Escalating internationalization decisions: intendedly rational, but only limitedly so?
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Escalating internationalization decisions: intendedly rational, but only limitedly so? Bjo¨rn Ro¨ber1
Received: 4 December 2017 / Accepted: 2 April 2019 The Author(s) 2019
Abstract The Uppsala model is commonly considered to be the pivotal approach in internationalization process research and often praised as particularly realistic. Yet at least implicitly and partially, it is also built on the assumption of rationally proceeding decision makers. This article challenges the behavioral assumptions of the Uppsala model and examines whether bounded rationality in the form of escalation of commitment has an influence on internationalization decisions. It demonstrates that this particular behavioral decision-making bias can be a critical factor. Thereby, this article indicates a major shortcoming of the Uppsala model, as it shows that internationalization processes can be maintained for non-rational reasons. It becomes clear that the bounded rationality of decision makers, particularly their limited cognitive capability, presents an issue that internationalization process research, including the Uppsala model, should give greater consideration to. Keywords International business Internationalization process theory Bounded rationality Empirical validity of the Uppsala model Escalation of commitment
1 Introduction For about 50 years now, internationalization decisions have been a major research topic in international business literature. In the course of time, two different branches of research were able to establish themselves. On one hand, the so-called rational choice view in internationalization research employs a more traditional & Bjo¨rn Ro¨ber [email protected] 1
Chair of International and Strategic Management, University of Stuttgart, Keplerstraße 17, 70174 Stuttgart, Germany
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Business Research
economic understanding of internationalization decisions. This stream of literature includes prominent examples from international business literature such as the eclectic paradigm (Dunning 1980, 1988, 2000), the internalization theory (Buckley and Casson 1991, 2009; Teece 1986), the product life-cycle theory (Vernon 1966), and the transaction cost approach (Hennart 1982). On the other hand, internationalization process (IP) research offers a processual and—allegedly—rather behavioral understanding of internationalization decisions. The latter includes in particular the Uppsala model (Johanson and Vahlne 1977, 1990, 2009; Vahlne and Johanson 2017), which stands out as the state-of-the-art theory in the field of IP research. This particular theory is often said to show a strong interest in the decision-making of managers under realistic conditions (Forsgren 2002). Often, it can also be read that the Uppsala model distinguishes itself, as it aspires to employ the perspective of bounded rationality to describe and explain internationalization decisions (Andersen 1997; Andersson 2000; Sullivan and Bauerschmidt 1990). Considering its continued prominence (Coviello et al. 2017; Hadjikhani et
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