Speed of the internationalisation process. The role of objective vs. subjective perceptions of time

The psychological literature tends to assume that time perception evolves with the chronological age of individuals (McCormack et al. 1999). This concept involves the existence of a subjective acceleration of time (Block 1990). In other words, time subjectively passes faster as individuals advance in their lifespan. This phenomenon of accelerated time perception with age has a variety of potential explanations. It has been proposed from biochemical analysis (DuNouy 1937), introspection (Cohen 1967), gerontology (Birren and Schaie 1990), a neurodevelopmental approach (Droit-Volet 2012), a linguistic approach (Huang and Kim 2020), and from synthetic approaches (Hancock 2002). As Hancock and Rausch (2010, p. 71) state, “We might suspect a progressive diminution in the ability to judge the fine-grain temporal succession of events with age”.

This phenomenon is related to memory-based effects because people accumulate a larger stock of knowledge and past events as they advance in age. Younger people carry a relatively “light bag” of knowledge and past events (Decker 2022), and this smaller stock of memories makes learning more accessible and faster (in terms of capturing and evaluating new information and making decisions). In this respect, individual age affects the subjective perception of time and, more specifically, “how fast or slow” time passes (Hancock and Rausch 2010). The effect of this acceleration of time with age is that younger people react faster than older people. One year is a long period for a teen and a short period for an older person. Younger people can capture new information, analyse it, learn new things, make decisions, and put these into practice faster because time moves internally more slowly (Hancock and Rausch 2010). In Tinits and Fey 2022 contrast, the elderly feel that time moving faster and they need more objective time to develop the same processes. For this reason, we propose:

At the organisational level, the subjective perception of time is related to a well-developed concept of “organisational inertia” (Hannan and Freeman 1984; Shimizu and Hitt 2005), based on established routines and patterns of thinking and activities that produce resistance to change (Nelson and Winter 1982; Kelly and Amburgey 1991). Organisations generate bureaucracy and “habits of mind” (Louis and Sutton 1991) that are directly related to the probability of change in organisations (Hannan and Freeman 1984). Organisational inertia is connected with firm age and size. As Kelly and Amburgey (1991, p. 594) stated:

“Because old organisations have had time to formalise relationships and standardise routines (Stinchcombe 1965), structural stability increases monotonically with age. The other side of this increasing stability is the increasing resistance to change: inertia also increases monotonically with age (Hannan and Freeman 1984: 157). Consequently, the probability of change in core features declines with age”.

Moreover, concerning organisational size, they argue:

“Size is also associated with resistance to change (Hannan and Freeman 1984: 158). As organisations increase, they emphasise predictability, formalised roles, and control systems (Downs 1967: 158). Organisational behaviour becomes predictable, rigid, and inflexible (Quinn and Cameron 1983: 34-35). Consequently, the probability of change in core features declines with size”.

Organisational inertia refers to the probability of changing and, implicitly assumes that time perception is heterogeneous across organisations. Younger and smaller businesses have a higher likelihood of changing their behaviour quickly since they have not yet established long-term ties, habits, and routines. The longer the routines are in place, the more difficult it becomes to change them. Stability makes time apparently go faster, while continuous changes create the perception of time passing more slowly. At the individual level, we argue that organisational inertia accelerates time perception, decreases the probability of change, and slows down decision-making processes. Subjective perceptions of time are based on events, not clock time (Ancona et al. 2001b; Yakura 2002). When many events occur during a fixed objective clock time (Morgeson et al. 2015), this period is perceived as longer, while when nothing relevant happens, the same period is perceived as passing faster (Kunisch et al. 2017). This is why people remember periods with many internal events, such as CEO succession and organisational turnover, that disrupt current patterns (Decker 2022). Hence, in terms of the internationalisation process, we propose:

