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Escalation of Commitment in Internationalization Processes

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Escalation of Commitment in Internationalization Processes

Part of the book series: MIR Series in International Business ((MIRSIB))

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Abstract

Judgment and decision-making plays a significant role for the internationalization of firms. This concerns—first and foremost—two issues, which have been fittingly summarized by Peter Buckley and colleagues: Where should the international activity be located and how should it be controlled? Decisions concerning location choice as well as market entry mode have a defining influence on the success or the failure of the international venture. Hence, it is no exaggeration to argue that judgment and decision-making processes play a vital role in the context of the internationalization of firms.

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Notes

  1. 1.

    Cf. Buckley et al. (2004, p. 4, 2007, p. 1069).

  2. 2.

    Cf. Andersson (2000, p. 63).

  3. 3.

    Cf. Forsgren and Johanson (2010, p. 283) and Björkman and Forsgren (2000, p. 10).

  4. 4.

    Cf. Vahlne and Johanson (2013, p. 190).

  5. 5.

    Cf. Hennart (1982, p. 166).

  6. 6.

    Cf. Buckley and Casson (1991, p. 45, 2009, pp. 1563 ff.) and Teece (1986, pp. 21 ff.).

  7. 7.

    Cf. Dunning (1980, pp. 9 ff., 1988, pp. 1 ff., 2000, pp. 163 ff.).

  8. 8.

    Andersson (2000, p. 64).

  9. 9.

    Cf. Johanson and Vahlne (2009, p. 1426).

  10. 10.

    Cf. Dunning (1979, p. 272).

  11. 11.

    Cf. Johanson and Vahlne (1990, p. 11).

  12. 12.

    Cf. Schmid (2002, p. 387).

  13. 13.

    Cf. Penrose (2009, p. 8).

  14. 14.

    Cf. Cyert and March (1963, p. 31).

  15. 15.

    Cf. Aharoni (1966, pp. 14 ff.).

  16. 16.

    Cf. Forsgren and Johanson (2010, pp. 283 ff.), Johanson and Vahlne (1977, pp. 23 ff.), Johanson and Wiedersheim-Paul (1975, pp. 305 ff.), and Carlson (1966, pp. 5 ff.).

  17. 17.

    Cf. Andersen (1993, p. 210).

  18. 18.

    Cf. Johanson and Vahlne (1977, pp. 23 ff., 1990, pp. 11 ff., 2009, pp. 1411 ff.).

  19. 19.

    Cf. Forsgren and Johanson (2010, p. 284).

  20. 20.

    Cf. Sullivan and Bauerschmidt (1990, p. 19).

  21. 21.

    Cf. Schmid (2002, p. 390).

  22. 22.

    Cf. Hutzschenreuter et al. (2007, pp. 1055–1056) and Sullivan and Bauerschmidt (1990, p. 20).

  23. 23.

    Cf. Cyert and March (1963, pp. 114 ff.) and Aharoni (1966, p. 17).

  24. 24.

    Hutzschenreuter et al. (2007, p. 1056).

  25. 25.

    In comparison to the date of publication of the initial study (1977).

  26. 26.

    Cf. Johanson and Vahlne (2009, pp. 1411 ff.).

  27. 27.

    Cf. Sect. 2.1.1.4 for a short insight into the significance of the theory of the firm.

  28. 28.

    Cf. Brockner et al. (1986, p. 122).

  29. 29.

    Cf. Sect. 2.2.1 for the previously outlined classification criteria.

  30. 30.

    Cf. Johanson and Wiedersheim-Paul (1975, pp. 305 ff.).

  31. 31.

    Cf. Johanson and Vahlne (1977, p. 24).

  32. 32.

    Stage 3 and Stage 4 are in fact both foreign direct investments, yet, they fulfill very different tasks in the foreign market.

  33. 33.

    Cf. Andersen (1993, p. 210) and Johanson and Vahlne (1990, p. 13).

  34. 34.

    Cf. Andersen (1993, p. 222).

  35. 35.

    Cf. Johanson and Vahlne (2009, p. 1422).

  36. 36.

    Johanson and Vahlne (1977, p. 24).

