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The Relationship between Performance and Internationlization
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.ORCID iD: 0000-0001-7479-0656
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2019 (English)Conference paper, Published paper (Refereed)
Abstract [en]

There is a plethora of research about the effect of multinationality on performance, yet results are contradictory and inconclusive. A growing number of researchers are reframing the research question to consider the effect of performance on multinationality. In line with these researchers, this paper develops a theoretical argument combining the resource-based view with prospect theory to derive two sets of competing hypotheses. The hypotheses were tested using non-linear ordinary least squares regressions on an unbalanced panel of 1680 firm-year observations of Swedish publicly listed firms over 12 years. Our results show that in line with prospect theory, firms with quite negative performance often have high internationalization. The rationale is that when growth and profitability are restricted by domestic markets, managers are risk-takers. As profits improve, risk-taking behavior in terms of internationalization drops. Then, as performance turns positive and grows, in accordance with the resource-based view, managers use slack resources to pursue internationalization. The result is a positive U-shaped relationship between multinationality and performance. As a robustness test, the more traditional causal relationship was also tested. Results showed a much lower explained variance, marginally significant relationships, and an illogical outcome. The effect of performance on multinationality is the substantially superior model.

Place, publisher, year, edition, pages
2019.
Keywords [en]
performance; multinationality; internationalization; P-M relationship; prospect theory; resource based view
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-389862OAI: oai:DiVA.org:uu-389862DiVA, id: diva2:1339584
Conference
79th Annual Meeting of the Academy of Management, August 9-13, 2019, Boston, Massachusetts, USA
Available from: 2019-07-30 Created: 2019-07-30 Last updated: 2019-07-30

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Schmuck, AliceLagerström, KatarinaSallis, James

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CiteExportLink to record
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Citation style
  • apa
  • ieee
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  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
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Output format
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  • text
  • asciidoc
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