2022). SME Management of Business Unpredictability in the market entry process. International Small Business Journal, 40(8), 991–1018.

    Article  Google Scholar 

  • Hsu, S. (2016). China’s Stock Market Crash: One Year Later. Forbes. https://www.forbes.com/sites/sarahsu/2016/07/13/chinas-stock-market-crash-one-year-later/#1b68d1505503.

  • Hsu, W. T., Chen, H. L., & Cheng, C. Y. (2013). Internationalization and firm performance of SMEs: The moderating effects of CEO attributes. Journal of World Business, 48(1), 1–12.

    Article  Google Scholar 

  • Jafari-Sadeghi, V., Mahdiraji, H. A., Budhwar, P., & Vrontis, D. (2023). Understanding the de-internationalization of entrepreneurial SMEs in a volatile context: A reconnoitre on the Unique compositions of Internal and External factors. British Journal of Management, 34(4), 2116–2137.

    Article  Google Scholar 

  • Jiang, Y., & Rüling, C. C. (2019). Opening the Black Box of Effectuation processes: Characteristics and Dominant types. Entrepreneurship: Theory and Practice, 43(1), 171–202.

    Google Scholar 

  • Johanson, J., & Johanson, M. (2021). Speed and synchronization in foreign market network entry: A note on the revisited Uppsala Model. Journal of International Business Studies, 52(8), 1628–1645.

    Article  Google Scholar 

  • Johanson, J., & Vahlne, J. E. (2009). The Uppsala internationalization process model revisited: From liability of foreignness to liability of outsidership. Journal of International Business Studies, 40(9), 1411–1431.

    Article  Google Scholar 

  • Jones, M. V., & Coviello, N. E. (2005). Internationalisation: Conceptualising an entrepreneurial process of behaviour in time. Journal of International Business Studies, 36(3), 284–303.

    Article  Google Scholar 

  • Jonsson, S., & Lindbergh, J. (2010). The impact of institutional impediments and information and knowledge exchange on SMEs’ investments in international business relationships. International Business Review, 19(6), 548–561.

    Article  Google Scholar 

  • Kalantaridis, C. (2004). Internationalization, Strategic Behavior, and the small firm: A comparative investigation. Journal of Small Business Management, 42(3), 245–262.

    Article  Google Scholar 

  • Kalinic, I., Sarasvathy, S. D., & Forza, C. (2014). Expect the unexpected: Implications of effectual logic on the internationalization process. International Business Review, 23(3), 635–647.

    Article  Google Scholar 

  • Kalnins, A. (2018). Multicollinearity: How common factors cause type 1 errors in multivariate regression. Strategic Management Journal, 39(8), 2362–2385.

    Article  Google Scholar 

  • Karami, M., Wooliscroft, B., & McNeill, L. (2020). Effectuation and internationalisation: A review and agenda for future research. Small Business Economics, 55(3), 777–811.

    Article  Google Scholar 

  • Karami, M., Ojala, A., & Saarenketo, S. (2023). Entrepreneurial orientation and international opportunity development by SMEs: The mediating role of decision-making logic. Journal of Small Business Management, 61(2), 994–1022.

    Article  Google Scholar 

  • Kaufmann, D., Kraay, A., & Mastruzzi, M. (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues. Working Paper, 5430, 29.

  • Khanna, T., & Palepu, K. G. (1997). Why focused strategies may be wrong for emerging markets. Harvard Business Review, 75(4), 41–51.

    Google Scholar 

  • Khanna, T., & Palepu, K. (2000). The future of business groups in emerging markets: Long-Run evidence from Chile. Academy of Management Journal, 43(3), 268–285.

    Article  Google Scholar 

  • Knight, F. (1921). Risk, Uncertain and Profit. Hart, Schaffner & Marx; Houghton Mifflin Co.

  • Knight, G. A., & Liesch, P. W. (2002). Information internalisation in internationalising the firm. Journal of Business Research, 55(12), 981–995.

    Article  Google Scholar 

  • Kostova, T., Beugelsdijk, S., Scott, W. R., Kunst, V. E., Chua, C. H., & van Essen, M. (2020). The construct of institutional distance through the lens of different institutional perspectives: Review, analysis, and recommendations. Journal of International Business Studies, 51(4), 467–497.

