Entry into New Foreign Markets: Performance Feedback and Opportunity Costs

Journal Of World Business https://doi.org/10.1016/j.jwb.2021.101258

46 Pages Posted: 30 Sep 2021 Last revised: 9 Nov 2021

See all articles by Ohad Ref

Ohad Ref

Ono Academic College - Faculty of Business Administration

Naomi Feldman

Hebrew University of Jerusalem

Dinesh N Iyer

Rutgers School of Business-Camden

Zur Shapira

Leonard N. Stern School of Business - Department of Economics; New York University (NYU) - Department of Management and Organizational Behavior

Date Written: October 1, 2021

Abstract

To resolve the mixed and sometimes contradictory results regarding the effect of performance feedback on the tendency and timing to expand abroad, we develop a theoretical framework that takes opportunity costs into account. Our findings show a non-linear relationship, mostly an inverted U-shape, between performance both below and above aspiration and entering new foreign markets. Our results also show that industry growth rate moderates this non-linear relationship differently for firms near aspiration (below or above) compared with firms well below or well above aspiration, furthering our understanding of contextual factors and the boundaries of performance feedback theory regarding international expansion.

Keywords: Entry into new foreign markets, Timing of entry, Behavioral theory of the firm, Performance feedback, Industry growth rate, Opportunity costs, Moderating effect

Suggested Citation

Ref, Ohad and Feldman, Naomi and Iyer, Dinesh N and Shapira, Zur, Entry into New Foreign Markets: Performance Feedback and Opportunity Costs (October 1, 2021). Journal Of World Business https://doi.org/10.1016/j.jwb.2021.101258, Available at SSRN: https://ssrn.com/abstract=3913414 or http://dx.doi.org/10.2139/ssrn.3913414

Ohad Ref (Contact Author)

Ono Academic College - Faculty of Business Administration ( email )

104 Tzahal Street
Kyriat Ono, 55000
Israel

Naomi Feldman

Hebrew University of Jerusalem ( email )

Mount Scopus
Jerusalem, Jerusalem 91905
Israel

Dinesh N Iyer

Rutgers School of Business-Camden ( email )

Camden, NJ 08102
United States

Zur Shapira

Leonard N. Stern School of Business - Department of Economics ( email )

40 West Fourth Street, 7-06
New York, NY 10012
United States

New York University (NYU) - Department of Management and Organizational Behavior ( email )

44 West 4th Street
New York, NY 10012
United States

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