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 |
|---|---|
| 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
Cite this
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How firm performance affects internationalization. / Jung, Jae C.; Bansal, Pratima.
In: Management International Review, Vol. 49, No. 6, 12.2009, p. 709-732.Research output: Contribution to journal › Article › Research › peer-review
TY - JOUR
T1 - How firm performance affects internationalization
AU - Jung, Jae C.
AU - Bansal, Pratima
PY - 2009/12
Y1 - 2009/12
N2 - 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.
AB - 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.
KW - Behavioral perspectives
KW - FDI
KW - Internationalization
KW - Multinational enterprise
KW - Prospect theory
KW - Relative performance
KW - Risk-taking
UR - http://www.scopus.com/inward/record.url?scp=73249134585&partnerID=8YFLogxK
U2 - 10.1007/s11575-009-0014-7
DO - 10.1007/s11575-009-0014-7
M3 - Article
AN - SCOPUS:73249134585
VL - 49
SP - 709
EP - 732
JO - Management International Review
JF - Management International Review
SN - 0938-8249
IS - 6
ER -