Internationalization of entrepreneurial firms: Leveraging real options reasoning through affordable loss logics

Abstract

Using a transaction-level analysis of 1,040 small lumber exporters from 52 countries, we develop and test a framework wherein internationalizing entrepreneurs pair affordable loss logics (ALL) with real options reasoning (ROR) to generate value-creating opportunities while substantively forestalling the unfavorable impacts of trade partner opportunism. Through this, our study extends the literature on international market entry by identifying novel mechanisms employed by entrepreneurs to navigate the cross-currents lying between opportunity and opportunism. In addition, we offer fresh insights to the ongoing debate concerning the applicability ROR to business venturing contexts. By bridging ROR and ALL, our study extends and enhances efforts to apply ROR as a descriptor and predictor of market entry decisions.