Internationalization-performance Relationship Research Articles

Role of resource investment management and strategic resource deployment capabilities in internationalization-performance relationship

The performance implications of internationalization have been a matter of debate in management literature for decades. Similar to developed market multinational enterprises (DMNEs), scholars found that emerging-market internationalizing firms (EMIFs) have initial costs and subsequent benefits of internationalization such that internationalization-performance (I-P) relationship is U-shaped. Emergingness of EMIFs gives us the opportunity to theorize how these internationalizing firms develop novel capabilities relevant to their state of evolution and resource conditions. Relying on resource management theory, we propose two capabilities – management of R&D investments (RIM) to balance between market and resource seeking motivations and re-deployment of strategic resources (SRD) to catch-up with the competitors. We use 20 years data from 837 Indian firms to empirically test whether the proposed capabilities steepen the I-P relationship and shift the turning point of the U-shaped curve to left. We find empirical support for our hypotheses, and thereby contribute to the literature on resource management in EMIFs and empirical analysis of non-linear relationship.

Internationalization Speed and International Performance among International New Ventures: The Moderating Role of Resource Synchronization

AbstractDrawing upon the extended resource‐based view, we examine the moderating effects of resource synchronization on the performance implications of the speed at which international new ventures (INVs) internationalize into emerging economies (EEs) versus developed economies (DEs). Using a sample of INVs from China, we discover that both speeds of internationalization into EEs and into DEs positively affect international performance, but the speed of internationalization into DEs has a greater influence. We also find that although resource synchronization positively moderates the relationships between the two speeds and international performance, it has a greater moderating role in the link between the speed of internationalization into DEs and international performance. Our findings not only contribute to the INV approach by addressing the inconsistencies about the internationalization speed and performance relationship, but also advance the resource‐based view by offering a more complete understanding of resource‐based performance advantages.

Internationalization of R&D and Innovation Performance in the Pharma Industry

This research investigates the effect of R&D internationalization and contingency variables on innovation performance. A number of prior studies addressing this question have concluded in diverse and inconsistent findings, which can be attributed only partly to sample selection and measurement discrepancies. Using a longitudinal dataset of global pharmaceutical firms, we partly solve this ambiguity in the R&D internationalization and innovation performance relationship. The results reveal an S-shaped relationship, suggesting the benefits of R&D internationalization ultimately overcome the costs after critical levels of R&D internationalization. This finding combines and unites prior findings of a U-shaped, followed by an inverse U-shaped curve. In addition, we find that the experience in conducting R&D internationally, but not the degree of general internationalization, moderates the relationship between degree of R&D internationalization and performance. This suggests that the effect is contingent on the knowledge of internationalization path of the firm but can flourish in the absence of overall internationalization as well. Implications for theory and practice are derived.

Internationalization-Performance Relationship of Family Firms: The Moderating Role of Familyness

Despite the growth in family firm (FF) research we hardly know how internationalization (I) impacts performance (P) of FFs, and how the familyness within FFs shape their IP relationship. Drawing on IB and FF literatures, we theorize in this study how two important sources of heterogeneity—extent of family ownership and involvement of CEO (family versus professional; founder versus non-founder)—moderate FFs’ IP relationship. Our empirical analysis of data from India suggests that FFs’ IP relationship is negative, but the extent of family ownership and involvement of professional CEO and founder CEO positively influences this relationship. Our results also demonstrate that involvement of family CEO and non-founder CEO casts a negative moderating influence on FFs’ IP relationship. Our results further provide evidence that FFs’ IP relationship is positively moderated when family CEOs possess international experience. Our study contributes to the IB and FF literature in multiple ways.

The Role of FMK and HCI in Entrepreneurial Internationalization-Performance : A Meta Analysis

We study the influence of foreign market knowledge (FMK) and home country institutions on the entrepreneurial internationalization-performance relationship. The sample for the current study comprises peer-reviewed journal articles published between 1996 to 2020. Our sample consists of 115 independent samples having 101,475 firms. We extend the previous meta-analysis (Schwens et al., 2018) on international entrepreneurship, which studied the moderating role of knowledge intensity for the same relationship. As per our results, FMK positively moderates the relationships between degree and scope of internationalization and performance. Whereas home country institutions positively moderate the scope of internationalization and performance relationship.

