Market Knowledge and Market Commitment: (the Uppsala Model).

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Market knowledge and Market commitment: (The Uppsala Model). The phenomena of market knowledge and Market commitment is derived from the empirical findings on the development of Swedish firms in international operations which lead to a theoretical model known as the Uppsala internationalisation process model (Johanson and Vahlne, 1977; Sara, 2009). According to Sara (2009:21), This internationalisation process is thus described as “the incremental interplay between the development of market knowledge and the commitment of resources in the foreign markets.” Findings from the psychic distance (a concept in the establishment chain model) has shown that it is vital for firms to have a knowledge of foreign market before entering into it (Sara, 2009). Although, this model also found that firms normal do have small or no knowledge of the international market when opening exporting channels (e.g. subsidiaries ) but they continues in the market as their knowledge of the market increases (Hörnell et all, 1973; Sara 2009). Hence, the term market knowledge in this study is referred to as foreign market knowledge which in conjunction includes “the specific knowledge and more general internationalization knowledge” (Sara 2009). According to Sara (2009: 16), foreign market knowledge is “defined as a firm’s experimental knowledge about foreign counterparts (customers, customers’ customer, suppliers, distributors, competitors) and a general experience of how to do business in foreign markets.” It is evident that the positive performance of firms in the foreign market will be traced back to their pre-knowledge of the market operations (Yli-Renko et al., 2002 quoted by Sara 2009). According to the Uppsala model, the experimental knowledge of foreign market operations is considered the highest crucial advantage for SMEs during internationalisation. It is highly crucial because it empowers firms to observe or be directly aware of the opportunities and threats in the foreign...
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