Heuristics and Decision Rationality in Entry Mode Choice: Implications for Decision Effectiveness and International Performance

Anisur R. Faroque*, Arafat Rahman, Mohammad Osman Gani

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingConference contributionScientificpeer-review

Abstract

This paper explores the role of heuristics (specifically availability and representativeness) and decision rationality in international business entry mode choice, and how their interaction influences decision effectiveness and subsequent international performance. Following the core premise of dual process theories, the study hypothesizes relationships between heuristics, decision rationality, decision effectiveness, and international performance. Using a quantitative survey-based approach, it measures the application of heuristics in decision making. The study evidences that managers can strategically exploit availability heuristics in conjunction with analytic, rational decision-making approaches to improve the effectiveness of their internationalization decisions. However, the combination of analytic decision model with representativeness heuristics can compromise decision effectiveness. The findings offer crucial insights for managers operating in global environments, underscoring the value of integrating heuristic and analytic strategies in the decision-making process for international market entry. Extending the dual-process theories in international business, this study enriches our understanding of the cognitive strategies behind entry mode choice and their bearings on overall business performance.
Original languageEnglish
Title of host publication 49th Conference of the European International Business Academy : The Changing Global Power Balance: Challenges for European Firms
Publication date2023
Publication statusPublished - 2023
MoE publication typeA4 Article in conference proceedings
EventConference of the European International Business Academy (EIBA): The Changing Global Power Balance: Challenges for European Firms - Lisbon School of Economics & Management of University of Lisbon, Lisbon, Portugal
Duration: 15.12.202317.12.2023
https://eiba2023.eiba.org/

Keywords

  • 512 Business and Management

Areas of Strength and Areas of High Potential (AoS and AoHP)

  • AoS: Competition economics and service strategy - Quantitative consumer behaviour and competition economics
  • AoHP: Strategic and entrepreneurial praxis

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