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This paper presents a model of dynamic experimental internationalization which we developed by employing Straussian Grounded Theory to explain how and why small- and medium-sized enterprises in a transitional economy (Vietnam) internationalize. Unlike other knowledge-based internationalization models, our model proposes that the internationalization process of these firms is largely influenced by their current experience rather than past experience because of frequent shifts in the institutional environment. Moreover, this process is directed not only by organizational goals but also critically by managerial goals. As such, these firms internationalize by continuously conducting multiple experiments to find strategies that optimize their chances of meeting these goals by ensuring the best fit with their current environment and thereby also quick responses to environment changes.