Multinational risk and performance outcomes: Effects of knowledge intensity and industry context
A multinational presence can diversify corporate business activities and provide access to diverse overseas resources. This can enhance operational flexibility and create new business propositions that increase responsiveness to global market changes. Establishing an international corporate structure may also require irreversible investments and impose maintenance and processing costs that contravene the implied resilience and agility benefits. We distinguish between downside risk and upside potential as the relevant outcome measures to assess the implied advantages of multinationality. Consistent with the rationales of the OLI paradigm, we argue that multinational reach particularly in knowledge-based industries can reduce downside risk and enhance upside potential. These results introduce more nuances to the ongoing debate about multinational risk and performance effects. Based on a large cross-sectional dataset, we find that flexibility and responsiveness thrives on a multinational presence among firms operating in information-driven knowledge businesses. In contrast, internationalizing firms in capital-based network services display adverse risk effects.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 21 (2012)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/description#description|
|Order Information:|| Postal: http://www.elsevier.com/wps/find/journaldescription.cws_home/133/bibliographic|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Daniel Sullivan, 1994. "Measuring the Degree of Internationalization of a Firm," Journal of International Business Studies, Palgrave Macmillan, vol. 25(2), pages 325-342, June.
- Bruce Kogut & Udo Zander, 1993. "Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation," Journal of International Business Studies, Palgrave Macmillan, vol. 24(4), pages 625-645, December.
- Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
- John A Doukas & Ozgur B Kan, 2006. "Does global diversification destroy firm value?," Journal of International Business Studies, Palgrave Macmillan, vol. 37(3), pages 352-371, May.
- Peter J Buckley & Mark C Casson, 1998. "Analyzing Foreign Market Entry Strategies: Extending the Internalization Approach," Journal of International Business Studies, Palgrave Macmillan, vol. 29(3), pages 539-561, September.
- Kogut, Bruce & Chang, Sea Jin, 1996. "Platform Investments and Volatility Exchange Rates: Direct Investment in the U.S. by Japanese Electronic Companies," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 221-31, May.
- Farok J Contractor & Sumit K Kundu & Chin-Chun Hsu, 2003. "A three-stage theory of international expansion: the link between multinationality and performance in the service sector," Journal of International Business Studies, Palgrave Macmillan, vol. 34(1), pages 5-18, January.
- Brainard, S Lael, 1997. "An Empirical Assessment of the Proximity-Concentration Trade-off between Multinational Sales and Trade," American Economic Review, American Economic Association, vol. 87(4), pages 520-44, September.
- Subramanian Rangan, 1998. "Do Multinationals Operate Flexibly? Theory and Evidence," Journal of International Business Studies, Palgrave Macmillan, vol. 29(2), pages 217-237, June.
- Coff, Russell W. & Laverty, Kevin J., 2001. "Real options on knowledge assets: Panacea or Pandora's box?," Business Horizons, Elsevier, vol. 44(6), pages 73-79.
- Jongmooo Jay Choi, 1989. "Diversification, Exchange Risks and Corporate International Investment," Journal of International Business Studies, Palgrave Macmillan, vol. 20(1), pages 145-155, March.
- Gordon E Greenley, 1998. "A Comparison of Slack Resources in High and Low Performing British Companies," Journal of Management Studies, Wiley Blackwell, vol. 35(3), pages 377-398, 05.
- Nicolai J. Foss & Torben Pedersen, .
"Transferring Knowledge in MNCs: The Role of Sources of Subsidiary Knowledge and Organizational Context,"
IVS/CBS Working Papers
00-12, Department of Industrial Economics and Strategy, Copenhagen Business School.
- Foss, Nicolai J. & Pedersen, Torben, 2002. "Transferring knowledge in MNCs: The role of sources of subsidiary knowledge and organizational context," Journal of International Management, Elsevier, vol. 8(1), pages 49-67.
- Foss, Nicolai J. & Pedersen, Torben, 2000. "Transferring Knowledge in MNCs: The Role of Sources of Subsidiary Knowledge and Organizational Context," Working Papers 6-2000, Copenhagen Business School, Department of International Economics and Management.