    Article  Google Scholar 

  • Kujala, I., & Törnroos, J. Å. (2018). Internationalizing through networks from emerging to developed markets with a case study from Ghana to the U.S.A. Industrial Marketing Management, 69, 98–109.

    Article  Google Scholar 

  • Lampert, C. M., Kim, M., & Polidoro, F. (2020). Branching and anchoring: Complementary asset configurations in conditions of Knightian uncertainty. Academy of Management Review, 45(4).

  • Langley, A. (1990). Patterns in the use of formal analysis in Strategic decisions. Organization Studies, 11(1), 17–45.

    Article  Google Scholar 

  • Leiblein, M. J., Reuer, J. J., Larsen, M. M., & Pedersen, T. (2022). When are global decisions strategic? Global Strategy Journal, 12(4), 714–737.

    Article  Google Scholar 

  • Li, L., Li, D., Goerzen, A., Shi, W., & Stone (2018). What and how do SMEs gain by going international? A longitudinal investigation of financial and intellectual resource growth. Journal of World Business, 53(6), 817–834.

    Article  Google Scholar 

  • Liedong, T. A., Peprah, A. A., Amartey, A. O., & Rajwani, T. (2020). Institutional voids and firms’ resource commitment in emerging markets: A review and future research agenda. Journal of International Management, 26(3).

  • Lu, J. W., & Beamish, P. W. (2001). The internationalization and performance of SMEs. Strategic Management Journal, 22(6–7), 565–586.

    Article  Google Scholar 

  • Lu, Y., Zhou, L., Bruton, G., & Li, W. (2010). Capabilities as a mediator linking resources and the international performance of entrepreneurial firms in an emerging economy. Journal of International Business Studies, 41(3), 419–436.

    Article  Google Scholar 

  • Luthans, F., Stajkovic, A. D., & Ibrayeva, E. (2000). Environmental and psychological challenges facing entrepreneurial development in transitional economies. Journal of World Business, 35(1), 95–110.

    Article  Google Scholar 

  • Magnani, G., & Zucchella, A. (2019). Coping with uncertainty in the internationalisation strategy: An exploratory study on entrepreneurial firms. International Marketing Review, 36(1), 131–163.

    Article  Google Scholar 

  • Mair, J., & Marti, I. (2009). Entrepreneurship in and around institutional voids: A case study from Bangladesh. Journal of Business Venturing, 24(5), 419–435.

    Article  Google Scholar 

  • Marquis, C., & Raynard, M. (2015). Institutional strategies in emerging markets. Academy of Management Annals, 9(1), 291–335.

    Article  Google Scholar 

  • Mauer, R., Wuebker, R., Schlueter, J., & Brettel, M. (2018). Prediction and control: An Agent-based Simulation of search processes in the Entrepreneurial Problem Space. Strategic Entrepreneurship Journal, 12(2), 237–260.

    Article  Google Scholar 

  • Meyer, K. E., Estrin, S., Bhaumik, S. K., & Peng, M. W. (2009). Institutions, resources, and entry strategies in emerging economies. Strategic Management Journal, 30(1), 61–80.

    Article  Google Scholar 

  • Mihalache, O. R., Jansen, J. J. P., Van den Bosch, F. A. J., & Volberda, H. W. (2014). Top Management Team Shared Leadership and Organizational Ambidexterity: A Moderated Mediation Framework. Strategic Entrepreneurship Journal, 8(2), 128–148.

    Article  Google Scholar 

  • Miller, C. C., & Cardinal, L. B. (1994). Strategic Planning and Firm Performance: A synthesis of more than two decades of Research. Academy of Management, 37(6), 1649–1665.

    Article  Google Scholar 

  • Miller, S. R., Lavie, D., & Delios, A. (2016). International intensity, diversity, and distance: Unpacking the internationalization-performance relationship. International Business Review, 25(4), 907–920.

    Article  Google Scholar 

  • Mingo, S., Junkunc, M., & Morales, F. (2018). The interplay between home and host country institutions in an emerging market context: Private equity in Latin America. Journal of World Business, 53(5), 653–667.

