Abstract
This study analyzes the effect of the relative performance of Korean newly public firms on internationalization from the perspective of the behavioral theory of the firm. According to the behavioral theory of the firm, a firm’s relative performance is an important determinant of the firm’s strategic decision as it affects risk taking attitude of a firm. In this study, it is expected that a newly public firm with low level of relative performance comparing to its competitors will develop internationalization strategy to overcome the negative performance discrepancy. And we also hypothesizes that this trait is moderated by the characteristics of subsidiary network to which the firm belongs and geographic cluster membership. For the analysis, we utilize newly public firm as our empirical setting including a time span of five years after a firm which firstly listed corporate stocks on KOSPI and KOSDAQ. Using data from 2012 to 2018 of 152 newly public firms in KOSPI and KOSDAQ, we found that newly public firms with the last performance below the market median is likely to have positive relationship with internationalization the following year. And the positive relationship is accentuated with the size of subsidiary network.
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