The learning perspective Flashcards
What type of theory?
Behavioral theory: the choice between markets and entry modes
What type of drivers?
Internal drivers (risk aversion), emergent nature of decision (gradual fitting the strategy)
Mention core assumptions in the learning perspective:
- Risk aversion - the firm should only increase commitment through experience
- Experiental knowlegde is crucial in foreign operations.
Ojective knowlede + Experiental
Incremental decision making in foregn operations through gradual acquisitution.
+ increasing commitment moving down the estbalishment chain - Increase long-term profit knowlegde.
Unit of anaysis?
Experience, commitment, knowlegde and psychic distance
How should the manager acc. to the learning perspective go about internationalizaiton?
Choose the countries with lowest pshysic distance and entry mode with lowest risk
Mention relevant authors related to the learning perspective
Johanson & Vahlne (a model of knowlegde development and increasing foreign market commitment)
Johanson and Paul (four swedish cases) - firms tend to internationalize down the establishment chain.
Draw the typical canvas of entry mode choice.. (degree of risk/commitment) and degree of control + different equity modes
Sporadic export, license production, export through agents, joint venture, sales subsidiaties, production subsidiares
Explain how control evolves in Tesla’s IP
Use canvas of entry mode choice.
Explain different types of knowlegde
Objective: Easy to get, less valuable
Experiental: Comes with increased resource commitment. Vital.
General knowlegde: the skills the firm has obtained over time.
Market specific knowlege: obtain through experiences in the market
Explain the model of knowlegde
Johanson & Vahlne
- Market knowlede
- Commitment decision
- Current activiteis (primary source to learning)
- Market Commitment
So if unvertainty rises, market commitment should be lowered. Lack of market knowlegde also increases risk -> decrease commitmetnt.
If the firm has superior resources, phychic distance is less important.
Define an entry mode
Entry mode definition: An international market entry mode is an institutional arrangement that carries a company’s products and/or services from one market context to another and regulates transactions between these market contexts
Explain degree of risk and control in the Canvas for entry mode
Degree of risk: Means degree of sources you commit to the market. How much you loose if you fail.
Degree of control: Fully owned s ubdiaries vs small stake in the subsidiary. The higher the ownership, the igher the control. But higher control also leads to higher risk.
Provide criticism of the learning perspevtive.
- The flow of informaiton from foreign markets have been enhanced -> lowe phychic distance
- The cost of internaitonal travel + communication have been enhanced -> easier to coordinate cross boarder activities.
- International managerial experiance have become more avialable -> great knowlegde can be obtained through recruitment.
What are born-globals:
The born global are Firms that from inception seek to derive significant competitive advantages from the use of resources and the sale of outputs in multiple countries.
How do we define a bornglobal?
The defining characteristic of a born global is its accelerated internationalization:
- Often defined as having an export share above 25% with the first 3 years (scope)