Revisiting the Internationalization-Performance Relationship: A Twenty-Year Meta-Analysis of Emerging Market Multinationals

With the rapid growth of emerging market multinational enterprises (EMNEs), increasing interest has been focused on exploring the internationalization-performance (I-P) relationship of EMNEs. Yet findings on the relationship remain contradictory. Although researchers emphasize the home-country-bounded nature of EMNEs, less is known about how home-government features and the EMNEs’ political mindset affect their internationalization and performance. This study integrates and extends the literature on the I-P relationship of EMNEs using a meta-analysis covering a dataset of 218 effect sizes from 186 retrieved studies published between 1998 and 2021. Findings show that the I-P relationship is overall positive, yet it varies across diverse research designs and emerging markets and regions. Also, our findings indicate that home-country government quality and transformability exert significant positive impacts on the relationship, while nationalism negatively moderates the government’s impacts on the relationship. This study pushes the boundaries of EMNE literature through conceptualizing home-government features and incorporating consideration of nationalism in this research field.

최고경영진의 특성과 국제화 배경이 기업 국제화와 경영성과 간에 미치는 영향

This paper aims to examine the impact of top management team(TMT)’s demographic characteristics and international background on the internationalization-performance relationship of firms. Based on the upper echelons theory, we consider that TMTs play an important role in the internationalization process of firms in that they have an influential decision-making power on key issues in business. Furthermore, we assume that specific demographic characteristics or international background of TMTs make them select internationalization among business strategies, and it results in different levels of performance attained based on their information processing capacities and international experience. For the empirical analysis, panel data was composed of 89 manufacturers in the automobile industry and electronics industry listed on the KOSPI for seven years from 2013 to 2019, and the statistical result was summarized as follows. (a) The younger the average age, (b) the longer the average tenure, (c) the higher the average education level of TMTs, the more significant positive moderating effect on the relations between firm internationalization-performance. Moreover, (d) the higher ratio of TMTs majoring in internationalization and (e) the higher ratio of TMT’s internationalization have positive moderating effects significantly as well. However, the ratio of TMT's educated or working abroad have no significant moderating effect contrary to expectations. These results imply that characteristics and background of TMTs must be considered when identifying the reason firms with similar levels of internationalization has difference in management performance.

Unbundling the Effects of Internationalization on Firm Performance in Emerging Economies: The Moderating Effects of Strategic Resource Decisions

The authors investigate how strategic resource decisions—regarding slack resources and strategic marketing ambidexterity—influence the relationship between internationalization and firm performance of emerging-market firms. Drawing on the resource-based view, the authors synthesize two dominant, yet divergent, perspectives that explain the respective resource slack advantages and liabilities in the internationalization literature: the flexible capacity and the efficient capacity perspectives. They also explore the moderating role of strategic marketing ambidexterity, which comprises a bundle of marketing activities covering both exploitation-dominant actions and exploration-dominant actions. The authors empirically examine the hypothesized relationships with data from a sample of 1,683 firm-year observations for the period between 2005 and 2018 and find that distinct forms of resource slack have contrasting effects on the relationship between internationalization and performance. The results provide strong evidence for a positive moderation effect of unabsorbed slack resources and a negative moderation effect of absorbed slack resources on the internationalization–performance relationship. The authors also find a nonsignificant moderating effect of strategic marketing ambidexterity, demonstrating that internationalization results in higher firm performance regardless of the firm’s exploration-dominant or exploitation-dominant strategic emphasis in emerging economies.

