Knowledge Gaps: The Case of Knowledge about Foreign Entry

Abstract

The study explores what factors influence the reduction of managers' perceivedknowledge gaps in the context of the environments of foreign markets. Potentialdeterminants are derived from traditional internationalization theory as well asorganizational learning theory, including the concept of absorptive capacity. Building onthese literature streams a conceptual model is developed and tested on a set of primarydata of Danish firms and their foreign market operations. The empirical study suggeststhat the factors that pertain to the absorptive capacity concept - capabilities ofrecognizing, assimilating, and utilizing knowledge - are crucial determinants ofknowledge gap elimination. In contrast, the two factors deemed essential in traditionalinternationalization process theory - elapsed time of operations and experientiallearning - are found to have no or limited effect.Key words: Internationalization, knowledge gap, absorptive capacity, learning box.