Information Costs and Internationalization Performance

Abstract

Studies on the internationalization‐performance relationship use different theories and arguments to justify shapes of this relationship that apply to certain types and strategies of firms. To reach convergence, we develop an information‐cost model that incorporates firm type and strategy variables as moderators of a generally S‐shaped relationship. We test the model on a panel of 3,398 firms as well as on subpanels representing different types and strategies of firms. As predicted, we find S‐shaped relationships that are attenuated for manufacturing firms and for large firms, show a less progressively rising component for internationally expanding firms and are more positive for firms that operate in geographically and culturally distant countries. The results help integrate earlier findings that are produced from distinct samples and variable ranges.

The international diversification-performance link in Spain: Does firm size really matter?

“…Thus, this study is one of the first attempts to explore the effect that ID may have on P in a panel of firms that includes both large firms and SMEs. A marked exception is, to a certain extent, the study by Fisch (2012), who finds support for the existence of a horizontal Sshaped curve in the full panel and subpanels of SMEs and large firms, although the shape of the ID-P link is attenuated for large firms. However, unlike Fisch (2012) and past research exploring SMEs, this study also differentiates between small and medium firms within the actual group of SMEs.…”

“…A marked exception is, to a certain extent, the study by Fisch (2012), who finds support for the existence of a horizontal Sshaped curve in the full panel and subpanels of SMEs and large firms, although the shape of the ID-P link is attenuated for large firms. However, unlike Fisch (2012) and past research exploring SMEs, this study also differentiates between small and medium firms within the actual group of SMEs. Thus, it initially sets out to test the validity of the horizontal S-shaped model in a panel of small, medium and large firms in a developed country (Spain).…”

“…Thus, significant results seem to range from a U-shaped curve (e.g., Kistruck, Qureshi, & Beamish, 2013;Qian, 1997) to an inverted Ushaped one (e.g., Driffield, Du, & Girma, 2008;Hitt et al, 1997). Finally, other studies find a horizontal S-shaped relationship (e.g., Contractor, Kundu, & Hsu, 2003;Fisch, 2012;Lu & Beamish, 2004;Sung, Bell, & Park, 2008).…”

“…studies focusing on SMEs (e.g., Chiao, Yang, & Yu, 2006;Fisch, 2012;Hsu, Chen, & Cheng, 2013;Lu & Beamish, 2001;Pangarkar, 2008;Qian, 2002). There are virtually no empirical studies that have simultaneously examined such a link in a single sample of large firms and SMEs.…”

“…The existing research on the ID-P link has also ignored the time dimension, or has considered short time periods-between 3 and 8 years (e.g., Capar & Kotabe, 2003;Contractor et al, 2003;Fisch, 2012;Gaur & Kumar, 2009;Qian, 2002;Ruigrok, Amann, & Wagner, 2007). In a critical review of existing research, Hennart (2007: 446) posits the need to study how firms expand abroad over long periods, since only in this way is it possible to identify the different stages in a firm's internationalization process.…”