    Article  Google Scholar 

  • Mintzberg, H. (1994). The fall and rise of Strategic Planning. Harvard Business Review, 72(1), 107–114.

    Google Scholar 

  • Mintzberg, H., Raisinghani, D., & Théorêt, A. (1976). The structure of unstructured decision processes. Administrative Science Quarterly, 21(2), 246–275.

    Article  Google Scholar 

  • Murphy, K. R., & Aguinis, H. (2022). Reporting Interaction effects: Visualization, effect size, and interpretation. Journal of Management, 48(8), 2159–2166.

    Article  Google Scholar 

  • Murphy, G. B., Trailer, J. W., & Hill, R. C. (1996). Measuring performance in entrepreneurship research. Journal of Business Research, 36(1), 15–23.

    Article  Google Scholar 

  • Ngobo, P. V., & Fouda, M. (2012). Is good governance good for business? A cross-national analysis of firms in African countries. Journal of World Business, 47(3), 435–449.

    Article  Google Scholar 

  • North, D. C. (1990). Institutions, Institutional Change and Economic Performance (2nd ed.). Cambridge University Press.

  • Nummela, N., Saarenketo, S., Jokela, P., & Loane, S. (2014). Strategic decision-making of a Born Global: A comparative study from three small Open economies. Management International Review, 54(4), 527–550.

    Article  Google Scholar 

  • O’Reilly, C. A., & Tushman, M. L. (2008). Ambidexterity as a dynamic capability: Resolving the innovator’s dilemma. Research in Organizational Behavior, 28, 185–206.

    Article  Google Scholar 

  • O’Reilly, C. A., & Tushman, M. L. (2013). Organizational ambidexterity: Past, Present, and Future. Academy of Management Perspectives, 27(4), 324–338.

    Article  Google Scholar 

  • Onwuegbuzie, H. N., & Mafimisebi, O. P. (2021). Global relevance of scaling African indigenous entrepreneurship. Technological Forecasting and Social Change, 166.

  • Oparaocha, G. O. (2015). SMEs and international entrepreneurship: An institutional network perspective. International Business Review, 24(5), 861–873.

    Article  Google Scholar 

  • Ozkan, K. S. L. (2020). International market exit by firms: Misalignment of strategy with the foreign market risk environment. International Business Review, 29(6).

  • Packard, M. D., & Clark, B. B. (2020). On the mitigability of uncertainty and the choice between predictive and nonpredictive strategy. Academy of Management Review, 45(4), 766–786.

    Article  Google Scholar 

  • Parnell, J. A., Lester, D. L., Long, Z., & Köseoglu, M. A. (2012). How environmental uncertainty affects the link between business strategy and performance in SMEs: Evidence from China, Turkey, and the USA. Management Decision, 50(4), 546–568.

    Article  Google Scholar 

  • Petrou, A. P., Hadjielias, E., Thanos, I. C., & Dimitratos, P. (2020). Strategic decision-making processes, international environmental munificence and the accelerated internationalization of SMEs. International Business Review, 29(5).

  • Podsakoff, P. M., MacKenzie, S. B., Lee, J. Y., & Podsakoff, N. P. (2003). Common method biases in behavioral research: A critical review of the literature and recommended remedies. The Journal of Applied Psychology, 88(5), 879–903.

    Article  Google Scholar 

  • Pogrebnyakov, N., & Maitland, C. F. (2011). Institutional distance and the internationalization process: The case of mobile operators. Journal of International Management, 17(1), 68–82.

    Article  Google Scholar 

  • Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and companies. The Free.

  • Prashantham, S., Kumar, K., Bhagavatula, S., & Sarasvathy, S. D. (2019). Effectuation, network-building and internationalisation speed. International Small Business Journal, 37(1), 3–21.

    Article  Google Scholar 

  • Priem, R. L., Rasheed, A. M. A., & Kotulic, A. G. (1995). Rationality in Strategic decision processes, environmental dynamism and firm performance. Journal of Management, 21(5), 913–929.

