925 EXPLORIN G N OVELTY IN THE IN TERN ATION ALIZATION PROCESS - UN DERSTAN DIN G DISRUPTIVE EVEN TS Päivi Aaltonen EXPLORING NOVELTY IN THE INTERNATIONALIZATION PROCESS - UNDERSTANDING DISRUPTIVE EVENTS Päivi Aaltonen ACTA UNIVERSITATIS LAPPEENRANTAENSIS 925 Päivi Aaltonen EXPLORING NOVELTY IN THE INTERNATIONALIZATION PROCESS - UNDERSTANDING DISRUPTIVE EVENTS Acta Universitatis Lappeenrantaensis 925 Dissertation for the degree of Doctor of Science (Economics and Business Administration) to be presented with due permission for public examination and criticism in the Auditorium 1316 at Lappeenranta-Lahti University of Technology LUT, Lappeenranta, Finland on 13th of November, 2020, at noon. Supervisors Professor Olli Kuivalainen LUT School of Business and Management Lappeenranta-Lahti University of Technology LUT Finland Associate Professor Lasse Torkkeli LUT School of Business and Management Lappeenranta-Lahti University of Technology LUT Finland Reviewers Professor Mika Gabrielsson, University of Eastern Finland Faculty of Social Sciences and Business Studies, Business School Finland Professor Grazia D. Santangelo Copenhagen Business School Department of Strategy and Innovation Denmark Opponent Professor Mika Gabrielsson University of Eastern Finland Faculty of Social Sciences and Business Studies, Business School Finland ISBN 978-952-335-568-2 ISBN 978-952-335-569-9 (PDF) ISSN-L 1456-4491 ISSN 1456-4491 Lappeenranta-Lahti University of Technology LUT LUT University Press 2020 Abstract Päivi Aaltonen Exploring novelty in the internationalization process - understanding disruptive events Lappeenranta 2020 103 pages Acta Universitatis Lappeenrantaensis 925 Diss. Lappeenranta-Lahti University of Technology LUT ISBN 978-952-335-568-2, ISBN 978-952-335-569-9 (PDF), ISSN-L 1456-4491, ISSN 1456-4491 The literature on international business combines a multitude of paradigms from organizational learning to entrepreneurship and economic theories. The behavior-based model of the internationalization process (IP) theory, the Uppsala model, has since the 1970s served as a starting point for understanding the process of internationalization, further contributing to the emergence of the international new ventures and born global theory constructs. However, illustrating disruptive, novel, and quirky events in the IP could benefit from additional approaches. Introducing new theory constructs could potentially explain in more detail some of the remaining differences in the current theory constructions. These include explaining the differences in the speed of internationalization, creating joint theory constructs for both small and medium-sized and multinational enterprises, and enabling a more clarified characterization of ambiguous concepts. Recently, a term beneficial for understanding disruptive events in internationalization was introduced, the concept of exaptation. Describing phenomena such as the development of wings, the fairly unknown concept in economics has been linked to describing entrepreneurial behavior, innovation creation, and the emergence of heterogeneity in markets and unpredictable developmental patterns. To assess the explanatory potential of the concept, a thorough review and analysis of current literature in internationalization as well as exaptation is needed. Further, to demonstrate the applicability of the concept in the field of international operations, empirical studies should be conducted. This dissertation contributes to internationalization process theories by highlighting how the origins of novel solutions can be addressed, and why intentions may differ from realized outputs. Thus, it demonstrates tools and theories to promote the study of internationalization, responding to calls made in the literature. Keywords: Internationalization process, adaptation, exaptation, organizational learning Acknowledgements Only when you know your goal will the path appear. This dissertation has been a long time in the making, while it seems the details have not been clear to me. The backbone of the emotional support, time, and advice extends to my entire family. As a smart man once said, no words are needed. You know your impact. Looking back, most of my memories are filled with inspiring debate and successes. For this, I have my mentors to thank; Olli and Lasse provided the perfect balance of support, reservations, and praise for the process I was at times going through, from advice I did not apply to advice I needed. Especially, I would like to thank Olli for his relentless effort in and critique regarding my work, always on point, and reminding me how issues that made sense in my head do not to necessarily make sense to everyone, unless properly explained. Lasse provided me with encouragement regarding my capabilities and introduced me to the team, taking me under his wings like an older brother would. I would also like to thank Agnes, Hannes, and Iustin for their supportive discussion, understanding, and relatability on the issues I was facing. I do hope we will continue this in the future. Tanja and Vesa, thank you for your time and effort in early 2017. Further, the enablers of this dissertation are numerous. Aron, Maija, and Thommy, your emotional support has been beyond words. For the numerous supportive comments on my work, thanks to Eric, Pierpaolo, Gino, and Justin; and to the rest my limited amount of space does not let me name: thank you. I wish to continue our discussions in the future. A special thanks goes to Grazia – I cannot express the joy I felt when you told the publication of what I’ve seen as niche theory made it from your hands to the JIBS. This finalized my perspective on this dissertation, that there was something there. I have a special place in my heart for Jaquis and Seppo. Needless to say, I would also like to express my gratitude to my family. While too young to grasp, my children have unknowingly contributed to this work by providing me the needed space and focus, particularly since this work was completed during the historical COVID-19 epidemic. The Legos did also help prior, to focus on what is important. The advice and support given by my family are priceless. In fact, writing this is much harder than it seems. Johanna, I know you have been through this at a difficult time, I respect you a great deal. I do still mourn him too. Pertti, I know how much this means, finally I’m there! Arja – again, in the words of a wise man – you know your significance and you are the backbone of this family, and no words are needed. Suvi, among the wisest I know. You told me to remain the same and respect myself decades ago; it just took me a while to understand. Juho, thank you for always supporting my parenthood, despite our differences. Anttoni, you are too good. And finally, Otto and Emma: you are the best. Päivi Aaltonen, May 2020 Helsinki, Finland Contents Abstract Acknowledgements Contents List of publications 9 Abbreviations 10 List of figures and tables 12 1 Introduction 13 1.1 Background ............................................................................................. 13 1.2 Research objectives and methods ............................................................ 15 1.3 Definitions of the key concepts ............................................................... 17 2 Theoretical background 19 2.1 Internalization and internationalization ................................................... 19 2.2 Internationalization theories .................................................................... 20 2.2.1 Organizational learning in internationalization ........................... 21 2.2.2 Networks and environment in internationalization ..................... 23 2.2.3 Entrepreneurial behavior in internationalization ......................... 24 2.2.4 Future research agenda for internationalization .......................... 25 2.3 Exaptation-adaptation theory .................................................................. 28 2.3.1 Origins and definitions ................................................................ 29 2.3.2 Exaptation in economics ............................................................. 31 2.3.3 Exaptation and adaptation in internationalization ....................... 33 2.3.4 Future research agenda with exaptation and adaptation ............. 36 3 Research Methods 39 3.1 Study design ............................................................................................ 39 3.2 Empirical material selection .................................................................... 40 3.3 Literature reviews .................................................................................... 42 3.3.1 Publication I ................................................................................ 42 3.3.2 Publication II ............................................................................... 44 3.4 Empirical studies ..................................................................................... 48 3.4.1 Publication III ............................................................................. 48 3.4.2 Publication IV ............................................................................. 50 4 Results 52 4.1 Publication 1 ............................................................................................ 52 4.2 Publication II ........................................................................................... 56 4.3 Publication III .......................................................................................... 61 4.4 Publication IV .......................................................................................... 67 5 Conclusions 73 5.1 Theoretical contribution .......................................................................... 74 5.1.1 Conceptual contributions ............................................................ 74 5.1.2 Empirical contributions ............................................................... 76 5.2 Managerial implications .......................................................................... 77 5.3 Study limitations and future research ...................................................... 81 5.3.1 Study limitations ......................................................................... 81 5.3.2 Future study suggestions ............................................................. 83 References 87 Publications 9 List of publications This dissertation is based on the following papers. The rights have been granted by publishers to include the papers in the dissertation. I. Aaltonen, P. (2019). Sources for heterogeneity–A literature review on exaptation in economics. In Academy of Management Proceedings (Vol. 2019, No. 1, p. 15032). Briarcliff Manor, NY 10510: Academy of Management. II. Aaltonen, P. (2020). Piecing together a puzzle—A review and research agenda on internationalization and the promise of exaptation. International Business Review, 101664. III. Aaltonen, P., Torkkeli, L., & Worek, M. (2020). The effect of emerging economies operations on knowledge utilization: The behavior of international companies as exaptation and adaptation. In International Business and Emerging Economy Firms (pp. 49-87). Palgrave Macmillan, Cham. IV. Aaltonen, P., & Torkkeli, L. (2019). Microfoundations of novelty in foreign locations–Exaptation in first-time FDI modes. In Academy of Management Proceedings (Vol. 2019, No. 1, p. 13801). Briarcliff Manor, NY 10510: Academy of Management. Author's contribution Aaltonen is the principal author and investigator in papers I–VI. Paper I is a preliminary literature review of a primary theoretical concept used in this dissertation: exaptation. Aaltonen studied and analyzed the literature, and the paper was presented as a conference paper in the annual meeting of the Academy of Management, Boston in August 2019. Paper II is a continuation of paper I. Aaltonen has conducted a systematic review of the literature on internationalization, revised the analysis on exaptation, and concluded how and why the concept of exaptation would benefit from future studies on the internationalization process, creating a systematic research agenda for subsequent studies in internationalization. Paper II has been accepted for publication in the International Business Review on January 27th, 2020. Paper III is a book chapter illustrating an empirical study based on Paper II. Aaltonen has collected and analyzed empirical material with the help of Dr. Worek, and conducted the theoretical section of the paper jointly with Dr Torkkeli. Aaltonen remains the principal author in Paper III, by contributing 40% to the theoretical section and 60% to the empirical analysis. The paper has been published as a book chapter in International Business and Emerging Economy Firms by Palgrave Macmillan. In Paper IV, Aaltonen has assumed primary responsibility in collecting and analyzing the empirical material. The theoretical contribution of the paper was written jointly with Dr Torkkeli, and Aaltonen contributed to the section 50%. The paper was presented as a conference paper in the annual meeting of the Academy of Management, Boston in August 2019. Abbreviations 10 Abbreviations ANT Agent-Network Theory BG Born Global BTEF Behavioral Theory of the Entrepreneurial Firm BTF Behavioral Theory of the Firm CAGE Cultural, Administrative, Geographic and Economic differences CPP Conservative, predictable, and pacemaker firms CSA Country-specific Advantages EM Emerging Economies EM-MNEs Emerging Market Multinational Enterprises FDI Foreign Direct Investment FSA Firm-specific Advantages IB International Business IE International Entrepreneurship INV International New Ventures IP Internationalization Process JV Joint Ventures MNE Multinational Enterprises M&A Mergers and Acquisitions PUE Power Usage Effectiveness ROR Real Options Reasoning SME Small and Medium-sized Enterprises 11 SNI Serial Nonlinear Internationalizers OECD Organisation for Economic Co-operation and Development OLI Ownership, Location, and Internalization TCCM Theory, Context, Characteristics, and Methodology TCE Transaction Cost Economics List of figures and tables 12 List of figures and tables Figure 1. Summary of IP theories ................................................................................... 20 Figure 2. Exaptive and adaptive processes (Aaltonen, Torkkeli, & Worek, 2020) ........ 33 Figure 3. Linearity and non-linear events in internationalization .................................. 35 Figure 4. Summary of exaptation theory development (Aaltonen, 2020) ...................... 52 Figure 5. Development of operations (Publication III) .................................................. 66 Figure 6. Outcomes of Case I (Publication IV) .............................................................. 71 Figure 7. Outcomes of Case II (Publication IV) ............................................................. 71 Table 1. Examples of research questions and central themes......................................... 25 Table 2. Characteristics of exaptation and adaptation (Aaltonen, 2020)........................ 30 Table 3. Summary of theory constructs related to exaptation ........................................ 32 Table 4. Differences between exaptive and adaptive uses ............................................. 35 Table 5. Added value of the exaptation-adaptation theory to future studies on internationalization ......................................................................................................... 37 Table 6. Summary of empirical issues in internationalization ....................................... 41 Table 7. Data overview I (Publication I) ........................................................................ 42 Table 8. Data overview II (Publication I) ....................................................................... 43 Table 9. Data overview I (Publication II: Aaltonen, 2020) ............................................ 45 Table 10. Data overview II (Publication II: Aaltonen, 2020) ......................................... 47 Table 11. Data overview III (Publication III) ................................................................. 49 Table 12. Data overview IV (Publication IV) ................................................................ 51 Table 13. Empirical evidence on exaptation (Aaltonen, 2020) ...................................... 53 Table 14. Analysis of complementary literature on exaptation (Aaltonen, 2020) ......... 53 Table 15. Summary of TCCM analysis (Aaltonen, 2020) .............................................. 57 Table 16. Revised future research agenda with the exaptation-adaptation theory (Aaltonen, 2020) ............................................................................................................. 59 Table 17. Summary of findings (Publication III; Aaltonen et al., 2020) ........................ 62 Table 18. Summary of results (Publication III; Aaltonen et al., 2020) .......................... 65 Table 19. Summary of findings (Publication IV) ........................................................... 68 13 1 Introduction 1.1 Background International business research spans decades. The field has matured from understanding national competitive edge to understanding foreign direct investment (FDI) and multinational enterprises (MNEs), to discussing networks and the significance of subsidiaries (Rugman, Verbeke, & Nguyen, 2011). Organizational learning is central in several frameworks. While firm-specific advantages (FSA) (e.g., Rugman et al., 2011) are connected to investment management via organizational learning processes (e.g., Tsang, 1999, Figure 1., p. 93), the process theories (e.g. Johansson & Vahlne, 1977) build on top of ones. As increasing emphasis has been given to novel host country attributes, improving the understanding of the process of learning increases the understanding of the emergence and development of international competitive edge in unique and unpredictable environments. The concept of organizational learning, based on Darwinian adaptation, has been used in a multitude of academic paradigms since the 1960s (Cyert & March, 1963; Lewin & Volberda, 2003). In international operations, this behavioral perspective has served as a base for the internationalization process (IP). The Uppsala model (Johanson & Vahlne, 1977) represents the beginning of the IP theories (Rugman et al., 2011, p.762-763; Paul & Singh, 2017, Table 1, p. 2517), focusing on the dynamic process of learning and gradually increasing commitment in international operations (e.g., Welch et al., 2016; Rugman et al., 2011, p. 762; Vahlne & Johanson, 2013, 2014; Johansson & Vahlne, 1990, 2009). While a variety of theory constructs, such as international new ventures (INV) (Oviatt & McDougall, 1994), born global (BG) (Knight & Cavusgil, 2004), internationalization as an evolutionary process (e.g., Santangelo & Meyer, 2011, 2017; Cantwell, Dunning, & Lundan, 2010; Kogut & Zander, 1993), the CAGE (Cultural, Administrative, Geographic and Economic differences) and CPP (Conservative, predictable, and pacemaker firms) models (see Paul & Sánchez-Morcilio, 2018), have since been introduced, a similar procedural perspective remains the focal point (Santangelo & Meyer, 2011; Kogut & Zander, 1993; Bartlett & Ghoshal, 1989). Thus, the Uppsala model, the international entrepreneurship (IE) theories, that is, INV and BG, and internationalization as an evolutionary process can be considered IP theories, whereas, for example, FDI, FSA, and transaction cost economics (TCE) represent the traditional, internalization theories (e.g., Verbeke & Ciravegna, 2018; Rugman et al., 2011; Paul & Benito, 2018; Paul & Singh, 2017). Therefore, the focal point of this dissertation is directed towards the IP theories. In recent years, there has been an increased requirement to further develop frameworks for IP to better address remaining issues. One missing element is the description of Introduction 14 disruptive developmental patterns (Reuber, Dimitratos, & Kuivalainen, 2017; Santangelo & Meyer, 2011; Kriz & Welch, 2018). However, current theories are not capable of explaining discontinuous dynamics or providing a basis for empirical study design on the subject (e.g., Santangelo & Mayer, 2011; Schwens, Zapkau, Brouthers, & Hollender, 2018). Further, recent analyses point out additional gaps, such as explaining variety in the speed of internationalization (e.g., Li, Qian, & Qian, 2015; Reuber et al., 2017), the need for a theory construct suitable for both small and medium-sized enterprises (SME) and multinational enterprises (MNE) (e.g., Verbeke & Ciravegna, 2018; Laufs & Schwens, 2014; Chetty, Hendren, Kline, & Saez, 2014; Paul et al., 2017; Paul & Sánchez-Morcilio, 2018; Paul & Rosado-Serrano, 2019; Santangelo & Meyer, 2017), and the need to emphasize context, variety, and dynamics in the processes (Reuber et al., 2017; Welch et al., 2016). While agreed that current theories require revision or novel frameworks, dichotomies exists (see e.g., Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018; Knight & Liesch, 2016; Reuber, Knight, Liesch, & Zhou, 2018; Kriz & Welch, 2018; Rialp, Rialp, & Knight, 2005), resulting in a lack of general consensus on how to address the issues. For example, the differences in the speed of internationalization are linked to the Uppsala model, and on IE theories, (e.g., Paul & Rosado-Serrano, 2019). However, it has been pointed out that such division may not be needed (e.g., Verbeke & Ciravegna, 2018) and that the focal point should be on additional or novel measures for time (e.g., Li et al., 2015; Reuber et al., 2017). Further, it is unclear how to define firms behaving according to one framework or the other (Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018). Therefore, in order to advance the IP theories, a more in-depth meta- analysis of the existing literature would be beneficial to evaluate existing gaps (Paul et al., 2017), including the Darwinian origins, adaptation. Another Darwinian concept, also used in behavioral theories, might provide novel insight to learning in international operations. Recently introduced to economics and international operations, exaptation (Gould & Vrba, 1982; Dew et al., 2004, 2008; Santangelo & Stucchi, 2018) describes a shift in the function of an existing artifact, such as the development of flight. The original purpose of feathers was thermal insulation (Gould & Vrba, 1982). This has inspired the framing of exaptation as “I have a solution - what is the problem I solved?” (Andriani & Cattani, 2016), illustrating how existing capabilities may be repurposed to additional uses (Marquis & Huang, 2010). Recent literature suggest that exaptation explains heterogeneity (Grandori, 2007; Felin, Kaufman, Mastogiorgio, & Mastogiorgio, 2016), is a mechanism behind global strategies (Ching, 2016), and explains how firms cope with competency gap in first-time, cross- border mergers and acquisitions (M&As) (Santangelo & Stucchi, 2018). Additionally, exaptation may have a greater explanatory potential in international operations as host- country context may induce ones (Santangelo & Stucchi, 2018; Levinthal, 1998). Hence, the most notable potential of the concept in advancing IP theories lies in the concepts capability to explain disruptive patterns, behavior under uncertainty, and elaborating the impact of host country to operations. Further, a similar concept had been suggested earlier to complement existing internationalization theories (Santangelo & Meyer, 2011, 2017; Hadjikhani, Hadjikhani, & Thilenius, 2014), despite lacking subsequent studies. Recent 15 literature suggests understanding exaptation would benefit from the simultaneous usage of adaptation, as the concepts are complimentary (see Lloyd & Gould, 2017). This suits the IP theories perspective by following behavioral theories. However, the theory potential of exaptation and adaptation has not been systematically evaluated, and empirical evidence of increased understanding of a phenomenon by using the theory in international operations is scarce. 1.2 Research objectives and methods To fully comprehend the literature gaps in IP theories and the limitations of current theories, a meta-analysis would be beneficial (Paul et al., 2017). Further, a systematic evaluation of the theory potential of exaptation and adaptation might provide novel explanatory mechanisms to gaps current constructs are unable to address. In addition to this, empirical studies using the theory to address the gaps could validate the conclusions. Thus, the objective of this dissertation is two-fold. First, it addresses the question: what are the mutually agreed gaps in IP literature, and what are the limitations of the current theories? Second, what are the advances in utilizing the exaptation theory in addressing these gaps, and how does empirical evidence illustrate this? As the theoretical perspectives incorporated are numerous, the design of a literature review section requires customization. Initially, a preliminary exploratory review on exaptation should be conducted, to clarify definitions and theory usage (Lloyd & Gould, 2017), to serve as an introduction. Due to the novelty of the concept of exaptation in economics, no complete literature review exists (to an extent, see Andriani & Cattani, 2016), and recognizing exaptation is prone to misinterpretation (Lloyd & Gould, 2017; Andriani, Ali, & Mastrogiorgio, 2017). Hence, a general understanding of the concept would also benefit subsequent studies on the matter (e.g., Strauss & Corbin, 1994). To address the first objective, a full systematic review (e.g., Tranfield, Denyer, & Smart, 2003) comparing the literatures, following a suitable review protocol, should be carried out. The theory, context, characteristics, and methodology (TCCM) protocol (e.g., Paul & Rosado-Serrano, 2019) would be suitable for reviewing multidisciplinary perspectives (see e.g., Singh & Dhir, 2019), and is also used in internationalization reviews (Paul & Rosado-Serrano, 2019). To beginn addressing the second objective, an analysis of the literature on exaptation-adaptation and the literature on IP should be compared based on the model in order to create a joint future research agenda (Paul & Rosado-Serrano, 2019), creating questions suitable for empirical study design. To fully address the second objective, two empirical studies were conducted. Further, study recommendations on empirical material based on IP literature were followed. Examples of such were aiming for a multilevel approach, focusing on emerging markets, and focusing on less studied contexts (e.g., Reuber et al., 2017; Paul et al., 2017; Paul & Introduction 16 Benito, 2018). The questions for the studies were loosely formulated as follows: First, what is the significance of exaptations in longitudinal global strategy development in emerging markets? This followed two important notions: the findings on exaptations in internationalization (Santangelo & Stucchi, 2018) contradict ones in home-country context (e.g., Marquis & Huang, 2010; Cattani, 2006), and exaptations seem less significant than what theories predict (Levinthal, 1998; Santangelo & Stucchi, 2018). Hence, addressing the potential theoretical understanding would serve as a beneficial starting point from a macro-level perspective. Second, why do intentions at the outset of an investment project differ from the actual operations established (Santangelo & Meyer, 2011)? This addresses a widely recognized issue (e.g., Schwens et al., 2018), which is predicting outcomes that differ from the intended falls beyond the explanatory capabilities of the current IP theories (Santangelo & Meyer, 2011), also called disruptive patterns (Santangelo & Meyer, 2017; Santangelo & Stucchi, 2018). The antecedents of perceived patterns of internationalization lie in the experiential learning processes and knowledge transfer to globally exploitable outcomes from locationally created ones (e.g., Eriksson, Johanson, Majkard, & Sharma, 1997; Schwens et al., 2018), yet micro-level origins are not fully understood (Schwens et al., 2018). Hence, addressing individual learning processes and unpredicted outcomes would add insight into the matter. Further, the focal point would be on firm and individual investment levels, following the recommendation of aiming for a multilevel perspective (e.g., Reuber et al., 2017). In order to understand longitudinal change, the focus was on product development in the first empirical study (Cattani, 2006; Berends, Jelinek, Reymen, & Stultiëns, 2014; Andriani et al., 2017; Hargadon & Sutton, 1997), which used a comparative historical case study method (Eisenhardt, 1989; Eisenhardt & Graebner, 2007; Siggelkow, 2002; Yin, 2011). The cases selected illustrate the internationalization process over a period of four or more decades from developed regions (Austria) to emerging economies, mainly the Czech Republic, China, and India. To continue with introducing exaptation to international operations (Santangelo & Stucchi, 2018), a longitudinal empirical study of internationalization in emerging economies would provide potential explanations to the question presented by following a similar empirical context as well. Most notably, the perspective should provide answers to the issue, do exaptations disappear in international operations context, emphasizing the significance of ones in international operations. In the second empirical study, two cases of new market entry of firms lacking previous experience of the selected FDI mode, that is, M&As (Mergers and Acquisitions), greenfields, JVs (Joint Ventures), or brownfields (Cheng, 2006; Gorg, 2000), were selected. These were the construction projects of data centers in Finland by IBM and Google, which are examples of exploitative FDI (e.g., Le Bas & Sierra, 2002), that is, brownfield investments. As the intended solutions differed greatly from the final project outcome and were well documented, the cases suited the research question. Exploitative FDI may lessen the control of operations in subsidiaries (e.g., Anand, Mesquita, & Vassolo, 2009; Lecraw, 1993), yet the significance of varied experience in location-bound learning could benefit from additional understanding (e.g., Helfat & Lieberman, 2002; 17 Felin et al., 2016; Hennart & Reddy, 1997). Exploring the projects in detail would help emphasize the processes underlying unpredicted outcomes. 1.3 Definitions of the key concepts The key concepts illustrate how the terminology used is understood in this dissertation. The main concepts are internationalization, exaptation, adaptation, linearity, and non-linearity in international operations, that is, entry and emergent use. First, internationalization is defined as a “cumulative, path-dependent process, whereby a firm’s international expansion behavior is a function of its past and surroundings” (Rugman et al., 2011, p. 762; Johanson & Wiedersheim‐Paul, 1975; Johansson & Vahlne, 1977; Helfat & Lieberman, 2002; Schweizer, Vahlne, & Johanson, 2010). This enables the inclusion of, for example, the Uppsala model, IE theories, and internationalization as evolutionary processes under the same definition. Further, it emphasizes the significance of past events, external impacting factors, and the cognitive and behavioral elements within a firm. Moreover, it does not exclude, for example, market exit nor re-entry (e.g., Chen, Sousa, & He, 2019), or disruptive patterns. Second, exaptation and adaptation are used to differentiate between two concepts for clarification. Adaptation and exaptation are not behaviors, despite illustrating ones in firms (see behavioral theory of the firm, BTF; Cyert & March, 1963; behavioral theory of the entrepreneurial firm, BTEF; Dew, Read, Sarasvathy, & Wiltbank, 2008). Adaptation is fit due to design (Andriani & Cattani, 2016); in other words, a feature is selected for its benefits (e.g., Lloyd & Gould, 2017). Exaptation is defined as traits that “…are fit for their current role, hence aptus [“fit”], but they were not designed for it, and are therefore not ad aptus [“ad-fit”]. They owe their fitness to features present for other reasons, and are therefore fit aptus by reason of ex their form, or ex aptus” [“ex-fit”] (Gould & Vrba, 1982, p.6, brackets added). Due to this, exaptation and adaptation differ in their past function – while adaptation has a similar function exaptation has a largely different one (Gould & Vrba, 1982; Lloyd & Gould, 2017). Hence, they are defined based on each other and are dependent on the context. However, a single adaptive event does not exist. A cumulative path with little variance can be considered adaptation (Lloyd & Gould, 2017); thus, adaptation consists of sequential events (e.g., Campbell, 1969 on variance, selection, and retention). Moreover, the contrary applies to exaptation, which is a singular event where a shift in function occurs, and secondary events tend to follow adaptation. The usage of exaptation and adaptation requires a slightly differing conceptualization of linearity and non-linearity, or disruptive patterns in internationalization, than in some current theories in internationalization. Linearity in internationalization is understood here as adaptation, whereas non-linearity, or disruptive events as exaptation. Adaptation forms a linear pattern, whereas exaptation Introduction 18 illustrates where a novel path begins (e.g., Campbell & Reece, 2003), also potentially continuing as a linear pattern (“secondary adaptation,” Lloyd & Gould, 2017; Andriani & Cattani, 2016). While the Uppsala model has been referred to as linear internationalization (Santangelo & Meyer, 2017), it is not considered fully synonymous here. Based on the evolutionary concepts, other IP theories may also describe linearity in this sense. For example, linearity may or may not form rapidly, which is evident in the evolution of species that have not evolved a lot since the dinosaurs, for example, crocodiles, when compared to the speciation of finches in island regions. Hence, linearity and non-linearity are understood based on cumulative sequential events in internationalization (e.g., Welch et al., 2016, p. 797; Verbeke & Ciravegna, 2018, p. 388), not as connected to existing models in IP. This is in line with previous studies, as opposed to linear internationalization, non-linear events are described as path-breaking, creating novelty, and quirky (Santangelo & Meyer, 2017). However, this usage differs partially from non-linear internationalization (also, e.g., Åkerman, 2015), such as repetitive non- linear internationalization (serial nonlinear internationalizers or SNIs, e.g., Vissak & Francioni, 2013; Chen, Sousa, & He, 2019). Market exit and re-entry can be examples of non-linear events in internationalization, yet a repetitive similar pattern does tend to suggest adaptive development (see Lloyd & Gould, 2017) and, therefore, linear internationalization. Differentiating between adaptation and exaptation can be subjective and context- dependent (Andriani et al., 2017). However, the uses of artifacts such as inventions can be categorized to aid this. They have a use and are designed for entry uses. From this, new ideas for variations for the use can emerge, which are termed as emergent uses (e.g., bricolage, see Baker & Nelson, 2005). Nonetheless, both of the above results form adaptive patterns (estimated to constitute 70% of uses, see Andriani et al., 2017). The rest are exaptive, yet also may have various degrees impacting especially empirical study design. In international operations, it is likely that an entry use exists (Santangelo & Stucchi, 2018); therefore, international entry creates an environment potentially inducing both emergent and exaptive uses (Levinthal, 1998) due to the uniqueness of the context (e.g., Erikkson et al., 1997). Further, exaptations in internationalization may have gone unnoticed; the perception of exaptations may be hindered by experience (Felin et al., 2016), making the concept of exaptation potentially highly significant for gaining new insight into the process of internationalization. 19 2 Theoretical background 2.1 Internalization and internationalization International business theories have developed from a country-level analysis to firm-level and subsidiary-level analysis (Rugman et al., 2011). Since the 1970s, two parallel streams have emerged: Internalization and internationalization. The former builds upon TCE (e.g., Verbeke & Ciravegna, 2018, p.388; Contractor, 2007), while the latter builds upon the Uppsala model (e.g., Rugman et al., 2011). Drawing a clear line between individual theory constructs is to some extent subjective. In the 1960s, the focal point shifted toward firm-level analysis and the understanding of FDI and FSA (e.g., Hymer, 1976; Dunning, 1977,1988, 1998; Paul et al., 2017). This was further elaborated with the inclusion of country-specific advantages (CSA) (e.g., Rugman, 1981; Rugman et al., 2011; Kogut & Singh, 1988), and the ownership, location, and internalization (OLI) theory (Dunning, 1977, 1988; Hill, Hwang, & Kim, 1990). The OLI components describe existing assets, and the creation and transferring of FSAs, while also incorporating CSAs (e.g., Narula, 2012; Dunning & Narula, 1995; Patel & Vega, 1999). Somewhat simultaneous to the OLI perspective, the Uppsala model (Johanson & Wiedersheim-Paul, 1975; Johanson & Vahlne, 1977) was introduced. Originally, the Uppsala model contradicted prior theories (Rugman et al., 2011; Paul et al., 2017), and it was intended to be a response to studies conducted in large corporations (Johanson & Wiedersheim-Paul, 1975; Vahlne & Johanson, 2013), following classic behavioral theories, such as BTF (Cyert & March, 1963). However, whether or not the Uppsala model represents traditional international business (IB) theories (e.g., Knight & Cavusgil, 2004; Verbeke & Ciravegna, 2018) is a subject of debate. On the contrary, other authors consider the FDI, FSA, CSA, and OLI perspectives to clearly represent the development of the internalization theory stream (especially see Rugman et al., 2011, p.762-763; Paul & Singh, 2017, Table 1, p. 2517), where the Uppsala model illustrates the beginning of the internationalization perspective. Following the critique on the Uppsala model analysis (e.g., Welch et al., 2016), the conclusion is that the Uppsala model notes the beginning of 2 Theoretical background 20 the internationalization stream. The literature in this dissertation is summarized in Figure 1. 2.2 Internationalization theories The Uppsala model (Johansson & Vahlne, 1977, 2009) is one of the most influential ones among internationalization process theories (e.g., Rugman et al., 2011). “Its importance to the IB field cannot be understated” (Welch et al., 2016, p.783), and is considered a starting point for the behavioral perspective in IP. Over the last decades, the Uppsala model has inspired a growing stream of literature with three focal points: entrepreneurship, organizational learning, and inter-organizational networks or organizational environment. As highlighted in Figure 1, the Uppsala model later inspired the emergence of IE theories, such as INV (e.g., Oviatt & McDougal, 1994) and BGs (Knight & Cavusgil, 2004; Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018; Rugman, Verbeke, & Nguyen, 2011; Rialp, Rialp, & Knight, 2005; Schweizer, Vahlne, & Johanson, 2010; Jones, Coviello, & Tang, 2011; Vahlne & Johanson, 2017). In addition to these, a networking (Johanson & Wiedersheim‐Paul, 1975; Eriksson et al., 1997; Johanson & Mattsson, 1988; Hutzschenreuter & Matt, 2017; Johanson & Vahlne, 2009) or organizational environment emphasizing approach in the theories can be seen, connected further to describing internationalization as an evolutionary process (e.g., Santangelo & Meyer, 2017; Vahlne & Johanson, 2017; Contractor, 2007). Somewhat distinct from this, a focal point more guided toward individual decision-making and micro-level learning processes and behavior (Welch et al., 2016; Vahlne & Johanson, 2013, 2014; Reuber et al., 2017; Cavusgil, 1980) is also evident. With increasing analysis of past literature, the focus to between gradual (following the Uppsala model) and rapid internationalization (suggested first by the INV/BG) is evident (e.g., Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018; Knight & Liesch, 2016; Reuber, Knight, Liesch, & Zhou, 2018; Kriz & Welch, 2018; Rialp, Rialp, & Knight, Figure 1. Summary of IP theories 2.2 Internationalization theories 21 2005). Admittedly, the positioning raises important issues for discussion, yet it does not fully incorporate additional perspectives emphasized. The Uppsala model essentially represents a learning process based on behavioral theories (Cyert & March, 1963; Welch et al., 2016), following decision-making theories of multiple entries closely (e.g., Poole & Van de Ven, 2010). Here, the primary focus is on the predictable and cyclical learning processes of individuals. The IE perspectives, however, draw much from entrepreneurship literature (Reuber et al., 2018; Keupp & Gassmann, 2009; Schweizer, Vahlne, & Johanson, 2010), such as effectuation logic (e.g., Sarasvathy, 2001, 2005a, 2005b; Read, Dew, Sarasvathy, & Venkataram, 2009; Berends et al., 2014; Kalinic, Sarasvathy, & Forza, 2014). However, this can also be understood as a complementary behavioral approach (following BTEF, Dew et al., 2008) to organizational learning (following BTF, Cyert & March, 1963). Therefore, rather than being contradictory, entrepreneurial behavior adds to the latter (Johanson & Valhne, 2006). Further, both acknowledge the significance of external impact (e.g., Johanson & Mattsson, 1988; Hutzschenreuter & Matt, 2017; Johanson & Vahlne, 2009; Reuber et al., 2017), yet the evolutionary perspective almost exclusively draws from this (e.g., Santangelo & Meyer, 2017; Vahlne & Johanson, 2017; Contractor, 2007; Cantwell et al., 2010). Thus, the theories tend to incorporate elements from three varieties of additional paradigms, while maintaining the underlying assumption of a cumulative, path-dependent process. Hence, these are understood here as distinct varieties in the literature. 2.2.1 Organizational learning in internationalization Predicting learning outcomes is challenging. The process of learning can be illustrated through a simple process, increased knowledge leads to learning (e.g., Johanson & Vahlne, 2009; Cyert & March, 1963; Lewin & Volberda, 2003). However, additional outcomes, such as the impact on building trust and commitment, cannot easily be predicted (Johanson & Vahlne, 2009). Further, each host country’s context is unique and unpredictable (Erikkson et al., 1997; Santangelo & Stucchi, 2018). The Uppsala model describes a cumulative process of increasing knowledge and commitment (e.g., Johanson & Vahlne, 1977; Johanson & Vahlne, 2006; Vahlne & Johanson, 2014). It illustrates four stages of commitment in international operations, and learning based on prior experiences increases commitment in international operations (Johanson & Vahlne, 1977, 2006, 2009; Schwens et al., 2018; Paul & Rosado-Serrano, 2019; Helfat & Lieberman, 2002; Hennart & Reddy, 1997). This can be described as a development from export to FDI to subsidiary construction. The illustration of stages and defining the process through a stage model have received much criticism (e.g., Andersen, 1993; Turnbull, 1987; Bell, 1995; Axinn & Matthyssens, 2002), yet recent reviews note this is due to the perception of the model during the time of its critique (e.g., I-model, Welch et al., 2016; Cavusgil, 1980). It has been argued that rather than perceiving the model as a neo-classical representation, the focal point should be more on the behavioral 2 Theoretical background 22 aspects and the learning processes (Welch et al., 2016; Vahlne & Johanson, 2013, 2014; Johanson & Vahlne, 1990, 2009; Santangelo & Meyer, 2011, 2017). Central to learning in international operations is learning based on prior experiences, that is, experiential learning (e.g., Johanson & Vahlne, 1977; Eriksson et al., 1997). In international operations, learning is connected to balancing ambidexterity (e.g., O’Reilly & Tushman, 2013; Birkinshaw & Gupta, 2013), or exploitation and exploration (March, 1991). However, the exploitation and exploration strategies (Le Bas & Sierra, 2002) evaluate FDI management than the learning processes of individuals. Location-bound and non-location-bound knowledge can be differentiated on individual firm-level and micro- level learning processes (e.g., Schwens et al., 2018). Location-bound knowledge is specific knowledge gained from a particular location, whereas non-location-bound knowledge is exploitable globally (e.g., Schwens et al., 2018), also described as mode- specific knowledge (Clarke et al., 2013; Hutzschenreuter & Matt, 2017). In internationalization, as locations are to a degree unique (Ekriksson et al., 1997; Johanson & Vahlne, 2009; Vahlne & Johanson, 2017), a variety in experiences and modes (also, non-FDI) may increase the transfer capability of locational experiential knowledge to benefit globally (Schwens et al., 2018; Buckley, Clegg, Cross, Liu, Voss, & Zheng, 2007; Helfat & Lieberman, 2002). Hence, increase in a variety of experiences is potentially connected to the degree of commitment in international operations (e.g., Johansson & Vahlne, 1997; Helfat & Lieberman, 2002; Hennart & Reddy, 1997). However, the process of learning based on this does not greatly illustrate the potential origins of radically novel solutions and unintended outcomes. In fact, the association of previous experience is occasionally connected to less optimal solutions (e.g., Felin et al., 2016; Garud et al., 2016), due to cognitive biases. Besides the intentional accumulation of knowledge, other processes that increase experiences also exist, such as mimicry (Anand, Mesquita, & Vassolo, 2009) and external impact (e.g., March, 1991; Lecraw, 1993). Explorative modes of FDI may result from mimicking other firms, whereas exploitative FDI may be pursued with less precaution (Anand et al., 2009; Lecraw, 1993). Organizational theories also note the impact of norms on firm behavior (e.g., DiMaggio & Powel, 1983), and behavioral theorists note the occasional significance of external impact (“jolt,” see March, 1991; Alrdich & Rueff, 2006) on organizational decision-making processes. Hence, while the perspective of organizational learning is relatively simple, the potential limitations arise from the same source. Further, behavioral theories emphasize the limitations of rationality in creating goals, limiting the search for solutions to such goals (Cyert & March, 1963; Felin, Kauffman, Koppl, & Longo, 2014). Studies in internationalization follow this, as mimicry is an example of a limited goal, that is, the aim is to create a solution already loosely known, thus limiting to gaining experiential locational knowledge with a wider perspective (Dew et al., 2008; Anand et al., 2009). 2.2 Internationalization theories 23 2.2.2 Networks and environment in internationalization The emphasis on networks widens the perspective of individual learning processes. In essence, networks consist of actors that are, to a degree, external from the firm, hence, the co-ordination of such may be crucial (e.g., Johanson & Vahlne, 2003). Networks illustrate the environment of actors in which organizations operate (e.g., Latour, 2005), also comparable to an ecosystem (e.g., Santangelo & Meyer, 2011, 2017; Contractor, 2007; Vahlne & Johanson, 2017). Organizational environments are often unique (Ekriksson et al., 1997; Johanson & Vahlne, 2009; Vahlne & Johanson, 2017), and describing firm behavior in such environments is strongly connected to organizational learning processes (Johanson & Mattsson, 1988; Eriksson et al., 1997; Johanson, Majkgard, & Sharma, 1997; Vahlne & Johanson, 2013; Lewin & Volberda, 2003), yet this adds complexity to theory constructs. An organizational environment can be described with a variety of simultaneous concepts. The socio-technological landscape (e.g., Geels, 2004), illustrates the history, politics, social norms, and technology related to a macro-level industry environment, whereas the perspective of an ecosystem and networks related to international operations tend to focus on a more defined context, such as actors directly connected to the organization (e.g., Santangelo & Meyer, 2011, 2017). Examples of models following a similar perspective are the CAGE and CPP models (Paul & Sánchez-Morcilio, 2018). The latter combines SMEs and MNEs under one model, following a conceptualization similar to cultural distance (e.g., Hofstede & Hofstede, 2005) and institutional context (Santangelo & Meyer, 2011, 2017). Therefore, while the process of learning may be illustrated similar to behavioral theories (e.g., Cyert & March, 1963), the limitations and enablers as well as the external impact of actors may create outcomes differing from predicted learning cycles (Santangelo & Meyer, 2011, 2017). The perspective of networks and organizational environment emphasizes the dynamic and developing nature of internationalization as well as the constraining and enabling organizational ecosystem (Santangelo & Meyer, 2017). Hence, it adds to the learning perspective the limitations and potential opportunities revealed by external actors (Felin et al., 2016). In addition to this, the organizational environment is uncertain and unpredictable (e.g., Liu & Almor, 2016), which is also an important notion in studies focusing on emerging market multinational enterprises (EM-MNEs) (e.g., Guillén & García-Canal 2009; Ramamurti, 2012) and cross-cultural analysis (e.g., Tung & Verbeke, 2010). While the significance of networks has long been a part of the Uppsala model (Johanson & Matsson, 1988; Vahlne & Johanson, 2013, 2014, 2017; Santangelo & Meyer, 2017), the impact of decreasing commitment remains less clear (Santangelo & Meyer, 2011), and the lack of theories related to development in an ecosystem (Contractor, 2007; Johanson & Vahlne, 2017) has only recently gained more conceptual tools (Santangelo & Meyer, 2017; Santangelo & Stucchi, 2018), to pursue further theory additions (e.g., Paul & Sánchez-Morcilio, 2018). 2 Theoretical background 24 Due to the potential complexity and multilevelness of the concepts “networks” and “organizational environment,” a conceptualization of a defined business ecosystem (e.g., Korhonen & Snäkin, 2005), following the perspective of internationalization as an evolutionary process (e.g., Santangelo & Meyer, 2011, 2017; Contractor, 2007; Vahlne & Johanson, 2017; Cantwell, et al., 2010) would increase the understanding of complex organizational environments present in the host-country context. However, organizational learning theories represent the individual behavior within an organization. Following this, the cyclical perspective of learning would require an additional pattern than the predictive, risk minimizing perspective of the Uppsala model to further capture the reality of operations (e.g., Santangelo & Myer, 2011). 2.2.3 Entrepreneurial behavior in internationalization Entrepreneurial behavior in internationalization follows a distinct path that differs from organizational learning and network perspectives, while all have points of connection. Entrepreneurship is connected to early internationalization (e.g., Knight & Cavusgil, 2004), rapid internationalization (Paul & Rosado-Serrano, 2019; Cavusgil & Knight, 2015), and to a behavior that is to a degree unpredictable but significant in opportunity recognition (Reuber et al., 2018; Sarasvathy, 2001, 2005a, 2005b; Dew et al., 2008; Dew & Sarasvathy, 2016; Keupp & Gassmann, 2009). Oviatt and McDougal (1994) introduced the concept of INV, and later Knight and Cavusgil (2004) were credited with introducing the concept of BG (Rialp et al., 2005; Johanson & Vahlne, 1990; Cavusgil & Knight, 2015). However, similar to the introduction of the Uppsala model, the term BG had already been suggested previously (e.g., Rennie, 1993). INVs and BGs expand globally in a relatively short time period (Paul & Rosado-Serrano, 2019, Fig. 1; Rialp et al., 2005; Schweizer et al., 2010; Paul et al., 2017; Verbeke & Ciravegna, 2018; Laufs & Schwens, 2010; Cavusgil & Knight, 2015). This demonstrates either the capability to learn rapidly or not aiming to learn as much; hence, decisions may be risky (e.g., Santangelo & Meyer, 2017; Liu & Almor, 2016; Liesch, Welch, & Buckley, 2011). However, there are a few controversial issues in the approach, such as the definition of BGs (Paul & Rosado-Serrano, 2019), the importance of variety in the speed of internationalization (Verbeke & CIravegna, 2018; Li et al., 2015), and whether the perspective is universal for all firms (Paul et al., 2017; Paul & Sánchez-Morcilio, 2018). Nonetheless, these critiques resemble ones aimed in general at entrepreneurship theories, despite existing since Schumpeter (1912). For example, one of the popular models of international opportunity perception is effectuation logic (Reuber et al., 2018; Sarasvathy, 2001, 2005; Read et al., 2009; Dew et al., 2008; Read et al., 2016; Arend, Saroogi, & Burkemper, 2015), in addition to bricolage (e.g., Baker & Nelson, 2005). It has been stated that 63% of experts use effectuation 75% of the time (Sarasvathy, 2001), but research has yet to indicate 2.2 Internationalization theories 25 why or who engage in such behavior (Read et al., 2016), and a prior perspective of young firms having increased entrepreneurial tendencies (Read et al., 2009; Dew et al., 2008) has been challenged (Read et al., 2016; Ganzaroli & Pilotti, 2014). Understanding entrepreneurial behavior in internationalization illustrates a potential perspective to understanding novelty in internationalization patterns. However, the origins of novelty may not systematically lie in firm attributes, and the conceptualization of novelty, and non-novelty, as well as the inclusion impact of uncertainty and organizational surroundings or external impact would advance the perspective. 2.2.4 Future research agenda for internationalization The literature on internationalization consists of three focal points. The learning approach follows closely the Uppsala model, illustrating a cyclical learning process. The challenges of the perspective are the limitations of conceptualizing cognitive processes connected to learning with a singular pattern. The networks and environment stream expand on the learning approach by combining inter-firm interactions and external forces in more detailed analysis, yet, the complex context studied is not consistent with definitions and operationalization. The entrepreneurial perspective challenges the cyclical model of decision-making following entrepreneurial behavioral theories; however, the ambiguity of constructs has created criticism toward the model. Hence, creating a joint agenda incorporating the varieties of literature streams in internationalization would illustrate missing constructs, but would also emphasize the complementary nature of the existing theories. In the past years, several research agendas have been published, and the Uppsala model was revised (e.g., Welch et al., 2016; Rosado-Serrano et al., 2018; Paul et al., 2017; Paul & Rosado-Serrano, 2019; Laufs & Schwens, 2014; Reuber et al., 2017; Forsgren & Johansson, 2010; Johansson & Vahlne, 2013, 2014; Johansson & Vahlne, 1990; Jones et al., 2011). However, none explicitly focus on internationalization theories as a whole (e.g., Welch et al., 2016 focuses on the Uppsala model). Moreover, the inclusion of disruptive developmental patterns is somewhat universal to all perspectives of internationalization. Nonetheless, the agendas have provided several questions for future studies, both for conceptual and empirical approaches. These can be divided based on their perspective under the categories of cognitive and social perspectives, longitudinal dynamics, and environment interactions. Examples of research questions and authors are provided in Table 1. Table 1. Examples of research questions and central themes ID Cognitive and sociological perspectives Author examples 2 Theoretical background 26 How do the conditions of particular decision situations, and the styles of individual decision-makers, affect the knowledge-commitment cycle? Johanson & Vahlne, 2013, 2014 What are the processes linking market knowledge and market commitment, and commitment decisions and current activities? Forsgren & Johanson, 2010 How sociocultural and sociolinguistic differences in the theoretical constructs related to opportunities affect the ways they are perceived and pursued? Reuber et al., 2017 Entrepreneurial characteristics influence on internationalization Paul et al., 2017 Longitudinal dynamics How does the knowledge-commitment cycle evolve over time? Johanson & Vahlne, 2013, 2014 The perception and pursuit of opportunities as sequences of duration events over time Reuber et al., 2017 What can we learn by studying the dynamic mechanisms involved? Welch et al., 2016 How can we account for both stability and change when explaining how internationalization evolves over time? Welch et al., 2016 How can the perception and pursuit of opportunities stabilize, destabilize, and restabilize organizations? Reuber et al., 2017 How can we go beyond studying changes in modes and new market entries to other events and sequences? Welch et al., 2016 Organizational environment interactions Under what circumstances does greater market knowledge not lead to greater commitment to foreign operations and markets? Johanson & Vahlne, 2013, 2014 How do internationalization processes intersect—and collide—with other processes occurring with the firm and the network? Welch et al., 2016 How do firms deal with the tensions and contradictions that these interdependent but possibly conflicting forces produce? Welch et al., 2016 How organizational and inter-organizational practices and routines affect and are affected by the perception and pursuit of opportunities? Reuber et al., 2017 How the perception and pursuit of opportunities affect, and are affected by, factors at other levels of analysis? Reuber et al., 2017 2.2 Internationalization theories 27 How are firm internationalization processes ”related to surrounding processes, that is, market or network internationalization, industry internationalization, technical development, concentration as well as deconcentration processes?” Johanson & Vahlne, 1990 The inclusion of disruptive patterns to internationalization process Why do intentions at the outset of an investment project differ from the actual operations established? Santangelo & Meyer, 2011 Why do firms not appear to learn from non-FDI contractual entry modes? Schwens et al., 2018 In addition to these, issues have been raised regarding the inclusion of SME to theories (Paul et al., 2017; Laufs & Schwens, 2014), and recommendations made regarding empirical material selection. Further, no particular research agendas have been constructed regarding internationalization as an evolutionary process (Santangelo & Meyer, 2017; Contractor, 2007). Addressing the first objective of this dissertation: what are the mutually agreed gaps in IP literature, and what are the limitations of the current theories? Analyzing Table 1, the questions suggested with existing internationalization theories have some limitations. First, the incorporation of the wide and complex theory constructs to behavioral approaches is challenging. Examples are individual decision-making (Johanson & Vahlne, 2013, 2014), the perception of opportunities and interpreting subjectivity in decisions (Forsgren & Johanson, 2010; Welch et al., 2016) using the Uppsala model. Recent studies conclude the model cannot explain location-bound learning processes (Schwens et al., 2018), and explaining decision-making with a commitment-learning cycle, that is, single-loop learning (e.g., Lewin & Volberda, 2003, p. 575) presents a narrow view for observations (see for comparison e.g., Poole & Van de Ven, 2010; Hodginson & Starbuck, 2008). Further, the inclusion of multiple context elements, such as organizational interactions (Welch et al., 2016), multi-level analysis (Reuber et al., 2017; Johansson & Vahlne, 1990), and environmental limitations (Santangelo & Meyer, 2017) would require clearer definitions (Axinn & Matthyssens, 2002). The socio- technological landscape includes a variety of impact factors (e.g., Geels, 2004; Autio et al., 2014), and very few models exist, in general, for empirical operationalization and study (e.g., Hirsch, Fiss, & Hoel-Green, 2009). This indicates the need for either existing additional theories enabling the inclusion of such constructs, or rigor characterization and definitions of new elements incorporated into existing frameworks. Second, there has been an increased requirement to incorporate concepts not existing in the models. Examples of such are the inclusion of change in the Uppsala model (Welch et al., 2016) and into the stable model, sequential events (Reuber et al., 2017), practices, routines and stabilization, destabilization, and restabilization (Reuber et al., 2017; Welch et al., 2016; see for comparison e.g., Hannan & Freeman, 1984; Tsoukas & Chia, 2002; Burgelman, Floyd, Laamanen, Mantere, Vaara, & Whittington, 2018). Further, in conceptualizing internationalization as an evolutionary process (Santangelo & Meyer, 2 Theoretical background 28 2017; Johansson & Vahlne, 2013, 2015; Contractor, 2007), the concepts are relatively loosely defined in terms of evolution (see e.g., Campbell, 1969; Gould & Vrba, 1982; Gould, 2002; Campbell & Reece, 2003). However, this is also true in IE, as the definitions of BGs are a focal point for much critique (e.g., Verbeke & Ciravegna, 2018; Paul & Rosado-Serrano, 2019). In addition to the aforementioned, it should be noted that while the limitations discussed here are not related only to the limitations of the Uppsala model and the IE theories, they are similar across the IP stream. To address these issues, a clarified concept is required and a metatheoretical approach needs to be used to answer the question: What is the question that should be asked, and can the question be answered with the existing frameworks? A prominent example of this is the discussion between rapid and gradual internationalization. Traditionally, rapid internationalization refers to the internationalization process taking less than six years (e.g., Verbeke & Ciravegna, 2018; Knight & Cavusgil, 2004), yet a potentially more beneficial question would be: is the pattern of internationalization predictable due to industry/country/firm characteristics, and what is the concept that enables a mutual leveled perspective on two differing firms’ internationalization? In sum, to address the current issues in internationalization literature, several conceptual clarifications should be addressed and agreed upon, and the question remains, would the theories improve in the issues mentioned only with regard to rigor development of the existing theories? This dissertation suggests that two existing concepts would complement internationalization theories with the inclusion of defined context relations, multilevel analysis, and conceptual flexibility, enabling the creation of a mutual, leveled approach in understanding missing elements in the internationalization process. Further, the concepts would be easily operationalized for internationalization and ready for systematic empirical testing. 