Double-edged sword of global demand heterogeneity: How service multinationals capture the benefits and mitigate the costs of managing customer knowledge

Abstract

Drawing on the knowledge-based view, we develop a cost–benefit approach to examine how service multinationals can capture the benefits and mitigate the costs of customer knowledge gained from global demand heterogeneity so as to improve their internationalization performance. In the relationship between global demand heterogeneity and internationalization performance, we theorize that customer relationship orientation and structural flexibility serve as two key moderators: the former amplifies the benefits of diverse customer knowledge, and the latter reduces the costs of knowledge processing and routine adaptation. The study of Chinese service multinational enterprises supports our theoretical predictions regarding the moderating effects of customer relationship orientation and structural flexibility. Moreover, we find positive three-way interactions among production and consumption simultaneity, customer relationship orientation, and global demand heterogeneity in shaping internationalization performance. This study contributes theoretically and practically to our understanding of how service multinationals tap into global customer knowledge to improve their internationalization performance.