Causal foreign market selection and effectual entry decision-making: The mediating role of collaboration to enhance international performance

Abstract

Foreign market selection and entry are important decisions for internationalizing small and medium-sized enterprises (SMEs) because they involve uncertainty, and influence performance. While it is inherent in effectual foreign market entry (FME) decision-making to rely on international partners and relationships to develop international markets, causal foreign market selection and business relationships/networks have frequently been presented as alternative ways to expand abroad. We conceive SMEs’ foreign market selection and entry as international business decisions and build on causal and effectual logic, and business network theory, to propose a model explaining SMEs’ international performance. We contribute to international business and SME literature by uncovering two different paths (causal and effectual) to FME collaboration and international performance. FME collaboration mediates the relation between causal foreign market selection and effectual entry decision-making and international performance. Our theoretical explanation for the mediating mechanism through which international performance can be enhanced is the network approach.