Unpacking the Influences of Firm-Level International Experience on Foreign Market Entry and Exit Strategies

Firm-level international experience (FIE), which is broadly defined as the experiences that firms acquire via operating in foreign markets, plays a critical role in shaping multinational enterprises’ (MNEs) foreign market entry and exit strategies. Rooted in the behavioural school of thought, FIE is widely accepted as a key factor in helping firms reduce uncertainty caused by lack of foreign market knowledge. By leveraging FIE, firms can better navigate foreign market entry, outperform inexperienced competitors in foreign markets, and are less likely to exit foreign markets.

However, as this perspective became dominant, International Business (IB) researchers increasingly treated FIE as a given without scrutinising its original conceptualisation. Previous studies have rarely accounted for: (1) the heterogeneous nature of experience and 2) the complexity of the experiential learning mechanism. This has led to a problematic evaluation of the FIE’s effect in influencing foreign market entry and exit strategies. Those two overlooked issues have resulted in an oversimplification of the FIE construct in IB and led to inconclusive empirical findings, which necessitates a reassessment of its validity and a reconceptualisation of this key concept.

Hence, this thesis expands the dominant perspective and reconceptualises FIE by critically re-evaluating the multi-dimensional role of FIE in shaping MNEs’ foreign market entry and exit strategies. Drawing insights from the original Uppsala model, this thesis incorporates John Dewey’s philosophy of experience and organisational learning theory. It develops a refined framework that captures the spatial, temporal, and involvement, continuity, and habit-related dimensions of FIE. These dimensions influence firms through four key mechanisms: capability building, knowledge accumulation, partnership development, and structural inertia.

This thesis comprises four key chapters, which are respectively a conceptual study, a systematic literature review, a meta-analysis, and an empirical study focusing on Chinese manufacturing firms entering African markets. Overall, the findings reveal that different dimensions of FIE demonstrate distinct influences on foreign market entry and exit strategies. Unlike previous studies that largely suggest that FIE brings more knowledge and capability in general, my research highlights that FIE can also enhance the risk of structural inertia, leading firms to repeat past strategies. This repetition could hinder experiential knowledge acquisition and impact firms’ strategy and performance, as evidenced by the mixed findings on subsidiary exit strategies.

By reconceptualising FIE as a multi-dimensional construct, this thesis provides a more holistic and nuanced understanding of how different dimensions of FIE impact firms’ foreign market entry and exit. It also highlights that impact of different experiential learning mechanism, drawing attention to a more refined understanding of the role of FIE in IB studies. Additionally, this thesis enhances construct validity by addressing the two overlooked issues outlined above. It also offers a more refined theoretical framework for understanding what FIE firms acquire and how they apply FIE across different contexts. By incorporating the notion of experience and organisational learning, this thesis lays a foundation for advancing IB theories that conceptualise FIE as a foundational construct. Furthermore, this thesis provides valuable insights for practitioners, enabling them to better navigate foreign market entry and exit by strategically leveraging different dimensions of FIE.