    Article  Google Scholar 

  • Puffer, S. M., McCarthy, D. J., Jaeger, A. M., & Dunlap, D. (2013). The use of favors by emerging market managers: Facilitator or inhibitor of international expansion? Asia Pacific Journal of Management, 30(2), 327–349.

    Article  Google Scholar 

  • Putzhammer, M., Fainshmidt, S., Puck, J., & Slangen, A. (2018). To elevate or to duplicate? Experiential learning, host-country institutions, and MNE post-entry commitment increase. Journal of World Business, 53(4), 568–580.

    Article  Google Scholar 

  • Reymen, I. M. M. J., Andries, P., Berends, H., Mauer, R., Stephan, U., & Van Burg, E. (2015). Understanding dynamics of strategic decision making in venture creation: A process study of effectuation and causation. Strategic Entrepreneurship Journal, 9(4), 351–379.

    Article  Google Scholar 

  • Ropega, J. (2011). The reasons and symptoms of failure in SME. International Advances in Economic Research, 17(4), 476–483.

    Article  Google Scholar 

  • Sakarya, S., Eckman, M., & Hyllegard, K. H. (2007). Market selection for international expansion: Assessing opportunities in emerging markets. International Marketing Review, 24(2), 208–238.

    Article  Google Scholar 

  • Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical Shift from Economic Inevitability to Entrepreneurial Contingency. Academy of Management Review, 26(2), 243–263.

    Article  Google Scholar 

  • Sarasvathy, S. D., Kumar, K., York, J. G., & Bhagavatula, S. (2014). An Effectual Approach to International Entrepreneurship: Overlaps, challenges, and provocative possibilities. Entrepreneurship: Theory and Practice, 38(1), 71–93.

    Google Scholar 

  • Schu, M., & Morschett, D. (2017). Foreign market selection of online retailers– A path-dependent perspective on influence factors. International Business Review, 26(4), 710–723.

    Article  Google Scholar 

  • Shepherd, D. A., Breugst, N., & Patzelt, H. (2023). A founding-team model of creating a venture’s culture. Journal of Business Venturing, 38(2).

  • Sirén, C., Hakala, H., Wincent, J., & Grichnik, D. (2017). Breaking the routines: Entrepreneurial orientation, strategic learning, firm size, and age. Long Range Planning, 50(2), 145–167.

    Article  Google Scholar 

  • Smolka, K. M., Verheul, I., Burmeister-Lamp, K., & Heugens, P. P. M. A. R. (2018). Get it together! Synergistic effects of Causal and effectual decision-making logics on Venture Performance. Entrepreneurship: Theory and Practice, 42(4), 571–604.

    Google Scholar 

  • Soh, P. H., & Yu, J. (2010). Institutional environment and complementary assets: Business strategy in China’s 3G development. Asia Pacific Journal of Management, 27(4), 647–675.

    Article  Google Scholar 

  • Stonehouse, G., & Pemberton, J. (2002). Strategic planning in SMEs– some empirical findings. Management Decision, 40(9), 853–861.

    Article  Google Scholar 

  • Sydow, J., Schreyögg, G., & Koch, J. (2009). Organizational path dependence: Opening the Black Box. Academy of Management Review, 34(4), 689–709.

    Google Scholar 

  • Tolstoy, D., Nordman, E. R., Hånell, S. M., & Özbek, N. (2021). The development of international e-commerce in retail SMEs: An effectuation perspective. Journal of World Business, 56(3).

  • Tolstoy, D., Hånell, S. M., & Özbek, N. (2023). Effectual market creation in the cross-border e-commerce of small- and medium-sized enterprises. International Small Business Journal, 41(1), 35–54.

    Article  Google Scholar 

  • Tracey, P., & Phillips, N. (2011). Entrepreneurship in emerging markets: Strategies for New Venture Creation in Uncertain Institutional contexts. Management International Review, 51(1), 23–39.

    Article  Google Scholar 

  • Van den Steen, E. (2017). A formal theory of strategy. Management Science, 63(8), 2616–2636.

    Article  Google Scholar 

  • WEF. (2018). In K. Schwab (Ed.), The global competitiveness report 2018. World Economic Forum.

