Session 32

The Dynamics of Internationalization

Track G

Date: Monday, October 8, 2012


Time: 08:00 – 09:15


Room: North Hall

Session Chair:

  • Gabriel R G Benito, BI Norwegian Business School

Title: Corporate Strategic Responses to Increased Foregin Market Penetration in the United States


  • Thomas Hutzschenreuter, Technical University of Munich
  • Ingo Kleindienst, Aarhus University
  • Florian Groene, WHU - Otto Beisheim School of Management
  • Alain Verbeke, University of Calgary

Abstract: Few studies have explored domestic firms’ dynamic corporate responses to an increase in foreign market penetration in their home market. We develop a new conceptual framework, building upon elements from prospect theory and portfolio theory, to explain domestic firms changing their product and geographic scope when facing increased market penetration by foreign MNEs. We hypothesize that the corporate strategic response selected by domestic incumbents will depend on these incumbents’ framing of the challenge posed by the increased foreign market penetration. We find that domestic incumbents reduce their product and geographic diversification when facing increased import penetration. However, facing FDI, the corporate response appears to be an increase in product and geographic diversification. Combining insights from prospect theory and portfolio theory explains this unexpected outcome.

Title: Country Relatedness and International Coherence


  • Sokol Celo, Suffolk University
  • Aya Chacar, Florida International University

Abstract: International business research considers country distance as independent of firm actions. Borrowing from industry relatedness research, we propose an alternative approach computing ‘country relatedness’, the inverse of distance using ‘survivor’ data culled from the very actions of these firms. To test the predictive validity of country relatedness for investment decisions, we hypothesize that MNEs characterized by high levels of international coherence, the degree to which they operate in related countries, will have a superior performance. Our empirical work starts by computing country relatedness for 24,000 country pairs, using investment data for all public MNEs worldwide. The empirical analysis finds support for the link between international coherence and performance for a sample of 1,000 U.S. MNEs supporting the validity of the country relatedness measures proposed.

Title: How do Inward Activities Lead to Outward Activities? Evidence from China


  • Haiyang Li, Rice University
  • Xiwei Yi, Rice University
  • Yan Anthea Zhang, Rice University
  • Geng Cui, Lingnan University

Abstract: Drawing upon both the learning perspective and the prospect theory, we examine the relationship between inward and outward activities in the context of Chinese firms. Our results support both lines of arguments and suggest that inward gain is negatively related to outward activities but inward gain can increase outward activities through its positive effect on a firm’s resource fungibility.

Title: Strategic Change in Emerging Economy Firm Internationalization


  • Vikas Kumar, University of Sydney
  • Garry Bruton, Texas Christian University
  • Ajai Gaur, Rutgers University

Abstract: Emerging economy firms are becoming more prevalent on the international stage. While traditionally most emerging economy firms operate in international markets through exporting, many in the recent past have shifted their international operating strategy to include foreign direct investment (FDI). This significant strategic change we show here is dependent on learning. Such learning in fact allows younger firms to change their path dependency while older firms in the same economy find such change more difficult. The evidence for these arguments is drawn from a longitudinal examination of 28,563 firm-year observations in a major emerging economy over 1989 to 2005.

All Sessions in Track G...

Sun: 08:00 – 09:15
Session 129: Strategy Implementation: Global Challenges
Sun: 09:30 – 10:45
Session 130: Practicing Strategy in Transition Economies: Reframing, Rethinking and Renewing
Sun: 11:15 – 12:30
Session 131: Global Strategies in the Service Sector
Sun: 15:15 – 16:30
Session 29: Strategy and Outsourcing
Mon: 08:00 – 09:15
Session 32: The Dynamics of Internationalization
Mon: 09:30 – 10:45
Session 34: Emerging Market/Advanced Market Strategic Interactions
Mon: 13:30 – 14:45
Session 33: Internationalization, Diversification & Performance
Mon: 16:30 – 17:45
Session 35: Entry Modes, Exit and Outcomes
Session 39: Global Strategies
Tue: 08:00 – 09:15
Session 37: Subsidiary Strategy
Tue: 11:00 – 12:15
Session 41: International M&A as an Entry Mode Strategy
Tue: 14:15 – 15:30
Session 30: Politics, Institutions, Political Risk & Global Strategy
Tue: 15:45 – 17:00
Session 40: Knowledge, Innovation and Global Strategy
Session 42: A Q&A with Pilsner Urquell: Strategy from a Small Nation
Tue: 17:30 – 18:45
Session 38: Global Managers and Managing Globally

Strategic Management Society