IDEAS home Printed from https://ideas.repec.org/p/ulb/ulbeco/2013-14190.html
   My bibliography  Save this paper

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

Author

Listed:
  • Gabriel Hawawini
  • Venkata Subban Subramanian
  • Paul Verdin

Abstract

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. © 2003 Elsevier Inc. All rights reserved.

Suggested Citation

  • Gabriel Hawawini & Venkata Subban Subramanian & Paul Verdin, 2004. "The home country in the age of globalization: how much does it matter for firm performance?," ULB Institutional Repository 2013/14190, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:ulb:ulbeco:2013/14190
    Note: SCOPUS: ar.j
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Karen K. Lewis, 1999. "Trying to Explain Home Bias in Equities and Consumption," Journal of Economic Literature, American Economic Association, vol. 37(2), pages 571-608, June.
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. Feldstein, Martin & Horioka, Charles, 1980. "Domestic Saving and International Capital Flows," Economic Journal, Royal Economic Society, vol. 90(358), pages 314-329, June.
    4. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-351, June.
    5. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2003. "Is performance driven by industry‐or firm‐specific factors? A new look at the evidence," Strategic Management Journal, Wiley Blackwell, vol. 24(1), pages 1-16, January.
    6. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
    7. Bruce Kogut & Harbir Singh, 1988. "The Effect of National Culture on the Choice of Entry Mode," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 19(3), pages 411-432, September.
    8. Roll, Richard, 1992. "Industrial Structure and the Comparative Behavior of International Stock Market Indices," Journal of Finance, American Finance Association, vol. 47(1), pages 3-41, March.
    9. M Krishna Erramilli, 1996. "Nationality and Subsidiary Ownership Patterns in Multinational Corporations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(2), pages 225-248, June.
    10. Coakley, Jerry & Kulasi, Farida & Smith, Ron, 1998. "The Feldstein-Horioka Puzzle and Capital Mobility: A Review," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 3(2), pages 169-188, April.
    11. ANITA M. McGAHAN & MICHAEL E. PORTER, 1997. "How Much Does Industry Matter, Really?," Strategic Management Journal, Wiley Blackwell, vol. 18(S1), pages 15-30, July.
    12. Harry G Barkema & Freek Vermeulen, 1997. "What Differences in the Cultural Backgrounds of Partners Are Detrimental for International Joint Ventures?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(4), pages 845-864, December.
    13. French, Kenneth R & Poterba, James M, 1991. "Investor Diversification and International Equity Markets," American Economic Review, American Economic Association, vol. 81(2), pages 222-226, May.
    14. Richard P. Rumelt, 1991. "How much does industry matter?," Strategic Management Journal, Wiley Blackwell, vol. 12(3), pages 167-185, March.
    15. Heston, Steven L. & Rouwenhorst, K. Geert, 1994. "Does industrial structure explain the benefits of international diversification?," Journal of Financial Economics, Elsevier, vol. 36(1), pages 3-27, August.
    16. Villalonga, Belen, 2000. "Does Diversification Cause the “Diversification Discount”?," University of California at Los Angeles, Anderson Graduate School of Management qt40v212gm, Anderson Graduate School of Management, UCLA.
    17. Jay B. Barney, 1986. "Strategic Factor Markets: Expectations, Luck, and Business Strategy," Management Science, INFORMS, vol. 32(10), pages 1231-1241, October.
    18. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-623, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Enrique Martínez García, 2008. "Globalization and monetary policy: an introduction," Globalization Institute Working Papers 11, Federal Reserve Bank of Dallas.
    2. Galbreath, Jeremy & Galvin, Peter, 2008. "Firm factors, industry structure and performance variation: New empirical evidence to a classic debate," Journal of Business Research, Elsevier, vol. 61(2), pages 109-117, February.
