A4 Conference proceedings

Shackled to the status quo: when do managers adopt or deviate from the prior entry mode?

Publication Details
Authors: Faroque Anisur, Ahi Ali, Kuivalainen Olli, Sundqvist Sanna
Publication year: 2019
Language: English
Title of parent publication: 45th European International Business Academy (EIBA)
JUFO-Level of this publication: 0
Open Access: Not an Open Access publication

Due to the well-established nature of the entry mode literature and researchers’ only marginal contribution to the field, scholars doubt over the need of more research on this topic. Yet some questions in the literature are unresolved, for example, why firms choose the past entry mode in the present. While the answer to this question has been provided broadly in the industry or firm context, the microfoundation of this repeat behavior, which is rooted in the managerial cognitive biases, has been overlooked. Taking a cognitive perspective and cue from psychology in decision making and adopting a scenario-based experimental approach, we show that such repetitive behaviors of managers are ingrained in status quo bias, a cognitive bias, which influences individuals to carry forward the past behavior. We also find that managers deviate from the prior export entry mode (from sales agent to sales subsidiary) because of a higher level of financial resources but stick to the FDI preferred mode (WOS as opposed to JV) when perceiving a larger market and a high political risk. The results of the study offer theoretical, managerial and policy implications.

Last updated on 2020-23-01 at 14:38

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