Environmental dynamism is “the rate of change, absence of pattern, and unpredictability of the environment” (Priem et al. 1995, p. 914). The identification and prediction of future events in uncertain environments remains complex, and many critical variables can follow vastly different alternative ways (Dess and Beard 1984; Miller and Friesen 1983). Environmental turbulence refers to volatility or difficult-to-predict discontinuities (Aldrich 1979; Haleblian and Finikelstein 1993). An elevated rate of change is a characteristic of a turbulent environment and involves a high level of information processing demands on top management teams (Galbraith 1973). Both environmental dimensions influence how individuals perceive the passage of time and how they respond regarding exploration, adaptation, inertia, and speed of strategic decisions (Baum and Wally 2003; Eisenhardt and Tabrizi 1995). Environmental dynamism integrates three dimensions: frequency of change, magnitude of change, and direction of change (Stieglitz et al. 2016).

For organisational inertia, we argue that rapid and unpredictable environmental changes activate a prevalence of ‘event time’ over ‘clock time’ perceptions (Tinits and Fey 2022). Berends and Antonacopoulou (2014) offer various examples of how environmental events (e.g., the collapse of the roof of the Baltimore and Ohio Railroad Museum) (Christianson et al. 2009) promote a unique time context for learning and organisational changes. For example, individuals will remember the recent COVID-19 pandemic as a traumatic period involving various changes in home confinement, closed businesses, the massive use of face masks, collapsed hospitals, and children without school, and not as two or three ‘clock time’ usual periods. From a cognitive perspective, the ‘pandemic time’ (March to May 2020) was much more extended than any other similar ‘stable’ or ‘regular’ three-month period (e.g., March to May 2019). Under highly dynamic and turbulent environments, time stretches in the minds of individuals, and people remember these periods as longer than regular times because they have experienced events of greater importance in their lives. During these abrupt periods, managers must make fast decisions regarding the many options available and the more varied and fragmented nature of managerial work (Mintzberg 1973). In these contexts, internationalisation is potentially accelerated to answer to radical changes in the environmental scenarios. For this reason, we propose:

One of the most popular propositions of the Uppsala model is that firms would gradually enter other markets that were further away in terms of psychic distance (Johanson and Wiedersheim-Paul 1975; Vahlne and Wiedersheim-Paul 1973; Johanson and Vahlne 1977). From these seminal studies, psychic distance is defined “as the sum of factors preventing the flow of information from and to the market. Examples are differences in language, education, business practices, culture, and industrial development” (Johanson and Vahlne 1977, p. 24). These examples are fascinating because they work at distinct levels. For example, language differences depend on managers' language skills; something similar can be said about education. However, business practices, culture, and industrial development are more related to the country level. Nevertheless, we believe that the definition of psychic distance is essentially individual. Even business practices or cultures are perceived differently by each individual, depending on their backgrounds.

As Johanson and Vahlne (2009, p. 1421) argue: “the relationship between market entry order and psychic distance applies at the level of the decision-maker […], not at that of the firm”. Two managers of the same company, industry, and country may perceive a different distance between two countries derived from their experience: where they were born, where they were brought up and where they studied, their language skills, their friends and personal relationships, their prior employment, where they travelled, etc. (see Johanson and Vahlne 2003, pp. 87–88). However, although psychic distance originated in the stage model, it has frequently been substituted in the IB literature by other dimensions, such as cultural distance (Hofstede 1980; Kogut and Singh 1988). Therefore, following the original proposal of the Uppsala model (Johanson and Wiedersheim-Paul 1975), we underline that psychic distance is per se a subjective concept and it is not replaceable by other dimensions. Consequently, the following hypothesis is proposed:

Distance is also perceived and assumed differently between organisations, depending on their own past decisions and behaviour. The organisational path-dependent approach (Barney 1991; Sydow et al. 2009) and the concept of organisational inertia (Kelly and Amburgey 1991; Schreyögg and Sydow 2011) have shown a high impact on the strategic behaviour of companies and also on international behaviour (Kotler et al. 2019). Organisational inertia is “the organisation’s ability to make internal changes in the face of significant external changes” (Moradi et al. 2021, p. 172). A wide range of studies underline the role of past “international experience” on the future path of internationalisation (Bruneel et al. 2010; Reuber and Fischer 1997). For example, Eriksson et al. (1997, 2000) define internationalisation knowledge as “how to organise and manage internationalisation effort” (1997, p. 334), including organisational routines, procedures, and structures related to international behaviour.

