Do a Firm’s Depth and Diversity of International Experience Increase Its Speed of Foreign Expansion? Evidence from South Korean Firms

Do a Firm’s Depth and Diversity of International Experience Increase Its Speed of Foreign Expansion? Evidence from South Korean Firms

Purpose - Based on the Uppsala model and organizational learning theory, this study empirically analyzes the effects of South Korean firm international experience depth and diversity on the speed of foreign expansion. Design/Methodology/Approach - The hypotheses were tested using GLS regression analysis and a panel data set of 424 Korean manufacturing firms listed on the KOSPI market from 1999-2007. Findings - First, the depth of firm international experience has a negative effect on the speed of foreign expansion. Second, the diversity of international experience has a positive influence on the speed of foreign expansion. Research Implications - First, depth of international experience has a negative impact on the speed of foreign expansion. This is contrary to Hypothesis 1, indicating that if a firm operates its business in a particular country for an extended duration, its level of commitment to that country could increase, hindering its swift expansion to another country. Second, diversity of international experience has a positive influence on speed of foreign expansion, which implies that, by being exposed to varied national environments, a firm’s diverse international experiences, represented by its official and unofficial management systems and operational experience tailored to its business in each country, reduces its perceived risk of uncertainty of internationalization, or increases its capability of effectively responding to the liability of foreignness, thus positively affecting the speed of foreign expansion.