A cognitive approach to international ambidexterity and its impact on the speed of internationalizationan application to smes in a peripheral region of Europe

Resumo

Why some Small and Medium Enterprises (SMEs) can speed up its international growth? Furthermore, what makes entrepreneurs decide to allocate resources to international exploration and exploitation activities? How does this international ambidexterity affect the growth of foreign sales? What is the role played by managerial cognition in these relations? Two theories of internationalization provide important insights into these issues: the theory of International Entrepreneurship and the Uppsala model. The latter highlights that the gradual approach to internationalization is based on the experience in international markets, whereas the former points out psychological factors relative to the entrepreneur-manager. To dig deeper in this issue, we turn to the psychological Dual Process Theory, which will help explain the role of managerial cognition. SMEs need a certain combination of organizational and individual skills to grow rapidly in international markets, but the research reports inconsistent evidence about this subject. To address this issue, we developed a model that contributes to the understanding of the role that international ambidexterity and the manager’s cognitive systems play on the SME’s speed of internationalization. We propose that this speed rests, partly, on the development of international exploitation activities, whereas the international exploration may hinder that speed. Additionally, we propose that the managerial cognitive systems will have only a mediated relation with the speed of internationalization, since both cognitive systems, (experiential System-X and analytic System-C) will have a direct impact on both international exploration and exploitation. The consideration of these two pair of components separately (Sys-X and Sys-C; international exploration and exploitation) will enable answering to some inconsistencies in the impact of ambidexterity in the firm's performance. We performed a quantitative analysis through a survey to a sample of Portuguese manufacturing SMEs belonging to sectors of footwear, textile, clothing, and furniture. Results suggest that the manager’s cognitive systems do not have an overall influence on the growth of foreign sales to total sales (FSTS) because of the compensation of the direct effects of exploration (negative) and exploitation (positive) on this growth. Nevertheless, the two cognitive systems (experiential and analytic) have a different impact on international exploitation and exploration. Additionally, we found that international ambidexterity does not provide a higher growth of SMEs' FSTS, but a trade-off between international exploitation and exploration exists in its relationship with international growth, at least in the short-term (3 years of growth in FSTS). Interestingly, we noticed that neither did the manager overall experience nor his / her international experience have an impact on the short-term growth of FSTS. Regarding the managerial cognition, the managers of those SMEs willing to accelerate their internationalization in the short term should rely heavily on both cognitive systems, namely Sys-X –experiential, intuitive, effortless– and Sys-C –analytical, requiring cognitive resources consciously–, considering that both systems have a positive impact on international exploitation and this will lead to additional growth rates of FSTS. However, they should not trust the outcomes of Sys-X when it comes to international exploration, since it entails new products, markets or processes and it is not warranted that experiential learning stemming from other contexts may apply. This dissertation expands the existing literature on the speed of internationalization in its quest for the micro-foundations of internationalization. Specifically, it contributes to the Uppsala model and International Entrepreneurship Theories by suggesting that managerial cognition has an impact in the study of the internationalization phenomena, thus contributing to research on behavioral international strategy. The consideration of the opposed signs in the relation of international exploration (negative) and exploitation (positive) with the FSTS growth is consistent with the gradual internationalization of the SME inherent in the U-Model. Since the venture requires a short-term growth, it should emphasize the performance of international exploitative more than explorative activities, which lead the SME to a gradual approach to internationalization. Yet it does not mean this process cannot be speeded up and shortened. Accordingly, the SMEs seeking to derive a relevant portion of sales from international markets should strive for exploitative rather than explorative activities in the short-term. Future research should determine whether there is an optimal combination of the share of resources allocated to international exploration and exploitation. The same applies to the potential optimal combination of managerial cognitive systems, in particular, whether there is an optimal mix of cognitive systems in the top management teams.