Improving SME Performance Globally
Research Handbooks in Business and Management series
Edited by Pervez N. Ghauri and V. H. Manek Kirpalani
Chapter 2: Reactive and proactive international entrepreneurial behaviour: causation and effectuation
Several theoretical perspectives have been used to explain the early internationalization of born global SMEs from small, developed economies, depending on the factors underlying their decision to enter and compete in international markets. Positioned within the field of international entrepreneurship, this chapter argues that observed internationalization patterns of SMEs relate to two distinct entrepreneurial approaches: causation and effectuation. Causation, consistent with a planned approach, describes a situation where international businesses opportunities are recognized and pursued based upon a plan, while effectuation denotes an emergent strategy, whereby founders experiment and make decisions based on loss affordability and flexibility (Sarasvathy, 2001; Chandler et al., 2011). We draw on this latter theory to explain proactive and reactive internationalization behaviours, reported widely in the extant literature, in terms of two salient and widespread factors: knowledge and networks of founders. We identify effectuation theory as a relevant and valuable emerging theory in international entrepreneurship. We argue that effectuation logic prevails during initial internationalization of born global SMEs. Interestingly, however, internationally experienced managers are more likely to engage in proactive behaviours, supported by causation logic, thereby employing both approaches simultaneously.
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