Internationalisation knowledge accumulates and outlasts individuals (Kilduff 1993). International knowledge is firm-specific and path-dependent (Eriksson et al. 2000). This knowledge influences how companies perceive foreign countries as psychologically and organisationally distant, depending on their specific stage in the internationalisation process. In this way, two different organisations (X and Y) from the same country (C) differ in their perception of the distance to the same market (M) when the two companies have different international experiences (Kotler et al. 2019). For example, firm X has few international experiences, and these experiences have been in countries distant to M, while firm Y has a broad international experience in many countries, including M or countries similar to M. In this case, the international distance between C and M will be considerable for firm X and small for firm Y. In short, given the previous arguments, the following hypothesis is proposed:

We mentioned earlier that various dimensions of international “distances” (Hutzschenreuter et al. 2016) differ in their level of analysis. In contrast, psychic distance operates at the individual level; other dimensions, such as cultural, institutional, and economic distance, are referred to at national or regional levels. Cultural distance has been widely used in the IB literature through the conceptualisation of Hofstede (1980), Kogut and Singh (1988), the GLOBE Project, and others, most of which were developed to measure cultural differences between countries, with certain exceptions, such as Solberg (2008). Another dimension of country-level distance is institutional distance, which is given by differences in the institutions' regulatory, normative, and cognitive pillars (DiMaggio and Powell 1983; Scott 1995). Most studies considering institutional distance between countries use international country/regional-level statistics and indicators (Malhotra et al. 2009; Pogrebnyakov and Maitland 2011). Lastly, economic distance usually captures differences between countries in GDP per capita, outward and inward FDI stock, differences in economic development, exports, etc. (Hutzschenreuter et al. 2016, p. 163).

While economic and institutional distances seem objective, the selection of the variable(s) employed for their measurement is a subjective decision by managers or researchers. At the same time, cultural distance is subjective, not at individual and organisational levels, but at regional and national levels (Hofstede 1980). Furthermore, all these distances are time-dependent and evolving. In contrast to geographic distance, the economic, institutional, and cultural distances between countries and regions evolve and change. The following hypothesis is therefore proposed (Table 2):

In their seminal work, Johanson and Vahlne (1977, 1990) argue that internationalisation is sequential because it is developed as a learning process, and learning consumes time. The question arises here: do all firms learn at the same speed? Previous research has shown that learning speed differs from one firm to another (Huang et al. 2023). Casillas and Moreno-Menéndez (2014) show that learning speed depends on diversity and depth of experiential learning. Similarly, learning speed is higher when firms use certain types of sources of learning (Huber 1991), such as vicarious learning and grafting, while experiential learning seems to involve a slower learning process (Bruneel et al. 2010; Casillas et al. 2015). However, learning speed depends on the absorptive capacity of the firm, defined as the firm’s ability to value, assimilate, and utilise new external knowledge (Lane and Lubatkin 1998). According to Huber (1991), learning involves the acquisition and integration of knowledge, internationalisation knowledge (Eriksson et al. 1997, 2000), captured directly by the firm (experiential learning) or from external sources (congenital learning, vicarious learning, grafting, and searching).