2.3 Exaptation-adaptation theory Exaptation and adaptation are defined based on each other. The existence of exaptations requires the existence of adaptive development. Similarly, in internationalization, disruptions to a pattern require a pattern to disrupt. Following this, the pattern forms from sequential events, that is, individuals are selected and populations evolve (Campbell & Reece, 2003, p. 454). Further, in adaptation, several events are required (two at least, see e.g., Lloyd & Gould, 2017), yet contradictory to this, sequential exaptations are unlikely. A summary of the exaptation-adaptation theory is challenging for a few main reasons. First, exaptation is still rarely used beyond evolutionary theory, yet adaptation is used in a multitude of economic paradigms (e.g., Lewin & Volberda, 2003). Second, the use of adaptation, selection, and retention in economic theories is occasionally misunderstood 2.3 Exaptation-adaptation theory 29 (e.g., Poole & Van de Ven, 2010, Fig. 20.2 p. 551; Campbell, 1969; Lloyd & Gould, 2017; Campbell & Reece, 2003). A similar misunderstanding is also evident in evolutionary psychology (Lloyd & Gould, 2017; further, Andriani et al., 2017). In addition to this, concepts similar to exaptation have been noted by scholars, yet defining these perspectives as related to exaptation is subjective and not agreed upon in all literature. Examples are autonomous initiatives (Burgelman, 1983), transformative capacity (Garud & Nayyar, 1994), and the works of Kauffman (1995, 2000) (see further e.g., Felin et al., 2016, p. 135 – 136). Based on the literature analyzed in this dissertation, a summary and conclusion is presented in Section 4.1. The in-depth illustration of the application of adaptation in economic theories is beyond the scope of this dissertation. For the purpose of this dissertation, the primary focal point of the theory background is to illustrate how to define and characterize exaptation and adaptation, summarize briefly the use of exaptation to date, and illustrate the operationalization and the added conceptual benefits to theories of internationalization. 2.3.1 Origins and definitions Exaptation is often referred to as a “shift in function” or as having an existing solution to an unknown problem (Andriani & Cattani, 2016). In essence, exaptation may or may not have a prior purpose, yet it was never originally designed for the current function, it is co-opted (Gould & Vrba, 1982; Lloyd & Gould, 2017). Adaptation means an inherited trait improving survival (e.g., Campbell & Reece, 2003). A significant aspect this illustrates is the double requirement of adaptation (Lloyd & Gould, 2017). Hence, the trait had a similar purpose in the past. Over generations, a systematic and relatively stable, selection process emerged (see Loyd & Gould, 2017; Gould & Vrba, 1982; Campbell, 1969 on selection-retention). The notion of exaptation arose from the critique of Gould and Lewontin (1979) regarding adaptation, which was unable to distinguish between the current utility and the reasons for its origins, leading to the introduction of ex(-)aptation in 1982 by Gould and Vrba. In 2017, the definitions were further clarified by Lloyd and Gould. Fit, function, and effect are the concepts differentiating exaptation and adaptation. The etymology of adaptation consists of ad- and -aptation. Aptation refers to an improved fit in general (Lloyd & Gloud, 2017, Table 1, p.51). The ad- prefix illustrates an increase in fit due to design, resulting from selection processes (Lloyd & Gould, 2017), that is, the trait has a function (Gould & Vrba, 1982). Pre-adaptation preceded exaptation (X- aptation), yet, as the word implicitly suggests, the unknown future use was somehow predetermined in advance; X-aptation suited the phenomenon better (Gould & Vrba, 1982). Therefore, an exaptive trait has an effect, that is, increasing fit without being designed to do so (Gould & Vrba, 1982). However, an exaptive trait may have had a 2 Theoretical background 30 function for a different purpose (e.g., Maquis & Huang, 2010). Further, exaptations may turn into adaptations in future generations, first into secondary adaptations (Lloyd & Gould, 2017), and later to fully adaptive traits. Any trait has a limited number of current functions (e.g., thermal insulation, appearance) and a theoretical infinite amount of possible effects (such as the increased ability to glide long distances) (e.g., Andriani & Cattani, 2016). In biology, examples of exaptation are the development of wings in dinosaurs (Gould & Vrba, 1982; Lloyd & Gould, 2017; Dew et al., 2004; Andriani & Cattani, 2016), and swim bladders exapted from floating to breathing (Gould & Vrba, 1982; Santangelo & Stucchi, 2018), which are regarded as “evolutionary novelties” in comparison to adaptation (e.g., Campbell & Reece, 2003). However, much of the current discussion has been built on false assumptions, seeing exaptation as a subcategory to adaptation (“adaptivist worldview,” see Lloyd & Gould, 2017), illustrating the importance of clear definitions when using the term. The relations between the concepts are illustrated in Table 2. Table 2. Characteristics of exaptation and adaptation (Aaltonen, 2020) Gould & Vrba, 1982 Definition Artifact Usage Adaptation Natural selection shapes the character for a current use Current and previous Function Exaptation A character shaped by natural selection co-opted for a new use Current aptation Effect A character whose origin is not due to natural selection, co-opted for a new function Current aptation, previous non-aptation Effect Lloyd & Gould, 2017 Increases fitness Aptation A function or effect Does not increase fitness (may in the future) Non-aptation No function nor effect Adaptation Has a proper function while increasing fitness Aptation Function Exaptation Has no proper function but increases fitness Aptation Effect Secondary adaptation Exaptation modified by natural selection (2nd generation) Aptation Previous effect, current function Exaptation can be considered either a part of a mechanism, or the entire mechanism (e.g., “engineering perspective,” see further Lloyd & Gould, 2017). In other words, while the function of a feather shifted in evolution, the individual functions within the structure of the feather did not (Lloyd & Gould, 2017). Hence, defining exaptations and adaptations is highly related to the level of observation in relation to the phenomenon studied. However, natural selection can only improve a structure in its current function, not predict 2.3 Exaptation-adaptation theory 31 the future (Campbell & Reece, 2003, p.483). Humans, on the contrary, have increased capability for cognitive processes, such as social constructs (e.g., Garud et al., 2016), indicating exaptations should be more common in economic history as in evolution (Mokyr, 2002). 2.3.2 Exaptation in economics In economics literature, scholarly work may either directly refer to exaptation or introduce streams where exaptation is considered a continuation of existing literature. The term exaptation was first introduced to economics in a manuscript, “The Economic Implications of Exaptation” (Dew et al., 2004). It was concluded that innovative solutions of repurposing existing materials in the Apollo 13 solutions and the development of the CD-ROM technology were “active adaptations in crisis,” that is, exaptations. For example, the CD-ROM technology was developed to improve the sound quality and durability of vinyl records, yet it had an additional characteristic enabling data transmission of much larger quantities than expected, paving the way for computer revolution (Dew et al., 2004). Following this, two large empirical studies were published on the development of fiber optics (Cattani, 2006) and the US banking industry (Marquis & Huang, 2010), using the term exaptation to describe the phenomena. In essence, both illustrated longitudinal developmental processes of firms, where the current output differed largely from what was initially planned. Especially in the case of the US banking industry, the current competitive edge resulted from an organizational capability originally created in the 1970s due to institutional pressure (see further, Marquis & Huang, 2010; Santangelo & Stucchi, 2018). The complexity theory of innovation introduced exaptation as one of three foundational concepts in understanding systematic innovation processes (Bonifati, 2010a, 2010b) and this line of reasoning has been continued since factor markets (Felin et al., 2016). The exaptation theory was further developed to include secondary developmental stages between the concept of modularity (Andriani & Carignani, 2014; Andriani & Cohen, 2013) and newer additions introduced in the 2016 special issue on exaptation (see Andriani & Cattani, 2016). In addition to this, newer scholarly work suggests options may be revealed in the second generation that were not available in the first (see Andriani & Cattani, 2016 on shadow options). Continuing this, exaptation next considered consisting at least two stages, first to acquire knowledge without a purpose and second to acquire knowledge while having a purpose or an intention of direction (Ganzanoli, De Noni, & Pilotti, 2014). This follows the evolutionary biology stream as exaptations may develop into adaptations, remain exaptations, or become useless (spandrels, Lloyd & Gould, 2017; Garud et al., 2016). Exaptation is connected in a variety of ways to additional existing literature, such as technological speciation (Levinthal, 1998; Adner, 2002; Adner & Levinthal, 2002), 2 Theoretical background 32 agent-network theory (ANT) (e.g., Latour, 2005; Andriani & Cattani, 2016; Villani, Bonacini, Ferrari, Serra, & Lane, 2007), and the perception of affordances (Felin et al., 2016; Tuomi, 2002). Artifacts are created between the actor- environment and artifact (Andriani & Cattani, 2016). The ability to see usages for artifacts beyond the designed function has been conceptualized as perception of affordances (Tuomi, 2002; Felin et al., 2016), and environment impacts this significantly. Further, cognitive biases, for example, related to experience with a certain artifact, that is, functional fixedness (e.g., Felin et al., 2016), may prevent this, and opportunities for exaptation cannot be predicted or calculated (Felin et al., 2016; Felin et al., 2014; German & Barrett, 2005). Exaptation is connected to entrepreneurial behavior (Levinthal, 1998), following effectuation logic theory (Sarasvathy, 2001; Sarasvathy & Dew, 2005), and is said to be one of the three core components of BTEF (Read et al., 2008). Instead of adapting to the environment, the entrepreneur can also spot opportunities in one (later also Felin et al., 2016). The theory constructs where exaptation is considered a building block or a continuation are illustrated in Table 3. Table 3. Summary of theory constructs related to exaptation Theory construct Author examples Contribution BTEF Dew et al., 2008; Read et al., 2009 Environments are changed rather than acting within one, three concepts are essential: accumulating stakeholder commitments under goal ambiguity, achieving control, predominately exaptive (rather than adaptive) orientation. Complexity theory on innovation Bonifati, 2010a, 2010b; Grandori, 2007 Exaptation is one of three basic concepts, explaining the emergence of heterogeneity. ANT Latour, 2005; Garud et al., 2016 The construction of reality in a network of actors and artifacts, exaptation illustrates unexpected solutions. Technical speciation Levinthal, 1998; Adner, 2002; Adner & Levinthal, 2002; Cattani, 2006 Describes technology development to a substantially different one, similar to Darwinian evolution of species. Exaptation explains the emergence of radical innovations in a context of little technological change and differs from a combination of existing technologies. Affordances Felin et al., 2014; German & Barrett, 2005; Felin et al., 2016, p. 137-138 for full list The potential of existing artifacts, where the perception is determined by cognitive capabilities. Most recently, utilizing exaptation theory in international operations provided an interesting perspective. Exaptation is defined as domain change and technology change (e.g., Levinthal, 1998), and the domain change is given when entering a new location (Santangelo & Stucchi, 2018; Santangelo & Meyer, 2011, 2017). 2.3 Exaptation-adaptation theory 33 2.3.3 Exaptation and adaptation in internationalization Exaptation or “the discovery of latent functions in existing technologies” (Andriani et al., 2017, p. 322), provides a systematic tool to assess individual solutions that previously were deemed to have resulted from chance, luck, accidents, or exogenous jolts (Aldrich & Rueff, 2006; March, 1989; March, 1991; Henderson, 2000). To differentiate when an event has exaptive or adaptive origins, an analysis of past functionality is beneficial. Exaptation and adaptation can be helpful in understanding individual decision-making. In organizational behavior, adaptation can refer to self-reinforcing patterns, such as the repetition of successful acts (March, 1981; March, 1991) and single-loop learning (March, 1991; Lewin & Volberda, 2003). Due to cognitive limitations, the search for solutions is limited to acceptable solutions in relation to previous goals (Dew et al., 2008). Therefore, a locally optimal solution is accepted, that is, a quasi-resolution of conflicts (e.g., Cyert & March, 1963; Dew et al., 2008; Read, 2009). In other words, the solution is potentially beneficial to a particular, well-defined problem. However, in the large scale of operations, more optimal general solutions may exist. Decision procedures rely on feedback-react procedures, sequential attention to goals, and negotiated environment (Cyert & March, 1963, p. 164-168). Exaptive processes begin with the perception of affordances and possibilities for exaptations. In theory, every trait has an infinite list of possible new functions (e.g., Felin et al., 2016; Andriani & Cattani, 2016). However, no formula for predicting or estimating functions exists (Felin et al., 2016), and there is no search process to reveal possible new uses (Felin et al., 2014). Hence, exaptation does not fully follow existing theories (e.g., double-loop learning); in the first phase, the accumulation of knowledge takes place without any anticipation of its future use (Ganzaroli, De Noni, & Pilotti, 2014). Due to the double requirement of adaptation, that is, there needs to be a confirmed similar purpose in the past (see Lloyd & Gould, 2017), exaptations are recognizable when the past functions are known. However, after the shift in function, the possibilities of second-degree paths are several, here referred to as secondary chains. The basic process of a single exaptation in comparison to adaptation is illustrated in Figure 2. Figure 2. Exaptive and adaptive processes (Aaltonen, Torkkeli, & Worek, 2020) 2 Theoretical background 34 However, several selection cycles should be visible in adaptation (Lloyd & Gould, 2017). Further, the secondary steps are not mandatory and may not take place. In essence, an exaptation may remain unnoticed for periods of time (Marquis & Huang, 2010), disappear (Santangelo & Stucchi, 2018), open up new possibilities (see shadow functions, Andriani & Cattani, 2016), or be directly used after discovery (Garud et al., 2016; Dew et al., 2004; Davis & Stern, 1988). The last option transforms an originally exaptive solution to a currently adaptive one, similar to the speciation of birds (e.g., Gould & Vrba, 1982). Exaptation and adaptation can be used on multiple levels. An example of micro-level usage is understanding the cognitive processes in new market creation (Dew & Sarasvathy, 2016; Read et al., 2009; Felin et al., 2016), whereas macro-level may refer to understanding the origins of industrial shifts and competitive advantage (Cattani, 2006; Marquis & Huang, 2010). In all levels, an individual trait is selected or co-opted, and the aftermath of development reflects the general population (Campbell, 1969). Following this, a single measure for determining time for solutions cannot be defined. Current studies illustrate that in internationalization a decade (Santangelo & Stucchi, 2018), in banking industry three decades (Marquis & Huang, 2010; Cattani, 2006), and in medical industry a week (Andriani et al., 2017, Table 2.) can all equally illustrate the emergence of exaptations when describing patterns of linearity in internationalization and non-linear, disruptive events based on exaptation and adaptation, Figure 3 shows an example. 2.3 Exaptation-adaptation theory 35 Figure 3. Linearity and non-linear events in internationalization Therefore, non-linearity is a single event of unpredictability (Santangelo & Meyer, 2011, 2017; Santangelo & Stucchi, 2018). Moreover, while non-linear events can be defined in internationalization, the continuation of these patterns likely returns to linear. Hence, for an entirely non-linear pattern to emerge, a continuous repetition of radically novel solutions should appear. So far, existing theories have not stated that a critically thunderous organizational environment (e.g., emerging markets, see Guillén & García- Canal, 2009) might, in theory, create a continuously non-linear pattern. In differentiating exaptation from adaptation, the useful concepts are entry use, emergent use, and exaptive use. Entry use refers to a use originally designed and emergent use is one that emerges from this, which is rather similar. Both are understood as adaptations, as in order to classify as exaptation, a clear difference compared with entry use should be evident (e.g., bifurcation in WHO database, see Andriani et al., 2017). The differences between uses and estimated quantities are illustrated in Table 4. Table 4. Differences between exaptive and adaptive uses Type ID Definition (following Andriani et al., 2017) Case examples Exaptations 30% Radical exaptations New to the world and significant improvement; degree of radicalness 5, estimated existence 3% Industry shifts (Cattani, 2006); using chair as a bike stand Semi- radical exaptations A significant improvement to a subpopulation; degree of radicalness 4 Repurposing co-ordination and control capabilities in M&A (Santangelo & Stucchi, 2018); using a chair for decorative purposes Incremental exaptations Add to the existing pool of functions; degree of radicalness 3 Organizational legacy as a competitive edge (Marquis & Huang, 2010); using chair to stabilize a table 2 Theoretical background 36 Adaptations 70% Emergent uses New use of an existing artifact that gradually emerges through development of the artifact; degree of radicalness 2; estimated existence 43% Usage of chair as a leg rest due to improved padding Known uses (entry uses) The first-time introduction of an artifact, designed to a particular function; degree of radicalness 1; estimated existence 27% Introduction of a chair(s) The empirical evidence on exaptation in economics is scarce, yet it has been suggested they account for more incidents than in evolution (e.g., Mokyr, 2002; Garud et al., 2016; Garud, Tuertscher, & van de Ven, 2013; Mokyr, 1991, 1998, 2000). In the pharmaceutical industry, it was noted that between 30-40% of uses are exaptive (Andriani et al., 2017). In the table above, fictional examples are added to emphasize the differences between uses (Andriani et al., 2017; Felin et al., 2016). The figures are calculated based on the study of exaptations in the pharmaceutical industry as indicators (n=581, see further Andriani et al., 2017). In addition, emergent uses can also be classified based on similar degrees of radicalness (see Andriani et al., 2017, p. 328); but, this is beyond the scope of this dissertation and remains a side note in the literature on exaptation. However, the variations within exaptive uses impact the selection of empirical material and detection in studies. The international operations context presents a beneficial field for the analysis of exaptations in economics. As exaptation is defined by the change in domain (see Levinthal, 1998), and transferring home country operations to host country is an example of such domain change (Santangelo & Stucchi, 2018), exaptations should be induced. Further, operations exist in home country context and, differing from previous studies on exaptation, entry-level solutions exist. By drawing the focus on host-country solutions, the empirical evidence focuses on emergent solutions alone (Santangelo & Stucchi, 2018), increasing the explanatory potential of exaptation in non-linear events in internationalization. 2.3.4 Future research agenda with exaptation and adaptation Following the literature on internationalization, the research questions can be roughly divided into four categories: ones with cognitive and sociological emphasis, ones focusing on longitudinal dynamics, ones interested in organizational environment interactions, and the inclusion of disruptive developmental patterns (see Table 1). Further, theories should incorporate both SMEs and MNEs (Paul et al., 2017; Verbeke & Ciravegna, 2018). However, addressing the questions with existing internationalization theories presented few main issues: the incorporation of complex theory constructs to existing frames, and the lack of coherent conceptualization in used terms and the focalization of questions. Particularly, the incorporation of disruptive development falls 2.3 Exaptation-adaptation theory 37 beyond the scope of most current frameworks (e.g., Santangelo & Meyer, 2011). Elements in the exaptation-adaptation theory can improve the explanatory potential of internationalization theories. In Table 5, relevant literature and a summary of added value per category are provided, addressing the second objective of this dissertation: what are the advances in utilizing exaptation theory in addressing the gaps in internationalization theory? Table 5. Added value of the exaptation-adaptation theory to future studies on internationalization Issues raised in internationalization theories Author examples Added value of exaptation- adaptation theory Manuscripts with key theory Cognitive and social perspectives Johanson & Vahlne, 2013, 2014; Forsgren & Johanson, 2010; Welch et al., 2016; Reuber et al., 2017 Categorization of cognitive processes of individuals; two processes of knowledge creation that reflect goal setting, search for solutions and cognitive biases Dew et al., 2008; Cyert & March, 1963; Felin et al., 2016; Garud et al., 2016 Longitudinal dynamics Santangelo & Meyer, 2017; Johansson & Vahlne, 2013, 2015; Contractor, 2007; Verbeke & Ciravegna, 2018; Li et al., 2015; Reuber et al., 2017; Li et al., 2015 Existing well-defined measures for processes that are scalable to multiple levels of observation and illustrate cumulative sequential processes that are not tied to traditional measures of time Campbell, 1969; Gould & Vrba, 1982; Gould, 2002; Campbell & Reece, 2003). Organizational environment interactions Welch et al., 2016; Reuber et al., 2017; Johansson & Vahlne, 1990; Santangelo & Meyer, 2017 Using existing concepts with built-in assumptions of a complex environment, that is, eco-system, while not all elements are understood and measured, the existence and impact of contextual factors is acknowledged Gould & Vrba, 1982; Lloyd & Gould, 2017; Campbell, 1969; Korhonen & Snäkin, 2005; Felin et al., 2016; also to a degree, Santangelo & Meyer, 2017; Contractor, 2007; Johansson & Vahlne, 2013, 2014 The inclusion of disruptive development Welch et al., 2016; Reuber et al., 2017; Santangelo & Meyer, 2011; Schwens et al., 2018 Exaptation explains disruptive developmental patterns and adaptive explains relatively stable ones; the inclusion of the concepts in understanding disruptive events would complement existing internationalization theories Lloyd & Gould, 2017; Andriani & Cattani, 2016; Santangelo & Meyer, 2011, 2017; Santangelo & Stucchi, 2018 However, due to the nature of the exaptation-adaptation theory, the categories may overlap. For example, the usage of the exaptation-adaptation theory includes disruptive development to the process of internationalization, yet this can be seen from an individual 2 Theoretical background 38 decision-making perspective (cognitive/social emphasis) or population evolution perspective (longitudinal dynamics). Hence, using the exaptation-adaptation theory in internationalization, it is likely that multiple issues can be addressed with similar theories. This is understandable as the empirical evidence and theory developed in international operations using exaptation is scarce and may be better focused in the future. Based on the theory, the two focal points with available frameworks for study are, in particular, the individual decision-making perspective (following Figure 3) and longitudinal dynamics (following Figure 4). These focus on the cognitive and social perspective and the longitudinal dynamics in internationalization theories, which are two focal points of the current research questions (Table 1). Moreover, understanding longitudinal dynamics with the exaptation-adaptation theory also incorporates the notion of disruptive patterns in internationalization. 3.1 Study design 39 3 Research Methods In order to embark on a journey to assess the theory potential of exaptation in internationalization, some background work is needed. This can be understood as increasing theoretical sensitivity (e.g., Strauss & Corbin, 1994), hence the open- mindedness of the questions stays intact. The study design of this dissertation therefore resembles a grounded theory approach (Strauss & Corbin, 1994, 1998; Denzin, 2009), with a focal point on the meta-analytical perspective of the theory origins in internationalization (Paul et al., 2017; Scherer, 2003, 2015) and the impact of mircofoundations on macrolevel outcomes (e.g., Coleman, 1990; Felin et al., 2014). Additionally, this could be understood as a deductive process. In essence, the research phenomenon can be approached with a wide set of questions that eventually clarify and focus as the study continues. Further, based on evolutionary theory, microlevel events shape the macrolevel outcomes in the population. the population. 3.1 Study design In accordance to the grounded theory approach, this dissertation proceeded as follows: First, a preliminary review of the literature was conducted to understand the basic concepts of exaptation, adaptation, selection, variation, and retention, creating theoretical sensitivity. This is illustrated in more detail in Publication I. Second, to assess the meta- theory potential and comparability with internationalization, a literature review following a systematic protocol was conducted. This is demonstrated in Publication II, and jointly the first publications form the basis of the objectives in this dissertation, which is to capture the literature gaps in internationalization and to assess the theory potential of the exaptation-adaptation theory in addressing the gaps. Further, these are utilized in the theoretical background of this dissertation; however, the final results of each empirical paper were concluded prior to the final evaluation of the theory potential in Publication II. This is in line with the grounded theory method, as the objectivity of the conclusions is not determined by the study design (Strauss & Corbin, 1994, 1998), following a explorative case study design with a limited number of cases (e.g., Siggelkow, 2002; Eisenhardt, 1998; Eisenhardt & Graebner, 2007; Yin, 2015). However, to compensate for the subjectivity of the approach, recommendations for the studies on internationalization (e.g., Paul et al., 2017), exaptation (Andriani et al., 2017), systematic review (Paul & Rosado-Serrano, 2019), and explorative case study (e.g., Cattani, 2006; Siggelkow, 2002) were followed. To address the follow-up of the objectives in this dissertation, that is, how does empirical evidence illustrate the added value of the exaptation-adaptation theory, two questions in particular were examined. These relate to the suggestions of previous literature gaps (Table 1) and the potential exaptation-adaptation theory additions (Table 6) on individual 3 Research Methods 40 decision-making processes and longitudinal dynamics. Here, these are loosely formulated as: what is the significance of exaptations in longitudinal global strategy development in emerging markets? (addressed in Publication III); and why do intentions at the outset of an investment project differ from the actual operations established (Santangelo & Meyer, 2011)? (addressed in Publication IV). Further, a thorough study of suitable methods for the analysis of exaptation was conducted, and recommendations for future study directions in empirical material selection in internationalization were followed. 3.2 Empirical material selection Empirical study designs related to exaptation follow ad-hoc designs (Andriani et al., 2017; Andriani & Cattani, 2016), and can resemble mixed methods approach (e.g., Tashakkori & Teddlie, 1998; Teddlie & Tashakkori, 2011). However, some indication of best practices does exist. First, in case of a lack of a similar systematic data base as the medical industry (see further the usage of WHO ICD-9-CM DataBase; Andriani et al., 2017), patents seem beneficial as “patents may also reflect the original private knowledge and intention for use of the firm at the time of filing” and in addition to this “the pharma industry is the only one … in which products’ functions are classified and systematized in internationally recognized databases” (Andriani et al., 2017, p.323). Similarly, patents have been used in previous studies (Cattani, 2006; Malerba & Orsenigo, 1999). Qualitative approaches would be most beneficial for studying patents and similar additional archive material(Cattani, 2006; Siggelkow, 2002; Bryman, 2006; Patton, 2002). To assess the solutions made by using exaptation and adaptation, a scale indicating differences between degrees of novelty is beneficial. This is illustrated in Table 5. A radical solution is rare and constitutes 10% of all exaptations, yet it is the easiest to detect (Andriani et al., 2017; Garcia & Calantone, 2002). This refers to a completely new artifact to the world, possibly resulting in branching of niches similar to the development of wings and, later, birds as a species (Cattani, 2006). Semi-radical, a middle ground, introduces a significant improvement to current solutions, such as repurposing co-ordination and control capabilities to overcome competency gap (Santangelo & Stucchi, 2018). It is assumed that solutions of a similar degree are likely to exist in the context of international operations. This indicates that qualitative study design would be most beneficial to compensate oversensitivity for exaptations. Qualitative studies tend to be more sensitive for detection and classification of exaptations (Andriani et al., 2017). Further, the use of qualitative approaches is also suggested in future studies for internationalization (Paul et al., 2017; Doz, 2011), while mixed methods may also be suitable (Andriani et al., 2017; Tashakkori & Teddlie, 1998; Teddlie & Tashakkori, 2011). 3.2 Empirical material selection 41 To follow this, empirical studies were designed as comparative case studies (e.g., Eisehardt, 1998; Yin, 2015), with an emphasis on limiting the cases to ensure objectivity and in-depth analysis of the material (Cattani, 2006; Siggelkow, 2002; Andriani et al., 2017). Moreover, the individual designs of the literature reviews were designed to increase both theoretical sensitivity (Strauss & Corbin, 1994, 1998) and provide a meta- analysis (e.g., Scherer, 2003). As past reviews address the theoretical elements missing from the literature on internationalization, they also occasionally point out how subsequent empirical material might benefit future studies. Examples of such are collected in Table 6. Table 6. Summary of empirical issues in internationalization Question Source Emphasis The perception and pursuit of opportunities by market actors in sectors, and with attributes that are less frequently associated with internationalization Reuber et al., 2017 Countries and markets not previously studied What can we learn from different vantage points on the evolution of processes, such as studies of micro- processes of internationalization as opposed to studies of internationalization that relate firm processes to broader industry and societal networks and structures? Reuber et al., 2017 Multilevel perspectives The usage of qualitative methods Paul et al., 2017 (also, Doz, 2011) Qualitative measures Contextual variety, that is, country-/region-specific characteristics, industry, target market Paul et al., 2017 Country, market, and industry specific characteristics Meta-analysis of the vast volume of scholarly literature to map out the themes, contexts, theoretical lenses, findings, and gaps Paul et al., 2017 Literature meta-analysis Research on OFDI from emerging countries other than China Paul & Benito, 2018 Emerging market countries not previously studied Following the suggestion regarding the meta-analysis on literature (Paul et al., 2017), this perspective is incorporated in the literature reviewed here. The aim of the reviews is to map out themes and theoretical lenses in internationalization, and exaptation-adaptation literature, to understand the explanatory theory potential. Examples of meta-analyses are used as a guiding line in conducting the reviews (e.g., Schrer, 2015). In addition to this, the literature makes recommendations on focusing on industries and countries with scarce empirical data (Reuber et al., 2017; Paul et al., 2017), such as emerging markets (Paul & Benito, 2018; Guillén & García-Canal, 2009; Guillén, 2005) and multilevel perspectives (Reuber et al., 2017). In the empirical evidence, the first study focuses on the emerging market context and comparative longitudinal analysis, and the second study focuses on brownfield investments with a focal point on individual, 3 Research Methods 42 exploitative FDI investments (e.g., Le Bas & Sierra, 2002). Further, the empirical evidence is collected at locations with little previous studies, such as the Czech Republic and Finland. The details of the study design in each of the publications are illustrated in the following chapters. 3.3 Literature reviews 3.3.1 Publication I The wide variety of scholarly work using exaptation creates a diverse field for analysis. As no previous reviews in economics were available, the usage of the term has suffered from un-unified conceptual constructs (Lloyd & Gould, 2017). To address this, an exploratory protocol for selecting papers was created (Tranfield, Denyer, & Smart, 2003; Anderson, Potočnik, & Zhou, 2014). This included searches using possible synonyms for the term (e.g., disruptive technologies, Adner, 2002; pre- adaptation, Cattani, 2006; transformative capacity, Garud & Nayar, 1994), and a review of sources used in previous manuscripts. Based on the literature collected from scholarly searches, references, and based on additional author recommendations, a preliminary analysis focusing on the main works and history of the term was conducted. In the analysis, theories directly discussing exaptation were made distinct from the theories suggested to also discuss the term, yet clear indication was lacking (e.g., Nelson & Winter, 1982). These were concluded to be complimentary approaches, and were studied to gain more insight into the literature. At this stage, a total of 28 manuscripts on exaptation and 17 additional sources were studied. The methodological approach of this paper relies on multiple sources and is open to critique. A summary of the literature reviewed is listed in Tables 8 and 9. Table 7. Data overview I (Publication I) Title Year Author The economic implications of exaptation 2004 Dew, Sarasvathy, & Venkataram Preadaptation, firm heterogeneity, and technological performance: A study on the evolution of fiber optics, 1970-1995 2005 Cattani Technological pre-adaptation, speciation, and emergence of new technologies: How Corning invented and developed fiber optics 2006 Cattani In praise of ambiguity: A commentary on exaptation 2007 Beunza Pre-adaptation, exaptation, and technology speciation: A comment on Cattani (2006) 2007 Dew Modifications and innovations to technology artifacts 2007 Desouza, Awazu, & Ramaprasad 3.3 Literature reviews 43 Reply to Dew's (2007) commentary: “Pre-adaptation, exaptation and technology speciation: A comment on Cattani (2006) 2008 Cattani Outlines of a behavioral theory of the entrepreneurial firm 2008 Dew, Read, Sarasvathy, & Wiltbank More is different, exaptation and uncertainty: Three foundational concepts for a complexity theory of innovation 2010 Bonifati Acquisitions as exaptation: The legacy of founding institutions in the U.S. commercial banking industry 2010 Marquis & Huang Exaptation and emerging degeneracy in innovation processes 2013 Bonifati From exaptation to radical niche construction in biological and technological complex systems 2013 Andriani & Cohen Modular exaptation: A missing link in the synthesis of artificial form 2014 Andriani & Carignani The role of social entrepreneurship in leveraging exaptation in locked-in industrial districts: The case of Idrogenet in the industrial district of Lumezzane 2014 Ganzaroli, De Noni, & Pilotti The determinants of technological exaptation 2015 Mastogiorgio & Gilsing Internationalization through exaptation: The role of domestic geographical dispersion* 2015 Santangelo & Stucchi Measuring exaptation in the pharmaceutical industry* 2015 Andriani, Ali, & Mastrogiorgio Technological exaptation: A narrative approach 2016 Garud, Gehman, & Giuliani Exaptation and niche construction: Behavioral insights for an evolutionary theory 2016 Dew & Sarasvathy Exaptation as source of creativity, innovation, and diversity: Introduction to the special section 2016 Andriani & Cattani Exaptation dynamics and entrepreneurial performance: Evidence from the internet video industry 2016 Ching Exaptation, innovation and the problem of the emergence of new functions* 2016 Andriani, Ali, & Mastrogiorgio Innovation through exaptation and its determinants: The role of technological complexity, analogy making & patent scope 2016 Mastogiorgio & Gilsing Factors, markets and affordances 2016 Felin, Kaufman, Stuart, & Mastogiorgio Measuring exaptation and its impact on innovation, search, and problem solving 2017 Andriani, Ali, & Mastrogiorgio Internationalization through exaptation: The role of domestic geographical dispersion 2018 Santangelo & Stucchi Table 8. Data overview II (Publication I) Title Year Author An evolutionary theory of economic change 1982 Nelson & Winter Corporate entrepreneurship and strategic management: Insights from a process study 1983 Burgelman 3 Research Methods 44 Transformative capacity: Continual structuring by intertemporal technology transfer 1994 Garud & Nayyar Investigations 1995 Kauffmann The slow pace of rapid technological change: Gradualism and punctuation in technological change 1998 Levinthal Neither chance nor necessity: Evolutionary models and economic history 1998 Mokyr Alone in the universe 2000 Kauffman The gifts of Athena: Historical origins of the knowledge economy 2002 Mokyr Networks of innovation: Change and meaning in the age of the internet 2002 Tuomi The emergence of emerging technologies 2002 Adner & Levinthal The evolution of new markets 2003 Geroski The future of ideas 2003 Lessig New market creation through transformation 2005 Sarasvathy & Dew Democratizing innovation 2005 Von Hippel Discovery in natural selection and knowledge processes: A commentary on anagent-based model of exaptive processes 2007 Grandori Comparing business and household sector innovation in consumer products: Findings from a representative study in the UK 2010 Von Hippel, Jeroen, De Jong, & Flowers Complexity and innovation dynamics 2011 Lane In retrospect, some theories can be seen to discuss a concept similar to exaptation (e.g., “blind variations resulting from chance, luck, or accidents,” Aldrich & Rueff, 2006; March, 1989; “exogenous jolts”, March, 1991), yet these were largely excluded from the analysis. 3.3.2 Publication II In the creation of a systematic review, a need should be identified and then a review protocol developed (Tranfield, Denyer, & Smart, 2003). The review protocol used for comparative analysis was the TCCM model (Paul & Rosado-Serrano, 2019). As the model is suitable for reviewing multidisciplinary perspectives (e.g., Singh & Dhir, 2019) and is used in internationalization reviews (Paul & Rosado-Serrano, 2019), it proved to 3.3 Literature reviews 45 be the most beneficial tool. In international business literature, internalization and internationalization streams can be separated (e.g., Rugman et al., 2011; Paul & Singh, 2017), and here the focus is on the latter. Following a systematic search (e.g., Canabal & White, 2008; Keupp & Gassmann, 2009; Tranfield, Denyer, & Smart, 2003), EBSCO Business Source Complete, Academic Search Elite, and Web of Science yielded close to 20,000 results in peer-reviewed journals, and after additional attributes, 9,727 were found in business economics. It has been said that the 1977 manuscript by Johanson and Vahlne represents the theoretical shift toward internationalization (e.g., Rugman et al., 2011, p. 757), representing the beginning of a more behavioral and a procedural approach (e.g., Welch et al., 2016), although not the first manuscript on the topic (Johanson & Wiedersheim‐Paul, 1975). Nonetheless, due to its status in the field, the 1977 manuscript by Johanson and Vahlne was selected as a beginning point of internationalization theories. Based on the number of citations referring to the paper, manuscripts were organized chronologically. In order to provide a similar sample of both theories, internationalization and exaptation- adaptation, the number of manuscripts per decade was limited to 15, resulting in roughly 60 manuscripts. This provided a base of internationalization literature development, and as several influential studies were found using the method (e.g., Dunning, 1995, 1998; Oviatt & McDougall, 1994; Knight & Cavusgil, 2004; Zahra, Ireland, & Hitt, 2000; Autio, Sapienza, & Almeida, 2000), the sample seemed appropriate. However, some manuscripts were excluded from the final analysis that focused more in detailled descriptions of the phenomena, such as bricolage (Baker & Nelson, 2005), effectuation logic (e.g Sarasvathy, 2001, 2005) and deeper insights on the Uppsala model (see e.g. Gabrielsson, Gabrielsson, Darling, & Luostarinen, 2006; Luostarinen & Gabrielsson, 2006), in order to maintain structural clarity. However, this was deemed appropriate for the review, as the main focal point was not the Uppsala model, rather, the behavioral perspective in general in internationalization, and the internationalization process, suggested to begin from the 1977 manuscript (Rugman, 2011). In addition, existing literature reviews and some significant missing manuscripts (e.g., Johanson & Wiedersheim-Paul, 1975; Johanson & Mattsson, 1998) were added with the help of reviewers and editors, amounting to a total of 30. Hence, a total of 90 written works were analyzed, which are summarized in Table 10. Table 9. Data overview I (Publication II: Aaltonen, 2020) Theories n Authors 1975 – 1994 15 Internalization; Internationalization Buckley & Casson, 1981; Cavusgil & Nevin, 1981; Cavusgil, 1984; Anderson & Gatignon, 1986; Turnbull, 1987; Terpstra & Yu, 1988; Welch & Luostarinen, 1988; Erramilli & Rao, 1990; Dichtl, Koeglmay, & Mueller, 1990; Johanson & Vahlne, 1990; Hill, Hwang, & Kim, 1990; Melin, 1992; Kim & Hwang, 1992; Benito & Gripsrud, 1992; Andersen, 1993 1995 – 2004 25 3 Research Methods 46 Internationalization; INV; Firm characteristics; Networks; Organizational learning; OLI; Institutional theory; Evolutionary process; Adaptation Woodcock, Beamish, & Makino, 1994; Oviatt & McDougall, 1994; Calof, 1994; Sullivan, 1994; Calof & Beamish, 1995; Dunning, 1995; Bell, 1995; Chang, 1995; Roth, 1995; Tallman, 1996; Barkema, Bell, & Pennings, 1996; Eriksson, Johanson, Majkgard, & Sharma, 1997; Madsen & Servais, 1997; Johanson & Mattsson, 1988; Birkinshaw & Hood, 1998; Dunning, 1998; Simonin, 1999; Zahra, Ireland, & Hitt, 2000; Autio, Sapienza, & Almeida, 2000; Henisz, 2000; Shenkar, 2001; Lu & Beamish, 2001; Axinn, & Matthyssens, 2002; Johanson & Vahlne, 2003; Sharma & Blomstermo, 2003 2004 – 2014 35 Internalization; BG; Networks; Cross- culture; Organizational theory; EM-MNEs; Family Business; Innovation; International Entrepreneurship; Method assessments Lu & Beamish, 2004; Rugman & Verbeke, 2004; Knight & Cavusgil, 2004; Rialp, Rialp, & Knight, 2005; Oviatt & McDougalll, 2005; Sapienza, Autio, Gerard, & Zahra, 2006; Matlay, Ruzzier, Hisrich, & Antoncic, 2006; Johanson & Vahlne, 2006; Nooteboom, Van Haverbeke, Duysters, Gilsing, & Van den Oord, 2007; Luo & Tung, 2007; Buckley, Clegg, Cross, Liu, Voss, & Zheng, 2007; Cuervo-Cazurra, & Genc, 2008; Johanson & Vahlne, 2009; Tung & Verbeke, 2010; Holburn, Zelner, & Bennet, 2010; Bhaumik, Driffiel, & Pal, 2010; Gubbi, Aulakh, Ray, Sarkas, & Chittoor, 2010; Berry, Guillén, & Zhou, 2010; Gomex-Meija, Makri, & Larraza, 2010; Beugelsdijk, McCann, & Mudambi, 2010; Cassiman & Golovko, 2011; Figueira-de-Lemos, Johanson, & Vahlne, 2011; Vahlne, Ivarsson, & Johanson, 2011; Ellis, 2011; Dos, 2011; Rugman, Verbeke, & Nguyen, 2011; Meyer, Mudambi, & Narula, 2011; Birkinshaw, Brannen, Toko, & Tung, 2011; Bignham & Eisenhardt, 2011; Ramamurti, 2012; Cuervo-Cazurra, 2012; Zaheer, Schomaker, Spring, & Nachum, 2012; Madhok & Keyhani, 2012; Hennart, 2012; Vahlne & Johanson, 2013 2014 - 15 BG; IE; Evolution; Behavioral approach; CAGE, CPP; SME internationalization Vahlne & Johasson, 2014; Vahlne & Ivarsson, 2014; Cavusgil & Knight, 2015; Welch, Nummela, & Liesch, 2016; Paul, Parthasaty, & Gupta, 2017; Paul & Singh, 2017; Vahlne & Johanson, 2017; Reuber, Dimitrators, & Kuivalainen, 2017; Kahiya, 2018; Rosado- Serrano, Paul, & Dikova, 2018; Verbeke & CIravegna, 2018; Reuber, Knight, Liesch, & Zhou, 2018; Paul & Benito, 2018; Paul & Rosado-Serado, 2019 Exaptation is a relatively new term and it is used rather ambiguously. Using the preliminary review as a starting point, the literature was revised to exclude manuscripts with less significance, newer contributions were added, and literature on adaptation was incorporated. A revised search for literature was conducted. Manuscripts with the exact key words “exaptation” (or “pre-adaptation,” see Gould & Vrba, 1982; Cattani, 2006) and “adaptation” were searched. The former provided a little over 2,000 results (EBSCO Business Source Complete; Academic Search Elite; Web of Science; Google Scholar) while the latter yielded over 6,000. After excluding paradigms deemed to be too far- 3.3 Literature reviews 47 fetched (i.e., linguistics, anthropology, and genealogy natural sciences), only 25 manuscripts were found in exaptation. Adaptation has been widely documented in a variety of economic paradigms (e.g., Lewin & Volberda, 2003) since the 1960s (Cyert & March, 1963). To acquire more manuscripts that address exaptation, references in manuscripts were studied. Further, some immersive theory constructs were partly excluded from deeper analysis (e.g., affordances, German & Barrett, 2005; bricolage, Baker & Nelson, 2005; effectuation logic, Sarasvathy, 2001, 2005; Sarasvathy & Dew, 2005; Arend et al., 2015; Read et al., 2016; Kalinic, Sarasvathy, & Forza, 2014; technological speciation, Andriani & Cattani, 2016), unless clearly discussing the implications of the exaptation-adaptation theory. After multiple reads, 62 works were finally included in the analysis: 15 referring to the concept of exaptation, 30 discussing exaptation theory, and 17 general references on adaptation and evolutionary processes. A summary of the final works included can be found in Table 11. Table 10. Data overview II (Publication II: Aaltonen, 2020) Theories n Authors Literature referencing the concept of exaptation* 17 Nelson & Winter, 1982; Burgelman, 1983; Levinthal & March, 1993; Garud & Nayyar, 1994; Kauffman, 1995; Levinthal, 1998; Mokyr 1998; Kauffman, 2000; Sarasvathy, 2001; Tuomi, 2002; Adner & Levinthal, 2002; Geroski, 2003; Lessig, 2003; Sarasvathy & Dew, 2005; Von Hippel, 2005; German & Barrett, 2005; Von Hippel, Jeroen, De Jong, & Flowers, 2010; Felin, Kauffman, Koppl, & Longo, 2014; Santangelo & Meyer, 2011, 2017 Literature on exaptation 30 Mokyr, 2002; Dew, Sarasvathy, & Venkataram, 2004; Grandori, 2007; Cattani, 2005, 2006; Beunza, 2007; Dew, 2007; Desouza, Awazu, & Ramaprasad, 2007; Villani, Bonacini, Ferrari, Serra, & Lane, 2007; Cattani, 2008; Dew, Read, Sarasvathy, & Wiltbank, 2008; Bonifati, 2010a, 2010b; Marquis & Huang, 2010; Aaltonen, 2010; Lane & Maxfield, 2005; Lane, 2011; Bonifati, 2013; Andriani & Cohen, 2013; Andriani & Carignani, 2014; Ganzaroli, De Noni, & Pilotti, 2014; Mastrogiorgio & Gilsing, 2016; Santangelo & Stucchi, 2018; Andriani, Ali, & Mastrogiorgio, 2015; Garud, Gehman, & Giuliani, 2016; Dew & Sarasvathy, 2016; Andriani & Cattani, 2016; Ching, 2016; Andriani, Alin, & Mastrogiorgio, 2016; Mastrogiorgio & Gilsing, 2016; Felin, Kaufman, Stuart, & Mastrogiorgio, 2016; Andriani, Ali, & Mastrogiorgio, 2017; Santangelo & Stucchi, 2018; Aaltonen, Torkkeli, & Worek, 2020 Literature on exaptation-adaptation 15 Cyert & March, 1963; Campbell, 1969; Gould & Lewontin, 1979; Gould & Vrba, 1982; Levitt & March, 1988; Mokyr, 1991, 1998, 2000; Buss, Haselton, Bleske, & Wakefield, 1998; Gould, 2002; Campbell & Reece, 2003; Lewin & Volberda, 2003; Latour, 2005; Aldrich & Ruef, 2006; Lloyd & Gould, 2017 3 Research Methods 48 3.4 Empirical studies 3.4.1 Publication III Following the TCCM analysis and previous studies of exaptation in internationalization, the research question was loosely formulated as follows: What is the significance of exaptations in longitudinal global strategy development in emerging markets? The first assumption made was that the exaptations observed would likely be semi-radical or incremental in nature (see Table 5). Similar evidence has been presented in internationalization (Santangelo & Stucchi, 2018), and exaptations other than radical exaptations are likely to be more common (Andriani et al., 2017). Further, a similar database as in the pharmaceutical industry is missing (WHO ICD-9-CM DataBase; Andriani et al., 2017), and less than radical exaptations are sensitive to mislabeling in quantitative study designs (Andriani et al., 2017). Hence, the study design should incorporate qualitative measures as well (Bryman, 2006; Patton, 2002). However, the use of patents, financial records, and additional archive material seems to suit exaptation studies in general (Santangelo & Stucchi, 2018; Cattani, 2006) Based on this, a longitudinal, comparative, and exploratory case-study method was selected (Eisenhardt, 1989; Eisenhardt & Graebner, 2007; Siggelkow, 2002; Yin, 2015). Further, previous studies on exaptation conclude that rich, qualitative, and historical empirical evidence suits the phenomena best (Cattani, 2006; Andriani & Cattani, 2016). In case selection, focusing on emerging market operations would increase the comparability of the results to previous ones suggesting exaptation in internationalization, as well as create potentially more observed exaptations. Following Hofstede and Hofstede (2005), in international operations, designating developed economies as the home country and emerging economies as the host country would create a significant distance (Guillén & Garcia-Canal, 2009). However, the longer the distance, the more accurate the quantitative approaches (Andriani et al., 2017), which should be taken into account in the analysis. Further, by following a similar case selection as before, the empirical evidence should provide more insight into why the reported cases of exaptation in international operations (Santangelo & Stucchi, 2018) differ from exaptation studies in general (Cattani, 2006; Marquis & Huang, 2010). This follows previous examples of longitudinal exaptation studies (Cattani, 2006), with the analysis resembling Siggelkows’ (2002) study. The research design differs from the previous ones in international business (Santangelo & Stucchi, 2018). However, this study suggests that the findings can make a useful contribution to the field. 3.4 Empirical studies 49 Two companies were selected to ensure the amount of empirical material is manageable. Following the previous examples in internationalization (Santangelo & Meyer, 2018) and exaptation development (Cattani, 2006), a single case would be enough (Siggelkow, 2002). The companies originated in Austria nearly a century ago and have since expanded to India, China, and the Czech Republic starting in the early 1990s. While India and China are considered developing economies (e.g., Gullen-Carcia, 2009), it is suggested that the post-soviet Czech Republic fared well in the early 1990s. Currently, the Czech Republic lies in between the upper-middle-income and the emerging economies, yet post-soviet regions experienced a significant decrease in their GDP in the early 1990s (Svejnar, 2002), falling closer to the current emerging economies in definition. In 1992, the Czech Republic’s GDP index ranged from −15 to −40, as the OECD (Organisation for Economic Co-operation and Development) average was +5 (Svejnar, 2002). The design followed a longitudinal case study type approach with material collection from all available sources (Cattani, 2006). Since financial data was available only from recent years, other historical records, such as patents (Cattani, 2006; Andriani et al., 2017; Malerba & Orsenigo, 1999) and lists of current subsidiaries and establishment years, were collected. This will provide greater insight into the complex aspects of the same phenomenon; thus, additional interviews were also conducted when possible (Case A), and company printed material was relied on when not (Case B). The material collected is detailed in Table 11. Table 11. Data overview III (Publication III) Year Data ID Who Audience Other Amount Interviews and participant observation 2016 Interview and faculty visits Director of operations/ Q. Manager, A Researcher Duration 3h + 1h 8 pages transcriptions + 4 pages field notes Archive Data 2016 – 2018 Patents European Patent Office Public 1514 pages 2016 Financial records Orbis; A Researcher 2004 - 2015 30 pages 2016 Product records Representative, A Public 30 pages 2016 Financial records Orbis; B Researcher 2010 – 2016 40 pages 2016 Product reports Representative; B Public 2015 - 2016 35 pages 2016 Company history Promotional material; B Researcher 150 years 142 pages 1990 -2016 Press releases Public Public 50 pages 2000 – 2016 Online/print articles Company B Public 20 pages 2016 – 2018 Online material Company web pages Public NA 3 Research Methods 50 3.4.2 Publication IV The process of learning is far from simple and is not completely understood. Evidence suggests that the transfer of location-bound knowledge to non-location bound (Clarke et al., 2013; Hutzschenreuter & Matt, 2017), in particular, falls beyond the explanatory capabilities of current IP theories (Schwens et al., 2018). Following the previous findings of exaptations in internationalization, that is, the disappearance of once- used novel solutions (Santangelo & Stucchi, 2018), the process of exaptation and adaptation (Figure 2), and the future research agenda conducted, the research question was loosely formulated as follows: Why intentions of an investment project differ from the project outcome in internationalization? Following previous research into exaptation (Santangelo & Stucchi, 2018) and the limitations of experiential learning (Schwens et al., 2018), the intention was to examine new market entry of firms lacking previous experience of the selected FDI mode, that is, MAs, greenfields, JVs, or brownfields (Cheng, 2006; Meyer & Estrin, 2001). Two suitable cases for analysis were found: the multinational digital companies Google and IBM, and their investments for increased computing capacity in Finland. The cases were also examples of first-time brownfield investment. Since neither had previous experience of the FDI mode, they were suitable cases for the enquiry. These two cases were examples of home-base exploiting investments (Le Bas & Sierra, 2002). Data center construction increases production capacity, which is not connected to market seeking. Data centers represent production facilities for global services (Marston, Bandyopadhyay, Zhang, & Anand, 2011), and Finland provides no technological expertise comparable to the Information and Commucation Technology (ICT) giants. In this case, “firms exploit their knowledgebase...without trying to improve it” (Le Bas & Sierra, 2002, p. 593). This would benefit the study design, as exaptation cases are more likely to occur unintentionally (e.g., Felin et al., 2016), and would present cases were observation of location-bound knowledge creation and non-location bound practices (e.g., Schwens et al., 2018) was possible. The cases varied to some extent due to differences in business models and clientele, as Google focuses on individual consumers in a public cloud, while IBM concentrates on private solutions for firms in a private or public cloud. However, in both, the ratio between computing equipment (~70%) and total sum of investment corresponded to the overall scale of operations. Both companies have experiential knowledge of similar operations in a variety of international locations, Google has 22 and IBM has over 60 data centers worldwide for new customers, yet none in Scandinavia at the time of the projects. Following the case study approach (e.g., Siggelkow, 2002), interviews were conducted with the case companies, archives of previous industries were visited, background information of the industries were collected, IT forums and guides for industry peers were 3.4 Empirical studies 51 visited, and government legislative data on the construction projects was collected. The data was summarized and compared in tables. The extensive government records (~50 000 pages) in Finland provided detailed information about the processes and helped validate the findings. The data collected is summarized in Table 13. Table 12. Data overview IV (Publication IV) Year collecte d ID Details Audience Other Quantity Interviews 2013 I Operations Manager Researcher Duration 2h 15 pages transcript 2013 II Solutions Manager Researcher Duration 2h 15 pages transcript 2013 III CEO Researcher Duration 2h 15 pages transcript 2013 IV Sales Manager Researcher Duration 2h 15 pages transcript 2013 V Project Manager Researcher Duration 2h 15 pages transcript 2013 VI Operations Manager Researcher Duration 2h 15 pages transcript Archive Data 2013 Archives (Case I) Blue prints, meeting documentations, budget Internal Years 1919 – 2006 Estimated 25,000 pages; 20 pages notes, pictures of blue prints 2013 Archives (Case II) Blue prints, meeting documentations, budget Internal Years 1955 – 2006 Estimated 18,000; 3 pages field notes 2012 – 2013 Environmental licenses; Regional Administ ration ESAVI/283/04.08/2010. ESAV I/230/04.08/2012. ISAVI/21/04.09/2010. PSAVI/2 35/04.08/2010. Public 2010 - 2013 149 pages (Finnish) 2012 - 2018 Press releases PR, News Public NA 2012 - 2018 Industry backgrounds Finnish Data Center Forum; The Green Grid; Amazon SLA; Google SLA; Bay Area Quality Management District, Annual Air Toxification Report, 2013; European Union, 2018, EUR 29103 Public; within industry Presentations, forums, maps, company- provided general information, E ducational material Printed material 184 pages, online NA 4 Results 52 4 Results 4.1 Publication 1 The main objective of this publication was to create theoretical background enabling the systematic review in Publication II. This should bring more insight to the question: “What are the advances in utilizing the exaptation theory in addressing gaps in internationalization literature?” The preliminary hypotheses for this are illustrated in Table 5. Exaptation in economics illustrates a wide variety of potential theoretical contributions. Based on the review, there are three varieties of theories related to the phenomena in economics. First, several authors note concepts related to exaptation are evident in literature not explicitly using the term. Second, a stream with an emphasis on individual or firm-level cognitive processes is evident. Effectuation logic and BTEF are the continuation of this perspective, following closely the original introduction of exaptation to economics (Dew et al., 2004; Read et al., 2009, 2016). Finally, a relative significant amount of empirical studies follows a wider level of analysis. This focuses on longitudinal changes over time, industry, and large populations (e.g., Felin et al., 2016; Cattani, 2006; Marquis & Huang, 2010; Santangelo & Stucchi, 2018; Andriani et al., 2017). The development of the exaptation theory in economics is illustrated in Figure 4. Figure 4. Summary of exaptation theory development (Aaltonen, 2020) 4.1 Publication 1 53 Incidents of exaptation have been described both in evolutionary psychology and economics. In addition to conceptual papers (e.g., Felin, 2016), a significant part of the literature recognizes incidents fitting the definition of exaptation. A summary of these is presented in Table 14. Table 13. Empirical evidence on exaptation (Aaltonen, 2020) Description Authors The development of feather usage from insulation to gliding Gould & Vrba, 1982; Campbell & Reece, 2003 Swim bladders exapted from floating to breathing Gould & Vrba, 1982; Campbell & Reece, 2003 Bird bone structure developed light, not due to flying Campbell & Reece, 2003 Apollo 13, repurposed equipment designed for another purpose Dew, Sarasvathy, & Venkataram, 2004 CD-ROM technology had additional unplanned benefits in data transfer Dew, Sarasvathy, & Venkataram, 2004 The development of fiber optics from glass handling technique; Corning Cattani, 2006 Mechanized printing press development Johnson, 2010 Fixed organizational structures as a source for competitive advantage; U.S. commercial banking Marquis & Huang, 2010 Post-it notes repurposed a glue that did not glue Garud, Gehman, & Gilliani, 2016 Toxic byproducts from coal mining broken down to a purple dye Garud, Gehman, & Gilliani, 2016 Simultaneous recombination and new functions in the internet video industry Ching, 2016 Several cases in the pharmaceutical industry Andriani, Ali, & Mastrogiorgio, 2017, Appendix A. Co-ordination and control tools in competence gap; cross-border mergers Santangelo & Stucchi, 2018 The analysis of the complementary literature is subject to some controversy. Whether or not the authors referred to a concept similar to exaptation may depend on the readers’ perception and knowledge of theories referred to and exaptation. In the review process of the publications for this dissertation, several examples were excluded from the final versions due to the increasing discussion of the validity of the conclusions. Hence, these are introduced here in full, based on the references, conclusions, and suggestions in exaptation literature in economics. A summary of the explanations is provided in Table 15. Table 14. Analysis of complementary literature on exaptation (Aaltonen, 2020) Author(s) Reference on exaptation Explanation, citing authors, and further reading Nelson & Winter, 1982 Individuals are the storage of knowledge in (Garud et al., 2016) 4 Results 54 organizations Levinthal & March, 1993; Levinthal, 1998; Adner & Levinthal, 2002 Why radical innovations emerge fast in the presence of little or no technological change is due to technology-domain change; different from technology- technology combination; “Technology-domain (exaptation) is a quintessential entrepreneurial activity.” (Levinthal 1998:220); Exaptation as determinant of disruptive innovation; exaptation-adaptation theory of development The emergence of radical, that is, substantially different, innovations in a context where technology does not substantially change is due to the domain shift of an existing technology. While not using the term exaptation or adaptation, March discusses prior (1980) “exogenous jolts” while Levinthal (1998) incorporated these into the realization of technologies seemingly emerging from scratch (Andriani & Cattani, 2016; Aldrich & Ruef, 2006 analysis on March’s work and the use of “blind variation”). Levinthal (1998) discussed technological speciation, noted by Cattani (2006) and Andriani and Cattani (2016) as examples of exaptation (note, even Cattani, 2006 does not use the term exaptation). Garud & Nayyar, 1994 Policy of exploration; the transfer of available in- house knowledge over new domains; transformative capacity: active policy of exploration and transfer of available in-house knowledge over new domains (unshelving approach) While knowledge transfer does not equate exaptation, the focal point in the statement is the recognition of knowledge transfer to new domains. Similarly, Cattani (2006) theorized the development of fiber optics and later Garud et al. (2016) follow this notion in the narrative construction of exaptation conceptualization. Kauffman, 1995, 2000 Exaptation is the “ignorance area” of the adjacent possible (Felin et al., 2016); non- prestatability of applications; multipurposeness of technology/resources, multifunctionality provides material (Grandori, 2007); source for heterogeneity (Mokyr, 1998, 2002) The idea that there is an unlimited field of opportunities, while unpredictable; measurable; and masked by the environment, cognitive capabilities, and external actors, is the essential explanation of exaptation in economics. Felin et al. (2016) emphasize this by incorporating affordances from psychology to the discussion, one that had already started a decade ago; (Grandori, 2007); source for heterogeneity (Mokyr, 1998, 2002); (Andriani et al., 2017). Burgelman, 1983; Changing environment rather than adapting; autonomous initiatives The reference to Burgelman has been made in summaries of exaptation literature (e.g., Andriani & Cattani, 2016; Read et al., 2016). Essentially, the concept of autonomous initiatives is highly similar to the early work of March (e.g. 1981). However, rather than a direct comparison to exaptation, this illustrates there are unknown elements perhaps caused by the environment that may inspire novelty, competitive edge, or benefit the construction of ideas (the story 4.1 Publication 1 55 of Post-Its is quite similar, see Garud et al., 2016). Sarasvathy, 2001; Sarasvathy & Dew, 2005 Effectuation; effectuation theory; effectuation logic While not again noted directly by the authors themselves, Dew and Sarasvathy (2004) later collaborated on the seminal piece of exaptation literature (Dew et al., 2004), and the concept of effectuation has been largely connected directly to the concept of exaptation (Read et al., 2009; Dew et al., 2008; Dew et al., 2008; Read et al., 2016) Tuomi, 2002; Artefacts as affordances, based on interpretative flexibility Exaptation and adaptation describe the functions of artefacts, also created in socially constructed environments (Garud et al., 2016; Latour, 2005). The perception of affordances, that is, use for artifacts, has been later described as an antecedent to an exaptive shift in function (Felin et al., 2016; German & Barrett, 2005). Beunza, 2007 Sociology of ambiguity; role of ambiguity in innovation; serendipity Exaptation takes place in two phases. In the first phase, the accumulation of knowledge takes place without any anticipation of its future use. In the second phase, the knowledge accumulated is explicitly and consciously leveraged and exploited to build up and take advantage of the opportunity in an emerging market niche. This contributes to extant literature by showing how social entrepreneurship may help firms to discover new potential and innovative fields of application for their existing know-how (Ganzaroli, De Noni, & Pilotti, 2014; Dew et al., 2004; Garud et al., 2016) Grandori, 2007 “performance potential” rather than “performance gap”; a fundamental source of “variation” in a Campbellian variation- selection-retention; non- prestatability of applications; multipurposeness of technology/resources, multifunctionality provides material The Campbellian selection-retention cycle always requires variance in order to function. A selection does not, essentially, take place in an entirely homogenous population (Campbell & Reece, 2003; Campbell, 1969; Felin et al., 2016). However, adaptation as a single source of variation was challenged in the first work on exaptation (Gould & Vrba, 1982), later also (Lloyd & Gould, 2017). Following the concept of exaptation in evolutionary sciences, the concepts of non-prestatability of application, that is, the usage of applications may change, multipurposeness and multifunctionality are all examples of exaptive opportunities in artifacts, the sources of variance for multiple uses of a given, 4 Results 56 ready object, that is, trait. Von Hippel, 2005; Von Hippel, Jeroen, De Jong, & Flowers, 2010 Creative transformation of existing technologies Von Hippel’s (2005) lead users and innovation communities are known for innovating via creative transformation of existent technologies. However, creative transformation does not equal bricolage, yet it has no other term to describe it than exaptation – transformation and existing technologies, a similar notion to Levinthal’s (1998) technology-domain combination rather than technology-technology combination. Santangelo & Meyer, 2011, 2017 Non-linear, quirky, and novel events in internationalization The authors do not explicitly make the connection, yet there are several connections between the 2011 and 2017 papers on non-linear internationalization, novel events, and exaptation – only to be introduced by the authors to the literature on internationalization in 2018. For lack of better knowledge, “quirky” events in internationalization in this manuscript are understood as examples of exaptation, introduced in a later paper to compliment the Uppsala model. 