International Firms Research Articles

Learning, foreign operations and operating performance

We study the effect of a firm's internationalization on operating performance using data on publicly listed non-financial firms in Japan during 1990–2019. The proportion of international firms in the sample has been around 30–40% during the sample period. We show that internationalization is not associated with operating performance. Our evidence shows that international firms do not perform better or worse than matched domestic firms with similar firm characteristics. We also find that the relation between international experience and operating performance is U-shaped. These results have wide-ranging implications for international investment strategies.

Family multinationals: a systematic literature review to take stock and look ahead

PurposeThe authors develop a systematic literature review of research on family multinationals, i.e. firms owned by one or more families that engage in foreign direct investments (FDIs). Building on the examination of past and current research, the authors develop an integrative framework and identify directions to advance this area of research.Design/methodology/approachCoherently with recommendations for systematic literature reviews, the authors developed and followed a systematic search protocol, selecting and reviewing 92 articles on family multinationals published from 1991 to 2021. The authors then identified the most recurrent and emerging themes in these studies to build an integrative framework.FindingsIn recent years, the literature on family firm internationalization has grown exponentially, and with it the focus on family multinationals. However, the study of family multinationals has many theoretical and methodological shortcomings that have only allowed marginally appreciating their entrepreneurial aspects. In this study, the authors take stock to identify the critical knowledge gaps and motivate future researchers to fill this breach.Originality/valueIn conducting the first systematic literature review of family multinationals, the authors provide an integrative account of current knowledge, develop a reconciling framework and identify directions for future research.

Government intervention in European mergers and acquisitions

The increasing globalization of economies has leveraged protectionist attitudes in different countries during the last decades.In the context of cross-border mergers and acquisitions (M&A), national governments have intervened to “protect” big domestic firms and their industries from foreign bidders. Despite the potential for severe implications of these actions on the internationalization of firms and development of markets, the research in this area is relatively scarce, and we still know very little about the real causes and consequences of government intervention. In this paper, we study government opposition to cross-border European M&A during the period 1997–2017, an era of important changes in Europe. Using an event study methodology, we examine abnormal returns for targets and their rivals in the time period prior to actual intervention to gauge if investors perceive intervened deals as harmful events for the industry, which could justify government intervention. We use a hand collected sample of 1,574 EU15 rival firms for 48 mergers, of which 18 experience government intervention. Entropy balanced regression models show that rivals of intervened targets earn significantly lower returns relative to rivals of non-intervened targets on deal announcement. Nevertheless, rivals’ abnormal returns are not negative, suggesting that intervened deals are not perceived ex ante as harmful for industry competitiveness. The results are more consistent with investors’ ability to identify likely blocked deals, which puts downward pressure on abnormal returns to both the target companies and their rivals. These findings indicate that government interventions against foreign bidders seem to have an economic cost in the sector that is anticipated by the investors.

Subsidized or Not, the Impact of Firm Internationalization on Green Innovation—Based on a Dynamic Panel Threshold Model

To alleviate the increasingly serious environmental problems, the environmental governance of relevant firms has received widespread attention. In this paper, based on panel data of Chinese listed firms from 2010–2019, we use the dynamic panel model to verify the non-linear relationship between internationalization and green innovation performance. The dynamic panel threshold model is also constructed to estimate the threshold effect of subsidies between internationalization and green innovation performance. The results show that there is a “U” relationship between internationalization and green innovation. Subsidies can help firms cross the inflection point earlier, and internationalization positively affects green innovation output only when the subsidy exceeds the threshold (16.994). Considering the heterogeneity issue, our study finds that the subsidy threshold for internationalization is bigger for state-owned, non-coastal enterprises, and enterprises with environmental information disclosure compared to other enterprises. In addition, when across the subsidy threshold, state-owned, non-coastal enterprises, and enterprises without environmental information disclosure are better able to stimulate green innovation output. This provides evidence and policy directions for other emerging developing countries.