  • Welter, C., Mauer, R., & Wuebker, R. J. (2016). Bridging behavioral models and theoretical concepts: Effectuation and Bricolage in the Opportunity Creation Framework. Strategic Entrepreneurship Journal, 10(1), 5–20.

    Article  Google Scholar 

  • Wiklund, J., & Shepherd, D. (2005). Entrepreneurial orientation and small business performance: A configurational approach. Journal of Business Venturing, 20(1), 71–91.

    Article  Google Scholar 

  • Wiltbank, R., Dew, N., Read, S., & Sarasvathy, S. D. (2006). What to do next? The case for non-predictive strategy. Strategic Management Journal, 27(10), 981–998.

    Article  Google Scholar 

  • World Bank (2019). Documentation. Worldwide Governance Indicators. https://info.worldbank.org/governance/wgi/#doc.

  • Wu, J., & Ang, S. H. (2020). Network complementaries in the international expansion of emerging market firms. Journal of World Business, 55(2).

  • Xiangfeng, L. (2008). SME Development in China: A Policy Perspective on SME Industrial Clustering. In SME in Asia and Globalization, ERIA Research Project Report 2007-5 (pp. 37–68).

  • Xu, D., Pan, Y., & Beamish, P. W. (2004). The effect of regulative and normative distances on MNE ownership and expatriate strategies. Management International Review, 44(3), 285–307.

    Google Scholar 

  • Young, S. L., Welter, C., & Conger, M. (2018). Stability vs. flexibility: The effect of regulatory institutions on opportunity type. Journal of International Business Studies, 49(4), 407–441.

    Article  Google Scholar 

  • Yu, X., Tao, Y., Tao, X., Xia, F., & Li, Y. (2018). Managing uncertainty in emerging economies: The interaction effects between causation and effectuation on firm performance. Technological Forecasting and Social Change, 135, 121–131.

    Article  Google Scholar 

  • Zaheer, S. (1995). Overcoming the liability of foreignness. Academy of Management Journal, 38(2), 341–363.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Technology and Business Studies, Dalarna University, Falun, Sweden

    Martin Johanson & Luis Oliveira

  2. Department of Business Studies, Uppsala University, Uppsala, Sweden

    Martin Johanson

  3. Fundação Getúlio Vargas, Center for International Business Studies, Sao Paulo, Brazil

    Luis Oliveira

Authors
  1. Martin Johanson
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Luis Oliveira
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Luis Oliveira.

Additional information

Publisher’s Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

We tested the operationalization of foreign institutional development (FID) with measurements derived from the Global Competitiveness Report (GCR) and the Economic Freedom Index (EFI), replacing the World Governance Indicators (WGI). Like with the WGI data, we elaborated the alternative measures by retrieving data from the alternative sources for each firm’s major host market in the year of survey application. After that, we implemented the regression analysis using the alternative measures and obtained the results displayed in Table A1 below.

Table A1 Robustness tests with alternative measurement for foreign institutional development
Full size table

The alternative models confirm hypotheses H1-H3 like in the original model. They do not show significant results for H4 and H5, which are significant in our main analysis. However, it is important to highlight that the coefficient for the effect of FID loses significance in the regression with GCR and EFI data (p = 0.657 and 0.289, respectively) in relation to the original model (p = 0.088). This result goes in line with the idea that GCR, EFI, and WGI data are not perfect substitutes for each other (Beugelsdijk et al., 2018; Kostova et al., 2020). In this vein, it would be reasonable to expect that a regression where FDI is operationalized using GCR and EFI data would not reproduce the same significance levels that are found for FDI’s independent and interaction effects when WGI data is employed. Despite all of that, the independent effect and interactions of FDI retain the sign that they have in the original analysis. We see this as a suggestion that the dynamic evaluated in H4 and H5 in fact goes in the hypothesized direction and, therefore, the alternative regressions can be seen as suggestive of confirmation of the original results.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Johanson, M., Oliveira, L. The Performance of Decision-Making Strategies in SME Internationalization: The Role of Host Market’s Institutional Development. Manag Int Rev 64, 303–335 (2024). https://doi.org/10.1007/s11575-024-00534-8

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11575-024-00534-8

Keywords

Search

Navigation