4.2 Publication II An analysis of internationalization process theories and exaptation-adaptation theories illustrates the potential benefits of describing phenomena with the novel approach. In the analysis, firstly a summary of the main meta-theoretical assumptions was collected and analyzed side-by-side (Paul & Rosado-Serrano, 2019). The main objective of this publication was to bring more insight to the question: what are the research questions and limitations of the current theories in internationalization? A summary of the TCCM model of internationalization and exaptation-adaptation can be found in Table 15. 4.2 Publication II 57 Table 15. Summary of TCCM analysis (Aaltonen, 2020) Internationalization Exaptation–adaptation Theory Differences in the speed of internationalization Individual success stories SME and MNE joint theory constructs Industry wide longitudinal shift Definitions of IE firms Cognitive, social, and behavioral perspective Addressing discontinuous and disruptive events Unnoticed, harmful, or developed Finding complementary theory structures Context emphasis Context assumptions Detailed elements vs complex ambiguity Multilevel context Risk avoidance vs risk tolerance Disruptive vs non-disruptive development Empirical evidence: innovative individuals vs medium- tech manufacturers Sequential events and degeneration of heterogeneity Joint characteristics Cognitive/Social emphasis Fit, function, effect Longitudinal development Simultaneous, sequential, and intercrossing The significance of organizational environment Methods Class analysis Conceptual Regression analysis Empirical evidence Survey Lack of systematic analysis Case studies Conceptual clarification needed Cluster analysis It was concluded, that despite constant leaps forward, internationalization process theories would benefit from less fragmented contributions. For example, the Uppsala 4 Results 58 model has been analyzed and revised on numerous occasions (Welch, Nummela, & Liesch, 2016; Vahlne and Johanson, 2013, 2014), focusing more on entrepreneurship (e.g., Schweizer, Vahlne, & Johanson, 2010; Jones, Coviello, & Tang 2011; Vahlne & Johanson, 2017), yet it still fails to include the individual perspective (Verbeke & Ciravegna, 2018) and contextual diversity (Reuber et al., 2017; Reuber et al., 2018; Andersen, 1993; Turnbull, 1987; Bell, 1995; Axinn & Matthyssens, 2002). On the contrary, the concept of BG lacks a theoretical definition (Paul & Rosado-Serrano, 2019; Cavusgil & Knight, 2015). To address this, several analyses have focused on creating future research agendas (e.g., Paul & Rosado-Serrano, 2019; Paul, Parthasarathy, & Gupta, 2017; Keupp & Gassmann, 2009), and calls have been made for joint theory constructs for a variety of firms (Paul, Parthasarathy, & Gupta, 2017; Pukall & Calabrò, 2014) and levels of analysis (e.g., Verbeke & Ciravegna, 2018). However, some frequent trends may hinder a more focused advancement. Further, emphasis on opposing paradigms downscales the behavioral aspects of IP (e.g., Welch, Nummela, & Liesch, 2016; Vahlne & Johanson, 2013, 2014). In addition, future studies have been suggested to incorporate disruptive development (e.g., Reuber et al., 2017; Santangelo & Stucchi, 2018; Kriz & Welch, 2018), and to seek novel theories beyond the currently used (e.g., Welch et al., 2016). Further, there were several issues in the basic construction of internationalization theories that made the future research questions (e.g., Johansson & Vahlne, 2013, 2014; Welch et al., 2016; Reuber et al., 2017; Paul et al., 2017) challenging to address with only the current theories. Following the analysis, new concepts to serve for the needs of internationalization theory were concluded. These are, first, entrepreneurial and non- entrepreneurial actions. The usage of these concepts follows entrepreneurship (e.g., Sarasvathy, 2001, 2005; Read, 2008) and behavioral theories (Cyert & March, 1963). Since IE theories rely much on the entrepreneurial theories (e.g., Reuber et al., 2018), this would follow the existing literature. However, with the usage of exaptation and adaptation, two distinct behavioral processes can be illustrated (see Figure 3), that may co-exist, occur simultaneously, and are independent from firm characteristics. Hence, this would address the discussion revolving around defining BGs, and the need to examine both SMEs and MNEs under its construct (e.g., Verbeke & Ciravegna, 2018; Welch et al., 2017; Laufs, & Schwens, 2014). Second, the relative speed of internationalization based on events. There are clear differences in the speed of internationalization between firms (Knight & Cavusgil, 2004; Verbeke & Ciravegna, 2018; Li et al., 2015). However, and as pointed out already (e.g., Li et al., 2015; Reuber et al., 2017), other measures of speed could be utilized. Following the singular processes of exaptation and adaptation and the forming patterns, different types of internationalization speeds, that is, 3 years versus 30 decades, could be compared on a similar level. This might introduce new insights into the debate between gradual and rapid internationalization alike, and is in line with existing empirical studies on exaptation (e.g., Marquis & Huang, 2010; Andriani et al., 2017; Santangelo & Stucchi, 2018). Third, the inclusion of disruptive events. Clear calls have been made regarding the inclusion of disruptive events to IP (e.g., Santangelo & Meyer, 2017; Reuber et al., 2017); hence, tools for this are needed. Exaptation by 4.2 Publication II 59 definition is the beginning of a disruptive developmental path, continuing to frame novel events in internationalization as exaptation (Santangelo & Stucchi, 2018) would complement existing models explaining linearity in internationalization (e.g., the Uppsala model, see Santangelo & Meyer, 2011). Lastly, calls have been made to incorporate additional theories. Here, the usage of exaptation and adaptation would increase the inclusion of complex extra- and inter- organizational actors, similar to seeing internationalization as an evolutionary process (e.g., Santangelo & Meyer, 2011, 2017; Contactor, 2007; Johansson & Vahlne, 2013, 2014). Following the analysis, the preliminary future research agenda for internationalization with the exaptation-adaptation theory (Table 6) and a revised agenda is presented in Table 16. Table 16. Revised future research agenda with the exaptation-adaptation theory (Aaltonen, 2020) Internationalization literature Exaptation – adaptation theory construct Exaptation – adaptation literature Future research questions Paul & Rosado- Serrano, 2019; Verbeke & Ciravegna, 2018; Paul et al., 2017; Kriz & Welch, 2018 Oviatt & McDougall, 1994; Knight & Cavusgil, 2004; Reuber et al., 2018; Laufs & Schwens, 2014; Liesch. Welch, & Buckley, 2011 Entrepreneurial and non- entrepreneurial actions Dew et al., 2008; Sarasvathy, 2001, 2005 a, 2005b; Cyert & March, 1963 What conditions enable/prohibit entrepreneurial behavior? Is non-entrepreneurial behavior more beneficial? How do firms balance between the both - Conceptualization of ambidexterity with exaptation and adaptation? Effects of balancing ambidextrous globally exploitable knowledge and location-bound knowledge on exploitation/exploration balance. What country conditions enable entrepreneurial or non- entrepreneurial actions? Global strategy development – strategic exaptation and adaptation. Incorporating FDI and non-FDI measures to the internationalization process Li et al., 2015; Reuber et al., 2017; Welch et al., 2017 The relative speed of internationaliza tion based on events Lloyd & Gould, 2017; Gould & Vrba, 1982; Campbell, 1969 Can IE happen gradually? Are rapid internationalizations the result of entrepreneurial actions, or rapid non-entrepreneurial actions? How is the amount of exaptive solutions related to the speed of 4 Results 60 internationalization? Welch et al., 2016; Reuber et al., 2017; Schwens et al., 2018; Johanson & Vahlne, 2013, 2014 Contextual significance conceptualized with evolutionary terminology Lloyd & Gould, 2017; Gould & Vrba, 1982; Campbell, 1969 What events are required prior to a certain outcome? What outcomes enable what post- events? Additional theories to understand the limitations of experiential learning. Limitations of exaptive knowledge transfer in international business. How does the context impact the solutions made, and how does the change in context impact host country operations? Social entrepreneurship in international operations. The significance of emerging market context to emerging exaptations and second-generation development. Limitations and constrains of network structure to exaptive and adaptive development. 4.3 Publication III 61 Santangelo & Meyer, 2011, 2017; Welch et al., 2016; Reuber et al., 2017; Santangelo & Stucchi, 2018; Johanson & Vahlne, 1997; Johanson & Vahlne, 2009; Vahlne & Ivarsson, 2014; Vahlne & Johanson, 2017; Hutzschenreuter & Matt, 2017 Linearity and non-linearity in internationaliza tion Lloyd & Gould, 2017; Gould & Vrba, 1982; Campbell, 1969 Frequency of exaptations in international operations. Degeneration of exaptations in international operations. The limitations of emerging exaptations in internationalization process. Longitudinal study of global strategy development – the significance of exaptations. Innovation creation in international operations – the exaptive and adaptive origins of inventions. New market entry as intentional or accidental exaptation. Exogenous knowledge creation and technical innovations in international business. 4.3 Publication III This study was designed to answer the second part of the objectives in this dissertation: can the conclusions of the theoretical analysis be confirmed in empirical studies? To address this, the first question was formulated to follow the longitudinal dynamics approach in internationalization. Hence the question is formulated as: what is the significance of exaptations in longitudinal global strategy development in emerging markets? Following the findings on exaptations in internationalization (Santangelo & Stucchi, 2018) contradicting ones in home-country context (e.g., Marquis & Huang, 2010; Cattani, 2006), and exaptations seeming less significant than theories predicted (Levinthal, 1998; Santangelo & Stucchi, 2018), this proved to be a potentially fruitful study area in addition to suiting the premises defined above. The use of exaptation and adaptation illustrated the significance of host-country context in the development of global product strategy. A detailed examination of patents revealed how the internationalization process developed over four decades into a substantially different one than originally planned. However, this was not evident in the company public info and company history. Yet, analysis of the inventions in the time they happened revealed how unforeseen at the time of the invention the future use would be. In particular, both cases illustrated how a single product, or product line, started as a side project, yet turned into the main source of income. Further, evidence suggests similar options were several though not all were realized in the end. 4 Results 62 Seven technology and/or product groups in Case A and six in Case B based on European Patent Office categorization, patent applications, and text material were identified. These were assigned codes 1 - 7 in Case A and A - G in Case B to improve readability when discussing the findings. Following the definition of radicalness in novelty, each patent was analyzed manually based on the antecedents of technology, that is, patent references. Further, this was compared to company details and interviews to determine the status of each solution. This followed loosely previous analyses on exaptation (Andriani et al., 2017; Cattani, 2006). Following the development of each technology and/or product between the 1960s and 2017, similar patterns emerged. These could be divided into four time phases, the phase prior to the first international expansion, approximately 1980 – 1990; the decade following the first foreign subsidiary, roughly 1990 – 2000; the years of further subsidiaries, between 2000 – 2010; and the phase of unified global product strategy, starting from 2010. The detailed findings are illustrated in Table 17. Table 17. Summary of findings (Publication III; Aaltonen et al., 2020) Years Details Sources Company A 1960 – 1994 Technological knowhow based on craftsmanship Company history First innovation Company history; Interview Core product developed (3) Interview; Patents, Technologies H01; H02 First production facility in the Czech Republic, 1992 Interview; Press material Second production facility in the Czech Republic, 1994 Interview; Press material 1995 – 2004 New products (4,5,6) Patents, Technologies B62; B60; G01 New markets sought (Netherlands) Patents, Technology B62 Global radical innovation (7) Patents, Technology G External ideas for innovation (2) Interview Home country development (1) Interview; Patents, Technology H01 Globally incremental innovations (3) Interview; Patents, Technologies H01; H02 Global revenue with old core product (3) Interview; Patents, Technologies H01; H02 2004 – 2008 New production facility in China, 2004 Company history; Interview Home country development (1) Interview; Patents, Technologies H01; H02 Core knowledge developed (2) Patents, Technologies H01; H02 4.3 Publication III 63 Radical innovation globally facilitated (2) Interview New markets not further pursued (Netherlands) Patents, Technology B62 New products dismissed (4,5,6,7) Patents, Technologies G; B62; B60; G01 Globally incremental innovations (3) Interview; Patents, Technologies H01; H02 Global revenue with old core product (3) Interview; Patents, Technologies H01; H02 2008 – 2017 Old core product not developed (3) Patents, Technologies H01; H02 No change in main direction of products (1,2) Interview; Technologies H01; H02 New production facility in India, 2010 Company history; Interview New production facility in Austria, 2017 Company history; Interview Company B 1880 – 1992 Craftmanship, education Company history Core product lines development, radical innovations Patents, Technologies F16; G04; G11 Old core product line developed, radical innovations Company history; Patents, Technologies G06; G01; G11 International export of radical innovations Company history; Patents, Technologies G01; G04; G06; H01 Old core product line developed Company history; Patents, Technologies G01; G04; G06; H01 New product line started Company history; Technologies H01; H02 1992 – 2004 Incremental innovation globally introduced Patents, Technology B29 Global incremental innovations Patents, Technologies H01; H02 First production facility in the Czech Republic, 1994 Company history New technologies introduced globally Patents, Technologies H05; B60; F21; E05 Revenue for old core product peaks, 1997 Company history; Patents, Technology G Second production facility in the USA, 2001 Company history Global incremental innovations, radical home Patents, Technologies H01; H02; H05; B60; F21; E05; B29 Growing revenue of old products Company history; Patents, Technologies G; H Old core knowledge repurposed Patents, Technology F16 Technologies dismissed Patents, Technologies F21; E05; F4 4 Results 64 2004 – 2008 New directions sought (financial crisis) Company history; Patents, Technologies A61 Niche technologies to specific locations (US, China) Patents, Technologies F16; B29 Expansion of location in the Czech Republic, 2004 Company history New location in China, 2008 Company history Growing revenue due to old products Company history; Patents, Technology G; H Globally incremental innovations, radical home Patents, Technologies H01; H02; B60 Development of core product lines Patents, Technologies H01; H02; B60 2009 – 2017 Old core product ended Company history; Patents, Technology G Focus on one industry Company history; Patents, Technologies H01, H02, B60 Core technologies developed, 5 product lines Press material; Patents, Technologies H01; H02; B60 Globally incremental innovations, radical home Patents, Technologies H01; H02; B60 New location in Mexico, 2017 Company history; Press material Each of the timeframes was defined based on the actions that took place, and a comparison showed similar patterns in both cases. First, there was a noticeable “calm” period. This took place primarily prior to the first international expansion when the product ranges were limited, yet sold globally. This resembles a relatively linear pattern, and lasted years or decades. Second, the ending of the Cold War opened up the possibility of building subsidiaries in neighboring countries with cheaper work force. Both companies established subsidiaries relatively fast within years of each other. However, after these extensions, the next decade seemed odd. Both companies launched several new products, completely out of range of their current business (i.e., both are component manufacturers for industry machinery; one patented an electrical bike and the other medical equipment). Further, new ideas were drawn from company history, that is, products that had not been developed for decades. Third, both companies seemed to end much of the experiments in the second phase. While some continued to be pursued, roughly half of the new ideas from the last decade were dismissed in the next. However, at this stage, both started to reduce the development of their core products. For both, this was still the main source of income, but was seemingly being shut down. Finally, both companies shut down the production of the old core business and focused on a single new core. Interestingly, this was one of the experiments of the second phase. The results are summarized in Table 19. 4.3 Publication III 65 Table 18. Summary of results (Publication III; Aaltonen et al., 2020) Case A 1st phase 2nd phase 3rd phase 4th phase Core product 3 Global incremental innovation Global incremental innovation Not developed, Niche Core knowledge New product 1 Home country development Global incremental innovations; Line 1 External ideas for innovation 2 Home country development Global radical innovations; Line 2 New products 4,5,6,7 Dismissed Case B 1st phase 2nd phase 3rd phase 4th phase Core product G Global incremental innovation Paused Ended Core product H Paused Home country development Core product line H Core knowledge F New product Bb Paused Core product line Bb New product Fb, Ba Paused Core product and niche New products Fa, E Dismissed Collaboration A Dismissed The patterns followed the exaptation-adaptation theory in internationalization, illustrated in Figure 3. The focal point of the study was to confirm the existence of exaptations in internationalization, and explain the differences in findings in international operations in relation to home-country context. As the internationalization process expands over several decades, it may consist of multiple and simultaneous exaptive and adaptive processes. Based on these processes, we can see various phases where one characteristic is more dominant in each phase. The development is described in brief in Figure 5. 4 Results 66 Figure 5. Development of operations (Publication III) This study suggests that international expansion to emerging markets creates the need to repurpose existing knowledge to a new purpose. Further, the findings confirm the significance of exaptations in internationalization, and explain the contradictory empirical evidence of exaptations in internationalization (Santangelo & Stucchi, 2018). In international business, exaptations were found in first-time cross-border mergers, but not in subsequent ones (Santangelo & Stucchi, 2018). While these findings seem to contradict the exaptation theory (e.g., Cattani, 2006; Marquis & Huang, 2010), they do follow the suggestions for future studies in exaptation and the potential actions that may take place in the secondary chains (see Figure 3). However, by expanding the observation period to several decades (Santangelo & Stucchi, 2018 use one decade) the evidence suggests that: first, host-country context induces the emergence of exaptations (Levinthal, 1998; Santangelo & Stucchi, 2018). Second, exaptations may disappear. But third, ones that do not are highly significant to the company’s future global strategy. This especially follows the longitudinal studies of exaptation (Marquis & Huang, 2010; Cattani, 2006), indicating that exaptation and adaptation are crucial elements in understanding longitudinal internationalization processes. More exaptations were detected, and it was concluded that not all disappear. The findings follow previous findings of exaptation in internationalization and add to the understanding of exaptations development over the long-term. Thus, the use of exaptation can describe non-linear events in internationalization that complement existing internationalization theories (e.g., the Uppsala model, Johansson & Vahlne, 1977) that are conceptualized as adaptation. Further, the study illustrates the significance of external impact in host-country as a significant factor in determining the success of the firm. 4.4 Publication IV 67 4.4 Publication IV Why intentions at the outset of an investment project differ from the actual operations established (Santangelo & Meyer, 2011)? This addresses a widely recognized issue (e.g., Schwens et al., 2018) related to the incapability of the Uppsala model to predict solutions made (Santangelo & Meyer, 2011). Hence, the question: “Why two highly similar cases of brownfield investment end up entirely different?” was inspired. The cases were selected due to availability of material and the highly prolific statements made on both regarding the preferred outcome. The selection of locations in both cases results in several attractive, location specific features. In general, Northern Europe and Finland are attractive locations to data centers not only due to reliability in general infrastructure, government and authorities, but also due to the Nordic climate and access to cable connections for high-power computing. In these cases, the main focus of the projects was sustainability, a feature missing at the time from the newest data centers. Further, the plans were announced on media to gain positive coverage. Due to construction projects taking place in Finland and in existing industry infrastructure, data was available on multiple sources not covered in the media. Examples of such sources were the administrative permits and licenses of new construction projects and archives of the past companies illustrating structures, blue prints, and additional details. The industry shift in Finland’s economic cornerstone, that is, the forest industry, had left several paper mills closed in Finland. While operational, the factories consumed from three to ten times the current consumption of, for example, Google’s data center (Stora Enso archives; UPM-Kymmene archives), 900 - 2000 GWh annually (for general references on paper manufacturing industry see Diesen, 2007; Koskinen, 2009; Hämäläinen & Tapaninen, 2010). On the contrary, the cloud computing industry is a constant race between improved technology development and capacity (Marston et al., 2011), resulting in a constant growing demand for new faculties (for general references on cloud computing see, e.g., Kant, 2009; Malkamäki & Ovaska, 2012; Masanet et al., 2013; Marston et al., 2012; Novothy, 2010). In assessing the effectiveness of a data center, the power usage effectiveness (PUE) value is most beneficial. The PUE illustrates how much power used is directed to computing; hence, it is also a general figure indicating sustainability. Older data centers tend to have PUE values around 3 and newer between 1 and 2, where 1 is the lowest. Thus, the changes in the figure when comparing facilities tend to be negligible. Most notable advantageous assets in this host-country location were related to electricity, water supply, climate, and connections infrastructure. Around-the-clock production was enabled by the custom electric network around factories, providing uninterrupted energy with parallel lines even during shortages (Stora Enso archives; UPM-Kymmene archives). The accessibility to electricity from the grid around paper mills is 100, 00%, while the rest of Finland lies between 99,995% - 99,9998%, and in the US significantly less. These figures are especially important to data centers as they form a base for the 4 Results 68 reliability of operations. The closeness of water supply was mandatory for paper production, and liquid-based cooling is the most energy efficient cooling method for computing equipment. Most of the energy consumption in data centers is related to the cooling required and the rest to the computing equipment. Hence, the lowered need for cooling equaled a more sustainable data center, also cutting down nearly all emissions, as they are created by the air-based cooling generators. The data collected was organized into tables illustrating both cases. The tables define first what was present at the location, such as climate conditions, reusable structures, and infrastructure on location. The main findings are illustrated in Table 19. Table 19. Summary of findings (Publication IV) ID Locational details Project outcomes Case I Climate 8000+ air-cooling hours National grid 99,99% Reliability; National 110 kV grid, the mill used 857 GWh/a. Local 10 kV power lines Estimated usage 280 GWh/a Paper mills grid 100%; 110 kV grid built to ensure power supply when lines fail Full 100% back-up power for essential operating systems, 21 diesel generators, 110 MW output, 42 MW electricity; PUE forecast 1,12 Paper mill The machine hall building; 3 machines were taken down and sold Cavities in the floor were filled. 80 -90 000 m2; Google owns the facilities Other power sources Gasum's natural gas trunk pipeline with pressure station, Haminan Energia's local pipeline, 3 MW district heating boiler Gas pipeline, estimated to deliver 2.1 Mm3/a, and district heating Cable connections Helsinki, Kotka, Russia; 8 connections from Helsinki; FUNET backbone Telia Carrier; BCS North - 2; Helsinki, Estimates: C-Lion1 to Rostock/Baltic Sea Submarine Cable to Stockholm; Tata TGN-Atlantic Water access A release water pipeline breakwater in the Gulf of Summa Two new pipes 1.6 meters in diameter; 130 m in length; depth of 5 m for water intake; the water flow is 0.83 m3/s for maximally 40 Mm3/a; release 3-15 degrees warmer Land/Water area Land and water areas, control reservoir dams to ensure water supply The dams are no longer needed for control, to be demolished; Stora Enso still owns the water areas Office facilities National wireless connection (Wi-Fi) for office needs; own waste treatment plant The facility has been attached to the local sanitation network; partial renewing of sanitation pipes Case II Climate 8000+ air-cooling hours Free air-cooling year-round, 2x420kV chillers; PUE forecast 1,08; storage hall cold already National grid 99,99% Reliability; National 110 kV grid Paper mills grid 100%; 110 kV grid built to ensure power supply when lines fail; Rata and Kone buildings connected to UPM-Kymmene electricity network; the paper mill used 2200 GWh annually Varasto was connected to the electricity network by Sweco, subcontractor to UPM-Kymmene 4.4 Publication IV 69 Paper mill Old hall new paper mill with two machine halls totaling 8,000 m2, and cold storage hall 10,000 m2; : total 120,000 m2; The old paper machine hall is a historical protectorate not to be demolished CSC rents 4000 m2 and IBM 1000 m2 in the Varasto building. In Rata and Kone buildings, cavities in the floors were filled Other power sources Three hydropower plants with 35 MW and a pellet power plant with 88 MW output The pellet power plant is in use for district heating. The hydropower plants are operational but too massive for current energy demand. Cable connections Public FUNET, cable managed by CSC Public FUNET fiber is connected to Varasto, Rata and Kone are within close reach of connection. Water access Structures for water use include a pipe from the river, equipment for chemical water purification; the pipe is functional, delivering water at a rate of 0.6 m3/s in temperatures between 1-22 degrees The water is not used by CSC or IBM for cooling. Plans to use water cooling in the future pending. Land/Water area UPM-Kymmene still owns all the land and water areas and premises leased to long-term tenants UPM leases to 23 other businesses; room still available Office facilities Water sanitation systems, waste management operated by Kuusakoski; Rata and Kone buildings connected to the Kuusakoski operated sanitation systems; National wireless connection (Wi-Fi) for office needs, FUNET fiber cable Varasto was connected to the sanitation system by Sweco, subcontractor to UPM-Kymmene However, the final project outcome was not the originally intended one. Google was first to announce they were building the most sustainable data center to date using the existing infrastructure of a paper mill, water cooling, and renewable energy. Following this, IBM announced they were planning to do exactly the same. Yet, a detailed analysis of the actions taken was different. First, while Google did use water cooling, it was not made by using the existing infrastructure as announced, that is, water pipes already available on location; instead, new piping was built. Second, back-up generators were built, capable of powering and cooling the center for an entire month. The emissions of a data center come from the generators (in fact, there was a 0,4kt annual increase in CO2 after the data center was operational, according to regional statistics. This is probably due to mandatory testing periods of the generators), and it is traditional to build such. This tradition is a result from data center construction in the warm climates, where the average temperatures tend to rise above the temperature of the systems often; hence, letting outside air flow through the premises does not cool the systems, rather, it does the opposite. Annual hours when air temperatures allow this type of cooling tend to average between 50 – 60% in the US. However, in the Scandinavian area this is an option all year round and, therefore, it is suggested that the generators of this scale were not optimal for the location. In addition, generators are used to ensure power supply in case of grid failures, which averages in the US at around 260min annually. In Finland and in the paper manufacturing facilities such occurrences are non-existent. The general grid experiences failures around 1-12 mins annually (99,999% reliability), yet as the paper manufactories were constructed, the grid was built to overcome this with parallel lines. As the cornerstones of the economy and 4 Results 70 built a century ago, the grid was made to ensure full operational power of the plants at 100%. This was confirmed in the company archives, as power losses were documented, and by independent measures by the CSC in Case II. Further, the plans for using renewable energy are still under discussion and were not realized at the time of the project. In general, the effectiveness of the center is evaluated at 1,12. IBM and CSC were inspired by Google’s announcement and aimed toward the same solutions: the usage of existing infrastructure, water cooling, and creation of the most effective data center to date. However, at the locations, the solutions differed. While the main goal of the most sustainable and effective data center was kept, the announced plans changed. First, water cooling was not utilized, which was due to the fact that a cheaper option was available, that is, free air cooling or using the climate to cool the equipment. This was achieved by changing the location of the equipment from the paper manufacturing hall – the premise Google uses – to the un-heated cold warehouse facilities. Such facilities are available on both locations as they were mandatory to paper production. While it is demanding to fully explain the chronological path of the solutions made, it was clear that all original plans were dismissed, and the new solution found on location utilized. Further, no back-up generators were built. This was based on an examination of the grid reliability and the annual temperatures on location (on the same level as, e.g., Iceland and Alaska). The estimated PUE value in operations is 1,08. Based on the findings, the evidence suggests that Case I was an example of adaptive exploitation based on prior experience (i.e., non-location bound experimental learning) (Schwens et al., 2018). It was suspected there could have been additional options to explore, based on the other case in this study. While speculative, the solutions made seem general and suitable for several locations, although not optimal to the one at hand. Therefore, this might be an example of functional fixedness (Felin et al., 2016; German & Barrett, 2005). This, in perception of affordances, represents organizational inertia, similar to competency trap (March, 1991; Levinthal & March, 1993; Levitt & March, 1988). Following the singular adaptive process, the solutions made seem to be driven by a strict goal setting (e.g., Cyert & March, 1963), where the additional options are not seen due to the limited solutions determined by the set goal. Here, the already announced plans of using water cooling and the existing infrastructure (the halls) seemed to dominate the search for solutions. Thus, water cooling was made to work, and the planned halls were used, and additional measures to ensure reliability were built based on prior experiences, despite eventually increasing the PUE and lower sustainability of the plant. However, the evidence from Case II suggests this was not the only option, and the potential to achieve lower PUE values was available. The solutions are either emergent or entry solutions. The system enabling the cooling solutions was customized to Google, although already used in other facilities (Belgium); similarly, the generators are an industry standard. While no data center had used paper manufacturing facilities in particular previously, existing infrastructure (e.g., mining locations) have been used. Hence, the minor additional modifications made resemble entry or emergent solutions (see Andriani et al., 2017). Therefore, the process consisted of multiple adaptative solutions. A simplification of the project is illustrated in Figure 6, that follows Figure 2. This highlights the plan, the 4.4 Publication IV 71 elements required for the plan, and the final outcome, following the adaptation theory (Figure 2). Figure 6. Outcomes of Case I (Publication IV) In Case II, it is suspected that this case was an example of exploration, where a shift in function (i.e., exaptation) (e.g., Andriani & Cattani, 2016) took place after entering the location. After entering the location, the firms had the options of either continuing with the original plan, based on repetition (e.g., Winter & Szulanski, 2001), or not. However, the goal was not elaborated, mainly due to lack of details shared at the time by Google. This is an example of exaptation following the cognitive decision-making model (Dew et al., 2008). A wider set goal enabled the search for additional solutions – without a clear reason why (e.g., Dew et al., 2008) - and let to the realization of existing structures enabling improved solutions. The solutions, using free air-cooling all year round, lacking back-up generators, and using premises not intended to be used (cold storage unit) were first of their kind in data center construction. This follows the categorization of semi- radical exaptations (see Andriani et al., 2017) and exaptation in internationalization (Santangelo & Stucchi, 2018). Further, this follows a similar pattern as the other empirical study in this dissertation, where entry to host-location launched a search for new paths, and if such path was found, the outcome of the solution would be superior to the one previously planned. Therefore, the solutions are considered exaptations. A summary of the project is illustrated in Figure 7, following Figure 2. This highlights the plan, the elements required for the plan, the change in the execution of the plan, and the final outcome, following the exaptation theory (Figure 2). Figure 7. Outcomes of Case II (Publication IV) 4 Results 72 4.4 Publication IV 73 5 Conclusions The conclusions based on the literature reviews were confirmed by the empirical data. First, the review on internationalization literature illustrated the limitations of current theories in fully capturing certain phenomenon. Second, a comparative analysis suggested that the exaptation-adaptation theory would suit addressing some of the issues better. Following this, suggestions for the future research agenda for internationalization addressing gaps in the literature were created (Table 6). The evidence and findings of the empirical studies highlighted in practice how the exaptation-adaptation theory would benefit the literature on internationalization. In particular, evidence from the first empirical study (Publication III) demonstrated how international expansion impacted and contributed to the longitudinal global product development strategy. Moreover, the second empirical study (Publication IV) highlighted the decision-making processes impacting intended and realized solutions. Further, recommendations for a study protocol addressing disruptive patterns on multiple levels were made. The first study concentrates on longitudinal internationalization in emerging markets, examining the impact of internationalization on product development (Santangelo & Stucchi, 2018; Santangelo & Meyer, 2011, 2017). The empirical evidence follows the conceptualization of exaptation and adaptation as non-linear events and linear internationalization, and concludes that all discovered novel solutions in international operations may not be further pursued (Santangelo & Stucchi, 2018). However, novel solutions are more common in international expansion than previous studies suggest (Santangelo & Stucchi, 2018). Further, the ones selected have a significant impact over the long term (Cattani, 2006; Marquis & Huang, 2010). This adds to the previous contributions in exaptation theory (e.g., Cattani, 2006), exaptations in international operations (Santangelo & Stucchi, 2018), illustrating the balance between exaptive and adaptive strategies in internationalization (Ching, 2016) and the significance of exaptations in international operations (Levinthal, 1998; Santangelo & Stucchi, 2018). Following the first study, the second study focuses on individual decision-making processes in international operations. By using the exaptation-adaptation theory, the cases illustrate why and when novel solutions are created based on location-bound knowledge, and when not, following non-location bound knowledge (e.g., Schwens et al., 2018). The cognitive processes behind the solutions follow singular exaptive and adaptive processes; hence, the reason for the differences lies in goal setting (Dew et al., 2008; Cyert & March, 1963). This highlights the difference between realized outcomes and intended solutions (Santangelo & Myer, 2011). In the detailed study of the two highly similar cases, the outcomes of the investment projects differed greatly from each other, despite similar original plans. Especially, in one project (Case II), locational advantages where utilized better, yet this is different from the original plan. In the other (Case I), the original plan was followed more closely. Following the behavioral processes behind the theory constructs, the study concludes that the decision-making processes in terms of goal setting 5 Conclusions 74 prior to engagement to the project differed (Dew et al., 2008; Cyert & March, 1963). The conclusions are divided on theoretical and managerial contributions, discussed in the following sections in more detail. 5.1 Theoretical contribution 5.1.1 Conceptual contributions Considering the potential usage of exaptation in international operations literature (Santangelo & Stucchi, 2018), the first literature analysis provides a review of the past theories, a critical review with perspectives left to lesser attention (e.g., Bonifati, 2013; Andriani & Cattani, 2016), and illustrates the complementary approaches in economics literature. This contributes to the understanding of the exaptation theory by creating a systematic characterization of the terms exaptation and adaptation (based on Lloyd & Gould, 2017; Gould & Vrba, 1982), recommendations for future study design, and summary of the theory. Exaptation theories can be roughly divided into theory development and complementary approaches. Complementary approaches include a wide variety of esteemed scholars (e.g., Kauffman, 1995, 2000; Mokyr, 2002; Burgelman, 1983). Exaptation theory development has five stages, the introduction of the concept to economics (Dew et al., 2004; Cattani, 2006), illustrating the significance of exaptations in competitive advantage (Read et al., 2009; Dew et al., 2008; Marquis & Huang, 2010; Peteraf, 1993), acknowledging secondary development (Andriani & Carignani, 2014; Andriani & Cohen, 2013), introduction of the integrated framework (Andriani & Cattani, 2016), and the recent clarifying additions on study design (Andriani et al., 2017). Expanding this, the review in this dissertation incorporates theories excluded from previous reviews, such as the degeneracy aspect (Bonifati, 2013), complexity in innovations (Bonifati, 2010a, 2010b), and internationalization (Santangelo & Stucchi, 2018). In addition to this, it emphasizes the need for the use of exaptation with adaptation simultaneously as a theory construct (Ching, 2016; Lloyd & Gould, 2017). This is especially significant as, in evolutionary theory, adaptation and exaptation are complementary terms explaining both the branching of niches and the evolution of lineages (Lloyd & Gould, 217; Gould & Vrba, 1982). However, economic theories explicitly incorporating both exaptation and adaptation are scarce (although, see Ching, 2016), leading to the miscategorization of exaptations (Lloyd & Gould, 2017) and potentially to contradictory empirical evidence (e.g., Santangelo & Stucchi, 2016; Cattani, 2006). Thus, the review contributes to the operationalization of exaptation and adaptation in empirical study design, creates a base for theory utilization, and positions the findings made in international operations to the literature in other economic paradigms. 5.1 Theoretical contribution 75 In the second review, the systematic analysis of the internationalization theory raises issues, firstly, related to the existing theory frames and proposed future research questions, and, secondly, a comparative analysis to the exaptation-adaptation theory provided a research agenda for empirical studies (Table 6). Here, the review was further revised and theory constructs based on the exaptation-adaptation theory were developed (see Table 18). Moreover, this dissertation highlights in the empirical evidence why exaptations may be significant in international operations over long periods of time (following Santangelo & Stucchi, 2018), and the emergence of novel solutions based on location-bound knowledge (following Schwens et al., 2018), also explaining the contradictory empirical findings of exaptations in internationalization (see Cattani, 2006; Santangelo & Stucchi, 2018). This dissertation continues the introduction of exaptation to international business literature. Linear internationalization resembles adaptation (see e.g., Santangelo & Mayer, 2011, 2015; Cyert & March, 1963; Johansson & Vahlne, 1997), and novel (“quirky”) events are examples of disruptive incidences beyond the explanatory capabilities of linear internationalization theories (Santangelo & Meyer, 2011, 2017). However, while existing internationalization theories explain a variety of phenomena (see e.g., Knight & Cavusgil, 2004; Johansson & Vahlne, 1977; Verbeke & Ciravegna, 2018), linearity and non-linearity in longitudinal development is not exclusively defined. Here, the differences can be loosely defined as two distinct patterns, one of relatively little variation between two back-to-back solutions and the other with a significant variance between the two. Hence, a branching pattern may emerge from the latter. Exaptation has been introduced as a concept capable of describing such disruptive development patterns (Santangelo & Meyer, 2018), while such patterns are missing from previous theories (also, Santangelo & Meyer, 2011, 2017). Therefore, this study contributes to the internationalization theory by introducing a frame to analyze both linear and non-linear, that is, exaptive patterns in internationalization, responding to several calls (e.g., Santangelo & Meyer, 2011, 2017). Consequently, this dissertation makes two additional contributions; a revised research agenda and recommendations for study design using the exaptation-adaptation theory. In analyzing previous research agendas, it became evident that current theoretical models cannot fully address the additional issues raised. Understanding decision-making following, for example, the Uppsala model (Johanson & Vahlne, 2013, 2014; Poole & Van de Ven, 2010, p. 551; Lewin & Volberda, 2003, p. 575) and interpreting subjectivity (Forsgren & Johanson 2010; Welch et al., 2016) have been called out on their limitations (Schwens et al., 2018). Moreover, the complexity of inter-organizational and environmental impact is only partially incorporated in the current models (Reuber et al., 2017; Johansson & Vahlne, 1990; Geels, 2004; Autio et al., 2014), as is the inclusion of change (Welch et al., 2016), and there is a general lack of concept definitions (Santangelo & Meyer, 2017; Johansson & Vahlne, 2013, 2015; Contractor, 2007; Madsen & Servais 1997; Cantwell 2010; Verbeke & CIravegna, 2018; Paul & Rosado-Serrano, 2018). The use of exaptation-adaptation theories provides more insight into these issues by demonstrating two potential paths in decision-making, following behavioral theories. 5 Conclusions 76 Furthermore, the use of the theories enables the study of SMEs and MNEs under the same construct, gives definitions to the impacting environment (understood as an ecosystem), and explains differences in the speed of internationalization, contributing to the existing models (see Table 18). Finally, this dissertation highlights recommendations for future use of exaptation and adaptation in empirical studies. These are the characteristics of exaptation and adaptation (see Figure 3), defining linear and non-linear internationalization as exaptation and adaptation (see Figure 4), defining differences between the usage of artifacts as a base for differentiating between the two (see Table 5), and creating a revised future research agenda (see Table 18). 5.1.2 Empirical contributions Addressing the longitudinal dynamics in internationalization, the first empirical study, it is concluded that as internationalization expands over several decades, it consists of multiple and simultaneous exaptive and adaptive processes. The construction of the first subsidiaries in both cases increased the number of exaptations significantly. This highlighted the emergence of perceived novel solutions (Reuber et al., 2017), while the general operations followed an adaptive pattern fairly similar to the Uppsala model (e.g., Johansson & Vahlne, 1977). Previous studies illustrate that, following the exaptation theory (Dew et al., 2004), exaptation emerges when the need is urgent (Dew & Sarasvathy, 2016; Santangelo & Stucchi, 2018). The study indicates that the expansion to host-country context creates a similar need, following the previous studies of exaptations in international operations (Santangelo & Stuchi, 2018). In addition to this, the concept of exaptation pointed out where the origins of non-linear patterns lie (Santangelo & Meyer, 2011, 2017; Hadjikhani, Hadjikhani, & Thilenius, 2014). However, the evidence suggests that not all novel solutions are pursued. In fact, most were not. This is in line with exaptation in internationalization (Santangelo & Stucchi, 2018), but it adds to the conclusions that some are pursued, somewhat contradicting previous studies. However, this is in line with exaptation in economics (Cattani, 2006). Further, the novel solutions pursued were highly significant and are the current basis for operations in both cases (Cattani, 2006; Marquis & Huang, 2010); according to the exaptation theory a similar situation may also yield novel market solutions (Cattani, 2006; Andriani et al., 2017; Dew et al., 2004). Therefore, the study concludes that the exaptation-adaptation theory describes the emergence of non-linear events in internationalization, while illustrating linearity simultaneously. Moreover, it reveals the frequency of such events upon first-time entry to host-location, and the significance of novel events in the past in global operations. In sum, international expansion launches several simultaneous searches for new solutions. The evidence suggests that subsidiary construction plays a significant part here, 5.2 Managerial implications 77 illustrating knowledge transfer between host- and home-country operations. Further, this creates the basis for a new global strategy, although it is evident only after several decades. This indicates the reasons for global success lie in location-bound knowledge processes, and the incorporation of such to non-location bound knowledge takes significantly long. Addressing the individual decision-making processes in internationalization, in the second empirical study of this dissertation, the questions raised by the first empirical study are examined. In international operations, exaptations seem to emerge in great numbers, while they are seldom pursued further. The factors impacting the perception and pursuit of novel solutions lie in organizational goal setting. In first-time M&A, post- acquisitional restructuring increase novel solutions (Santangelo & Stuchhi, 2018) - the study confirms this finding in relation to other FDI modes (e.g., brownfields). It is concluded that Case I was an example of adaptive process and that Case II was an example of exaptation. Previous experiences in Case I suggest exaptation theory of functional fixedness (Felin et al., 2016) and the presence of an adaptive pattern. Case II was based on replication (Winter & Szulanski, 2001), or mimicry (Anand et al., 2009; DiMaggio & Powell, 1983); however, this did not limit future options. This follows the exaptation theory, in that the interactions between the environment and an actor may reveal possible new uses (Felin et al., 2016), but will also illustrate asset combination (Collinson & Narula, 2014) under uncertainty (Figueira-de-Lemos, Johanson, & Vahlne, 2011; Liu & Almor, 2016). Contradictory to previous studies (Johansson & Vahlne, 1977; Hennart & Reddy, 1997; Kogut & Singb, 1988), specific prior experiences did hinder the examination of improved solutions in Case I. Here, it is speculated that this was due to the goal setting (Cyert & March, 1963; Dew et al., 2008). This also follows the notion of firms optimizing actions in exploitative FDI than in explorative (Anand et al., 2009). In sum, an examination of the processes followed the patterns of adaptation and exaptation, hence, prior to construction, the goal setting of the firms differed. This resulted in a semi-optimal, yet predictable solution in Case I, and a fully optimal, yet unplanned solution in Case II. This illustrates the processes behind non-location bound knowledge creation, that is, enabling elements relating to a wider search for solutions, contributing to the understanding of transferring location-bound knowledge to globally exploitable knowledge (following Schwens et al., 2018). 