International Experience and the Recognition of Business Opportunities in Foreign Markets — A Study of SME’s International Experiences and Choice of Location

Jukka Hohenthal and Jessica Lindbergh

Chapter 7 in Managing Opportunity Development in Business Networks, 2005, pp 146-163 from Palgrave Macmillan

Abstract: Abstract International expansion of business firms has often been seen as a choice among various international investment opportunities (e.g. Young, 1989). These investment opportunities are characterised by different probability distributions of returns that are initially unknown. As the firm acts, more information about returns is gathered and the firm gains a clearer picture of the alternatives (Arrow, 1974; Radner, 1979; Radner and Rotschild, 1975). The decision maker is supposed to choose the investment opportunity with the highest expected return, unless that opportunity poses a higher risk. Risk is a variation in outcome that can be calculated and considered when deciding. There are, however, several problems with this view of optimal decision-making behaviour. For example, managers do not consider all alternatives; they tend to search in the vicinity of the current problem (Cyert and March, 1963). Moreover, people assess the same situation differently which means that risk is in the eye of the beholder.

Keywords: Foreign Direct Investment; International Business; Foreign Market; International Experience; Business Opportunity (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-37969-5_8

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DOI: 10.1057/9780230379695_8

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