Decision-Makers’ Perceptions of Risks in Internationalization and the Role of Context

This paper relates managers’ risk perceptions in SME internationalisation to context by drawing upon situated cognition theory to explore how context shapes decision-makers’ different perceptions of risk in firm internationalisation. It contributes to extant knowledge on risk by developing a systematic tree map on perceived risks based on primary data from 180 interviews in six different country contexts and three industry sectors, and by showing what similarities and differences exist in the risk perceptions of SME internationalisation decision-makers across countries and industries. We suggest that the core types of risk can be described as a combination of outside-in and inside-out conditioning related to: (1) Legitimation and compliance, (2) Change and volatility, (3) Opportunism and betrayal, and (4) Strategy making and execution. These core risk perception groups may have a different degree of manifestation in view of the firm-specific objectives and goals. Finding show that home country context conditions more prominently affect all main SME internationalisation perceived risks, whereas industry context conditions are most important in risk perceptions of legitimation and compliance.