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Country effect on firm performance: A multilevel approach

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  • Goldszmidt, Rafael G. Burstein
  • Brito, Luiz Artur Ledur
  • de Vasconcelos, Flávio Carvalho
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    Abstract

    The debate about the impact of environmental constraints on firm performance in developing countries is relevant for business enterprises and governments. However, the academic literature offers limited empirical evidence comparing firm performance in emerging and developed countries. This paper performs a statistical analysis based on a sample of more than 10,000 firms in a 10-year span. A cross-classified 3-level hierarchical linear model allows the estimation of country, industry and country-industry interaction effects, which have roughly the same relative importance each. The analytical procedure is able to estimate the influence of each specific country on firm performance and produce a ranking of nations based on this effect. Country effects have a greater positive influence on firm performance in emerging countries than in more developed economies.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Business Research.

    Volume (Year): 64 (2011)
    Issue (Month): 3 (March)
    Pages: 273-279

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    Handle: RePEc:eee:jbrese:v:64:y:2011:i:3:p:273-279

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    Web page: http://www.elsevier.com/locate/jbusres

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    Keywords: Country effect Multilevel models Firm performance;

    References

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    1. Roll, Richard, 1992. " Industrial Structure and the Comparative Behavior of International Stock Market Indices," Journal of Finance, American Finance Association, vol. 47(1), pages 3-41, March.
    2. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2004. "The home country in the age of globalization: how much does it matter for firm performance?," ULB Institutional Repository 2013/14190, ULB -- Universite Libre de Bruxelles.
    3. Aron, Janine, 2000. "Growth and Institutions: A Review of the Evidence," World Bank Research Observer, World Bank Group, vol. 15(1), pages 99-135, February.
    4. Jongwook Kim & Joseph T. Mahoney, 2005. "Property rights theory, transaction costs theory, and agency theory: an organizational economics approach to strategic management," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 223-242.
    5. J Markham Collins, 1990. "A Market Performance Comparison of U.S. Firms Active in Domestic, Developed and Developing Countries," Journal of International Business Studies, Palgrave Macmillan, vol. 21(2), pages 271-287, June.
    6. Heston, Steven L. & Rouwenhorst, K. Geert, 1994. "Does industrial structure explain the benefits of international diversification?," Journal of Financial Economics, Elsevier, vol. 36(1), pages 3-27, August.
    7. Pankaj Ghemawat, 2003. "Semiglobalization and international business strategy," Journal of International Business Studies, Palgrave Macmillan, vol. 34(2), pages 138-152, March.
    8. William P. Wan, 2005. "Country Resource Environments, Firm Capabilities, and Corporate Diversification Strategies," Journal of Management Studies, Wiley Blackwell, vol. 42(1), pages 161-182, 01.
    9. Ferreira, Miguel A. & Gama, Paulo M., 2005. "Have World, Country, and Industry Risks Changed over Time? An Investigation of the Volatility of Developed Stock Markets," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(01), pages 195-222, March.
    10. Makino, Shige & Beamish, Paul W. & Zhao, Natalie Bin, 2004. "The characteristics and performance of Japanese FDI in less developed and developed countries," Journal of World Business, Elsevier, vol. 39(4), pages 377-392, November.
    11. David L. Rigby & J¸rgen Essletzbichler, 2002. "Agglomeration economies and productivity differences in US cities," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 407-432, October.
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    Cited by:
    1. Ketelhöhn, Niels W. & Quintanilla, Carlos, 2012. "Country effects on profitability: A multilevel approach using a sample of Central American firms," Journal of Business Research, Elsevier, vol. 65(12), pages 1767-1772.

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