  37. 37.

    Cf. Johnston et al. (2012, p. 38).

  38. 38.

    Cf. Johanson and Vahlne (1990, p. 13).

  39. 39.

    Cf. Johanson and Vahlne (2009, p. 1412) and Zaheer (1995, p. 341).

  40. 40.

    Cf. Sullivan and Bauerschmidt (1990, p. 20).

  41. 41.

    Johanson and Vahlne (2009, p. 1421).

  42. 42.

    Johanson and Vahlne (2009, p. 1411) and see also Johanson and Vahlne (2003, pp. 83 ff.).

  43. 43.

    Cf. Rugman and Verbeke (2007, pp. 200 ff.).

  44. 44.

    Cf. Petersen et al. (2003, pp. 39 ff.).

  45. 45.

    Cf. Sullivan and Bauerschmidt (1990, p. 29).

  46. 46.

    Johanson and Vahlne (2006, p. 166).

  47. 47.

    Cf. Petersen et al. (2003, p. 42).

  48. 48.

    Cf. Andersen (1993, p. 211) and Johanson and Vahlne (1977, pp. 26–27).

  49. 49.

    Cf. Andersen (1993, p. 211) and Johanson and Vahlne (1977, p. 27).

  50. 50.

    Cf. Forsgren and Johanson (2010, p. 300) and Johanson and Vahlne (2006, pp. 168–169).

  51. 51.

    Cf. Forsgren (2002, p. 263) and Hadjikhani (1997, pp. 50–52).

  52. 52.

    Cf. Forsgren and Johanson (2010, p. 300).

  53. 53.

    Cf. Forsgren (2002, p. 263), Schmid (2002, p. 388), and Johanson and Vahlne (1977, p. 28).

  54. 54.

    Cf. Schmid (2002, p. 389).

  55. 55.

    Cf. Sect. 2.2.4 of the present study for a summarizing overview of the mentioned criteria.

  56. 56.

    Cf. Sect. 2.2.1 of the present study.

  57. 57.

    Johanson and Vahlne (1977, p. 23).

  58. 58.

    Johanson and Vahlne (2009, p. 1411).

  59. 59.

    Johanson and Vahlne (1977, p. 23).

  60. 60.

    Cf. Cyert and March (1963, pp. 114 ff.).

  61. 61.

    Cf. Schmid (2002, p. 390).

  62. 62.

    Cf. Perks and Hughes (2008, p. 312), Melin (1992, p. 104), Turnbull (1987, pp. 23–26), Reid and Rosson (1987, pp. 7–8), and Reid (1983, pp. 44–45).

  63. 63.

    Johanson and Vahlne (1990, p. 12).

  64. 64.

    Cf. Schmid (2002, p. 390).

  65. 65.

    Cf. Forsgren (2002, p. 267).

  66. 66.

    Cf. Johanson and Vahlne (2009, p. 1412).

  67. 67.

    Johanson and Vahlne (2009, p. 1412).

  68. 68.

    Johanson and Vahlne (1977, p. 29).

  69. 69.

    Cf. Forsgren (2002, p. 269).

  70. 70.

    Johanson and Vahlne (1977, p. 31).

  71. 71.

    Forsgren and Johanson (2010, p. 284).

  72. 72.

    Johanson and Vahlne (1977, p. 29); cf. also Schmid (2002, p. 389).

  73. 73.

    Johanson and Vahlne (2009, p. 1412).

  74. 74.

    Cf. Sect. 2.1.2.

  75. 75.

    Cf. Sect. 2.1.2 for more information on the heuristics and biases program of bounded rationality.

  76. 76.

    Cf. Buckley et al. (2007, p. 1072).

  77. 77.

    Cf. Johanson and Vahlne (1977, p. 29).

  78. 78.

    As stated in Sect. 1.4 of the present study.

  79. 79.

    Cf. Sect. 2.2.2 for more information on the multi-dimensionality of JDM approaches.

  80. 80.

    Cf. Forsgren and Johanson (2010, p. 284).

  81. 81.