Nevertheless, learning speed and absorptive capacity depend on the managers' perception of time. At the individual level, younger people learn faster than older people due to the slower speed with which the passage of time is perceived (Hancock and Rausch 2010). Similarly, organisational inertia, usually associated with firm age and size, affects psychological time (Ancona et al. 2001b) and how fast organisations learn. A higher level of organisational inertia decreases the firm's absorptive capacity, and slows down learning speed due to the prevalence of well-established routines and processes developed in the past. In contrast, new ventures with low levels of organisational practices and inertia show higher levels of absorptive capacity, and learning can be accelerated. When environmental dynamism and turbulence are high, time seems to extend, and organisations can accelerate their learning process. For these reasons, we propose:

At the same time, psychological perceptions of distance also affect the relationship between learning speed, absorptive capacity, and speed of the internationalisation process. Firstly, managers with a shorter psychic distance from distant markets as a result of their international background, technological skills, involvement in international networks, etc., will have a higher absorptive capacity, and they will be able to accelerate their learning speed for the internationalisation process (Bolívar et al. 2022). At the same time, since the psychological and organisational distance from the home market to foreign markets requires less time to absorb the new country-specific knowledge, the learning process will develop faster (Yan et al. 2023). Firms with a wide diversity and depth of past international experience can accelerate the learning process for new foreign entries (Casillas and Moreno-Menéndez 2014). The shorter the perceived country-level distance from foreign markets, the higher the organisational absorptive capacity and the faster the learning speed in the internationalisation process. In short, we propose:

Along with the speed of learning, Johanson and Vahlne (1977, 1990, 2009) justified the sequential nature of the process with the desire to minimise the (perceived) risks of internationalisation. For example, Huang and Kim (2020, p. 755) recently noted that “asymmetric cost behavior is more pronounced for firms located in countries whose languages do not require future events to be grammatically marked”. Our model proposes that international risk perception varies with psychological time and distance. Johanson and Vahlne (2009, p. 1420) argue that a sequential process will decrease the international risk perception of foreign activities: “while exploitation [of foreign opportunities] is risky, that risk can be reduced by progressing in small steps and building successive commitments”.

Concerning the perception of time, differences in individual psychological time affect the perception of risk in identical objective situations (e.g., export to market X, investment in country Y, joint venture with a partner in country Z). In this respect, we expect younger people (with less past and more future) to be more prone to assuming risks than would older managers. If time is felt to pass more quickly by older people, then risks are more difficult for them to assume, and they will tend to avoid taking any risks. Conversely, younger people, for whom time seems to pass more slowly, tend to perceive that they have sufficient time to face unforeseen contingencies and that they can behave in a riskier way. Something similar can be argued at the organisational level concerning organisational inertia (Moreno-Menéndez et al. 2023). Companies operating on a solid organisational structure possess an accelerated perception of time. Consequently, any new decision is perceived as entailing greater risk, given their difficulty in coping with unexpected results due to poor organisational agility. Lastly, environmental dynamism and turbulence also exert a similar effect on managers' perception of time. Situations of dynamism and turbulence in the environment cause an apparent stretching of time, which facilitates disruptive decision-making. Time runs more slowly psychologically in these environments because more events occur in a fixed period (clock time). Therefore, managers can take more objective risks than in stable environments because this environment constantly changes. Consequently, we propose:

Finally, psychological perceptions of distance also affect the relationship between international risk perception and the speed of the internationalisation process. The Uppsala model (Johanson and Wiedersheim-Paul 1975; Johanson and Vahlne 1977) assumes the idea that managers prefer to enter markets that are closer in terms of psychic distance in order to minimise risks (Johanson and Vahlne 2009). Psychological distance, organisational distance, and perceived country-level distance with foreign markets are expected to be correlated to the risk perception of foreign markets. All being equal, the greater the home-host market distance (which differs between individuals and companies), the higher the risk perception of investing resources in foreign operations. Therefore, we propose (Fig. 1):

Time has constituted an almost implicit dimension of international business research, with only a few exceptions in which it has been considered explicitly (Eden 2009). In this paper, we have striven to incorporate the most recently developed ideas regarding time in the management field, and in particular the distinction between objective time (clock time) and subjective time, by incorporating the speed of the internationalisation process into the study (Casillas and Acedo 2013). We propose a theoretical framework that contributes to the literature in three different ways (Cropanzano 2009): (a) between the stage (Uppsala) model and born-global firms; (b) between the cognitive and behavioural dimensions of internationalisation; and (c) between three different levels of analysis (individual, organisational, environmental).

