Using a unique dataset of over 1000 foreign marketre-entries by multinational enterprises, we draw on organizational learning and institutional theory perspectives to examine the antecedents of speed of foreign market re-entry into previously exited markets. Contrary to expectations, we find that the length of experience accumulated between initial entry and exit does not lead to earlier re-entries. In turn, the depth of experience accumulated through operating via joint ventures and the nature of the experience determined by the exit process have a significant impact for early re-entrants. Host country institutional quality leads to early re-entry and, under certain circumstances, moderates the relationship between learning from past experiences and re-entry speed. Our findings reveal experience-based learning to be a complex and dynamic process, one highly dependent on the quality of the institutional setting of the firm. Theoretical and practical implications of the paper are discussed, along with directions for future research on international business strategies.
Notwithstanding the pervasiveness of foreign market re-entry, when and how multinational enterprises (MNEs) return to already exited markets is not yet fully understood (Surdu, I., Mellahi, K., & Glaister, K., 2018; Surdu, Mellahi, & Glaister, 2015; Vissak & Francioni, 2013; Vissak & Zhang, 2015; Welch & Welch, 2009). Guided by market entry research, we draw on learning and institutional theories to examine how prior experience and the institutional context influence an MNE's speed of foreign market re-entry into an already exited market. Our knowledge of the antecedents of speed of re-entry into a foreign market is informed primarily by research into initial market entry decisions (Chetty, Johanson, & Martín Martín, 2014; García-García, García-Canal, & Guillén, 2017; Gaur, Kumar, & Singh, 2014; Jiang, Beamish, & Makino, 2014; Tan & Mathews, 2015). Grounded in learning theory, the crux of this burgeoning literature is that learning - the development of new knowledge or understanding as a result of past experiences which have the potential to impact on the future behavior of the organisation (Hurley & Hult, 1998, p. 43) - is an important determinant of the MNE’s speed of entry into foreign markets (Casillas & Moreno-Menendez, 2014; Surdu, I., Mellahi, K., & Glaister, K. W., 2018). What is more, different types of experiences are expected to impact international business strategies such as speed of entry depending on whether they accentuate or reduce uncertainties associated with going into a new international market (see also Delios & Henisz, 2003; Gao & Pan, 2010; Hilmersson & Jansson, 2012). Learning enables the MNE to absorb and utilise knowledge acquired through different types of past experiences to better assess the risks and benefits associated with market entry strategies.