The Co-evolution of Learning and Internationalization Strategy in International New Ventures

Abstract

In this paper, we examine the co-evolution of learning and internationalization strategy in international new ventures (INVs). Many researchers have suggested that in contrast to the reliance on experiential learning by firms that internationalize incrementally, firms that internationalize rapidly use alternatives such as congenital and vicarious learning. However, few empirical studies explicitly examine how the use of learning processes in INVs evolves. We used retrospective longitudinal analysis to explore the learning processes of four New Zealand-based INVs, and found that their dominant learning mode and foci of learning changed as internationalization increased. Around the time of founding, congenital learning dominated, but as the firms began to internationalize, they relied more on experiential, vicarious, searching and noticing learning processes. The focus of their learning also shifted from product knowledge to knowledge about foreign markets and the internationalization process. In the later stages of their internationalization, experiential learning increased in importance, as did other resource-intensive learning processes such as grafting by hiring locals or acquiring foreign companies. We conclude that the learning processes used by INVs co-evolve with their internationalization, and are more rapid and less systematic than is implied by traditional models of the internationalization process, with substitutes for experiential learning dominating early in the process.