CentER

Rian Drogendijk

Abstract:
In this study, the internationalization decisions of firms are looked at from a dynamic perspective. Internationalizing firms gradually build the experience that help them to reduce uncertainty and expand further into new international markets. Earlier experiences are seen as stepping stones that help firms to conduct new expansions and enhance learning from these new steps. However, do firms in the current globalized business environment really take incremental steps in expanding into new markets? And, do firms indeed need to take incremental expansion steps in order to learn to internationalize successfully? This study finds firstly, that the expansion patterns of firms entering the new markets in Central and Eastern Europe in the nineties of the twentieth century are still affected by factors of uncertainty and 'psychic distance' but firms have internationalized at a higher pace than observed before. Secondly, the study explores whether firms should take smaller, incremental, steps in order to learn successfully to the benefit of new expansions, or whether they can also learn successfully from taking larger consecutive expansion steps. An expansion model allowing for larger internationalization steps receives support from the data.