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Abstract This study examines small and medium-sized enterprises (SMEs) entrepreneurial internationalization by exploring how effectual decision-making principles and real options reasoning (specifically pre-commitment, staging logic, and affordable loss (influence the creation of foreign market entry opportunities and international performance in 332 New Zealand SMEs. It demonstrates that pre-commitment not only initiates but also drives opportunity creation, which in turn enhances international performance. Moreover, affordable loss and staging logic fully mediate this relationship by mitigating uncertainties and facilitating incremental market adaptation. Experiential learning further moderates the relationship, as more experienced SMEs leverage accumulated knowledge for enhanced performance. Considering effectual thinking along with real options reasoning, this study provides empirical evidence that SMEs can strategically navigate uncertainty through incremental, resource-constrained investments. A post hoc analysis reveals that internationalized SMEs employ early stakeholder agreements, affordable loss caps, and pilot initiatives to create more market entry opportunities. All in all, our findings offer a structured framework for SME managers, emphasizing flexible, adaptive decision-making and experiential learning to achieve sustainable international expansion, validated using survey data and Partial Least Squares Structural Equation Modeling (PLS-SEM) analysis.
Alinasab et al. (2026) studied this question.