Procedural Rationality in the Decision-Making of Internationalizing SMEs

This paper contributes to the growing body of empirical work on how SME decision-makers decide to internationalize in two ways: first, it responds to recent calls for incorporating strategic decision-making literature into understanding SME internationalization decisions. Second, it provides a better understanding of under what circumstances, SME decision-makers tend to follow a more rational approach toward internationalization decisions. Specifically, this paper examines a set of contextual variables (the level of perceived international risk, internationalization performance, planned versus ad hoc internationalization, credit check, distribution adaptation, and decision team size) and their influence on the extent of procedural rationality in SME internationalization decision-making process. The findings from a sample of 176 export-active SMEs show that decision-makers tend to follow a more rational decision-making procedure when they perceive a high level of international risk. The evidence also suggest that internationalization performance, planned internationalization, credit check, and decision team size are positively related to procedural rationality.