The internationalization process revisited: Institutionalization, exploitation and exploration

Pieter Pauwels and Paul Matthyssens INTRODUCTION Classic internationalization process theory (Johanson and Vahlne, 1977; 1990) builds upon the incremental progression of a firm’s experiential learning in foreign markets to explain equally incremental accumulation of commitment to foreign markets. Despite its intuitive elegance and enduring prominence in the international business literature, this knowledge-based process theory - or so-called Uppsala model - has been challenged on theoretical as well as empirical grounds. One critique focuses on the relationship between market knowledge and market commitment. While the Uppsala model proposes a direct and non-mediated relationship between experiential knowledge and market commitment, variation in the accumulation of commitment seems insufficiently explained by the variation in the accumulation of knowledge, as if structurally mediating explanatory factors are missing (e.g. Andersen, 1993; Pedersen and Petersen, 1998). International business literature remains frustrated by the fact that the internationalization process theory does not (aim to) explain internationalization progression in the short run. Indeed, case studies have reported on shorter episodes of internationalization that clearly do not reflect a linear and direct relationship between experiential learning and accumulating market commitment. For instance, observed internationalization processes that leapfrog the expected sequence of entry strategies (e.g. from indirect export to foreign direct investment) may illustrate accelerating accumulation of commitment that outpaces the accumulation of experiential knowledge (e.g. Hedlund and Kverneland, 1985). Expanding research on ‘born globals’ has regularly focused on accelerated learning that seems hard to be explained within the logic of the classic Uppsala model (e.g. Knight and Cavusgil, 2004; Li, 2010)….