The theoretical rationale for a multinationality-performance relationship (original) (raw)
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Global Strategy Journal, 2011
I assess the theoretical basis for the existence of a relationship between the size of a firm's foreign footprint (its multinationality) and its performance. I argue that multinationality results from a firm's choice between coordinating internally the stages of its value chain and letting them be organized on the market and hence that there are no reasons to expect net gains from an increase or a decrease in multinationality, the only profitability impact coming from a firm having made the wrong choice and being over-or under-integrated compared to the optimum. I then show that the way the literature has operationalized multinationality does not match the theoretical arguments it has advanced. I conclude that a reassessment of the literature is overdue and point to some new directions.
Multinational Diversification and Performance: A Reevaluation of the Evidence
SSRN Electronic Journal, 2012
Expanding upon prior studies, firms with foreign operations are segmented by three different schemes: the percentage of foreign tax liability to total tax liability; the percentage of foreign sales to total sales; the percentage of foreign assets to total assets. We evaluate whether the degree of foreign participation affects the risk-return profile of the firms by categorising firms with foreign participation into quintiles. The research indicates significant differences exist between domestic firms and multinational firms. The study suggests that the extent of multinational diversification does not provide incremental economic benefit. The advantages enjoyed by multinational corporations appear to have disappeared over time owing to an increasing integration of the global economy.
MULTINATIONALITY -PERFORMANCE RELATIONSHIP: A REVIEW AND RESEARCH AGENDA
The aim of this paper is make a review of the literature of the empirical studies about the multinationality-performance relationship. The surveys developed during the period 2003-2014 were reviewed. The results identified some gaps and future research agenda to be addressed such as: use of moderator and mediator variables in the multinationality-performance relationship, the use of non-financial/accounting indicators as indicators of performance, carry our comparative surveys between countries and regions and the inclusion of internationalization motivation.
Global Strategy Journal, 2012
This theory note offers a detailed microanalysis of the benefits, costs, and limits to international expansion to explain why multinational firms exist, in response to critiques which ask whether any generalizable theory relationship exists between firm performance and its degree of multinationality. Some even question the validity of the entire multinationality-performance field. These critiques fly in the face of the fact that multinational firms exist, thrive, increase in number, and are generally regarded as earning superior profits versus their purely domestic counterparts. This note proposes alternative methodological reasons for the seemingly contradictory and confusing results of past empirical studies over 30 years, indicates directions for future research, and calls for a contingent variable approach to empirical studies in the field.
The Performance and Risk Management Implications of Multinationality: An Industry Perspective
Social Science Research Network, 2005
Multinational enterprise in control of dispersed overseas resources and capabilities has been linked to strategic flexibility that allows the firm to take advantage of opportunities and manage exposures imposed by changing environmental conditions. This paper analyzes the implied performance and risk management effects in a comprehensive sample of public firms and finds supportive evidence for the proposition that multinationality can enhance performance across industries. However, the ability to exploit upside potential and avoid downside risk is industry specific. The positive effects of multinationality are found particularly pronounced among firms operating in knowledge intensive service industries while firms in capital-intensive primary industries display the inverse relationships.
A relational view on the performance effects of international diversification strategies
Journal of International Business Studies
International diversification is a fundamental pillar of multinational corporations’ (MNCs) growth strategies. Consequently, there is a considerable body of research on the performance implications of MNCs’ international diversification strategies. We extend this literature by adopting a relational view where we compare the diversification profiles of firms in an inter-organizational context. We argue that the relative characteristics of firms’ and their partners’ diversification profiles is an indicator of parties’ resource bases and thereby can explain if and when inter-organizational ties yield optimum performance outcomes. We examine these relative characteristics and propose a conceptual refinement by differentiating between the degree and content dimensions of international diversification. Analyzing data from 202 manufacturing firms from the S&P 500 list, we find that firms achieve optimum performance when their partners have moderately higher degrees of international diversi...
Management International Review, 2007
■ This paper's objective is to articulate, more precisely than has occurred in the past, the principal theory rationales underlying the Multinationality/Performance (M/P) link, by examining each claim for the negative or positive benefits of internationalization, from the lens of the theory of the firm and the multinational enterprise. A concurrent objective of this paper is to respond to critiques of M/P theory and discuss methodology and operationalization problems in empirical testing. ■ While international expansion of a firm will not necessarily always improve performance (during the initial international expansion stage, or in cases where a firm may have over-internationalized), for the most part, over the considerable middle range of expansion, net positive benefits accrue from internationalization. Underlying theory rationales are detailed in the paper. ■ The results of over one hundred empirical studies over the past 30 years appear, on superficial examination, to be contradictory, but can be reconciled by the recently proposed 3-stage or S-shaped general theory.
How Good are Multinationality–Performance (M‐P) Empirical Studies?
We critically evaluate strong views in the scholarly literature that suggest a linkage between multinationality (M) and performance (P). Building upon this critical analysis, we propose a new M-P conceptual approach as well as a testing framework, consisting of 12 subtests, to assess the quality of the M-P empirical literature to date. We observe that many of the most cited studies were poorly conceived and simply cannot lead to reasonable conclusions on possible M-P linkages. The single most important flaw is the neglect of the multinational enterprise's firm-specific advantages as the main driving force behind internationalization strategies and related effects on performance.
Multinationality and Firm Performance
Page 726. 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 7 8 9 20 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 6 7x Multinationality and Firm Performance The Moderating Role of R&D and Marketing Capabilities Masaaki Kotabe, Srini S. Srinivasan, and Preet ...