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Home market competitive pressure and the tendency to internationalise: An inverse U-shape

Author

Listed:
  • Mayer, Pascal
  • Schäper, Thomas

Abstract

Firm internationalisation has been a central topic of scholarly interest in international business for decades. However, the role of competitive pressure in firms' home markets for firm internationalisation has not been investigated for the full variety of market types, despite the central role of competition in firm strategy. In this study, we examine the relationship between home market competitive pressure, operationalised by the concept of market concentration, and firm internationalisation, and propose an inverted U-shape. We find evidence for our hypothesis based on longitudinal data from more than 27,000 firm-year observations between 2007 and 2019. Our results suggest that internationalisation increases with increasing market concentration up to a certain peak, after which internationalisation declines. Moreover, managerial ability and market fluidity intensity are two important contingencies that intensify this relationship and steepen the inverted U-shape. In revealing this non-linear relationship between home market competitive pressure and firm internationalisation, we contribute to the literature on firm strategy and international business.

Suggested Citation

  • Mayer, Pascal & Schäper, Thomas, 2024. "Home market competitive pressure and the tendency to internationalise: An inverse U-shape," Discussion Papers of the Institute for Organisational Economics 11/2024, University of Münster, Institute for Organisational Economics.
    • Handle: RePEc:zbw:umiodp:307137
    DOI: 10.17879/35948656850
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    More about this item

    Keywords

    Competition; Concentration; Internationalisation; Managerial Ability; Market Fluidity;
    All these keywords.

    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration

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