Managers and internationalization decisions: An affect-enacted model

Research Summary

This paper identifies a critical gap in foundational assumptions between traditional International Business (IB) theories (e.g., internalization theory and Uppsala model) and empirical individual-level research. Traditional theories, rooted in assumptions of bounded rationality, tend to overlook the influence of affective cognition in shaping managerial decisions. In contrast, our systematic review of individual-level IB research reveals that empirical studies recognize the influence of affective cognition in decision-making but have only extended mainstream theories in fragmented ways, leaving room for a comprehensive theoretical revision. We propose an affect-enacted model of internationalization decision-making, showing how affective cognition critically shapes IB decisions. Our findings have important implications for IB theorization, advocating for the integration of both affective and non-affective cognition into a unified framework.

Managerial Summary

Managers assess risks as part of their decision-making process for firm internationalization. Traditional theories suggest that managers, as boundedly rational actors, are imperfect agents influenced primarily by analytical considerations. However, our systematic review of over two decades of empirical research reveals instead that managers are complex agents that rely on both affective and non-affective processes to inform their judgments. We present an affect-enacted model of internationalization decisions, showing how these processes combine to shape knowledge, experience, attitudes, and risk evaluations, ultimately guiding their internationalization decisions. Contrary to the traditional view, our findings suggest that internationalization decisions are deeply influenced by affective cognition reflecting a complex interplay of intra- and interpersonal dynamics.