Abstract

Drawing upon the theories of resource dependence and private ordering, this study compares and contrasts diverse approaches taken by international entrepreneurs facing constitutional uncertainty, meaning that the legal authority governing contracts may be unclear or even non- existent. Through an analysis of more than 35,000 transactions by small, owner-operated lumber exporters, I examine the ways in which entrepreneurs pursuing high-risk international business ventures contend with scarce resources and jurisdictional uncertainties. My study hypothesizes that the use of informal, trust-based, favor-granting mechanisms operationalized through accommodative transaction–by-transaction trade terms is positively related to the generation of new market opportunities (NMO), which is, in turn, positively related to total forward internationalization (TFI). Conversely, the use of inflexible trade terms, such as full pre-payment or sizable escrows, is expected to be negatively associated with NMOs and TFI.

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