The Case of Knowledge about Foreign Entry

The study explores what factors influence the reduction of managers’ perceived knowledge gaps in the context of the environments of foreign markets. Potential determinants are derived from traditional internationalization theory as well as organizational learning theory, including the concept of absorptive capacity. Building on these literature streams a conceptual model is developed and tested on a set of primary data of Danish firms and their foreign market operations. The empirical study suggests that the factors that pertain to the absorptive capacity concept – capabilities of recognizing, assimilating, and utilizing knowledge - are crucial determinants of knowledge gap elimination. In contrast, the two factors deemed essential in traditional internationalization process theory – elapsed time of operations and experiential learning – are found to have no or limited effect. Key words: Internationalization, knowledge gap, absorptive capacity, learning box