Firm Internationalisation as an Emergent Property of a Complex Adaptive System

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)peer-review

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Detail(s)

Original languageEnglish
Publication statusPublished - 3 Mar 2017

Conference

Title10th Munich-Sydney-Tilburg Conference in the Philosophy of Science
LocationUniversity of Sydney
PlaceAustralia
CitySydney
Period1 - 3 March 2017

Abstract

Most theories of internationalization are firm-centric, based on methodological individualism, in which they seek to explain internationalization behavior and performance in terms of the characteristics of the individual firm. They are based on the following logic: “We want to believe that X succeeded because it had just the right attributes, but the only attributes we know are the attributes that X possesses; thus we conclude that these attributes must have been responsible for X’s success” (Watts 2011 p 27). Theories of this kind are common in business.
Theories of internationalization fall into the same trap. Retrospectively, we can trace the course of events affecting how a particular firm’s internationalization behavior (e.g., timing or speed of international market entry) unfolded, and interpret it in terms of a firm’s and managers characteristics and the environment and key events taking place. These can include having employees with the right skills, resources and orientations; having the right social networks, the right links to influential firms, a network position that enables it to see and respond to particular opportunities, and a degree of luck.
Here we argue that internationalization behavior of firms is an emergent property of a complex adaptive system comprising a network of interacting people and firms and other types organisations. Aggregate patterns of internationalization emerge in a self-organising bottom-up manner from complex sets of micro actions and interactions taking place over time among various types of actors. In addition, the aggregate patterns emerging have top down feedback effects on the micro actions and interactions taking place. The internationalization behaviour and success of an individual firm cannot be predicted or controlled by the firm because it depends directly and indirectly on a complex web of actions and interactions taking place over time among many people, firms and other organisations operating in a dynamic environment. It is a highly non linear system in which seemingly insignificant events and changes can have disproportional
In this paper we explain how complex systems theory applies to firm internationalization and formalize our theory in terms of the social physics hidden markov model of influence networks developed by Alan Pentland and his colleagues at MIT (Pan et al 2012; Pentland 2014).
By viewing and modelling firm internationalization in terms of complex systems science we can gain a deeper understanding of the mechanisms and processes involved, better understand some forms of internationalization behaviour that cannot be explained by traditional theories, and gain a clearer understanding of the challenges facing managers and policy makers. It also opens up whole new lines of inquiry, such as building agent based models of the complex systems involved.

Research Area(s)

  • complex systems, internationalization

Citation Format(s)

Firm Internationalisation as an Emergent Property of a Complex Adaptive System. / Chandra, Yanto; Wilkinson, Ian F.

2017. Paper presented at 10th Munich-Sydney-Tilburg Conference in the Philosophy of Science, Sydney, Australia.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)peer-review