Important role of subjective beliefs, assumptions and perceptions in internationalization decisions

A long-standing assumption in International Business studies is that internationalization decisions - such as location decisions and the selection of foreign modes of operation - are strongly influenced by both country differences and firms’ actual understanding of foreign contexts. As a result, internationalization theorists traditionally conceptualize the internationalization process of firms as the gradual expansion into increasingly more different countries, paralleled by a gradual deepening of a firm’s involvement in those foreign markets in which a firm is already active.

Jasper Hotho's PhD dissertation asserts that internationalization process theory thereby largely overlooks the important role of subjective beliefs, assumptions and perceptions in human decision-making. Taking a behavioural perspective, an alternative explanation is developed of what drives internationalization decisions and of the behavioural dynamics that shape internationalization patterns.

The validity of the assumptions of internationalization process theory is assessed empirically both through a quantitative analysis of the location of foreign investment and through an in-depth case study of the internationalization process of a German publishing house. The results illustrate that internationalization decisions are not only based on the limited knowledge decision-makers have of foreign countries, but also on the beliefs which decision-makers hold to be true on the nature of these countries, and on the appropriate ways to organize a firm’s foreign operations. Taken together, this dissertation develops the notion that the perception of familiarity is an important yet much overlooked driver of internationalization decisions; a notion which, though simple, may help explain the observed heterogeneity in internationalization patterns.
 

Curriculum vitae
Jasper Hotho (Warnsveld, 1981) studied business administration in Groningen. He conducted his research at the department of International Business and Management of the Faculty of Economics and Business. He will be awarded his PhD on 8 October (2.45pm). His supervisors are prof.dr. A.M. Sorge and prof.dr. H. van Ees. The thesis title is: Internationalization decisions: the effects of country differences and familiarity perceptions. Hotho currently works as assistant professor at Copenhagen Business School in Denemark.