5.2 Managerial implications In international operations, the exaptation-adaptation theory highlights the significance of first-time entry, the creation of global strategy, the limitations of perception and pursuit of optimal solutions, understanding the limitations of location- bound knowledge creation, and systematic comparative evaluation of firm attributes and 5 Conclusions 78 processes in internationalization. In particular, the empirical evidence highlights the unforeseen forces resulting from local organizational environment impacting international operations, making the findings highly beneficial for managers. The exaptation theory notes that exaptations can be created especially under uncertainty and lack of resources, such as the several solutions for Apollo 13 (Dew et al., 2004). In international expansion, the context change from home-country operations to host- country operations creates a competency gap difficult to fill. Evidence concludes this gap can be filled with exaptive repurposing of existing capabilities (Santangelo & Stucchi, 2018). The empirical evidence in this dissertation continues this by illustrating that the amount of exaptations emerging after first-time entry is significant. Studies on expansion to new locations emphasize the incremental nature of operations, such as reducing risks in explorative FDI with mimicry (Anand et al., 2009; Figueira-de-Lemos, Johanson, & Vahlne, 2011; Liesch et al., 2011; Liu & Almor, 2016), accumulation of experience (Hennart & Reddy, 1997; Johanson & Vahlne, 1977; Kogut & Singh, 1988) and adapting to cultural differences (Barkema, Bell, & Pennings, 1996; Cheng, 2006; Kogut & Singh, 1988), or the repetition of successful acts (March, 1981, 1991). The existence of exaptations further illustrates that novel solutions are searched as well. For example, prior to the first subsidiary construction, in both cases in the first empirical study, very few patents that were analyzed fit the definition of exaptation. As the first subsidiary was built, the amount increased significantly; however, simultaneous adaptive development was evident. This suggests two differing processes, following previous studies on internationalization (e.g., Anand et al., 2009; Hennart & Reddy, 1997; Johanson & Vahlne, 1977; Kogut & Singh, 1988), but also how additional patterns can be noted (Santangelo & Stucchi, 2018). When comparing the studies in this dissertation and previous studies in internationalization, two potential reasons for exaptations in each can be identified. To compensate for the lack of knowledge in the competency gap, a new solution is needed (e.g., Dew & Sarasvathy, 2016). This is one of the reasons exaptations have been suspected to occur, while the other is the creation of new markets. As the usage was limited to first-time FDI, but not subsequent (see Santangelo & Stucchi, 2018), exaptations in M&A seemed to be dismissed. Contradictory to this, the empirical evidence in this dissertation further suggest that exaptive solutions contributed significantly to the global strategy after decades, similar to new market creation (Dew & Saasvathy, 2016; Dew et al., 2004). Thus, this evidence suggests that the differences in the need for exaptations may contribute to their survival over the long term. This is in line with the exaptation theory, as they are not limited to uncertain environments, but are also a mechanism behind entrepreneurial behavior (Read et al., 2009; Dew et al., 2008; Sarasvathy, 2005), active search for new market opportunities (Cattani, 2006; Dew & Sarasvathy, 2016), and a selected strategy (Ching, 2016; Lane & Maxfield, 2005; Lane, 2011). The empirical evidence supports this also in the second study on brownfield investment. When the exaptive path was selected, the final outcome of the project was superior, in terms of the goals set at the outset. This highlights two potential benefits in using the 79 exaptation-adaptation theory in the study of internationalization. First, entry into new locations induces the potential amount of exaptive solutions. This is also described in the exaptation theory (Levinthal, 1998), cognitive processes (e.g., Felin et al., 2016), and in internationalization (Santangelo & Stucchi, 2018; Guillén & García-Canal, 2009; Guillén, 2005). Second, there may be differences in the pursuit of exaptations due to the conditions under which they emerge. Exaptations have been said to either answer to a dire need (e.g., Apollo 13, see Dew et al., 2004), or create a new need (e.g., Post-Its, see Garud et al., 2016). In the context of international operations, overcoming the competency gap fits the description of the former, whereas the development of a new global product line fits the latter. Further, the former seems to remain a one-time solution (Santangelo & Stucchi, 2018). This is significant in both, understanding the impact of host-country context to firm operations, yet also in understanding the development of international operations – in the former the general pattern may remain relatively linear, whereas in the latter a disruptive event continuing as a new direction is evident (see Figure 3). Using exaptation and adaptation as complimentary theory structures to existing internationalization theories, the individual decision-making processes can be addressed. The behavioral theories based on the concepts illustrate two cognitive paths resulting in final outputs; one relies on a more predictive stance, while the other similar to entrepreneurial opportunity search (Dew et al., 2008; Wiltbank, Read, Dew, & Sarasvathy, 2009; Cyert & March, 1963). Exaptation describes the possibilities that arise from unintentional interactions with the environment (Felin et al., 2016; Felin et al., 2014). For managers, understanding the existence and the effects of such a possibility may lessen the effect of cognitive biases on decision-making. Further, opportunities for novelty may arise from social interactions (e.g., Garud et al., 2016; Read et al., 2016). Adaptation refers to a decision-making pattern similar to single loop learning and evolutionary processes in decision-making (e.g., Lewin & Volberda, 2003; Poole & Van de Ven, 2010), and has also been suggested to complement internationalization theories (e.g., Santangelo & Meyer, 2011, 2017; Johansson & Vahlne, 2017). However, the lack of inclusion of exaptation in approaches has prevented a coherent operationalization of the term. For example, the term “selection” (e.g., variation-selection-retention process of evolution, see Campbell, 1969) is often used in addition to adaptation to explain intentionality in solution selection (e.g., Poole & Van de Ven, 2010; Santangelo & Meyer, 2011, 2017). Adaptation is classified as a response to external demands, selection is seen synonymous to a cognitive, intentional “selection.” However, intent is notoriously difficult to measure (e.g., Andriani et al., 2017; Vidaillet, 2008), and selection of adaptive traits is as likely as exaptive traits (similarly, Marquis & Huang, 2010; further Lloyd & Gould, 2017). Thus, the cognitive processes behind decision-making cannot be addressed with adaptation, selection, nor exaptation. Similarly, while entrepreneurial behavior can be recognized (Dew et al., 2008), studies cannot determine why or when (e.g., Read et al., 2016). Nevertheless, the potential for solutions differs (e.g., Kogut & Kulatilaka, 1994; Winter & Szulanski, 2001; Garud & Karnoe, 2001; Garud et al, 2016). In theory, the amount of potential exaptations is unlimited (e.g., Felin et al., 2016), and the difference between the pursuing one or the continuing adaptive path can be determined based on evolution (Lloyd & Gould, 2017). However, limitations and further implications 5 Conclusions 80 of decision-making theories, such as real options reasoning (ROR) (e.g., Barnet, Rogere & Dunbar, 2008) fall beyond the scope of this dissertation. In sum, based on exaptation and adaptation, it can be deduced when a solution was intended for its current purpose and when not. This can present a diving line to luck and managerial foresight (Andriani & Cattani, 2016; Garud et al., 2016; Andriani et al., 2017; Dew & Sarasvathy, 2016; Henderson, 2000), and reasons for the perception of exaptations lie in the goal setting in the search for solutions (e.g., Dew et al., 2008). While the IP theories cannot fully explain the interconnections between location- and non-location bound knowledge (Schwens et al., 2018), evidence indicates that the external impact of host country operations does continue to internal operations (Santangelo & Stucchi, 2018). The interplay between the actor, that is, organization, and the environment, is illustrated in the conceptualization of internationalization as an evolutionary process (Santangelo & Meyer, 2011, 2017; Johansson & Vahlne, 2013, 2014; Contractor, 2007) and emphasized in turning the focal point to context significance (e.g., Welch et al., 2016; Reuber et al., 2017). Exaptation and adaptation follow the behavioral theories illustrating the impact of the environment (Cyert & March, 1963), individual behavior in networks (following ANT, see Latour, 2005; Andriani & Cattani, 2016), the creation of novelty in networks (Von Hippel, 2005; Von hippel et al., 2012), and narrative construction of solutions in social reality (e.g., Garud et al., 2016). Further, exaptation has been suggested to illustrate the exogenous impact of context, and the emergence of variance (Read et al., 2016, p. 532; Felin et al., 2016; Grandori, 2007) Thus, they are capable of describing a multitude of phenomena impacting the emergence of solutions. Location-bound learning refers to unique solutions for a particular location, utilizing the external knowledge of locational networks and actors. This resembles the premise-inducing possibilities for exaptations (Levinthal, 1998; Santangelo & Stucchi, 2018). On the contrary, the utilization of non-location bound knowledge may enhance the perception of exaptation or quite the opposite. In the empirical evidence of this dissertation, two possible patterns of knowledge utilization on location were defined, exaptive and adaptive. Based on the theoretical origins, the latter was due to limited goal setting, whereas the prior to a wider goal setting for the final output. Further, the prior was suspected to result from existing non-location bound experience, that is, in water cooling, infrastructure reuse, and grid reliability; whereas the former was an example of creating novel knowledge based on locational advantages, that is, all year round free air cooling, grid reliability measures. This illustrates the differences in learning from location; however, this requires further study on the type of prior experience, current impact of the processes, and the role of mimicry (e.g., Winter & Zulanski, 2001). The use of the theories enables two simultaneous benefits in the internationalization theory: understanding the capability of novel market creation as an attribute existent in all firms, that is, it is not a static quality or lost after stakeholder demands grow (Dew et al., 2008), but also creates an approach where two different processes of internationalization can be compared. The internationalization theories concluded that there are two varieties in the speed of internationalization, the rapid international 5.3 Study limitations and future research 81 expansion and the gradual. However, it is debated if the theories indeed address two types (e.g., Verbeke & Ciravegna, 2018), and what are the characteristics of firms engaging on either (e.g., Paul & Rosado-Serrano, 2019) and why not all firms learn from international operations in the same manner (e.g., Schwens et al., 2018). Exaptation and adaptation describe sequential processes that are not bound by temporal measures. While a single process may take several decades, by definition it still constitutes a pattern resulting from non-linear events (Cattani, 2006; Marquis & Huang, 2010). Similarly, a single event contributing to linear patterns may emerge several times a week (Andriani et al., 2017). The exaptation-adaptation theory contributes to the internationalization theories for several reasons. First, it highlights the impact of first-time entry to internal processes. Second, it enables the operationalization of multiple constructs, such as decision-making, longitudinal internationalization, speed of internationalization, and contextual significance in operations. Third, it provides existing definitions for theory constructs suitable for empirical studies incorporating multiple firms (e.g., SMEs and MNEs). Fourth, it introduces new potential study subjects, such as the impact of novel solutions to firm operations based on their criticalness to current operations. Finally, it introduces new elements beneficial in addressing discourses in current theories, such as the comparison between the IE and Uppsala model approaches, disruptive developmental patterns and subsidiary significance in the creation of globally exploitable knowledge. 5.3 Study limitations and future research 5.3.1 Study limitations This dissertation builds on a theoretical concept new to internationalization theories. Therefore, existing guidelines for study design have been limited, and theories referred to in this dissertation may fall beyond the scope of international operations. Hence, while there are several limitations, there is also much potential for subsequent analysis. The selection of the empirical material for the reviews is open for critique, although it was designed following existing recommendations while taking into account limitations in material. For the preliminary review on exaptation, a search protocol provided 580 (Web of Science) results, with only a few from economics. Further, although some studies in the referenced literature were still in their developmental stages, that is, conference proceedings, they were included, and it was expected for some manuscripts to develop into more mature publications; the introduction of exaptation to internationalization (Santangelo & Stucchi, 2018) is an example of such. Further, it is suggested here that the ad-hoc design of the preliminary review built a base for theoretical knowledge on 5 Conclusions 82 exaptation, resembling the grounded theory method and theoretical sensitivity (see e.g., Strauss & Corbin, 1994, 1998; Denzin, 2009). Following this, the design of the systematic review on internationalization and the exaptation-adaptation theory is also subject to critique. The selection of manuscripts aimed to create conclusions that are subjective, not following the conclusions of previous research agendas in international operations (e.g., Laufs & Schwens, 2014; Paul & Rosado-Serrano, 2019; Paul et al., 2017; Rosado-Serrano, Paul, & Dikova, 2018). Following the review of literature on international operations (Rugman et al., 2011), the focal point was selected as the original manuscript for the Uppsala model (Johansson & Vahlne, 1977), and manuscripts were searched based on citations. Thus, the focal point is on the chronological appearance of most influential works of each parallel stream (e.g., Keupp & Gassmann, 2009, p.605). In addition to this, the review consisted of two rather massive paradigms, the internationalization theory and the exaptation-adaptation theory. Examples of the usage of adaptation are in decision-making theories (e.g., Ven der Ven & Poole, 2010); organizational learning (Cyert & March, 1963); and exaptation has been connected to effectuation logic (e.g., Arend et al., 2015), complexity theory on innovation (Bonifati, 2010a, 2010b), and economic history (Mokyr, 2002; Kauffman, 1995, 2000; Andriani & Cattani, 2016). Similarly, theories building on top of the Uppsala model were limited accordingly (e.g. Garbrielsson et al., 2006; Luostarinen & Gabrielsson, 2006). Hence, the sources were limited on both streams, and paradigms deemed beyond this particular subject were excluded. Hence, the review may lack with regard to the details of each stream studied. However, as the focal point is intended to illustrate a brief review of the behavioral aspects of internationalization, this was considered acceptable. Simultaneously, it is noted that the review may not present a full comprehensive view of the field of international business research. Further, much analysis focused on meta- theoretical origins, as the paradigms compared in the review were at times different. Here, similar perspectives were studied (e.g., Scherer, 2003, 2015), yet the analysis can be considered subjective in nature. In designing the empirical studies, the previous suggestions were followed, yet the design was to some extent ad-hoc. As the current studies related to exaptation in internationalization differ from some longitudinal studies (Cattani, 2006), while resembling some more closely (Marquis & Huang, 2010), the study of exaptation is sensitive to misevaluation. In the previous studies on industry shifts, the changes in comparison to the original were radical in nature, hence the evidence from exaptations was more easily detected. In international operations, this is an unlikely case, as such incidents are rare in general. Hence, recent suggestions (Andriani et al., 2017) pointed toward a more qualitative approach, making the analysis here different from previous studies in international operations. However, the findings suggest that this did not impact the significance of the contributions. Further, the empirical material consisted of archive records and historical analysis, since in some cases the companies refused interviews, making triangulation of evidence (e.g., Miles & Haberman, 1994; Siggelkow, 2002; Cattani, 2006) difficult (although, see Hammersley, 2008). In addition to this, industries 83 besides the pharmaceutical industry lack similar databases, with records of intended, emerging, and novel purposes at a given time. However, it has been said that patents resemble a similar source, as upon application the internal perception of the invention is more clearly defined, whereas in the general public this may be later marketed as something different (Andriani et al., 2017). Here, it is further suggested that mandatory environmental and government licenses are similar to a degree. Additional limitations in the theories used in this dissertation exist as well. This dissertation illustrates how the exaptation-adaptation theory could benefit the internationalization theories. In doing so, additional theories were used as examples, such as effectuation logic (Dew et al., 2008), decision-making theories (e.g., Poole & Van de Ven, 2010), and organizational learning (Cyert & March, 1963). However, addressing these theories in full falls beyond the scope of this particular dissertation. Moreover, some current usages of evolutionary terms in the additional theories are partially incorrect. For example, the multilevel decision-making motors (Poole & Van de Ven, 2010) do not resemble the variation-selection-retention cycle of the evolutionary theory (e.g., Campbell, 1969; Lloyd & Gould, 2017), the incorporation of exaptation to effectuation logic (Read et al., 2016, p. 532), understanding selection and adaptation in organizational learning theories (Lewin & Volberda, 2003), and internationalization as an evolutionary process (Santangelo & Meyer, 2011, 2017) are similarly in need of conceptual clarifications. However, this implies the incorrectness of the additional theories rather than the explanatory potential of exaptation that is often linked to the concept of adaptation, as exaptation is relatively new in comparison to the adaptation-selection theory. This also results in definitions in this dissertation differing to some extent from existing definitions in internationalization, such as for example non-linear events in internationalization (e.g., Vissak & Francioni, 2013). Finally, in order to fully assess the added contributions of the exaptation-adaptation theory in location-bound learning, there are limitations in the empirical evidence. Experiential learning theories emphasize the variety of experiences (Vahlne & Ivarsson, 2014; Vahlne & Jonsson, 2017; Hennart & Reddy, 1997), or various entry mode experiences (Santangelo & Stucchi, 2018; Canabal & White, 2008). In the cases of the second empirical study, no data was available on the investments made by IBM previously, as the locations and solutions of their data centers are not known. Further, the potential impact on FDI selection strategies (e.g., Le Bas & Sierra, 2002), and the evidence of locationally created knowledge utilized in future operations was not studied. In other words, at the time of the material collection, no data was available on subsequent data center construction and solutions based on locations. This would have benefitted the understanding of knowledge transfer in both cases, hence, remaining a potential future study subject. 5.3.2 Future study suggestions 5 Conclusions 84 In the research agenda created in this dissertation, several detailed questions for potential studies are illustrated (see Table 18). As the exaptation-adaptation theory is scarcely used, several contributions made in this dissertation would benefit from subsequent study and analysis. Few in particular arise following the empirical evidence. First, what is the significance of host-country context to the amount of exaptations. Exaptations require, by definition, a change in domain (e.g., Levinthal, 1998), and international entry is an example of such change in domain (Santangelo & Stucchi, 2018). It is concluded that host-country operations are at least, to some extent, unique (e.g., Eriksson et al., 1997), hence, the uses for solutions in host-country operations are likely to be emergent. Here, it was concluded that international entry increased the amount of exaptations significantly, but what is the correlation between for example a variety of CSAs? Further, does an increase in, for example, geographical distance relate to the amount of exaptations, and if so, in which way? The empirical evidence related to this was collected during the first subsidiary construction in publication III from two bordering countries. How would the results differ if the first-time entry would be further in a geographical, perhaps also psychological sense (e.g., Johansson & Vahlne, 1997; Hofstede & Hofstede, 2005)? While this may be challenging to determine and may not be noted by the firms themselves (Marquis & Huang, 2010), it suggests there is much to still discover of the creation of global competitive edge (Collinson & Narula, 2014; Peteraf, 1993). Here it is hypothesized that the probability of exaptive solutions may increase as a function of unfamiliarity, that is, psychic distance (e.g., Johansson & Vahlne, 1977; Barkema, Bell, & Pennings, 1996) in host-country operations. In essence, as the geographic and/or psychic distance increases, the number of exaptations should increase in a situation where variety in experiences and mode-specific knowledge (e.g., Schwens et al., 2018) do not change. On the contrary, are exaptations significant in other contexts than emerging economies? In the empirical evidence related to longitudinal internationalization processes, the subsidiary construction locations were nearly all in emerging regions. The first expansion took place in the Czech Republic in the 1990s, directly after the Cold War had ended. In the mid-1990s, they were closer to emerging economies (OECD Data, National income, 2016), such as the current BRICS countries (Brazil, Russia, India, China, and South Africa), rather than developed, similar to Austria. This has been noted in studies as nearly all post-soviet regions experienced a significant decrease in their GDP in the early 1990s (Svejnar, 2002, Figure. 1, p. 9). Further expansions were also directed largely to emerging economies, such as China in the mid-2000s and India in 2010. This raises a question, is exaptation induced by emerging economies only in the internationalization process? Previous findings in international operations also focus on empirical material collected from emerging economies, such as India (Santangelo & Stucchi, 2018). Therefore, another potential subject for study is: are exaptations in large amounts significant in developed regions? 85 Second, what are the potential paths for niche branching in international operations, and why are they pursued. The theory of exaptation suggests there are at least four potential paths after the shift in function (Lloyd & Gould, 2017; Andriani & Cattani, 2016). Exaptation may either remain unnoticed (e.g., Marquis & Huang, 2010), become useless (Lloyd & Gould, 2017; Garud et al., 2016), be dismissed (Santangelo & Stucchi, 2018), or further developed, as the evidence in this dissertation concludes. Further, it has been suggested that a shift in function may reveal new options and shadow options (Andriani & Cattani, 2016). These may reveal new potential exaptations, adaptive development paths, or lead to nowhere, probably causing the initial exaptation to be dismissed. While it cannot be concluded here fully, the evidence indicates the last could have happened in relation to M&As in a dire need for solutions, that is, competency gap. The solutions in Case II in this dissertation may indicate the continuation of exaptation with adaptive development, only made possible after a shift in function first. The theoretical contributions might resemble or line with such concepts as ROR, however, the reasons, paths, and the potential obstacles in the selection of solutions require further evidence and analysis. Continuing this, what is the significance of shadow options in international operations? Shadow options, or options not available prior to shift in function, is a relatively new term to the exaptation theory ( e.g., Andriani & Cattani, 2016). However, tracking a path of realized actions and the reasons behind that is a potential study subject for the utilization of exaptation. In addition to the suggestions made in this dissertation, novel directions for subsequent studies would be, for example, what is the degree of selection in global exaptive and adaptive strategies? Understanding the underlying conditions between the selection of exaptive or adaptive strategies in international operations would also provide insight into the interconnections between limitations of non-location bound learning, and how location-bound learning may lessen these (e.g., Schwens et al., 2018). Moreover, what is the significance of entry modes in inducing exaptation? In this dissertation, it was concluded that both companies’ expansions were exploitative, resulting in simultaneous exaptive and adaptive strategies. Previous studies note that explorative FDI modes are particularly more prone to mimicry, whereas exploitative may result in relatively little local limitations (Anand et al., 2009), enabling exaptation. This is further in line with the exaptation theory, as the perception of affordances is negatively affected by experience (Felin et al., 2016; Felin et al., 2014) and stakeholder commitment limiting exaptations (Dew et al., 2008). Previously, exaptation had been connected to first-time entry modes (Santangelo & Stucchi, 2018), yet understanding the impact and difference between FDI mode selection to exaptation could further improve our understanding of internationalization outcomes, antecedents (e.g., Autio, Sapienza, & Almeida, 2000), and balancing ambidexterity (e.g., Vahlne & Ivarsson, 2014; O’Reilly & Tushmann, 2010; Birkinshaw, & Gupta, 2013). New theories could potentially also incorporate both SMEs and MNEs (Verbeke & Ciravegna, 2018; Chetty et al., 2014; Paul et al., 2017; Paul & Sánchez-Morcilio, 2018; Paul & Rosado-Serrano, 2019; Santangelo & Meyer, 2017; Laufs & Schwens, 2014) and illustrate improved measures for the temporal dimension (Verbeke & CIravegna, 2018; Li et al., 2015; Reuber et al., 2017). In addition to future research agenda, the complementary approaches on exaptation indicate potential 5 Conclusions 86 directions for future studies utilizing the theory. Suggestions for such can be drawn from the analysis of the complementary approaches on exaptation (see Table 8). However, this falls beyond this particular dissertation and is illustrated in more detail in Publication I and II, in the appendixes. In sum, understanding unpredictable events in the internationalization process could benefit from the exaptation or adaptation conceptualization. Exaptive and adaptive processes are complimentary (Lloyd & Gould, 2017), and follow the definitions of linear and non-linear forms of development (Santangelo & Meyer, 2017; Santangelo & Meyer, 2011) in internationalization. While similar concepts have been applied (i.e., novelty, unpredictability, and quirky discontinuities) (Santangelo & Meyer, 2017; Santangelo & Meyer, 2011; Santangelo & Stucchi, 2018; Kriz & Welch, 2018), exaptation would suit the conceptualization better as a coherent extension of evolutionary concepts (Santangelo & Stucchi, 2018). Further, this allows greater scalability between individual firms and industry wide shifts. In international operations, the unit of analysis is a single firm (e.g., Santangelo & Meyer, 2017; Johansson & Vahlne, 2017; Vahlne & Johansson, 2017; Vahlne & Ivarson, 2014), and the scalability of the perspective aids in-depth understanding of a phenomenon. 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International opportunity realization in firm internationalization: Non-linear effects of market-specific knowledge and internationalization knowledge. Journal of International Entrepreneurship, 13(3), 242-259. Publication I Aaltonen, P. Sources for heterogeneity–A literature review on exaptation in economics Reprinted with permission from Academy of Management Proceedings Vol. 2019, No. 1, pp. 15032 © 2019, Academy of Management ID: 15032 Sources for heterogeneity – a literature review on exaptation in economics ABSTRACT Management theories occasionally utilize foundations from other disciplines, and exaptation and adaptation are examples of such, both based on Darwinian evolution. Exaptation describes a disruptive developmental process behind the development of wings, the invention of CD-ROM and Post-it’s, a fundamental source for heterogeneity. Recently, exaptation has suggested to bring new insights to entrepreneurial behavior, internationalization, and global product development. However, subsequent theory development illustrates a dilemma, as the theory is used in linquistics, technological innovations, evolutionary psychology and sociology, since the 1980’s. Where to begin? This paper is aimed to provide a starting point in the field of management by providing a literature review of the origins, concepts and current developments of exaptation, thus providing a perspective for future studies. Keywords: exaptation, adaptation, innovation, INTRODUCTION Exaptation and adaptation represent the yin and the yang of evolutionary development. Adaptation is an inherited trait increasing a fit to the environment (e.g. Campbell & Reece, 2003), a trait with a function. Exaptation is a trait with an effect (Gould & Vrba, 1982; Lloyd & Gould, 2017). Exaptation offers a framework beneficial in analyzing innovation as a multilevel construct (similarly, Anderson, Potočnik, & Zhou, 2014). However, the current literature on exaptation lacks a critical review. Exaptation is a discontinuous developmental path, and adaptation a consistent one. Adaptation is development with little variation (e.g. Cyert & March, 1963), linear, whereas exaptation is a fundamental source for heterogeneity (Grandori, 2007; Felin, Kaufman, Stuart & Mastogiorgio, 2016), a non-linear developmet (Santangelo & Stucchi, 2018). The has latter only recently gained attention (Dew, Sarasvathy & Venkataram, 2004; Cattani, 2006; Marquis & Huang, 2010), but the significance of the term lies in it’s ability to explain the origins “quirky” events (Santangelo & Stucchi, 2018; Aaltonen, Torkkeli, Worek, 2019; Dew et al., 2006), market heterogeneity (Felin et al., 2016; also Grandori, 2007), and in the ability to connect technological innovations to social interactions and the environment (Felin et al., 2016; Garud et al., 2016), also singificant to entrepreneurial behavior (see Arend, Saroogi & Burkemper, 2015; Read, Dew, Sarasvathy & Wiltbank, 2016, p. 532). However, a subsequent theories require a complex multidisciplinary literature review, lessening the potential of the concept. The problem lies in the scattered nature of previous literature. Currently, a handful of manuscripts exists in economic publications (e.g. Marquis & Huang, 2010; Andriani & Cattani, 2016), while thousands in evolutionary psychology. However, most recent review 2 reveals they tend to suffer from false underlying assumptions (Lloyd & Gould, 2017). Further, current anr previous results are contradictory (e.g. Cattani, 2006; Santangelo & Stucchi, 2018), and novel perspectives are not acknowledged (Bonifati, 2013). This has created scarce new empirical evidence (see Andriani et al., 2017; Santangelo & Stucchi, 2018; Aaltonen et al., 2019). While described in multiple economic perspectives (e.g. Burgelman, 1983; Kauffman, 1995, 2000; Levinthal, 1998; Adner & Levinthal, 2002; Mokyr, 2002; von Hippel, 2005; Tuomi, 2002; von Hippel, Jong & Flowers, 2010; Lane, 2011), a coherent review of the current status is missing. This manuscript addresses this by creating a starting point for new, systematic and rigour, empirical approaches. The following review is organized as follows: firstly, the concepts are defined, based on the original Darwinian concept (Gould & Vrba, 1982; Lloyd & Gould, 2017). Secondly, complimentary approaches are listed and theory development reviewed critically. Third, issues still remaining are introduced, and the new potential theoretical contributions suggested. DEFINING EXAPTATION Exaptation is a counterpart to adaptation, both describing the development of traits in the evolutionary process. Where adaptation is “selected” (see Lloyd & Gould, 2017), exaptation is co-opted (Gould & Vrba, 1982; Lloyd & Gould, 2017). Therefore, adaptative traits have a function, and exaptive an effect. Exaptation explains what adaptation can not. Adaptation means the development of a feature to better fit its purpose, or in biology, an inherited trait improving survival (e.g. Campbell & 3 Reece, 2003). One significant aspect this illustrates is the double requirement of adaptation (Lloyd & Gould, 2017). In other words, the trait was beneficial in the past, and currently. Hence, over generations, a systematic and relatively stable, selection process emerges (see Loyd & Gould, 2017; Gould & Vrba, 1982; also Campbell, 1969). Yet, stable forces are not the only option for a developmental path emerging (e.g. Gould & Vrba, 1982; Lloyd & Gould, 2017). The notion of exaptation arose from the critique of Gould and Lewontin (1979) on this widely used traditional terminology, describing biological adaptation, which was unable to distinguish between the current utility of a feature in the structure of an organism and the reasons for its origins. Therefore, exaptation was introduced by Gould & Vrba in 1982, correcting this flaw. Fit, function, and effect are the concepts differentiating exaptation and adaptation. The etymology of adaptation consists of ad- and -aptation. Aptation refers to an improved fit (see Lloyd & Gloud, 2017, Table 1., p.51), regardless of past. The ad- prefix illustrates an increase in fit due to design – resulting from selection processes (Lloyd & Gould, 2017), i.e. the trait has a function (Gould & Vrba, 1982). Pre-adaptation preceeded exaptation (X-aptation), yet as the word implicitly suggests that the unknown future use was somehow planned or predetermined in advance, hence, exaptation suited the phenomenon better (Gould & Vrba, 1982). An exaptative trait has an effect – increasing fit without designed to do so (Gould & Vrba, 1982). This does not differentiate whether there was a past function or not, nor the amount of generations the prior to selection of the co-opted traits effect (similarly, Andriani & Cattani, 2016; Felin et al., 2016). Hence, exaptations may turn in future generations into adaptations, secondary adaptations (Lloyd & Gould, 2017) and reffered in this paper generally as second generation. In essence, exaptations are always co-opted, while 4 adaptations selected (Lloyd & Gould, 2017), and any adaptive trait has a limited number of current functions and a theoretical infinite amount of possible effects (e.g. Andriani & Cattani, 2016). In biology, examples of exaptation are the development of wings on dinosaurs (Gould & Vrba, 1982; Lloyd & Gould, 2017; Dew et al., 2004; Andriani & Cattani, 2016), and swim bladders exapted from floating to breathing (Gould & Vrba, 1982; Santangelo & Stucchi, 2018), regarded as evolutionary novelties in comparasion to adaptation (e.g. Campbell & Reece, 2003). These are concepts are illustrated in Table 1. ------------------------------------------ Insert Table 1 about here. ------------------------------------------- Humans have the capability to induce exaptation. Natural selection can only improve a structure in its current function, not predict the future (Campbell & Reece, 2003, p.483). Humans, on the other hand, have increased capability for cognitive processes, such as social constructs (e.g. Garud et al., 2016; Mokyr, 2002), indicating exaptations should be more common in the economic history as in evolution (Mokyr, 2002). In fact, economic studies on exaptation indicate the same. A recent study on the pharmaceutical industry indicated that 40% of new drug uses were exaptive in nature (Andriani, Ali & Mastrogiorgio, 2017). EXAPTATION IN ECONOMICS The literature on exaptation in economics can be divided into two categories. Firstly, scholarly work referring to exaptation, yet contributing little to the theoretical development of the concept, and second, theoretical contributions to exaptation theory. The prior is referred to here as complimentary approaches, and the usage of the term “exaptation” may vary. 5 Complimentary approaches to exaptation Examples of exaptation theory are multiple. Incidences of exaptation have been reported in evolutionary psychology (Buss, Haselton, Shackelford, Bleske & Wakefield, 1998), biology (Gould & Vrba, 1982), and linguistics (further see e.g. Adriani & Cattani, 2016). Already Nietzsche (1887) painstakingly distinguished between the current beliefs or habits of men from how they came about, previously serving some other purpose arising from different origins. The complimentary theories on exaptation illustrate why and how the concept fits economic theories. For examaple, exaptation has said to be a fundamental mechanism in the expansion of technosphere (Kauffmann, 2000; Mokyr 1998), explaining the emergence of radical innovations (Levinthal, 1998), the relationship between rivalrous and non-rivalrous goods (Lessig, 2003), innovation communities creative new uses (von Hippel, 2005; von Hippel, De Jong & Flowers, 2010), explaining transformative capacity (Garud and Nayyar, 1994) and performance or potential gap (Grandori, 2007). The scholarly work referring to the concept of exaptation in economics is illustrated in Table 2, the historical indicents suggested to originate from exaptation in Table 3 and a summary of the introduced benefits of exaptation theory in Table 4. ------------------------------------------ Insert Tables 2, 3 and 4 about here. ------------------------------------------- 6 From 2004 on (Dew et al., 2004), a stream explicitly describing the economic implications of exaptation theory emerged, continuing to 2019 (Aaltonen et al., 2019). However, the roots lie in behavioral approaches and in critique towards adaptive organizations (Cyert & March, 1963; March, 1989, 1991; Levinthal, 1998; Adner & Levinthal, 2002; Aldrich & Rueff, 2006). Early theories on exaptation – innovations as evolutionary processes Notions of a phenomenon similar to exaptation can be traced back to critique towards adaptive organizations (see Aldrich & Rueff, 2006). The early complimentary theories (in particular, Levinthal, 1998) suggested technology-domain combination, i.e. exaptation, in the presence of little technology change, explains the unexplained emergence of innovations. Later, in 2004, exaptation was officially introduced to economics by two seminal pieces (Cattani, 2006; Dew et al., 2004). Behavioral theorists suggested organizations are adaptive in nature (Cyert & March, 1963), and the early adaptive organization theories (Cyert & March, 1963) were refined to incorporate the first notions of exaptation in management, such as blind variations resulting from chance, luck, or accidents (Aldrich & Rueff, 2006; March, 1989), and exogenous jolts (March, 1991). However, exaptation was first introduced to management by Dew, Sarasvathy & Venkataram (2004) in their article “The Economic Implications of Exaptation”. Here, evidence from Apollo 13, CD-ROM technology and the development of wings were compared, and concluded exaptation would also benefit the understanding of economic incidents. Especially innovative solutions taking place in uncertain environments seemed to 7 fit the theory, and this is further supported by more recent empirical evidence (Santangelo & Stucchi, 2018). During the Apollo 13 mission, an ongoing crisis situation enabled innovative repurposing of existing materials not designed for their newfound usage (Dew et al., 2004). The CD-ROM technology was developed to improve sound quality and durability of vinyl records, yet had an additional characteristic enabling data transmission of much larger quantities than before, paving the way for computer revolution (Dew et al., 2004). This is considered the first theory to combine the evolutionary concept to specific innovations. Further, the authors additional work compimented the approach (see Sarasvathy, 2001; Sarasvathy & Dew, 2005; Read et al., 2008; Read et al., 2016). Exaptation theory development in economics continued with the seminal work of Cattani (2006) on the development of fiber optics. In a detailed case study on technology speciation, he reconstructs how an existing technology evolves to a substantially different one. He concludes that Corning’s technological knowledge on specialty glass was accumulated in R&D without anticipation of subsequent use for conducting light rays but later turned out to be functional for the alternative, as yet unknown application for fiber optics. This followed previous examples of exaptation in economics, as feathers were first developed for thermal insulation function, later co-opted for gliding as well, leading to the adaptative development of wings on dinosaurs (Gould & Vrba, 1982; Lloyd & Gould, 2017). These findings further developed exaptation in economics by connecting the frame to technological speciation (e.g. Levinthal, 1998; Adner, 2002; Adner and Levinthal, 2002; Cattani, 2006), in other words, a developmental process. However, according to recent studies, such industry shifts are firstly rare, and secondly, when occurring, often exaptive (Andriani et al., 2017). While this does not dimish the value of the particular study, it illustrates how it marked potentially only the top of 8 the iceberg of exaptation occurring in economics. It should be noted here, that occasionally the referred work can include several versions of the particular study (Cattani, 2005, 2006). To sum up, in the early theories of exaptation, the emphasis was on singular innovation events, such as the Apollo 13 solutions, or large industry shifts (Cattani, 2006). The theories used a rather loose definition of exaptation (similarly, Santangelo & Stucchi, 2018), justifying the concept. The benefit of this approach, however, is the ability to describe phenomenons beyond technological innovations and is among the most potential future uses for exaptation theory, also supported by additional evidence (e.g. Marquis & Huang, 2010; Santangelo & Stucchi, 2018; Aaltonen et al., 2019). Illustrating the environmental factors The exaptive process has roots in agent-network theory (Latour, 2005), as artifacts are created between the actor- environment, and artifact (Andriani & Cattani, 2016). This has been conceptualized as perception of affordances (Tuomi, 2002; Felin et al., 2016), revealed by the environment. Here, this can be seen as an underlying assumption, as predicting or changing the environment in the future (Dew et al., 2008), or as having inevitable existing structures formed by the environment (Marquis & Huang, 2010). Exaptive behavior reveals additional synergies – such as using one's expertise on the utterly distinctive field, following Cattani, 2006 and also closely Burgelman’s (1983) notion of autonomous initiatives. Exaptation is connected to entrepreneurial behavior, following effectuation logic theory (Sarasvathy, 2001; Sarasvathy & Dew, 2005), and said to be one of the three core components in the behavioral theory of the entrepreneurial firm (Read, et al., 9 2008). Instead of adapting to the environment, the entrepreneur can also spot opportunities in one (later also Felin et al., 2016). Exaptative orientation formed a basis for effectuative logic – a search for new markets by not aiming to solve a particular goal set by the environment (see further Read et al., 2008), whereas adaptation illustrates the countering, predictive stance – aiming to predict the environment. The benefits of exaptation in understanding effectuation logic and balancing between predictive and effectuative stances have recently resurfaced in a response to criticism of effectuation logic (see Read et al., 2016, p. 532), as exaptation theory can connect the final output – an innovation – to cognitive processes. This is illustrated in more detail later in this review, and in Figure 1. Exaptation theory also illustrated an additional significant perspective. Structures in an organization can be permanent due to history, i.e. path-dependent, yet turned into competitive advantage. In 2010, Marquis & Huang illustrated in their study of the US Banking Industry, how organizational culture developed as an adaptive response towards institutions may also provide a competitive advantage in mergers and acquisitions. Marquis and Huang (2010) suggest that the underlying reasons and conditions why some organizations exapt techniques in an environmental change and turn the change into a success, whereas others do not, dwell in the organizations and their legacy. Studying investment banking acquisitions, they noted that the imprinting effects on the acquiring firms – based on conditions occurring at the time of their founding - manifested differently after they acquired other firms. In particular, banks better used to managing a vast number of branch offices were using these capabilities to better manage acquisitions and integrate activities after bank deregulation made merges possible. This has been later connected to internationalization (Santangelo & Stucchi, 2018), where similar phenomenon is evident. While the theories discuss essentially adaptive 10 development in relation to exaptive, they did not rigorously differentiate exaptation from adaptation. To sum up the findings, adaptative traits are present in organizations and exaptation theory illustrates the origins of competitive advantage. However, realization of opportunities for exaptation may depend of cognitive biases (similarly, Felin et al., 2016), as effectuative logic is not utilisized constantly (e.g. Sarasvathy, 2001; Read et al., 2016). The conceptualization of second generation development Exaptation theory was further developed to include secondary developmental stages between 2010 and 2014 (Andriani & Carigani, 2014; Andriani & Cohen, 2013). However, interestingly a countering perspective was – and has been – left to lesser attention, the degeneracy theory (Bonifati, 2013). Modularity addresses secondary adaptations and exaptations, i.e. niche construction (Andriani & Cohen, 2013; Andriani & Carigani, 2014). This perspective follows the logic of later evolutionary perspectives, i.e. exaptation may evolve into and adaptative trait, yet exaptation has an additional step to comply with the double requirement of adaptation (e.g. Lloyd & Gould, 2017) and has been since included in exaptation literature (Andriani & Cattani, 2016). This also illustrates a bridge between cognitive approaches (e.g. Dew et al., 2008) and technological innovations, the final output, or using evolutionary vocabulary, a third generation of the trait. In comparison to innovation literature, the second generation is a “missing link” between the shift in function and final output. Another important notion arises from this work, as it introduces the possibility of multiple options in secondary development (Andriani & Carigani, 2014). Not all exaptations develop indentically, for modularity 11 determines the degree. Therefore, modularity makes two specific contributions to exaptation theory. Firstly, it introduced the option of second generation development (Andriani & Cohen, 2013) so far missing from previous approaches, and secondly, it noted that options for these secondary developments may be several. According to the more recent literature and the evolutionary origins, exaptations may develop into adaptations, remain exaptations or become useless (spandrels, Lloyd & Gould, 2017; Garud et al., 2016). Further, newer scholarly work suggests options may be revealed in the second generation, not available in first (see Andriani & Cattani, 2016 on shadow options). This perspective was supported by other scholars alike. Here, the impact of the environment was incorporated into the perspective of secondary development (Ganzanoli, De Noni & Pilotti, 2014). Exaptation next considered consisting at least two stages, one of acquiring knowledge without a purpose, and a second with acquiring knowledge while having a purpose or an intention of direction (Ganzanoli, De Noni & Pilotti, 2014). This perspective is highly similar to the first theories on exaptation (Cattani, 2006), where new markets to utilize knowledge were intentionally searched. Later, this has also been connected to exaptation theory as an example of how exaptation can differentiate foresight from luck (Garud et al., 2016). For example, a debate remains, whether a firm is successful due having a predetermined set of knowledge that the current environment happens to favor, or does performance result from strategic foresight (or managers) (Andriani & Cattani, 2016, p.119; similarly, e.i. Audretsch & Keilbach, 2009; Griliches, 1979; Cohen & Levin, 1989; Chandler, 1990). Exaptation introduces a dividing line to this debate. In the process of knowledge creation, a division between a stage where knowledge is acquired without knowing where to use it and acquiring knowledge to a certain purpose can be made (Ganzanoli, De Noni & 12 Pilotti, 2014; Andriani & Cattani, 2016). When a shift in function, exaptation, occurs the line is crossed. Post-adoptive behavior in innovations was also suggested earlier (Desouza, Awazu & Ramaprasad, 2007), where exaptation theory was suggested to contribute to the understanding of the interconnections between the user and organizational innovations, a perspective later continued with the conceptualization of factor market heterogeneity (Felin et al., 2016). The complexity theory of innovation introduced exaptation as one of three foundational concepts in understanding systematic innovation processes (Bonifati, 2010). While this line of reasoning has been continued since in factor markets (Felin et al., 2016), subsequent theories are scarce. Continuing this, exaptation and emerging degeneracy (Bonifati, 2013) illustrates socio-economic innovation processes and provides empirical supporting evidence. Based on two case studies, it was concluded, that while exaptation may generate new artifacts, the effects may resemble ones with other structures already existing (Bonifati, 2013). In other words, the perspective questions the significance of exaptation as a source for continuous heterogeneity, but rather emphasizes the possibility of creating similar artifacts via exaptation that already exists – an iron cage type of approach of individuals eventually resembling one another. While highly interesting, this perspective has not been pursued since in exaptation literature and should be considered one of the most potential future directions for exaptation theory, along with shadow options (Andriani & Cattani, 2016) and the inclusion of simultaneous exaptive and adaptive developments (Ching, 2016; Santangelo & Stucchi, 2018; Aaltonen et al., 2019). The introduction of the integrated framework 13 In 2016 (Andriani & Cattani, 2016), a framework connecting exaptation theory’s prior contributions and newest studies was illustrated, following some perspectives also discussed in here. The theories can be divided into ones discussing events prior to the shift in function and to ones discussing secondary generations. The theories are illustrated in figure 1. ------------------------------------------ Insert Figure 1 about here. ------------------------------------------- In the beginning, one needs to consider the interactions between the entrepreneur, agent, environment, and artifact. This follows the cognitive and environmental aspect of exaptation theory (e.g. Dew et al., 2008) and agent-network theory (Latour, 2005), and new theories illustrating the cognitive (Felin et al., 2016) and socially constructed obstacles (Garud et al., 2016) was introduced. The discovery of new functions for artifacts by the actor requires affordances (Felin et al., 2016), a sensitivity for opportunities. Cognitive biases, for example, related to experience with a certain artifact, I.e functional fixedness (eg. Felin et al., 2016), may prevent this, and opportunities for exaptation cannot be predicted or calculated (see Felin et al., 2016; Felin et al., 2014; German and Barrett, 2005). The environment may reveal ones or may limit ones. Affordances can also be created by meanings in a network system (Latour, 2005; Garud et al., 2016), and furthermore, narratives may mediate the perception of said affordances (Garud et al., 2016; Adriani & Cattani, 2016, p.122). Nonetheless, as the opportunity is utilized, a shift in function occurs (Andriani & Cattani, 2016). This particular discussion focused much on the cognitive origins of individual capabilities, where it connects to psychology (e.g. German and Barrett, 2005; Duncker, 1945; Jansson & Smith, 1991), yet 14 the other perspective focused more on practical development, and towards a less studied area of exaptation. The secondary development of exaptation is little known. While Cattani (2006) does illustrate this in his work, the theoretical contributions to exaptation theory are scarce. Further, this has been also brought to light by scholars familiar with exaptation (e.g. Dew & Sarasvathy, 2016), calling for more studies on the matter. In comparison to a fairly straightforward process in natural selection and exaptation in biology (Lloyd & Gould, 2017), the process in economics is much more complex. One element is the undefined amount of time exaptation may take prior to final output, potentially significantly long (see Andriani & Cattani, 2016). It has been suggested, that secondary development has two potential reasons, or paths, to continue. Either there is a dire need (in the market), or a new market needs to be constructed (Dew & Sarasvathy, 2016). For example, the Apollo 13 example describes a clearly a “market need” - an ongoing crisis – whereas the case example on Post-it notes a new niche construction (Garud et al., 2016; Dew & Sarasvathy, 2016). Further, the pharmaceutical industry presents an example also where a market pre-exists, diseases exist in need of a cure, as does internationalization (Santangelo & Stucchi, 2018), in the form of an unavoidable competency gap on foreign markets. On the other hand, the development of fiber optics (Cattani, 2006) and the US banking industry (Marquis & Huang, 2010) represent new market construction. In addition to this, a functional shift may work parallel with recombination, making new functional components available (Ching, 2016), and a shift in function may reveal shadow options, i.e. possibilities not known or available prior (Andriani & Cattani, 2016). 15 The framework, while providing a coherent base, did not represent all previous contributions. Examples of such are social entrepreneurship (Ganzaroli, De Noni & Pilotti, 2014; Gianpaolo, Belussi, Breslin & Filatochev, 2016) and the degeneracy aspect (Bonifati, 2013), raising additional questions. In essence, the introduction of the exaptation process provided a similar picture to exaptation theory as currently exist in evolutionary sciences (e.g. Lloyd & Gould, 2017), yet the framework would not be incorporated to the later studies (e.g. Santangelo & Stucchi, 2018), creating contradictory results. Clarifying additions The revision of the term (Lloyd & Gould, 2017) brought clarity to the field of exaptation theory and guidelines on measuring elaborated this further to economics (Andriani et al., 2017). Further, the inclusion of internationalization process to the theory of exaptation (Santangelo & Stucchi, 2018) opened new possibilities for exaptation studies by demonstrating the effect of continuous expected uncertainty, i.e. host location, and internationalization process as a simultaneous balance between exaptation and adaptation (Aaltonen et al., 2019; similarly, Ching, 2016). Following closely to the original literature on exaptation (Gould & Vrba, 1982), the term was revised as a commentary to recent developments (Lloyd & Gould, 2017). Here, the authors argued much of current discussion has been built on false assumptions, seeing exaptation as a subcategory to adaptation (“adaptivist worldview”, Lloyd & Gould, 2017, p.). In this work, the conceptualization between exaptation and adaptation was clarified, as was the multilevel concept of the terms alike (similarly also Garud et al., 2016). Depending on the definition, 16 exaptation could be considered either a part of a mechanism, or the entire mechanism (e.g. “engineering perspective”, see further Lloyd & Gould, 2017), and adaptations do not have added effects – only exaptations have effects and adaptations functions (also Gould & Vrba, 1982). This framework enabled the assessment of previous theories in a new light, setting well-defined rules for defining exaptation with the help of adaptive double requirement. This would benefit the understanding of contradictory results, as measuring exaptation with only two-time points (e.g. Santangelo & Stuchhi, 2018), would produce results differing from longitudinal observation (e.g. Cattani, 2006; Marquis & Huang, 2010; Aaltonen et al., 2019). While it was suggested that functional shift takes place parallel with recombination (Ching, 2016) until the recent year a developed framework combining adaptation and exaptation emerged from the field of international operations (Santangelo & Stucchi, 2018). The work was based on previous suggestions of linear non-linear development of organizational operations in the internationalization process (e.g. Santangelo & Meyer, 2001, 2015). Connecting the predictable pattern to exaptation, unpredictable events in the firm internationalization process could be explained. However, for exaptation theory, this contribution illustrated a new dilemma. In the study, exaptation took place in first time cross- border mergers (following Marquis & Huang, 2010), yet disappeared in subsequent actions. In essence, exaptation seized to exist. While this is along the lines of exaptation theory in natural sciences (Lloyd & Gould, 2017; Garud et al., 2016), it had not been assumed previously in economics. Another study confirmed the initial findings of exaptation emerging in excess during foreign entry (Aaltonen et al., 2019), simultaneously with adaptation (similarly, Ching, 2016), and illustrated the significance of exaptative origins to global strategy development (see Aaltonen et al., 2019). International expansion utilizing exaptation 17 theory provided an interesting perspective, for exaptation is defined as domain change and technology change (e.g. Levinthal, 1998), and when entering a new location, the domain change is given (Santangelo & Stucchi, 2018; Santangelo & Meyer, 2011,2015). Therefore, exaptation should be further induced – entering the new environment in international expansion already reveals a context differing from normal operations, i.e. a dire need (e.g. Dew & Sarasvathy, 2016). There is a lack of established research design in the study of exaptation, studies often relying on ad-hoc design (Andriani & Cattani, 2016). In 2017, a first systematic approach towards measuring and studying exaptation was published offering helpful guidelines (Andriani et al., 2017), namely, the degrees of radicalness and distance. Radicalness illustrates how new exaptation is to a market; while being only 10% (Andriani et al., 2017), industry shifts are one such example of radical exaptation (Cattani, 2006; Marquis & Huang, 2010). The distance describes how far the new use is from the previous one – occasionally problematic to determine, but suitable for some industries. As a case example, the study used the pharmaceutical industry, where databases exist describing both variables objectively (WHO ICD-9-CM DataBase; Andriani et al., 2017). While this offered a perspective on designing quantitative studies on exaptation, most conclusions marked that qualitative approaches remain most reliable, I.e are more conservative and sensitive (Andriani et al., 2017). In sum, quantitative measures tend to over-estimate exaptation cases, especially when the cases are not radical. The literature discussed here is illustrated in Table 3 along with corresponding contributions. This provided two particular questions regarding exaptation theory, firstly, do exaptations disappear, and secondly, are exaptations a source for heterogeneity in economics. Further, the newest additions (Andriani et al., 2017; Lloyd & Gould, 2017) brought to light 18 on designing studies for exaptation. The literature on exaptation reviewed here is collected to Table 5. ------------------------------------------ Insert Table 5 about here. ------------------------------------------- QUESTIONS REMAINING The development of exaptations to a final output Do exaptations disappear? Perhaps both. The contradictory results here refer to the work of Cattani (2006), Marquis & Huang (2010) and Santangelo & Stucchi (2018). According to the latest, exaptations were recorded in the first-time entry to a foreign location, yet not in second time (Santangelo & Stucchi, 2018). In comparison, both earlier works explicitly demonstrate how exaptations create a base for a particular competitive advantage and are present for decades (Cattani, 2006; Marquis & Huang, 2010). Further, this is supported by the newest addition to exaptation studies, where it was concluded exaptations may take a considerable amount of time to become visible outside of the organization, yet contribute strongly to the global strategy construction (Aaltonen et al., 2019). However, there is an explanation for this. Radicalness illustrates how “new” exaptation is to a market; industry shifts (Cattani, 2006; Marquis & Huang, 2010) are an example of an extreme one, and ~90% of such are exaptive (Andriani et al., 2017). In international business, the observed exaptation cases (Santangelo & Stucchi, 2018) were semi-radical (see Andriani et al., 2017), therefore having a smaller frequency. This is further supported by the study, as exaptations were observed only in one FDI mode, and confirms the definition between exaptation and adaptation was likely 19 justified, as exaptation is defined in relation to adaptation (Lloyd & Gould, 2017). Following the previous indications of secondary processes in exaptation (Andriani & Carigani, 2014; Andriani & Cohen, 2013; Andriani & Cattani, 2016) and the conceptual origins (Gould & Vrba, 1982), it can be stated there are three options in the second generation. First, exaptation continues to develop into a final product, second, it does not and may become obsolete, and third, it reveals shadow options. While in the earlier studies (e.g. Cattani, 2006; Marquis & Huang, 2010), the cases likely represented the first option, the later findings on disappearing exaptations (Santangelo & Stucchi, 2018) likely either of the latter ones. However, this may not be the case. Previous longitudinal observations of exaptation measure either differences between two-time points (Marquis & Huang, 2010; Santangelo & Stucchi, 2018), follow a developmental path (Cattani, 2006), or illustrate frequency (Andriani et al., 2017). These are in line with exaptation definition (Lloyd & Gould, 2017), as distinguishing previous and current function is mandatory (Andriani & Cattani, 2016), but only the perspective of a developmental path (Cattani, 2006) includes possibilities to observe also additional steps in the exaptation process (see Andriani & Cattani, 2016), i.e. confirm the disappearance of exaptations. The novelty of effects Do exaptations create heterogeneity or not? Against the mainstream conclusion, in the 2013 study Bonifati questions if exaptation produces truly unique solutions, or are the solutions produced already existing ones. Essentially, this questions the assumption of heterogeneity in economics credited to exaptation. The assumption of heterogeneity as a given in exaptations follows the natural sciences origins (e.g. Campbell & Reece, 2003), however, it has not been 20 studied if this indeed is the case also in economics. While theories from organizational science have suggested a similarity, i.e. homogenous mass, arising from norms (e.g. DiMaggio & Powell, 1983), the more important question lies here elsewhere. Is the tendency for effects to mimic functions of other artifacts a result from exaptation process? Or is it an outcome of emergent uses and/or adaptation? This presents an interesting puzzle, left to be solved in future theories. Further, the perspective introduces a potential explanatory framework in discovering sustainable reuse practices (similarly, Aaltonen & Aaltonen, 2014). Reliable study design How to study exaptation? According to recent suggestions, qualitative approaches and documented event histories would be most beneficial. Exaptation studies currently utilize both qualitative and quantitative methods and have inconsistent underlying assumptions. This results in describing exaptation as either intentionally induced (Cattani, 2006), or contrastingly, unintentional (Andriani & Carignani, 2014; Andriani et al., 2017). Furthermore, some studies predict exaptation (e.g. Andriani et al., 2017), while in some it is an emergent construct (Cattani, 2006; Santangelo & Stucchi, 2018). This can result in various definitions of exaptation, either following the strictly evolutionary definition (e.g. Andriani et al., 2017, p. 323), or the more loose, re-purposing of knowledge (e.g. Santagelo & Stuchhi, 2018). To determine which innovations are exaptive and which ones are not, patents (Cattani, 2006; Ching, 2016), legal documents and publications (Andriani et al., 2016), postal indexes, export intensity reports, joint ventures and acquisitions (Santangelo & Stucchi, 2018; Marquis & Huang, 2010) have been used and the recent study on measuring exaptation indicates such empirical material would be beneficial. Further, following the definition of exaptation and 21 adaptation (e.g. Lloyd & Gould, 2017), rather than defining exaptation as a singular event taking place, the division of all recorded events as exaptation or