Interconnecting financial performance and internationalization: a case of a rare metal producer

Abstract

The paper aims to outline the causes that affected a rare earth metal producer Molycorp Silmet's internationalization based on case study evidence. Moreover, based on statistical analysis, it aims to study how its internationalization and financial performance were interconnected. It concludes that 1) its export fluctuations mostly resulted from external factors and that despite such fluctuations, the firm's financial health was mostly good, 2) high concentration on a single target market can lower profitability, 3) fluctuations in target market shares can increase or decrease a firm's profitability, but they are not interconnected with its bankruptcy probability.

A literature review on CEE firms’ internationalization: success measurement, achievement and outcomes

“…Thus, three databases – Scopus, Google Scholar and Thomson Reuters’ Web of Science – were searched to find out whether they had published any other articles or book chapters that could be included into the analysis. As a result, 16 publications (Ciszewska-Mlinarič, 2015; Ciszewska-Mlinarič and Trapczyński, 2019a, 2019b; Ciszewska-Mlinarič et al , 2012; Ciszewska-Mlinarič et al , 2020; Lukason and Vissak, 2016; Lukason et al , 2021; Miranda García et al , 2019; Panibratov, 2016; Panibratov and Klishevich, 2020; Panibratov et al , 2022; Trapczynski, 2016b, Trąpczyński et al , 2016; Vissak, 2022a, 2022b, Wójcik and Ciszewska-Mlinarič, 2020) were added. Thus, in total, 113 publications will be analysed in the following sections.…”

“…Some authors have used high profitability as an indicator of successful internationalization as being profitable is all firms’ main goal (Bulis et al , 2021; Yang and Niedzielska, 2017). For measuring profitability, various indicators – including return on equity (ROE), return on assets (ROA) and/or return on sales (ROS) – have been used in some studies (Barłożewski and Trąpczyński, 2021a, 2021b) and operating cash flow divided by net sales (Lukason and Vissak, 2016), earnings before interest and taxes (EBITTA), or retained earnings to total assets (RETA) in others (Lukason and Vissak, 2019). In addition, high productivity – for example, value added per employee – has been used as a success indicator (Vranchev, 2022).…”

Are Neoclassic Internationalization Models Enduring? A Case-Review of the Uppsala Paradigm

“…Conversely, Lukason and Vissak (2016) on their research upon the rare earth metal (REM) producers' internationalization, focuses their attention on the bottom line question of international failure and international success (IS), through the observation of the crossbred of the markets with the financial performance, as the latter is considered a key measurement of IS, which is defined as the ability to effectively recombine firm-specific advantages (FSAs) across borders (Coviello et al, 2017). Here, Lukason and Vissak (2016) argue that pace (fast or slow internationalization) per se, does not determine performance, referring to the connection of financial performance and international activities. In fact, the authors advocate that the widespread internationalization failures are due to the firm's adoption of conventional models as a process or BG approach.…”

“…Forsgren (2016) has recently explicitly stated that a specific model [the 1977 model] is not needed, because firms' internationalization is fully captured in models of firms' general business behaviour, for instance in models of how firms' grow by strengthening their position in business networks. (p. 1142) The discrepancies of the original rationale of the 1977 model to the contemporary business practices was accentuated by newer frameworks adding alternatives to the pallet of architectures of IB, but with less-contingent designs portrayed in the rational, sinusoidal, and nonlinear patterns of foreign venturing (Lukason & Vissak, 2016;Prange & Verdier, 2011;Sheppard & McNaughton, 2012). For instance, early internationalization, or born-global (BG) establishment, is advocated as more suitable models for current times, due to the detachment to gradualism and bold risk-taking (Ciravegna et al, 2019;Dimitratos et al, 2008;Gabrielsson et al, 2006;Schwens et al, 2018).…”

“…In fact, the authors advocate that the widespread internationalization failures are due to the firm's adoption of conventional models as a process or BG approach. Lukason and Vissak (2016) posit a serial nonlinearity (SNL) model of a rather unpredictable and selective commitment within a portfolio of already established and prospective markets, which implies a fluctuating approach, envisioning market-entry and commitment and divestment and re-entering adapted the dynamism and conditions of the markets.…”