Abstract: We extend the literature on the relationship between speed of internationalization and performance by analyzing the effect of a rapid foreign expansion on value creation, as well as the boundary conditions for a profitable accelerated internationalization. We argue that the relationship between speed and value creation follows an inverted U-shaped pattern. We also predict that firms’ resources and capabilities help enhance the positive effect of a rapid internationalization on their market performance. On the contrary, higher needs for adaptation of multinationals’ strategies or the existence of restrictions to their future growth intensify its negative impact. We test and confirm our hypotheses by implementing Heckman’s two-step estimation method (1979) on a panel-data sample from 1986 to 2010 which comprises Spanish firms which were listed in 1990.

Abstract: We examine the effect of multinationality on firm performance using detailed longitudinal data for a comprehensive sample of US manufacturing MNCs from 1989 to 2007, while accounting for the endogeneity of multinationality. We show that while firm performance has a positive effect on multinationality, multinationality has an insignificant effect on performance once we account for its endogeneity. Looking beyond an aggregate measure of multinationality, we show that firms do benefit from investments in foreign R&D activities and product transfers between subsidiaries. Overall, these findings offer fresh empirical insight into the relationship between multinationality and performance, providing a substantially more rigorous test of the relationship while opening the way for further exploration of the effect of foreign knowledge seeking and subsidiary networks on firm performance.

Abstract: An MNC’s choice of its functional language(s) for corporate communication is of strategic importance because this decision has strong implications for the implementation of its international expansion strategy. Drawing on psycholinguistics, we advance a conceptual framework for analyzing the trade-offs in the choice of functional languages and use a series of lab experiments to assess the relative efficiency of different functional language systems. Our empirical results shed light on the trade-offs in this strategic decision and potential remedies for the communication costs associated with the different choices. The insights that our study gains on the choice of functional languages and the measures for mitigating communication costs contribute to the microfoundations for both the established theory of MNCs and the emerging capability-based theory of MNCs.

Abstract: Based on the marginal benefits and marginal costs arising out of internationalization, its overall effect on performance is widely accepted to have a horizontal S-curve shape. The relationship has been tested across different empirical settings including those from emerging markets. In this paper, we argue that dynamic capabilities such as invest in resources and to deploy them appropriately enable firms to improve the positive effects of internationalization. We test our hypotheses using data on internationalization of 837 Indian firms between 1995 and 2014. Our results support the horizontal S-curve relationship including the high internationalization with a negative performance effect. We also find support for a moderating role of dynamic capabilities in enhancing the performance effects of internationalization.