Improvisation in internationalization decision-making: The critical role of entrepreneurs in SMEs

Abstract

Entrepreneurs of international small and medium enterprises (SMEs) are continuously making decisions in ever-changing foreign market environments. To capture these dynamics, this study addresses the following research questions: (1) What effect do entrepreneurs' international competences have on improvised decision-making in SMEs’ international market performance? and (2) What is the role of the entrepreneur's experience in this relationship? We build a model and postulate hypotheses for the improvised decision-making of young international SMEs building on the learning school of decision theory. We contribute theoretically to the decision-making view on internationalization by arguing for the importance of improvised internationalization decision-making at the level of individual entrepreneurs for the international market performance of the firm, and that these decisions are influenced by their competences (international alertness, self-efficacy, and preparedness), and the performance outcomes are contingent upon both entrepreneurial and managerial experience. Hence, we advance also international business research by examining the micro-foundations of SME internationalization. In addition, we contribute empirically by gaining support for our hypotheses in a survey consisting of 218 entrepreneur-led young international SMEs. We conclude with managerial and policy implications and future study directions.