Home Country Institutions and the Internationalization-Performance Relationship

Abstract

We propose that the mixed findings of research on the internationalization-performance (I-P) relationship reflect its failure to adequately consider the moderating role of firms’ home country formal and informal institutions. This general hypothesis is supported in a meta-analysis of the firm-, industry-, home country–, and host country–level factors driving the I-P relationship across 32 countries between 1972 and 2012 from 359 primary studies—the largest sample of primary studies of any meta-analysis on this topic to date. We make three main contributions to the I-P and global strategy literatures. First, we develop a novel integration of the theoretical logics from the I-P research and the institution-based view of strategy to explain how embeddedness in home country institutions affects the strength of the I-P relationship. Second, we show the importance of including both formal and informal institutions in analyses of firms’ institutional embeddedness, thereby extending our knowledge of the effects of institutional complexity. Our third contribution is methodological and reflects our use of advanced meta-analytical techniques based on both product-moment and partial correlations as effect sizes, which allow us to address unresolved debates about the sign and shape of the I-P relationship. Our results show that the I-P relationship is positive, although the overall effect is small and varies greatly across firms’ home countries. We conclude by discussing the findings’ relevance and promising future research avenues, including novel research questions, multilevel theoretical and empirical frameworks, and improvements in methodological rigor.

Innovation Offshoring, Institutional Context and Innovation Performance: A Meta‐Analysis

“…Specifically, our results indicate that a fine‐grained understanding of the consequences of IO needs to incorporate home‐country institutions and variations over time in the theoretical framework and methodological design. Thus, our findings support adopting context‐sensitive approaches (see Kostova et al, ; Marano et al, ; Meyer and Peng, ) for research at the intersection of internationalization and innovation.…”

“…Thus, our most interesting finding may be that, contrary to our expectations, more recent studies find less positive effects of IO for firms. This appears to challenge, for example, Marano and colleagues’ () meta‐analytical finding that studies using more recent samples elicit a stronger internationalization–performance relationship. Why may the benefit of IO be diminishing?…”

“…Future research is needed to disentangle the complex global changes that occurred over the period of the primary research underlying this meta‐analysis (1973–2014). Empirically, we recommend that future research uses multilevel growth modelling to capture systematic patterns of change in the IO–innovation performance relationship over time (see also Marano et al, ).…”

The Role of Relationships in Initiating the Internationalisation Process in B2B Markets

“…Such domestic intermediaries may not have direct access to all companies across all industries, although they can establish a formal platform of dialogue, which mitigates the initial wariness of potential partners, as was in the case of Solaris's expansion into the German and Israeli markets. The relationship capital that can be obtained thanks to domestic intermediaries is not particularly high and varies greatly across The Role of Relationships in Initiating the Internationalisation Process … | 103 firms' home countries (Marano, Arregle, Hitt, Spadafora, & van Essen, 2016, p. 1075. It seems to reinforce mainly the establishment of the initial level of contractual trust (Fonfara, Deszczyński, & Dymitrowski, 2016;Nielsen, 2004).…”

Capacidades de inovação nas multinacionais de países emergentes: as condições do paí­s de origem as influenciam?

“…Marano et al (2016) Portanto, não está claro até que ponto a argumentação do escape do ambiente institucional mais frágil e instável dos países emergentes perde relevância quando as EMNEs aumentam sua internacionalização. Nesse contexto apresenta-se o seguinte problema de pesquisa:…”