Learning perspective

Question 1

Describe the learning perspective.

Answer 1

The international activities emerge gradually as the level of experience increases.
- The perception of risks and uncertainty is balanced against the growing involvement, which is successively realised on the foreign market.
o The Uppsala-school represent this theoretical perspective.
- When internationalizing a firm should choose new geographic markets with low psychic distances from existing markets, and to choose an entry mode with few marginal risks.

Question 2

What is the underlying assumption of the learning perspective?

Answer 2

1. The firm is risk-averse
2. Lack of knowledge about foreign markets is a barrier to international expansion (bounded rationality).
3. Experiential knowledge is essential to overcome this barrier.

Question 3

What is the characteristic of the internationalization process in the learning perspective?

Answer 3

• Timing: incremental decision-making and learning about foreign markets and operations through gradual acquisition, integration, and use of knowledge (knowledge comes from the direct experience in the country).
• Location choice: Entry into increasingly distant foreign markets (based on psychic distance). Experience in one country helps the firm to be more prepared to enter a similar or slightly more “distant” country.
• Entry mode choice: Moving down the establishment chain in the country where the firm is already present. Experience with one type facilitates knowledge acquisition and the encourages transition to the other.

Question 4

What is the state and change aspects in the learning perspective?

Answer 4

The state aspects are the market commitment and market knowledge about foreign markets and operations.
o Market commitment is composed of two factors: the amount of resources committed and the degree of commitment.
o Market knowledge: consists of objective, experiential, general, and market specific knowledge.

The change aspects are decisions to commit resources and the performance of current business activities.
o Current Business Activities: the prime source of experience.
 Alternatively, it could be gained through the hiring of personnel with experience, or through advice from persons with experience.
 Distinguish between firm experience and market experience, both of which are essential.
- Lag is also important.
o Commitment Decisions: Decisions to commit resources to foreign operations assume that such decisions depend on what decision alternatives are raised and how they are chosen.
 distinguish between an economic effect and an uncertainty effect of each additional commitment.

Question 5

what is meant by internationalization pattern as knowledge exploration?

Answer 5

Strategic, planned variation and search characterized by a greater departure from the firm’s knowledge base: entering unfamiliar markets skipping low-commitment modes.
- It reduce short-term performance but enhance learning and the performance of future expansions.
- Expanding to a new cultural bloc

Question 6

what is meant by internationalization pattern as knowledge exploitation?

Answer 6

refinement of the company’s existing knowledge of how to operate in foreign cultures in line with the uppsala model: entering familiar markets through low-commitment modes firs.
- Companies tend to search for solutions in the neighborhood of current practices and routines.
- Expanding within a cultural bloc

Question 7

What are the limits of learning?

Answer 7

Companies will learn from their local experience only if the new knowledge overlaps with or is related to their existing knowledge.
- either one of two extreme situations may exist:
o (1) The overlap between the cultural knowledge of the company and the knowledge needed to operate in a new, distant cultural bloc is small.
 Hence, little knowledge can be absorbed from the local experience, resulting in few if any performance improvements of subsequent expansions in the cultural bloc.
o (2) the overlap between the company’s knowledge base and the knowledge required for the new culture bloc may be very large.
 It is easy to absorb the remaining knowledge, but there is little left to learn.
- Learning is most effective in the middle between these two extremes, when some portion of the new knowledge is closely related to the knowledge base of the company but the remaining portion, though still related, is diverse.

Question 8

What is the establishment chain?

Answer 8

a sequence of stages that are made in small incremental steps with extended commitment and a higher degree of commitment for every new step.