Moderator Effect of Innovation on the Relationship between Internationalization and Performance in Brazilian and European Companies

Objective: To analyzes the moderating effect of innovation on the relationship between internationalization and financial performance.
 Method: The sample gathers 1,840 companies listed on Brasil, Bolsa, Balcão (B3) and NYSE Euronext during the period of 2014-2018. Tests for difference of means were performed and linear regression models with panel data via systemic generalized moments method (GMM-Sys) were estimated.
 Results: Estimates indicate that the degree of internationalization alone does not assure high financial performance in Brazilian companies, while in European companies it influences return on assets (ROA) negatively. Moreover, in both contexts, the individual moderating effect of the two variables of innovation, exploration (R&D) and exploitation (Capex), could not be identified. However, a positive and significant effect of ambidextrous innovation activities in the relationship between internationalization and financial performance was verified. Evidence of the effect of internationalization on financial performance in both Brazilian and European companies is confirmed when enhanced by the simultaneous engagement of innovation activities.
 Contributions: This study contributes to a recent investigative line, which verifies the effect of intervening variables in the internationalization-performance relationship. It contributes to the analysis of this relationship in companies from emerging markets, a much and still needed research focus as a way of gaining a better understanding of business opportunities in adverse institutional conditions and how to seize them.

Double-edged Sword of Global Demand Heterogeneity on the Performance of Service Multinationals

Drawing upon knowledge-based view and transaction-costs perspective, the study identifies customer relationship orientation and structural flexibility as the two key mechanisms that service multinationals can use to capture the benefits and mitigate the costs of global demand heterogeneity. Using a sample of Chinese service multinational firms, we show that one the one hand, customer relationship orientation amplifies the benefits of customer knowledge in the interaction between customer relationship orientation and global demand heterogeneity, resulting in a positive impact on internationalization performance. On the other hand, structural flexibility mitigates the costs of knowledge processing and routine adaptation in the interaction between structural flexibility and global demand heterogeneity, also contributing to the improved internationalization performance. Besides, production and consumption simultaneity strengthens the positive moderating effect of customer relationship orientation in the global demand heterogeneity–internationalization performance relationship. This study contributes theoretically and practically to our knowledge of how demand-side factors can shape firms’ internationalization performance.

Rapid internationalization and exit of exporters: The role of digital platforms

Digital platforms have been developing fast which transform the benefits and costs of rapid internationalization of firms on them. Employing transaction cost economics perspective, we argue that the transaction attributes of asset specificity, transaction uncertainty, and transaction frequency, have all changed fundamentally in digital platform-based transactions. They render the organizational learning in rapid Internet exporting to counterbalance the diseconomies of time compression caused by the lack of organizational absorptive capacity. By using the three attributes as underlying mechanisms, we hypothesize that the expansion speed of exporters on digital platforms reduces exit hazards of the exporters. We further hypothesize that digital signals on product quality strengthen the main effect. As for digital infrastructure, we recognize its competing effects and make curvilinear moderating hypotheses. Survival analyses based on 353,636 entries of real transaction records from a digital exporting platform have provided robust findings. This study highlights the importance of examining how the digital platform reshapes the transaction attributes and internationalization-performance relationship.

A Study of the Internationalization–Performance Relationship in Global Retailing: The Moderating Role of Brand Standardization and Cultural Diversity

While the internationalization–performance relationship has been extensively studied in the international business literature, it has only recently begun to be systematically and empirically explored in the retailing context, albeit with mixed findings. This study extends this emerging stream of research on retail internationalization by investigating the moderating role of brand standardization, or the extent to which retailers standardize their domestic store-as-a-brand across foreign markets, using longitudinal data from global retailers. The authors demonstrate that the internationalization–performance relationship is positive and curvilinear for retailers, and it is positively moderated by brand standardization. In particular, brand standardization offers benefits at low and high levels of internationalization, which suggests a learning curve with respect to global brand management as retailers internationalize. The study also finds that cultural diversity in retailers’ foreign markets acts as a boundary condition by weakening this moderating effect of brand standardization. This research contributes to firm internationalization, standardization–adaptation, and global brand management literature streams, with implications for global retailers.

