Abstract
Only a few studies have investigated whether a firm's performance has an effect on its internationalization. These studies, focusing on actual firm performance, have suggested a resource-based argument and generally found non-significant results. In this paper, we argue that relative firm performance is critical in determining a firm's internationalization because it influences a firm's attitude toward risk-taking. We apply prospect theory to predict this relationship. Using time-series, cross-sectional analysis of 701 Japanese firms from 1993 to 1998, we uncovered an inverted-U shaped relationship between a firm's relative performance and its degree of internationalization using its historical performance target. As compared to the industry target, relative performance showed a positive impact on a firm's internationalization.
Original language | English |
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Pages (from-to) | 709-732 |
Number of pages | 24 |
Journal | Management International Review |
Volume | 49 |
Issue number | 6 |
DOIs | |
Publication status | Published - Dec 2009 |
Externally published | Yes |
Keywords
- Behavioral perspectives
- FDI
- Internationalization
- Multinational enterprise
- Prospect theory
- Relative performance
- Risk-taking