Internationalization of retail banks: A micro-level study of the multinationality-performance relationship

AbstractAbstract and Key Results This study discusses the underlying reasons for the variant nature of the relationship between multinationality and firm performance in the context of service firms.To date, this line of research has mostly used evidence from manufacturing firms, despite the ever-increasing contribution of service firms to national and global economies.We conduct an exploratory study using case analyses of large European retail banks. We argue that the nature of the multinationality-performance relationship for services is moderated by industry characteristics, market-based factors and firm-specific factors.We conclude that the shape of the curve depicting the multinationality-performance relationship of retail banks experiences substantial variations on a single case level.Our exploratory study of retail banks shows that the multinationality-performance relationship varies significantly depending on banks’ strategic decisions regarding branch network configurations, product portfolios, branding strategies, organizational architecture (HQ-subsidiary relationship), and social networks. Any generalization of the relationship is difficult and prone to error.

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