International opportunity realization in firm internationalization: Non-linear effects of market-specific knowledge and internationalization knowledge

This study focuses on determinants of the realization of international opportunities. Market knowledge and internationalization knowledge are applied in order to understand how opportunities are realized in internationalization, and these relations are tested for linearity. The study relies on data collected from 144 Swedish firms that export to the Baltic States, Poland, Russia, and China. The results of the study give a theoretical contribution concerning growth behavior beyond early internationalization by integrating learning dimensions from internationalization theory and international opportunities from international entrepreneurship. The results suggest that knowledge about the local business network is significantly associated with international opportunity realization, with an increasing marginal effect. The non-linearity gives an accelerated effect of further learning about the local business network. The results also suggest that multiple national contexts are beneficial to a certain point, after which the marginal effect is negative, thus exhibiting an inverted U-shape. This advocates that a firm’s capability to realize opportunities in international markets is developed positively from the initial internationalization but only to a certain point. Consequently, there is a threshold for when the marginal effect of further internationalization becomes negative for international opportunity realization. Non-significant results for knowledge about the institutional context suggest a downplayed role of the institutional context in favor to the business network. Furthermore, non-significant results for international depth show that time in international markets may be less important than diversity in international contexts.