adaptation could provide a coherent base for empirical studies. However, beyond the answering, these questions, the complementary and exaptation literature provides an indication of potential future uses of exaptation theory worth mentioning in this review. FUTURE STUDY PROSPECTIVES Based on the review, the perspectives introduced here illustrate a wide variety of potential theoretical contributions, such as unpredictable developmental patterns, innovation process as knowledge utilization, bridging entrepreneurship to technological innovations, and theories for sustainable development. Understanding unpredictable developmental patterns According to Dew, Read, Sarasvathy and Wiltbank (2008; also Cattani, 2006), exaptation gives patterns to heterogeneity, or serves as material for exaptation (Mokyr, 2002), and has benefits as a study of branching of niches instead adaptive evolution of lineages. Furthermore, exaptation is a Campbellian variation-selection-retention (see eg. Campbell & Reece, 2003, p. 1072 - 1155) source for variation (Grandori, 2007), while artifacts as affordances promote interpretative flexibility (Tuomi 2002:10-12). In addition to this, exaptation is a fundamental mechanism in the expansion of technosphere (Mokyr, 1998; Kauffman, 2000). Kauffman (1995; 2000) also notes non-prestatability of applications, multipurposeness of technology or resources or multifunctionality of material (Grandori, 22 2007) are practical implications where exaptation provides beneficial perspective. As Cattani (2006) and Marquis & Huang (2010) demonstrated, the origins of competitive advantage may dwell in organizational legacy and can be intentionally searched. Following the integrated framework, this process has a distinct pattern (Andriani & Cattani, 2016), yet not all exaptations develop into dominant strategies (see Santangelo & Stucchi, 2018; Aaltonen et al., 2019). This nonetheless indicates exaptation gives a framework to non-linear developmental patterns (Santangelo & Meyer, 2001, 2015), whereas previous theories have focused on linear development (e.g. Johansson & Vahlne, 1977). This illustrates two distinct developmental patterns in organizational longitudinal development – non-linear exaptation and linear adaptation (similarly, Santangelo & Stucchi, 2018). Further, organizational structures may be inevitable (see Marquis & Huang, 2010), yet present a solution to future problems. Entrepreneurial behavior outcomes Dew, Sarasvathy, and Venkataraman (2004) suggest that exaptation is a central concept to better understand the creation of new markets and opportunities in an unpredictable environment. This has been suggested to be a key tool for social entrepreneurs to discover new potential and new innovative fields for applying their existing knowledge, especially in locked-in industrial fields (Ganzaroli, De Noni & Pilotti, 2014). The behavioral theory of the entrepreneurial firm (BTEF) is based on exaptive strategy, along with two other basic pillars, accumulating stakeholder commitments under goal ambiguity and achieving control through non-predictive strategies (Dew, Read, Sarasvathy, Wiltbank, 2008). In the recent debate surrounding effectuation logic (see Arend et al., 2016; Read et al., 2016), exaptation was 23 raised as a concept capable of bridging entrepreneurial new market creation to technological innovation (Read et al., p.532; see also Andriani & Carigani, 2014; Andriani & Cohen, 2013). However, due to the recent inclusion (Ching, 2016; Santangelo & Stucchi, 2018) of the dualistic evolutionary perspective, i.e. adaptation and exaptation, the concepts may provide even further insight to this debate, namely, in understanding the balance between the transition of effectual and causal approaches. For example, 63% of experts use effectuation 75% of the time (Sarasvathy, 2001), yet research has yet to indicate why. Combining this notion with the recent findings on exaptation disappearing (Santangelo & Stucchi, 2018) and cognitive limitations in observation (Felin et al., 2016), a future direction could lie with the assumption that exaptations may or may not be pursued despite realized. Multi-level and multi-definition innovations In addition to illustrating the emergence of innovations, conceptualizing exaptation and adaptation as innovation process antecedents, or creative processes (e.g. Anderson et al., 2014) has other important implications. Namely, this enables the discussion to shift from innovation categorization (e.g. Schumpeter, 1934) to a more general, utilization of knowledge. Examining the exaptation cases presented here, the conceptualization of exaptation exceeds technological innovations. For example, Marquis & Huang (2010) discuss organizational culture and capabilities creating a competitive edge, and Santangelo & Stucchi (2018) explicitly note exaptation is connected to post-acquisitional restructuring processes in cross- border mergers, in the form of repurposing existing coordination and control techniques to a 24 new use. Knowledge is particularly important in production (e.g. Romer, 1986; Lucas, 1988; Audretsch & Keilbach, 2009), and results from exogenous events (e.g. Audretsch & Keilbach, 2009, p.284), but according to formal models, endogenously too (Griliches, 1979; Cohen & Levin, 1989; Chandler, 1990). The creation of knowledge and managing this process, is more important than the eventual actual outcome of the process (Cattani, 2006; Garud, et al, 2016; Rilla, 2016; Agarwal & Helfat, 2009), for the initial origin of knowledge can be untraceable (Garud et al., 2016; Cattani, 2008), endo- or exogenous (Hebert & Link, 1989; Venkataram, 1997; Shane and Eckhardt, 2003; Shane and Venkataram, 2001; Griliches, 1979; Cohen & Levin, 1989; Chandler, 1990), or come from another industry (Smith, 2006; Dew, Sarasvathy & Venkataram, 2004; similarly Garud et al., 2016). To include these concepts to innovation creation can be demanding, yet exaptation theory introduces a way to incorporate them into the discussion of technological innovations. Sustainable practices To pursue a sustainable economy, Patzelt and Shepherd (2010) suggest that current ideas on entrepreneurship and innovation are not capable for modeling sustainable innovation, since the focus their search for innovative opportunities differently, including also natural environment. Although scholars hail sustainability as the key driver of innovation when advising practitioners (e.g. Nidumolu, Prahalad and Rangaswami, 2009), supporting sustainability transitions is a still an open theoretical (e.g. Smith et al, 2010) and unresolved policy issue (e.g. Nill and Kemp, 2009). Exaptation can illustrate concepts of sustainability in a more coherent matter, connecting innovation, serendipity and regional policy together. For example, sustainable re-use of infrastructure has been noted as adaptive (see Bullen & Love, 25 2007; Bullen, 2004), while based on this review is essentially exaptive, i.e. a shift in function, therefore, the drivers and enablers towards sustainable infra reuse (see Bullen & Love, 2007 ) are conditions limiting and enabling secondary adaptations after the exaptative process, for the idea for structure reuse has been already applied when addressing the issues. Based on this, designing policies supporting sustainable innovations (Rennings, 2000) and empirical studies, may benefit from the conceptualization of infra reuse as exaptation. Further, the exaptation degeneracy aspect (Bonifati, 2013) provides an important notion to sustainability transition theory. Following the assumption that exaptations may have effects, already available by functions of adaptive traits, instead of construction of new artifacts, one might exist already capable of serving the same purpose. Examples of such are the reusing of old infrastructure (see Aaltonen & Aaltonen, 2014), and repurposing existing knowledge to overcome competency gaps (Santangelo & Stucchi, 2018). In other words, to pursue sustainable solutions, the degeneracy theory indicates such exist already. DISCUSSION AND STUDY LIMITATIONS The wide variety of scholarly work using exaptation creates a diverse field for analysis. In order to produce a respectable review, the identification for the need is the first step and here, the promising concept of exaptation and the scattered previous literature was considered as such. Secondly, a protocol for selecting papers was created (similarly Tranfield, Denyer & Smart, 2003; see also Anderson et al., 2014). However, this turned out problematic, as some references common in exaptation literature use diverse terminology (e.g. technologies disruptive technologies, (Adner, 2002); pre-adaptation (Cattani, 2006); transformative capacity (Garud & Nayar, 1994), and are not found by keywords – even most influential ones 26 (e.g. Cattani, 2006; Levinthal, 1998). In addition to this, a search protocol provided 580 (Web of Science) results, with only a few from economics. The most recent addition to this discussion (Lloyd & Gould, 2017) provided helpful guidelines in evaluating previous literature, as did the simultaneous publication regarding the frequency and measuring of exaptation (Andriani et al., 2017). It should be noted, that some studies in the referenced literature are still in their developmental stages, i.e. conference proceedings (see Table 5). These are expected to be published in higher level publications, as the most recent work of Santangelo & Stucchi (2018) did (previously AoM conference proceedings in 2015). The methodological approach of this paper relies on multiple sources and is open to critique. However, by doing this it demonstrates exactly how scattered this promising field of the managerial theory is, hopingly serving as a starting point for enthusiastic scholars for further analysis. CONCLUSIONS Including exaptation to the field of management would provide key insights on debates regarding developmental patterns (e.g. Santangelo & Stucchi, 2018), entrepreneurial behavior (Read et al., 2016), innovation process (Marquis & Huang, 2010; Dew & Sarasvathy, 2016) and sustainable development (Bonifati, 2013). Exaptation theories can be divided into theory development and complementary approaches. The complementary approaches include a wide variety of esteemed scholars (e.g. Kauffman, Mokyr, Burgelman), yet in order to develop the theory further, a review of the significance of the different approaches is in place. Exaptation theory development has five stages, the introduction of the concept to economics (Dew et al., 2004; Cattani, 2006), the inclusion of environmental factors (Read et al., 2008; Marquis & Huang, 2010), acknowledging 27 secondary development (Andriani & Carigani, 2014; Andriani & Cohen, 2013), introduction of the integrated framework (Andriani & Cattani, 2016) and the clarifying additions (Lloyd & Gould, 2017; Andriani et al., 2017). Further, new insights providing a base for future studies are the degeneracy aspect (Bonifati, 2013), internationalization (Santangelo & Stucchi, 2016), effectuation logic (Read et al., 2016) and the inclusion of adaptation (Ching, 2016; Aaltonen et al., 2019). This review contributes to the understanding of exaptation theory by illustrating the literature contributing to the theory development (based on Lloyd & Gould, 2017), providing a critical review of past theories, along with perspectives left to lesser attention (e.g. Bonifati, 2013), examining the reasons for contradictory findings (e.g. Cattani, 2006; Santangelo & Stucchi, 2018), and by illustrating the potential new uses for the theory. Based on the review, these are understanding disruptive, non-linear, developmental patterns (similarly, Santangelo & Meyer, 2015; Santangelo & Stucchi, 2018), balancing effectuation and causality (similarly, Read et al., 2016), conceptualization of innovations as knowledge utilization (see e.g. Marquis & Huang, 2010; Santangelo & Stucchi, 2018; Aaltonen et al., 2019) and introducing potential perspective of sustainability transition theories (Bonifati, 2013). 28 References Aaltonen, P. H. M., & Aaltonen, P. 2014. 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Terms and definitions (based on Gould & Vrba, 1982; Lloyd & Gould, 2017) Gould & Vrba, 1982 Definition Artifact Usage Adaptation Natural selection shapes the character for a current use Current and previous Function Exaptation A charater shaped by natural selection co-opted for a new use Current Aptation Effect A charater whose origin is not due to natural selection co-opted for a new function Current Aptation, previous non-aptation Effect Lloyd & Gould, 2017 Increases fitness Aptation A function or effect Does not increase fitness (may in the future) Non-aptation No function nor effect Adaptation Has a proper function while increasing fitness Aptation Function Exaptation Has no proper function but increases fitness Aptation Effect Secondary adaptation Exaptation modified by natural selection (2nd generation) Aptation Previous effect, current function Table 2. Complimentary approaches in literature Title Year Author Publication Specific notes An evolutionary theory of economic change 1982 Nelson & Winter Book Individuals are the storage of knowledge in organizations Corporate entrepreneurship and strategic management: Insights from a process study 1983 Burgelman Management Science Changing environment rather than adapting Transformative capacity: continual structuring by intertemporal technology transfter 1994 Garud & Nayyar Strategic Management Journal Policy of exploration and transfer of available in house knowledge over new domains Investigations 1995 Kauffmann Book Exaptation is what we call the ‘ignorance area’ of the adjacent possible The Slow Pace of Rapid Technological Change: Gradualism and Punctuation in Technological Change 1998 Levinthal Industrial and Corporate Change Explains fast emergence of radical innovations in presence of little or no technological change. Technology-domain (exaptation) is different from techn-techn combination. The former is “a quintessential entrepreneurial activity.” (p. 220) Neither chance nor necessity: evolutionary models and economic history 1998 Mokyr Book Exaptation is a A fundamental mechanism in the expansion of the technosphere Alone in the universe 2000 Kauffman Book The Gifts of Athena: Historical Origins of the Knowledge Economy 2002 Mokyr Book Heterogeneity as material for exaptation Networks of Innovation: Change and Meaning in the Age of the Internet 2002 Tuomi Book Artifacts as affordances based on interpretative flexibility The emergence of emerging technologies 2002 Adner & Levinthal California Management Revie Explains fast emergence of radical innovations. Speciation of technologies and emergence of radical innovations. The emergence of new market niches is based on 35 exaptation. The evolution of new markets 2003 Geroski Book Technology-push model and exaptation, p55. The future of ideas 2003 Lessig Book Relationship between rivalrous and non rivalrous goods New market creation through transformation 2005 Sarasvathy & Dew Journal of Evolutionary Economics Effectuation logic theory Democratizing Innovation 2005 Von Hippel Book Discovery in natural selection and knowledge processes: a commentary on ‘anagent-based model of exaptive processes 2007 Grandori a fundamental source of ‘variation’ in a Campbellian variation- Selection-retention Comparing Business and Household Sector Innovation in Consumer Products: Findings from a Representative Study in the UK 2010 Von Hippel, Jeroen, De Jong, & Flowers Management Science Complexity and Innovation Dynamics 2011 Lane Book Basic mechanisms in innovation cascade – exaptive bootstrapping Table 3. Empirical evidence Description Author/ Author example Feathers exapted from insulation to gliding Gould & Vrba, 1982 Swim bladders exapted from floating to breathing Gould & Vrba, 1982 Bird bone structure developed light, not due to flying Campbell & Reece, 2003 Apollo 13, repurposed equipment designed for another purpose Dew, Sarasvathy & Venkataram, 2004 CD-ROM technology had additional unplanned benefits in data transfer Dew, Sarasvathy & Venkataram, 2004 the development of fibre optics from glass handling technique; Corning Cattani, 2006 Mechanised printing press development Johnson, 2010 Fixed organizational structures as a source for competitive advantage; U.S. Commercial Banking Marquis & Huang, 2010 Infrastructure reuse of multinational ICT’s Aaltonen & Aaltonen, 2014 Post-it notes repurposed a glue that did not glue Garud, Gehman, Gilliani, 2016 Toxic byproducts from coal mining broken down to a purple dye Garud, Gehman, Gilliani, 2016 Simultaneous recombination and new functions in the internet video industry Ching, 2016 Invention level determinants; a large sample of U.S. patents Mastogiorgio & Gilsing, 2016 40% of new uses for drugs, pharmaceutical industry Andriani, Ali, & Mastrogiorgio, 2017 Co-ordination & Control tools in competence gap; cross-border mergers Santagelo & Stucchi, 2018 Innovations in internationalization to emerging markets Aaltonen, Torkkeli & Worek, 2019 Table 4. Complimentary approaches: Summary Perspective Details Reference Source for a fundamental mechanism in the expansion of the technosphere Kauffmann, 2000: Mokyr, 2002 36 heterogeneity a fundamental source of ‘variation’ in a Campbellian variation- selection-retention Grandori, 2007 Non-prestatability of applications; Multipurposeness of technology/resources, multifunctionality provides material Kauffman 1995, 2000; Grandori 2007 Heterogeneity as material Mokyr 2002 Artifacts as affordances for exp based on interpretative flexibility Tuomi 2002 Innovation theory Exaptation as determinant of disruptive innovation; exaptation – adaptation theory of development Levinthal 1998 Basic mechanisms in innovation cascade – exaptive bootstrapping Lane, 2011 Technology-push model and exaptation Geroski 2003 Exp explains fast emergence of radical innovations in presence of little or no technological change (exp as technology- domain different from tech-tech combination); Emergence of new market niches Levinthal, 1998; Adner & Levinthal 2002 Sociology of ambiguity; role of ambiguity in innovation; Serendipity Beunza 2007 Entrepreneurship Technology-domain (exaptation) is“a quintessential entrepreneurial activity.” (Levinthal 1998:220) Levinthal, 1998 R&D Management ‘performance potential’ rather than ‘performance gap’ Grandori 2007 Transformative capacity: active policy of exploration and transfer of available in house knowledge over new domains (unshelving approach) Garud and Nayyar, 1994 Von Hippel’s lead users and innovation communities are known for innovating via creative transformation of existent technologies Von Hippel 2005; Von Hippel, De Jong et al. 2010 Relationship between rivalrous and non - rivalrous goods. Lessig, 2003 Table 5. Exaptation theory literature Title Year Author Key contributions The Economic Implications of exaptation 2004 Dew, Sarasvathy & Venkataram Exaptation explains the emergence of innovations; Innovations in rapid crisis situtations and serendipity; Case examples Preadaptation, Firm Heterogeneity, and Technological Performance: A Study on the Evolution of Fiber Optics, 1970-1995 2005 Cattani Empirical evidence of pre-adaptation Technological pre-adaptation, speciation, and emergence of new technologies: How Corning invented and developed fiber optics 2006 Cattani Intentional search for new markets to fill with existing capabilities; Microprocesses underlying emergence of; Speciation of technologies and emergence of new market niches is based on exp new technologies; Empirical evidence In praise of ambiguity: a commentary on exaptation 2007 Beunza Pre-adaptation, exaptation and technology speciation: a comment on Cattani (2006) 2007 Dew Modifications and innovations to technology artifacts 2007 Desouza, Awazu & Ramaprasad exploratory, it contributes to a deeper understanding of post- adoptive behavior and the dynamic relationship between user innovations and organizational innovations 37 Reply to Dew's (2007) commentary:“Pre-adaptation, exaptation and technology speciation: a comment on Cattani (2006) 2008 Cattani Outlines of a behavioral theory of the entrepreneurial firm 2008 Dew, Read, Sarasvathy & Wiltbank In behavioral theory of firm of entrepreneurial firm (environments are changed rather than acting within one) , three concepts are essential: (1) accumulating stakeholder commitments under goal ambiguity (in line with a political conception of goals), (2) achieving control (as opposed to managing expectations) through non-predictive strategies, and (3) predominately exaptive (rather than adaptive) orientation More is different', exaptation and uncertainty: three foundational concepts for a complexity theory of innovation. 2010 Bonifati Exaptation as one of three basic concepts in complexity theory of innovation Acquisitions as exaptation: The legacy of founding institutions in the U.S. commercial banking industry 2010 Marquis & Huang introducing exaptation; Three founding conditions--branching policy, modernization, and political culture--influenced banks' development of capabilities for managing dispersed branches, and these capabilities subsequently led to variation in banks' propensity to engage in acquisitions Exaptation and emerging degeneracy in innovation processes. 2013 Bonifati socio-economic innovation processes, theoretical framework to analyze exaptation–degeneracy processes and use two case studies to show that exaptation can generate new artifacts providing functionalities similar to those provided by existing structurally different ones. This paper is intended to provide a contribution to an exaptation–degeneracy perspective in innovation theory ‘From exaptation to radical niche construction in biological and technological complex systems 2013 Andriani & Cohen Demonstrates the centrality of exaptation for a modern understanding of niche, selection, and environment Modular exaptation: A missing link in the synthesis of artificial form 2014 Andriani & Carigani Exaptation constructs a new niche, enters a preexisting, or transforms an artifact without changing its function (internal change) Eco-innovation as exaptation* 2014 Aaltonen & Aaltonen Exaptation as eco-innovation in infrastructure reuse; Empirical evidence The role of social entrepreneurship in leveraging exaptation in locked-in industrial districts: the case of Idrogenet in the industrial district of Lumezzane. 2014 Ganzaroli, De Noni & Pilotti Exaptation takes place in two phases. In the first phase, the accumulation of knowledge takes place without any anticipation of its future use. In the second phase, the knowledge accumulated is explicitly and consciously leveraged and exploited to build up and take advantage of the opportunity in an emerging market niche. We contribute to extant literature by showing how social entrepreneurship may help firms to discover new potential and innovative field of application for their existing know-how and exploiting it into such a field. The Determinants of Technological Exaptation. 2015 Mastogiorgio & Gilsing Previous empirical studies have focused on the organizational- level conditions of exaptation. This paper focuses on invention- level conditions such as technological complexity, inventors' analogical ability, and patent scope. Internationalization through exaptation:The role of Domestic geographical dispersion* 2015 Santangelo & Stucchi In internationalization, using domestically exapted knowledge increases foreign FDI, but not after long periods of time. Measuring Exaptation in the Pharmaceutical Industry* 2015 Andriani, Ali & Mastrogiorgio A method to measure the frequency of exaptation Technological exaptation: a 2016 Garud, Narratives can frame perception of affordances 38 narrative approach. Gehman & Giuliani Exaptation and niche construction: behavioral insights for an evolutionary theory. 2016 Dew & Sarasvathy After shift in function, niche construction is either responding to a dire need or creating it from nothing Exaptation as source of creativity, innovation, and diversity: introduction to the Special Section. 2016 Andriani & Cattani Introduction of the integrated framework Exaptation dynamics and entrepreneurial performance: evidence from the internet video industry. 2016 Ching Simultaneous recombination and new functions Exaptation, innovation and the problem of the emergence of new functions* 2016 Andriani, Ali & Mastrogiorgio Frequency of exaptation correlate it with distance across market sector and radicalness Innovation through exaptation and its determinants: The role of technological complexity, analogy making & patent scope 2016 Mastogiorgio & Gilsing focusing on invention and inventor-level conditions such as technological complexity , inventors ’ analogical ability , and patent scope Factors, markets and affordances 2016 Felin, Kaufman, Stuart & Mastogiorgio Environment and social interactions create affordances for exaptation, perception is masked by functional fixedness Measuring Exaptation and Its Impact on Innovation, Search, and Problem Solving 2017 Andriani, Ali & Mastrogiorgio 42% of new functions for existing drugs are exaptive and most radical innovations are exaptive. Internationalization through exaptation:The role of Domestic geographical dispersion. 2018 Santangelo & Stucchi In internationalization, using exapted knowledge is used in first time FDI, but not in subsequent entry. The Effect of Emerging Economies Operations to Knowledge Utilization: The Behavior of International Companies as Exaptation and Adaptation 2019 Aaltonen, Torkkeli & Worek Entry to emerging markets creates exaptation, may take long to become observable. 39 Figure 1. The intergrated framework 40 Publication II Aaltonen, P. Piecing together a puzzle—A review and research agenda on internationalization and the promise of exaptation Reprinted with permission from International Business Review (article in press) © 2016, Elsevier Ltd Contents lists available at ScienceDirect International Business Review journal homepage: www.elsevier.com/locate/ibusrev Piecing together a puzzle—A review and research agenda on internationalization and the promise of exaptation Päivi Hanna Maria Aaltonen Lappeenranta University of Technology, School of Business and Management, Finland A R T I C L E I N F O Keywords: Exaptation Adaptation Internationalization Entrepreneurship Organizational learning A B S T R A C T The development of wings on dinosaurs is an example of a discontinuous developmental shift, an exaptation. This complements adaptive behaviour, and both are Darwinian concepts used in organizational behaviour theories. Organizational behaviour also forms the basis of internationalization theories, and exaptation has been sug- gested to provide a theoretical tool for understanding disruptive development in internationalization. Together with adaptation, the concept illustrates a joint framework for understanding both disruptive and non-disruptive development in internationalization. However, a systematic assessment of the theory’s potential is missing. This manuscript builds on the TCCM review protocol, illustrating the commonalities between research agendas in the internationalization process, and provides a starting point for subsequent theory development utilizing ex- aptation in predicting internationalization. Thus, the review contributes to the field of international business by offering a conceptual framework to combine internationalization theories by including non-linear, discontinuous and novel events more tightly to the existing foundations of internationalization. 1. Introduction The literature on international business combines a multitude of paradigms from organizational learning to entrepreneurship and eco- nomic theories. A procedural perspective is relevant for all phenomena (e.g. Burgelman et al., 2018), and the process of internationalization is one of the most complex multidisciplinary phenomena in the field. What are the tools to move forward in the theory development on in- ternationalization? The purpose of this review is to provide a systematic meta-analysis of the key concepts of the internationalization process literature and illustrate a theory construct beneficial for the discovery of subsequent building blocks for the internationalization process: ex- aptation and adaptation. Evidently, there are two sides to a coin in the past discussion on in- ternationalization. Discussion often revolves around gradual inter- nationalization based on the Uppsala model, and the internationalization of International New Ventures (INV) and Born Globals (BG) (e.g. Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018; Reuber, Knight, Liesch, & Zhou, 2018; Kriz & Welch, 2018; Rialp, Rialp, & Knight, 2005). While the particular theories representing purely either side are not agreed upon, a division between two differing patterns in internationalization emerges from the literature. There are differences in the speed of inter- nationalization (Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018), firm characteristics in empirical evidence (SME/MNE, e.g. Paul, Parthasarathy, & Gupta, 2017; addressed by Paul & Sánchez‐Morcilio, 2018) and the level of analysis (e.g. Verbeke & Ciravegna, 2018). Whether such theory division is beneficial or needed in subsequent study devel- opment remains an open question. Yet, in addition to these, a networking (Eriksson, Johanson, Majkard, & Sharma, 1997; Johanson & Wiedersheim‐Paul, 1975; Johanson & Mattsson, 1988; Hutzschenreuter & Matt, 2017; Johanson & Vahlne, 2009) or organizational environment emphasising approach in the theories (e.g. Santangelo & Meyer, 2017; Vahlne & Johanson, 2017) can be seen. However, predicting novel, non- linear, patterns in internationalization lacks a coherent theory frame (Santangelo & Meyer, 2017; Santangelo & Meyer, 2011). Further, several calls have been made to incorporate disruptive development to inter- nationalization theories (e.g. Reuber, Dimitratos, & Kuivalainen, 2017; Santangelo & Stucchi, 2018; Kriz & Welch, 2018) The perspectives are not free from critique. The Uppsala model has been analysed and revised on numerous occasions (2014, Vahlne & Johanson, 2013; Welch, Nummela, & Liesch, 2016), focusing more on entrepreneurship (e.g. Schweizer, Vahlne, & Johanson, 2010; Jones, Coviello, & Tang, 2011; Rugman, Verbeke, & Nguyen, 2011; Vahlne & Johanson, 2017), yet it still fails to include the individual perspective (Verbeke & Ciravegna, 2018) and contextual diversity (Reuber et al., 2017, 2018; see also Andersen, 1993; Turnbull, 1987; Bell, 1995; Axinn & Matthyssens, 2002). On the other hand, the concept of BG lacks a theoretical definition (Paul & Rosado-Serrano, 2019), and following https://doi.org/10.1016/j.ibusrev.2020.101664 Received 11 March 2019; Received in revised form 27 December 2019; Accepted 7 January 2020 E-mail address: pahamaaltonen@gmail.com. International Business Review xxx (xxxx) xxxx 0969-5931/ © 2020 Elsevier Ltd. All rights reserved. Please cite this article as: Päivi Hanna Maria Aaltonen, International Business Review, https://doi.org/10.1016/j.ibusrev.2020.101664 entrepreneurial theories, questions such as why and when en- trepreneurial behaviour emerges, when it does not, is similarly difficult to define (see further e.g. Read, Sarasvathy, & Dew, 2016). Ad- ditionally, the impact of location on organizational learning, the basis of internationalization process, might require additional theories (e.g. Schwens, Zapkau, Brouthers, & Hollender, 2018) and calls have been made to incorporate new theory constructs to the mix (e.g. Welch et al., 2016). Yet, very few such attempts exist. To aid determining such po- tential constructs, a deeper analysis of the perspectives’ metatheoretical constructs is needed. Following this path, what are then the concepts with joint theoretical roots, and what unsolved issues can we address with ones discovered? According to the Behavioural Theory of a Firm (BTF), learning is an essential element of a firm (Cyert & March, 1963; Rugman et al., 2011). This is also a cornerstone in the Uppsala model (e.g. Schwens et al., 2018), emphasising the impact of the environment on the organization (e.g. Johanson & Mattsson, 1988). Firm behaviour according to BTF is a result of adaptive development (Cyert & March, 1963), and adaptation in evolution is counterbalanced by exaptation (Gould & Vrba, 1982; Lloyd & Gould, 2017). The IE perspectives follow more recent devel- opments in behavioural theories, such as effectuation logic (Sarasvathy & Dew, 2005; Sarasvathy, 2001), based on the concept of exaptation (e.g. Dew, Read, Sarasvathy, & Wiltbank, 2008; also inspiring the Be- havioural Theory of an Entrepreneurial Firm (BTEF)). Further, both occur in an ecosystem, i.e. a mix of actors, enablers and constraints (see e.g. Santangelo & Meyer, 2011; Santangelo & Meyer, 2017), and re- present dynamic development (see e.g. Lloyd & Gould, 2017). However, while similarly representing two sides of a coin, is neither synonymous nor directly comparable with current internationalization theories. Adaptation is an inherited trait that increases fit to the environment (e.g. Campbell & Reece, 2003), that is, a trait with a function. Exapta- tion is a trait with an effect (Gould & Vrba, 1982; Lloyd & Gould, 2017). The main difference is that adaptive traits are designed to serve a purpose. Exapted traits happen to fit a purpose; for example, swimming bladders, feathers and human brain capacity are such (see further Gould & Vrba, 1982; Mokyr, 2002; Garud, Gehman, & Giuliani, 2016). However, exaptation is a singular event. Whether it leads to an adaptive path or not, depends on several factors (further see e.g. Felin, Kauffman, Mastrogiorgio, & Mastrogiorgio, 2016). Adaptation, on the other hand, is a relatively stable process (Campbell, 1969; Lloyd & Gould, 2017), resembling sequential learning cycles (Cyert & March, 1963). In eco- nomics, this has been linked to existing organizational structures creating an unforeseen competitive edge (see Marquis & Huang, 2010), coping with competency gap (Santangelo & Stucchi, 2018) and niche products developing into core business (Aaltonen, Torkkeli, & Worek, 2019). In fact, exaptation in international operations is suggested to merely emerge as a temporal solution in first time entry (see Santangelo & Stucchi, 2018). Further, external environment may impact sig- nificantly the perception of exaptive opportunities (see e.g. Dew, Sarasvathy, & Venkataram, 2004) – resembling existing economic theory constructs, such as autonomous iniatives (Burgelman, 1983) and creative transformation1 of existing technologies (Von Hippel, 2005; von Hippel, Jong & Flowers, 2012). Therefore, describing exaptation and adaptation as theories predicting linear development in inter- nationalization (e.g. Santangelo & Meyer, 2011, 2017) and non-linear, disruptive events in the processes potentially leading to novel solutions would suit this manuscript most. Further, this is in line with literature on non-linear internationalization also (e.g. Vissak & Francioni, 2013; Chen, Sousa, & He, 2019), as market exit and re-entry are possible within the theory of exaptation in economics2 . However, the question remains: How and why do these constructs build on top the established theories in internationalization? In order to produce a systematic review, this manuscript follows the TCCM model (Theory, Context, Characteristics and Methodology) (e.g. Paul & Rosado-Serrano, 2019). This review contributes to the under- standing of basic internationalization theory assumptions based on a meta-analysis of themes. Practical tools and guidelines for subsequent theory development in the internationalization process are demon- strated by comparing these core ingredients to the theory of exaptation and adaptation. The review is organised as follows: First, inter- nationalization and exaptation–adaptation literature is collected. Second, this literature is analysed based on the TCCM model. Third, new potential theoretical contributions in the field of international business are suggested and discussed. Finally, the study limitations, discussion and conclusions are presented. 2. Method In the creation of a systematic review, a need should be identified and then a review protocol developed (Tranfield, Denyer, & Smart, 2003). This review is based on the following question: What are the unresolved issues in internationalization theories, and by addressing which in particular could the theory construct of exaptation–adaptation further our understanding of the internationalization process? Hence, the manuscript is required to analyse two different literature streams, internationalization and exaptation – adaptation. In order to provide comparable results, the TCCM, i.e. Theory, Context, Characteristics and Methodology, is used for analyzing both disciplines, and later the two constructs are compared (similarly, Paul & Rosado-Serrano, 2019). As the model is suitable in reviewing multidisciplinary perspectives (see e.g. Singh & Dhir, 2019), and used in internationalization reviews (Paul & Rosado-Serrano, 2019) it proved the most beneficial tool. In the international business literature, the internalisation and in- ternationalization streams can be separated (e.g. Rugman et al., 2011; Paul & Singh, 2017), and here the focus is on the latter. Following a systematic search (e.g. Canabal & White, 2008; Keupp & Gassmann, 2009), EBSCO Business Source Complete; Academic Search Elite; Web of Science yielded close to 20,000 results in peer-reviewed journals, and after additional attributes, 9727 were found in business economics. It has been said that the 1977 manuscript by Johanson & Vahlne re- presents the theoretical shift towards internationalization (see e.g. Rugman et al., 2011 p. 757), representing the beginning of a more behavioural and process approach (e.g. Welch et al., 2016) - although not the first manuscript on the topic (see Johanson & Wiedersheim‐Paul, 1975). Due to the status in the field, nonetheless, the 1977 manuscript by Johanson & Vahlne was selected as a beginning point of internationalization process theories. Based on the number of citations referring to the paper, manuscripts were organized chron- ologically. In order to provide a similar sample of both theories, in- ternationalization and exaptation – adaptation, the amount of manu- scripts per decade was limited to 15, resulting in roughly 60 manuscripts. This provided a base of internationalization literature development, and as several known studies were found using the method (for example (Dunning, 1995, 1998; Oviatt & McDougall, 1994; Knight & Cavusgil, 2004; Zahra, Ireland, & Hitt, 2000; Autio, Sapienza, & Almeida, 2000), the sample seemed appropriate. In addition, existing literature reviews and some significant missing manuscripts (e.g. Johanson & Wiedersheim‐Paul, 1975; Johanson & Mattsson, 1988) were added with the help of reviewers and editors, a total of 30. Hence, a total of 90 written works were analysed, which are illustrated in Table 1 chronologically. Exaptation is relatively new term, and it is used rather ambiguously. However, traces of the concept are evident in literature not directly addressing the term (more, see e.g. Andriani & Cattani, 2016; Felin et al., 2016 and further e.g. Aldrich & Ruef, 2006) on defining “blind variation”). On the other hand, according to a recent review (Lloyd & 1 Differs from bricolage, i.e. creative combination of existing technologies (Baker & Nelson, 2005). 2 Unlike other species, humans are capable of evaluating future actions (see further, Mokyr, 2002; Garud et al., 2016). P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 2 Gould, 2017), adaptation also has been defined poorly in relation to exaptation in many sources. Hence, and following a similar protocol as above, several methods were used. Manuscripts with the exact key words “exaptation” (or “pre-adaptation”, see Gould & Vrba, 1982; Cattani, 2006) and “adaptation” were searched. The former provided a little over 2000 results (EBSCO Business Source Complete; Academic Search Elite; Web of Science; Google Scholar) while the latter yielded over 6000. After exclusion of paradigms deemed to be too far-fetched (i.e. linguistics, anthropology and genealogy natural sciences), only 25 manuscripts were found in exaptation. Adaptation has been widely documented in a variety of economic paradigms (see e.g. Lewin & Volberda, 2005) since 1960’s (Cyert & March, 1963). To gain more manuscript addressing exaptation, references were studied. However, some immerse theory constructs were partly excluded from deeper analysis (e.g. affordances, e.g. German & Barrett, 2005; bricolage, Baker & Nelson, 2005 effectuation logic, e.g. Sarasvathy, 2001; Sarasvathy & Dew, 2005; Sarasvathy & Dew, 2005; Arend, Saroogi, & Burkemper, 2015; Read et al., 2016) technological speciation, see Andriani & Cattani, 2016), unless clearly discussing the implications of ex- aptation–adaptation theory. After multiple reads, a total of 62 works were finally included in the analysis, 15 referring to the concept of exaptation, 30 discussing exaptation theory and 17 general references on adaptation and evolutionary processes. A summary of the works can be found in Table 2. Following the TCCM model, the constructs of internationalization and exaptation–adaptation are discussed separately from the perspec- tive of theory, context, characteristics and methodology. The main findings are summarised in Tables 3–9 and Figs. 1 and 2. 3. Internationalization 3.1. Theory International business theories have existed for decades. Beginning in the 1960s, international business theories were built on Foreign Direct Investment (FDI) and Firm-Specific Advantages (FSA), such as the product life cycle frame (Vernon, 1966; see Paul et al., 2017). Later, the focal point shifted towards Country-Specific Advantages (CSA) (see Rugman et al., 2011) and the eclectic paradigm, OLI (Dunning, 1977, 1988, 1998; Hill, Hwang, & Kim, 1990; Rugman et al., 2011; Paul & Singh, 2017; Paul & Benito, 2018). Simultaneously, the behaviour- based model of internationalization process theory, the Uppsala model (Johanson & Wiedersheim‐Paul, 1975; Johanson & Vahlne, 1977), was introduced as an extension of the life cycle theories. Similarly, IE the- ories (see e.g. Johanson & Mattsson, 1988; Oviatt & McDougall, 1994; Knight & Cavusgil, 2004; Johanson & Vahlne, 2006; Welch et al., 2016) later emerged from the Uppsala model. Originally, the Uppsala model somewhat contradicted the prior theories (Rugman et al., 2011), and it was aimed to be a response to studies conducted in large corporations (Johanson & Wiedersheim-Paul, 1975; also Vahlne & Johanson, 2013). While drawing the line between the theory constructs is up for dis- cussion, it is concluded here that the Uppsala model represents the beginning of internationalization process theories, whereas FDI, FSA, CSA and OLI represent the development of the internalisation stream (especially see Rugman et al., 2011, p.762-763; similarly Paul & Singh, 2017, Table 1, p. 2517), and the focal point of this analysis is on the prior. The analysis reveals three distinct focal points: the learning ap- proach, the significance of networks and/or evolutionary process and entrepreneurial behaviour. Table 1 The development of the internationalization research literature (1975–2019). Theories n Authors 1975 – 1994 15 Internalisation; Internationalization Buckley & Casson, 1981; Cavusgil & Nevin, 1981; Cavusgil, 1984; Anderson & Gatignon, 1986; Turnbull, 1987; Terpstra & Yu, 1988; Welch & Luostarinen, 1988; Erramilli & Rao, 1990; Dichtl, Koeglmay & Mueller, 1990; Johanson & Vahlne, 1990; Hill et al., 1990; Melin, 1992; Kim & Hwang, 1992; Benito & Gripsrud, 1992; Andersen, 1993; 1995 – 2004 25 Internationalization; INV; Firm characteristics; Networks; Organizational learning; OLI; Institutional theory; Evolutionary process; Adaptation Woodcock, Beamish & Makino, 1994; Oviatt & MaDougall, 1994; Calof, 1994; Sullivan, 1994; Calof, & Beamish, 1995; Dunning, 1995; Bell, 1995; Chang, 1995; Roth, 1995; Tallman, 1996; Barkema, Bell & Pennings, 1996; Eriksson, Johanson, Majkgard & Sharma, 1997; Madsen & Servais, 1997; Johanson & Mattsson,1988; Birkinshaw & Hood, 1998; Dunning, 1998; Simonin, 1999; Zahra et al., 2000; Autio et al., 2000; Henisz, 2000; Shenkar, 2001; Lu & Beamish, 2001; Axinn & Matthyssens, 2002; Johanson & Vahlne, 2003; Sharma & Blomstermo, 2003 2004 – 2014 35 Internalisation; BG; Networks; Cross-culture; Organizational theory; EMNE; Family Business; Innovation; International Entrepreneurship; Method assessments Lu & Beamish, 2004; Rugman & Verbeke, 2004; Knight & Cavusgil, 2004; Rialp et al., 2005; Oviatt & McDougalll, 2005; Sapienza, Autio, Gerard & Zahra, 2006; Matlay, Ruzzier, Hisrich, & Antoncic, 2006; Johanson & Vahlne, 2006; Nooteboom, Van Haverbeke, Duysters, Gilsing & Van den Oord, 2007; Luo & Tung, 2007; Buckley, Clegg, Cross, Liu, Voss & Zheng, 2007; Cuervo-Cazurra & Genc, 2008; Johanson & Vahlne, 2009; Tung & Verbeke, 2010; Holburn, Zelner & Bennet, 2010; Bhaumik, Driffiel & Pal, 2010; Gubbi, Aulakh, Ray, Sarkas & Chittoor, 2010; Berry, Guillen & Zhou, 2010; Gomex-Meija, Makri & Larraza, 2010; Beugelsdijk, McCann & Mudambi, 2010; Cassiman & Golovko, 2011; Figueira-de-Lemos, Johanson, J., & Vahlne, 2011; Vahlne, Ivarsson, & Johanson, 2011; Ellis, 2011; Dos, 2011; Rugman et al., 2011; Meyer, Mudambi & Narula, 2011; Birkinshaw, Brannen Toko & Tung, 2011; Bignham & Eisenhardt, 2011; Ramamurti, 2012; Cuervo-Cazurra, 2012; Zaheer, Schomaker, Spring & Nachum, 2012; Madhok & Keyhani, 2012; Hennart, 2012; Vahlne & Johanson, 2013 2014 - 15 BG;IE; Evolution; Behavioural approach; CAGE, CPP; SME internationalization Vahlne & Johasson, 2014; Vahlne & Ivarsson, 2014; Cavusgil, Knight, 2015; Eriksson, Johanson, Majkgård, & Sharma, 2015; Welch et al., 2016; Paul, Parthasaty & Gupta, 2017; Paul & Singh, 2017; Vahlne & Johanson, 2017; Reuber, Dimitrators & Kuivalainen, 2017; Kahiya, 2018; Rosado-Serrano et al., 2018; Verbeke & CIravegna, 2018; Reuber et al., 2018; Paul, & Benito, 2018; Paul & Rosado-Serrano, 2019 *Excluding ones not referring to internationalization; see full list e.g. Paul & Singh, 2017, Table 1, p. 2517. P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 3 Organizational learning. Learning is key to the utilization of knowl- edge in behavioural theories (Cyert & March, 1963; Lewin & Volberda, 2005). The Uppsala model describes a process of increasing knowledge and commitment leading to gradual internationalization (e.g. Johanson & Vahlne, 1977, 2006; Vahlne & Johanson, 2014). It illustrates four stages of commitment in international operations, and learning based on prior experiences increases gradual commitment (Johanson & Vahlne, 2006; Johanson & Vahlne, 2009; Johanson & Vahlne, 1977; Schwens et al., 2018; Paul & Rosado-Serrano, 2019). This emphasises the development from export, to FDI and to internationalization. The representation of internationalization through separate stages has re- ceived much criticism (e.g. Andersen, 1993; Turnbull, 1987; Bell, 1995; Axinn & Matthyssens, 2002), although it has also been labelled a mis- conception (see e.g. I-model, Welch et al., 2016; Cavusgil, 1980) due to a focus on the neo-classical perspective and original empirical evidence (Welch et al., 2016). Hence, the dynamic process of learning is the focal point of the model (also e.g. Vahlne & Johanson, 2013; Vahlne & Table 2 Summary of exaptation–adaptation literature. n Authors Literature referencing the concept of exaptation* 17 Nelson & Winter, 1982; Burgelman, 1983; Levinthal & March, 1993; Garud & Nayyar, 1994; Kauffman, 1995; Levinthal, 1998; Mokyr, 1998; Kauffman, 2000; Sarasvathy, 2001; Tuomi, 2002; Adner & Levinthal, 2002; Geroski, 2003; Lessig, 2003; Sarasvathy & Dew, 2005; Von Hippel, 2005; German & Barrett, 2005; Von Hippel et al., 2012; Felin et al., 2014; Santangelo & Meyer, 2011; Santangelo & Meyer, 2017 Literature on exaptation 30 Mokyr, 2002; Dew et al., 2004; Grandori, 2007; Cattani, 2005, 2006; Beunza, 2007; Dew, 2007; Desouza, Awazu, & Ramaprasad, 2007; Cattani, 2008; Dew et al., 2008; Bonifati; Marquis & Huang, 2010; Aaltonen, 2010; Lane, 2011; Bonifati, 2013; Andriani & Cohen, 2013; Andriani & Carigani, Aaltonen & Aaltonen, 2014; Ganzaroli et al., 2014; Mastrogiorgio & Gilsing, 2015; Santangelo & Stucchi, 2015; Andriani, Ali & Mastrogiorgio, 2015; Garud et al., 2016; Dew & Sarasvathy, 2016; Andriani & Cattani, 2016; Ching, 2016; Andriani & Cattani, 2016; Mastrogiorgio & Gilsing, 2016; Felin et al., 2016; Andriani et al., 2017; Santangelo & Stucchi, 2018; Aaltonen et al., 2019 Literature on exaptation–adaptation 15 Cyert & March, 1963; Campbell, 1969; Gould & Lewontin, 1979; Gould & Vrba, 1982; Levitt & March, 1988; Mokyr, 1991, 1998Mokyr, 2000; Buss, Shackelford, & Wakefield, 1998; Gould, 2002; Campbell & Reece, 2003; Lewin & Volderba, 2003; Latour, 2005; Aldrich & Ruef, 2006; Lloyd & Gould, 2017 Table 3 Internationalization theory context assumptions. Context assumptions Detailed elements vs complex ambiguity Risk avoidance vs risk tolerance Empirical evidence: innovative individuals vs medium-tech manufacturers Table 4 Summary of internationalization theory characteristics. Characteristic Examples Cognitive/Subjective emphasis Johanson and Vahlne, 2013, 2014; Santangelo & Meyer, 2011; Paul et al., 2017 Decision-making situations, individual decision-making; Circumstances where greater knowledge does not equal greater commitment; Entrepreneurial characteristics influence; antecedents of export success Forsgren and Johanson 2010 cognitive processes between knowledge acquisition and decision-making Reuber et al., 2017 cultural and linguistic differences in opportunity perception Welch et al., 2016 subjective and narrative construction of processes Longitudinal development Vahlne & Johanson, 2013; Vahlne & Johanson, 2014 The evolvement of knowledge-commitment cycle Reuber et al., 2017 the change in perception of opportunities over time; the change in pursuit of opportunities over time; the impact of perception on organizational development (stabilize/destabilize/restabilize) Welch et al., 2016; Paul et al., 2017 Change as events and sequences; sequential events; the evolvement of internationalization while explaining simultaneous change and stability; sustaining export performance Organizational environment Johanson and Vahlne, 2013, 2014; Santangelo & Meyer, 2011; Paul & Benito, 2018 Circumstances where greater knowledge does not equal greater commitment; EM circumstances Reuber et al., 2017 Inter-organizational practices and routines impacting/interacting with opportunity perception; other levels of analysis Welch et al., 2016; Johanson & Vahlne, 1990 Network processes interacting with firm processes; conflicts from interactions Santangelo & Meyer, 2017; Vahlne & Johanson, 2017 Internationalization as an evolutionary process Table 5 Internationalization theory methods distribution (based on Paul & Rosado-Serrano, 2019). Journals with at least 1.0 impact factor Case analysis 38 Regression analysis 23 Survey 22 Mixed methods 14 Cluster analysis 3 Other Class/Cluster analysis 17 Regression analysis 25 Survey 33 Case studies 25 *Excluding reviews and conceptual papers. Table 6 Exaptation – adaptation contexts assumptions. Context assumptions Multilevel context Disruptive vs non-disruptive development Sequential events and degeneration of heterogeneity P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 4 Johanson, 2014; Johanson & Vahlne, 1990; Johanson & Vahlne, 2009). In experiential learning, that is, learning from prior experiences (Eriksson et al., 1997; Johanson & Vahlne, 1977;), location-bound and non-location-bound knowledge can be differentiated (e.g. Schwens et al., 2018). Non-location bound knowledge is exploitable globally while location-bound knowledge is exploitable only under similar cir- cumstances (see further e.g. Schwens et al., 2018), as in the notion of the uniqueness of networks (Eriksson et al., 1997; Johanson & Vahlne, 2009; Vahlne & Johanson, 2017). While it is argued that the original model requires additional components to fully capture the learning processes (Schwens et al., 2018), this does not conflict with the beha- vioural origins of learning or the authors of the model (e.g. Welch et al., 2016; Johanson & Vahlne, 1977; Johanson & Vahlne, 2006; Johanson & Vahlne, 2009). However, despite numerous revisions (e.g. Welch et al., 2016; Vahlne & Johanson, 2013; Vahlne & Johanson, 2017), a limited number of practical tools for furthering the understanding of for ex- ample location and non-location bound learning have been introduced (also Schwens et al., 2018). Networks. Networks illustrate the environment of actors in which organizations operate (e.g. similarly Latour, 2005), also known as an ecosystem (e.g. Santangelo & Meyer, 2011, 2017; Contractor, 2007; Vahlne & Johanson, 2017). Hence, they often are unique (Eriksson et al., 1997; Johanson & Vahlne, 2009; Vahlne & Johanson, 2017) and strongly connected to the learning perspective (Johanson & Mattsson, 1988; Eriksson et al., 1997; Eriksson et al., 1997; Vahlne & Johanson, 2013) also see e.g. (Lewin & Volberda, 2005). Examples of later models following a similar perspective are the CAGE and CPP models (see Paul & Sánchez‐Morcilio, 2018). The latter combines SMEs and MNEs under one model, following a conceptualisation similar to cultural distance Table 7 Exaptation–adaptation characteristics, summary. *see e.g. Davis & Stern (1988). Table 8 Exaptation – adaptation methods and studies. Method Author(s) Cases Conceptualisation* Campbell & Reece, 2003; Dew et al., 2004; Garud et al., 2016; Gould & Vrba, 1982; Mokyr, 2002; Johnson, 2010 Feathers; Swimm bladders; human brain capacity; Bird bone structure; Eye structure; Apollo 13; CD-ROM technology; Post-Its; Mechanised printing press; Toxic by- products from coal mining broken down to a purple dye Longitudinal case study Cattani, 2005, 2006; Marquis & Huang, 2010 Cornig development of fibre optics from glass handling; U.S. Commercial Banking Comparative explorative case study Aaltonen & Aaltonen, 2014 Infrastructure reuse by Google & IBM Mastrogiorgio & Gilsing, 2016 Invention level determinants in US patent industry Ching, 2016 Internet video industry Andriani et al., 2017 Pharmaceutical industry Santangelo & Stucchi, 2018 Longitudinal comparative case study Aaltonen et al., 2019 Product development in EM internationalization; 2 cases * See full evolutionary discussion starting from Lloyd & Gould (2017). Table 9 Summary of analysis. Internationalization Exaptation–adaptation Theory Differences in the speed of internationalization Individual success stories SME and MNE joint theory constructs Industry wide longitudinal shift Definitions of IE firms Cognitive, social and behavioural perspective Addressing discontinuous and disruptive events Unnoticed, harmful, or developed Finding complementary theory structures Context emphasis Context assumptions Detailed elements vs complex ambiguity Multilevel context Risk avoidance vs Risk tolerance Disruptive vs non-disruptive development Empirical evidence: innovative individuals vs medium-tech manufacturers Sequential events and degeneration of heterogeneity Joint characteristics Cognitive/Social emphasis Fit, function, effect Longitudinal development Simultaneous, sequential and intercrossing The significance of organizational environment Methods Class analysis Conceptual Regression analysis Empirical evidence Survey Lack of systematic analysis Case studies Conceptual clarification needed Cluster analysis P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 5 and institutional context (similarly, Santangelo & Meyer, 2011; Santangelo & Meyer, 2017). The co-ordination of networks (e.g. Johanson & Vahlne, 2003) de- monstrates the core difference between networks and organizational learning – networks are external to the organization, and to some extent autonomous. Similarly, the perspective emphasises the dynamic and developing nature of internationalization as well as the constraining and enabling organizational ecosystem (Santangelo & Meyer, 2017) in which the aforementioned learning takes place. In addition to this, organizational surroundings are uncertain and unpredictable, which is also an important notion in studies focusing on emerging market mul- tinationals (EMNEs) (e.g. Guillén & García-Canal, 2009; Ramamurti, 2012) and cross-cultural analysis (e.g. Tung & Verbeke, 2010). While the significance of networks has long been a part of the Uppsala model (Johanson & Mattsson, 1988; Vahlne & Johanson, 2013, 2014, 2017; Santangelo & Meyer, 2017), the impact of decreasing commitment re- mains less clear (Santangelo & Meyer, 2011), and the lack of theories related to development in an ecosystem (see Contractor, 2007; Johanson & Vahlne, 2017) has only recently gained more conceptual tools (Santangelo & Meyer, 2017; Santangelo & Stucchi, 2018), to pursue further theory additions (e.g. Paul & Sánchez‐Morcilio, 2018). Entrepreneurial behaviour. Entrepreneurial behaviour in interna- tional operations is characterised two focal points, unpredictable ac- tions and rapid internationalization. Inspired by the Uppsala model, Oviatt and McDougall (1994) introduced the concept of INV, and later Knight and Cavusgil (2004) are credited in introducing the concept of BG (see also Rialp et al., 2005; also Johanson & Vahlne, 1990). How- ever, similar to the introduction of the Uppsala model, the term BG had already been suggested prior (e.g. Rennie, 1993). Instead of gradually increasing commitment, INVs and BGs expand globally in a relatively short time period (Paul & Rosado-Serrano, 2019, Fig. 1; Rialp et al., 2005; Schweizer et al., 2010; Paul et al., 2017; Verbeke & Ciravegna, 2018; Laufs & Schwens, 2014). This demonstrates either the capability to learn rapidly or not aiming to learn as much; hence, decisions may be risky (e.g. Santangelo & Meyer, 2017). One of the popular models of international opportunity perception is effec- tuation logic (see Reuber et al., 2018; more e.g. Sarasvathy, 2001; Sarasvathy & Dew, 2005; Read et al., 2016; Dew et al., 2008; Arend et al., 2015). However, this direction is under much current debate, including the definition of BGs (Paul & Rosado-Serrano, 2019), the importance of the speed of internationalization (Verbeke & Ciravegna, 2018), and whether the perspective is universal for all firms (see Paul et al., 2017; also, Paul & Sánchez‐Morcilio, 2018). Further, the theo- retical umbrellas have additional issues. From a firm-level perspective, the notions of Sarasvathy (2001, 2005) and bricolage (Baker & Nelson, 2005; Reuber et al., 2018) have not provided answers to all questions. The prior perspective of young firms having increased entrepreneurial tendencies (Dew et al., 2008) has been challenged (Read et al., 2016), and a question remains about how and why firms engage in en- trepreneurial behaviour. A majority (63 %) of experts use effectuation 75 % of the time (Sarasvathy, 2001), yet research has yet to determine why this is so (Read et al., 2016). The development of the inter- nationalization theory is illustrated in Fig. 1. Here, the figure represents a simplified, partly chronological de- velopment and publication of some of the most influential works, yet does not aim to illustrate parallel development and interdisciplinary discussion in full detail (on internalization see e.g. Rugman et al., 2011). Further, the focal point is on the chronological appearance of Fig. 1. Internationalization theory development. Fig. 2. Exaptation theory development. P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 6 most influential works of each parallel stream (similarly e.g. Keupp & Gassmann, 2009, p.605). From the analysis perspective, there is not a clear division between the focal points. However, a division between incremental internationalization and rapid internationalization persists in the current literature (e.g. Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018; Rugman et al., 2011; similarly, Santangelo & Stucchi, 2018). However, the authors of the Uppsala model do note that some firms may be more rapid in their internationalization (Johanson & Vahlne, 1990), and entrepreneurial actors are typically the reason for this, along with networks (Johanson & Vahlne, 1990, p.20). Further, entrepreneurship is an essential element in the internationalization process (Schweizer et al., 2010; Paul & Rosado-Serrano, 2019). Hence, besides the speed of internationalization and the division between SMEs and MNEs in the empirical material, it remains unclear whether such division is needed (similarly, Verbeke & Ciravegna, 2018). Never- theless, several issues challenge the future of internationalization pro- cess theories. These include discontinuous and disruptive events (e.g. Reuber et al., 2017; Santangelo & Stucchi, 2018; Kriz & Welch, 2018), finding complementary theory structures (Schwens et al., 2018; Welch et al., 2016; Vahlne & Johanson, 2013; Vahlne & Johanson, 2014), addressing the SME–MNE division (e.g. Verbeke & Ciravegna, 2018; Paul et al., 2017 – done by some already, e.g. Paul & Sánchez‐Morcilio, 2018) and defining entrepreneurial firms (such as BGs) (e.g. Paul & Rosado-Serrano, 2019). 