Performance effects of multinationality: evidence from European companies Online publication date: Fri, 30-Sep-2016
by Arkadiusz Ral-Trebacz
European J. of International Management (EJIM), Vol. 10, No. 6, 2016
Abstract: The relationship between multinationality and performance is a relevant research field in international business. The most prominent theoretical paradigm to describe this relation can be derived from the three-stage theory of international expansion, which was developed with regard to US companies. Therefore, it may be questionable if the three-stage approach is also applicable for firms from other countries, e.g. from Europe. We find that the multinationality-performance relationship is contingent upon some characteristics of the home region, in which a company has its headquarters. