Political hazards, experience, and sequential entry strategies: the international expansion of Japanese firms, 1980–1998

TLDR

The authors analyze 3,857 international expansions of 665 Japanese manufacturing firms, applying uncertainty and experiential learning concepts to demonstrate that firms with relevant international experience are less deterred by uncertain policy environments. The results confirm that experiential learning facilitates international expansion, showing that firms with prior international experience are less sensitive to uncertain policy environments, and suggest that future research on international strategy and the stages model should treat political institutions and policy uncertainty as equally important as cultural, social, and market factors. © 2003 John Wiley & Sons, Ltd.

Abstract

Abstract We find support for the role of experiential learning in the international expansion process by extending the stages model of internationalization to incorporate a sophisticated consideration of temporal and cross‐national variation in the credibility of the policy environment. Using a sample of 3857 international expansions of 665 Japanese manufacturing firms, we build on the concepts of uncertainty and experiential learning, to show that firms that had gathered relevant types of international experience were less sensitive to the deterring effect of uncertain policy environments on investment. One implication of our results is that research on international strategy should emphasize understanding the political institutions that constrain or enable political actors, just as entry mode research has done. A second implication is that research in the stages model of internationalization should give the same weight to the policy environment as a source of uncertainty to a firm, as it has given to cultural, social and market institutions. Copyright © 2003 John Wiley & Sons, Ltd.