Accelerated Internationalization Among Inexperienced Digital Entrepreneurs: Toward a Holistic Entrepreneurial Decision-Making Model

This study explores accelerated internationalization among inexperienced digital entrepreneurs who lack resources such as prior experience, knowledge, and networks, which previous research regards as prerequisites for such growth. Following an in-depth qualitative research methodology, the findings reveal three theoretical mechanisms through which inexperienced entrepreneurs can make international commitment decisions with regard to the internationalization of their digital firms. The first is a novel mindset-based approach through which an entrepreneur can make an affective commitment to the international stakeholders within a digital community. Entrepreneurs do that by applying pull-based tools in digital communication to build interest among potential network contacts. The second mechanism is a means-based approach following effectuation logic resulting in an effectual form of commitment to international stakeholders in the digital community. The mechanism relies on applying push-based tools for digital communication to facilitate interactions with known network contacts. The third mechanism is continuance commitment to international business that entrepreneurs can foster over time in tandem with accumulated international experiential knowledge. This research provides an entrepreneurial decision-making model that extends effectuation theory and integrates it with extant research. The resulting holistic entrepreneurial decision-making model explains the accelerated internationalization of digital firms.

Decision-Making Process in Foreign Investment Choices

Abstract This exploratory investigation aims to develop a managerial decision model that assist international firms and investors in selecting the right valuable foreign country for their international operations. Two comparative and rich-information case studies were purposefully selected from among Arabian large firms. Additionally, six international investment decisions were investigated within these two cases and data were collected by in-depth interviews, follow-up interviews and questionnaire instrument. Within and cross-case analyses were undertaken in the current investigation. The findings demonstrated that a methodical and international experience-based strategic decision-making process was adopted to attain a profitable foreign country choice. The decision process comprised five critical managerial phases; that is, (1) analysis of internationalization drivers, (2) searching and development of location determinants and country alternatives, (3) obtaining adequate and related-information about potential countries, and, ultimately, assessment for these alternatives, (4) selection of a final beneficial foreign country choice, and, finally, (5) effective implementation of the selected country choice. The research findings provide theoretical and practical implications to the internationalization of firms as well as international investment. Further, it provides significant methodological contributions to international business research in relation to an effective multiple case study approach to capture elements of the international market selection process.

Distance of doing business and outward foreign direct investment: An empirical study of China

AbstractDifferences between the business environment in the home country and the host country are an important factor when enterprises consider their location choice with regard to outward foreign direct investment (OFDI). However, this is ignored by much existing literature. Based on the trade‐off framework of international firms between exporting and participation in OFDI under the condition of heterogeneous enterprises, this paper constructs a theoretical model of the impact of distance of doing business (DDB) on OFDI. We take China's OFDI as an example and use the World Bank Group's Ease of Doing Business Index to construct the DDB indicator, as well as test the impact of the DDB on China's OFDI by combining the macro‐location panel data of China's OFDI between 2004 and 2017. The results showed that increasing DDB significantly reduces the scale of China's OFDI. The effect is robust. The mechanism is that DDB significantly decreases the success rate of OFDI and increases the cost of OFDI, thereby decreasing the scale of OFDI. Further analysis then finds that official acts, such as building partnerships, and folk acts, such as increasing cultural identity, can significantly reduce the negative effect of DDB on OFDI.

How does networking stimulate the internationalisation of firms in Poland?

The study’s objective is to verify the relationship between networking and the internationalisation of firms from Poland. Additionally, the relationship is evaluated according to the criterion of the scale and the pace of internationalisation. The article uses field research on the sample of internationalised firms from Poland (n = 355). The research methods used in the study are logistic regression and Chi–Square test of independence. Based on the literature review, we assumed that firms participating in formal and informal networks internationalise faster and on a larger scale. Our research confirmed this hypothesis. It means that networking stimulates the scale and the pace of internationalisation of firms from Poland (the case of late comers; post-emerging economy) in the same pattern as indicated in prior studies. Moreover, based on the empirical research we found that resources and entrepreneurial orientation are essential for networking. The study provides necessary focus on the networking and internationalisation for policy and managers. It enforces the creation of certain preconditions for network development and underlines the necessity of penetrating various types of networks (formal and informal).

Which resources and competences are in favour of an international strategy? A case of Polish firms

The objective of the study is to verify the way and the scope of the impact of resources and competences on the process of entrepreneurial internationalisation. In this paper we have presented a broad review of the literature, which shows that resources and competencies are two fundamental aspects that play vital roles in the internationalisation of firms. The novelty of this article lies in selecting Poland as a post-emerging economy, and such countries as being late comers to international business are still not well explored in the literature. The article uses own primary data based on a survey questionnaire. We used a quantitative approach. We applied simple and multiple logistic regression to verify the impact of resources and competences and their individual components on the creation of an international strategy in the firm. We have proved that resources and competences have a significant impact on the creation of an international strategy in internationalised firms from Poland. The results for specific individual resources and competences are no longer so clear-cut.

