Experience of Emerging Market Firms: The Role of Cognitive Bias in Developed Market Entry and Survival

This paper draws on organizational learning theory to explain how experience influences the propensity for emerging market firms (using an event history analysis of a sample of Latin American firms during the 1990s) to enter developed markets, and their likelihood of survival. We argue that developed market experience is positively related to emerging market firms' entry and survival in developed markets; however, cognitive biases affect the roles played by other types of experience in entry decisions. Alliance experience with developed market firms increases the likelihood of entry, but decreases the likelihood of survival. Failure experience in developed markets reduces the likelihood of entry, but increases the likelihood of survival.