International Expansion Path, Speed, Product Diversification and Performance Among Emerging-Market MNEs: Evidence from Asia-Pacific Multinational Companies

The purpose of this study is to provide an integrated framework that conceptualizes multifaceted antecedents pertaining to international expansion of emerging-market businesses in relation to firm performance. This paper develops multiple-item measures of multiple dimensions to clarify how internationalization path, expansion speed, product diversification and geographic scope affect emerging-market multinational enterprise (MNE) performance in a sample of 115 Asia-Pacific MNEs over the period 1998–2002. The results show that the relationship between internationalization and firm performance is non-linear. The results also indicate that moderate product diversification, foreign expansion speed and geographic scope can increase emerging-market MNE capacities to exploit different market opportunities when they engage in foreign activity. By contrast, firm performance will turn negative if MNEs heavily expand their product range and geographic scope.

[1]  J. Johanson,et al.  The Internationalization Process of the Firm—A Model of Knowledge Development and Increasing Foreign Market Commitments , 1977 .

[2]  M. Kotabe,et al.  The relationship between international diversification and performance in service firms , 2003 .

[3]  Jan W. Rivkin,et al.  Estimating the performance effects of business groups in emerging markets , 2001 .

[4]  Erik Schlie,et al.  Regional follows global: strategy mixes in the world automotive industry , 2000 .

[5]  Daniel P. Sullivan.  Measuring the Degree of Internationalization of a Firm , 1994 .

[6]  Jerome H. Friedman.  Multivariate adaptive regression splines (with discussion) , 1991 .

[7]  Robert E. Hoskisson,et al.  International Diversification: Effects on Innovation and Firm Performance in Product-Diversified Firms , 1997 .

[8]  Charles Baden-Fuller,et al.  Globalization frustrated: The case of white goods , 1991 .

[9]  David P. McCaffrey,et al.  Multinational Enterprises and the Global Economy. , 1995 .

[10]  Gongming Qian.  Determinants of Profit Performance for the Largest U.S. Firms 1981-92 , 1998 .

[11]  Howard Thomas,et al.  DIVERSITY, DIVERSIFICATION, AND PROFITABILITY AMONG BRITISH MANUFACTURING COMPANIES, 1972-84 , 1988 .

[12]  J. Friedman.  Multivariate adaptive regression splines , 1990 .

[13]  Sumit K. Kundu,et al.  A three-stage theory of international expansion: the link between multinationality and performance in the service sector , 2003 .

[14]  Srilata Zaheer,et al.  THE DYNAMICS OF THE LIABILITY OF FOREIGNNESS: A GLOBAL STUDY OF SURVIVAL IN FINANCIAL SERVICES , 1997 .

[15]  Lilach Nachum.  Geographic and Industrial Diversification of Developing Country Firms , 2004 .

[16]  H. Barkema,et al.  Pace, rhythm and scope: Process dependence in building a profitable multinational corporation , 2002 .

[17]  Sanjaya Lall,et al.  The Recent Growth of the Largest US Multinationals , 2009 .

[18]  M. Porter.  Competitive Advantage: Creating and Sustaining Superior Performance , 1985 .

[19]  J. M. Collins,et al.  A Market Performance Comparison of U.S. Firms Active in Domestic, Developed and Developing Countries , 1990 .

[20]  Mike W. Peng,et al.  GOVERNING THE CORPORATION IN EMERGING ECONOMIES: A PRINCIPAL-PRINCIPAL PERSPECTIVE. , 2002 .

[21]  A. Rugman,et al.  The end of globalization : why global st[r]ategy is a myth & how to profit from the realities of regional markets , 2001 .

[22]  A. Rugman,et al.  Multinational Enterprises Are Regional, Not Global , 2003 .

[23]  Paul W. Beamish,et al.  DIVERSIFICATION STRATEGY AND INTERNATIONALIZATION: IMPLICATIONS FOR MNE PERFORMANCE , 1989 .

[24]  C. Zeithaml,et al.  The International Expansion Process of MNEs from Developing Countries: A Case Study of Thailand's CP Group , 1998 .

[25]  C. Bartlett,et al.  Managing across Borders: The Transnational Solution , 1990 .

[26]  Winfried Ruigrok,et al.  Internationalization and Performance: An Organizational Learning Perspective , 2003 .

[27]  Paz Estrella Tolentino,et al.  Technological Innovation and Third World Multinationals , 1993 .

[28]  P. Ghemawat.  Semiglobalization and international business strategy , 2003 .

[29]  Bart Victor,et al.  Strategy, structure, and performance of U.S. manufacturing and service MNCs: A comparative analysis , 1991 .

[30]  Mauro F. Guillén,et al.  Business Groups in Emerging Economies: A Resource-Based View , 2000 .

[31]  Manmohan S. Kumar.  Growth, Acquisition and Investment: An Analysis of the Growth of Industrial Firms and Their Overseas Activities , 1985 .

[32]  R. Vernon.  Sovereignty at bay: The multinational spread of U.S. enterprises , 1971 .

[33]  Kannan Ramaswamy,et al.  An Empirical Examination of the Form of the Relationship Between Multinationality and Performance , 1999 .

[34]  Constantinos C. Markides,et al.  Diversification, restructuring and economic performance , 1995 .

[35]  John S. Hughes,et al.  Corporate International Diversification and Market Assigned Measures of Risk and Diversification , 1975, Journal of Financial and Quantitative Analysis.