Firstly, the speed of the internationalisation process refers to how fast or slowly firms develop the rhythm proposed by Johanson and Vahlne (1990). As mentioned earlier, the Uppsala model does not explicitly refer to the speed but only to the stages in a cyclical rhythm: the mechanism of internationalisation (Johanson and Vahlne 1977). Regarding the psychological dimension of speed, both the numerator (distance) and denominator (time) of the concept of speed (Casillas and Acedo 2013; Chetty et al. 2014) may explain why certain firms need longer than others to advance along the establishment chain (Johanson and Vahlne 1977) and why certain ventures can perform this action in a very short time from their inception (Knight and Cavusgil 2004; Rialp et al. 2005).

New international ventures and born-global firms tend to be led by entrepreneurs with perceptions of time and distances different to those of managers of mature companies. In many cases, these entrepreneurs are young people with international backgrounds, who create a venture free of organisational inertia in a dynamic and turbulent environment. In these conditions, time apparently passes more slowly, the venture can rapidly learn (due to their high absorptive capacity), and the entrepreneurs can assume a higher level of international risk. Furthermore, these entrepreneurs have different perceptions regarding distances from their home market to foreign markets, derived from their international background and the prior experience and knowledge developed in specialised activities related to their new ventures, which result in a higher absorptive capacity to learn rapidly about international markets on a lower level of risk perception regarding foreign countries. As a result, new international ventures operate more quickly than do mature firms on the condition that the speed of the internationalisation process is referred to in “clock time”. The reason is that managers of new ventures have a different psychological perception of time and distance, and hence they perceive time as passing more slowly and distances as being shorter.

Secondly, our framework underlines the mutual interdependence of cognitive and behavioural perspectives in internationalisation process decisions. Cognitive processes are related to subjective conception and perception of time, while the behavioural perspective is closely related to objective time (Ancona et al. 2001a). Consequently, constructs such as ‘fast’ and ‘slow’ may differ between the two approaches: the same event can be based on a fast/slow cognitive process but seen as a firm's slow/fast internationalisation behaviour. For example, certain old large family companies take their first international steps only once their national growth has been developed over many decades or centuries. Their first movements can be perceived as slow if solely their objective behaviour is considered and the accurate international decisions (entering new countries, foreign acquisitions, international agreements, and so on) are measured, in comparison to younger multinational firms in the same industry, from the same country of origin and of similar size (Tinits and Fey 2022). However, these first movements can be perceived as swift decisions inside the organisation compared to the company's past trajectory. In short, the same decisions can be considered slow from a cognitive perspective, fast from a behavioural view, and vice versa. Behaviour and cognition are interrelated dimensions. Behaviour is usually based on accumulated cognitive processes, and cognition dictates how individuals and organisations interpret behaviour.

Thirdly, our model proposes the joint effect of three different levels of analysis: individual, organisational, and environmental. These three levels are continuously connected, and affect cognitive and behavioural processes regarding the speed of firms' internationalisation processes. The perception of time by individuals depends on the organisational and environmental boundaries. Similarly, concepts that tend to be considered ‘objective’ and ‘static’, such as cultural/psychic distances between countries or even ‘objective calendars’, are subjective constructions that can be internally developed in a different way depending on the individual characteristics of managers, the past history of the firm, and the characteristics of the environment, such as turbulence and times of crisis. For example, a crisis such as the COVID-19 pandemic has accelerated the need to make fast decisions and has changed the temporal frameworks of managers. The perception of time by managers has altered during this period, and the future extent of this change in managers' conception of time remains uncertain. For this reason, more research is needed regarding the interaction effects of the three levels of analysis, in an attempt to understand how changes in the time framework in one level influence the other two levels (e.g., how an environmental shock, such as a pandemic, war, or major political change, may either accelerate or slow down the internationalisation process of firms).

