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A three-stage theory of international expansion: the link between multinationality and performance in the service sector

Listed author(s):
  • Farok J Contractor

    (School of Management, RutgersUniversity, USA)

  • Sumit K Kundu

    (Boeing Institute of InternationalBusiness, John Cook School of Business, Saint Louis University, USA)

  • Chin-Chun Hsu

    ([1] 2Boeing Institute of InternationalBusiness, John Cook School of Business, Saint Louis University, USA [2] 3The Overseas Chinese Institute ofTechnology, Taiwan, ROC)

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    It is generally assumed that the performance of a firm improves with greatermultinationality. Yet recent empirical studies have shown both a U-shapedrelationship (which suggests an initially negative effect of international expansionon performance, before the positive returns of international expansion arerealized) and an inverted-U-shaped relationship (which suggests thatinternational expansion beyond an optimal level is again detrimental toperformance, and results in a negative slope). This paper proposes a new unifiedthree-stage theory of international expansion that incorporates both concepts in asigmoid hypothesis. It then tests this on data from 11 service industries,highlighting the difference between knowledge-based and capital-intensiveservice sectors. Journal of International Business Studies (2003) 34,5–18. doi:10.1057/palgrave.jibs.8400003

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    Article provided by Palgrave Macmillan & Academy of International Business in its journal Journal of International Business Studies.

    Volume (Year): 34 (2003)
    Issue (Month): 1 (January)
    Pages: 5-18

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    Handle: RePEc:pal:jintbs:v:34:y:2003:i:1:p:5-18
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