    Certainly, Expected Utility Theory and Prospect Theory present a different category of JDM approaches than the U-Model, which is not a typical JDM approach (despite providing certain decision-making information). Nevertheless, all three are depicted in Fig. 3.8 in order to give the reader a better chance of comparison.

  82. 82.

    Cf. Matthyssens and Pauwels (2000, p. 698); exceptions include Oesterle (1999, pp. 225–229), Benito and Welch (1997, pp. 7 ff.), Fletcher (2001, pp. 25 ff.), Barkema et al. (1996, pp. 151 ff.), Li (1995, pp. 333 ff.), and Bonaccorsi (1992, pp. 605 ff.).

  83. 83.

    Benito (2005, p. 236).

  84. 84.

    Cf. Rugman (2009).

  85. 85.

    Cf. Welch and Wiedersheim-Paul (1980, p. 22).

  86. 86.

    Cf. Matthyssens and Pauwels (2000, p. 699).

  87. 87.

    As of 2017, a short search with Google Scholar revealed 49 citations of which only an insignificant number appeared in IB related scientific journals.

  88. 88.

    Brockner et al. (1986, p. 109).

  89. 89.

    Cf. Ibid.; Teger (1980, pp. 10–11) and Staw (1976, p. 27).

  90. 90.

    Cf. the remarks on the Stewardship approach in Sect. 2.1.1.4.

  91. 91.

    Cf. Sleesman et al. (2012, p. 547).

  92. 92.

    Cf. Beauvois et al. (1993, p. 2) and Festinger (1957, pp. 260 ff.).

  93. 93.

    Cf. Barkema et al. (1996, p. 153).

  94. 94.

    Cf. Luo and Peng (1999, pp. 287–289), Cavusgil (1984, pp. 195 ff.), and Luostarinen (1979, pp. 196 ff.).

  95. 95.

    Cf. Nordström (1991, p. 24), Sullivan and Bauerschmidt (1990, p. 19), and Papadopoulos and Denis (1988, pp. 38 ff.).

  96. 96.

    Cf. Oviatt and McDougall (2005, p. 537), Rialp et al. (2005, p. 147), and Oviatt and McDougall (1994, p. 45).

  97. 97.

    Cf. Kalinic et al. (2014, p. 635).

  98. 98.

    Cf. Johanson and Vahlne (2009, pp. 1421 ff.).

  99. 99.

    Johanson and Vahlne (2009, p. 1421).

  100. 100.

    Cf. Johanson and Vahlne (2009, p. 1420).

  101. 101.

    Cf. Andersen (1993, p. 222).

  102. 102.

    Cf. Sect. 1.3.

  103. 103.

    Forsgren and Johanson (2010, p. 294).

  104. 104.

    Cf. Hutzschenreuter et al. (2007, p. 1056).

  105. 105.

    Cf. Donthu and Unal (2014, p. 210).

  106. 106.

    Brockner et al. (1986, p. 122).

  107. 107.

    Cf. Kunz (2013, pp. 209–210), Moser et al. (2013, pp. 363 ff.), Denison (2009, pp. 135–136), Sivanathan et al. (2008, pp. 1 ff.), Wong et al. (2008, pp. 248–249), Moon (2001a, pp. 104 ff., b, pp. 534–535), Rao and Monk (1999, p. 496 ff.), Ghosh (1997, p. 88), and Chenhall and Morris (1991, p. 32).

  108. 108.

    Cf. Ku (2008, p. 222), Whyte (1993, p. 431), Garland and Newport (1991, pp. 55–56), and Singer and Singer (1986, p. 197).

  109. 109.

    Brockner et al. (1986, p. 110).

  110. 110.

    Cf. Wong et al. (2006, p. 283).

  111. 111.

    While examples for this matter are naturally controversial, one could count the Vietnam War as a manifestation of escalation of commitment (cf. Brockner (1992, p. 39), Staw (1981, p. 577), and Brockner et al. (1979, p. 494).

  112. 112.

    Cf. Staw (1976, pp. 27 ff.).

  113. 113.

    Cf. Wong et al. (2006, p. 283), Bazerman et al. (1984, p. 142), and Staw (1976, p. 27).

  114. 114.

