Achieving the Paradox of Concurrent Internationalization Speed: Internationalizing Rapidly in Both Breadth and Depth

Georgios Batsakis,Vasilis Theoharakis

doi:10.1007/s11575-021-00453-y

Abstract

In this paper, we draw on the notions of breadth and depth of internationalization speed in an attempt to examine the performance implications for multinational enterprises (MNEs) that rapidly and concurrently internationalize in new and existing foreign markets. Specifically, we examine the organizational paradox which suggests that firms which grow internationally by concurrently expanding rapidly in both new foreign markets (breadth) and in foreign markets they currently operate (depth), are better off than firms which do not adopt such an approach. Since past research has not examined the interaction between the breadth and depth of MNE internationalization speed on firm performance, we contribute to the temporal dimension of the internationalization process by developing a novel, yet paradoxical approach. Our analysis is based on a longitudinal sample of the world’s largest retail MNEs covering the period 2003–2012, which includes the 2008 financial crisis that had a significant effect on the global economy. We find that concurrent internationalization speed positively relates to firm performance during periods of stability. Further, we draw from the upper-echelons theory and find that the aforementioned relationship can be strengthened by the level of CEO international experience and CEO education.

Highlights

The internationalization process is considered one of the most important tenets of corporate strategy (Melin, 1992; Vermeulen & Barkema, 2002)
We compute the variance inflation factor (VIF) statistics which indicate the absence of multicollinearity in all our models, as the highest VIF score is below the threshold of 10.0, which is one of the most common cutoff points for the possible presence of multicollinearity
With regard to hypothesis 3, we argued that capable senior leaders (CEOs) international experience will strengthen the positive relationship between the interaction of internationalization speed breadth and internationalization speed depth and firm performance, in a way that firm performance will increase at high levels of concurrent internationalization speed

Summary

Introduction

The internationalization process is considered one of the most important tenets of corporate strategy (Melin, 1992; Vermeulen & Barkema, 2002). A fourth area of concern, relating to when to internationalize, has emerged This temporal dimension of the internationalization process (such as the timing of entry and speed of internationalization), has been receiving considerable attention in international business (IB) research (e.g., Casillas & Moreno-Menéndez, 2014; Hitt et al, 2016; Jiang et al, 2014; Qian et al, 2018). In the same vein, Chetty et al (2014) view internationalization speed as a process and raise the importance of the managerial challenge firms encounter in their decision-making This is reflected by the increasing research attention on the performance implications of internationalization speed (García-García et al, 2017; Mohr & Batsakis, 2017; Powell, 2013; Yang et al, 2017)

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