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Journal of International Business Studies

, Volume 50, Issue 8, pp 1359–1371 | Cite as

Entry mode deviation: A behavioral approach to internalization theory

  • Stefano Elia
  • Marcus M. LarsenEmail author
  • Lucia Piscitello
Research Note

Abstract

We explore when and why decision makers choose international entry modes (e.g., hierarchies or markets) that deviate from internalization theory’s predictions. By applying a cognitive perspective on entry mode decision making, we propose that the performance of prior international activities influences decision makers’ behavior in different ways than assumed in internalization theory. More specifically, due to a representativeness bias, underperforming (overperforming) past ventures influence the decision to change (continue using) the previous entry mode choice, which may result in an entry mode deviation. In addition, the propensity to deviate from theoretical predictions is stronger when the experience is recent and/or salient due to an availability bias. In conclusion, we argue that internalization theory can benefit from incorporating more systematically important behavioral assumptions on how firms enter international markets. In so doing, we contribute to the recent conversation on how variations in human behavior influence internalization theory.

Keywords

entry mode deviation from prediction internalization theory bounded rationality cognitive bias 

Résumé

Nous analysons quand et pourquoi les décideurs choisissent des modes d’entrée internationaux (par exemple, des hiérarchies ou des marchés) qui s’écartent des prédictions de la théorie de l’internalisation. En appliquant une perspective cognitive à la prise de décision sur le mode d’entrée, nous proposons que la performance d’activités internationales antérieures influe sur le comportement des décideurs de différentes manières que celles supposées dans la théorie de l’internalisation. Plus spécifiquement, en raison d’un biais de représentativité, les initiatives passées sous-performantes (sur-performantes) influencent la décision de changer (continuer d’utiliser) le choix du mode d’entrée précédent, ce qui peut entraîner un écart par rapport au mode d’entrée. Par ailleurs, la tendance à s’écarter des prévisions théoriques est plus forte lorsque l’expérience est récente et/ou saillante en raison d’un biais de disponibilité. En conclusion, nous soutenons que la théorie de l’internalisation peut tirer avantage de l’intégration systématique d’hypothèses comportementales importantes sur la manière dont les entreprises pénètrent les marchés internationaux. Ce faisant, nous contribuons au récent débat sur l’influence des variations du comportement humain sur la théorie de l’internalisation.

Resumen

Exploramos cuándo y por qué los tomadores de decisión eligen modos de entrada internacional (ejemplo, jerarquías o mercados) que se desvían de las predicciones de la teoría de internalización. Al aplicar una perspectiva cognitiva en la toma de decisión de modo de entrada, proponemos que el desempeño de las actividades internacionales previas influye el comportamiento de los tomadores de decisión de maneras diferentes a las asumidas en la teoría de internalización. Más específicamente, debido a un sesgo de representatividad, el bajo rendimiento (o desempeño superior) de las incursiones en el pasado influye la decisión de cambiar (continuar usando) la elección de modo de entrada anterior, la cual puede resultar en una desviación del modo de entrada. Además, la propensión a desviarse de las predicciones teóricas es más fuerte cuando la experiencia es reciente y/o destacada debido a un sesgo de disponibilidad. En conclusión, discutimos que la teoría de internalización puede beneficiarse al incorporar más suposiciones comportamentales importantes sistemáticamente sobre cómo las empresas ingresan a mercados internacionales. Al hacerlo, contribuimos a la conversación reciente de cómo las variaciones en el comportamiento humano influencia la teoría de internalización.

Resumo

Exploramos quando e por que tomadores de decisão escolhem modos de entrada internacional (por exemplo, hierarquias ou mercados) que se desviam das previsões da teoria de internalização. Ao aplicar uma perspectiva cognitiva na tomada de decisões do modo de entrada, propomos que o desempenho de atividades internacionais pregressas influencia o comportamento dos tomadores de decisão de formas diferentes das supostas pela teoria da internalização. Mais especificamente, devido a um viés de representatividade, os empreendimentos pregressos de baixo desempenho (alto desempenho) influenciam a decisão de alterar (continuar usando) a escolha do modo de entrada anterior, o que pode resultar em um desvio do modo de entrada. Além disso, a propensão a desviar-se das previsões teóricas é mais forte quando a experiência é recente e/ou saliente devido a um viés de disponibilidade. Em conclusão, argumentamos que a teoria da internalização pode se beneficiar da incorporação mais sistemática de importantes premissas comportamentais a respeito de como empresas entram em mercados internacionais. Ao fazê-lo, contribuímos para a recente discussão sobre como variações no comportamento humano influenciam a teoria da internalização.

摘要

我们探讨决策者何时以及为何选择偏离内部化理论预测的国际进入模式(例如,等级或市场)。通过运用进入模式决策的认知视角,我们提出, 先前的国际活动业绩以不同于内部化理论假设的方式影响决策者的行为。更具体地说, 由于代表性偏差, 业绩不佳(业绩过高)的过去的投资影响改变(继续使用)先前的进入模式选择的决定, 这可能导致进入模式偏差。此外, 当经验是新近的和/或由于可用性偏差而突出时, 偏离理论预测的倾向更强。总结而言, 我们认为内部化理论可以从采纳对企业如何进入国际市场的更系统而重要的行为假设中获益。通过这样做, 我们为最近关于人类行为的变化如何影响内部化理论的讨论做出了贡献。

Notes

ACKNOWLEDGEMENTS

We thank the JIBS Special Issue Editorial Team, the anonymous reviewers, the participants at the JIBS Special Issue Workshop in Minneapolis, and Jean-Francois Hennart for their comments and suggestions that significantly improved this paper.

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Copyright information

© Academy of International Business 2019

Authors and Affiliations

  • Stefano Elia
    • 1
  • Marcus M. Larsen
    • 2
    • 3
    Email author
  • Lucia Piscitello
    • 1
    • 4
  1. 1.Department of Management, Economics and Industrial EngineeringPolitecnico di MilanoMilanItaly
  2. 2.Department of Strategy and InnovationCopenhagen Business SchoolFrederiksbergDenmark
  3. 3.Department of Strategy and EntrepreneurshipBI Norwegian Business SchoolOsloNorway
  4. 4.Henley Business SchoolUniversity of ReadingReadingUK

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