In terms of dynamic approaches of internationalization, learning stages’ models are still the dominating theories. This group of theories views the internationalization of a company as a sequential and orderly process, where the shift from one to the next stage is based on the learning and accumulation of experience within the previous stage. The most influential theories of learning stages’ models include Jaohnaon and Wiedersheim
– Paul (1975), Biley and Tesar (1977), Cavusgil (1980) and Czinkoda (1982) among others (Figure 2.3).
The different versions of the theory of learning stages of internationalization focus on different aspects, and emphasize different major factors. Johanson and Wiedersheim-Paul (1975) focuses on the market entry and development mode of firms to internationalize, and points to a gradual process occurring in stages, rather than spectacular investment activities. Actually, Johanson and Wiedersheim-Paul’s (1975) learning stages model is a part of the Uppsala internationalization model (see section 2.3.3), while this learning stage version identifies the internationalization of MNCs in four stages: from no regular export activities to export via overseas agents, establishment of an overseas sales subsidiaries and finally the overseas production manufacturing.
Johanson and Wiedersheim-Paul’s works influenced subsequent studies in the area.
Bilkey and Tesar (1977) focuses on the market selection of the internationalization of firms with six stages. The concept of psychological closeness of one market to another was proven to be an important issue in internationalization. Bilkey and Tesar’s model was further refined by Cavusgil (1980). Cavusgil (1980) incorporated the internal company factors into the explanation of internationalization process. The internal company factors include inhibiting firm characteristics, attitudinal barriers, internal managerial aspirations, willingness to commit resources and others. All these factors may be grouped into four, i.e. (i) expectations of management; (ii) level of commitment;
(iii) differential advantages to the firm; (iv) managerial aspirations. The identification of these four groups of factors was included into many later studies in MNCs’
internationalization. Czinkota’s six-stage model (Czinkota, 1982) overlaps with the previous models, but emphasizes the experimentation aspect and the differences induced by the company size.
Figure 2.3 Learning stages models of internationalization Source: Jaohnaon and Wiedersheim – Paul (1975), Biley and Tesar (1977), Cavusgil (1980), Czinkoda (1982), and Czinkota and Ronkainen (1998)
A major concern regarding to the learning stages models is that these theories ignore the context in which the internationalization takes place, or they assume the
Czinkota (1982)Cavusgil (1980)Bilkey and Tesar ( 1977)Johanson and Wiedersheim-Paul (1975)
Internationalization process Time
Stage 4 Overseas production manufacturing Stage 2 Export via overseas agents
Stage l No Regular export activities Stage 3 Establishment of an overseas sales subsidiariesStage 5 Commited involvement: management constantly makes choices in allocating limited resources between domestic and foreign markets
Stage 4 Active involement: exporting to more new countries - direct exporting -increase in export volume Stage 3 Experimental involvement: the firm starts exporting on a limited basis to some psychologically close country
Stage 2 Pre-export stage: the firm searches for information and evaluates the feasibility of undertaking exporting
Stage 1 Domestic marketing: the firm sells only to the home market Stage 6 Management explores the feasibility of exporting to other more psychologically distant country
Stage 3 Management actively explores feasibility of active exporting Stage 2 Management is willing to fill unsolicited orders, but makes no effort to explore the feasibility of active exporting
Stage l Management is not interested in exporting Stage 4 The firm exports on an experimental basis to some psychologically close country Stage 5 The firm is an experienced exporter Stage 6 The experienced large exporter
Stage 5 The experienced small exporter Stage 4 The experimental exporter
Stage 3 The exploring firm Stage 2 The partially interested firm
Stage 1 The completely uninterested firm
internationalization of a firm is context free, i.e. the same pattern is expected across different contexts and environments (Sorensen, 1997). This is absolutely not realistic in contrast with the static and contingency models shown in section 2.2.
The static and contingency models imply that the firm that intends to internationalize would make attempt to be differentiated from others and therefore to build up its unique competitive advantages or comparative advantages, as elaborated in the different industrial organization theories and competitive theory. However, the learning stages theories implied and generalized their common patterns during internationalization. This looks contradictive. Sorensen (1997) gives three explanations on this issue, and therefore enhances the understanding of static and dynamic approaches of internationalization. According to Sorensen (1997), at least three explanations can be provided:
• According to the rationale of the stages models, the internationalization is based on the laws and principles of learning, combined with risk taking. A company learns from its action and when it has acquired experience enough and reached an acceptable risk level, it is ready to take another step on the internationalization path. As all companies follow this rule of risk reduction through learning, a common internationalization pattern may emerge.
• Related to the first explanation, a general pattern may also be found because: (i) enterprises are managed by people who have acquired the same management philosophy and the same management tools; (ii) the enterprises may learn from each other and imitate the presently most successful companies. In these instances, a common pattern will emerge based on common world views and, in general, the emergence of a common business culture or system (Whitley, 1992a;
1992b). However, the experiences of internationalization of Japanese companies showed that this explanation of general patterns became inadequate.
• The structure of an industry may also facilitate a general pattern in internationalization. If industry structures comprise many companies with similar nature, and each of them may decide autonomously but influenced by their relations to other companies, a general pattern of development may emerge.
This aspect may also connect with the networking theories such as the Uppsala model.