Routine microprocesses and capability learning in international new ventures

Abstract

Drawing on the distinction between the ostensive aspects (abstract patterns) and performative aspects (specific actions) of organizational routines, the paper offers a micro-level explanation of capability learning in international new ventures (INVs), that is, firms that internationalize actively from inception. The paper argues that variability in the performative aspects of internationalization routines is associated with improvisational learning and new capability development, whereas variability in the ostensive aspects is associated with trial-and-error learning and existing capability improvement. Furthermore, psychic distance moderates these relationships. Low psychic distance facilitates both improvisation and trial-and-error learning; high psychic distance frustrates learning of both types. Moderate psychic distance makes the success of both learning forms more likely – but only for more experienced INVs. The paper also argues that social capital may mitigate the negative effects of high psychic distance. It contributes to the extant literature by providing a micro-level explanation of how INVs accomplish capability learning and avoid wasteful learning efforts, and by theorizing the moderating effects of psychic distance on the relationships between routine microprocesses and capability learning.