Working Abroad: The Value of Experience

Intuitively, experience reduces the chance of failure. An experienced manager will make fewer mistakes than the inexperienced manager. The same logic can be applied to international business activity: companies experienced in foreign markets are going to fail less frequently than companies without foreign experience. New research shows, however, that this assumption is too simple. Previous experience in a foreign market helps if the company returns to that market. It also helps if the company ventures into a different foreign market, but only, the research shows, as long as the situational context between the new market and the previously experienced market is similar. If the context is dissimilar, it is actually better to have no experience in foreign countries than irrelevant experience; previous irrelevant experience becomes harmful.