International experience plays an important role in research regarding firm internationalization due to it being a key concept that researchers often consider in studies addressing topics from foreign market entry modes to firm performance. A focus on experience could also prove useful in assessing the validity of assumptions regarding the benefits and costs of internationalization that underpin a universal relationship between international diversification and firm performance. For this reason, the focal research question of this thesis is: What is the role of experience in firm internationalization? This thesis explores aspects of the focal research question through the three studies of this thesis.
The research question of the first study of this thesis is: How do researchers conceptualize international experience in the international business literature? In this study, a narrative review of how the literature concerning international experience and firm performance conceptualizes international experience provides a foundation for further development of the international experience construct. The previously recognized length, scope, and diversity dimensions of the international experience construct are combined with my novel intensity dimension to present a new multidimensional international experience construct. Comparing this multidimensional international experience construct with typical conceptualizations of international diversification clarifies the distinction between these two constructs.
The research question of the second study of this thesis is: Why do firms tend to pursue home-region-orientated strategies? This research question provides a context for exploring the value of home country experience in regional markets. In particular, this study investigates whether a firm’s home country experience is useful in achieving regional sales, taking into account geographic distance, market dissimilarity, and its regional experience. Exploring the value of a firm’s home country experience in regional markets enables this study to shed light on why firms tend to pursue strategies that focus on their home regions. The results of this study cast doubt on some aspects of the current expression of Rugman and Verbeke’s explanation for firms’ home-region orientation in relation to the firm-specific advantages (FSAs) that firms derive from their home country experience. To accommodate the results of this study, I develop a recent suggestion of a network aspect to their explanation that focuses on the liability of host-region outsidership.
The research question of the third study of this thesis is: How do factors internal to a firm cause its realized internationalization strategy to diverge from its intended internationalization strategy? By exploring how the organizational forgetting of experience influences firm internationalization, this study delves into how factors internal to a firm may cause its realized internationalization strategy to diverge from its intended internationalization strategy. To investigate this research question, I extend the internationalization process model to incorporate organizational forgetting as well as another internal factor, namely the risk behaviour of decision makers. These suggested extensions to the internationalization process model provide new insights into how emergent internationalization strategies may arise.
In addition to its contributions concerning the role of experience in firm internationalization, this thesis also contributes to the debate concerning the relationship between international diversification and firm performance. Some of the findings and arguments of this thesis provide a basis for assessing three of the implicit assumptions underpinning a universal relationship between international diversification and firm performance. As the findings suggest that these implicit assumptions are unlikely to be valid, it is unlikely that all firms at the same level of international diversification will share the same performance. Therefore, my research suggests that whilst there may be a relationship between international diversification and performance for a particular firm at a particular point in time, a universal relationship between international diversification and performance is unlikely to be uncovered.