Entrepreneurial Logics in International Entry Mode Decisions

Entrepreneurial Logics in International Entry Mode Decisions

Valentina Macovei, Birgit Hagen
Copyright: © 2021 |Pages: 19
DOI: 10.4018/IJABE.2021040101
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Abstract

The aim of this paper is, through a two-staged literature review, to identify the role and impact of causation, effectuation, and bricolage logics during internationalization and, in particular, in entry-mode choice. The results show that entrepreneurs in their internationalization decisions can follow one, a combination, or a sequence of logics depending on the venture's or its international lifecycle and experience, the (perceptions of) internal and external context, and network relations. Likewise, entry modes such as JVs, strategic alliances, and export can be driven by different logics or their combination, while foreign direct investment is predominantly driven by causation logic. Bricolage has received little attention in extant work and, thus, is a future avenue for research. Research, although growing in importance, falls short of longitudinal studies, which are necessary to identify shifts, and, importantly, performance consequences of different decision-making logics.
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Introduction

Entrepreneurial logics have emerged as a new theoretical perspective to explain entrepreneurial decision-making in contexts of uncertainty and resource scarcity. The causation logic is best expressed by economic thinking, which stresses planning, control, and rationality. On the other hand, noneconomic thinking emphasizes flexibility, improvisation, and collaborative decision-making which mirrors the effectuation logic or bricolage. The causation logic suggests to take a particular effect as a given and to focus on selecting between means to create that effect (Sarasvathy, 2001). Effectuation logic instead takes the set of means as given and the focus is on the selection of possible effects that can be created with that set of means (Sarasvathy, 2001), similarly to the bricolage logic - “making do by applying combinations of resources at hand to new problems and opportunities” (Baker & Nelson, 2005, p. 33).

Decision-making in an international context is inherently characterized by uncertainty or risk, exacerbated in the case of resource-scarce SMEs where missteps in the international arena may threaten survival and growth. Therefore, the objective of this paper is to take stock of extant knowledge about the role of causation, effectuation, and bricolage in foreign market entry decisions, and in particular the choice of entry modes. Entry mode decisions are considered a ‘frontier issue’ (Anderson & Gatignon, 1986) in International Business and International Marketing as they determine future success in foreign markets.

The literature review is performed in two stages: In the first stage, the role and key dimensions of causation, effectuation, and bricolage logics in the general context of internationalization are identified. In the second stage, a systematic review of experimental design studies traces their impact on entry mode decisions.

The given study bridges entrepreneurship and international business studies to contribute to the understanding of the nature of three different logics, and their roles in a key area of international business. Beyond effectuation and causation, it is included bricolage, a neglected logic in scholarly work, to illustrate when and why they come into play, and how they display in entry mode decision-making.

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