International Diversification and Firm Performance: The S-curve Hypothesis

A proposed theoretical framework for the study of multinationality and performance includes both benefits and costs of geographic expansion over different phases of internationalization. Data on 1,489 Japanese firms over 12 years show a consistent horizontal X S-shaped X relationship between multina...

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Bibliographic Details
Published in:Academy of Management journal 2004-08, Vol.47 (4), p.598-609
Main Authors: Lu, Jane W, Beamish, Paul W
Format: Article
Language:English
Subjects:
Business studies
Correlation analysis
Firm theory
Foreign investment
Globalization
Hypothesis
Intangible assets
Management science
Multiculturalism & pluralism
Multinational corporations
Multinational enterprises
Profitability
Studies
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Summary:A proposed theoretical framework for the study of multinationality and performance includes both benefits and costs of geographic expansion over different phases of internationalization. Data on 1,489 Japanese firms over 12 years show a consistent horizontal X S-shaped X relationship between multinationality and performance. Further, firms investing more heavily in intangible assets, such as technology and advertising, achieved greater profitability gains from growth in foreign direct investment. Our framework and findings highlight complexity and temporal dynamics. [PUBLICATION ABSTRACT]
ISSN:0001-4273
1948-0989
DOI:10.5465/20159604