The international commitment of exporting firms: the role of a decision-maker, firm size and competitive intensity in the home market
The international commitment of exporting firms: the role of a decision-maker, firm size and competitive intensity in the home market

Summary/Abstract: Purpose – The purpose of this study is to explore how cognitive heterogeneity between managers andentrepreneurs-owners of exporting firms and firm size affect internationalization decisions in terms of resourcecommitment under competitive threat in the home market.Design/methodology/approach – This study applies experimental vignette methodology (EVM) to test theresearch hypotheses on a sample of 200 participants (100 entrepreneurs and 100 managers). Mann-WhitneyU-tests were used to analyze the data.Findings – This study finds that the condition of competitive threat in the home market increases entrepreneurs’(but decreases managers’) willingness to decrease commitment in foreign markets (de-internationalize) anddecreases their (but increases managers’) intention to increase international commitment.Research limitations/implications – As with all experimental studies, the vignette methodology suffers fromlimited external validity, although it ensures a high level of causal relationship. The relatively simpleexperimental scenario did not account for other potential factors and their combinations, limiting the reality ofthe considered situation (the effect of high competitive pressure on decision-making). However, this limitedreality opens paths for future research, which could consider additional boundary conditions affecting decision-making in international business.Practical implications – The findings indicate the importance and nature of decision-making ininternationalization, driven by cognitive, firm-level and industry factors. How a given event is perceived bya decision-maker depends on the interplay between cognitive factors and the firm’s resources. Our results revealthat organizational design and corporate governance of large diversified firms should account for the alignmentof risk preferences between owners and appointed executive managers.Social implications – This study’s findings raise attention to owners–managers relationships in terms of hiringprocesses in terms of alignment of the owners’ and appointed managers’ risk attitudes. Furthermore, in the caseof small firms led by an entrepreneur-owner (CEO), this study raises awareness of his/her potentialinternationalization choices and associated team building and overall orientation towards foreign vs. homemarket.Originality/value – This study demonstrates how behavioral theory predictions contribute to the strategy tripodperspective in explaining determinants of resource commitments in foreign markets. It sheds new light on internationalization choices, by demonstrating how differences between the cognitive processes ofentrepreneurs and managers and firm size affect their decisions about resource commitment in foreign vs.home market.

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