Benefits or costs? Exploring the international expansion process of the business group

Abstract

PurposeDrawing on the time compression diseconomies perspective and business network theory, this study examines how the international expansion of a business group’s pace, scope and rhythm affects its performance.Design/methodology/approachPanel data (1999–2013) from the top 100 Taiwanese business groups investing in globalization were collected.FindingsThe results show that international pace and rhythm have an inverse U-shaped relationship with business group performance, while the relationship between international scope and business group performance is U-shaped. This study highlights that international expansion is multidimensional and nonlinear and that the factors that shape nonlinear relationships between international processes and performance are different. Furthermore, family group involvement positively moderates the link between international scope and performance and negatively affects the relationship between international pace and performance. However, no significant effect is observed between rhythm and performance. High family business group involvement mitigates the impact of outsiders’ liability and managerial costs; moreover, it enhances the positive effects of location-specific advantages and business network resources.Originality/valueThis study combined the time compression diseconomies perspective and business network theory to explain why and how internationalization may not always lead to good performance by examining the effects of different international expansion processes and the interactive effect of family group involvement.