How to select an export mode without bias

Abstract

Managers of startups and small and medium-sized enterprises (SMEs) tend to view subsidiaries as the preferred export mode. Yet this type of organization is associated with a high failure rate. Our in-depth interviews with more than 40 managers show that their bias in favor of foreign sales subsidiaries is rooted in unsubstantiated beliefs about control and the superiority of subsidiaries over other export modes. This article details the faulty reasoning that supports these prejudices and proposes a simple method for selecting more profitable and less risky international entry strategies.