Twice as Smart? The Importance of Managers’ Formative‐Years’ International Experience for their International Orientation and Foreign Acquisition Decisions

Abstract

This study examined how top management team's (TMT) international orientation influences perceptions of environmental uncertainty and how these perceptions impact international strategic decisions, in particular regarding ownership stakes taken in foreign acquisitions. We highlighted the need for the concept of TMT international orientation to encompass executives' formative-years' international experiences along with their international career experiences and nationalities. Empirical tests based on a sample of 2122 international acquisitions completed by 561 UK firms over the period 1999-2008 showed that TMT international orientation positively moderated the negative impact of cultural differences and host country risk on acquisition ownership stakes.The results underscored the importance of considering decision-makers' attributes due to their experiences at a young age, beyond their demographic characteristics or professional experience, in the context of international strategic choices. We also discussed some implications of one of the possible consequences of executives' formative international experience, namely biculturalism, for international business.

SME Internationalization: Investigating Antecedents and the Effect of Organizational Capabilities on Strategy in the German MedTech Industry

“…Often, they have fewer skills and resources [37], which are obstacles in the internationalization process since experience and management skills are seen as important resources. This is in alignment with Theodosiou and Katsikeas [60] and Piakowski [48], who see managerial factors as crucial in this context. According to the resource-based view, human capital has an essential impact on the internationalization of SMEs, but it is also agreed that financial and human resources are limited in such firms.…”

“…Then the process of internationalization has advanced so far that the individual company has manufacturing, sales and R&D in a number countries and it becomes multinational [38]. Many of the selected studies and articles refer to a functional model based on Porters' five forces model [48]. But also other established constructs such as Dunnings's [17] OLI Model or Johansen and Vahlne's [28] Uppsala Stage Approach are often named theories in the context of internationalization strategies.…”

When do international human capital enhancing practices benefit the bottom line? An ability, motivation, and opportunity perspective

“…In such settings, performance could depend largely on motivation and opportunity. However, IHC is a hard-won ability, built through investment of much effort, time, and financial resources on the part of the organization and the employee (Nielsen & Nielsen, 2011;Piaskowska & Trojanowski, 2014), and therefore firms vary in their possession of IHC. As we will discuss below, the availability of IHC gives firms a unique ability to bring cross-cultural competence, specialized knowledge about the international marketplace, as well as diverse cognitive perspectives to bear upon their operations and decision making in different situations.…”

“…In our context, firms that have numerous employees with IHC possess the ability to achieve superior performance by drawing upon employee expertise to effectively operate in diverse cultural, institutional, and competitive environments (Nielsen & Nielsen, 2011;Piaskowska & Trojanowski, 2014). At the same time, substantial research shows that firms often fail to make good use of their employees' international expertise (e.g., Furuya, Stevens, Bird, Oddou, & Mendenhall, 2009;Oddou et al, 2009).…”

The diversity of the top management team and the survival and success of international companies: The case of Spanish companies with foreign direct investment in China

“…On the one hand, previous research has studied the influence of each demographic trait on the expansion process and has made some interesting findings. For example, internationalisation has been shown to have a negative relationship with TMT age, measured as the percentage of assets attributed to a global market (Tihanyi et alii 2000;Herrmann and Datta 2005;Hsu et alii 2013) and a positive relationship with TMT education (Moreira et alii 2013) and international experience (Tihanyi et alii 2000;Hutzschenreuter and Horstkotte 2013;Piaskowska and Trojanowski 2014). On the other hand, it is not only the individual characteristics of the TMT members that influence the strategic outcome of the internationalisation process of a company; the diversity of these characteristics within the TMT also has an effect, and in this regard, previous research has not reached a generalised consensus.…”