Unpacking the age at initial internationalization-performance relationship: A meta-analytic investigation

The relationship between a firm’s age when it initiates internationalization and performance has spurred significant theoretical development but also yielded mixed empirical results. Applying the capabilities perspective of age at initial international entry to these mixed empirical results, we use meta-analytic methods leveraging results from 121 studies and find that an earlier age at entry is associated with improved firm performance. Yet, this effect is strongest when firms begin internationalizing at intermediate stages of their development and is mediated by the extent to which firms increase international sales (international intensity). We extend prior research by explaining how and how much age at entry matters as well as when it matters most, unpacking the pathways and timing by which age at entry matters, and we offer avenues to continue advancing work on the capabilities perspective of age at initial international entry.

The Internationalization-Performance Relationship of Small-and-Medium-sized Enterprises: The Case of Taiwan’s ESCO Industry

We analyze the international output patterns with Taiwan’s energy service companies (ESCOs) investigated in 2016~2019. Due to the finite demand in Taiwan energy-saving market, half of Taiwanese ESCOs develop Asia Pacific markets with international trade, alliance and enterprises group. We derive and confirm some hypotheses about international developing patterns of Taiwanese ESCOs. The First is that those firms with more specific resources will be easier to promote the internationalization of energy-saving businesses. The specific resources are confirmed as firm capital, annual ESCO sales, net income ratio, annual growth rate, energy saving rate. Secondly, if the degree of internationalization of ESCOs is greater, the overall profitability is also relatively higher. The third, the relationship between internationalization and profitability of ESCOs displays a non-linear trend which means when the export ratio is low, the profit from energy service projects increases; however, when the ratio exceeds the optimal point, about 49.584%~54.323%, it will reveals a reversed phenomenon due to high overseas operation costs.

A Home Country Institutional Perspective Towards the Internationalization-Performance Relationship

Despite the widespread attention on the rise of emerging market multinational enterprises (EMNEs) in recent decades, the relationship between internationalization and performance for EMNEs remains an under-addressed issue in International Business (IB) research field. Drawing from an institution-based view, we suggest that the international strategic decisions of EMNEs can be regarded as the outcomes of their interactions with home country institutional parameters, including home government characteristics (formal institution), and social norms and ideologies (informal institutions). We utilizes a two-decade Meta-analysis and constructs a three-level (firm-, study-, and country-level) hierarchical linear model to identify the internationalization-performance relationship for EMNEs. Our findings confirm the existence of an overall positive relationship, and indicate that the relationship is affected by the home country government characteristics. We also find that these firm-government interactions are moderated by the ideology-induced informal institutions. To sum, our findings help elucidate the puzzle concerning the internationalization-performance relationship of EMNEs, provides additional value for institution-based view in IB area, and opens several avenues for future research.

Is Internationalization a Boon or a Bane? An Assessment of the I-P Relationship.

The debate on whether and how internationalization affects firm performance, despite decades of research remains ambiguous. While some internationalization-performance (I-P) relationship studies have also found the absence of a significant relationship or that firms are better off operating in their domestic markets, the focus of these studies is largely limited to developed markets. In contrast, we conduct our analysis in an important emerging market using an extensive data set of 173,665 observations from 27,388 Indian manufacturing and services firms during the period 1996-2018. We find that depending on the mode of internationalization chosen and the industry context, the internationalization effect on firm performance results in a relationship that is either an ‘S’/cubic model or a ‘U’/quadratic model. For the entire sample of firms, as well as for a sample exclusively of manufacturing firms, the relationship is an ‘S’ when firms internationalize through exports and is a ‘U’ when the mode is foreign investments. For manufacturing firms, we find that the performance during internationalization exceeds prior performance when the mode is exports. For the services industry, the relationship is a ‘U’ for both exports and foreign investments, implying that services firms are yet to achieve their optimal level of internationalization. We check for the robustness of our results by conducting state of the art statistical tests recommended in the literature for both the cubic model and the quadratic model.

