Managerial cognition and internationalization

Abstract

How do the senior decision-makers within a multinational enterprise (MNE) think through and determine an internationalization decision? Despite the cognitive foundations of several key constructs, standard internationalization models do not explicitly incorporate managerial cognition. We argue that the boundedly rational decision-maker is underspecified in international business models and this oversight contributes to weak empirical findings on experience, learning, internationalization strategy and MNE performance. Drawing on these extant models, we identify seven knowledge domains and interdependencies that may make up decision-makers' mental models. Granted rare access to senior executives and board members engaged in a foreign direct investment decision, we find substantial heterogeneity in the mental models these individuals used to make sense of the opportunity. This variance aligns with differences in individuals' experience along four dimensions: international breadth, depth, diversity and prior strategic decision-making. We argue these cognitive processes -how individuals exercise judgment about information search parameters, assessment and decision integration, and how decision teams coalesce in their thinking -are crucial microfoundations for modeling heterogeneity in firm-level internationalization strategies and performance.

A time-based process model of international entrepreneurial opportunity evaluation

“…Opportunity evaluation is central to the study of the entrepreneur's cognitive processes in international decisions and, arguably, remains underexplored and poorly understood (Lamb et al, 2011;Maitland & Sammartino, 2015;Zahra et al, 2005). Scholars have recently begun to link internationalization and effectuation theory (e.g., Kalinic et al, 2014;Chetty et al, 2015) yet very little research explicitly studies the role of time and its impact on international entrepreneurial opportunity (IEO) evaluation and actualization.…”

“…The internationalization process is based on assumptions about (1) the opportunity to create and capture economic value, (2) the decision-making process underpinning the evaluation of international entrepreneurial opportunities (IEOs), and (3) time, against which all decision-making processes can be explained (Chandra, Styles, & Wilkinson, 2009;Jones & Coviello, 2005;Maitland & Sammartino, 2015;Zahra, Korri, & Yu, 2005). Despite the burgeoning research on internationalization over the past four decades, decision-makers' cognitive processes in internationalization decisions, and how the processes evolve over time, remain underexplored and poorly understood (Benito, Petersen, & Welch, 2009;Hennart & Slangen, 2015;Maitland & Sammartino, 2015;Zahra, Korri, & Yu, 2005).…”

“…The internationalization process is based on assumptions about (1) the opportunity to create and capture economic value, (2) the decision-making process underpinning the evaluation of international entrepreneurial opportunities (IEOs), and (3) time, against which all decision-making processes can be explained (Chandra, Styles, & Wilkinson, 2009;Jones & Coviello, 2005;Maitland & Sammartino, 2015;Zahra, Korri, & Yu, 2005). Despite the burgeoning research on internationalization over the past four decades, decision-makers' cognitive processes in internationalization decisions, and how the processes evolve over time, remain underexplored and poorly understood (Benito, Petersen, & Welch, 2009;Hennart & Slangen, 2015;Maitland & Sammartino, 2015;Zahra, Korri, & Yu, 2005). A growing number of IB scholars have repeatedly highlighted the need to study decision-makers' decision styles, biases and cognitive processes (e.g., Barkema & Shvyrkov, 2007;Hennart, 2009;Hutzschenreuter, Pedersen, & Volberda, 2007;Williams & Grégoire, 2015) and ''to explicitly incorporate the role and influence of time'' (Jones & Coviello, 2005: 290) in internationalization research.…”

“…Research on internationalization and on decision-making models underpinning opportunity evaluation has proceeded along fairly divergent tracks, although researchers have recognized the utility of conceptually linking them (Jones & Casulli, 2014;Maitland & Sammartino, 2015;Sarasvathy, Kumar, York, & Bhagavatula, 2014;Zahra et al, 2005). Among the three stages of internationalization, discovery ?…”

Beyond categorization: New directions for theory development about entrepreneurial internationalization

“…A step in this direction is Maitland and Sammartino's (2015) study of how decision-makers responded to the serendipitous opportunity to make an acquisition in a politically hazardous foreign country.…”