What does the Uppsala model suggest about firms' international involvement?

The Uppsala model, developed by Swedish researchers Johanson and Vahlne in the 1970s, emphasizes a gradual and incremental approach to internationalization for firms. This model suggests that firms typically begin their international involvement through low-risk strategies, such as exporting, before advancing to more complex operations, like establishing subsidiaries or engaging in joint ventures. The reasoning behind this gradual approach is rooted in the idea that companies often have limited knowledge about foreign markets, which increases the risk associated with entering those markets. As firms gain experience and knowledge over time, they become more comfortable and confident in their international operations, allowing them to commit more resources and take on greater risks.

By advocating for a step-by-step expansion into international markets, the Uppsala model highlights the importance of learning and adaptation in the internationalization process, allowing firms to mitigate risks associated with uncertainties and unfamiliarity in new markets. This aligns well with the choice indicating that firms should gradually increase their international involvement with low-risk entry.