Country Familiarity in the Initial Stage of Foreign Market Selection

31 Pages Posted: 7 May 2018 Last revised: 22 Sep 2018

See all articles by Daniel R Clark

Daniel R Clark

Fundación Instituto de Empresa, S.L. - IE Business School

Dan Li

Indiana University - Kelley School of Business - Management & Entrepreneurship

Dean Shepherd

University of Colorado at Boulder - Department of Management

Date Written: September 2017

Abstract

Focusing on the initial stage of foreign market selection (i.e., narrowing a set of potential countries from which to make a final choice), we theorize that manager’s country familiarity influences both the decision-making process and outcome. We hypothesize that with increasing country familiarity, (a) manager investment of cognitive effort (process) first increases and then decreases, and (b) the likelihood of a country being included for further consideration (outcome) also increases and then decreases. We further hypothesize that the effects of country familiarity are contingent on the managers’ international experience. Empirical evidence from verbal protocol analyses of managers provides strong support to our arguments. These findings contribute to the emergent literature on the critical role of cognition in decision making about foreign markets. Manager cognition potentially influences sequential/non-sequential entry decision making, possibly explaining some previously observed exceptions to internationalization process theory. The contingent role of international experience further stresses that the influence of cognition in internationalization decision making is both important and complex, involving, at least, innate cognitive processes, idiosyncratic knowledge, and international experience. We discuss the theoretical implications, along with practice implications, of country familiarity and intuitive decision making in foreign market selection.

Keywords: country familiarity, internationalization, foreign market selection, decision making, cognition, verbal protocol analysis

Suggested Citation

Clark, Daniel R and Li, Dan and Shepherd, Dean, Country Familiarity in the Initial Stage of Foreign Market Selection (September 2017). Journal of International Business Studies, Vol. 49, Issue 4, 2017, Available at SSRN: https://ssrn.com/abstract=3174283 or http://dx.doi.org/10.1057/s41267-017-0099-3

Daniel R Clark (Contact Author)

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

Dan Li

Indiana University - Kelley School of Business - Management & Entrepreneurship ( email )

Bloomington, IN 47405
United States

Dean Shepherd

University of Colorado at Boulder - Department of Management ( email )

Boulder, CO 80309-0419
United States
303-492-5962 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
231
PlumX Metrics