Back to basics: Behavioral theory and internationalization

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.

Haven‐Sent? Tax Havens, Corporate Social Irresponsibility and the Dark Side of Family Firm Internationalization

“…Whilst this approach was valuable, greater attention is needed in exploring how the organizational context influences decision trade‐offs. We propose that the exploration of alternative behavioural theories (Surdu, Greve and Benito, 2020), in addition to the BAM and SEW perspectives, is appropriate, given their ability to explain firm heterogeneity (Nardella, Narula and Surdu, 2021). Therefore, future research may find it fruitful to explore how CEO characteristics (Coles and Li, 2019, 2020), FF values (Rau, Schneider‐Siebke and Günther, 2019) and/or corporate reputation (Parker, Krause and Dever, 2019) impact managers’ propensity for CSI.…”

Temporality and the first foreign direct investment

“…However, firm behaviors regarding internationalization are relatively heterogeneous, which reduces the predictability of these theories. To strengthen theoretical robustness, it has been proposed to add theories on organizational decision-making, such as the behavioral theory of the firm to IB (Surdu, Greve, & Benito, 2021). Our study shows that a more critical approach to time can also be added to internationalization theories.…”

A Theoretical Model on the Role of Aspirations in the Internationalization of Born Global Companies

“…The performance of similar firms can be a mechanism to determine the level of international aspirations, which is more relevant for born global firms (Surdu et al, 2020). These aspiration levels form when a firm compares its performance with its peers.…”

“…The dimensions of aspirations indicate the types of goals firms pursue (i.e., profitability versus market share). The behavioral theory of the firm suggests that dimensions of aspirations reflect: (1) the firm's reward system; (2) the relative power of the top management team or dominant coalition (Bromiley, 2005;Surdu et al, 2020). As for the reward system, born global firms are young entrepreneurial firms that operate with minimal capital.…”