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International Experience and the Recognition of Business Opportunities in Foreign Markets — A Study of SME’s International Experiences and Choice of Location

In: Managing Opportunity Development in Business Networks

Author

Listed:
  • Jukka Hohenthal
  • Jessica Lindbergh

Abstract

International expansion of business firms has often been seen as a choice among various international investment opportunities (e.g. Young, 1989). These investment opportunities are characterised by different probability distributions of returns that are initially unknown. As the firm acts, more information about returns is gathered and the firm gains a clearer picture of the alternatives (Arrow, 1974; Radner, 1979; Radner and Rotschild, 1975). The decision maker is supposed to choose the investment opportunity with the highest expected return, unless that opportunity poses a higher risk. Risk is a variation in outcome that can be calculated and considered when deciding. There are, however, several problems with this view of optimal decision-making behaviour. For example, managers do not consider all alternatives; they tend to search in the vicinity of the current problem (Cyert and March, 1963). Moreover, people assess the same situation differently which means that risk is in the eye of the beholder.

Suggested Citation

  • Jukka Hohenthal & Jessica Lindbergh, 2005. "International Experience and the Recognition of Business Opportunities in Foreign Markets — A Study of SME’s International Experiences and Choice of Location," Palgrave Macmillan Books, in: Pervez Ghauri & Amjad Hadjikhani & Jan Johanson (ed.), Managing Opportunity Development in Business Networks, chapter 7, pages 146-163, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-37969-5_8
    DOI: 10.1057/9780230379695_8
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    Citations

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    Cited by:

    1. Jonsson, Sara & Lindbergh, Jessica, 2010. "The impact of institutional impediments and information and knowledge exchange on SMEs' investments in international business relationships," International Business Review, Elsevier, vol. 19(6), pages 548-561, December.
    2. Dimitratos, Pavlos & Plakoyiannaki, Emmanuella & Pitsoulaki, Antigoni & Tüselmann, Heinz Josef, 2010. "The global smaller firm in international entrepreneurship," International Business Review, Elsevier, vol. 19(6), pages 589-606, December.
    3. Bianchi, Constanza & Abu Saleh, Md., 2020. "Investigating SME importer–foreign supplier relationship trust and commitment," Journal of Business Research, Elsevier, vol. 119(C), pages 572-584.

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