A fuzzy-set qualitative comparative analysis of factors influencing successful shared service center implementation

PurposeOrganizations nowadays require services supplied by shared service centers (SSCs) to achieve organizational responsiveness. Previous contributions focused on distinct qualitative-explorative factors for explaining successful SSC implementation but failed to consider the interdependencies and combined effects between factors.Design/methodology/approachDrawing on complexity and configuration theories, this research employed a fuzzy-set qualitative comparative analysis (fsQCA). A unique dataset of 121 international firms was obtained to examine the combined effects of five conditions (factors), namely, modularization, standardization, decision-rights, portfolio and customer-orientation .FindingsThe findings show that multiple configurations of conditions (or solutions) can lead to successful SSC implementation. The fsQCA results indicated that portfolio and standardization are perceived as core conditions in all configurations. Firms that focus on portfolio and continuous evaluation of customer-orientation are more likely to be successful. Furthermore, in some configurations, the size of the firm size matters.Research limitations/implicationsThe cross-sectional survey data might be a potential limitation. In future research, a more extensive survey can be collected to help generalize the results.Practical implicationsSuccess factors are dependent on the SSC configuration. Standardization, portfolio management and regular evaluations of changing customer services by executive management are needed.Originality/valueTo the best of the authors' knowledge, there is no academic study that examines SSC implementation based on salient conditions using a configurational thinking approach. As such, the findings of the research allow us to better understand the causal complexity and interdependencies between essential SSC factors.

Chair–CEO demographic dissimilarities and firm internationalization

PurposeThe purpose of this paper is to investigate the relationship between chair–chief executive officer (CEO) demographic dissimilarities and firm internationalization.Design/methodology/approachThe pooled ordinary least squares regression is used on a sample of listed firms in Malaysia from 2013 to 2017. This study considers three demographic dissimilarities between the chair and CEO, i.e. differences in age, educational background and nationality.FindingsThe results reveal that demographic dissimilarities between the chair and CEO, notably differences in nationality, may result in conflicting cognitive styles, which in turn may impede the firms’ ability to expand internationally, as compared to differences in age and educational background. The findings demonstrate the deleterious effects of demographic dissimilarity between these two individuals in the highest echelons on the firms’ internationalization strategy due to poor communication and lack of ability to cooperate when dissatisfaction and conflicts intensify between these corporate elites.Originality/valueTo the best of the author’s knowledge, this paper makes the first attempt to examine the influence of chair–CEO demographic dissimilarities on firm internationalization. Previous studies examining firms’ internationalization strategy, for the most part, restricted their scope to either the board members or top management team characteristics, but had largely overlooked the nexus between nonexecutive and executive directors through the chair and CEO. A focus on the demographic dissimilarities between the co-leaders of the firm is essential to improve the understanding of the collaboration and rivalry between them, which may affect board effectiveness and firm internationalization.

The evolution of emerging market firms and time until subsidiary exit: Competitive dynamics of domestic market followers and contingency factors

The literature has tended to overlook the great divergence in the competitive dynamics of firms in emerging economies. Drawing on the strategic competitive dynamics literature and prospect theory, this article aims to deepen our understanding of the competitive dynamics among firms in emerging economies and how the dissatisfaction of dominated firms with their domestic position affect foreign subsidiary exit time. Using hazard models with an accelerated failure time (AFT) specification, we investigate the impact of a firm’s domestic market position on subsidiary exit time using a longitudinal sample of 6,651 subsidiary-year observations and 735 subsidiary exits of 296 South Korean parent firms with international operations in 64 countries over a 27-year span (1990–2016). The empirical results suggest that the domestic market position affects the risk-taking orientation of dominated firms and plays a critical role in the internationalization of firms in emerging economies. Specifically, dominated firms, compared to dominant firms, have some advantages when investing abroad, notably in less-developed countries.

