Time compression diseconomies in foreign expansion

Abstract

Time compression diseconomies (TCD) in resource development impact the durability of competitive advantage according to the resource-based view. The Uppsala Model emphasizes experiential learning, which is subject to TCD. TCD joins the two perspectives and can help explain the foreign expansion process. We found the existence of TCD in post-entry expansion by examining the speed of establishing subsequent subsidiaries and the performance outcomes. Speed was negatively associated with subsidiary survival. TCD was exacerbated with environmental uncertainty and lack of vicarious learning, so that early mover subsidiaries are less likely to make a profit when they are established with faster speed.