Decision-making during small and medium-sized enterprises' internationalisation - effectuation vs. causation

Abstract

Although research on decision–making in small and medium–sized enterprises' (SMEs) international ventures has emphasised various attributes of the decision–maker when trying to explain decisions, few studies have examined the underlying overall mental models used. Exploring the explanatory power of effectuation, this paper discusses how and why SMEs change decision logic related to internationalisation over time. Using decisions made during a Swedish medical technology firm's internationalisation process as the unit of analysis, this paper employs an embedded case study approach. The paper concludes that a decision–maker makes decisions by following the logic of both effectuation and causation independent of the internationalisation stage of a firm. The chosen approach is influenced by the nature of the perceived problem space, existing decision–making routines and heuristics and the inability of decision–makers to learn from previous internationalisation decisions due to the idiosyncratic nature of each foreign expansion.