Internationalization, Strategic Slack Resources, and Firm Performance: The Case Study of Vietnamese Enterprises

Phuong V Nguyen,Hoa Doan Xuan Trieu,Hien Thi Ngoc Huynh,Khoa T Tran

doi:10.3390/jrfm12030144

Phuong V Nguyen, Hoa Doan Xuan Trieu + Show 2 more

Open Access

https://doi.org/10.3390/jrfm12030144

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Abstract

The study attempted to fill a gap in the research on international business by providing fresh evidence of the effect of the degree of internationalization on firm performance and the influence of organizational slack on this relationship. By applying a fixed-effects model to data from 569,767 Vietnamese enterprises from 2007 to 2015, a significant W-shaped linkage between internationalization and firm performance was revealed. Importantly, the results also emphasized the importance of three types of slack in the first stage of the internationalization process: absorbed slack human resources, other absorbed slack resources, and unabsorbed slack resources.

Highlights

As internationalization in recent decades has expanded the size of the market and enabled small firms to do business on a global scale, the expansion of the presence of enterprises in the international market is no longer a strange phenomenon (Ciravegna et al 2014)
We found that the three types of slack recently delineated by Zhang et al (2018), i.e., absorbed slack human resources (AHRs), OARs, and unabsorbed slack resources (USRs), can capture human capital accumulation and the discretion level; in addition, we identified which type of slack was critical for international integration in Vietnam in each of the different stages of internationalization
This study attempted to fill a gap in the research on the international business of enterprises by investigating whether the relationship between internationalization and enterprise performance exhibits a W-shaped trend using unbalanced panel data of 569,767 Vietnamese enterprises from 2007 to 2015

Summary

Introduction

As internationalization in recent decades has expanded the size of the market and enabled small firms to do business on a global scale, the expansion of the presence of enterprises in the international market is no longer a strange phenomenon (Ciravegna et al 2014). There is great interest in whether foreign expansion is beneficial for enterprises, given their different sizes and capabilities, and numerous studies have sought to assess the relationship between foreign expansion and firm performance as well as its influencing factors in order to optimize this relationship (Cho and Lee 2018; Dasí et al 2015; Glaum and Oesterle 2007; Pangarkar 2008; Zhang et al 2018; Zhou 2018; Delios and Beamish 1999). Others have found a negative linear relationship, suggesting threats of global expansion to firm performance due to the presence of foreignness liabilities such as fierce competition, high transaction costs, market volatility, and cultural diversity (Zhou 2017; Zhang et al 2018)

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