Session 33

Internationalization, Diversification & Performance

Track G

Date: Monday, October 8, 2012

 

Time: 13:30 – 14:45

Paper

Room: North Hall


Session Chair:

  • Joseph Clougherty, University of Illinois at Urbana-Champaign

Title: Drivers of International Growth: An Analysis of U.S. Franchisors’ Strategic Decisions in Expanding across Borders

Authors

  • Bart Devoldere, Vlerick Business School
  • Venkatesh Shankar, Texas A&M University

Abstract: Firms are increasingly going global to achieve high growth rates. Global growth is particularly important in the franchising context. This study investigates franchisors’ strategic decisions driving international performance. We collect data on overseas operations and strategic decisions of 50 U.S. franchisors across seven industries and 77 countries for the period 1994-2010. We account for firm unobserved heterogeneity by using random effects estimation. We find that a franchisor’s international system size is especially driven by cultural distance and speed of internationalization through a U-shaped respectively inverted U-shaped form. Also, with increasing demographic attractiveness a firm’s cultural distance has a less negative influence on international system size. And as cultural distance increases, the relationship between international franchise system size and proportion of company-owned outlets becomes more negative.

Title: Dynamic Performance Effects of Diversification into Emerging Markets: Evidence from the Retailing Industry

Authors

  • Timo Sohl, Pompeu Fabra University
  • Govert Vroom, IESE Business School
  • Thomas Rudolph, University of St. Gallen

Abstract: Drawing on the resource-based view and transaction cost economics, this study investigates the benefits and costs that might drive the dynamic relationship between an established multinational enterprise's (MNE) diversification into emerging markets and its firm performance. Using an unique dataset of the leading MNEs from the global retailing industry over thirteen years (from 1997 to 2009), we find a persistent inverted U-shaped relationship between diversification into emerging markets and profits. Thus, established MNEs that focus more intensively on a few emerging markets are able to outperform rivals that either decided not to diversify into emerging markets, were reluctant to commit sufficient resources to emerging markets, or diversified intensively into many emerging markets. However, when MNEs market a focused product portfolio, they are able to benefit by diversifying more intensively into various emerging markets. The study concludes with a discussion of established theoretical arguments in the context of emerging markets.

Title: Effects of International Diversification on the Relationship between Prior Product Diversification and Firm Performance

Authors

  • Diana Benito-Osorio, Rey Juan Carlos University
  • José Angel Zuñiga-Vicente, King Juan Carlos University
  • Alberto Colino, King Juan Carlos University
  • Luis Angel Guerras-Martin, University of Rey Juan Carlos

Abstract: This study explores empirical individual effects of product diversification on performance and joint effects of international diversification and a product diversification strategy implemented in the recent past on performance. Unlike prior research we posit that firm managers can implement one strategy before the other. We use a sample of Spanish manufacturing firms from 1994 to 2008. The results suggest an inverted-U relationship between product diversification and performance. We also show partial support for two essential assumptions: 1) international diversification can moderate the performance of firms that have implemented in the recent past a product diversification strategy; and 2) the moderating effect on firm performance of international diversification will be distinct in firms that have implemented different product diversification strategies in the recent past.

Title: International Intensity, Diversity, and Distance: The Performance Implications of Multinationality

Authors

  • Stewart Miller, University of Texas-San Antonio
  • Dovev Lavie, Technion-Israel Institute of Technology
  • Andrew Delios, National University of Singapore

Abstract: Despite extensive research, evidence on the performance implications of multinationality has been inconclusive. We seek to develop theory and reconcile the mixed evidence in prior research by unbundling three distinctive facets of multinationality, namely intensity, diversity and distance. We explain the causal mechanisms and contingencies that underlie the performance implications of these three facets of multinationality. Using data on the foreign subsidiaries of Japanese firms during 1985-2003, we confirm that international intensity and distance produce sigmoid effects on firm performance, yet for different reasons. Meanwhile, international diversity generates a U-shaped performance effect. A firm’s international experience enhances the performance effects of international diversity, while peer international experience improves the performance effects of international diversity and intensity. Neither type of experience improves the performance effect of international distance.

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


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