EXPERIENTIAL KNOWLEDGE AND COST IN THE INTERNATIONALIZATION PROCESS

Using a behavioral approach, this study identifies and delineates comp onents of experiential knowledge in the internationalization process, Three hypotheses are developed and tested, They center around the lack of knowledge in the areas of foreign business, foreign institutions a nd firm internationalization, as well as the effect that this lack of knowledge has on managers' perceived cost in the internationalization process, With the help of a LISREL-based structural model, the three h ypotheses are tested on a sample of 362 service firms, The analysis sh ows that lack of internationalization knowledge has a strong impact on the lack of both business and institutional knowledge which, in turn, influence the perceived cost of internationalization. But there is no direct effect of lack of internationalization knowledge on perceived cost of internationalization.