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An empirical examination of the influence of industry and firm drivers on the rate of internationalization by firms


  • Elango, B.


Foreign direct investment made by firms globally rose by 40 percent to $315 billion in 1995 compared with the previous year. In spite of the apparent importance of globalization, very little research has examined the factors with potential to influence the rate of internationalization of firms. Using 158 large U.S.-based multinational firms drawn from seven different industries, this study explains about 24 percent of the variance of the rate of internationalization. Results indicate that global market growth rate, domestic market growth rate, relative size of domestic market to international market, employee productivity, administrative investments, as well as new plant and equipment influence the rate of internationalization of firms.

Suggested Citation

  • Elango, B., 1998. "An empirical examination of the influence of industry and firm drivers on the rate of internationalization by firms," Journal of International Management, Elsevier, vol. 4(3), pages 201-221, November.
  • Handle: RePEc:eee:intman:v:4:y:1998:i:3:p:201-221

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    References listed on IDEAS

    1. Caves, Richard E, 1980. "Industrial Organization, Corporate Strategy and Structure," Journal of Economic Literature, American Economic Association, vol. 18(1), pages 64-92, March.
    2. Hymer, Stephen, 1970. "The Efficiency (Contradictions) of Multinational Corporations," American Economic Review, American Economic Association, vol. 60(2), pages 441-448, May.
    3. Edward M. Graham, 1978. "Transatlantic Investment by Multinational Firms: A Rivalistic Phenomenon?," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 1(1), pages 82-99, October.
    4. 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;Academy of International Business, vol. 21(2), pages 271-287, June.
    5. Bradburd, Ralph M & Caves, Richard E, 1982. "A Closer Look at the Effect of Market Growth on Industries' Profits," The Review of Economics and Statistics, MIT Press, vol. 64(4), pages 635-645, November.
    6. Rugman, Alan M, 1986. "New Theories of the Multinational Enterprise: An Assessment of Internalization Theory," Bulletin of Economic Research, Wiley Blackwell, vol. 38(2), pages 101-118, May.
    7. Curry, B & George, K D, 1983. "Industrial Concentration: A Survey," Journal of Industrial Economics, Wiley Blackwell, vol. 31(3), pages 203-255, March.
    8. Robert M Grant, 1987. "Multinationality and Performance among British Manufacturing Companies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 18(3), pages 79-89, September.
    9. Briance Mascarenhas, 1986. "International Strategies of Non-Dominant Firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 17(1), pages 1-25, March.
    10. Alan Rugman, 1980. "Internalization as a general theory of foreign direct investment: A re-appraisal of the literature," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 116(2), pages 365-379, June.
    11. Shapiro, Helen & Taylor, Lance, 1990. "The state and industrial strategy," World Development, Elsevier, vol. 18(6), pages 861-878, June.
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    Cited by:

    1. repec:spr:manint:v:47:y:2007:i:3:d:10.1007_s11575-007-0021-5 is not listed on IDEAS
    2. Sara Urionabarrenetxea, 2010. "Decisive factors in company financial internationalization: an empirical study," Managerial Finance, Emerald Group Publishing, vol. 36(1), pages 22-43, February.
    3. Ele Reiljan, 2006. "The role of entrepreneurial actions in the de-internationalization of Estonian enterprises: entrepreneurs’ perceptions," University of Tartu - Faculty of Economics and Business Administration,in: Entrepreneurship in Estonia: policies, practices, education and research, volume 28, chapter 7, pages 139-153 Faculty of Economics and Business Administration, University of Tartu (Estonia).
    4. Zhang, Yijing & Toppinen, Anne & Uusivuori, Jussi, 2014. "Internationalization of the forest products industry: A synthesis of literature and implications for future research," Forest Policy and Economics, Elsevier, vol. 38(C), pages 8-16.


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