1. ¹Department of Organisation and Strategy, Tilburg University, Tilburg, The Netherlands
2. ²Department of Management, London School of Economics, London, UK
3. ³Department of Technology and Innovation Management, Rotterdam School of Management, Rotterdam, The Netherlands
4. ⁴Department of Business Studies, Uppsala University, Uppsala, Sweden

Correspondence: H Barkema, Tilburg University, PO Box 90153, 5000 LE Tilburg, The Netherlands. Tel: +31 13 466 2243; Fax: +31 13 466 8354; E-mail: barkema@uvt.nl

Received 10 November 2005; Revised 11 October 2006; Accepted 19 June 2007; Published online 6 September 2007.

Abstract

We argue that companies may enter foreign environments either incrementally, as suggested by long-established theory, or by taking larger steps that may result in lower initial performance but, through learning and experience, lead to increased performance in future expansions. This idea is corroborated by the experience of Dutch companies entering into Central and Eastern Europe. We also find that expansion steps may be too large, thereby limiting the exploration of foreign environments. Our study suggests that sequential internationalisation strategies do still matter, and that companies have to balance exploitation and exploration in internationalisation.