Organizational evolution in the interorganizational environment: Incentives and constraints on international expansion strategy

This research examines how a supplier's relationships with other organizations in its environment influence the occurrence and timing of its international expansion. The paper describes how constraints on information and market attractiveness influence the establishment by a supplier of a first plant in a foreign location. We develop a model that captures these two constraints through the prevalence and timing of prior expansion by current and potential buyers, by rival suppliers, and by non-competing suppliers. An analysis of expansion patterns among 547 Japanese automotive component suppliers into the United States and Canada between 1978 and 1990 shows that the likelihood of supplier expansion increases at a decreasing rate as the number of its current buyers that have expanded increases. International expansion of competitors leads to an initial increase and a subsequent decrease in the supplier expansion rate. A supplier is more likely to expand within a short period after the first entry by a current buyer or by a potential buyer and within an extended period after the first entry by a non-competing supplier. Organizational size and scope and equity control by transplanted buyers have a modest positive effect on suppliers' international expansion.