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Nature of the relationship between international expansion and performance: The case of emerging market firms

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  • Contractor, Farok J.
  • Kumar, Vikas
  • Kundu, Sumit K.
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    Abstract

    Internationally expanding companies would like to see how they compare with rivals in terms of the effect of internationalization on financial performance (for their sector and their firm). Virtually all such studies have focused on advanced nations. This study, on internationalization of firms based in an emerging economy (India), provides a unique research setting and sheds additional light on this relationship. It tests for the shape of the internationalization-performance curve for emerging market firms, and investigates differences between service firms and manufacturers in the threshold effect between the initial and later stages of internationalization. We find a U-shaped curve depicting the internationalization-performance relationship of Indian firms. Service sector firms tend to gain the positive benefits of internationalization sooner than manufacturing companies.

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    Bibliographic Info

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

    Volume (Year): 42 (2007)
    Issue (Month): 4 (December)
    Pages: 401-417

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    Handle: RePEc:eee:worbus:v:42:y:2007:i:4:p:401-417

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    References

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    Citations

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    Cited by:
    1. Kohli, Reena & Mann, Bikram Jit Singh, 2013. "Analyzing the likelihood and the impact of earnout offers on acquiring company wealth gains in India," Emerging Markets Review, Elsevier, vol. 16(C), pages 203-222.
    2. Love, James H. & Mansury, Mica Ariana, 2009. "Exporting and productivity in business services: Evidence from the United States," International Business Review, Elsevier, vol. 18(6), pages 630-642, December.
    3. Boehe, Dirk Michael, 2011. "Exploiting the liability of foreignness: Why do service firms exploit foreign affiliate networks at home?," Journal of International Management, Elsevier, vol. 17(1), pages 15-29, March.
    4. Thite, Mohan & Wilkinson, Adrian & Shah, Dhara, 2012. "Internationalization and HRM strategies across subsidiaries in multinational corporations from emerging economies—A conceptual framework," Journal of World Business, Elsevier, vol. 47(2), pages 251-258.
    5. Tolentino, Paz Estrella, 2010. "Home country macroeconomic factors and outward FDI of China and India," Journal of International Management, Elsevier, vol. 16(2), pages 102-120, June.
    6. Gaur, Ajai S. & Kumar, Vikas & Singh, Deeksha, 2014. "Institutions, resources, and internationalization of emerging economy firms," Journal of World Business, Elsevier, vol. 49(1), pages 12-20.
    7. Hsu, Wen-Tsung & Chen, Hsiang-Lan & Cheng, Chia-Yi, 2013. "Internationalization and firm performance of SMEs: The moderating effects of CEO attributes," Journal of World Business, Elsevier, vol. 48(1), pages 1-12.
    8. Denk, Nikola & Kaufmann, Lutz & Roesch, Jan-Frederik, 2012. "Liabilities of Foreignness Revisited: A Review of Contemporary Studies and Recommendations for Future Research," Journal of International Management, Elsevier, vol. 18(4), pages 322-334.
    9. Love, James H. & Ganotakis, Panagiotis, 2013. "Learning by exporting: Lessons from high-technology SMEs," International Business Review, Elsevier, vol. 22(1), pages 1-17.
    10. Somnath Lahiri, 2011. "India-focused publications in leading international business journals," Asia Pacific Journal of Management, Springer, vol. 28(2), pages 427-447, June.
    11. Xiao, Simon Shufeng & Jeong, Insik & Moon, Jon Jungbien & Chung, Chris Changwha & Chung, Jaiho, 2013. "Internationalization and Performance of Firms in China: Moderating Effects of Governance Structure and the Degree of Centralized Control," Journal of International Management, Elsevier, vol. 19(2), pages 118-137.
    12. Chao, Mike Chen-Ho & Kumar, Vikas, 2010. "The impact of institutional distance on the international diversity-performance relationship," Journal of World Business, Elsevier, vol. 45(1), pages 93-103, January.
    13. Christian Genthon, 2008. "International diversification, performance and offshoring : the case of the computer services industry," Post-Print halshs-00348198, HAL.
    14. Tsai, Huei-Ting, 2014. "Moderators on international diversification of advanced emerging market firms," Journal of Business Research, Elsevier, vol. 67(6), pages 1243-1248.
    15. Congcong Zheng & Susanna Khavul & Dilene Crockett, 2012. "Does it transfer? The effects of pre-internationalization experience on post-entry organizational learning in entrepreneurial Chinese firms," Journal of International Entrepreneurship, Springer, vol. 10(3), pages 232-254, September.
    16. Andrea Pontiggia & Tiziano Vescovi, 2013. "When Size Does Matter. Trends of SMEs Internationalization Strategies in Chinese Economy," Working Papers 28, Department of Management, Università Ca' Foscari Venezia.

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