Influence of experience in internationalization decision-making among international new ventures

Abstract

International new ventures are companies that start to internationalize from the early stages. These companies are founded on a strong aim towards global markets. Their entrepreneurs have to face many risks and problems, because of the size of the company, the complex international market place and limited resources. Experience in the international field can be good asset in order to minimize these risks. Uncertainty is present in every business decision in these organizations. Effectual decision logic is one way to deal with these uncertain decisions. Experienced entrepreneurs actively utilise effectual logic in their decisions, which enables them to act fast. At cognitive level, experience based comparative reasoning processes provide understanding to the reasoning behind the entrepreneur’s decisions regarding internationalization. Analogical reasoning is mainly utilised when the individual has similar analogical experiences from the internationalization process, but the individual might also look for analogies from personal life, that match with the current situation. Heuristic reasoning is utilised in daily fast decisions, especially when the entrepreneur might not have experience of the matter, but it is also more vulnerable to biases.

The thesis includes a qualitative case study of three Finnish technology driven international new ventures. The findings of this study imply that INV entrepreneur’s should be aware that experience is one of the key factors in decision making and lack of it can have negative effects to the internationalization process of the company. Inexperienced entrepreneurs should look to utilize effectual networks to fill out the missing experience in decision making, so they can lower the uncertainty in decision making. The use of decision logics vary and companies might switch from causal to effectual logic during the internationalization process, depending on the situation and success of the decisions. It seems that experience from internationalization from previous jobs or companies increases the use of effectuation and analogical reasoning.