- Mudambi, Ram, 2002. "Knowledge management in multinational firms," Journal of International Management, Elsevier, vol. 8(1), pages 1-9.
- Tim Opler & Lee Pinkowitz & Rene Stulz & Rohan Williamson, 1997.
"The Determinants and Implications of Corporate Cash Holdings,"
NBER Working Papers
6234, National Bureau of Economic Research, Inc.
- Opler, Tim & Pinkowitz, Lee & Stulz, Rene & Williamson, Rohan, 1999. "The determinants and implications of corporate cash holdings," Journal of Financial Economics, Elsevier, vol. 52(1), pages 3-46, April.
- John Dunning, 2001. "The Eclectic (OLI) Paradigm of International Production: Past, Present and Future," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 8(2), pages 173-190.
- Dunning, John H, 1973. "The Determinants of International Production," Oxford Economic Papers, Oxford University Press, vol. 25(3), pages 289-336, November.
- Tailan Chi & Donald J McGuire, 1996. "Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes," Journal of International Business Studies, Palgrave Macmillan, vol. 27(2), pages 285-307, June.
- Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan, vol. 19(3), pages 411-432, September.
- Masaaki Kotabe & Srini S Srinivasan & Preet S Aulakh, 2002. "Multinationality and Firm Performance: The Moderating Role of R&D and Marketing Capabilities," Journal of International Business Studies, Palgrave Macmillan, vol. 33(1), pages 79-97, March.
- Desouza, Kevin & Evaristo, Roberto, 2003. "Global Knowledge Management Strategies," European Management Journal, Elsevier, vol. 21(1), pages 62-67, February.
- Tony W Tong & Jeffrey J Reuer, 2007. "Real options in multinational corporations: organizational challenges and risk implications," Journal of International Business Studies, Palgrave Macmillan, vol. 38(2), pages 215-230, March.
- Andersen, Torben Juul & Foss, Nicolai Juul, 2005. "Strategic opportunity and economic performance in multinational enterprises: The role and effects of information and communication technology," Journal of International Management, Elsevier, vol. 11(2), pages 293-310, June.
- Bruce Kogut & Nalin Kulatilaka, 1994. "Operating Flexibility, Global Manufacturing, and the Option Value of a Multinational Network," Management Science, INFORMS, vol. 40(1), pages 123-139, January.
- Linda Allen & Christos Pantzalis, 1996. "Valuation of the operating Flexibility of Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan, vol. 27(4), pages 633-653, December.
- Qian, Gongming, 1996. "The effect of multinationality measures upon the risk-return performance of US firms," International Business Review, Elsevier, vol. 5(3), pages 247-265, June.
- McArthur, Angeline W. & Nystrom, Paul C., 1991. "Environmental dynamism, complexity, and munificence as moderators of strategy-performance relationships," Journal of Business Research, Elsevier, vol. 23(4), pages 349-361, December.
- Robert M Grant, 1987. "Multinationality and Performance among British Manufacturing Companies," Journal of International Business Studies, Palgrave Macmillan, vol. 18(3), pages 79-89, September.
- W. Chan Kim, 1989. "Note---Developing a Global Diversification Measure," Management Science, INFORMS, vol. 35(3), pages 376-383, March.
- Williamson, Oliver E, 1979. "Transaction-Cost Economics: The Governance of Contractural Relations," Journal of Law and Economics, University of Chicago Press, vol. 22(2), pages 233-61, October.
- Sushil Vachani, 1991. "Distinguishing Between Related and Unrelated International Geographic Diversification: A Comprehensive Measure of Global Diversification," Journal of International Business Studies, Palgrave Macmillan, vol. 22(2), pages 307-322, June.
- Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
- David M Reeb & Chuck C Y Kwok & H Young Baek, 1998. "Systematic Risk of the Multinational Corporation," Journal of International Business Studies, Palgrave Macmillan, vol. 29(2), pages 263-279, June.
When requesting a correction, please mention this item's handle: RePEc:eee:iburev:v:21:y:2012:i:2:p:239-252. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.