3.2. Context The context of internationalization process theories is diverse and fragmented (similarly, Paul & Rosado-Serrano, 2019). However, some conclusions can be drawn. In particular, the learning and en- trepreneurial perspectives differ in their definitions of context and risk tolerance. Context definitions. How detailed the context is understood to be also indicates how it is treated. From a learning perspective, it is assumed that uncertainty exists (Figueira-de-Lemos, Johanson, & Vahlne, 2011), the environment is not in equilibrium (see Welch et al., 2016) and it can be evaluated as a whole (also, Cyert & March, 1963; Schwens et al., 2018). Here, the focal point is on combined contextual elements, which can be learned from and/or avoided. This is essentially a “predictive” stance according to entrepreneurship theories (Dew et al., 2008; Sarasvathy, 2001; Sarasvathy & Dew, 2005). The goal is to overcome a problem created by the environment while learning from it (see Cyert & March, 1963; Dew et al., 2008). The IE literature, meanwhile, specifi- cally addresses a variety of contextual elements, such as situational, institutional, temporal (Reuber et al., 2017) and social capital (Paul et al., 2017), influencing the perception of opportunities (Reuber et al., 2017; also, Paul et al., 2017). Thus, either the external environment in internationalization process literature is an anonymous threat (e.g. Figueira-de-Lemos et al., 2011; Johanson & Vahlne, 1977; Johanson & Vahlne, 2009, also similarly Kriz & Welch, 2018) or it may have parts with a variety of uses and opportunities (Santangelo & Meyer, 2017; Axinn & Matthyssens, 2002; Johanson & Vahlne, 2006; Santangelo & Meyer, 2011; Reuber et al., 2017). The network perspective balances between the two. Networks can be controlled and co-ordinated (Johanson & Vahlne, 1990), they may possess an obstacle or create opportunities (Vahlne & Johanson, 2017; Johanson & Vahlne, 2006; Santangelo & Meyer, 2017) and they are unique (e.g. Eriksson et al., 1997). Therefore, there are two perspectives on context – it can be seen either through details or as a complex am- biguity. Risk tolerance. Following the previous chapter, there are two ways to deal with risk: aiming to minimise or dealing with issues as they occur. In adaptive organizations (Cyert & March, 1963), such as the learning perspective assumes, the environment presents a multitude of pro- blems. The intentional search for solutions is biased due to human cognitive limitations, and while additional problems will follow, learning does occur (see further Cyert & March, 1963). This means the environment needs to be predicted (also Dew et al., 2008) in order to minimise risk. The entrepreneurial perspective follows entrepreneurial behaviour logic. This translates to firms tolerating risk, as the primary goal is not to assume that one’s risk can be calculated nor estimated to a great degree of detail (see further Dew et al., 2008; Sarasvathy, 2001, 2005). In essence, the future cannot be predicted because risks are beyond comprehension; accordingly, issues are dealt with as they occur. Analysing the context of theory constructs, a clear dualism emerges in risk tolerance. Further, this distinction between seemingly opposing perspectives can be found in the empirical evidence used in the lit- erature. Empirical studies utilizing, for example, BG theory are typically conducted in technology-intensive, knowledge industries and new generation technologies (e.g. by Google, Apple and Facebook), whereas incremental internationalization focuses on medium-technology man- ufacturing organizations (see details Paul & Rosado-Serrano, 2019, Fig. 1; see further on technologies for example Smith, 2005, p.157). A similar notion is further evident in previous literature, for example, it has been said that mature technologies tend evolve slowly, whereas rapid change tends to happen in newer technologies in international context (e.g. Narula & Zanfei, 2005 p. 333), despite not systematically true in all cases. The context assumptions of internationalization the- ories are illustrated in Table 3. 3.3. Characteristics As the review of theory demonstrated, there are few focal issues in the current literature on internationalization. However, what are the joint required elements shaping the future? Joint variables and theory constructs may fail to include qualitative perspectives (see e.g. Kalinic, Sarasvathy, & Forza, 2014 in Paul & Rosado-Serrano, 2019), and this is evident through a comparison of contemporary research agendas (Laufs & Schwens, 2014; Welch et al., 2016; Reuber et al., 2017; Paul & Rosado-Serrano, 2019; Paul & Benito, 2018), model revisions (Johanson & Vahlne, 2009; Santangelo & Meyer, 2011; Vahlne & Johanson, 2017) and new perspectives (Santangelo & Meyer, 2017; Paul & Sánchez‐Morcilio, 2018). The issues can be divided into categories emphasising a particular characteristic, the first of which is the cognitive/social emphasis. The focal point here is either on decision-making processes, the cognitive biases and capabilities or socially constructed situations or concepts originating from sociological and behavioural theories. Further, a par- ticular emphasis on firm characteristics exists in the SME inter- nationalization literature (Paul et al., 2017). Second, there are calls to examine and understand longitudinal development. Additionally, a dis- tinction has been made between dynamic, continuous and event-based, sequential development. Finally, the organizational environment is em- phasised (e.g. Santangelo & Meyer, 2017; Paul & Sánchez‐Morcilio, 2018). This includes multilevel perspectives, simultaneous processes and inter-firm relations. The characteristics, sources and examples are illustrated in Table 4. In sum, the characteristics of future theory development focus on behaviour, longitudinal development and organizational environment. Therefore, they mostly follow the issues raised in the current inter- nationalization literature, such as the significance of the organizational environment and longitudinal development. However, the character- istics do not describe in a particular manner the categorisation between SMEs and MNEs. While it has been noted that more studies on SME internationalization should be conducted (e.g. Laufs and Schwens, 2014; Paul et al., 2017). Further, it has been noted that the categor- isation may not benefit future theories (e.g. Verbeke & Ciravegna, 2018), and recent models already consider this by creating joint theory constructs (e.g. Paul & Sánchez‐Morcilio, 2018 also similarly, inter- nationalization as an evolutionary process). P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 7 3.4. Method Internationalization studies use a variety of data collection and analysis methods, such as regression analysis, survey, case analysis, mixed method and cluster analysis (for a complete review see Paul & Rosado-Serrano, 2019, Table 2). However, the summaries include sev- eral studies from decades ago (e.g. Bloodgood, Sapienza, & Almeida, 1996; Elango, 1998; Leonidou & Katsikeas, 1996; see Paul & Rosado- Serrano, 2019, Table 2), and some scholars argue that the Uppsala model has been misinterpreted in previous literature (e.g. Welch et al., 2016). Focusing on recent literature (see Paul & Rosado-Serrano, 2019, Table 5 & 6), there is no evident difference in methods between studies using the Uppsala model and IE perspectives. Both utilize regression analysis (Graves & Shan, 2014; Choquette, Rask, Sala, & Schröder, 2017), surveys (Chetty, Hendren, Kline, & Saez, 2014; Cannone & Ughetto, 2014; Li, Qian, & Qian, 2015) and case studies (Kalinic et al., 2014; see more Paul & Rosado-Serrano, 2019, Table 5 & 6). Further, both study SMEs (e.g. Li et al., 2015; Chetty et al., 2014; Graves & Shan, 2014). Calls have been increasing to widen the geographic coverage of empirical material (Paul et al., 2017; Reuber et al., 2017; see also Paul & Benito, 2018), to include cross-country analyses and to focus on qualitative methods (e.g. Tung & Verbeke, 2010; Doz, 2011; Welch et al., 2016; Paul & Rosado-Serrano, 2019; Verbeke & Ciravegna, 2018), which refer to methods besides case studies (e.g. narrative analysis). The methods used are illustrated in Table 5. Based on this, fruitful areas for future empirical evidence would be internationalization from emerging economies (also see Paul & Benito, 2018, Table 1), already growingly conducted (e.g. Santangelo & Meyer, 2011; Santangelo & Stucchi, 2018), increasing cross-cultural analysis (e.g. Reuber et al., 2017) and creating theory perspectives suitable for SME and MNE studies alike (e.g. Verbeke & Ciravegna, 2018; also see Paul & Sánchez‐Morcilio, 2018). 4. Exaptation – adaptation 4.1. Theory The term “exaptation” refers to a shift in function of a trait. Introduced in 1982 by Gould and Vrba to the field of evolutionary psychology and 2004 to economics by Dew et al., 2004, with first empirical evidence in economics presented in 2006 (Cattani, 2006). Prior to this, in evolutionary psychology the term “pre-adaptation” (Gould & Vrba, 1982) was used, and, while lacking a joint term, some economic perspectives hinted of a similar concept (see e.g. Garud and Nayyar, 1994, “transformative capability”; further Aldrich & Ruef, 2006, p.18 -20; 47 – 48). Since 2004, a growing stream of exaptation has emerged in the economics literature, with two specific focal points: the individual success story (Dew et al., 2004; Dew et al., 2008; Read et al., 2016) and the gradual industry shift (e.g. Cattani, 2006; Marquis & Huang, 2010). Individual success stories. Exaptation was first introduced to man- agement by Dew, Sarasvathy and Venkataram (2004), who argued that serendipitous events could be explained with the concept (Apollo 13, Post-It notes, CD-ROM invention; also Johnson, 2010: mechanised printing press; Garud et al., 2016: purple dye). This idea continued in the authors’ later manuscripts to develop into the behavioural theory of entrepreneurial firms, the BTEF (e.g. Dew et al., 2008), using effec- tuation logic (Sarasvathy, 2001, 2005) and later to niche market con- struction (Dew & Sarasvathy, 2016). Hence, exaptation is connected to entrepreneurial behaviour. Instead of adapting to the environment, the entrepreneur can spot opportunities in it. This exaptive orientation means that new markets are found since a relatively broad goal is maintained rather than a narrow one, leading to adaptive behaviour (see further Cyert & March, 1963; Dew et al., 2008; Read et al., 2016 p. 532; also Aaltonen et al., 2019). An additional perspective of this stream is the social entrepreneurship perspective (Ganzaroli, De Noni, & Pilotti, 2014; Abatecola, Belussi, Breslin, & Filatotchev, 2016), making exaptation rooted also in cognitive theories. Prior to the shift in function – the utilization of realised opportunity – the focal point of exaptation theories has been on the cognitive (Felin et al., 2016), social (Garud et al., 2016) and environmental aspects (e.g. Dew et al., 2008), following agent-network theory (Latour, 2005; see also Andriani & Cattani, 2016). This discovery of new functions re- quires affordances (Felin et al., 2016), a sensitivity for opportunities. Cognitive biases, related to, for example, experience (“functional fix- edness” e.g. Felin et al., 2016) may prevent this – explaining why not all opportunities are pursued. On the other hand, the roots of current competitive edge may not have been planned as ones (Marquis & Huang, 2010). Prior to discovery, the assumed opportunities cannot be predicted or calculated (see Felin et al., 2016; Felin, Kauffman, Koppl, & Longo, 2014; German & Barrett, 2005), may be externally influenced (similarly Latour, 2005; see Garud et al., 2016; Read et al., 2016; Felin et al., 2016), or masked by narratives (Andriani & Cattani, 2016; Garud et al., 2016, p.122). This is a highly similar notion to the characteristic of internationalization theory emphasising cognitive and subjective perception and opportunities (e.g. Reuber et al., 2017; Welch et al., 2016). There are two reasons for exaptations to occur in economics: there is a dire need in the market, or a new market “needs” to be constructed (Dew & Sarasvathy, 2016). Examples of the former are the pharmaceutical industry (see e.g. Andriani, Ali, & Mastrogiorgio, 2017) while Post-it notes are an example of the latter (Dew et al., 2004; Garud et al., 2016). This stream emphasises the cognitive and social aspects of individual behaviour, and entrepreneurial tendencies of individual firms. Industry shifts. Exaptation theory development in economics con- tinued with the seminal work of Cattani (2006) on the development of fibre optics. In a detailed case study on technology speciation (see also Levinthal, 1998; Adner, 2002; Adner & Levinthal, 2002), he re- constructed how an existing technology evolves into a substantially different one. In a 2010 study on the US banking industry, Marquis and Huang illustrated how organizational culture, developed as an adaptive response towards institutional pressure, provided a competitive ad- vantage in mergers and acquisitions. A similar pattern emerges also in branching niches of evolutionary development – wings are an example (e.g. Campbell & Reece, 2003). A shift in function creates a new de- velopmental direction, if beneficial enough and after generations, de- veloped into an adaptive trait (see Lloyd & Gould, 2017). On the other hand, exaptations may also remain unnoticed, become useless (span- drels, Lloyd & Gould, 2017; Garud et al., 2016) or became harmful (e.g. Davis & Stern, 1988). These, second-generation stages after the initial shift in function, were developed with the concept of modularity (Andriani & Carignani, 2014; Andriani & Cohen, 2013) connected to internationalization (Aaltonen et al., 2019; Santangelo & Stucchi, 2018) and to organizational strategy (Ching, 2016). This direction, none- theless, emphasized the industry-wide level of analysis. Exaptation theory development streams are illustrated in Fig. 2. 4.2. Context Development occurs in an ecosystem (e.g. Santangelo & Meyer, 2017; Adner, 2017; Korhonen & Snäkin, 2005). However, an ecosystem is a dynamic structure that is changing, unique, unpredictable and may be analysed from multiple levels. As exaptation explains disruptive development, the branching of niches in some cases, adaptation a continuously stable selection–retention process (see Campbell, 1969; Lloyd & Gould, 2017). In economics, the selection-retention process is also potentially rapid (see Andriani et al., 2017). Multilevel context. In an ecosystem, micro-, meso- and macrolevel actions are interconnected (similarly e.g. Coleman, 1994). Ex- aptation–adaptation theory constructs can predict individual behaviour (similarly, Cyert & March, 1963; Dew et al., 2008), network and en- vironment interconnections (also, Felin et al., 2016; Santangelo & P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 8 Meyer, 2017) or gradual changes (Cattani, 2006; Marquis & Huang, 2010). Subjects for potential exaptation, artefacts, and new uses for artefacts, affordances, are created between the actor environment and artefact (Andriani & Cattani, 2016; Felin et al., 2016; Tuomi, 2002; Andriani & Cattani, 2016; further, e.g. Latour, 2005; similarly, Santangelo & Meyer, 2017). The emphasis on the cognitive elements and individual behaviour illustrates why and how exaptation theory is a building block in entrepreneurial behaviour (Dew et al., 2004, 2008) - also following recent suggestions to advance IE theories (e.g. Reuber et al., 2017). On the other hand, evolution of lineages (e.g. Cattani, 2006) is an example from the other end of the spectrum. Hence, ex- aptation – adaptation theory sets little to no limits on level of analysis. Disruptive versus non-disruptive development. Darwinian adaptation follows linear development, where exaptations are non-linear, dis- ruptive events (see e.g. Lloyd & Gould, 2017). In theory, each artefact has potential to be exapted, following economic theories on the non- prestability of applications (see e.g. Kauffman, 1995, 2000), multi- purposeness of technology and resources or multifunctionality of ma- terial (Grandori, 2007). However, due and in addition to this, exapta- tion and adaptation are temporally tied. In order to constitute as adaptation, the current use has to be similar to the past usage – due to e.g. environmental demand (Lloyd & Gould, 2017), or intentional de- velopment (similarly e.g. Cyert & March, 1963; Dew et al., 2008). Further, in evolution, exaptations are deemed to be an “occasional novelty” (e.g. Campbell & Reece, 2003), yet they are far more common in economics (see further Mokyr, 2002; Garud et al., 2016; Felin et al., 2016; Andriani & Cattani, 2016). In fact, a recent study on the phar- maceutical industry indicated that 40 % of new drug uses were exaptive in nature (Andriani et al., 2017). Sequential events. Exaptation–adaptation theory constructs in eco- nomics, or in mammals in general (see Mokyr, 2002; Garud et al., 2016), are not bound to a particular set of time units. In evolution, selection-retention cycles are tied to generations. In economics, this may vary from decades (Marquis & Huang, 2010) to weeks (Andriani et al., 2017). Adaptation in biology means the development of a feature for a purpose, an inherited trait improving survival (e.g. Campbell & Reece, 2003). This illustrates the spatial double requirement of adapta- tion (Lloyd & Gould, 2017). In other words, the trait was beneficial in the past as well as currently. Over generations, a systematic and rela- tively stable selection process may emerge (see Lloyd & Gould, 2017; Gould & Vrba, 1982; also Campbell, 1969). Exaptation on the other hand, may either develop into an adaptation, remain unnoticed or cease to exist (see Lloyd & Gould, 2017; Bonifati, 2013). The contextual as- sumptions of exaptation–adaptation are illustrated in Table 6. 4.3. Characteristics Exaptation and adaptation theories have two main characteristics. The first is related to development history – fit, function and effect. Second, exaptation and adaptation are complementary, sequential or simultaneous (Lloyd & Gould, 2017). Fit, function and effect. Fit, function and effect are the concepts dif- ferentiating exaptation and adaptation. Both describe the part of the development of traits in the evolutionary process. However, adapta- tions are “selected” – hence having a function (see Lloyd & Gould, 2017), and exaptations are co-opted, having an effect (Gould & Vrba, 1982; Lloyd & Gould, 2017). Functions of a current adaptations are limited, and have a limited set of effects – as exaptations cannot be predicted, possible effects are unpredictable (Felin et al., 2016). In biology, examples of exaptations are the development of wings on di- nosaurs (Gould & Vrba, 1982; Lloyd & Gould, 2017; Dew et al., 2004; Andriani & Cattani, 2016) and swim bladders exapted from floating to breathing (Campbell & Reece, 2003; Gould & Vrba, 1982; Santangelo & Stucchi, 2018). Yet, confusion among the concepts has remained until recently (see on “adaptivist worldview”, Lloyd & Gould, 2017). Simultaneous, sequential and intercrossing. While singular events of exaptation are temporally tied, often multitudes of traits are connected to an individual. Feathers co-opted for flying is an example of a parti- cular structure, while many other structures might have remained with similar functions connected to the wing (see e.g. “engineering per- spective”, Lloyd & Gould, 2017). Further, multiple paths – each novel in comparison to previous – can lead to similar results (Bonifati, 2013). Adaptations may develop into useless junk, yet be discovered after a while for another purpose (see e.g. Aaltonen et al., 2019). Exapted features may disappear from use (Santangelo & Stucchi, 2018) or re- main unnoticed (Marquis & Huang, 2010), while supporting features remain useful and purposeful. Hence, exaptation and adaptation are, or should, be to a degree defined based on the purpose of the analysis, take into consideration the entire structure, and be situated in a historical context (Lloyd & Gould, 2017; see also Gould & Vrba, 1982). The characteristics of exaptation and adaptation are illustrated in Table 7. 4.4. Method Empirical evidence on exaptation can be divided into two cate- gories: studies specifically measuring exaptation and studies introdu- cing historical incidents fitting exaptation theory. Further, there is a lack of established research design in the study of exaptation, with studies often relying on ad-hoc design (Andriani & Cattani, 2016). However, adaptation is often used as an umbrella term, and the amount of paradigms (see Lewin & Volberda, 2005), hence, the analysis of methods on adaptation studies falls beyond the scope of this particular manuscript. To determine which innovations are exaptive and which ones are not, patents (Cattani, 2006; Ching, 2016), legal documents and pub- lications (Andriani et al., 2016), postal indexes, export intensity reports, joint ventures and acquisitions (Marquis & Huang, 2010; Santangelo & Stucchi, 2018) have been used. In 2017, a first systematic approach towards measuring and studying exaptation was published, offering helpful guidelines (Andriani et al., 2017), namely, the degrees of ra- dicalness and distance. Radicalness illustrates how new exaptation is to a market; extremely radical exaptations, such as industry shifts, only count for 10 % of incidences (Andriani et al., 2017; Cattani, 2006; Marquis & Huang, 2010). The distance describes how far the new use is from the previous one, and patents and other immerse databases (see the use of WHO ICD-9-CM Database; Andriani et al., 2017) provide a tool for analysing this distance. While quantitative empirical material would suit the study of exaptation, qualitative analyses (Siggelkow, 2002; Cattani, 2006) remain most reliable (Andriani et al., 2017). The methods in exaptation manuscripts are illustrated in Table 8. 5. Results Based on the literature collected and analysed, internationalization theory has developed to emphasise networks, entrepreneurship and organizational behaviour. However, some unresolved issues remain. One of them, firstly, is explaining the differences in the speed of in- ternationalization (e.g. Li et al., 2015). Second, there is a clear need for joint theory constructs for both SME and MNE (Verbeke & Ciravegna, 2018; see further Chetty et al., 2014; Graves & Shan, 2014; Paul et al., 2017; Paul & Sánchez‐Morcilio, 2018; Paul & Rosado-Serrano, 2019; Santangelo & Meyer, 2017). Third, and related to the previous, there is need to define BGs (Paul & Rosado-Serrano, 2019), and fourth, dis- ruptive events must be addressed. Finally, new theories may be re- quired to complement the existing ones. However, a clear line between, only, two sets of theories can not be made. Differences in basic me- tatheoretical assumptions can be found, related to risk tolerance and risk avoidance, resulting in various perspectives on understanding the organizational environment, but also in the empirical evidence used. On the other hand, similarities also exist. In future theory development, emphasis on cognitive and social perspectives should be increased, along with the emphasis on the environment and context phenomena P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 9 takes place. Further, a longitudinal and a dynamic perspective should be used, enrichening the empirical evidence would be beneficial, and cross-country analyses are needed. Exaptation–adaptation theory has two distinct streams: one focusing on individual success stories and the other on industry-wide shifts. While the joint setting emphasises the cognitive, social and organiza- tional environment perspectives (similarly, Santangelo & Meyer, 2011, 2017; Paul & Sánchez‐Morcilio, 2018), a clear requirement emerges. Level of analysis and concept definitions are crucial, and affect the description of the phenomena. In economics even more so than in evolution. Fit, function and effect, historical dependence and definition of structure examined may transform a perspective from en- trepreneurial behaviour to organizational structures and to industry- wide analysis. Yet, beyond this, much freedom can be found. The theory would suit multiple levels, include and explain disruptive events (Santangelo & Stucchi, 2018), heterogeneity in solutions – also the lack of in some cases (Bonifati, 2013), without constraining the compar- ability of the results (compare e.g. Andriani et al., 2017 and Marquis & Huang, 2010). However, there is a severe lack of systematic methods in exaptation; scarce empirical evidence and occasionally an underlying lack of conceptual clarification (compare e.g. Read et al., 2016, p.532 and Lloyd & Gould, 2017 on “selection”). A summary of the TCCM- model of both paradigms can be found in Table 9. 6. Future research agenda The issues remaining unsolved in internationalization can be ad- dressed with four themes drawn from exaptation-adaptation literature. Firstly, entrepreneurial and non-entrepreneurial actions. The usage of these concepts follows entrepreneurship (e.g. Sarasvathy, 2001, 2005; Dew et al., 2008) and behavioural theories (Cyert & March, 1963). Instead of defining BGs, and simultaneously addressing the need to examine both SMEs and MNEs under it construct (e.g. Verbeke & Ciravegna, 2018), focusing on behaviour would benefit subsequent theory development (similarly, Welch et al., 2016). Secondly, the re- lative speed of internationalization based on events. There are clear dif- ferences in the speed of internationalization between firms, measured by conventional units (e.g. years). However, and as pointed out already (e.g. Li et al., 2015; Reuber et al., 2017), other measures of speed could be utilized, and further, for example industry structure and level of technology of imported goods should be taken into account. Thirdly, the inclusion of disruptive events. Clear calls have been made regarding the inclusion of disruptive events to the internationalization process (e.g. Santangelo & Meyer, 2017; Reuber et al., 2017), hence tools for this are needed. Similarly, calls have been made to incorporate additional theories in particular. This is addressed here under the theme, dynamic development and context significance with additional theories. While aspects partly incorporated already in theories, such as the Uppsala model, internationalization as an evolutionary process (see e.g. Santangelo & Meyer, 2011, 2017), and the CCT- model (Paul & Sánchez‐Morcilio, 2018), the scope and constructs still require addi- tional clarification. However, certain requirements are set by previous theories to new ones, in order to follow findings already made. Here, this is further addressed with the subcategories of level of analysis, dy- namic development and contextual significance. The framework of the agenda is illustrated in Table 10. Entrepreneurial and non-entrepreneurial actions. Defining BGs and incorporating SMEs and MNEs under same theory constructs focus on a similar issue. However, the issue is not unique to internationalization, and can also be seen in entrepreneurial behaviour theories. There are no definitive answers to the questions of why and when firms act “entrepreneurially” (e.g. Read et al., 2016, p. 531; further Sarasvathy, 2001), and more importantly, what types of firms. However, what can be agreed on, is that there are certain actions that can be defined as entrepreneurial, such as the recognition and pursuit of opportunities and novel and new market creation (Sarasvathy, 2001, 2005; Oviatt & McDougall, 1994; Knight & Cavusgil, 2004; Reuber et al., 2018, 2017; Verbeke & Ciravegna, 2018; Laufs & Schwens, 2014; Liesch, Welch, & Buckley, P.J. 2011; Reuber et al., 2017; Dew & Sarasvathy, 2016). Dew, Sarasvathy and Venkataram (2004) suggest that exaptation is a central concept in understanding the creation of new markets and the per- ception of opportunities in an unpredictable environment. Further, it is a key tool for social entrepreneurs to discover new potential and new innovative fields (Ganzaroli et al., 2014). One of the issues in inter- nationalization theory is the division between SME and MNE firms (e.g. Paul et al., 2017). A significant amount of empirical evidence has fo- cused on the latter (Laufs & Schwens, 2014; Paul et al., 2017), while the distinct characteristics of SME internationalization have been given lesser attention. Exaptation is an example of a behavioural pattern; hence, it is not limited by certain organizational characteristics (en- trepreneurial orientation) or firm attributes (SME–MNE). In essence, exaptation–adaptation theory draws no boundaries between firm-level differences (all firms, in theory, are capable of entrepreneurial beha- viour) but classifies entrepreneurship through behaviour rather than with a static attribute such as BGs and INVs. Hence, with ex- aptation–adaptation theory we can understand internationalization as entrepreneurial and non-entrepreneurial actions instead of a particular typology of firm characteristics. This follows the recent discussion re- garding the characteristics of organizations, as there is a lack in defi- nition (Paul & Rosado-Serrano, 2019), arguments on perhaps char- acteristics not playing a significant role (Verbeke & Ciravegna, 2018; Welch et al., 2016; Vahlne & Johanson, 2013, 2014; Santangelo & Meyer, 2011, 2017; Vahlne & Johanson, 2017) or are beyond the ex- planatory capabilities of other theories alike (see e.g. Read et al., 2016; Sarasvathy & Dew, 2005). The relative speed of internationalization based on events. One of the major differences between for example the Uppsala model and IE the- ories, is the speed of internationalization. While the option of rapid internationalization was acknowledged by the authors of the Uppsala model (see Johanson & Vahlne, 1990, p. 20; also Schweizer et al., 2010, p. 365), the theory constructs predicting the rapid internationalization are currently separate from the construct predicting the slow, incre- mental process. Traditionally, the speed of internationalization is de- termined by the number of years between export and FDI (e.g. Paul & Rosado-Serrano, 2019; Rugman et al., 2011), and this serves as a basis for differentiating BGs from gradual internationalization. However, “incremental” in other paradigms does not necessary refer to the speed but rather to the change in comparison to previous solution (e.g. Kizrnerian vs Schumpeterian innovation). Further, for example, mature technologies tend to evolve slowly, whereas rapid change tends to happen in newer technologies in international context (e.g. Narula & Zanfei, 2005, p. 333; see further on technologies for example Smith, 2005, p.157). Hence, additional measures of speed should be con- sidered (Li et al., 2015), such as sequential events (e.g. Reuber et al., 2017; Welch et al., 2016) in relation to the context of operations. Ex- aptation–adaptation theory is suitable for analysing both incremental and rapid internationalization, as it draws conclusions based on relative comparison. The unit of time may depend on the industry in question, the tendency to internationalise (see e.g. Guillén & García-Canal, 2009) or organizational characteristics. In a study of the US banking industry (Marquis & Huang, 2010), a gradual shift in function was evident in three decades. Similarly, a decade was enough for observations related to overcoming the competency gap (Santangelo & Stucchi, 2018). On the other hand, in the pharmaceutical industry, exaptations may take place several times a week (Andriani et al., 2017). The sequential events are also emphasised as a future conceptual direction for using the Uppsala model (e.g. Welch et al., 2016; Johanson & Vahlne, 1990) as well as the IE perspective (e.g. Reuber et al., 2017). This further introduces a new possibility in the study of international en- trepreneurship: can IE also happen gradually over time? Moreover, vice versa, are rapid internationalizations the result of entrepreneurial ac- tions or rapid incremental actions? Further, how is the number of novel P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 10 solutions (i.e. exaptations) related to internationalization? The inclusion of disruptive events. According to the literature on in- ternationalization as an evolutionary process (e.g. Johanson & Vahlne, 1977; Vahlne & Johanson, 2017; Santangelo & Meyer, 2011, 2017), the internationalization process consists of linear and non-linear events. Linear events follow a predictable pattern, such as the stages of com- mitment in internationalization (Johanson & Vahlne, 1977), while non- linear ones are novel or “quirky” (Santangelo & Meyer, 2011; Santangelo & Stucchi, 2018, 2017). Even in a relatively stable en- vironment, exaptation is a Campbellian variation–selection–retention (see e.g. Campbell & Reece, 2003, p. 1072–1155) source for variation (Grandori, 2007), that is, a disruption in development. Hence, ex- aptation–adaptation theories provide an explanatory framework for non-linear developmental patterns in the internationalization process (Santangelo & Meyer, 2011, 2017) and disruptive events (Santangelo & Stucchi, 2018), without excluding the previous theories on linear de- velopment (e.g. Johanson & Vahlne, 1977). Therefore, inter- nationalization based on exaptation–adaptation would consist of linear and non-linear internationalization patterns (similarly, Santangelo & Meyer, 2011, 2017; Santangelo & Stucchi, 2018; Johanson & Vahlne, 1997; Johanson & Vahlne, 2009; Vahlne & Ivarsson, 2014; Vahlne & Johanson, 2017; Aaltonen et al., 2019; Hutzschenreuter & Matt, 2017). This not only follows the many calls made to incorporate disruptive events in the theory of internationalization but also illustrates a sig- nificant element of internationalization that benefits exaptation theory. By definition, exaptation is a domain change of an existing technology (Levinthal, 1998) however, international expansion is in itself a change in operational domain (Santangelo & Stucchi, 2018; similarly, Marquis & Huang, 2010). Hence, exaptation should be far more evident in in- ternational ventures than in home country ventures (i.e. en- trepreneurial behaviour, see (Dew et al., 2008), and exaptation can be considered a strategic choice (Ching, 2016). Therefore, using the con- cept of exaptation for describing internationalization would also deepen the understanding of exaptation in economics. Dynamic development and context significance with additional theories. In using exaptation-adaptation theory to describe inter- nationalization, few key issues both respond the requirements of in- ternationalization theories and benefit subsequent theories. Level of analysis. In internationalization process theories, the focal point may be on the micro-, meso- or macrolevel (e.g. Verbeke & Ciravegna, 2018). Following evolutionary perspective, the conceptualisation of inter- nationalization with two behavioural models, exaptation and adapta- tion, can illustrate both. Novel individual-level solutions, such as the Apollo 13 (see Dew et al., 2004), can be analysed, as can patterns in large industry shifts (e.g. Cattani, 2006; Marquis & Huang, 2010; Santangelo & Stucchi, 2018; Aaltonen et al., 2019). Therefore, ex- aptation and adaptation would suit the analysis on multiple levels – individual behaviour based on cognitive and behavioural approaches, the interorganizational networks and actors following the concept of ecosystems and longitudinal development and industry-wide analysis following population ecology approaches. Dynamic development. When discussing development, a crucial de- terminant is the actions and path taken previously. Continuing with the discussion regarding the speed of internationalization, the dynamic perspective introduces concepts not related to certain time-units/events (Reuber et al., 2017). The usage of existing technologies or resources to copy the competency gap is one example of exaptation in international operations (see Santangelo & Stucchi, 2018), but exaptation theory also explains why they may remain unused. There are three options after the initial shift in function, in the second generation: exaptation continues to develop (e.g. Cattani, 2006), it does not (Santangelo & Stucchi, 2018) or it reveals shadow options (Andriani & Cattani, 2016), that is, options not available previously. Therefore, the concepts of exaptation and adaptation also include further developmental paths after a singular event of either exaptation or adaptation, highlighting the dynamic de- velopment of internationalization along with multiple paths also in- corporating perspectives of non-linear internationalization (e.g. Vissak & Francioni, 2013; Chen et al., 2019). Contextual significance. Following internationalization process the- ories, the surrounding environment may enable or constrain operations (e.g. Santangelo & Meyer, 2011, 2017). The significance of context in internationalization has long been recognised in the form of experi- ential and organizational learning (e.g. Eriksson et al., 1997), although the explanatory capability of the theory has recently been challenged (e.g. Schwens et al., 2018). Exaptation theory holds that affordances are revealed in social interactions (e.g. Garud et al., 2016; Latour, 2005), subject to cognitive biases (Felin et al., 2016), and formed in the ac- tor–environment–artefact triangle (Andriani & Cattani, 2016; following Latour, 2005). This follows the conceptualisation of internationaliza- tion in a given ecosystem (e.g. Santangelo & Meyer, 2011, 2017), in- corporating the network perspective. This also enables further studies on experiential location-bound learning in internationalization with additional tools (similarly, see e.g. Schwens et al., 2018; Santangelo & Meyer, 2011, 2017; Eriksson et al., 1997; Aaltonen et al., 2019; O’Reilly III and Tushman, 2013). Hence, the exaptation–adaptation theory construct would allow the evaluation and inclusion of multiple con- textual elements in organizational development. The concepts and suggestions for future research questions are summarized in Table 11. 7. Discussion and study limitations The wide variety of scholarly work using exaptation creates a di- verse field for analysis. In order to produce a respectable review, it is first necessary to identify the need for the review, and here the pro- mising concept of exaptation and the scattered previous literature were considered as such. Second, a protocol for selecting papers was created Table 10 Future research agenda summary. Internationalization theory Conceptualization Exaptation–adaptation solutions Specific issues Entrepreneurial and non-entrepreneurial actions Individual success stories SME and MNE joint theory constructs Industry wide longitudinal shift Definitions of IE firms Cognitive, social and behavioural perspective Differences in the speed of internationalization The relative speed of internationalization based on events Sequential events and degeneration of heterogeneity; Addressing discontinuous and disruptive events The inclusion of disruptive events Disruptive vs non-disruptive development; Fit, function, effect Additional benefits Dynamic development and context significance with additional theories Level of analysis Multilevel context Longitudinal development Dynamic development Sequential events and degeneration of heterogeneity; The significance of organizational environment; Cognitive/Social emphasis Context significance Context emphasis P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 11 (similarly Tranfield et al., 2003; Paul & Rosado-Serrano, 2019). How- ever, this was problematic for the theory on exaptation. Incidences of exaptation are described in evolutionary psychology (Buss, Haselton, Shackelford, Bleske & Wakefield, 1998), biology (Gould & Vrba, 1982) and linguistics (further see e.g. Andriani & Cattani, 2016). Exaptation has been said to be a fundamental mechanism in the expansion of the technosphere (Kauffman, 2000; Mokyr, 1998). This further explains the emergence of radical innovations in the presence of little technological change (Levinthal, 1998), following the theories on the relationship between rivalrous and non-rivalrous goods (Lessig, 2003), creative in- novation community uses (Von Hippel, 2005; von Hippel, De Jong & Flowers, 2012), transformative capacity (Garud & Nayyar, 1994) and the performance or potential gap (Grandori, 2007). Hence, the litera- ture uses diverse terminology (e.g. disruptive technologies, (Adner, 2002); pre-adaptation (Cattani, 2006) and transformative capacity (Garud & Nayyar, 1994). Therefore, a distinction between manuscripts referring directly to exaptation (e.g. Cattani, 2006), to the antecedents of exaptation (e.g. see Felin et al., 2016), or concepts resembling ex- aptation (e.g. Von Hippel, 2005) required much revision. A search protocol provided 580 (Web of Science) results, only a few of which were from economics. The most recent addition to this discussion (Lloyd & Gould, 2017) provided helpful guidelines for evaluating pre- vious literature, as did the simultaneous publication regarding the frequency and measuring of exaptation (Andriani et al., 2017). It should be noted, however, that some studies in the referenced literature are still in their developmental stage (i.e. conference proceedings), and it is expected that they will be published in higher-level publications. The methodological approach of this paper, hence, relies on multiple sources and is open to critique. Further, while forwarding the field of internationalization process literature, the theoretical review may be considered scarce in relation to the review on the exaptation literature. However, as several recent reviews have been conducted on the inter- nationalization process (Vahlne & Johanson, 2017), international en- trepreneurship (Reuber et al., 2018; Verbeke & Ciravegna, 2018), lo- cation-bound learning (Schwens et al., 2018; also closely, Santangelo & Meyer, 2011, 2015) and effectuation logic (Read et al., 2016; Arend et al., 2015), the purpose of this manuscript is to provide a frame for addressing future challenges. Table 11 Future research questions. Internationalization theory gap Author examples Exaptation – adaptation theory construct Future research Definition of international entrepreneurial firms and joint theory constructs Paul & Rosado-Serrano, 2019; Paul et al., 2017; Verbeke & Ciravegna, 2018; Krich & Welch, 2018; Knight & Cavusgil, 2004; Laufs & Schwens, 2014; Liesch, Welch, & Buckley, 2011; Oviatt & McDougall, 1994; Sarasvathy, 2001, 2005; Reuber et al., 2018 Entrepreneurial and non- entrepreneurial actions What conditions enable/prohibit entrepreneurial behaviour? Is non-entrepreneurial behaviour more beneficial? How do firms balance between the both? Conceptualisation of ambidexterity with exaptation and adaptation? Balancing ambidexterity globally exploitable knowledge and location-bound knowledge effects on exploitation/exploration balance? What country conditions enable entrepreneurial or non-entrepreneurial actions? Global strategy development – strategic exaptation and adaptation? Incorporating FDI and non-FDI measures to the internationalization process? The speed of internationalization Li et al., 2015; Reuber et al., 2017; Welch et al., 2017 The relative speed of internationalization based on events Can IE happen gradually? Are rapid internationalizations the result of entrepreneurial actions, or rapid incremental actions? How is the amount of exaptive solutions related to the speed of internationalization? Dynamic development and context significance with additional theories Aaltonen et al., 2019; Reuber et al., 2017; Schwens et al., 2018; Vahlne & Johanson, 2013; Vahlne & Johanson, 2014; Welch et al., 2016 First and second generation of events¸ Stable forces and emergent potential of artefacts in actor-environment What events are required prior to certain outcome? What outcomes enable what post-events? Additional theories to understand the limitations of experiential learning? Limitations of exaptive knowledge transfer in international business? How does the context impact the solutions made, and how does the change in context impact host country operations? Social entrepreneurship in international operations? The significance of emerging market context to emerging exaptations and second-generation development? Limitations and constrains of network structure to exaptive and adaptive development? Disruptive events Reuber et al., 2017; Santangelo & Meyer, 2011, 2017; Santangelo & Stucchi, 2018; Welch et al., 2016; Johanson & Vahlne, 1997; Aaltonen et al., 2019; Hutzschenreuter & Matt, 2017; Johanson & Vahlne, 2009; Vahlne & Ivarsson, 2014; Vahlne & Johanson, 2017 Linear and non-linear patterns/ disruptive and non-disruptive events in internationalization Frequency of exaptations in international operations? Degeneration of exaptations in international operations? The limitations of emerging exaptations in internationalization process? Longitudinal study of global strategy development – the significance of exaptations? Innovation creation in international operations – the exaptive and adaptive origins of inventions? New market entry as intentional or accidental exaptation? Exogenous knowledge creation and technical innovations in international business? P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 12 8. Conclusions Based on the analysis conducted in this review, the inter- nationalization theory following the Uppsala model consists of en- trepreneurial, organizational learning and network perspectives. The exaptation and adaptation concepts have similar basic assumptions, and further, they follow the basic theoretical origins behind the current theories. Hence, exaptation – adaptation theory would suit addressing gaps in the internationalization literature. Additionally, they are cap- able of illustrating concepts currently missing from internationalization theories, such as disruptive development, the incorporation of SMEs, MNEs (and EMNEs) under the same theoretical construct and illus- trating dynamic development and situational context. Thus, exaptation and adaptation theory provides a guiding systematic framework for the study of internationalization in the future. Appendix A. Evidence of exaptation in complementary literature Author(s) Reference Explanation and further reading Nelson & Winter, 1982; Individuals are the storage of knowledge in organizations Continued with the discussion of narrative construction of exaptation by individuals in organizations Garud et al., 2016) and the cognitive bias related to the perception of opportunities in actor-environment interac- tions (Felin et al., 2016). Levinthal & March, 1993; Levinthal, 1998; Adner & Levinthal, 2002 Why radical innovations emerge fast in presence of little or no technological change is due to technology-domain change; different from technology- technology combination; “Technology-domain (exaptation) is a quintes- sential entrepreneurial activity.” (Levinthal, 1998:220); Exaptation as determinant of disruptive innovation; exaptation – adaptation theory of development The emergence of radical, i.e. substantially different, innovations in a context where technology does not substantially change is due to the shift of domain of an existing technology. While not using the term exaptation, nor adaptation, March discusses already prior (1980) “exogenous jolts”, while Levinthal incorporated these into the realisation of technologies seemingly emerging from scratch (see Andriani & Cattani, 2016; also Aldrich & Ruef, 2006 analysis on March work and the usage of “blind variation”). Levinthal (1998) discussed technological speciation, noted by Cattani, 2006 and Andriani & Cattani, 2016 as examples of exaptation (note, even Cattani does not use the term exaptation) Garud & Nayyar, 1994; Policy of exploration; the transfer of available in house knowledge over new domains; Transformative capacity: active policy of exploration and transfer of available in house knowledge over new domains (unshelving approach While knowledge transfer does not equal to exaptation, the focal point in the statement is the recognition of knowledge transfer to new domains, similarly, Cattani (2006) theorized the development of fibre optics and later Garud et al. (2016) follow this notion in the narrative construction of exaptations conceptualisation Kauffman, 1995; Kauffman, 2000 Exaptation is the ‘ignorance area’ of the adjacent possible (later, Felin et al., 2016); Non-prestatability of applications; Multipurposeness of technology/ resources, multifunctionality provides material (also Grandori, 2007); Source for heterogeneity (also Mokyr, 1998, 2002) The idea that there is an unlimited field of opportunities, yet unpredict- able, measurable and masked by the environment, cognitive capabilities and external actors, is the quite essential explanation of exaptation in economics – Felin et al. (2016) emphasize this by incorporating affor- dances from psychology to the discussion, one that has started already a decade ago; (also Grandori, 2007); Source for heterogeneity (also Mokyr, 1998, 2002) Burgelman, 1983; Changing environment rather than adapting; autonomous initiatives The reference to Burgelman has been made in summaries of exaptation literature (e.g. Andriani & Cattani, 2016; Read et al., 2016). Essentially, the concept of autonomous initiaves is highly similar to the early work of March. However, rather than a direct comparison to exaptation, this illustrates there are unknown elements, perhaps caused by the environ- ment, that may inspire novelty, competitive edge or benefit the con- struction of ideas – the story of Post-Its is quite similar. Sarasvathy, 2001; Sarasva- thy & Dew, 2005 Effectuation; effectuation theory; effectuation logic While not again noted directly by the authors themselves, Dew & Sarasvathy later collaborated on the seminal piece of exaptation literature (Dew et al., 2004), and later the concept of effectuation has been largely connected directly to the concept of exaptation (see Read et al., 2008; Dew et al., 2008; Read et al., 2016) Tuomi, 2002; Artefacts as affordances for exp. based on interpretative flexibility Exaptation and adaptation describe the functions of artefacts, also created in socially constructed environment (Garud et al., 2016; Latour, 2005). Later, the perception of affordances, e.i. uses for artifacts, has been described as a antecedent to exaptive shift in function (Felin et al., 2016; German & Barrett, 2005 Beunza, 2007 Sociology of ambiguity; role of ambiguity in innovation; Serendipity Exaptation takes place in two phases. In the first phase, the accumulation of knowledge takes place without any anticipation of its future use. In the second phase, the knowledge accumulated is explicitly and consciously leveraged and exploited to build up and take advantage of the opportu- nity in an emerging market niche. We contribute to extant literature by showing how social entrepreneurship may help firms to discover new potential and innovative field of application for their existing know-how and exploiting it into such a field (Ganzaroli et al., 2014; Dew et al., 2004; Garud et al., 2016 Grandori, 2007 ‘performance potential’ rather than ‘performance gap’; a fundamental source of ‘variation’ in a Campbellian variation- selection-retention; Non- prestatability of applications; Multipurposeness of technology/resources, multifunctionality provides material The Campbellian selection-retention cycle always requires variance in order to function. A selection does not, essentially, take place in an entirely homogenous population (Campbell & Reece, 2003; Campbell, 1969; Aaltonen, 2010; Felin et al., 2016). However, adaptation as a single source of variation was challenged in the first work on exaptation (Gould & Vrba, 1982), later also (Lloyd & Gould, 2017). Following the concept of exaptation in evolutionary sciences, the concepts of non-prestability of application, i.e. the usage of applications may change, multipurposeness and multifunctionality are all examples of exaptive opportunities in artifacts, the sources of variance for multiple uses of a given, ready object, i.e. trait. P.H.M. Aaltonen International Business Review xxx (xxxx) xxxx 13 Von Hippel, 2005; Von Hi- ppel, De Jong, & Flo- wers, 2012; creative transformation of existing technologies Von Hippel’s lead users and innovation communities are known for innovating via creative transformation of existent technologies, however, the creative transformation does not equal to bricolage, yet has no other term to describe it than exaptation – transformation & existing technol- ogies, a similar notion to Levinthal’s technology-domain combination rather than technology- technology combination Santangelo & Meyer, 2011; Santangelo & Meyer, 2017 non-linear, quirky and novel events in internationalization The authors do not explicitly make the connection, yet there are several connections between the 2011 and 2017 papers on non-linear interna- tionalization, novel events and exaptation – only to be introduced by the authors to the literature on internationalization in 2018. 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The effect of emerging economies operations on knowledge utilization: The behavior of international companies as exaptation and adaptation Reprinted with permission from Springer Nature Switzerland International Business and Emerging Economy Firms, pp. 49 - 87 © 2020, Springer Nature Switzerland AG The Effect of Emerging Economies Operations to Knowledge Utilization: The Behavior of International Companies as Exaptation and Adaptation Päivi Aaltonen Lappeenranta University of Technology, School of Business and Management Lasse Torkkeli Lappeenranta University of Technology, School of Business and Management Maija Worek University of Innsbruch Department of Strategy, Management and Tourism Abstract No one informed the dinosaurs that their thermal insulation could someday be useful for another purpose, yet their feathers developed into wings. This example describes exaptation, the discovery of new uses for existing traits; complementary to adaptation. The former, which is similar to opportunity recognition, and the latter, which follows environmental demands, are paths of knowledge utilization. Following the notion of exaptive repurposing of knowledge in internationalization, this study illustrates how internationalizing emerging markets changes a firm’s behavior from adaptive to exaptive, offering a systematic theory to analyze organizational behavior in a variety of contexts. This study illustrates how a change from developed to emerging locations demands new uses for existing knowledge. This expansion creates further possibilities for additional expansions to developing economies in a similar state. This is particularly important since it illustrates how organizations from developed markets adopt a behavior more similar to ones originating from emerging markets, such as the capability to deal with political instability. However, this process can take a significantly long time. Therefore, we suggest exaptation is an essential concept in understanding organizational learning patterns in emerging markets and that capabilities learned in emerging economies can further leverage organizational capabilities in other emerging locations. Keywords: Exaptation, adaptation, emerging economies, innovation, internationalization, organizational learning Introduction Dinosaurs had feathers before they could fly. The original function of feathers was for thermal insulation, but they were found to be useful for gliding as well (Gould and Vrba 1982; Dew et al. 2004). This is the classic example of exaptation, the discovery of new uses for existing traits (Gloud and Vrba 1982; Dew et al. 2004). Having similarities with entrepreneurial opportunity recognition (Sarasvathy 2001; Dew and Sarasvathy 2005; Dew et al. 2008), exaptation is complementary to the adaptive process (Cyert and March 1963; Gould and Vrba 1982; Lloyd and Gould 2017). Exaptation and adaption describe the only paths of development, either solving a problem (Cyert and March 1963) or already possessing an answer (Andriani and Cattani 2016), according to evolutionary theory (Gould and Vrba 1982). Exaptation is, nonetheless, more common in humans (Garud et al. 2016; Mokyr 2000); explaining unique human characteristics from brain development (Garud et al. 2016) to strategic foresight (Dew et al. 2008). However, not all actions are exaptive. Studies indicate around 40% of innovations are (Andriani, Ali and Mastrogiorgio 2017), therefore, the dualism forms a simple yet systematic analysis tool for behavior. This perspective would benefit the understanding of internationalization of companies in emerging markets as the theories are applicable to all variances of nations, but further, they specifically illustrate that organizational behavior is shaped by emerging economies. Using exaptation and adaptation is beneficial when examining the behavior of internationalizing companies in emerging markets, since they illustrate behavior in any given environment. Pascal pointed out that truth varies depending on the side of the Pyrenees and cultural studies continue to illustrate this (Hofstede and Hofstede 2005). Besides the division between developed and emerging economies, emerging markets have great diversity and develop constantly, whereas developed economies are described with less variety (Guillén and García-Canal 2009). Furthermore, operating in emerging economies can foster company behaviors that can be beneficial in developed economies as well. Theories have acknowledged that firms originating from emerging markets may follow a different path in internationalization (Guillén and García-Canal 2009). These firms are used to dealing with an unstable political environment, explore multiple paths to growth, and have increased flexibility (see also Guillén and García-Canal 2009: 31). These capabilities are highly similar to entrepreneurial ones; dealing with risk, limited resources, and uncertainty (Venkataram 1997; Dew et al. 2008). It has been further noted that knowledge gained in the home country can help in cross-country acquisitions (Guillen 2006; Marquis and Huang 2010), especially in coordination and control capabilities (Santangelo and Stucchi 2018), yet this re-use of existing knowledge is considered a static organizational capability (Dew et al. 2008). This raises the question: If organizations in emerging economies have such a variety of entrepreneurial skills, in addition to the above skills, for example, networking (Buckley et al. 2007) and institutional entrepreneurial ability (Lecraw 1993), should there not be a great number of succesfull global firms originating also from emerging economies? This leads to the conclusion that the emerging locations foster these skills, rather than seen them as organizational capabilities (innovation studies suggest sometimes similarly, see Anderson, Potocnik, and Zhou 2014). Following this logic, the present study suggests that not a firm’s capability, but rather the locational demand in emerging economies causes the search for new opportunities, enhances the capability to deal with uncertainty and political controversies. Exaptation and adaptation would offer the beneficial tools to examine this shift because we can illustrate the change in behavior based on time and location, which follows the notion of exaptive re-use of knowledge in internationalization (Santangelo and Stucchi 2018). In order to study this phenomenon, our broad research question is formulated as follows: How does the expansion to emerging markets affect firm behavior, which is defined as either exaptation or adaptation? We examined longitudinal evidence of organizations that expanded from developed nations to emerging nations over a period of four decades, using a mixed methods analysis (Miles and Huberman 1994; Patton 2002; Teddlie and Tashakkori 2011). The case companies, having historical roots in Austria since the 1800s, started with subsidiaries in the Czech Republic in the 1990s, then later expanded to China and India in the 2000s and 2010s. Our analysis reveals that when expanding to emerging economies from developed ones, adaptive behavior changes are dominantly used compared to exaptive one. This is partly in line with previous literature of exaptation in internationalization (Dew et al. 2008; Santangelo and Stucchi 2018), as the exaptive re-use was evident much longer than previously suggested. Furthermore, 1the exaptive behavior emerged in established organizations in Germanic Europe nearly instantly as they entered the previous Soviet region and continued further during the expansion to China and India. We conclude that expansion to emerging markets changes organizational behavior to be more suitable for emerging economies (Guillén, and García-Canal 2009), due to the location. This eventually led to case companies developing a new global strategy for emerging economies. The present study is organized as follows: first, we review the relevant literature on the terms adaptation and exaptation. After this, we illustrate the methodology along with empirical context. Finally, we present the results in relation to theory with a discussion and conclusions. Analyzing Locational Effect: Theoretical Background Exaptation and adaptation share common morphemic origins, -aptation (Lloyd and Gloud 2017). Ad- refers to improving existing traits, whereas ex- refers to a new unknown purpose, previously called pre-adaptation (Gloud and Vrba 1982; Lloyd and Gloud 2017). This, while sometimes still mentioned (Cattani 2006), nonetheless implies teleology, knowing in the past already what the future use could be – which is impossible, making X more appropriate (Gloud and Vrba 1982). Adaptation in economics was firstly used in the behavioral theory of the firm (Cyert and March 1963), and the antecedents of exaptation in economics that have arisen from critique towards this theory (March 1991; Levinthal 1998; Aldrich and Rueff 2006). Later, notions of exaptation have continued to develop into the behavioral theory of an entrepreneurial firm (Dew et al. 2008) and effectuation logic (Sarasvathy 2001; Sarasvathy and Dew 2005). Their shared roots illustrate the mutual significance of both in understanding organizational behavior by describing elements the other term cannot. Adaptation and exaptation are used by a variety of literature streams (Lewin and Volderba 2003; Andriani and Cattani 2016), yet their shared origins are in the evolutionary process. Variance is a necessity for the evolutionary process (Campbell 1969; Aldrich and Rueff 2006), and exaptation and adaptation describe the reasons for it. The wide usage of adaptation in management literature has sprouted some critique (Aldrich and Rueff 2006) and these can be concluded to be early notions of exaptation. Outside of Darwinian evolution, definitions of adaptation appear relatively often (Cyert and March 1963; Lewin and Volderba 2003; Aldrich and Rueff 2006) and suggest that variance in organizations is due to an incomplete search process or discontinuous information. This leads to further problems to solve: Do organizations learn via adapting to the environment? Starting from behavioral theory of a firm by Cyert and March (1963), the concept of adaptive organization has been further developed into single, incremental, and double, radical, loop learning (March 1991; Lewin and Volderba 2003). However, this is a source for some controversy among scholars. For example, some studies further argue double loop learning does not fully follow adaptive 1 organizations (Aldrich and Rueff 2006), and this has been later followed by notions of exaptation by the same scholars (Levinthal 1991; March 1991; see also Andriani and Cattani 2016). Therefore, while adaptations have been a more popular concept of this evolutionary perspective, also brief notions of the term exaptation have existed for some time. Uses for exaptation in previous theories have been multiple and the term is closely connected to human behavior in particular. Exaptation has been said to explain the emergence of novelty when no new technology is introduced (Levinthal, 1998; Adner and Levinthal 2002), and be a source of variation or performance potential (Grandori 2007). Variance in organizations includes intentional and blind variance (Aldrich and Rueff 2006), and adaptation can only explain intentional variance. Intentional variance can result from the above mentioned problematic research as suggested by Cyert and March (1963), yet blind variance can also result from luck, individual human behavior in everyday actions, or exogenous shocks (“jolts” Meyer 1982) that theories do not and cannot fully explain (Aldrich and Rueff 2006). Since humans have an advantage in comparison to other species – constructing narratives, and abstract speech (Garud et al. 2016) – when including exaptation theory, it illustrates the human attributes adaptation cannot explain, for example, strategic foresight and creating luck (further on different types of luck see Garud et al. 2016). Observing exaptation is sensitive to retrospective bias (Gloud and Vrba 1982), which explains only in part the recently