Institutional Theory and International Entrepreneurship: A Review

Purpose: To review the literature that uses institutional theory to examine the internationalization of smaller and entrepreneurial firms, covering the period from January 1, 2008 to September 30, 2020. Method: The bibliometric review uses the bibliographic coupling technique and content analysis. Main Findings: The literature was divided in three periods using bibliometric techniques, and the main themes examined in each period were identified and analyzed qualitatively. Relevance /Originality: Only one previous literature review examined the same issue addressed in this paper, but only covered articles published up to 2008 (Szyliowicz & Galvin, 2010). Theoretical Contributions: The study uncovers the thematic structure of the field throughout the period examined and suggests issues for future research.

Perceptions about Internationalization Barriers in the Creative Economy: a Multiple-Case Study with Brazilian SMEs

Objective: to explore perceptions that stakeholders of Brazilian firms from the Creative Economy have regarding internationalization barriers.Method: a multiple-case study was carried out involving three small- and medium-sized Brazilian enterprises (SMEs), producers and experienced exporters of creative goods.Main findings: internal barriers, mainly those functional- and price-related, are perceived as the most important, while product-related barriers seem to be irrelevant. Among external barriers, economic and governmental constraints seem to stand out, which indicates the need for some regulatory and export incentive improvement.Relevance/ originality: while exports of creative goods from emerging economies have grown since beginning of this century and even surpassed those from developed economies, Brazil has gone in the opposite direction, reducing its exports of this kind of goods. This suggests the existence of relevant barriers to the internationalization of local firms belonging to the Creative Economy. This study adds to the literature about export barriers, most of it centered in large manufactures from developed economies.Teorethical/ methological contributions: the identified preponderance of internal barriers to internationalization, mainly due to the scarcity of human and financial resources, also makes it harder for the firms to deal with external barriers imposed by governments and competitors. On the other hand, low product-related and socioeconomic barriers suggest that creative products are most valued exactly by their originality and differentiation.Keywords: International business; Internationalization barriers; Export barriers; Creative economy; Creative industries.

When firms go international: deliberate or random?

PurposeThe net outward investment position (NOIP) indicator is insufficient for the purposes of understanding firms’ internationalization decision-making behaviour. The indicator does not allow for the withdrawal of insights into the structure of an economy and is a weak predictor of the degree of foreign direct investment. The purpose of this paper is to argue that a typology of firms aggregated according to intrinsic characteristics of those firms is a better predictor of the degree of internationalization of an economy than the NOIP.Design/methodology/approachThis paper uses a database of 2,133 firms located in Portugal with international operations, made available by AICEP, a government agency. This paper uses multiple correspondence and cluster analyses to build a typology of firms and obtains evidence of common characteristics of the constituent groups.FindingsThis paper identifies a typology of firms characterized by five types differentiated by firm age, length of internationalization process, sector of economic activity, legal status and psychological/cultural proximity. These variables suggest an evolutionary, iterative, self-learning approach to internationalization, which can be better explained by the combined use of the investment development path (IDP) framework, the Uppsala Evolutionary School and Vernon’s product life cycle theory. Additionally, this paper finds that the most striking differences between developed and developing host countries are in terms of the economic sector, legal status of the firm and belonging (or not) to an economic group.Originality/valueThis paper establishes a link between the IDP framework, the Uppsala Evolutionary School and Vernon’s product life cycle theory, using a categorization of firms made according to selected characteristics to understand the internationalization of firms.

The impact of industry 4.0 on the 2017 version of the Uppsala model

The emergence of Industry 4.0 offers firms internationalization opportunities employing digital platforms and emerging technologies. Relying upon the Uppsala model as applied in light of a firm case study, we contribute to the validity of the Uppsala model 2017. We respond to the counterpoint by Coviello, Kano, and Liesch (2017) to the Uppsala 2017 model, answering the question, What is the impact of Industry 4.0 on the validity of the 2017 version of the Uppsala model? This study builds on a qualitative research methodology through a single case study of Delivery Hero, a global service provider firm. We adopt an extensive longitudinal approach to understand a startup firm’s digital business concept and business evolution, including its internationalization paths. We conclude that the mechanisms of the Uppsala model are valid, but their characteristics have changed by digital and globalized value-adding processes. The dynamic capabilities possessed by the founding entrepreneur turn out to constitute a critical micro foundation for the firm’s international business success. Our findings explain these change mechanisms, illustrating the stepwise progression process led by entrepreneurial decision-making. Industry 4.0 technologies have changed the very manner by which firms arrange their value-adding activities with their business stakeholders in course of the firm’s internationalization. By relying on reasonable business targets, algorithms, and data management systems, real-time market monitoring enables international startup firms to learn and adopt local identities faster, thereby efficiently alleviating liabilities of foreignness.

