Toward More Effective Research On the Multinationality-Performance Relationship

Zusammenfassung

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This paper revisits the mainstream academic perspective on the relationship between multinationality and performance (MP). The authors argue that most, if not all, past empirical work on this international management topic is flawed from a conceptual perspective since there is no valid theoretical rationale that would predict a generalizable MP relationship. They suggest that useful empirical work on the MP linkage requires prior analysis of the key parameters underlying the substance of the multinationality concept in specific empirical settings. They revisit the MP relationship, and elaborate on three key parameters underlying the substance of the multinationality concept: Variety of strategic motivations for FDI, environmental complexity resulting from bundles of discrete FDI decisions, and organizational complexity.

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Auszug

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Toward More Effective Research On the Multinationality-Performance Relationship

Introduction

The study of the multinationality-performance (MP) relationship has occupied a prominent place in the international management literature for the past thirty years. "M" is the relative extent of a firm's international activities (typically measured by the ratio of foreign sales or assets, to total sales or assets), and "P" is usually a firm's financial return (typically measured as the return on sales or assets, or as Tobin's q). The importance of the MP relationship is exemplified by the sheer number of empirical articles on this topic in major journals such as the Academy of Management Journal, Strategic Management Journal, Journal of International Business Studies, and Management International Review. The reasons for the significant attention to this topic are straightforward: First, if there were an "optimal" level of multinationality that would lead to superior multinational enterprise (MNE) performance, given certain boundary conditions, managers should try to guide their firms in this direction. Second, large databases containing both performance data and quantitative data on multinationality levels of firms operating internationally - however imperfect - are readily available to researchers in many countries, and lend themselves to sophisticated statistical analysis.

Despite the large number of empirical studies, the statistical findings on the MP relationship have been inconsistent (see the recent studies by Capar/Kotabe 2003, Contractor/ Kundu/Hsu 2003, Lu/Beamish 2004, Ruigrok/Wagner 2003, and the discussion in Thomas/Eden 2004). With few exceptions (e.g., Annavarjula/Beldona 2000, Des...

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