Institutions, effectuation and network outsidership: Reviews and case studies of foreign market entry

Abstract

How firms respond to institutional turbulence while entering foreign markets remains a research gap in international business today. This is especially true due to the scarcity of understanding regarding the interaction between a firm's network development and its decision-making process. We employ a historical multiple-case study method to investigate three Swedish firms and their foreign market entry into China between 1980 and 2010. Our findings show that while firms followed the incremental pathwork suggested by the Uppsala Model, their internationalization shifted from causal prediction to effectual flexibility due primarily to institutional turbulence that led them to hiatus and reorganization of interrelated network relationships. Our research makes two significant observations related to firms establishing insidership network positions that deserve future research attention: On the one hand, firms' network development is influenced by institutional turbulence, and on the other hand, firms' network position also influences further significant institutional changes by themselves.