Degree of internationalisation and firm performance: the flattening role of organisational slack resources

Abstract

PurposeThis study aims to analyse the impact of the degree of internationalisation (DOI) on firm performance (FP), with the moderating role of organisational slack resources, namely, absorbed slack human resources, absorbed financial slack resources and unabsorbed slack resources, in the context of Asian emerging markets.Design/methodology/approachData includes 45 companies and 225 observations in 2014–2018. The authors adopted the generalised least squares method to test their hypotheses.FindingsDOI negatively influences FP, indicating that the link between DOI and FP is not U-shaped but relatively linear. Absorbed human resources and absorbed slack financial resources significantly enhance FP, absorbing resources associated with DOI and FP. Unabsorbed slack resources play a minor role in mitigating the deleterious impact of DOIs on FP.Practical implicationsFirms in an emerging market should begin exploring and expanding into overseas markets with characteristics similar to the domestic market. The firm should optimise the benefits of slack resources by appropriately allocating resources to strategic operations.Originality/valueThis study reveals the beneficial effect of organisational slack resources on the DOI-FP relationship via the lens of the resource-based view.