Back to basics: Behavioral theory and internationalization
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PERSPECTIVE
Back to basics: Behavioral theory and internationalization Irina Surdu1, Henrich R. Greve2 and Gabriel R. G. Benito3 1
Warwick Business School, The University of Warwick, Coventry CV4 7AL, UK; 2 INSEAD, 1 Ayer Rajah Avenue, Singapore 138676, Singapore; 3 BI Norwegian Business School, Nydalsveien 37, 0484 Oslo, Norway Correspondence: GRG Benito, BI Norwegian Business School, Nydalsveien 37, 0484 Oslo, Norway e-mail: [email protected]
Abstract International business (IB) scholars’ over-reliance on a select few theories leaves our understanding of firm internationalization incomplete. The behavioral theory of the firm (BTF) can offer new insights and can be used to model a broad range of firm actions. We focus on the three basic BTF components: problemistic search, learning by doing, and vicarious learning. These components help us understand why firm behaviors are more dynamic and heterogeneous than other theories allow. BTF, with its emphasis on how firms assess performance according to aspiration levels, selectively learn and update routines, and selectively incorporate the learning of others, is better suited to examine the diversity and change increasingly observed in internationalization decisions. We explain why scholars should move beyond ‘‘dynamizing’’ static theories and show BTF’s applicability to behaviors involving change such as multi-mode market entries and market re-entries. BTF also helps examine the decision to internationalize in the first place, nascent firm internationalization, location choices, international market adaptation, and headquarter–subsidiary relationships. We encourage IB scholars to use theories that can handle the complexity increasingly associated with modern firm growth, and propose BTF as a promising starting point. Journal of International Business Studies (2020). https://doi.org/10.1057/s41267-020-00388-w Keywords: behavioral theory; dynamic MNE behavior; problemistic search; learning by doing; vicarious learning; internationalization theory
The online version of this article is available Open Access
Received: 22 May 2020 Revised: 2 October 2020 Accepted: 22 October 2020
INTRODUCTION For the past five decades, the scholarly focus in the field of international business has been on how multinational enterprises (MNE) generate rent by effectively utilizing their resources and capabilities in attractive international markets. Recent comprehensive reviews and commentaries point out the progress made in IB research, but also claim that there are limitations against continuing this progress (Buckley, Doh, & Benischke, 2017; Delios, 2017; Rugman, Verbeke, & Nguyen, 2011). First, because international business is always changing, IB theories should put dynamics centrally in their epistemology. This requires going beyond ‘‘dynamizing’’ essentially static theories to focus more on how
Behavioral theory and internationalization
specifically firm behaviors change over time. Second, because it involves different contexts and firms, international business is also h
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