Firm resources, cultural distance and simultaneous international expansion in the retail sector

Abstract

Despite the fact that many firms simultaneously expand into multiple new markets, we continue to know very little about why firms choose this type of international expansion instead of sequentially entering new markets. Drawing on the resource-based view (RBV) we argue that in order to engage in simultaneous international expansion firms have to be able to draw on intangible assets, be financially strong, and have international experience that will enable them to reduce and/or shoulder the strains on managerial resources, time compression diseconomies and costs of simultaneously entering multiple new overseas markets. We further expect the strength of these associations to be moderated by the cultural distance between a firm’s home country and newly entered countries. Our analysis of the international expansion of the sales operations of 102 retailers over the period 2003-2012, during which these retailers sequentially or simultaneously experienced a total of 836 foreign expansions, largely supports our hypotheses. Our study underlines the usefulness of the RBV for understanding simultaneous international expansion as an important phenomenon that has received only scant scholarly attention to date