Problemistic Search and International Entrepreneurship

Abstract

This paper explains the internationalization process of small firms using the theory of performance relative to aspiration levels. The study complements prior theory by explaining why and how small firms are triggered to engage in internationalization despite not reaching maturity in their home market. We outline a model where firms’ internationalization is triggered by problemistic search, following periods of below-aspiration performance. The model is tested on 860 Swedish firms followed during an economic downturn. Results indicate that internationalization activities follow a boundedly rational process characterized by search behavior which is triggered by performance feedback. The study complements prior theories of internationalization and offers a first empirical demonstration of the viability of aspiration-level performance theory in international entrepreneurship research.Entrepreneurship; International Entry; Behavioral Theory of the Firm