Session 130

International Diversification

Track G

Date: Tuesday, October 6, 2015

 

Time: 15:45 – 17:00

Common Ground

Room: Plaza Court 1


Facilitator:

  • Vikas Kumar, University of Sydney

Title: Internalization-Theory-Based Portfolio Analysis of the MNE Subsidiary Network

Authors

  • Alain Verbeke, University of Calgary
  • Birgitte Grogaard, BI Norwegian Business School

Abstract: In this study, we propose a novel approach to assess portfolio decisions in multinational enterprises. We categorize each operation in a host country in terms of a set of critical, high asset specificity contracts with various stakeholders. These high asset specificity contracts are then assessed in terms of the information problems (bounded rationality) they are associated with, as well as the possible challenges of proper execution related to a lack of contracting parties’ reliability (bounded reliability). Through a case study, we find that portfolio decisions incorporating bounded rationality and bounded reliability challenges differ from decisions based on conventional technical and economic analyses. This suggests that conventional portfolio analyses may be missing key analytical variables, thereby somewhat divorcing such analyses from mainstream scholarly IB work.

Title: International Speed and Performance

Authors

  • Naveen Jain, University of Akron
  • Sokol Celo, Suffolk University
  • Vikas Kumar, University of Sydney

Abstract: Service firms have been rapidly expanding into international markets in order to tap new markets and enhance their competitiveness. Given the potential adverse performance effects of rapid internationalization, firms face a dilemma to simultaneously manage their internationalization speed and performance. We investigate service firms’ resources that can potentially moderate the internationalization speed and performance relationship. We posit that process capability, relational capital, human capital and international experience may mitigate some of the negative influences of internationalization speed on firm performance. We test our hypotheses on a sample of Indian software service firms. Our empirical findings largely support our predictions and depict a more nuanced influence of customer relationship and human capital on the speed – performance relationship.

Title: Internationalization and Corporate Social Performance: A Legitimacy Perspective

Authors

  • Xueji Liang, National University of Singapore
  • Jane Lu, University of Melbourne

Abstract: We conceptualize corporate social performance (CSP) as firm legitimacy and decompose it into two types of legitimacy: social and regulatory legitimacy, according to who grants legitimacy. We argue that internationalization has a negative effect on social legitimacy. To gain social legitimacy, a firm has to conform to the norms, values and expectations of stakeholders, but to satisfy diverse normative demands that are embedded in unique cultural, socioeconomic and ethical institutions is a big challenge for MNCs. By contrast, internationalization has a positive effect on regulatory legitimacy. Because typical stakeholder demands of this domain (government, accreditation, licensing and certifying organizations) are likely to be standardized and consistent across countries, MNCs are motivated to comply with more stringent rules in environment protection and corporate governance to have the scope economy advantage that they can leverage across countries.

Title: Internationalization Pace in a Fragmented Industry: Environmental and Competitive Factors

Authors

  • Naomi Gardberg, City University of New York
  • Xiaoli Yin, City University of New York
  • Jing Liu, City University of New York
  • William Newburry, Florida International University

Abstract: Fragmented industries differ from concentrated industries as they are characterized by low entry and exit barriers, small or no scale economies, low market power, high substitutability among products and strong price competition. However, there has been little quantitative research on the shifting international boundaries of firms in fragmented industries. One line of inquiry suggests that country-level market characteristics impact foreign direct investment (FDI) decisions. A second line suggests that firm characteristics drive FDI. A third suggests that competitive dynamics drive FDI as firms react to the expansion of competitors. Within this project, we examine these drivers of the pace of international expansion in retailing, a relatively fragmented industry with a recent internationalization history, using a sample including 947 firm-year observations from 1997 to 2006.

Title: Managing Across Borders: The Relationship Between International Diversification And Ambidexterity

Authors

  • Achim Schmitt, École hôtelière de Lausanne, HES-SO // University of Applied Sciences Western Switzerland

Abstract: We adopt an international diversification perspective to study ambidexterity and make two claims: First, the focus on international diversification distracts firms from balancing explorative and exploitative activities. Firms with a high degree of international diversification show lower levels of ambidexterity. Second, and despite firms’ lack of attention to ambidexterity, we submit that ambidextrous firms are particularly able to benefit from international diversification. Firms with a high degree of international diversification have the attention capacity and structure to particularly benefit from balancing exploration and exploitation. Studying a sample of 64 international insurance firms over a nine year period provides support for our arguments. We derive contributions to the ambidexterity literature as well as to the debate on the performance implications of international diversification.

Title: Political Connections and International Expansion Strategy: Evidence from French Firms

Authors

  • Joao Albino-Pimentel, University of South Carolina

Abstract: This paper examines how political connections influence a firm’s international strategy. I argue that connections with the home-country’s political authorities help firms to alleviate the impact of environmental risk, to obtain better information, and to reduce capital costs. Accordingly, I propose that political connections are positively associated with a firm’s international investments, the level of political risk and the level of political alignment of the chosen host-countries. I test hypotheses on a sample of international investments by the largest French firms during 2003-2012. Results suggest that politically-connected firms invest more internationally, following a distinct pattern of host countries’ level of political risk and level of political alignment with France relative to firms without political connections. This heterogeneity is contingent on the type of political connections and is influenced by environmental changes that alter the value of political connections.

All Sessions in Track G...

Sun: 08:00 – 09:15
Session 32: Microfoundations of international strategic management: Opportunism, trust, and bounded reliability
Sun: 09:45 – 11:00
Session 279: Formal theory in strategy - A primer
Sun: 11:15 – 12:30
Session 33: Methodological challenges in publishing international strategy research
Sun: 16:15 – 17:30
Session 209: Institutions and Emerging Markets
Sun: 17:45 – 00:00
Session 315: Global Strategy Business Meeting
Mon: 08:00 – 09:15
Session 126: Entry Mode & Cross-Border Acquisitions
Mon: 11:15 – 12:30
Session 149: Management and Coordination of Multinationals
Mon: 13:45 – 15:00
Session 128: Emerging Markets
Mon: 16:45 – 18:00
Session 151: Networks and Collaborative Arrangements
Tue: 08:00 – 09:15
Session 129: Foreign Direct Investments
Tue: 11:00 – 12:15
Session 127: Institutional Context
Tue: 14:15 – 15:30
Session 266: Offshoring
Tue: 15:45 – 17:00
Session 130: International Diversification
Session 150: Location and Geography
Tue: 17:30 – 18:45
Session 208: Internationalization Strategies and Performance


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