Prior conditions and early international commitment: the mediating role of domestic mindset

Sucheta Nadkarni and Pedro David Perez
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Sucheta Nadkarni: Department of Management, University of Nebraska-Lincoln, Lincoln, USA
Pedro David Perez: Department of Applied Economics and Management, Cornell University, Ithaca, USA

Journal of International Business Studies, 2007, vol. 38, issue 1, 160-176

Abstract: Our study investigates why some firms engage in low international commitments such as exports in the early phases of internationalization, whereas others leapfrog the internationalization process and start with high international commitments in the form of foreign direct investment (FDI). Process models of internationalization propose that firms start with low commitment activities and gradually increase their commitments to international markets. However, recent empirical evidence has shown that many firms make high international commitments from the start. Our findings suggest that domestic resources and competitive action propensity affect early international commitments indirectly through domestic mindsets. A domestic mindset refers to the knowledge structures of the top management team prior to starting international activities, based on their managerial experience and learning in domestic markets. Our results suggest that knowledge and learning gained in domestic markets through diverse resource and competitive activities may be crucial in early international commitments. Journal of International Business Studies (2007) 38, 160–176. doi:10.1057/palgrave.jibs.8400248

Date: 2007
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