increased interest addressing the origins of variance. In retrospect, all behavior can be labeled adaptive (Gloud and Vrba 1982) and this may constitute as occasional luck from an evolutionary perspective (“evolutionary novelties” Campbell and Reece 2005: 482), yet a recent study concludes that 40% of new drugs started out as something else, following the definition of exaptation (Andriani et al. 2017). Exaptations are an essential human trait (Mokyr 2000), but only describe a part of behavior. Based on behavioral approaches, adaptation and exaptation illustrate how and why knowledge is created and used. According to Cyert and March (1963), organizations must solve specific goals that arise from the external environment, such as shareholders, competition and employees. Since organizational subunits each have their individual goals, the effect of possible solutions limits the possibilities of general organizational solutions. In other words, despite a certain solution being best for one subunit, it can cause harm to another and is therefore impossible. This creates a cycle of limited solutions answering a set of well-defined problems; an adaptive organization. This, following the evolutionary definition of adaptation, is intentional development of a certain feature to better fit its niche (Gloud and Vrba 1982; Garud et al. 2016; Lloyd and Gloud 2017). However, organizations can also transform their environment rather than act within its limitations (Sarasvathy 2001). This notion, later connected to exaptation (Dew et al. 2004; Dew et al. 2008) and effectuation logic (Dew and Sarasvathy 2005), suggests that in addition to problem solving, organizations can create possible actions not aimed to solve problems. In adaptation, organization has a set of means to meet goals that are limited based on their effect (Cyert and March 1963). In other words, if a certain outcome is strictly defined beforehand, the effects of possible solutions limit the means available (Cyert and March 1963; Andriani and Cattani 2016). This is further illustrated in recent studies where exaptation is understood as knowledge utilization (Santangelo and Stucchi 2018). Exaptations can not be entirely predicted, despite taking place often. The possible effects can be infinite, and the means are not limited by goals – if goals are met then they are residual effects (Dew et al. 2008; Andriani and Cattani 2016). In its simplified definition, exaptation translates to, I have a solution – what problem could this solve (Andriani and Cattani 2016). This is referred to as repurposing existing knowledge (Dew et al. 2004) and has been connected to internationalization (Santangelo and Stucchi 2018), entrepreneurial behavior (Dew et al. 2008), serendipitous discoveries (Dew et al. 2004; Cattani 2006), drug functions (Andriani et al. 2017), and a source of heterogeneity in economies (Felin et al. 2016). While connected to technological innovations (Andriani et al. 2017), exaptation and adaptation are complementary patterns of organizational behavior, which is similar to individual behavior in evolution (Gloud and Vrba 1982; Lloyd and Gloud 2017). However, despite some similarities, exaptation is not identical with, for example, effectuation logic (Sarasvathy and Dew 2005; Read et al. 2009). The origins of exaptation and adaptation, are jointly a part of the evolutionary approach, organizational behavior, and exist simultaneously, despite their lack of illustration together. This could provide new insights to organizational behavior by considering the organizational environment as an eco-system (Korhonen and Snäkin 2005; Adner 2017). The difference of perspectives between adaptation and exaptation are illustrated in figure 1. - insert Figure 1 here - Adaptation and exaptation processes are not mutually exclusive but complementary, or sequential, and similar to the multi-motor decision-making processes (Van de Ven and Poole, 1995). Exaptive behavior is connected to firms actively seeking opportunities to use their core knowledge to achieve competences in a new market (Cattani 2006; Ganzaroli et al. 2014), or find out new uses for toxic by-products (Garud et al. 2016). Exaptations are connected to internationalization (Santangelo and Stucchi 2018), but may have several additional steps (Andriani and Cattani 2016). The presence of them explains why new traits are not fully effective immediately (Andriani and Carignani 2014; Andriani and Cattani 2016; Dew and Sarasvathy 2016), but empirical studies on internationalization have yet to include this. However, this further follows the notion of describing internationalization as an evolutionary process (Santangelo and Meyer 2017; Vahlne and Johansson 2017), and would benefit the study of emerging markets by explaining how change in location affects organizational behavior (similarly Santangelo and Stucchi 2018). One categorization of emerging markets is between upper-middle income economies, such as Spain and Portugal; emerging economies, such as China, Turkey and India; and developing countries, such as Egypt; or oil-rich countries like Venezuela (Guillén and García-Canal 2009). Turkey has been an OECD country since the 1960s along with most of Northern and Central Europe (OECD, 2019), but developed differently compared to Spain. Many Central Eastern European (CEE) nations gained their OECD status in the 1990s, such as the Czech Republic and Hungary (OECD, 2019), and are currently closer to the upper-middle income categorization (Guillén and García- Canal 2009; OECD, 2019). However, in the mid-1990s, they were closer to emerging economies (OECD, 2019 ), such as the current BRICS countries (Brazil, Russia, India, China, and South Africa). This is noted by studies as nearly all post-soviet regions experienced a significant decrease in their GDP in the early 1990s (Svejnar 2002:9). This illustrates a variety of organizational environments, consisting of multiple actors, policies, and institutions, where individuals are historically and geographically tied but also change over time (Autio et al. 2014). Defining organizational environment as an eco-system (Iansiti and Levien 2004; Korhonen and Snäkin 2005; Adner 2017), with exaptation and adaptation assumed, allows the inclusion of these components. Next, we will examine the empirical demonstration, by outlining the research methodology and the cases. Method Our study is based on connecting the exaptation and adaptation processes to internationalization process in emerging markets. However, analyzing exaptation can be challenging because there is a lack of established study designs (Andriani and Cattani 2016). Exaptation studies currently utilize both qualitative and quantitative methods, but we suggest a beneficial approach would be a mixed methods perspective, as a combination of methods would create a complementary picture (Hammersley 2008), emphasize philosophical orientation (Teddlie and Tashakkori 2011), and allow sequential quantification (Miles and Hubermann 1986; see also Teddlie and Tashakkori 2011; Andriani and Cattani,2016;) and qualification (Tashakkori and Teddie 1998), making the research a question-driven design (Teddlie and Tashakkori 2011) and following previous examples (Cattani 2006). Based on this, we formulated our primary research question as follows, “How does the expansion to emerging markets affect firm behavior, defined as either exaptation or adaptation?” In order to study exaptation and follow the mixed methods perspective, the philosophical foundations should be defined (Teddlie and Tashakkori 2011; Andriani et al. 2017). The previous studies have used both macro and micro perspectives, as both are acceptable in evolution (Lloyd and Gloud 2017). However, a large (Marquis and Huang 2010; Andriani et al. 2017; Santangelo and Stucchi 2018) or a small sample selection (Cattani 2006) leads to conceptual differences, either exaptation is intentionally (Cattani 2006) or unintentionally induced (Andriani and Carignani 2014; Andriani et al. 2017). Following human attributes (Mokyr 2000), firm level observations would follow the intentional perspective (Cattani 2006), and as this is also the focal point in internationalization process (Santangelo and Meyer 2017), a smaller sample would suit this study. Examples of such are case study approaches, where the number of cases can vary between 6-1 (Eisenhardt 1989; Siggelkow 2002; Eisenhardt and Graebner 2007; Yin 2011). Previous studies on exaptation have used the single case approach (Cattani 2006) of Siggelkow’s (2002). Furthermore, as internationalization is an example of non-linear development (Santangelo and Meyer 2017), and this perspective would further emphasize the contextual significance of emerging locations. Previous longitudinal observations of exaptation measure either differences between two time points (Marquis and Huang 2010; Santangelo and Stucchi 2018), follow a developmental path (Cattani 2006), or illustrate frequency (Andriani et al. 2017). These are in line with exaptation definition (Lloyd and Gloud 2017), as distinguishing previous and current function is mandatory (Andriani and Cattani 2016), but only the perspective of a developmental path (Cattani 2006) includes possibilities to observe also additional steps in the exaptation process (see Andriani and Cattani 2016). As the aim of this study is to follow the longitudinal development if international operations in emerging locations, a similar approach in material collection should be followed. Based on the dualism of evolutionary definitions (Gloud and Vrba 1982; Lloyd and Gloud 2017) and following our theoretical illustration, we continue by defining exaptation through comparison to adaptation (similarly, Dew et al. 2009). We selected comparative longitudinal case study method, following studies of exaptation in internationalization (Santangelo and Stucchi 2018) and used mixed method analysis (Teddlie and Tashakkori 2011) to improve the fit of the design to our research question. Cases Selection and Material Collection As we aimed for longitudinal examination of internationalization to emerging economies, the changes in economic status in history was relevant. For cases representing emerging economies we adopted the previously introduced categories of developed, upper-middle-income, emerging economies, developing countries and oil-rich countries classes, where the last four are defined as emerging economies (Guillén and García-Canal 2009). The categories mentioned above do overlap with, for example, OECD classifications and upon closer inspection the differences can depend on, for instance, political history. Spain and Portugal, upper-middle-income countries (Guillén and García-Canal 2009), have been OECD countries since the 1960s, while Turkey, who joined around the same time (OECD, 2019), is defined as a developing country (Guillén and García-Canal 2009). The Czech Republic lies in between upper-middle-income and emerging economies, yet according to studies, post-soviet regions experienced a significant decrease in their GDP in the early 1990s (Svejnar 2002). This indicates that most of the CEE prior to the mid-1990s would have fallen closer to the current emerging economies. In 1992, the Czech Republic’s GDP index ranged from −15 to −40, as the OECD average was +5 (Svejnar 2002: 9). Therefore we concluded, that expansion to for example CEE countries in the mid-1990s would constitute as an emerging economy expansion, similar to current BRICS- countries. Based on this, we collected a list of available study subjects of expansions to emerging locations from developed, both currently and in the past. The number of cases following our desing was limited to a maximum of 6 (Eisenhardt 1989), yet following the previous examples in internationalization (Santangelo and Meyer 2017) and exaptation development (Cattani 2006), a single case would be enough (following Siggelkow 2002). We selected two case companies and suggest a comparison of two similar processes further validates the findings, and would benefit exaptation studies in international locations due to possible varieties in organizational environment. Company A is a middle-sized electronic component manufacturer in Lower Austria, with over 1,100 employees, an annual turnover of 50 million Euros, and a total of seven locations globally. Established in the 1960s, it was founded under its current name in 1987. By 1992, a new production facility in the Czech Republic was established, followed by another one in 1994 in the Czech Republic. After a 200% increase in turnover between 1998 and 2000, new locations that were opened in China (2004) and India (2011). The original production plant from the 1960s in Austria still remains today as a subsidiary. Company B is a global production facility that manufactures parts for automobiles. Their global revenue is 117 million Euros and they have 1,200 employees with production locations in Austria, the Czech Republic, China, and independent local units in North America, 2001, and in Mexico, 2017. Founded in 1888 and handed over to new management in 1930, the personnel were educated in a professional clock school based on company know-how. Acquiring over 200 employees by the 1960s, the first subsidiary was established in the Czech Republic in 1991. The opening of their third production facility was in China in 2006. New products were introduced in 2007 and a second production facility opened in China in 2010. We conclude expansion to the Czech Republic in the 1990s constituted as an expansion to emerging economies. Furthermore, China and India are currently seen as emerging economies (Guillén and García-Canal 2009), and the GDP in relation to the average in OECD countries confirms this (OECD, 2019), making the cases suitable to illustrate expansion to emerging economies. Austria currently has a higher than average GDP within OECD countries and is considered a developed economy in this study. The material collected includes the years 1900–2014. Figure 2 below illustrates the development of the Net National Income (NNI) of selected regions in comparison to the emerging economies categorization above. - insert Figure 2 about here - We followed a longitudinal case study type approach with the material collection, collecting material from all available sources (similarly Cattani 2006). Since financial data was available only from recent years, we collected other historical records, such as patents (similarly Cattani 2006; Andriani et al. 2017) and lists of current subsidiaries and establishment years. Following the mixed methods approach, a larger empirical material allows the possibility of diversity, rather than convergence, in conclusions (Patton 2002; Denzin 2009). This will provide greater insight into the complex aspects of the same phenomenon, thus, we also conducted additional interviews when possible (Case A) and relied on company printed material when not (Case B). The material collected is illustrated in Table 1. - insert Table 1 here- Analysis The mixed methods approach does not mean a study design has complete freedom in method selection, but methods can be chosen to answer the particular research question (Teddlie and Tashakkori 2011; see also Straus and Corbin 1998; Bryman 2006). Following sequential design, we qualified the quantitative material (Patton 2002; Teddlie and Tashakkori 2011) by connecting locations, year, and patents into tables. This gave us a timeline of established subsidiaries, patents active, patent country scope and patent relation to others, following the definition of exaptive and adaptive processes, internationalization process and emerging economies presence. We followed this initial analysis with quantifying (Miles and Huberman 1994) company histories, interview and text material, to the tables. This demonstrated the company operations prior to international actions, origins of current product lines technology and one unpatented technology (Case A, 2), creating a coherent and valid picture of the phenomenon (Patton 2002; Denzin 2009). Based on these, we divided the patent data according to their connections (European Patent Office categorization; patent application; text material) labeling them 1 through 7 in case A and F, G, H and B, and emergent subgenres of B and F to Ba, Bb, Fa and Fa, in case B, and collected these into tables. The resulting data is illustrated in Table 2, and further discussed in the following section. - insert Table 2 here- Findings Based on the analysis, we identified four distinct phases that explain the behavioral changes of companies before and during their entry to emerging markets. These are named here (a) local embeddedness, (b) exaptive adjustment, (c) secondary chains, and (d) international embeddedness. The main findings based on Table 2 are summarized in Table 3. - insert Table 2 about here- While the phases may overlap and differ slightly between the cases, the findings suggest that each has certain characteristics and follow the definitions of exaptive and adaptive behavior. Firstly, the locally embedded phase was evident over decades, since the 1800s for Company B and since the 1960s for Company A. With gradually increasing exports during this period, though production still remained in the home country, Austria, both companies had established their fields of operation. Company B developed from manufacturing clocks to a wholesaler and specialized in mileage counters in automobiles after the 1960s (company history). This resulted in three distinct patent families, named in this analysis as F, G, and H. Company A had developed power unit technology, referred to here as 3. Secondly, after the first international expansion to the Czech Republic, this status quo changed significantly. Early on, this was evident in new directions sought as the old core business was gaining revenue. For Company A, products 1, 2, 4, 5, 6, and 7 were completely new fields utilizing technology from 3. For company B, technology F was reintroduced after a pause beginning in the 1960s and completely new technologies B, E, and A were later introduced. Furthermore, Company B both paused a previous technology development (H) and gained revenue with G. Similarly, Company A continued to produce 3 and grow. Thirdly, these actions were further developed. For Company A, products 1 and 2 were kept in development while 4, 5, 6, and 7 were no longer pursued. For Company B, some of the new lines were paused (Bb, Fb, Ba, and G), some dismissed (Fa, E, and A) and some brought back into development (H). Finally, this resulted in a rather well-defined strategy after several decades around the 2010s. Company A no longer develops 3, and now focuses on 1 and 2. Company B continues with H and Bb, ended their previous line G, and re-directed two (Fb and Ba) to specific locations serving local customers. By taking a closer look at the findings, the exaptive and adaptive behavioral patterns emerge. Local Embeddedness - Prior to International Expansion Company A has a history of nearly 60 years and their first product (3), was built from original entrepreneurial inventions and expertise. This technology was based on fine electronics used in clocks, which further developed into various products that are still manufactured for some long run customers, such as large institutions like hospitals and hotels. The findings illustrate a relatively steady growth in markets and the production facilities were located in a developed economy prior to 1992 (interview; patent data, 1992). Prior to the 1990s, the company operated under a different name, and up until 1988, the production and sales were locally concentrated. After a change in management in the 1990s, the first award winning innovation was created based on the company’s technological expertise (patent data; interview). In 1992, their first international expansions were built in the Czech Republic, which is geographically close to the previous location (interview). According to the company, as the Cold War ended, the political atmosphere was more relaxed and, due to cheaper labor, the company production facilities were extended to the nearby location across the border. This facility was further expanded in 1994 (interview; company history). The operations between the Austrian headquarters and the facility in the Czech Republic were identified as a single operating unit (interview). However, prior to this, the company strategy based on our findings, seemed to illustrate a certain area of expertise, customer base, and a relatively steady growth. The expansion was due to improved efficiency and taking advantage of the political situation according to the company. But despite innovation (patents; awards), the company tended to operate in their own established field, which is concluded in this study to follow a more adaptive learning. Currently, Company B is solely focused on the automobile industry and has several product lines for various usage in cars, some products utilizing similar technologies. By the 1960s, the core technological know-how was based on decades of craftsmanship in clock manufacturing dating back to the 1880s. Prior to the 1980s, the core technology development had decreased (G) as the manufacturing of clocks changed to wholesales and counters (H). Their biggest selling product (G) (patent data) still peaked in global sales in 1997 (company history). They also further developed into educational facilities in Austria, where an engineering school built around company expertise was founded. This followed the company tradition of historically having apprentices for senior crafters to teach their knowledge. Having two important export lines (G and H) in the early 1990s, the company built their first international manufacturing unit in 1994 in the Czech Republic, due to similar reasons like Company A (company history). The relaxation of the political atmosphere and attractive cheaper workforce just 50 kilometers away from company headquarters were the main reasons Company B also engaged in international expansion by constructing production facilities in the Czech Republic. However, just like Company A, Company B seemed to have a relatively set field of expertise, establishing new products based on similar technology and a set client base, which also follows an adaptive pattern. In addition to this, their core expertise was not in the automobile industry at this point, but, similar to Company A, Company B sold specialized products to a variety of industries that were built on top of a history of craftsmanship. We can conclude the process following the first international expansion began with what we named in our analysis as locally embedded organizations. Both Companies A and B had long local histories: B for over a century and A for several decades. The long history was also a key characteristic in their technological know-how and served as a base for the first innovations and products (interview; patent data). Similarly, company traditions, history, and local environments are emphasized by the companies (interviews; company history). Furthermore, the first international locations were established in the 1990s in the Czech Republic, a German-speaking region close to Austria (roughly 30 kilometers). While a strict division based the companies’ years of establishment can be challenging to make, we suggest that around 1992–1994 the start of a new phase can be clearly seen as distinct from previous years, thereby, following an exaptive pattern. Exaptive Adjustment - After the Expansion to Emerging Countries After the first locations in the Czech Republic, a shift in the main developmental phases, new market discovery and product development, can be seen. This included searching for new markets to utilize previous knowledge, trials of entering completely new markets both geographically and product-wise, and pausing development of existing technologies. This period can be further divided into two sub-categories, the initiation of the new projects and the ending of them, labeled in here as exaptive adjustment and secondary chains, respectively (Andriani and Cattani 2016). Firstly, we focus on the years between the mid-1990s and the mid-2000s, which illustrate new initiatives, defined here as exaptive adjustment, to describe the nature of the phase more comprehensively. Based on the definition stated prior, exaptation is evident when the solution made differs distinctly enough from previous solutions. Here, Company A established new product lines, illustrated here as 1, 2, 4, 5, 6 and 7 in figure 3. From these, not all products were continued for long, but products 1 and 2 are currently the basis for operations, according to the company. These lines were built on top of existing technology since 1994 and are also in collaboration with the facilities in the Czech Republic (patent data). Simultaneously, the company grew in revenue with the first core product (3), and the company reported a 200% increase in sales by 1995 (interview; company history). However, lines 1 and 2 were completely new areas to use technology. As improvement of line 3 became obsolete due to the rising mobile phone industry in the 1990s and the development in global markets eventually decreased after 1999 (patent data, interview); line 3 was still in production for a particular clientele and has a particularly long life cycle (interview). Officially, the first sub-range of these new products were launched in 1998 (1a), along with a second variation that was created for slightly different purposes (1b) (interview; patent data; company history), and together, make up Company A’s current global product line 1 (interview; patent data). However, the product lines were not only new ventures because product lines 4, 5, 6, and 7 were established. This suggests an intentional search for opportunities to use existing core knowledge without the knowledge of what could be useful, which follows the definition of exaptation (Cattani, 2006). This is further illustrated in the geographical scope of the new ventures. Between 1994 and 2007, two more locations were established in the Czech Republic and China. However, between 1992 and 1999, several additional new markets in developed countries and emerging economies were sought. Examples of such were Finland (1992), the Netherlands (1995), Germany (1992 – ongoing), Australia (1998-1999), and Japan (1994) (patent data). Most of these were not further pursued. Furthermore, some trials included rather far-fetched ideas to utilize the current knowledge, for example, electrical bicycles in the Netherlands. More details regarding these trials cannot be found from the information provided by the company but are available in public intellectual property documents. This nonetheless illustrates the idiosyncratic nature of the exaptive phase, and further, the retrospective bias connected to differentiating exaptation from adaptation. While primary data suggests the company created a new direction (lines 1 and 2) as they grew larger (expansions in 1994 and 2007), a closer inspection reveals additional directions were also sought (patent data) both in exploring new locations and new product lines. This, not included in written company histories, further suggests that international expansion induced exaptive behavior—even if not all solutions made are currently not included in company strategy. However, based on a single case, this could also be related to particular changes in the industry (the introduction of mobile phone technology), but further observations from Company B seem to suggest similarly. In Company B’s case, the technologies are referred to based on their patent family and current production lines, such as sunroofs, doors, and steering. The core business followed technologies G and H, and prior to the 1990s, was focused on mileage counters. In 1994, an old unused technique from the 1960s (F) was helped to create to a new product, a sunroof mechanism for cars. This follows the definition of exaptation, for while it cannot be stated what the technology was previously used for, it can be stated that it seems the technology was, lying around (see further on categories of exaptation Garud et al. 2016). Interestingly, the utilization of this prior knowledge took place after the first expansion in 1991, and while no company records acknowledge this, it is currently connected to their core expertise: sunroof technology. Furthermore, an additional new technology, door locking (product line B), was introduced in 1998 and later in 2007 also transformed into another core product area, steering systems. Since data showed no collaborations or external inventors, and both companies remarkably differed from either’s previous field (G, H, and F), it suggests that core knowledge was repurposed for a new use, which follows the definition of exaptation (Cattani 2006). However, taking a closer look at evidence connected to the particular time period, we can see that not all trials were eventually formed into core products. An old technology (F), unused since the 1960s, was introduced globally in 1999 (patent data, 1999). Furthermore, a completely new technology was also introduced globally (product B) that same year (patent data). In the analysis, this period between the mid- 1990s and the mid-2000s also included heavy investments in new directions (patent data, 1994– 1997), and by further dividing the technologies into subcategories, Ba, Bb, Fa and Fb, we can illustrate the different solutions made. Several innovations were developed in the home country (patent data, 1992–2008), yet only a part of these were later kept in development. A new collaboration was introduced in the medical industry, product A in 2008, but it remained the only occurrence. Some old core technology was paused (patent data, 1998; patent data, 2005) in order to focus more on the new ones, but this was later revised and used to form the current core operations. In conclusion, much of the events in Company B between 1991 and 2008 fall into the same experimental category, as did Company A’s lines 4, 5, 6, and 7, which follow the definition of exaptation. However, repurposing knowledge in the initial stages of internationalization seemed to be exceeded, as the following phase resulted in the final selection from the opportunities available, which follows the definition of secondary chains in exaptation (Andriani and Cattani 2016). Secondary Chains - The Development into Final Solutions The previously introduced changes reached a conclusion after the mid-2000s. Depending on the company, this phase was completed relatively close to 2010, as the new ventures were either further pursued (Company A’s 1 and 2) or not pursued (Company A’s, 4, 5, 6, and 7; Company B’s Fa, E, and A), ended (Company A’s 3; Company B’s G), or paused (Company B’s Bb, Ba, and Fb), or re-introduced (Company B’s H). While these events differ between the companies, they are considered either the final output of their exaptive process or the secondary chain of exaptation for this study, illustrating from the previous stage what was finally selected. For Company A, lines 4, 5, 6, and 7 were ended. As some of these consisted of only one product, such as the electric bicycle, which were dismissed after one trial. However, some ventures starting in the previous phase, were further pursued, such as lines 1 and 2. For product line 1, this meant several incremental improvements and a global introduction of the technology, but for line 2, the development was due to an exogenous idea. While also based on a previous core technology (interview; patent data, 1999 – 2014), the competitive advantage currently related to line 2 is not the technology developed, but the production speed-enhancing system (interview). This was initiated with the help of external consulting in 2001 (interview) and further developed into an innovative self-monitoring system among the production facilities, which was introduced globally by 2009 and shortened manufacturing times from 160 days to only 5 days long. The self-monitoring system has been introduced globally and short-time planning has become the company’s main strategy along with custom-made products (interview). However, this was a major shift in production design rather than technology, suggesting that is was an exogenously induced secondary exaptation of the product. Following the definition of exaptation, line 1 was firstly exapted— created using previous knowledge, and further developed into a final output: the current line. Line 2 was similarly exapted first, but further developed with changes in the production design. For Company B, between 2005 and 2008, previously established technologies, Fb and Ba, were on hold (patent data), and the company built new locations in the United States in 2001 and the Czech Republic in 2004 and 2008 (company history). The financial crisis of 2008 caused the company to re-evaluate their operations according to the company, but this was not reflected in financial records (Orbis Data Base). More importantly, in the analysis, by 2010, paused developments were further allocated to specific production facilities (Fb and Ba) for local customers only (patent data, 2010). The process of finding a future direction for these took even longer, as the locations were established in 2001 and 2008 and the technology was only allocated to these locations in 2010. However, it is not currently a part of the globally available lines. Simultaneously during this period, the core product line G was ended (company history, 2016), and the previously paused technology H was revived. From the current technology, most parts (H and Bb) can be traced back to technologies in the 1980s and 1990s; however, between 1992 and 2008, they were not the major focal point of the company. International Embeddedness – A New Direction Following Adaptive Cycle Emerges Depending on the organization, around 2008 at the earliest for Company A, a phase where loose ends were tied seemed to emerge; we named this in our analysis as international embeddedness to contrast it with the first situation, local embeddedness. The experiments with new product lines, starting during the adjustment or later in the process, have a clear destination as a core technology, products to meet local customer demand, part vacillation in the organizational educational processes, or the ending of the line, to name a few. During the previous phase, some adjustments towards this stage were made (increasing development of core technology [patent data 1994 - 2008], allocating certain lines to specific locations, or still continuing production of currently exterminated lines). Not until this phase, however, was an innovation strategy adopted – a highly different creation than prior strategies at international locations. Most all old product lines creating revenue during 1990–2010 have ended (Company B’s G, Company history) or are now niche businesses (Company A’s 3, interview). As soon as a new status quo was established, the significance of these products diminished. In the case of Company A, the old line is still in production in the home country serving only a few customers and the product life cycle is long – over a decade. It cannot be stated whether this product will continue to be developed or will end in the future. In Company B, their old main product peaked during this period in 1997 and has been reported by the company to now be finished. This did not happen until recent years, however, as the company had established a new, more strict strategy and business segment; becoming solely an automobile manufacturer. Between 2010 and 2017, the company continued to focus on their particular field and expanding in their areas. In 2011 and 2017, new locations were opened in India and Austria, respectively. These findings illustrated that after first entering emerging market domains, multiple trials took place. New products, markets, and directions were sought, but after operations had become more accustomed to the new location, these were eventually left out before further expansion. This indicates a significant learning phase in relation to place, creating a new direction for future strategy and was initiated by the expansion to emerging market locations. New locations were built or expanded (a new location in 2010, expansions in 2010, 2011, and 2015, and two more new locations in 2017), the core business took its current form and the companies were globally repositioned. For example, before 2009, Company A’s main competitive advantage was not only the production speed and global development for product 2, but the technology was only transferred to headquarters. Also, product 1, where the technology expertise is more crucial, was only heavily developed globally after 2007–2009. The results are collected in the following Figure 3 along with the theoretical framework. - insert Figure 3 about here- Prior to the first expansion (market with a line in figure 3), the firm’s behavior followed an adaptive pattern. However, after establishing locations in the Czech Republic, exaptive behavior became evident. This trend continued for three decades and resulted in the establishment of locations first in China and then in India. After this, the behavior seemed to return to a more adaptive pattern. We shall now discuss the results and conclusions of this study along with managerial implications and future directions. Discussion and Conclusions Discussion The results provide an insightful starting point for describing how the expansion of operations to emerging markets is linked to changes in organizational behavior. The case companies present interesting outcomes of learning after establishing locations in the Czech Republic. Company A remained largely in emerging locations, and much of their customers are based in Asia, following horizontal expansion (Guillén and García-Canal 2009), however, their initial attempts to conquer developed markets are evident. The Netherlands, Finland and Germany were all possible locations to expand their customer base, yet these were not further pursued after the 2000s. The causality and interconnections of this would require further study, but the results can also be understood as creating a learning environment suitable only for emerging locations. Company B took a different route, eventually. While having large car manufacturers as clients in the early stages of internationalization, these did not seem to play a large part at first. After the new path started to emerge, a clear change of locations in developed countries emerged. Company B transformed into local production facilities to serve only local clients. Company B also distinguished the emerging sectors from development and focused on emerging locations, following a more vertical expansion (Guillén and García-Canal 2009). This also suggests that nearly a century of operations in developed economies had little change and the expansion to emerging locations forced or encouraged the organization to take a more experimental route, such as trying new product development and markets. This, presumably, further led to gaining knowledge of how to deal with the local workforce, adopting the ability to deal with political controversies and accepting uncertainty. Conclusions We conclude that as the internationalization process expands over several decades, it consists of multiple and simultaneous exaptive and adaptive processes. Based on these processes, we can see various phases where one characteristic is more dominant in each phase. This study suggests that entering emerging domains organizations learn to manage operations in these, yet this takes significantly long. International expansion to emerging markets creates the need to repurpose existing knowledge to a new purpose. A main contribution of our study is thus illustrating how internationalization to emerging markets creates a contextual disruption in organizational processes (Santangelo and Stucchi 2018) and demands new paths to be examined. Internationalization of firms has been called an evolutionary process for a long time (Madsen and Servais 1997; Contractor, 2007; Cantwell 2010), yet the extant studies have not applied true evolutionary theories. By applying evolutionary theory through the concepts of exaptation and adaptation and illustrating the behavior of internationalizing firms, this study provides an important empirical verification of evolutionary theories as explanatory models in international business. Repurposing existing knowledge has been linked to internationalization (Santangelo and Stucchi 2018), but not how they develop from there on. Following exaptation theory, we can illustrate that they are significant in the long run, as figures 1 and 3 demonstrate. The activities resemble the various stages of exaptation, the conscious search for uses of existing knowledge (Dew et al. 2004; Cattani 2006) in exaptive adjustment, and niche market creation (Andriani and Cattani 2016; Dew and Sarasvathy 2016) in secondary chains. We conclude that international expansion to emerging markets launched exaptive patterns, which follows a previous theory on internationalization to emerging economies (Santangelo and Stucchi 2018). This follows the notion that emerging economies require different capabilities of the organizations (Guillén and García-Canal 2009) and it is suggested here that the reason lies in the geographical location. Furthermore, contradictory to previous studies that conclude exaptive behavior is linked more to entrepreneurial firms and early stages (Dew et al.,2008), established firms under uncertainty may engage in exaptive behavior. However, as there is currently no comparable material on developed economies under a similar theory, this study demonstrates the need for further research. We conclude that capabilities developed in emerging locations equip the firms with the capabilities to do the same in expanded locations. This study illustrates the importance of exaptation, a method for analyzing exaptation, and practical implications following the analysis method. The perspective used here has several benefits for studying entrepreneurship in a contextual setting because it offers a systematic theory framework to analyze complex actor networks, institutions, and entrepreneurial behavior that are tied to the environment. Following the evolutionary approach and describing institutions, culture, and other actors as an eco-system (Adner 2017) simplifies the otherwise complex network, and furthermore, enables empirical analyses of change on the individual level, as this study has illustrated. This is particularly important to globalization and entrepreneurship studies alike, including the context and interactions between context and entrepreneur to entrepreneurial opportunity recognition (Shane and Venkataram 2001; Jones and Wadhwani 2007), but especially by illustrating that entrepreneurial judgement is not a static quality or lost after stakeholder demands grow (Dew et al. 2008). According to this analysis, the internationalization process does not have well-defined lines or phases, but is, instead, dynamic and the development can be determined in the long run, or in these cases, over decades. Moreover, as seen in the analysis, exaptation and adaptation can help explain the differences and changes in behavior when entering emerging markets in particular, thus, extending exaptation and adaptation’s applicability to account for the extent of host market development. In summary, using exaptation in describing international expansion is beneficial since it illustrates how an unpredictable context can promote the usage of knowledge created for an entirely different purpose. Managerial Implications, Study Limitations and Future Studies Managerial Implications The evolutionary concepts used here illustrate how incorporating a more behavioral research agenda to managerial decision-making would benefit the understanding of locational change. Based on this, and drawing further conclusions from evolutionary literature, the concepts of exaptation and adaptation represent behavior models suitable for single firm studies. This study has several practical implications for managers, as it illustrates the unexpected elements presented in emerging locations and that there is no need to always create new practices from scratch. For example, open and fast informal communication channels were emphasized by Company A as a part of company culture which was attributed to innovation. However, these have also proven beneficial in overcoming timing delays when discussing operations in China. The habit of informal communication was based on the closely tied organization of the home location in the 1990s, but currently, the channels are used to minimize logistical dilemmas in Asia, according to the company. However, organizational practices developed at the home location are not always beneficial in emerging economies. Safety regulations are highly important in developed regions, but, in emerging economies they might not be as applicable in a similar manner. In India, the case company described a neglect towards safety regulations because of the major religious belief in reincarnation at the location. However, the care for company employees, which is embedded in the organizational culture, was transformed into a practice of accompanying female workers home from the factory. This illustrates, that in practice, the concern of employee safety can remain as a vague goal, and the actual practices will depend on each location. Incorporating a similar, more behavioral research agenda to managerial decision-making would also benefit the understanding of some additional challenges, such as longitudinal context, ambiguity, and low probability high consequence decision-making (Shapira 2008). Study limitations and Future Studies The results of this study illustrate how, in retrospect, several historical events can be seen as intentionally adaptive, but upon closer inspection, result from a more experimental approach of discovering new paths. This follows the sensitivity to retrospective bias in exaptation (Gloud and Vrba 1982), however, as it is not always mentioned in company histories or by the respondents, this may cause subjectivity in the conclusions. We suggest that this does not lessen the significance of the results due to the experimental design of the study. The evolving and sequential research design and data conversions (Teddie and Tashakkori 2011) do allow a more emergent method, having similarities with grounded theory design (Straus and Corbin 1998; Bryman 2006), and could provide beneficial attributes for future studies on exaptation. However, the method has been criticized due to the emphasis of the individual researcher’s ability to choose the methods (Teddie and Tashakkori 2011). As the theory is relatively new in management, and it has been concluded to differ from approaches in evolutionary perspective (Garud et al. 2016; Lloyd and Gloud 2017), an exploratory research design could be beneficial and we suggest that the method chosen follows previous studies and is complementary to them. Furthermore, emphasizing diversity explains the phenomenon on a wider scale. The empirical results suggest that emerging economies demanded new approaches from the companies’, following the suggestion of locations creating certain capabilities, rather than organizations themselves (Guillén and García-Canal 2009). However, how could this be interpreted? Was it an additional benefit of entering emerging locations or a restraining phenomenon, limiting options to also expand to developed locations? The results indicate a clear change in direction, but was this involuntary, beneficial, or harmful to the organization in the long run? Answering this would require more in-depth studies of the case organizations, such as having several interviews to further explain the solutions chosen (Cattani 2006). The results suggest that this might have further enabled the expansion to emerging economies, such as China and, current consideration, Mexico. However, why did the operations not expand to the United States? We suspect the entry to emerging markets only leveraged capabilities suitable for emerging economies, as Company A demonstrated, but this would require further studies. Innovation typologies have been introduced already by Schumpeter, therefore, the variety in possibilities to define innovations are naturally immersive. Innovation, creativity, and research and development can be presented as synonyms or divided into categories of typologies (Baregheh et al. 2009; Andersen et al. 2014), but, for example, innovations without commercial measure, process, service, sustainable innovation, or even business model innovations, are challenging to incorporate under a single observational measure for analysis. For example, Company A’s line 2 is a mixture of both technological innovation and a manufacturing process innovation that started out as something else but, presumably, gained status as the core product line due to the immersive competitive edge, which was made possible by shortening manufacturing times. As this was not possible for other lines, it is suggested here that the innovation process specifically consisted of both invention-level and organization-level innovations (Baregheh et al. 2009; Mastrogiorgio and Gilsing 2016). Using behavioral theories to describe innovation could help the inclusion of various types, such as process, product and service innovations – as the focal point is currently much on technological product innovations (Andersen et al. 2014). Exaptation and adaptation as organizational behavior reveal several directions to explore for future studies. What is the effect of a foreign location to specific innovations? Exaptation does include the notion of ambidexterity—an idea that a previous function needs not to be discarded as a new function emerges. Feathers still serve the purpose of thermal insulation despite the additional trait of flight being developed. The case companies illustrated development of old core products simultaneously with a new search for directions, which follows a sequential and simultaneous trait of organizational ambidexterity (Boumgarden et al. 2012; Gulati and Puranam 2009), but also in times of disruptive change (O'Reilly and Tushman 2013), which follows the use of exaptation in internationalization (Santangelo and Stucchi 2018). Exaptation and adaptation illustrate the dynamic nature of organizational behavior, but concluding this either as an organizational capability or resulting from locational pressure requires more studies. Contradictory to previous theories (Dew et al. 2008), including both adaptation and exaptation as longitudinal evidence illustrates the presence of exaptive capabilities in established organizations as well. Repurposing knowledge has been connected to cross-border mergers and acquisitions (Marquis and Huang 2010), as well as co-ordination and control capabilities (Santangelo and Stucchi 2018), but the results suggest that cultural environment is tied to location and may play a significant role. Company A explicitly explained how each location had a variety of issues, such as respect for authority in the Czech Republic in comparison to Austria and a lack of respect to law and regulations in India, which follows the differences of cultural studies (Hofstede and Hofstede 2005). Further examining the cultural differences’ effect on innovation in emerging locations could provide more insight to entrepreneurial cross-cultural studies. Exaptation along with adaptation could also improve the illustration of these types of results. Finally, the emergent literature on exaptation in management remains scattered across disciplines. 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Manager, A Researcher Duration 3h + 1h 8 pages transciptions + 4 pages field notes Archive Data 2016 - 2018 Patents European Patent Office Public 1514 pages 2016 Financial records Orbis; A Researcher 2004 - 2015 30 pages 2016 Product records Representative, A Public 30 pages 2016 Financial records Orbis; B Researcher 2010 – 2016 40 pages 2016 Product reports Representative; B Public 2015 - 2016 35 pages 2016 Company history Promotional material; B Researcher 150 years 142 pages 1990 -2016 Press releases Public Public 50 pages 2000 - 2016 Online/ print articles Company B Public 20 pages 2016 - 2018 Online material Company web pages Public NA Table 2. Findings Years Description Details Sources Company A 1960 – 1994 Local embeddedness Technological knowhow based on craftsmanship Company history First innovation Company history; Interview Core product developed (3) Interview; Patents, Technology H01;H02 First production facility in Czech Republic 1992 Interview; Press material Second production facility in Czech Republic, 1994 Interview; Press material 1995 – 2004 Exaptive adjustment New products (4,5,6) Patents, Technologies B62; B60;G01 New markets sought (Netherlands) Patents, Technology B62 Global radical innovation (7) Patents, Technology G External ideas for innovation (2) Interview Home country development (1) Interview; Patents, Technology H01 Globally incremental innovations (3) Interview; Patents, Technologies H01, H02 Global revenue with old core product (3) Interview; Patents, Technologies H01, H02 2004 – 2008 Secondary chains New production facility in China 2004 Company history; Interview Home country development (1) Interview; Patents, Technologies H01, H02 Core knowledge developed (2) Patents, Technologies H01; H02 Radical innovation globally facilitated (2) Interview New markets not further pursued (Netherlands) Patents, Technology B62 New products dismissed (4,5,6,7) Patents, Technology G; B62; B60; G01 Globally incremental innovations (3) Interview; Patents, Technologies H01, H02 Global revenue with old core product (3) Interview; Patents, Technologies H01, H02 2008 – 2017 International embeddedness Old core product not developed (3) Patents, Technologies H01; H02 No change in main direction of products (1and2) Interview; Technologies H01, H02 New production facility in India 201 Company history; Interview New production facility in Austria 2017 Company history; Interview Company B 1880 – 1992 Local embeddedness Craftmanship, education Company history Core product lines development, radical innovations Patents, Technologies F16 G04 G11 Old core product line developed, radical innovations Company hist., Patents, Technologies G06 G01 G11 International export of radical innovations Company hist.,Patents, Technol. G01 G04 G06 H01 Old core product line developed Company hist., Patents, Technol.G01 G04 G06 H01 New product line started Company history; Technology H01; H02 1992- 2004 Exaptive adjustment Incremental innovation globally introduced Patents, Technology B29 Global incremental innovations Patents, Technologies H01;H02 First production facility in Czech Republic 1994 Company history New technologies introduced globally Patents, Technologies H05;B60;F21;E05 Revenue for old core product peaks 1997 Company history; Patents, Technologies G Second production facility in USA 2001 Company history Global incremental innovations; Radical home Patents, Technol. H01;H02;H05;B60;F21;E05;B29 Growing revenue of old products Company history; Patents, Technology G;H Old core knowledge repurposed Patents, Technology F16 2004 – 2008 Secondary chains Technologies dismissed Patents, Technologies F21; E05; F4 New directions sought (financial crisis) Company history; Patetns, Technologies A61 Niche technologies to specific locations (US, China) Patents, Technologies F16; B29 Expansion of location in Czech Republic, 2004 Company history New location in China, 2008 Company history Growing revenue due to old products Company history; Patents, Technology G;H Globally incremental innovations, radical home Patents, Technologies H01, H02; B60 Development of core product lines Patents, Technologies H01, H02; B60 2009 - 2017 International embeddedness Old core product ended Company history, Patents, Technology G Focus on one industry Company hist., Patents, Technology H01, H02, B60 Core technologies developed, 5 product lines Press material; Patents, Technologies H01, H02; B60 Globally incremental innovations, radical home Patents, Technologies H01, H02; B60 New location in Mexico 2017 Company history; Press material Table 3. Summary of main findings Case A Local embeddedness Exaptive adjustment Secondary chains International embeddedness Core product 3 Global incremental innovation Global incremental innovation Not developed, Niche Core knowledge New product 1 Home country development Global incremental innovations; Line 1 External ideas for innovation 2 Home country development Global radical innovations; Line 2 New products 4,5,6,7 Dismissed Case B Local embeddedness Exaptive adjustment Secondary chains International embeddedness Core product G Global incremental innovation Paused Ended Core product H Paused Home country development Core product line H Core knowledge F New product Bb Paused Core product line Bb New product Fb, Ba Paused Core product and niche New products Fa, E Dismissed Collaboration A Dismissed Publication IV Aaltonen, P. & Torkkeli, L. Microfoundations of novelty in foreign locations–Exaptation in first-time FDI modes Reprinted with permission from Academy of Management Proceedings Vol. 2019, No. 1, pp. 13801 © 2019, Academy of Management ID:13801 Microfoundations of novelty in foreign locations—exaptation in first-time FDI ABSTRACT Engaging in new FDI modes require capabilities that firms do not normally possess. In post- acquisitional stages, prior experience is linked to successfull restructuring, but recent studies also suggest that firms may invent novel approaches when lacking experience. Exemplified by exaptation, the repurposing of capabilities, we illustrate the individual actions behind novelty in the internationalization process. Doing so provides useful insights into experiential learning and balancing ambidexterity, however, the understanding of this concept in international locations merits further research. In this article, we introduce a new method to assess the antecedents of ambidexterity in the internationalization process, and examine the FDI entry cases of two multinational ICT companies. Our findings suggest mimicry leads to novel solutions, hindered by possessed experience. This is in line with previous studies on exaptation in internationalization, but our study further demonstrates the limitations of repurposing capabilities in international operations and novelty in post-acquisition processes, thus contributing to the literature of understanding unpredictable outcomes in the internationalization process. Keywords: Exploitation, Internationalization, Finland INTRODUCTION Necessity is the mother of inventions. New FDI modes can require novel solutions to cope with the lack of experience (Santangelo & Stucchi, 2018), described as exaptation (Gould & Vrba, 1982; Santangelo & Stucchi, 2018). This phenomenon behind market heterogeneity (Felin, Kauffman, Mastrogiorgio, & Mastrogiorgio, 2016), balancing ambidexterity (Birkinshaw & Gupta, 2013; Garud, Gehman, & Giuliani, 2016; O’Reilly & Tushman, 2013; Vahlne & Jonsson, 2017), and discontinuous development (Santangelo & Meyer, 2011, 2017) would benefit studies of international operations, although findings in this context are still growing. Herein we present an important question about the microfoundations of ambidexterity in the internationalization process: When are such novel solutions created or otherwise in post-acquisition restructuring processes in first time FDI modes? To address the question, we examined two investments of Google and IBM in Finland. We found that mimicry-based exploitation creates exaptation, and possibilities for future exploration; however, prior experience does not. This is significant for international operations because it illustrates the interconnections of current exploitation, future exploration, and the limits of location-bound novelty emergence. Successful post-acquisition restructuring processes have been linked to experience (Hennart & Reddy, 1997; Johanson & Vahlne, 1977; Kogut & Singh, 1988). Nonetheless, experience is something that needs to be gained first. Understanding the antecedents of new entry based on experimental learning can be constraining (Schwens, Zapkau, Brouthers, & Hollender, 2018), but exaptations present an important premise for foreing operations: I have a solution. Where is the problem? (Andriani & Cattani, 2016). First-time engagement in FDI requires capabilities that organizations may not possess (Santangelo & Stucchi, 2018), occasionally creating a need for novel solutions (Dew, Sarasvathy, & Venkataram, 2004; Santangelo & Stucchi, 2018). Repurposing existing capabilities, such as templates designed for controlling a country’s geographic dispersion 2 (Santangelo & Stucchi, 2018), explains the antecendents of organizational ambidexterity in international operations (Vahlne & Ivarsson, 2014; Vahlne & Jonsson, 2017). Organizations have an infinite list of untapped potentials (Andriani & Cattani, 2016; Felin et al., 2016) and entering a novel entity, i.e. location, creates conditions conducive to discovering these potentials (Levinthal, 1998; Santangelo & Meyer, 2011, 2017). These may develop into new market opportunities (Cattani, 2006; Dew & Sarasvathy, 2016; Dew et al., 2004), illustrating the antecendents of market heterogeneity (Felin et al., 2016; Grandori, 2007) and futher, of simultaneous ambidexterity (Birkinshaw & Gupta, 2013; O’Reilly & Tushman, 2013; Vahlne & Jonsson, 2017). In other words, how exploration may result from exploitation (Garud et al., 2016). Especially the post-acquisition restructuring processes, previously connected to interaction problems (Ravenscraft & Scherer, 1987), require increased novelty (see Santangelo & Stuchhi, 2018). Studying this development can be particularly beneficial to illustrating the microfoundations of ambidexterity and advancing our understanding of unintentional (Felin et al., 2016) experiential learning. Based on an exploratory, comparative case study method (Cattani, 2006; Siggelkow, 2002) we illustrate when novelty emerges in restructuring processes of exploitative FDI. Our findings suggest FDI based on replication (Winter & Szulanski, 2001); in other words, a certain template, successfully led to the creation of novel solutions leading to new market solutions, but not when restucturing was based on prior experience. The prior could be considered an example of location- bound learning and the latter of non-location bound (Schwens et al., 2018). We believe that our study helps understand the limitations and facilitates innovations in new FDI modes. The rest of this study is organized as follows. First, we explain the concepts of exaptation and adaption as well as their applications in international business studies. We will then introduce our research design and present our findings. We conclude the paper by discussing the implications and offer recommendations for future research. 