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Internationalization speed and cost efficiency: evidence from Germany

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  • Wagner, Hardy

Abstract

This study reports findings on the relationship between internationalization speed and cost efficiency. This investigation of 83 large, stock-quoted German firms over the five-year period 1993-1997 suggests that the link exhibits an inverted-U form. That is, low and modest expansion speeds generate cost-efficiency gains, but extreme speeds cause value destruction. Further analysis indicates that "labor cost efficiency" is the key explanatory variable for the identified curve type. In contrast, "material cost efficiency" is not found to be affected by internationalization speed. Moreover, the findings suggest that "cost efficiency" (i.e., operational performance) represents an important mediator between international expansion and firm-level financial performance. Overall, this study contributes to the internationalization-performance research stream by simultaneously applying temporal, black box, and contextual perspectives.

Suggested Citation

  • Wagner, Hardy, 2004. "Internationalization speed and cost efficiency: evidence from Germany," International Business Review, Elsevier, vol. 13(4), pages 447-463, August.
    • Handle: RePEc:eee:iburev:v:13:y:2004:i:4:p:447-463
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