    Cf. Brockner et al. (1981, pp. 68 ff., 1982, pp. 247 ff.), Nathanson et al. (1982, pp. 193 ff.), and Rubin and Brockner (1975, pp. 1054 ff.).

  115. 115.

    Cf. Kunz (2013, p. 209).

  116. 116.

    Cf. Kunz (2013, p. 206).

  117. 117.

    Cf. Chulkov (2007, p. 29).

  118. 118.

    Cf. Tang (1988, p. 79).

  119. 119.

    Staw (1981, p. 584).

  120. 120.

    Staw (1981, p. 584).

  121. 121.

    Staw (1981, p. 584).

  122. 122.

    Cf. Denison (2009, p. 133), Schulz-Hardt et al. (2009, p. 175), and Schmidt and Calantone (2002, pp. 104–105).

  123. 123.

    Cf. Ku (2008, p. 222), Ross and Staw (1986, p. 287, 1993, p. 708), Walsh and Henderson (1989, p. 534), Singer and Singer (1986, p. 197), Staw (1981, p. 579), and Conlon and Wolf (1980, p. 172).

  124. 124.

    Cf. Brockner (1992, p. 41).

  125. 125.

    Cf. Sleesman et al. (2012, p. 542).

  126. 126.

    Cf. Savage (1972, p. 3).

  127. 127.

    Staw (1981, p. 583).

  128. 128.

    Cf. Fishburn (1981, p. 139) and Savage (1972, pp. 27 ff.).

  129. 129.

    Cf. Hammond (1998, p. 215).

  130. 130.

    Cf. Sharp and Salter (1997, p. 102).

  131. 131.

    Cf. Sect. 2.2.3.2 for a thorough presentation of ‘framing effects’.

  132. 132.

    Brockner (1992, p. 51).

  133. 133.

    Whyte (1986, p. 311).

  134. 134.

    Cf. Brockner (1992, p. 51).

  135. 135.

    Cf. Kunz (2013, p. 210).

  136. 136.

    Cf. Wong et al. (2006, p. 285) and Staw (1976, p. 27, 1981, pp. 578–580).

  137. 137.

    Cf. Wong et al. (2006, p. 285), Aronson (1969, pp. 2–3), and Festinger (1957, p. 260).

  138. 138.

    Cf. Sivanathan et al. (2008, p. 2), Wong et al. (2008, pp. 249–251), and Staw (1976, p. 40).

  139. 139.

    Cf. Bazerman et al. (1984, p. 141).

  140. 140.

    Cf. the comments on Staw’s experiment in Sect. 3.3.2 of the present study.

  141. 141.

    Cf. Wolff and Moser (2008, p. 241), Bobocel and Meyer (1994, pp. 362–363), Brockner (1992, pp. 43–49), Barton et al. (1989, pp. 541–543), Ross and Staw (1986, pp. 274 ff.), Bazerman et al. (1984, p. 150), and Caldwell and O’Reilly (1982, pp. 121 ff.)

  142. 142.

    Brockner (1992, p. 40).

  143. 143.

    Cf. Brockner (1992, p. 43).

  144. 144.

    Cf. Sivanathan et al. (2008, p. 2), Ku (2008, p. 222), Schulz and Cheng (2002, p. 82), Rao and Monk (1999, p. 498), and Staw (1981, p. 579).

  145. 145.

    Cf. Brockner et al. (1981, pp. 69–70) and Turner (1977, p. 438).

  146. 146.

    Cf. Goffman (1959, pp. 3–4).

  147. 147.

    Cf. Jones and Pittman (1982, p. 233).

  148. 148.

    Cf. Wong et al. (2006, p. 292).

  149. 149.

    Cf. Brockner (1992, p. 56).

  150. 150.

    Cf. Ross and Staw (1993, pp. 715–718) and Staw and Ross (1987, p. 43, 1989, pp. 216–218).

  151. 151.

    Cf. Staw and Ross (1987, pp. 39 ff.), Ross and Staw (1986, p. 275), and Brockner and Rubin (1985, pp. 101 ff.)

  152. 152.

    Cf. Sleesman et al. (2012, p. 542).

  153. 153.

    Sleesman et al. (2012, p. 542).