The Determinants of Outward Foreign Direct Investment from Latin America and the Caribbean: An Integrated Entropy-Based TOPSIS Multiple Regression Analysis Framework

Given that home country factors play a major role in the internationalization of emerging market firms, there is an ever-growing debate on how they influence the intensity of outward foreign direct investment (OFDI) from these regions. This study investigates how home country factors affect the OFDI intensity in Latin America and Caribbean (LAC) countries. We use the entropy weight method, which uses the Technique for Order of Preference by Similarity to Ideal Solution (TOPSIS) method and a balanced panel data consisting of 19 countries from 2007 to 2016. The results show a positive association between macroeconomic performance, formal institutions, infrastructure, technology and the OFDI intensity. Furthermore, we find that robust formal institutions, along with the quality of infrastructure and technology, positively moderate the relationship between macroeconomic performance and the OFDI intensity. These findings show that the internationalization of LAC firms is highly dependent on the contextual conditions in their markets.

Are institutional investors “in love” with the sustainable development goals? Understanding the idyll in the case of governments and pension funds

AbstractConsidering the key role that companies must play to achieve the Sustainable Development Goals (SDGs), this paper aims to analyze the effect of the presence of two types of institutional investors (governments and pension funds) in large companies' ownership structure on the alignment of their sustainability strategy towards the 2030 Agenda as well as the moderating effect that firm internationalization and industry's sensitivity to stakeholder pressures have on the influence of these two institutional investors on business commitment to the SDGs. For a sample of 4089 multinational companies from 2015 to 2018, the results show that institutional ownership does matter for business commitment to the SDGs, but in a different way depending on the type of investor. Specifically, ownership by government favors commitment to the SDGs, while ownership by pension funds has a negative impact, which is partially corrected in the case of globalized companies as well as in those firms belonging to industries, which are highly sensitive to stakeholder pressures. These findings seem to suggest that institutional investors' support the implementation of the SDGs by the companies in which they invest is mainly driven by corporate complexity.

Artificial intelligence – challenges and opportunities for international HRM: a review and research agenda

Artificial intelligence (AI) and other AI-based applications are being integrated into firms’ human resource management (HRM) approaches for managing people in domestic and international organisations. The last decade has seen a growth in AI-based applications proliferating the HRM function, triggering an exciting new stream of research on topics such as the social presence of AI and robotics, effects of AI adoption on individual and business level outcomes, and evaluating AI-enabled HRM practices. Adopting these technologies has resulted in how work is organised in local and international firms, noting opportunities for employees and firms’ resource utilisation, decision-making, and problem-solving. However, despite a growing interest in scholarship, research on AI-based technologies for HRM is limited and fragmented. Further research is needed that analyses the role of AI-assisted applications in HRM functions and human-AI interactions in large multinational enterprises diffusing such innovations. In response to these combined issues—the fragmented nature of research and limited extant literature, we present a systematic review on the theme of this special issue and offer a nuanced understating of what is known, yet to be known, and future research directions to frame a future research agenda for international HRM. We develop a conceptual framework that integrates research on AI applications in HRM and offers a cohesive base for future research endeavours. We also develop a set of testable propositions that serve as directions for future research.

Effectual market creation in the cross-border e-commerce of small-and medium-sized enterprises

Cross-border e-commerce can enable smaller firms to quickly reach many foreign markets. This article examines how effectual market creation affects the international performance of small and medium-sized enterprises (SMEs) engaged in cross-border e-commerce. Building upon effectuation theory, we suggest that firms can drive foreign market demand by creating new ways to interact and engage with customers in the digital space. Analysing a sample of 99 Swedish e-commerce SMEs, we find that effectual market creation has a positive effect on their international performance. We also find that this positive effect is enabled by insidership in international markets, illustrated by activities related to international marketing analytics and international networking. Through these findings, we contribute to theory development on the internationalisation of small digital firms.