Does entrepreneurs’ risk perception influence firm’s rapidity in foreign market entry through moderation of entrepreneurial decision-making approach?

Abstract

<jats:sec> <jats:title content-type="abstract-subheading">Purpose</jats:title> <jats:p>The purpose of this paper is to find out whether risk perception can affect rapidity in international market entry. Also, this paper tries to find out whether the decision-making approach, effectuation, can moderate the pathway between risk tolerance and internationalization speed.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> <jats:p>A hypothetico-deductive methodology has been used to conduct this study. Using partial least square regression, this study tested and proved two developed hypotheses based on a sample of 101 software and IT-enabled services firms in Bangladesh. The sample was selected using non-probability sampling techniques, and data were collected using a structured questionnaire developed from the extant literature.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Findings</jats:title> <jats:p>All of the hypotheses proposed in this study have been accepted. The results show that the effectual approach of decision-making negates the risk perception of the entrepreneur and speeds up the internationalization process of that firm.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Research limitations/implications</jats:title> <jats:p>The implications of this study are inherent in the entrepreneurial cognition and decision-making approach (effectuation). This study provides an insight into risk perception and the rapidity of internationalization, which can spur future development in this field.</jats:p> </jats:sec> <jats:sec> <jats:title content-type="abstract-subheading">Originality/value</jats:title> <jats:p>Rapidity in internationalization of small- and medium-sized enterprises depends on a significant number of factors, one of which is the decision-making approach. The decision-making approach followed by the firms can have an effect on the speed of internationalization. This paper connects the dots between the rapidity of entry to foreign markets with a cognitive variable, risk perception. This paper developed two hypotheses to measure the relationship between risk perception of the entrepreneurs and the rapidity in international market entry with moderation of the decision-making approach.</jats:p> </jats:sec>

Cognitive Bias and the Extraversion Personality Shaping the Behavior of Investors

“…Extraverts have dominant personalities and are bold in risk-taking (Nguyen et al, 2019). We also focus on extraversion as the most influential personality trait in financial and investment decisions (Costa and McCrae, 1980) because extraversion interacts with individuals' emotional states, which influences individual investment behavior (McInish, 1980), risk perception, and decision-making (Alam et al, 2020). However, research has not explored the moderating effect of personality traits, including extraversion, in the relationship between heuristic cognitive bias and investors' irrational decision-making.…”

A network model approach to enhance knowledge sharing for internationalization readiness of SMEs

“…In academic literature, it is sometimes pointed out that these three decision-making processes are interrelated (Malhotra and Majchrzak, 2019). However, the interrelated approach leads to very complex decision-making models, which are useful in the academic literature, but less useful for practical business purposes (Alam et al , 2020). Indeed, the international management and business literature evaluates internationalization processes as relevant strategies to increase financial performance, diversify products and services, and reduce business risk (Zahra et al , 2000; Bobillo et al , 2010; Haapanen et al , 2016; Leonidou et al , 2018).…”

“…Therefore, through the internationalization process firms can leverage strategic factors in order to achieve benefits and create value (Ruigrok and Wagner, 2003). However, several authors identify the processes of internationalization as very risky due to the prior huge amount of knowledge required of foreign countries (Tallman and Li, 1996; Marin et al , 2017; Alam et al , 2020). Thus, internationalization provides several risky events for the business (Figueira-de-Lemos et al , 2011; Kiss et al , 2013).…”

“…Thus, internationalization provides several risky events for the business (Figueira-de-Lemos et al , 2011; Kiss et al , 2013). Moreover, the more SMEs have few internal resources, the more the internationalization processes are risky and unattractive (Alam et al , 2020). Handrito et al (2020) have assumed that the amount of knowledge of the foreign country is a relevant factor for starting effective internationalization processes and for managing the internationalization's risks.…”

Effect of Regret Aversion and Information Cascade on Investment Decisions in the Real Estate Sector: The Mediating Role of Risk Perception and the Moderating Effect of Financial Literacy

“…Risk perception plays a fundamental role in the behavior of investors (Alam et al, 2020). Investment, as an expense for future benefits and profits, is tangled with risk and uncertainty.…”