Foreign entry commitment as a human choice : an empirical study of how firm and manager experience impact the entrance decision and entry mode choice through the managerial assessment of host country conditions in China

This thesis reports on how firm and manager experience relate to internationalization commitment in foreign entrance decisions and mode choice, by studying the managerial assessment of the host country. In doing so, it addresses the core issue of international business studies: a lack of knowledge about foreign markets complicates the decision making on commitment to work across country borders. The basic premise of the well known internationalization process theory is that knowledge on internationalization is acquired through firm experience abroad (Johanson and Vahlne, 1977). This study provides empirical support for the assumed experiential learning within the firm. Multilevel comparative case studies are suited to study how managerial assessment reflects the learning of the firm in the internationalization process. A total of 54 plans with 26 decision making managers are studied in 25 Dutch firms. Data is gathered on (a) the managerial assessment of host country conditions in China, (b) the firm and manager’s experience and (c) how the main strategic choices evolve during the entrance process. This multilevel analysis allows for insight in what causes increasing entry commitments. The findings confirm that more international experience often relates to higher commitment in entrance and entry mode, supporting the internationalization process view empirically. Analysis at a lower level reveals how different managers form varying opinions on host country conditions in China, dependent on the firm and manager’s characteristics and experience. The manager’s host country assessment reflects the learning process in internationalization. The manager and the firm as a context in which entry choices are made, should not be ignored in international business research