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Effectuation and foreign market entry of entrepreneurial firms

Sylvie Chetty (School of Business, University of Otago, Dunedin, New Zealand AND Uppsala University, Uppsala, Sweden)
Arto Ojala (School of Business and Economics, University of Jyväskylä, Jyväskylä, Finland)
Tanja Leppäaho (School of Business and Economics, University of Jyväskylä, Jyväskylä , Finland)

European Journal of Marketing

ISSN: 0309-0566

Article publication date: 14 September 2015

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Abstract

Purpose

The purpose of this study is to examine the decision-making process for entrepreneurial firms when entering foreign markets and how and why they entered those markets.

Design/methodology/approach

A nascent theory in entrepreneurship called effectuation is combined with internationalization process theory as the conceptual framework to study decision-making under uncertainty. The central concept in both these theories is relationships and how they can be used to gain knowledge and thus reduce uncertainty and in the case of effectuation to co-create opportunities to enter foreign markets. The research design involves a multiple case study of software firms from Finland and New Zealand.

Findings

It was found that entrepreneurs differentiate between foreign market selection and foreign market entry during their internationalization process, potentially using different decision-making processes in them. They tend to interweave effectuation and causation logics as substitutes in their decision-making. Uncertainty during foreign market entry is not always a barrier because it can provide opportunities depending on the logic used. In addition, there is evidence that entrepreneurs who have existing relationships in foreign markets tend to use effectuation to select and enter foreign markets.

Originality/value

This paper transposes effectuation from its original field of entrepreneurship research to the context of internationalizing entrepreneurial firms. Consequently, it contributes toward understanding the decision-making process for selecting and entering foreign markets.

Keywords

Acknowledgements

The authors would like to thank the anonymous reviewers for their valuable comments and suggestions. The New Zealand study was funded by a New Zealand Foundation for Research Science and Technology Grant. The study in Finland was funded by Need for Speed project governed by DIGILE Oy, the Marcus Wallenberg Foundation and Foundation for Economic Education.

Citation

Chetty, S., Ojala, A. and Leppäaho, T. (2015), "Effectuation and foreign market entry of entrepreneurial firms", European Journal of Marketing, Vol. 49 No. 9/10, pp. 1436-1459. https://doi.org/10.1108/EJM-11-2013-0630

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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