TY - JOUR
T1 - The relationship between multinationality and performance
T2 - Knowledge-intensive vs. capital-intensive service micro-multinational enterprises
AU - Shin, Joonho
AU - Mendoza Mayordomo, F.
AU - Hawkins, Matthew A.
AU - Choi, Changbum
N1 - Publisher Copyright:
© 2017 Elsevier Ltd
PY - 2017/10
Y1 - 2017/10
N2 - This research explores the relationship between multinationality and firm performance (M-P) in the context of micro-multinational enterprises (mMNEs) within the service sector. We examine the moderating effects of industry characteristics using a data set of 1082 Spanish service mMNEs over an eight-year period. The empirical results provide statistical evidence that knowledge-intensive service mMNEs exhibit an inverted U-shaped M-P relationship, while capital-intensive service mMNEs present a U-shaped relationship. Our findings demonstrate that knowledge-intensive service mMNEs increase their performance in the initial stage of multinationality, encounter a threshold of internationalization at relatively low levels of multinationality and have a propensity to over-internationalize. By comparison, capital-intensive service mMNEs experience negative performance effects at low levels of multinationality and positive ones as they further internationalize. Given that their operations are scale-sensitive, they tend to expand internationally by concentrating their operations in few foreign markets as a means to overcome the liabilities of internationalization and smallness. We contribute to the literatures on multinationality research in the service sector and on SME internationalization by showing that the effects of multinationality on the performance of mMNEs depend on industry characteristics and that such contextual factors provide a better understanding of the M-P relationship.
AB - This research explores the relationship between multinationality and firm performance (M-P) in the context of micro-multinational enterprises (mMNEs) within the service sector. We examine the moderating effects of industry characteristics using a data set of 1082 Spanish service mMNEs over an eight-year period. The empirical results provide statistical evidence that knowledge-intensive service mMNEs exhibit an inverted U-shaped M-P relationship, while capital-intensive service mMNEs present a U-shaped relationship. Our findings demonstrate that knowledge-intensive service mMNEs increase their performance in the initial stage of multinationality, encounter a threshold of internationalization at relatively low levels of multinationality and have a propensity to over-internationalize. By comparison, capital-intensive service mMNEs experience negative performance effects at low levels of multinationality and positive ones as they further internationalize. Given that their operations are scale-sensitive, they tend to expand internationally by concentrating their operations in few foreign markets as a means to overcome the liabilities of internationalization and smallness. We contribute to the literatures on multinationality research in the service sector and on SME internationalization by showing that the effects of multinationality on the performance of mMNEs depend on industry characteristics and that such contextual factors provide a better understanding of the M-P relationship.
KW - Micro-multinational enterprises
KW - Multinationality and performance relationship
KW - SME internationalization
KW - Service industry
KW - Spain
UR - http://www.scopus.com/inward/record.url?scp=85014529941&partnerID=8YFLogxK
U2 - 10.1016/j.ibusrev.2017.02.005
DO - 10.1016/j.ibusrev.2017.02.005
M3 - Article
AN - SCOPUS:85014529941
SN - 0969-5931
VL - 26
SP - 867
EP - 880
JO - International Business Review
JF - International Business Review
IS - 5
ER -