3 EVOLUTIONARY MICROFOUNDATIONS Exaptation, “I have a solution—what is the problem I solved” (Andriani & Cattani, 2016) and adaptation, the “inherited characteristics that enhance organisms’ ability to survive” (Campbell & Reece, 2005) illustrate two intertwined concepts. Adaptation is commonly used in a wide variety of literature streams (e.g. Lewin & Volderba, 2003), and exaptation was introduced to management research fairly recently (Dew et al., 2004). However, first illustrated by Gould & Vrba in 1982 as complimentary (also Lloyd & Gould, 2017). The concepts illustrate the social outcomes based on individual actions (Coleman, 1990; Felin, Foss, & Ployhart, 2015, Fig.1.), following the microfoundations perspective in the internationalization process (Johanson & Vahlne, 1977; Santangelo & Meyer, 2011, 2017; Vahlne & Johanson, 2017) based on evolutionary theory. Exaptation and adaptation The early adaptive organization theories (Cyert & March, 1963) were refined to incorporate the first notions of exaptation in management, such as blind variations resulting from chance, luck, or accidents (Aldrich & Ruef, 2006; March, 1981), exogenous jolts (March, 1991), as a change in technological domain (Levinthal, 1998), ignorance area (Kauffman, 1995, 2000), evolution of new ideas (Geroski, 2003), and the emergence of new market niches (Adner & Levinthal, 2002; Dew & Sarasvathy, 2016). Exaptation has subsequently been connected to the behavioral theory of the entrepreneurial firm (Dew, Read, Sarasvathy, & Wiltbank, 2008), effectuation logic theory (Read, Sarasvathy, Dew, & Wiltbank, 2016; Sarasvathy, 2001; Sarasvathy & Dew, 2005b, 2005a), and complex innovation systems (Bonifati, 2010, 2013). However, only the more recent notions of exaptation offer a systematic theoretical framework for future studies (see Andriani & Cattani, 2016); they also illustrate the significance of exaptation in relation to microfoundations of market 4 heterogeneity (Felin et al., 2016), internationalization (Santangelo & Stucchi, 2018), and balancing ambidexterity (Garud et al., 2016). Exaptation refers to the process by which a structural feature that was originally intended for a specific function is co-opted for a new purpose. Adaptation, on the other hand, involves the “intentional” development of a feature (i.e., resulting from selection). The key difference between the terms lie in their current and past functions (Lloyd & Gould, 2017). Adaptation has a double requirement and is selected due to a history of usefulness (Lloyd & Gloud, 2017); this is typically evident after repeating a mechanism of independent selection (Campbell, 1969; Lloyd & Gould, 2017). Exaptation is a functional shift of technology to a new domain (e.g. Levinthal, 1998). A similar change of domain also takes place when organizational operations are established in a new location (Santangelo & Meyer, 2011, 2017). Examples of exaptation in economics are the development of wings (Dew et al., 2004), CD-ROM technology, Apollo 13 solutions (Cattani, 2006; Andriani & Cattani, 2016), and Post-it Note (Garud et al., 2016). These developments represent diverse situations, a rapid need (e.g., Apollo 13) (Dew et al., 2004), niche construction (Dew & Sarasvathy, 2016)—a conscious search for a new use of existing technology (Cattani, 2006), designing a product based on a failed invention (e.g., Post-it Note) (Garud et al., 2016), or using additional qualities of inventions (e.g., CD-ROMs) (Dew et al., 2004). Exaptation increases current fit or aptation (Lloyd & Gloud, 2017) due to its effects; however, it is not synonymous to technology combinations, such as bricolage (Baker & Nelson, 2005) or asset combination (Collinson & Narula, 2014). Adaptive properties increase current fit because they have a function, but exaptation possibilities do not because they are co-opted into a new use (Lloyd & Gloud, 2017). Exaptation can have four outcomes. First, it may remain unchanged. This explains why capabilities developed in the past can still be utilized decades after (see Marquis & Huang, 2010; Cattani, 2006), since their new purpose(s) may not be immediately discovered or enhanced. Second, a 5 realization of exaptation can lead to additional developments. The structure of the feather, for example, fits the purpose of flying; this property was subsequently improved to serve flying better —a secondary adaptation (Lloyd & Gloud, 2017), similar to the emergence of a new market (Dew & Saravathy, 2016). It is possible that exaptation properties lose their extra effects and become useless (Buss, Haselton, Shackelford, Bleske, & Wakefield, 1998; Garud et al., 2016; Lloyd & Gould, 2017)) when, for example, the external conditions change. Finally, exaptation properties may unveil shadow functions (Andriani & Cattani, 2016); these are options that were not available before. Fig. 1 illustrates the key properties of exaptation and adaptation. ------------------------------------------ Insert Figure 1 about here ------------------------------------------- Exaptation and adaptation in international operations Exaptation and adaptation illustrate why and how organizations make decisions (Dew et al., 2008). Exaptation is not synonymous with exploration, nor is adaptation equivalent with exploitation; exaptation can take place during exploitation (Garud et al., 2016) and exploration is intentional (e.g. Le Bas & Sierra, 2002; Pazienza, 2014). Especially exploitation (see Anand, Mesquita, & Vassolo, 2009) may result in location-bound learning (Schwens et al., 2018), create exaptation, and justify future exploration. International operations tend to follow the adaptive pattern. Internationalization, as an evolutionary process (Contractor, 2007; Vahlne & Johanson, 2017), consists of linear (e.g. Johansson & Vahlne, 1977) and non-linear outcomes (Santangelo & Meyer, 2011, 2017). In other words, predictable and “quirky” outcomes (Santangelo & Stucchi, 2018, p. 758). The repetition of successful acts (March, 1981, 1991) follows an adaptive pattern (Cyert & March, 1963). The search for solutions to problems is limited to acceptable solutions in relation to previous goals—a quasi-resolution of conflicts (e.g. Cyert & March, 1963; Dew et al., 2008; Read, 2009). While this approach represents organizational inertia in the home market, similar to competency trap (Levinthal & March, 1993; 6 Levitt & March, 1988; March, 1991) in international context, it can be beneficial. Internationalization is a disruption to organizational processes (Santangelo & Stucchi, 2018), and home location creates organizations suitable only for those particular conditions (Guillén & García- Canal, 2009). Studies on expansion to new locations emphasize the adaptive nature of operations, such as reducing risks in explorative FDI with mimicry (Anand et al., 2009), accumulation of experience (Hennart & Reddy, 1997; Johanson & Vahlne, 1977; Kogut & Singh, 1988) and adapting to cultural differences (Barkema, Bell, & Pennings, 1996; Cheng, 2006; Kogut & Singh, 1988). In other words, FDI selection mode or new entry is not an accidental event or behavior (e.g. Dew et al., 2008; Cyert & March, 1963). However, ambidexterity in location (Huang, 2017), an unfamiliar environment (Liu & Almor, 2016; Santangelo & Meyer, 2017), and location-bound organizational learning offer the potential for creating new opportunities (Felin et al., 2015; Schwens et al., 2018) in exploitation and exploration. Exaptation illustrates where and how novelty may originate in international operations; it is not however synonymous with R&D investments or innovations. Exaptation explains variations in outcomes (Felin et al., 2016) and inform the opportunities and possibilities for new markets (Dew & Sarasvathy, 2016). Such new markets in internationalization processes, are examples of non-linear outcomes (Santangelo & Meyer, 2017, 2011; Santangelo & Stucchi, 2018). Exaptation can emanate from the interactions between the actors, the environment (Felin et al., 2016), and social functions (Garud et al., 2016), although its emergence cannot be predicted (Felin et al., 2016), and there lacks a search process (Felin, Kauffman, Koppl, & Longo, 2014). For example, based on acquiring competitive edge (Dunning & Narula, 1995; Le Bas & Sierra, 2002) or exploitation (Behrman & Fischer, 1980; Le Bas & Sierra, 2002), technology (Le Bas & Sierra, 2002) or market search (Le Bas & Sierra, 2002; Patel & Vega, 1999) can inform location choices, basis for economic return (Pazienza, 2014) and conditions such as cultural distance (Barkema et al., 1996) and relocation costs (Görg, 2000; Meyer & Estrin, 2001) may influence the selection of the FDI mode. In 7 exaptation, however, the perception of opportunities depends on cognitive functions, such as functional fixedness (Felin et al., 2016; German & Barrett, 2005) and narratives (Garud et al., 2016). This might lead to explorative FDI in secondary development (see Fig. 1; also see Dew & Sarasvathy, 2016), although it may not be considered a selection criterion for FDI investment (Cheng, 2006; Patienza, 2014; cf. Dew et al., 2008). Possibilities for exaptation that arise from unintentional interactions (Felin et al., 2016) and foreign locations increase possibilities for the emergence of such (Adner & Levinthal, 2002; Levinthal, 1998; Santangelo & Meyer, 2011, 2011), therefore exaptations can represent the the complementary and substitutive relationship between innovation and internationalization (Kyläheiko, Jantunen, Puumalainen, Saarenketo, & Tuppura, 2011). Following the microfoundational structure, exaptation and adaptation connect the environment to individual actions. Exaptation is based on agent-network theory (Latour, 2005), and explains how ideas can emerge from social interactions, such as collaborative partnerships (Liu, Sarala, Xing, & Cooper, 2017). This could be understood as an eco-system (Adner, 2017; Korhonen & Snäkin, 2005), making exaptation particularly suitable for understanding international operations; moreover, actors, competitions, and resources all enable and constrain the organizational operations that help form an ecosystem (Santangelo & Meyer, 2017). While adaptation requires repetition (see Campbell, 1969) and stability in selection processes (Lloyd & Gloud, 2017), exaptation can serve single events or individual organizations (e.g. Dew et al., 2004; Cattani, 2006). This view derives from the micro-perspective structure (Felin et al., 2016; Colemann, 1990; also see Fig. 1) in international operations by combining social facts, the ecosystem (Santangelo & Meyer, 2017), conditions of individual action (i.e., exaptation or adaptation), and social outcomes, such as market heterogeneity in explorative FDI, for example (also see Felin et al., 2016). This would benefit the prediction of social outcomes based on social facts (Felin et al., 2015; see Fig. 1), especially in international operations, given the presence of the contextual change (Santangelo & Stucchi, 2018), 8 but also explaining how ambidexterity (Vahlne & Ivarsson, 2014; Vahlne & Jonsson, 2017) is created. In international operations, exaptation is a theory that illustrates how the capabilities that exist in a home country might solve a problem in a foreign location. The theory includes templates created to manage geographical dispersion, usable in post-acquisition integration plans and pre- acquisition action planning (Santangelo & Stucchi, 2018). In international operations, the uncertainty of new locations is recognized (Santangelo & Meyer, 2017; Santangelo & Stucchi, 2018). In the case of Apollo 13, for example, the existing pressures in the environment resulted in the creation of novelty (see Dew et al., 2004). FDI normally prefers locations with high ambidexterity (Huang, 2017). This preference raises this question: what are the microfoundations of creatingorganizational ambidexterity in foreing locations? The limits of exaptation as a source of novelty in new FDI modes are uncharted. Studies confirm their existence in a dire need, and according to the exaptation theory, two reasons help exaptation to develop: (a) a dire need and (b) a new market creation (Dew & Sarasvathy, 2016). What are the limitations of new market creation based on exaptation in first-time FDI modes is yet to be answered. METHOD There is a lack of an established research design in the study of exaptation (Andriani & Cattani, 2016), although a study has recently offered helpful guidelines (Andriani et al., 2017). Using previous empirical studies on exaptation in international operations, we selected a comparative, exploratory case-study method (Eisenhardt, 1989; Eisenhardt & Graebner, 2007; Siggelkow, 2002; Yin, 2015). Radicalness illustrates how new exaptation is to a market; while being only 10% (Andriani et al., 2017), industry shifts are one such example of radical exaptation (Cattani, 2006; Marquis & Huang, 2010). In international business, the observed exaptation cases (Santangelo & Stuchhi, 2018) were semi-radical and new to a subpopulation (Andriani et al., 2017), suggesting addressing competency gaps in outward FDI. However, a risk for miscategorization 9 exists when using quantitative approaches, with qualitative methods being more conservative (Andriani et al., 2017). In other words, not all innovations are exaptive. To determine which innovations are exaptive and which ones are not, patents (Cattani, 2006; Ching, 2016), legal documents and publications (Andriani et al., 2016), postal indexes, export intensity reports, joint ventures and acquisitions (Santangelo & Stucchi, 2018; Marquis & Huang, 2010) were used. Distance illustrates how far the new use of an innovation is from its previous one (Andriani et al., 2017). Following Hofstede, in international operations, the distance between the uses is conceptualized as host versus home location physical distance (see WHO ICD-9-CM DataBase; Andriani et al., 2017). The longer the distance, the more accurate quantitative approaches are (Andriani et al., 2017). In international business, the entry of developed economies into emerging economies/developing countries (Guillén & García-Canal, 2009) would be considered a long distance, whereas between developed intermediate. Qualitative methods are most suitable for intermediate distances (Andriani et al., 2017). We limited our research to developed regions, meaning that the distance would be intermediate or small (Hofstede & Hofstede, 2005). The exaptation cases are likely to be semi-radical, justifying a qualitative approach (Andriani et al., 2017). This follows previous examples of longitudinal exaptation studies (Cattani, 2006), with our analysis resembling Siggelkows’ (2002) study. Our research design differs from the previous ones in international business (Santangelo & Stucchi, 2018). However, we believe that our findings can make a useful contribution to the field. Our research question was formulated thus:  When are novel solutions created or otherwise in post-acquisition restructuring processes in first-time FDI? Case selection Following previous research into exaptation (Santangelo & Stucchi, 2018), we intended to examine new market entry of firms lacking previous experience of the selected FDI mode, either MA’s, greenfield, JV’s, or brownfield (Patienza, 2014; Cheng, 2006). We found two suitable cases 10 for analysis: the multinational digital companies Google, and IBM, and their investments for increased computing capacity in Finland. The cases were also examples of first time brownfield investment. In both cases, existing structures of these industries were used. Neither had previous experience of FDI mode, and we concluded that these would suit our enquiry. These two cases were examples of home-base exploiting investments (Le Bas & Sierra, 2002) (i.e., exploitation). Data center construction increases production capacity, which is not connected to market seeking. Data centers represent production facilities for global services (Marston, Bandyopadhyay, Zhang, & Anand, 2011), and Finland provides no technological expertise comparable to the ICT giants. This would benefit our study design, as exaptation cases are more likely to occur unintentionally (e.g. Felin et al., 2016). In this case, “firms exploit their knowledge base...without trying to improve it” (Le Bas & Sierra, 2002, p. 593). In early 2009, Google announced the opening of their data center in Hamina, Finland. The investment took place in three stages from 2010 to 2013 and cost 800 million euros. However, the initial investment in the first stage was around 150 million euros, with the purchase cost being 40 million euros. In 2010, IBM announced their plans to follow suit and constructed a similar data center in Kajaani, Finland. The estimated cost for the project was around 20 million euros, with around 6 million being the cost of equipment. The cases varied to some extent due to differences in business models and clientele, as Google focuses on individual consumers in a public cloud, whereas IBM concentrates on private solutions for firms in a private or public cloud. The ratio between computing equipment (~70%) and total sum of investment corresponded to the overall scale of operations. Google has 22 and IBM has over 60 data centers worldwide for new customers. Details are not available of private ones. Governments or government-owned public service organizations may be among IBM’s customers, and data centers may have several aliases in foreign operations that help disguise facilities locations, similar to the cases in this study. 11 Following the case study approach (e.g. Siggelkow, 2002), we conducted interviews with the case companies, visited archives of previous industries, collected background information of the industries, visited IT forums and guides for industry peers, and collected government legislative data on the construction projects. We summarized and compared the data in tables. The extensive government records (~50 000 pages) in Finland provided detailed information about the processes and helped validate our findings. Table 1 shows these data. ------------------------------------------ Insert Table 1 about here ------------------------------------------- FINDINGS When analyzing our findings, we familiarized ourselves with the industries in question, as these were significant in understanding the microfoundations of the processes, the institutions, or the social facts (Felin et al., 2015; see Fig. 1). Further, they illustrate the basis for the locational strategy of the cases (Le Bas & Sierra, 2002). First, we would like to discuss the characteristics of cloud computing industry production facilities, data centers. Data center characteristics Data centers are the physical locations hosting computing equipment for cloud computing operators. Google, Amazon, IBM, and Facebook are among the most famous ones (see (Marston et al., 2011). Most Western industrialized nations, however, typically have dozens of local data centers; Luxemburg, for example, has 23. Based on their readability, data centers are ranked from I- IV, with IV indicating the highest. A center that is ranked IV theoretically provides 99.999% access to data, with 99.98% for a center tanked III, and 99.6% for one that is ranked I. While these are not regulated standards (see Acton et al., 2018), they are a general indicator among industry peers and are included in service contracts. A drop of 0.01% often equals 50% compensation (Amazon Oy, 12 2018; Google Oy, 2018). As the customer base exceeds millions, longer power shortages may be costly. The cloud computing industry is a constant race between improved technology development and capacity (Marston et al., 2011). First locations were established in 1994 (Marston et al, 2011). In December 2004, Facebook had 1 million users; by 2017, this figure had reached 2 billion users every month (see “Facebook Timeline, 2018,” 2018). The result of such developments is the continuous growing demand for new facilities, bearing in mind that the first data centers are not ecological by today’s standards. A standard data center produces 59 kilotons of carbon dioxide emissions (Masanet, Shehabi, & Koomey, 2013), and data center hotspots, such as Silicon Valley, continuously exceed safe values, resulting in fines (Bay Area Quality Management District, 2013). The emissions result from cooling and backup, and the same equipment creates inefficient electricity usage. Digital technology consumes 2% of the global electricity (Masanet et al., 2013), and efficiency relates to the relation between electricity intake and computing power (PUE), ideally 1. The efficiency level of the latest equipment can reach 1.08-1.2, and 3 in the case of the older ones (for general references on cloud computing technologies, see (Kant, 2009; Marston et al., 2011; Masanet et al., 2013; Novothy, 2010) Data center construction play a key role in increasing the scale of operations, but not attracting customers. The operators have two business models: the private and the public cloud (e.g. Marston, 2011). Services directed to individual consumers, such as Facebook, Google+, and Gmail, operate in a public cloud, are accessible to all, and demand more rapid scalability. A private cloud is directed towards individual businesses and are accessible to them only. This means that expansion of capacity does not need to be rapid; however, locations may be numerous. According to the official promotional material, IBM, for example, has 55 locations globally, whereas Google has some 20. We think that, given the nature of the industries, the cases are examples of home-based exploitative FDI strategies (Le Bas & Sierra, 2002). 13 The final location selected, the paper production facilities in Finland, provides useful insights about data centers. These facilities illustrate the motivation for FDI mode selection (e.g. Cheng, 2006; Huang, 2017) and the individual conditions for action (Felin et al., 2016; see Fig. 1). They also form the basis for our analysis of novelty in post-acquisition restructuring processes. We shall illustrate these conditions next. Characteristics of paper production facilities in Northern Europe and Finland The facilities were physically massive and required immense amounts of energy and water. The machine halls, 250 meters long and over ten meters high, each covering a floor of 10 000 square meters to host a single machine; many mills have three to four machines, saws, storage facilities, and pulp production (e.g., Stora Enso archives), with the total area averaging around 100 000 square meters. While operational, the factories consumed between three and ten times the current consumption of Google’s data center, for example (Stora Enso archives; UPM-Kymmene archives), that is 900-2000 GWh annually. Papermaking uses 8 to 15 cubic meters of water per ton of paper. Factories produce around 500 000 tons annually (e.g., Stora Enso archives), albeit to varying degrees. To ensure the water supply, paper mills in Finland are located in the immediate vicinity of a lake, river or the sea. Being near water allows many sites to use renewable hydropower as an energy source, although due to continuous growth in production capacity, only a tenth of the total energy comes from renewable sources for the factories (see Diesen, 2007; Hämäläinen & Tapaninen, 2010; Koskinen, 2009) For economies like Finland, the industry is a cornerstone of economic development, and a supportive framework has been a part of government objectives (Diesen, 2007). Around-the-clock production was enabled by the custom electric networks around the factories, providing uninterrupted energy, even during shortages with parallel lines (Stora Enso archives; UPM- Kymmene archives), and supported by the nationwide electricity infrastructure. The Finnish 14 electricity network is extremely reliable with only 1-12 minutes of annual shortage (Energy Market Authority, 2012), whereas the corresponding figures in Silicon Valley, for example, are 260 minutes annually (Plumer, 2013). According to a report by CSC (CSC – IT CENTER FOR SCIENCE LTD), the access to electricity around paper mills is 100.00%, while in the rest of Finland is between 99.995% and 99.9998%. These figures are particularly important to data centers as noted earlier. Cooling in data centers can be carried out with air or liquid. Typically, the cooling system has closed primary and secondary systems, and the variety in cooling solutions relates to the latter system. Air is often required to cool generators in between cycles, but the temperature differences are not massive—between 3-5 degrees Celsius in liquids (“Southern Finland Region, Dnro ESAVI/230/04.08/2012,” 2013; “Southern Finland Region, Dnro. ESAVI/283/04.08/2010,” 2010). Given that the outside temperature is low, outside air is enough for cooling; otherwise, generators can be used. In most of Northern Europe, the climate is between 25 and 30 degrees Celsius over 8000 hours annually, over 93% of the time. However, in most of the US regional data center hotspots, such as in California and Eastern Central US, such temperatures are achieved during only 3000-6000 hours annually. Scandinavia, the Baltic Region, Upper Central and Eastern Europe, and the UK have cold climates for most of the year (see“Air-Side Free Cooling Map,” 2013). Taking into consideration that an average data center consumes 200-300 Gwh annually (ESAVI/230/04.08/2012; ESAVI/283/04.08/2010), and that third of the electricity consumed may go to cooling, lower annual temperatures are considered more cost-efficient. Data centers rely on cable connections, and in order to achieve the highest rank (IV), multiple links ensure data accessibility. Currently, the biggest bundles of submarine cables lead from Europe to Eastern Central America and over to Asia from Western Central America. However, the Northern European coastal region has a significant number of connections to land operators, creating a network of multiple links around Germany, the Netherlands, France, Sweden and the UK. Similar hubs are located around Asia. The significance of such multiple connections is further supported by 15 the fact that both Google and Microsoft have located their newest facilities in the proximity of multiple undersea cables, such as the towns of St. Ghislain, Eemshaven, Dublin, and the coast of Norway. Finland enjoys an additional advantage because it has a nationwide cable network that the Finnish Ministry of Education launched in 1983 to provide Internet access in Finland for the first time (Ahonen, 2008). The main structure covers 95% of the Finnish regions, creating an option to connect with relative ease to high-speed network further away from the coastal regions, as is currently the case with IBM and CSC in Kajaani. Furthermore, the electricity network supports the data center construction, ranked IV, more easily than that in the US, for example. One of the requirements of achieving higher rankings is the theoretical average of data availability, ranked I— being around 99.6%, and IV—being 99.9995%. Disconnections can occur by accident and there are risks involved in any business, requiring that gaps in availability be compensated to the customers. Finland and essentially all Norther European coastal areas are highly beneficial locations to data centers. This is further supported by the fact that most large players such as Microsoft, Facebook and Oracle currently have offices in such locations in Ireland, Belgium, Denmark and Sweden. While this is partly due to the concentration of the European customer bases, these locations provide additional benefits, such as improved cooling options and connectivity hubs. Finland in particular benefits from these advantages because of an extremely stable electricity and a nationwide fiber-optic network launched in the early 1980s (Ahonen, 2008). The cases in this study present similar starting points that took place from 2009 to 2012. Table 2 outlines our findings, and we shall examine the cases in more detail. ------------------------------------------ Insert Table 2 about here ------------------------------------------- Google purchased a factory’s used infrastructure and the surrounding areas and used the local providers for basic services, such as sanitation, electricity, and cable connections (i.e., Telia-Sonera 16 for cable). IBM has taken out a long-term lease on the premises in Kajaani, owned jointly by UPM- Kymmene, a forest industry company and CSC, a non-profit organization. CSC provides computing services for hospitals and universities in Finland and is owned by the Ministry of Education. Despite this, both projects were independent investments and were not financially linked. Services such as electricity, premises, office needs, and cable connections are supplied from either UPM- Kymmene or local producers (e.g., FUNET for cable). The cases represent first-time brownfield FDI—a combination of acquisition and greenfield (Cheng, 2006). In data center construction, greenfield is more common, mainly because of the specific demands of the industry, although since 2015, few similar solutions have been proposed (e.g., Motorola and Amazon). Case I: Google Hamina The project in Hamina was very large in scale, although the original factory constituted a smaller case. Enso Gutzeit (renamed later to Stora Enso), the former owner, has a long history of being one of the major players in the Finnish forest industry. Summa factory was built in 1955, and after expansion in the 1970s, the site had three paper machines that delivered over 400 000 tons of paper every year, consuming close to 900 GWh (Stora Enso archives). The paper mill site and some connected land areas were purchased by Google for 40 million euros in 2009 (ESAVI/283/04.08/2010). In the beginning, the old factory hall was transformed into a data center at an estimated investment of 150 million euros. The center was expanded between 2011 and 2013 at 800 million euros to accommodate for a data center server at an estimated area of 80 000 to 90 000 square meters; it currently has 350 employees. For the sake of comparison, one square meter of space can hold some 100 servers; an average data center is around 2000 square meters, but it can also range between 100 and 6000. Majority of the expenses are spent on technological equipment. The paper machines were sold for further use or were simply demolished. Prior to the deal, Stora Enso took the responsibility for some minor surface renovations, which included filling in the holes 17 left behind across the factory’s floor after the machines were removed. Google also conducted some basic renovations, such as renewing the sanitation plumbing of the basement and connecting it to the local sanitation network; this is because the facility’s waste refinery plant had previously been owned by Stora Enso (ESAVI/283/04.08/2010). Google’s custom-made equipment is specially designed to use natural water as coolant. The primary system is cooled down with a secondary system that pumps water from the sea through the two newly built pipelines. The intake depth is 5 meters; the water flows into the data hall and is then released through the old pipeline back to the Gulf of Summa. The temperature of the outflowing water is 3 to 15 degrees higher than the incoming water; the waste heat is not reused nor harmful to the native fauna (ESAVI/283/04.08/2010). The infrastructure of the water pipelines and pumps was partly reused by Google for water outflow. The water areas are still owned by Stora Enso (ISAVI/21/04.09/2010). A similar practice has been adopted in Belgium, and the main difference lies in the purity degree of the data center cooling liquids. The water used as coolant—the “grey” water—is not purified enough for consumption, but can be used for cooling special equipment. The center in Belgium uses water from an industry canal. Further, the data center, established in 2007 in Berkeley, uses rainwater and some other centers have circular water-based cooling systems. The site is connected to the old national 110 kV power grid, which has multiple parallel lines to ensure the supply of power, even if a line or two are dysfunctional. This enhanced network is still operational and used by Google and Google’s estimated annual use of electricity is 280 Gwh (ESAVI/283/04.08/2010). There are also 21 diesel-powered generators with the total capacity of 110 MW, yielding 42 MW electricity to keep the essential systems running at maximum capacity (i.e., 100%) in case of grid failures (ESAVI/283/04.08/2010). This and Google’s SLA with 99.99% accessibility indicate that the data center would qualify for the highest rank of IV. However, the testing period of the backup power generators causes monthly emissions, averaging at 0.4 kilotons annually (ESAVI/283/04.08/2010). These emissions seem to conform to the company’s procedures, 18 considering the average grid reliability of 99.995% in Finland, which is compatible with Google’s SLA and the on-site measurements, reaching a theoretical degree of 100% (Jenkins, 2012). After selecting the location, the changes made were similar to prior solutions in other locations. The data center was not Google’s first location. It currently has four sites in Europe, two in Asia and nine in the US. Although the available data about each location is not extensive, we know that natural water is used for cooling in at least two locations, established prior to the one in Hamina. However, at least one site uses similar cooling solutions to the one in Case II of this study. Further, Case II lacks a similar backup system, which is also apparently missing from Google’s subsequent data center designs. Based on this and our theoretical frame, we suggest that this is an example of adaptive exploitation based on prior experience (i.e., non-location bound experimental learning) (Schwens et al., 2018). We suspect there could have been additional options based on the other case in this study. Therefore, this might be an example of functional fixedness (Felin et al., 2016). Fig. 2 illustrates the process. ------------------------------------------ Insert Figure 2 about here ------------------------------------------- The two projects here were promoted in the media for their sustainable approach. Google was first to announce that they were looking into sustainable infrastructure reuse, which turned out to be an eye-opener for other cloud computing providers, such as IBM (Jenkins, 2012). Despite having initiated the idea, Google did not disclose any details regarding the project during the process except for some general goals, according to our informants. Below, we present our second case, where the process differed. The first intention for IBM (and CSC) was to follow Google’s example and use similar structures. In addition, they intended to use the operating hydropower plant for ecologically sustainable energy. Case II: IBM Kajaani 19 The data center construction projects in Kajaani was smaller in scale, due to the differences in business models, although the factory was one of the largest buildings available. After a number of fusions, UPM-Kymmene became the largest forest industry company in the early 2000s. Its paper mill in Kajaani has been functional since the late 1800s; this is the fourth largest energy consumer in Finland, requiring an estimated 2000 GWh electricity and delivering 640 000 tons of paper annually (UPM-Kymmene archives). In addition to three paper machines, it has pulp and sawmills, cold storage units, and it delivers district heating to Kajaani (PSAVI/235/04.08/2010). In 2010, UPM-Kymmene’s paper mill in Kajaani was in many ways operationally similar to Stora Enso’s: the factory’s paper machines were sold, and some superficial renovations were made. The machine halls have access to the electricity infrastructure, such as 110vkV and 10vkV electricity grids, hydropower, and water pipelines. Currently, UPM-Kymmene hosts over 20 smaller businesses. CSC requires some 4000 and IBM 1000 square meters, and the premises have a total capacity of around 120 000 square meters. CSC has invested approximately 16 million euros, and IBM investments are estimated to be some 6 million euros. In Kajaani, the water pipelines used by the paper factory are still in place, and water can be delivered at the speed of 0.6 cubic meters per second at temperatures between 1 to 22 degrees in the summer. However, the liquids that the data centers use in their cooling are not similar to natural water, at least with the standard equipment. CSC and IBM did plan to use water for cooling. For small data centers, using water for cooling means additional efforts in R&D. Moreover, IBM and CSC had the option of using hydropower; however, their demand for energy is one tenth of what UPM-Kymmene can offer to its tenants. The hydropower plants in Kajaani were designed to provide massive power loads, compatible with an average city (PSAVI/235/04.08/2010), as the plant was one of the largest in Finland. It soon became clear that the entrants needed far less power (about 2 MW) than the hydropower plant could offer (10 MW), and this was quickly dismissed. When entering the location, with a set time limit of three years (Jenkins, 2013), the solution was not 20 ideal. Based on Google’s example, the investment would require additional investments in R&D, undermining the idea of sustainability, mainly because hydropower was no longer available. They noted that the outside temperature in the area was cold enough for a year-round, free air-cooling without the need of any backup generators, and this could be done with standard equipment. There is no precedent for completely free air-cooling in other locations, but the Nordic climate allowed this. This would lessen emissions and counterbalance hydropower. Several other options were considered instead of the original plan. The first decision concerned the location of the equipment—the original being in the machine halls. Experts inspected the networks structure around the facility and concluded that the reliability was 100%; they also reported that the data centers could be connected to the network and cable connections anywhere in the premises. UPM-Kymmene did not intend to use the premises besides the assigned ones; however, the data center operators became interested in the cold environment outside the storage unit. The storage hall allowed server modules to be built on top of each other; the resultant height rendered cooling more effective, and the hall had a lighter structure, allowing it to cool more efficiently. However, placing the equipment containers outside was also an option. However, this would jeopardize the safety measures, because of winter, and because the centers still needed an office space. Instead of the original plan, IBM and CSC decided to choose the cold storage facility, use free, year-round air-cooling, and leave the backup generators unbuilt for both power and cooling. Fig. 3 illustrates this case. ------------------------------------------ Insert Figure 3 about here ------------------------------------------- We believe that this case was an example of exploration, where a shift in function (i.e., exaptation) (e.g. Andriani & Cattani, 2016) took place after entering the location. After entering the location, the firms had the two options of continuing with the original plan, based on repetition (e.g. Winter & Szulanski, 2001), or not. However, the goal was not elaborated, mainly due to lack of 21 details. This is an example of a decision-based exaptation (Dew et al., 2008), and loose general goal setting in comparison with strict goals in adaptive behavior (Cyert & March, 1963). The change from exploitation strategy to exploration was rather rapid in Case II (from October 2011-January 2012; see Jenkins, 2013), given the total three-year length of the project. This also follows the notion of firms optimizing actions in exploitative FDI than in explorative (Anand et al., 2009); however, the reason for this decision requires further study. The idea of data center was not new; currently CSC has only one center, whereas IBM has over 60 centers for public cloud (i.e., small businesses). Further details regarding additional data centers in the private cloud by IBM are difficult to find, in compliance with the Finnish Parliament, KELA, demanding that corporate or government customers’ data privacy be respected in Finland. Table 3 summarizes these findings. ------------------------------------------ Insert Table 3 about here ------------------------------------------- DISCUSSION Based on the discussions above, we would like to note the following. First, both locations have similar conditions (see “Details” in Table 2). Therefore, the differences between adaptations and exaptation cases were not significantly influenced by external conditions (i.e., the conditions for individual actions) (Felin et al., 2015; see Fig. 1). This also indicates that the post-acquisition process outcomes were based on firms’ individual decision-making (see Cheng, 2006; see Fig. 1). Using the solutions in Case II, we suggest that additional options were also available in Case I. Underutilization of these options resembles functional fixedness (Felin et al., 2016), although other factors may need to be considered. Second, determining motivation for FDI mode selection goes beyond the scope of this study. In addition to post-acquisition experience, cultural distance and relocation costs could also affect the FDI selection choices between brownfield, greenfield or acquisition (Cheng, 2006; see Fig. 1). These observations, however, require further investigation, given the focal point of this—the 22 examination of microfoundations of first-time FDI modes in creating novelty in poststructural restructuring. Third, in the context of sustainability, the solutions in Case II were slightly more efficient and innovative. A new line for data center mechanics from a nearby secondary educational facility was opened a few years later to collaborate with IBM; the free air-cooling produced less emission, compared to the electricity network. Additional evidence indicates that many customers chose IBM, mainly due to the location (“Court Decision,” 2012), although more details are needed. This finding illustrates that the first time mover (i.e., the international innovator) (Kyläheiko et al., 2011), arrived at a less innovative solution than the international replicator (Kyläheiko et al., 2011). Fourth, the operations timeline supports the conclusions. Google announced their investment in 2009 in similar locations established in 2007. IBM and CSC introduced theirs in 2010, based on Google (Jenkins, 2013). In 2012, Google found similar solution to IBM and CSC in cooling in Dublin, and reusing infrastructure has since 2015 been undertaken by some operators. The suggested replication, prior experience, and possibilities for new ideas in the future would suit this timeline. CONCLUSIONS Repurposing of knowledge in post-acquisition restructuring in first-time FDI may increase novel solutions (Santangelo & Stuchhi, 2018); our study confirms this findings in relation to other FDI modes (e.g., brownfield). Previous studies illustrate that, following exaptation theory (Dew et al., 2004), exaptation emerges when the need is urgent (Santangelo & Stuchhi, 2018). We would like to argue that, following the same theory (Cattani, 2006; Andriani et al., 2017; Dew et al., 2004), a similar situation may also yield novel market solutions exaptation theory (Cattani, 2006; Andriani et al., 2017; Dew et al., 2004). Further, contradictory to previous studies (Johansson & Vahlne, 1977; Hennart & Reddy, 1997; Kogut & Singb, 1988), specific prior experiences may hinder the 23 growth of such markets. However, this perceived issue is linked to the limitations of experimental learning theories in explaining new entries (Schwens et al., 2018) and reducing cognitive biases in managerial perceptions (Felin et al., 2016). This highlights the limitations of the cognitive theory about embracing the possibilities of exaptation (Felin et al., 2016), albeit contradictory to experience in post-acquisition restructuring (Hennart & Reddy, 1997; Johanson & Vahlne, 1977; Kogut & Singh, 1988). We speculate that this due to the lack of a variety of experiences— experiences from various fields (Vahlne & Ivarsson, 2014; Vahlne & Jonsson, 2017), or various entry mode experiences (Santangelo & Stucchi, 2018). We suggest that, following exaptation theory-based effectuation logic (see Dew et al., 2008), first-time FDI post-acquisition restructuring may benefit from broad goal setting. We conclude that Case I was an example of adaptive exploitation; we also hold that Case II was an example of adaptive exploitation that turned to exploration because of exaptation. Previous experiences and limited observations in Case I suggest exaptation theory of functional fixedness (Felin et al., 2016) and the presence of an adaptive pattern. Case II was based on replication (Winter & Szulanski, 2001), or mimicry (Anand et al., 2009; DiMaggio & Powell, 1983); however, this did not limit the future options. This follows exaptation theory, in that the interactions between the environment and an actor may reveal possible new uses (Felin et al., 2016), but also illustrate asset combination (Collinson & Narula, 2014) under uncertainty. Our study follows the structure of microfoundations (Felin et al., 2015) in internationalization (Santangelo & Meyer, 2017), based on evolutionary theory (Lloyd & Gloud, 2017). We believe that it can contribute to the understanding of simultaneous ambidexterity (O’Reilly & Tushman, 2013; Birkinshaw & Gupta, 2013; Garud et al., 2016) in foreign locations and to the nascent theory of exaptation in internationalization (Santangelo & Stucchi, 2018). MANAGERIAL IMPLICATIONS, STUDY LIMITATIONS AND FUTURE STUDIES 24 Managerial implications Exaptation describes that possibilities that arise from unintentional interactions with the environment (Felin et al., 2016). For managers, understanding the existence and effect of such a possibility may lessen the effect of cognitive biases on decision-making. Google’s decision to construct identical data centers in the past and follow a certain blueprint illustrates exploitation, creating competency gap for exploration (March, 1991). IBM and CSC, on the other hand, discovered the benefit of alternative premises within the factory area and the option of not adhering to the industry practices. This strategy has several benefits. We do not know whether there were any factors (e.g., increased sustainability or a slight competitive edge in one customer) that influenced the entry mode decisions, but in postacquisitional restructuring exaptation explains the difference between luck and foresight, not systematically studied (Andriani & Cattani, 2016; Garud et al., 2016; see Tables 1 and 2). Describing innovations as knowledge utilization processes might resolve understandings of lesser studied innovations, such as Eco-Innovations (Rennings, 2000). Santangelo & Stuchhi (2018) illustrated the usage of knowledge in relation to a certain domain, home country coordination and control, repurposed for acquiring and integrating external resources, illustrating the applicability to cognitive processes, etc. Further, Felin et al. (2016) illustrate how interactions between the environment and actors create affordances for exaptation (Felin et al., p. 140 on psychologist W. James and K. Duncker). This describes the innovation process (i.e., knowledge creation, utilization and outcome), rather than the eventual outcome—innovation. This perspective could encourage the inclusion of sustainable processes, services, and business model innovations in studies. To pursue a sustainable economy, Patzelt and Shepherd (2011) suggest that current ideas on entrepreneurship and innovation are not capable for modeling sustainable innovation; however, exaptation might address this dilemma, and, depending on time and context, it may illustrate how dynamic international innovators and replicators are (Kyläheiko et al., 2011). 25 Creation of novel new market solutions may be accidental. In this study, IBM and CSC entered the locations with a broad goal in mind, yet ended up not following it. This resulted in an innovative solution to reutilize existing infrastructures in an unprecedented manner. In 2012, Google used a similar cooling solution in 2015 in Dublin. Amazon announced that they were reusing the old infrastructure in Dublin—a location with possibilities for free, year-round air- cooling similar to Case II discussed herein. In 2016, Motorola also announced that they were reusing the old printing press by Chicago Times. These developments illustrate that accidental novelty may also lead to future applications in industry. Study limitations Due to the exploratory nature of the study, a number of limitations need to be considered. The first limitation relates to the validation of conclusions. Earlier case studies in exaptation (Cattani, 2006) used triangulation, despite concerns about its validity (see Hammersley, 2008). The interviews revealed limited information, and most findings were corroborated by documents (e.g., environmental licenses and archive documentation). This is consistent with the recommendations about exaptation theory, as the phenomenon is highly vulnerable to retrospective bias (Lloyd & Gloud, 2017; Gloud & Vrba, 1982), and a qualitative study involving a documentary analysis is currently in vogue (Andriani et al., 2017). Nevertheless, the study design is based on subjective observations. The definition of exaptation is subjective, and many topics in evolutionary psychology are contentious (see Lloyd & Gloud, 2017); moreover, unlike the medical industry, there lacks a database for classification (see Andriani et al., 2017; WHOs’ ICD-9-CM). In response to the question about what would constitute a “semi radical” or “incremental” exaptation in the context of international business, our answer would be that this is subjective. Considering previous studies on exaptation, we are encouraged by the validity of our findings and study design. Finally, the scale of operations could have created different circumstances, and the 26 nature of local co-operation would not be determined. The investment in Case II was much smaller than that in Case I, despite similar input of equipment versus infrastructure. The pertinent details are not known; however, based on company size, we estimate that both had similar resources, and that differences were related to business models. However, this does not imply that small-scale FDI solutions are not scalable to accommodate larger ones (e.g., Dublin). In addition, while operating independently, IBM cooperated with UPM-Kymmene and CSC during the time that the project was launched unofficially. The extent to which this affected the final output requires further enquiries. However, similar to past exaptation and BGs studies that focused on financial connections and strategic controling (Santangelo & Stucchi, 2018), the validity of our conclusions, in our opinion, has not been significantly affected. Future studies The projects raised several questions. First, in previous studies, exaptation was evident in first- time CBAs but not in the subsequent ones (Santangelo & Stucchi, 2018). This has important implications for international operations and location-bound experimental learning (Schwens et al., 2018). Do exaptation cases provide the basis for future exploration, or are they solutions created in response to a lack of resources in new locations without being subsequently used due to better solutions being available? In this study, we examined the extent to which the subsequent solutions in data center construction are similar to the ones presented here. While our study provides a starting point for analyzing this, it does not provide a definitive answer, which merits further investigation. Secondly, are the cases examples of location- or non-location-bound learning, and what are the implications of this for internationalization process? Further studies might also give insights about the effects and differences between location-/non-location-bound experimental learning (Schwens et al., 2018). The results of Case I resemble non-location-bound learning, whereas the 27 results of Case II relate to location-bound learning. Nonetheless, the evidence is far from conclusive. Creating similar solutions as before resemble non-location-bound experience, which limits the perception of exaptation. Further, one could argue that IBM had relatively more experience in constructing data centers than the other case-study companies, rendering IBM the most experience; however, the empirical materials do not reveal the details of other facilities to enable comparison, which can be a worthwhile subject for future studies. On the other hand, the locational experience of CSC might have helped in gaining knowledge of the possible, reliable solutions of location-bound learning nature. Third, what are the implications of exaptation for innovation creation? Understanding market heterogeneity, based on the realization of exaptation (Felin et al., 2016), depends on conceptualizing the relationships between the actor, environment and artifact (Andriani & Cattani, 2016). In this study and elsewhere (e.g., in the pharmaceutical industry) (Andriani et al., 2017) and industrial shifts (Cattani, 2006; Marquis & Huang, 2010), functions, and varieties in functions are more logically conceptualized. Although in international operations, exaptation is rather linked to knowledge utilization (i.e., internal capabilities) (Santangelo & Stucchi, 2018). This coheres with the current debate that concepts that are evolutionary, or operate at a macro-level, suit individual examination (Felin et al., 2015), however, exaptation might be different, and is currently connected to entrepreneurial effectuative logic (Dew et al., 2008; Dew & Sarasvathy, 2005; Dew et al., 2016). Finally, the internationalization process can benefit from exaptation/adaptation conceptualization. Exaptive and adaptive processes are complimentary (Lloyd & Gloud, 2017), and follow the definitions of linear and non-linear forms of development (Santangelo & Meyer, 2017; Santangelo & Meyer, 2011) in evolutionary processes. While similar concepts have been applied (i.e., novelty, unpredictability, and quirky discontinuities) (Santangelo & Meyer, 2017; Santangelo & Meyer, 2011; Santangelo & Stucchi, 2018), exaptation would suit the conceptualization better (Santangelo & Stuchhi, 2018), mainly because it originates from Darwin’s work (see Gloud & Vrba, 28 1982) and individual variations. In international operations, the unit of analysis is a single firm (e.g. Santangelo & Meyer, 2017; Johansson & Vahlne, 2017; Vahlne & Johasson, 2017; Vahlne & Ivarson, 2014), and the scalability of the perspective aids in-depth understanding of a phenomenon. However, implications at a macro-level (i.e., evolutionary process), provide generalizable data for managers to reflect on their operations or plans. 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Year collected ID Details Audience Other Quantity Interviews 2013 I Operations Manager Researcher Duration 2h 15 pages transcript 2013 II Solutions Manager Researcher Duration 2h 15 pages transcript 2013 III CEO Researcher Duration 2h 15 pages transcript 2013 IV Sales Manager Researcher Duration 2h 15 pages transcript 2013 V Project Manager Researcher Duration 2h 15 pages transcript 2013 VI Operations Manager Researcher Duration 2h 15 pages transcript Archive Data 2013 Archives (Case I) Blueprints, meeting minutes, budgets Internal Years 1919-2006 Estimated 25 000 pages; 20 pages of notes, pictures & blueprints 2013 Archives (Case II) Blueprints, meeting minutes, budgets Internal Years 1955-2006 Estimated 18 000; 3 pages of field notes 2012-2013 Environmental licenses; regional administration; court hearings ESAVI/283/04.08/2010. ESAVI/230/04.08/2012. ISAVI/21/04.09/2010. PSAVI/235/04.08/2010. MAO:232/12Dnro.400/II/JH Public 2010-2013 169 pages (Finnish) 2012-2018 Press releases PR, News Public NA 2012-2018 Industry backgrounds Finnish Data Center Forum; The Green Grid; Amazon SLA; Google SLA; Bay Area Quality Management District; Annual Air Quality Report, 2013; European Union, 2018, EUR 29103 Public; within industry Presentations, forums, maps, company-based general information, educational materials Printed 184 pages, online NA Table 2 Findings. ID Details Project outcome Case I Climate 8000+ air-cooling hours Nationwide grid 99.99% reliability; nationwide 110 kV grid; the mill used 857 GWh/a. local 10 kV power lines Estimated usage 280 GWh/a Paper mills grid 100%; 110 kV grid built to ensure power supply when lines fail Full (100%) backup power for essential operating systems; 21 diesel generators, 110 MW output, 42 MW electricity; PUE forecast 1.12 Paper mills The machine hall building; three machines were dismantled and sold Cavities in the floor were filled: 80-90 000 m2 ;Google owns the facilities Other power sources Gasum's natural gas trunk pipeline with pressure station; Haminan Energia's local pipeline, 3 MW Gas pipeline, estimated to deliver 2.1 Mm3/a, and district heating 35 district heating boiler Cable connections Helsinki, Kotka, Russia; eight connections from Helsinki; Funet backbone Telia Carrier; BCS North-2; Helsinki, *Estimate: C-Lion 1 to Rostock/Baltic Sea Submarine Cable to Stockholm; Tata TGN-Atlantic Water access A release water pipeline breakwater in the Gulf of Summa Two new pipes 1.6 meters in diameter; 130 m in length; depth of 5 meters for water intake; The water flow is 0.83 m3/s for maximally 40 Mm3/a; release 3-15 degrees warmer Land/water area Land and water areas, control reservoir dams to ensure water supply The dams are no longer needed for control—to be demolished; Stora Enso still owns the water areas Office facilities Nationwide wireless connection (Wi-Fi) for office needs; own waste-treatment plant The facility has been attached to the local sanitation network; partial renewing of sanitation pipes Case II Climate 8000+ air-cooling hours Free, year-round air-cooling, 2x420 kV chillers; PUE forecast 1.04; storage hall cold already Nationwide grid 99.99% reliability; nationwide 110 kV grid NA Paper mills grid 100%; 110 kV grid built to ensure power supply when lines fail; Rata and Kone buildings connected to UPM-Kymmene electricity network; the paper mill used 2200 GWh annually Varasto was connected to the electricity network by Sweco, subcontractor to UPM-Kymmene Paper mill Old hall new paper mill with two machine halls totaling 8 000 m2, and cold storage hall 10 000 m2; total 120 000 m2; the old paper machine hall is a historical protectorate not to be demolished CSC rents 4000 m2 and IBM 1000 m2 in the Varasto building. In Rata and Kone buildings, cavities in the floors were filled. Other power sources Three hydropower plants with 35 MW and a pellet power plant with 88 MW output The pellet power plant is in use for district heating. The hydropower plants are operational but too massive for current energy demand. Cable connections Public FUNET, cable managed by CSC Public FUNET fiber is connected to Varasto, Rata, and Kone; are within close reach of connection Water access Structures for water use include a pipe from the river, equipment for chemical water purification; the pipe is functional delivering water at a rate of 0.6 m3/s at temperatures between 1-22 degrees The water is not used by CSC or IBM for cooling. Pending plans to use water cooling in the future Land/water area UPM-Kymmene still owns all the land and water areas and premises leased to long-term tenants UPM leases to 23 other businesses; room still available Office facilities Water sanitation systems, waste management operated by Kuusakoski; Rata and Kone buildings connected to the Kuusakoski operated sanitation systems; nationwide wireless connection (Wi-Fi) for office needs; FUNET fiber cable Varasto was connected to the sanitation system by Sweco, subcontractor to UPM-Kymmene * Not confirmed Table 3 Summary of Microfoundations in First-time FDI Modes. ID 36 Social Facts Conditions Actions Outcomes Adaptation (I) Exaptation (II) Exploitation Exploration Sustainability Reusable halls x Stage II, Stage III Cold storage area X Education, competitive edge Cooling Climate X Dublin 2011, 2012, 2015; the Netherlands, 2018 Water access X Effective cooling Power Nationwide grid X X 0.4 kt/a CO2 ~0 CO2, Mills grid X Added 42 MW (0.4 MW; not used) Cable Available X X Telia-Sonera FUNET Figure. 1. Exaptation and Adaptation. Figure. 2. Case I. Figure. 3. Case II. 37 38 ACTA UNIVERSITATIS LAPPEENRANTAENSIS 887. LIIKANEN, MIIA. Identifying the influence of an operational environment on environmental impacts of waste management. 2019. Diss. 888. RANTALA, TERO. Operational level performance measurement in university-industry collaboration. 2019. Diss. 889. LAUKKANEN, MINTTU. Sustainable business models for advancing system-level sustainability. 2019. Diss. 890. LOHRMANN, CHRISTOPH. 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Fenton chemistry beyond remediating wastewater and producing cleaner water. 2020. Diss. 906. JOHN, MIIA. Separation efficiencies of freeze crystallization in wastewater purification. 2020. Diss. 907. VUOJOLAINEN, JOUNI. Identification of magnetically levitated machines. 2020. Diss. 908. KC, RAGHU. The role of efficient forest biomass logistics on optimisation of environmental sustainability of bioenergy. 2020. Diss. 909. NEISI, NEDA. Dynamic and thermal modeling of touch-down bearings considering bearing non-idealities. 2020. Diss. 910. YAN, FANGPING. The deposition and light absorption property of carbonaceous matter in the Himalayas and Tibetan Plateau. 2020. Diss. 911. NJOCK BAYOCK, FRANCOIS MITERAND. Thermal analysis of dissimilar weld joints of high-strength and ultra-high-strength steels. 2020. Diss. 912. KINNUNEN, SINI-KAISU. Modelling the value of fleet data in the ecosystems of asset management. 2020. Diss. 913. MUSIKKA, TATU. Usability and limitations of behavioural component models in IGBT short-circuit modelling. 2020. Diss. 914. SHNAI, IULIIA. The technology of flipped classroom: assessments, resources and systematic design. 2020. Diss. 915. SAFAEI, ZAHRA. Application of differential ion mobility spectrometry for detection of water pollutants. 2020. Diss. 916. FILIMONOV, ROMAN. Computational fluid dynamics as a tool for process engineering. 2020. Diss. 917. VIRTANEN, TIINA. Real-time monitoring of membrane fouling caused by phenolic compounds. 2020. Diss. 918. AZZUNI, ABDELRAHMAN. Energy security evaluation for the present and the future on a global level. 2020. Diss. 919. NOKELAINEN, JOHANNES. Interplay of local moments and itinerant electrons. 2020. Diss. 920. HONKANEN, JARI. Control design issues in grid-connected single-phase converters, with the focus on power factor correction. 2020. Diss. 921. KEMPPINEN, JUHA. The development and implementation of the clinical decision support system for integrated mental and addiction care. 2020. Diss. 922. KORHONEN, SATU. The journeys of becoming ang being an international entrepreneur: A narrative inquiry of the "I" in international entrepreneurship. 2020. Diss. 923. SIRKIÄ, JUKKA. Leveraging digitalization opportunities to improve the business model. 2020. Diss. 924. SHEMYAKIN, VLADIMIR. Parameter estimation of large-scale chaotic systems. 2020. Diss. 925 EXPLORIN G N OVELTY IN THE IN TERN ATION ALIZATION PROCESS - UN DERSTAN DIN G DISRUPTIVE EVEN TS Päivi Aaltonen ISBN 978-952-335-568-2 ISBN 978-952-335-569-9 (PDF) ISSN-L 1456-4491 ISSN 1456-4491 Lappeenranta 2020