‘Misfits’ DO try to fit: Deviations from firm-specific optimal multinationality and subsequent market entry or exit in US law firms

Powell, K. Skylar; Lim, Eunah

doi:10.1016/j.jbusres.2017.09.023

Cited by 9 publications

(2 citation statements)

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“…Past research has also considered international experience as a factor (Coeurderoy and Murray, 2008; Tuppura et al , 2008; Zhao and Hsu, 2007), with the expectation of a positive relationship with speed of market entry (Tan et al , 2007), as incrementally greater levels of foreign experience may encourage greater commitment to internationalization (Johanson and Vahlne, 1977). Third, this analysis includes the logarithm of the total number of domestic offices that a law firm maintained in a focal year (Powell and Lim, 2018), without a priori expectations on a relationship with speed of foreign market entry. Greater levels of domestic geographic expansion could indicate a preference for geographic diversification, suggesting a positive relationship with speed of foreign market entry.…”

Section: Methodsmentioning

confidence: 99%

Competition at home and foreign market entry timing

Powell

2019

MBR

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Purpose Research has identified inverted U-shaped relationships between domestic competitive position, often cast in terms of home-country market share or relative profitability, and speed of entry into a foreign market. However, in some industries, firms may be especially attentive and responsive to competition between firms in their local-home market (i.e. sub-national). Hence, this study aims to explore the effect of local-home market competitive intensity on the relationship between a firm’s overall competitive position and speed of entry into a foreign market. Design/methodology/approach Data from 114 large US corporate law firms from 1992 through 2008 were used for Cox proportional-hazards regression models to estimate the moderating effect of local-home market competitive intensity on the relationship between relative profitability at the national level and speed of entry (i.e. hazard rate) into China. Findings Less-dominant firms from highly competitive local-home markets entered China more quickly than less-dominant firms from less-competitive local-home markets. In addition, first-movers from highly competitive local-home markets tended to have more advantageous competitive profiles, as reflected in profitability, than first-movers from less-competitive local-home markets. Originality/value This research explores an important contingency in the relationship between a firm’s competitive position at home and timing of entry into a foreign market. Additionally, the results suggest that first-movers from less-competitive local-home markets may face immediate competition from better-positioned first-movers from more competitive locations within the same home market when they enter new markets.

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Section: Methodsmentioning

confidence: 99%

Competition at home and foreign market entry timing

Powell

2019

MBR

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“…While this work is notable, to successfully navigate these complexities and achieve an optimal international configuration, an MNC must continuously adapt to its needs and its environment (Powell and Lim, 2018). This ability to orchestrate an adaptive organizational configuration has been described as a dynamic capability (Teece, 2007), defined as “the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments” (Teece et al , 1997, p. 516).…”

Section: Orchestration: a Dynamic Capabilities Perspectivementioning

confidence: 99%

MNCs’ orchestration capability of the 3Ds and financial performance

Abdelzaher

Torre

Rolf

2022

RIBS

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Purpose In today’s ever-increasing context of volatile, uncertain, complex and ambiguous market conditions, the shifts of countries’ protectionist policies toward inward Foreign Direct Investment (FDI), and an increased gap between headquarters’ (HQ) and subsidiaries’ perspectives on what makes business sense, it has become apparent that challenges toward foreign expansion are becoming more severe and require a multidimensional dynamic approach. The authors draw from orchestration theory, dynamic capabilities literature and previous literature on dimensions of internationalization [specifically, density, geographic distance and degree of diversity of the multinational corporation (MNC) subsidiary network] to argue that firms must enhance their orchestration capability. In doing so, this study aims to highlight the nuances of orchestrating a three-dimensional (3D) conceptualization of MNCs’ international configurations. Design/methodology/approach The authors analyzed the patterns of configurations that are adopted by MNCs. This sample was made up of the international configuration of 78 Fortune 500 MNCs consisting of 3,318 foreign subsidiaries. Furthermore, the authors examined the impact of different configurations of the 3Ds on firm performance using ordinary least squares regression analysis. Findings While the research did indicate that the sample MNCs adopted the sample configurations of the three internationalization dimensions more frequently than others, the authors found that orchestrating MNCs with an international configuration characterized by high density, low geographic distance and low internetwork scope diversity had a positive impact on firm performance. Practical implications While international expansion is often motivated by financial performance or market/resource gains, it is also impacted by the firm’s dynamic capability profile. Thus, as MNCs seek to continue to expand globally, they must assess and, if needed, develop their management team’s orchestration capability, which includes effectively determining how the addition or removal of a subsidiary will impact the density, geographic distance and diversity dynamics of the MNC’s international configuration. Finally, the management team needs to be able to devise plans to respond to the potential challenges associated with each of these dimensions. Originality/value The contribution of this study includes bringing a dynamic capabilities lens to the extant international business literature examining the multinationality and performance relationship by highlighting the importance of an MNC’s process orchestrating capability that is needed for firms to effectively manage increasingly complex subsidiary networks. It also conceptually explains and empirically supports that some configurations are likely to yield higher returns than others, which can act as a guide for firms as they are seeking to expand in more geographically distant as well as diverse sectors. Furthermore, this study highlights the need for a multidimensional simultaneous approach to the examination of internationalization to performance relationship. Finally, it highlights the tradeoffs that MNCs must address across the orchestration of the three internationalization dimensions using a dynamic capabilities theoretical lens that acknowledges the differences in perspective that exist between HQs and subsidiaries.

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