The Performance of Decision-Making Strategies in SME Internationalization: The Role of Host Market’s Institutional Development

Martin Johanson and Luis Oliveira ()
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Martin Johanson: Dalarna University
Luis Oliveira: Dalarna University

Management International Review, 2024, vol. 64, issue 2, No 5, 303-335

Abstract: Abstract The possibility that small and medium-sized enterprises (SMEs) mix and match prediction and non-prediction while making decisions during internationalization remains a highly unaddressed scenario. The rare studies considering it do not go beyond domestic effects when contextualizing the decisions that guide SMEs’ foreign expansion. This study links SMEs’ decision-making strategies to performance and suggests that such a relationship is moderated by the host market’s institutional development and the associated institutional voids. The analysis combines primary survey data from 851 SMEs in Brazil, China, Italy, Poland, and Sweden with secondary data retrieved from the World Bank. Besides supporting both independent and synergistic performance effects of predictive and non-predictive strategies, the results indicate that foreign market institutions affect these effects differently and suggest firm size effects worth consideration. Contributions include the expansion of the debate on the relationship between prediction and non-prediction beyond the either-or reasoning that prevails in existing research and the contextualization of SMEs’ decision-making strategies in terms of the institutional dynamics that SMEs encounter abroad.

Keywords: SME internationalization; Decision-making strategies; International market performance; Foreign market institutions; Institutional voids (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11575-024-00534-8

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