  154. 154.

    Cf. Staw and Ross (1987, pp. 44–48) and Ross and Staw (1986, p. 275).

  155. 155.

    Cf. Staw and Ross (1987, pp. 44–48).

  156. 156.

    Cf. Sleesman et al. (2012, p. 542).

  157. 157.

    Staw and Ross (1987, p. 45).

  158. 158.

    Cf. He and Mittal (2007, p. 226).

  159. 159.

    Cf. Ross and Staw (1986, pp. 275–276).

  160. 160.

    Rubin and Brockner (1975, pp. 1054 ff.).

  161. 161.

    Brockner et al. (1981, pp. 68 ff.).

  162. 162.

    McCain (1986, pp. 280 ff.).

  163. 163.

    Northcraft and Wolf (1984, pp. 233–234).

  164. 164.

    Cf. Staw and Ross (1989, pp. 216–217).

  165. 165.

    Cf. Sleesman et al. (2012, p. 542) and Moon and Conlon (2002, pp. 33 ff.).

  166. 166.

    Cf. Sleesman et al. (2012, p. 542) and Staw and Ross (1989, p. 217).

  167. 167.

    Cf. McCarthy et al. (1993, p. 22) and Staw and Ross (1987, p. 48).

  168. 168.

    Cf. Sleesman et al. (2012, p. 544) and Street and Anthony (1997, pp. 274–275).

  169. 169.

    Cf. McCarthy et al. (1993, p. 15) and Staw and Ross (1989, p. 217).

  170. 170.

    Sleesman et al. (2012, p. 544).

  171. 171.

    A popular example in this regard is the waiting time for a bus that is not on time. Once somebody has begun to wait, it becomes increasingly harder abandon the bus station with every further minute invested.

  172. 172.

    Cf. Arkes and Blumer (1985, pp. 124 ff.) and Thaler (1980, pp. 47–50).

  173. 173.

    Arkes and Blumer (1985, p. 126).

  174. 174.

    Staw and Ross (1989, p. 217).

  175. 175.

    Cf. Soman (2001, p. 169).

  176. 176.

    Cf. Duxbury (2012, p. 145) and Brockner et al. (1981, pp. 68 ff.).

  177. 177.

    Arkes and Blumer (1985, p. 139).

  178. 178.

    Cf. Sleesman et al. (2012, p. 543).

  179. 179.

    Cf. Staw and Ross (1989, p. 217).

  180. 180.

    Cf. Sleesman et al. (2012, p. 546).

  181. 181.

    Conlon and Garland (1993, p. 402).

  182. 182.

    Cf. Ting (2011, pp. 93 ff.).

  183. 183.

    Cf. Harvey and Victoravich (2009, pp. 759 ff.) and He and Mittal (2007, p. 227).

  184. 184.

    Cf. Brockner et al. (1986, p. 111).

  185. 185.

    Cf. Staw and Ross (1989, p. 217) and Staw (1976, p. 38).

  186. 186.

    Cf. Zhang and Baumeister (2006, pp. 881 ff.) and Sleesman et al. (2012, p. 543).

  187. 187.

    Cf. Street and Anthony (1997, pp. 274–275) and Bazerman et al. (1984, p. 141).

  188. 188.

    Cf. Sleesman et al. (2012, p. 543), Bragger et al. (2003, pp. 10–12), and Judge et al. (1998, pp. 167 ff.).

  189. 189.

    Cf. Ross and Staw (1993, p. 702), Whyte (1993, pp. 430 ff.), Staw and Ross (1987, p. 55, 1989, p. 217f.), and Bazerman et al. (1984, p. 141).

  190. 190.

    Cf. Staw and Ross (1987, p. 58).

  191. 191.

    Cf. Sleesman et al. (2012, pp. 543–544).

  192. 192.

    Cf. Brockner et al. (1981, p. 68) and Fox and Staw (1979, pp. 449 ff.).

  193. 193.

    Cf. Street and Anthony (1997, p. 275), Staw and Ross (1987, p. 55), Ross and Staw (1986, p. 277), and Brockner et al. (1981; pp. 68 ff.).

  194. 194.

