Thursday, December 3, 2020

Changing Lenses: Using a Different Theory to Look at Internationalization

Here is a slightly nerdy question for those interested in social science: How attached are theories to fields of investigation? For example, in business schools we have marketing and organization theory. So marketing is about markets, and organization theory is about organizations, right? Not to mention all the subfields within marketing and organization theory, which are dedicated to understanding specific topics. Consumer Behavior in Marketing is about (drumroll…) how consumers behave. But is it so simple?

It is not. Many fields of investigation have been dominated by specific theories, making thinking about them so uniform that much can be learnt from other theories making inroads. To take two examples that I know well: Finance studies financial markets, but organization theory has shown that the status of investment banks affects decisions in those markets, which is against finance scholars’ belief that pricing is pure demand and supply. Organization theory studies organizations, but the entry of economists have increased awareness of how contingent rewards (incentives) can have a big role in organizing.

This means we should look around for opportunities to give established fields of investigation new ideas. That is exactly the purpose of an article by Irina Surdu, Gabriel Benito, and me in Journal of International Business Studies looking at the theory of International Business and arguing that the behavioral theory of the firm, which is an organizational theory, can inform international business studies. Why do we think this will happen? First, addressing a field of investigation with a new theory always brings out something interesting, so it would be surprising if it did not.


Second, who does international business? Firms do. Firms are organizations, and the most man-hours spent studying organizations are logged by organizational theorists, not scholars in international business. Yes, internationalization is a specific action taking by a minority of all firms, but knowing how firms act in general is very useful for understanding any specific action they do.

Behavioral theory is particularly important because it is about how firms learn, and how their managers cope with bounded rationality. This is very important for internationalization because firms that engage in international business repeatedly step into areas of uncertainty that are too great for the boundedly rational manager to make flawless decisions. Instead, they probe, get feedback, adjust, and learn. That is what the behavioral theory of the firm is about.

We do not yet know what will come from an investigation of internationalization through the lens of behavioral theory. That’s part of the beauty, because there are so many ways that this theory can be used, and so many things that can be discovered and can improve our knowledge of international business. In the end, this will feed into how we teach students to manage the complex international world that they are facing. We have now issued an invitation to researchers to change lenses, and we think it will be productive.

Surdu I, Greve HR, Benito GRG. 2020. Back to basics: Behavioral theory and internationalization. Journal of International Business Studies forthcoming.

1 comment:

  1. Now I certainly understand what you mean by "excessively busy". Just look at this series of papers coming out, high quality and stimulating as always. That is so amazing. Thank you so much Prof. Henrich.

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