Abstract
Abstract This research investigates managerial risk perception regarding internationalization of small and medium-sized enterprises in the Brazilian context. We examine how managers' perception of risk influences firms' degrees of internationalization. Likewise, we assessed how risk perception is influenced by managers' cognitive traits, such as tolerance for ambiguity and cognitive style. We provided empirical evidence for the relationships we proposed through a partial least squares structural equation model with data gathered from a survey of 149 SMEs from the State of Parana, Brazil. Our results suggest that managers' tolerance for ambiguity is only significant for explaining risk perception for the managers with a preference for a deliberative style. Still, the research suggests that the Brazilian SMEs in our sample presented a higher degree of internationalization even when their managers perceived higher levels of risk.
Highlights
The first step of the path modeling partial least squares structural equation modeling approach (PLS-SEM) analysis was the assessment of individual item reliability, construct reliability and discriminant validity of the measurement model, which is equivalent to performing a confirmatory factor analysis (Acedo & Florin, 2006; Richter et al, 2016)
The aim of our research was to verify the influence of cognitive antecedents in terms of managers’ tolerance for ambiguity and cognitive style preference on their risk perception regarding international operations and its effect on the degree of internationalization of small and medium-sized firms (SMEs)
The findings concerning the mediation analysis show that tolerance for ambiguity only has a significant effect on risk perception when considering the deliberative cognitive style of the decision
Summary
Firms worldwide exploited such expansion, looking for higher growth rates, sales, and revenue from sources beyond traditional domestic markets (Prasad, 1999). In this context, small and medium-sized firms (SMEs) suddenly had a vast territory at their disposal to explore and escape from the competition against larger incumbent firms within their domestic markets (Etemad, 2004). Despite internationalization being considered a form of risk diversification for late-movers in international markets (Carneiro & Brenes, 2014), SMEs that decide to engage in internationalization must be aware of the additional risks inherent in new, uncertain, and distinct markets, that are different from their usual domestic competition (Sapienza, Autio, George, & Zahra, 2006; Zahra, Korri, & Yu, 2005). The managerial perception, propensity, or aversion to risk is a relevant matter of interest to international business and international entrepreneurship scholars (Acedo & Florin, 2006; Claver, Rienda, & Quer, 2008; Figueira-de-Lemos, Johanson, & Vahlne, 2011)
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