The consideration of subjective time carries significant implications for managers and directors of international companies. Firstly, the assumption of the subjective dimension of time in decision-making processes implies that the speed of these processes is not directly transferable from one context to another. This means, for example, that managers of mature companies who leave their company to begin an entrepreneurial start-up may need help adjusting their understanding of the speed of change to better fit their new position (Mohr and Batsakis 2019). Similarly, for those managers who change companies, the new company may belong to a very different field of activity (Shipp and Jansen 2011). A second implication, partially related to the first, refers to the need to match the profile of individuals to the company's needs in terms of speed (Moreno-Menéndez et al. 2023). In this respect, companies must incorporate managerial resources with temporary schemes (Shipp and Richardson 2020) suited to the company's needs regarding faster or slower internationalisation (Johanson and Kalinic 2016; Zahoor and Al-Tabbaa 2021). A third practical implication refers to the need to work on the mediating constructs of the model: absorptive/learning capacity and risk perception (Berends and Antonacopoulou 2014). The former is a capacity for which companies can be fostered consciously and explicitly by company directors and managers if the context of their company demands more speed. On the other hand, risk perception can also be increased through various mechanisms, such as presenting managers with a variety of international contexts, hiring managers with an international profile, and embedding risk as a value in the company's culture (Musaji et al. 2020).

Our conceptual model strives to offer an invaluable framework for future theoretical and empirical research, which will simultaneously be at the core of the analysis of the internationalisation process. We open new avenues for future research by combining the three dimensions (objective/subjective time, cognitive/behavioural perspectives, and individual/organisational/environmental levels of analysis).

Firstly, based on our work, empirical research should be developed that enables a more in-depth analysis of the propositions presented. Several propositions can be addressed directly through quantitative research to contrast how specific dimensions (e.g., the age of the individuals, psychological distance, and organisational inertia) influence both the intermediate variables proposed in our model and the speed of the internationalisation process of companies. In contrast, other propositions require further exploratory research that expands the knowledge of the subjective micro-processes that are developed in the internationalisation process from a temporal perspective (Shipp and Jansen 2021). In this respect, it is necessary to generate new knowledge based on qualitative research that addresses the subjective dimension of the temporal schemes of individuals and organisations in developing the international expansion process.

Secondly, it is necessary to delve both into the subjective perception of time held by individuals and organisations when confronted with changes in the international context, and also into its influence on the speed of companies' decisions regarding international expansion. It is therefore likely that the growing uncertainty and dynamism of the economic, political, technological, and social environment at a global level, which has led to an interest in the so-called VUCA (volatility, uncertainty, complexity, and ambiguity) environments (Bennett and Lemoine 2014), exert an influence on how companies tackle internationalisation. Not only is this influence exerted in terms of the content of decisions but also in their rhythm and speed (Casillas and Acedo 2013; Chetty et al. 2014).

Finally, a third line of research should be oriented towards improving definitions and developing measurements of concepts linked to the temporality of processes at an objective and subjective level (Welch and Paavilainen-Mäntymäki 2014). Quantitative research needs clear concepts and reliable measurements. Therefore, the development and validation of scales on the cognitive dimensions of time and internationalisation would provide a better understanding of the temporal phenomena of the internationalisation process (Kriz et al. 2023).

In summary, our work addresses subjective time when explaining the speed of the internationalisation process. It proposes an explanatory model with propositions that should facilitate the advancement of knowledge regarding time and internationalisation. Two classic constructs (developed in the seminal literature from the Uppsala model) are also incorporated into our framework: learning speed and risk avoidance. These are essential mediators of the speed of the internationalisation process, and reach an extended meaning in our proposal. Further research should shed new light on how all these dimensions interact so that not only can the speed of the internationalisation process be better understood, but that a greater understanding is also attained regarding how the time dimension influences the international behaviour of firms.