    3. Maurice Obstfeld & Kenneth Rogoff, 2001. "The Six Major Puzzles in International Macroeconomics: Is There a Common Cause?," NBER Chapters, in: NBER Macroeconomics Annual 2000, Volume 15, pages 339-412, National Bureau of Economic Research, Inc.
    4. Chen, Yi-Min, 2010. "The continuing debate on firm performance: A multilevel approach to the IT sectors of Taiwan and South Korea," Journal of Business Research, Elsevier, vol. 63(5), pages 471-478, May.
    5. Ketelhöhn, Niels W. & Quintanilla, Carlos, 2012. "Country effects on profitability: A multilevel approach using a sample of Central American firms," Journal of Business Research, Elsevier, vol. 65(12), pages 1767-1772.
    6. Juan Regino Maldonado & Wen Yali & Frederick Cubbage & Patricia Regino Maldonado, 2017. "Forest Resources in the Performance of Mexican Community Forest Enterprises in a Vertical Integration System," International Journal of Sciences, Office ijSciences, vol. 6(09), pages 1-15, September.
    7. Arend, Richard J., 2009. "Industry effects and firm effects: No effect is an island," Journal of Business Research, Elsevier, vol. 62(6), pages 651-659, June.
    8. Michele Fratianni, 2004. "Borders and the Constraints on Globalization," Working Papers 2004-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    9. Weiß, Christian, 2010. "The Ownership Concentration of Firms: Three Essays on the Determinants and Effects," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 30247, July.
    10. Pankaj Kumar & Xiaojin Liu & Akbar Zaheer, 2022. "How much does the firm's alliance network matter?," Strategic Management Journal, Wiley Blackwell, vol. 43(8), pages 1433-1468, August.
    11. Mena, Jeannette A. & Hult, G. Tomas M. & Ferrell, O.C. & Zhang, Yufei, 2019. "Competing assessments of market-driven, sustainability-centered, and stakeholder-focused approaches to the customer-brand relationships and performance," Journal of Business Research, Elsevier, vol. 95(C), pages 531-543.
    12. Lee, Junyong & Lee, Kyounghun & Oh, Frederick Dongchuhl, 2023. "International portfolio diversification and the home bias puzzle," Research in International Business and Finance, Elsevier, vol. 64(C).
    13. Francesco Castellaneta & Oliver Gottschalg, 2016. "Does ownership matter in private equity? The sources of variance in buyouts' performance," Strategic Management Journal, Wiley Blackwell, vol. 37(2), pages 330-348, February.
    14. Axel Börsch‐Supan & Alexander Ludwig & Joachim Winter, 2006. "Ageing, Pension Reform and Capital Flows: A Multi‐Country Simulation Model," Economica, London School of Economics and Political Science, vol. 73(292), pages 625-658, November.
    15. Yi-Min Chen, 2008. "How Much Does Country Matter?," International Regional Science Review, , vol. 31(4), pages 404-435, October.
    16. Martin, Philippe & Rey, Helene, 2004. "Financial super-markets: size matters for asset trade," Journal of International Economics, Elsevier, vol. 64(2), pages 335-361, December.
    17. M. Leroch & C. Reggiani & G. Rossini & E. Zucchelli, 2012. "Religious attitudes and home bias: theory and evidence from a pilot study," Working Papers wp811, Dipartimento Scienze Economiche, Universita' di Bologna.
    18. Coeurdacier, Nicolas, 2009. "Do trade costs in goods market lead to home bias in equities?," Journal of International Economics, Elsevier, vol. 77(1), pages 86-100, February.
    19. Nicolas Coeurdacier & Hélène Rey, 2013. "Home Bias in Open Economy Financial Macroeconomics," Journal of Economic Literature, American Economic Association, vol. 51(1), pages 63-115, March.
    20. Arribas Ivan & Perez Francisco & Tortosa-Ausina Emili, 2010. "The Determinants of International Financial Integration Revisited: The Role of Networks and Geographic Neutrality," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 15(1), pages 1-55, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ulb:ulbeco:2013/14190. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Benoit Pauwels (email available below). General contact details of provider: https://edirc.repec.org/data/ecsulbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.