Disentangling the Effect of Prior International Experience on the Foreign Market Entry Mode Choice of Small- and Medium-Sized Enterprises

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Firms venturing into foreign markets can choose between equity (e.g. wholly-owned subsidiaries) and non-equity (e.g. exports) based entry modes. Prior research with a primary focus on large multinational enterprises yielded inconclusive findings regarding the impact of prior international experience on firms` foreign market entry mode choice. The aim of the present research proposal is to enhance knowledge of small- and medium-sized enterprises` (SMEs`) foreign market entry mode choice by disentangling the effect of prior international experience on foreign market entry mode choice. First and on an organizational level, we investigate how (which mode types has an SME used in prior international engagements), where (in which locations has an SME collected prior international experiences), and when (how temporally close/distant are prior internationalization events to a new internationalization event) the SME collected prior international experience. Second and on an individual level, we seek to examine the impact of prior international experience of the firm`s major decision maker (e.g. CEO) on SMEs´ foreign market entry mode choice. Third, we focus on the interaction between organizational and individual experience and how it jointly impacts SMEs´ foreign market entry mode choice. We seek to test these questions on a sample of German SMEs. Although our research is specifically tailored to the SME context, we envisage our research findings to have research and practical implications for large multinational enterprises and policy makers.