From Systematic to Mimetic Behavior in the International Market Selection

Abstract

Traditionally, the international market selection is a systematic process, based on predefined criteria. This process is, however, very time- and cost-consuming, and only a small number of firms have sufficient resources to do it. So, according to the Uppsala Model, firms tend to internationalize to the closest markets (psychic distance), managing uncertainty in a very gradual process based on experiential knowledge. The second-hand knowledge that flows in the firm's network could help firms select the market, helping them to expand gradually. Independently from the source (experiential or second hand), knowledge seems to be a mandatory resource to internationalize. However, a lot of firms imitate other firms' behavior, selecting the international market according to others' selections, believing that they must have superior information. In this situation, firms could imitate the leader (a successful firm) or the herd (a big number of firms). This international market selection is not based on knowledge; it is a mimetic process.