    Cf. Chong and Syarifuddin (2010, p. 4).

  195. 195.

    Cf. Ross and Staw (1986, p. 277).

  196. 196.

    Cf. Sleesman et al. (2012, p. 545), Ross and Staw (1993, p. 701), and Staw and Ross (1987, pp. 59 ff.).

  197. 197.

    Cf. Goodman et al. (1980, pp. 215 ff.).

  198. 198.

    Staw and Ross (1989, p. 218).

  199. 199.

    Cf. Staw and Ross (1987, p. 60).

  200. 200.

    Cf. Hambrick (2007, pp. 334 ff.) and Hambrick and Mason (1984, pp. 193 ff.).

  201. 201.

    Cf. Kish-Gephart and Campbell (2015, p. 1615).

  202. 202.

    Cf. Kelly and Amburgey (1991, pp. 592–595) and Hannan and Freeman (1984, p. 151).

  203. 203.

    Cf. Staw and Ross (1989, p. 218).

  204. 204.

    Cf. Teger (1980, pp. 107 ff.).

  205. 205.

    Cf. Brockner et al. (1979, p. 493).

  206. 206.

    Cf. Staw and Ross (1989, pp. 216 ff.).

  207. 207.

    Cf. Ross and Staw (1993, pp. 701 ff.), Staw and Ross (1987, pp. 39 ff.), and Staw (1981, pp. 577 ff.).

  208. 208.

    Staw and Ross (1987, p. 43).

  209. 209.

    Cf. Sect. 3.3.4.1.

  210. 210.

    Cf. Staw and Ross (1989, p. 218) and Ross and Staw (1986, p. 293).

  211. 211.

    Cf. Staw and Ross (1989, p. 218) and Ross and Staw (1986, p. 293).

  212. 212.

    Cf. Staw and Ross (1989, p. 218).

  213. 213.

    Cf. Ross and Staw (1986, p. 293) and Staw and Ross (1989, p. 218).

  214. 214.

    Cf. Staw and Ross (1989, p. 219).

  215. 215.

    Cf. Oesterle (1993, pp. 81–101).

  216. 216.

    For the sake of the development and discussion of hypotheses, internationalization process decision-making is reduced to decisions on (further) internationalization investments. Continued internationalization investments signify the maintenance of the internationalization process.

  217. 217.

    Cf. Schwenk (1984, p. 117).

  218. 218.

    Cf. Sects. 3.3.4.2 and 3.3.4.3 for more information on psychological and social forces for persistence.

  219. 219.

    Cf. Sect. 3.3.4.4 for more information on structural forces for persistence.

  220. 220.

    Cf. Dow and Karunaratna (2006, pp. 578–579).

  221. 221.

    Cf. Beckerman (1956, p. 38).

  222. 222.

    Cf. Brewer (2007, p. 44).

  223. 223.

    Cf. Johnston et al. (2012, p. 38).

  224. 224.

    Johanson and Vahlne (1977, p. 24).

  225. 225.

    Cf. Magnusson and Boyle (2009, p. 77).

  226. 226.

    Cf. O’Grady and Lane (1996, pp. 309–310).

  227. 227.

    Cf. Kraus et al. (2015, pp. 1501 ff.).

  228. 228.

    Cf. Brockner (1992, p. 51).

  229. 229.

    Cf. Eriksson et al. (1997, p. 341) and Johanson and Vahlne (1977, p. 25); as well as Sect. 3.2.1.1 of the present study.

  230. 230.

    Cf. Sect. 3.2.1.1 of the present study for a summary of the internationalization pattern according to the Uppsala School of Thought.

  231. 231.

    Cf. Pan and Tse (2000, pp. 535–536).

  232. 232.

    Cf. Morschett et al. (2010, p. 61) and Das et al. (2007, p. 867).

  233. 233.

    Cf. Arkes and Blumer (1985, pp. 124 ff.); see also Sect. 3.3.4.2.

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Röber, B. (2018). Escalation of Commitment in Internationalization Processes. In: Escalation of Commitment in Internationalization Processes. MIR Series in International Business. Springer, Cham. https://doi.org/10.1007/978-3-319-69102-2_3

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