International Diversification and Firm Performance: The S-curve Hypothesis

Lu, Jane; Beamish, Paul W.

doi:10.5465/20159604

Cited by 279 publications

(362 citation statements)

References 38 publications

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“…When firms disaggregate their value chain activities and then integrate those discrete activities, they can reach higher levels of efficiency and productivity. This finding supports the theoretical arguments made in earlier research (Doh, 2005) and extends the work on the relationship between internationalization expansion and firm performance (e.g., Contractor et al, 2003;Lu & Beamish, 2004;Riahi-Belkaoui, 1998). Second, structuring the expansion of geographical dispersion conferring more location-specific advantages than disadvantages and balancing potential gains and risks demonstrates a firm's capabilities of relocation and accumulation.…”

Section: Discussionsupporting

confidence: 80%

“…On the one hand, this finding echoes the notion that firm performance depends on not only cost reduction but also access to highly skilled workers across dispersed locations (e.g., Fifarek & Veloso, 2010;Jensen, 2009;Nieto & Rodriguez, 2011). On the other hand, it leaves open the discussion about the possible negative impact of location factors and environmental dynamics associated with international expansion on firm performance (e.g., Lu & Beamish, 2004;Peng, 2002;Yang & Jiang, 2007;Zaheer, 1995). Following the theoretical logics of international expansion and environmental dynamism, third, we find that the effect of offshoring disaggregation on firm performance is escalated by geographical dispersion.…”

Section: Discussionmentioning

confidence: 64%

“…The literature of international expansion, particularly in geographic diversification, has indicated that geographical dispersion provides exploitation and exploration benefits, enabling a firm to gain above-normal returns (Contractor et al, 2003;Hitt, Hoskisson, & Kim, 1997;Lu & Beamish, 2004;Peng & Delios, 2006;Zahra et al, 2000). For example, recent research shows that geographical diversification and dispersion confers the potential of location-specific advantages whereby new capabilities develop in international markets (Qian, Khoury, Peng, & Qian, 2010;Rugman, Verbeke, & Nguyen, 2011).…”

Section: Hypothesesmentioning

confidence: 97%

“…The literature of international expansion has indicated that the degree of internationalization, which accounts for offshoring disaggregation, allows firms to generate economies of scales and scope and, consequently, achieve better firm performance (Contractor, Sumit, & Hsu, 2003;Dunning, 1988;Lu & Beamish, 2004;RiahiBelkaoui, 1998). Firms pursuing internationalization can exploit both foreign market opportunities and imperfections (Rugman, 1981) as well as relationships among business segments and geographic areas (Porter, 1985), take advantage of differences in factors markets (Porter, 1990), and benefit from the expanded learning environment provided by the international experience (Zahra, Ireland, & Hitt, 2000).…”

Section: Hypothesesmentioning

confidence: 98%

See 3 more Smart Citations

Structure offshoring and returns on offshoring

Hung

2014

Asia Pac J Manag

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Focusing on global offshoring, this paper adapts the dynamic capabilities perspective to analyze how the structuring of offshoring disaggregation and geographical dispersion affects firm performance. While previous studies show that the returns on offshoring remain unclear, we present three findings that explain how the structuring of offshoring disaggregation and geographical dispersion influences firm performance. First, the larger the level of offshoring disaggregation, the better the firm performs. Second, the more geographical dispersion, the better the firm performs. Third, the effect of offshoring disaggregation on firm performance is greater when the firm structures and offshores its disaggregated value chain activities to dispersed locations. While economies of scale and learning may guide firms to offshore many discrete activities of the value chain, firms are able to gain the most returns from the structuring of offshoring disaggregation when they reconfigure lots of offshoring projects implemented in dispersed locations where environmental dynamism concurs.Offshoring is an important strategic choice that has fascinated the scholars of transaction cost economics, the resource-based view, and international business (Boehe, 2010;

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Section: Discussionsupporting

confidence: 80%

Section: Discussionmentioning

confidence: 64%

Section: Hypothesesmentioning

confidence: 97%

Section: Hypothesesmentioning

confidence: 98%

See 2 more Smart Citations

Structure offshoring and returns on offshoring

Hung

2014

Asia Pac J Manag

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“…The dummy approach helped control for exogenous country of origin effects (Buckley & Casson, 2009). Change in foreign exchange rate may affect firm performance (Lu & Beamish, 2004). I constructed a variable to control for the influence of foreign exchange rate using the logarithm of exchange rate between the US dollar and a country's currency in each year over the period.…”

Section: Variablesmentioning

confidence: 99%

Learning breakdown in latecomer multinational enterprises

Tian

2017

Asia Pac J Manag

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Integrating the linkage, leverage, and learning (LLL) model with institutional economics, this paper develops a moderated mediation framework to examine the relationship between internationalization and the performance of multinational enterprises from latecomer economies (latecomer MNEs). In the framework, whether a latecomer MNE may succeed in learning and knowledge-led profit gains from internationalization is contingent on the development of market-oriented institutions in the country in which it is based. Latecomer MNEs based in countries with a high level of the development of market-oriented institutions are likely to succeed in learning to obtain knowledge-led profit gains from internationalization. Latecomer MNEs based in countries with a low level of the development of market-oriented institutions are likely to experience a breakdown in learning, and a failure in knowledge-led profit gains from internationalization. This paper provides robust evidence on the relationship between internationalization and the performance of latecomer MNEs conditional on the development of market-oriented institutions in their home countries, and discusses strategic implications for latecomer MNE managers.

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Agribusiness diversification and technological innovation efficiency: A U‐shaped relationship

Zhang

Sun

et al. 2022

Agribusiness

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In recent years, agribusiness firms have increasingly diversified their product portfolio and expanded into new business areas through internal growth or acquisition, which can lead to the reallocation of innovation resources. This study examines the impact of agribusiness diversification (AD) on technological innovation efficiency (TIE) in China. Based on an 8‐year longitudinal dataset of 101 Chinese listed agribusiness firms from 2012 to 2019, this study applies the Tobit regression technique to reveal the underlying mechanism between AD and TIE. The empirical results show that: (1) the AD‐TIE relationship follows a U‐shaped pattern, that is, at low levels of AD, the AD‐TIE relationship is negative; at high levels of AD, the AD‐TIE relationship is positive. (2) government subsidies (GS) negatively moderate the U‐shaped relationship between AD and TIE, such that GS flattens the U‐shaped curve. Our findings have important implications for agribusiness managers and public policymakers. [EconLit citations: H25, L25, Q16].

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International Diversification and Firm Performance: The S-curve Hypothesis

Cited by 279 publications

References 38 publications

Structure offshoring and returns on offshoring

Structure offshoring and returns on offshoring

Learning breakdown in latecomer multinational enterprises

Agribusiness diversification and technological innovation efficiency: A U‐shaped relationship

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