Beyond the Internationalization-Performance Relationship: Institutional Asymmetries and Complexity

By combining the regionalization and institutional perspectives we examine emerging inter-regional linkages in the context of internationalizing strategies of MNEs. Using a multi-level approach, we show that a MNE’s home country and home region have a significant impact on the returns from operations in specific host regions. Further, the returns from regional operations are positively associated with greater levels of asymmetry in economic institutions between the home and the host regions. Our analysis uncovers a complex set of uni-directional relationships between different supra-national regions, which shows that the internationalization- performance (I-P) relationship is a multifaceted phenomenon. We propose a regional dyadic approach as being more suitable for capturing the complexity in the I-P relationship, with implications for MNEs’ internationalizing strategies.

Firm-specific assets and the internationalization–performance relationship in the U.S. movie studio industry

We study the role that firm-specific assets (FSAs) play in the processes underlying the internationalization–performance relationship. International business scholars have begun studying the interrelationship between FSAs, internationalization, and performance; however, this research is still emergent, and has produced inconclusive results. We believe that this may be due, in part, to research designs involving the same FSAs across many industries, even though individual industries may rely on different FSAs in their internationalization strategies. We address this issue in a single industry study of U.S. movie studios, which typically rely on blockbuster production capabilities as FSAs in their internationalization efforts. We show how these FSAs co-evolve with firms’ degree of internationalization, and how each factor mediates the positive effect of the other on performance. Our results highlight the importance of studying specific industries and their salient FSAs when assessing their role of such resources in the internationalization–performance relationship.

Internationalization and Performance of Vietnamese Manufacturing Firms: Does Organizational Slack Matter?

This paper aims to investigate the three-stage theory of international expansion in the long run from the perspective of firm behavior. Although this topic has been mostly explored using data from developed countries, this paper aims to fill the research gap in an emerging market by using an extensive unbalanced panel data of 12,704 unlisted Vietnam manufacturing enterprises from the General Statistics Office during 2007 to 2012. The findings illustrated a significant S-shaped relationship between internationalization and performance. Notably, the results depict significantly moderating effects of both high-discretion slacks and low-discretion slacks on the internationalization–performance relationship across three stages of global expansion as an enterprise enhances this relationship in the first and third stage although this worsens it in the middle stage. The empirical results suggest that firms should determine the optimum level of internationalization and slacks in addition to balancing their costs with their real gains.

A combined focused industry and company size investigation of the internationalization-performance relationship: The case of small and medium-sized enterprises (SMEs) within the Swedish wood manufacturing industry

The current literature has failed to deliver a coherent explanation of the internationalization-performance (I–P) relationship. The empirical findings are quite confusing and even contradictory. Researchers have found positive, negative, U-shaped, inverted U-shaped, S-shaped, and inverted S-shaped relationships between degree of internationalization and performance. Based on plausible theoretical explanations such as networking effects, cost and benefit mechanisms and minimum efficient scale (MES), the recommendation for further research is to change focus – from an overall level to a more detailed country-industry and company size contextual level. The underlying assumption is that more specific contextual aspects are paramount to the existence and shape of the I–P relationship. Building on the resource-based view and the S-shape theory of internationalization, this paper aims at such an empirically focused investigation of SMEs within the Swedish wood manufacturing industry. A repeated cross-sectional survey study using hierarchical regression analysis has revealed a linear negative relationship between internationalization and performance. Given that wood manufacturing is a low-tech industry, not highly automated and with a low level of MES, the results are expected. The size of the Swedish market is big enough to amortize the initial investments of establishing a small wood manufacturing business, and the costs associated with internationalization diminish overall performance. In addition, the follow-up tests of ANCOVA (analysis of covariance) and piecewise regression revealed a non-linear relationship between (1) internationalization and performance for highly internationalized firms in 2001, (2) internationalization and growth for low internationalized companies in 2001, and (3) internationalization and performance for highly internationalized groups in the pooled dataset. Considering the costs and benefits associated with international activities, the non-linear effects of internationalization on performance or growth is plausible.