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International Experience and the Recognition of Business Opportunities in Foreign Markets — A Study of SME’s International Experiences and Choice of Location

  • Chapter
Managing Opportunity Development in Business Networks

Abstract

International expansion of business firms has often been seen as a choice among various international investment opportunities (e.g. Young, 1989). These investment opportunities are characterised by different probability distributions of returns that are initially unknown. As the firm acts, more information about returns is gathered and the firm gains a clearer picture of the alternatives (Arrow, 1974; Radner, 1979; Radner and Rotschild, 1975). The decision maker is supposed to choose the investment opportunity with the highest expected return, unless that opportunity poses a higher risk. Risk is a variation in outcome that can be calculated and considered when deciding. There are, however, several problems with this view of optimal decision-making behaviour. For example, managers do not consider all alternatives; they tend to search in the vicinity of the current problem (Cyert and March, 1963). Moreover, people assess the same situation differently which means that risk is in the eye of the beholder.

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Authors
  1. Jukka Hohenthal
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  2. Jessica Lindbergh
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Editor information

Editors and Affiliations

  1. Manchester Business School, The University of Manchester, UK

    Pervez Ghauri

  2. Department of Business Studies, Uppsala University, Sweden

    Amjad Hadjikhani  & Jan Johanson  & 

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© 2005 Pervez Ghauri, Amjad Hadjikhani and Jan Johanson

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Hohenthal, J., Lindbergh, J. (2005). International Experience and the Recognition of Business Opportunities in Foreign Markets — A Study of SME’s International Experiences and Choice of Location. In: Ghauri, P., Hadjikhani, A., Johanson, J. (eds) Managing Opportunity Development in Business Networks. Palgrave Macmillan, London. https://doi.org/10.1057/9780230379695_8

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