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The home country in the age of globalization: how much does it matter for firm performance?

  • Hawawini, Gabriel
  • Subramanian, Venkat
  • Verdin, Paul

The globalization process has created considerable speculation on the impact of the home country environment to a firm's competitive advantage in international markets. Using a random effects model that is partly induced from the concept of comparative advantage and partly following the descriptive modeling of performance determinants, this paper explores the quantitative impact of home country environment on the performance for firms across 6 countries. The paper uses two value-based, i.e., risk adjusted and cash-flow based, measures of firm performance. The results indicate that the importance of country factors is low and firm-specific factors dominate performance across and within countries. The results also show that global industry effects are increasingly more important than country effects.

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

Volume (Year): 39 (2004)
Issue (Month): 2 (May)
Pages: 121-135

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Handle: RePEc:eee:worbus:v:39:y:2004:i:2:p:121-135
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