The International Journal Of Business & Management (ISSN 2321–8916) www.theijbm.com 170 Vol 4 Issue 5 May, 2016 THE INTERNATIONAL JOURNAL OF BUSINESS & MANAGEMENT Effect of Centricity on Mode of Choice of Entry to International Markets by Iranian Firms 1. Introduction The trend of internationalization of firms is increasingly shifting away from conventional incremental steps (Johnson and Vahlne, 1977) to new patterns that were previously considered as exceptions (Knight and Liesch, 2015; Knight, 1997; Oviatt and McDougall, 1994). Many of the International Business theories such as Vernon’s Product Cycle Theory (1966), Knickerbrocker’s Oligopolistic Theory (1973), Hymer’s Monopolistic Advantage Theory (1976), Buckley and Casson’s Internalization Theory (1976), Johanson and Vahlne’s Uppsala School Stage Theory (1977), Dunning’s Eclectic Paradigm (1988) and Axelsson and Easton’s Network Theory (1992), while proposing different processes for internationalization, assume a time lag between the formation of an organization and its transformation into an international enterprise (Child and Hsieh, 2014; Caillas and Acedo, 2013; Kandasaami, 1998). Little has been done in past literature to explain the process of mode change in internationalization and why or how firms change their strategies of foreign market entry (Welch and Paavilainen‐Mäntymäki, 2014;Calof and Beamish 1995). A reason for this could be attributed to the negligence of entrepreneurial dimensions that exist within firms (McDougall, Shane and Oviatt, 1994). In recent years, the International Business literature has experienced a shift from the “fit” between strategy and structure to a “process” perspective that proposes managers make sense of their global environment and organization to gain competitive advantage for their firms (Trudgen and Freeman, 2014; Caproni, Lenway and Murtha, 1992). Management attitudes can be very influential on firms’ decisions to enter, exit or change the type of operations in a foreign market. The role of attitude in affecting firms’ decision making process can result in differences in performance across firms (Calof, 1992). Prior research has referred to the attitude of managers towards foreign cultures as “centricity”(Perlmutter, 1969). In contrast to prior research in International Management, which are more economics oriented, Perlmutter’s (1969) research is based on attitudes (Alarik, 2000). Managers can possess different centricities which can result in differences in firm behavior. While prior empirical research has mainly been concerned with centricity from a North American perspective, little research has been done to investigate centricity of firms in developing countries, particularly the Middle East. This research tries to investigate and whether there are similarities with regards to centricity between Iranian and Canadian firms. 2. Literature Review 2.1. Firm Centricity Four types of centricity have been identified for managers in prior research. These four types of centricity include: ethnocentricity, polycentricity, regiocentricity and geocentricity. While different types of centricity influence the way a firm approaches a foreign market, one could expect to see different types of centricity across different divisions of the firm (Korbin, 1994), as one can almost never expect them to exist in a firm in their pure form (Alarik, 2000). Pouya Seifzadeh Assistant Professor, Department of Strategy and International Business, Indiana University-Purdue University Columbus, United States Abstract: While many of the theories of internationalization have explored economic or structural reasons for firms’ internationalization process, the effects of behavioral issues on making such decisions remain understudied. This study explores the effects of centricity on the internationalization decisions made by managers in a different geographic context, Iran, between 1995 and 2006. Following in the footsteps of a pervious study on Canadian managers conducted by Calof (1991), this research provides insight into the topic, focusing on a different context. The findings of this research show similarities in the behavior of ethnocentric and geocentric firms across the two settings and minor differences in the behavior of poly/regiocentric firms. The findings of this research lend further support to the effects of manager centricity on internationalization decisions found in past research and therefore, contribute to the external validity of previous theoretical propositions. Keywords: Foreign Direct Investment, Iranian Firms, Geocentricity, Polycentricity, Ethnocentricity 1.