Overcoming the liability of outsidership in institutional voids: Trust, emerging goals, and learning about opportunities

Journal article

Building on the complementarity of the revisited Uppsala model and effectual logic, this article examines the role of affective and cognitive trust for developing knowledge in the context of small- and medium-sized enterprise (SME) internationalization in emerging markets. Drawing on qualitative interview data from New Zealand SMEs engaging with Chinese business partners, the article first shows that an overreliance on affective trust can result in a situation of ‘persistent mediation’, in which learning about opportunities is impaired. Second, utilization of the affordable loss principle and a focus on control facilitates relationship-specific knowledge, which may also lead to cognitive trust. However, cognitive trust does not necessarily result in substantive business market knowledge needed to overcome the liability of outsidership. Third, business market knowledge is advanced when partners mutually set goals and develop the opportunity, which potentially also fosters cognitive and affective trust.

Authors: Fiedler, A; Fath, B; Whittaker, D

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: SAGE Publications
• Journal: International Small Business Journal
• Publication date: 2016-08-01
• Acceptance date: 2016-07-12
• DOI: 10.1177/0266242616662510
• ISSN: 1741-2870 and 0266-2426
• Keywords: institutional voids; effectuation; emerging markets; Uppsala model; affective and cognitive trust