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When it comes to developing strategic organizational
processes, experience may not be the best teacher.
Christopher Bingham, assistant professor of
management and
organization, studied six technology-based entrepreneurial
firms with headquarters in Finland, the U.S., and Singapore
as they went through the process of internationalization.
The firms represented a variety of technology industries:
hardware devices, medical solutions, enterprise software,
and security services. The study was funded in part by the
National Science Foundation.
Bingham identified several forms of heuristics used by
each firm. Heuristics are informal rules of thumb that guide
and shape learning—in this case, rules that entrepreneurial
organizations used as they expanded globally. While the
actual heuristics were unique to each organization and its
situation, all firms in Bingham’s sample developed similar
types of rules.
Each firm developed a few simple, specific rules for
choosing opportunities (boundary rules) and a few rules for
executing them (how-to rules). Boundary and how-to rules
helped organizations as they pursued a global strategy, even
though the rules themselves were often flawed. “A heuristic
initiates action; it lets you get the ball rolling,” says
Bingham.
 Boundary
and how-to rules provide important guidelines for young
entrepreneurial firms choosing between available
opportunities. “Without filters it is very easy to engage in
opportunistic behavior and jump on the first thing that
comes your way, whether or not that fits with the
longer-term mission of your organization,” says Bingham.
“Entrepreneurs have very limited resources; if you’ve placed
your bet in a wrong area it can be very detrimental to your
organization’s future.” Boundary and how-to rules give
executives the confidence to act even in new and unfamiliar
situations.
Organizations also developed rules about timing which
Bingham calls “temporal heuristics.” These included rules
about synchronization (deciding when to enter a country
according to some external timing); destination (which
country or countries the firms was targeting); sequence (the
order of countries that the firm needed to enter in order to
accumulate experience correctly); and pacing (internal
timing).
Rules about timing turned out to be important for
successful globalization. “If you were going to make a
soufflé, you would want certain ingredients added before
others. Yet there seems to be an assumption in the academic
literature that if you accumulate more experience, that’s
all you need. It takes a more discerning mindset to
understand which experiences ought to come first, and which
should come later” says Bingham. He cites a Singaporean
organization which wanted to enter the Japanese market.
Despite the fact that Japan was closer geographically,
leaders chose to enter the U.S. first. Doing so gave the
firm U.S. reference customers, which was very important to
signal the legitimacy and credibility needed for entering
one of Asia’s largest markets.
As the firms continued to develop their globalization
strategies, their heuristics became more abstract, with
fewer details. This allowed for more freedom on the part of
workers within the new country markets to act and make
decisions. This is a counter-intuitive insight of Bingham’s
research: while early learning involves less abstract
thinking as leaders develop specific boundary and how-to
rules, later learning involves more abstract thinking, as
leaders improve their understanding of how simple rules
encourage effective improvisation. More abstract heuristics
provide coherence, so managers aren’t reinventing the wheel,
but at the same time permits for flexibility and creativity.
“Firms start with very specific boundary and how-to
rules, but over time these rules become more abstract,” says
Bingham. “When we look at improvisation we think that people
are just winging it, but there is actually a deep
foundational knowledge and cognitive sophistication which
allows managers to understand how their heuristics can be
improvised in different ways in different countries.”
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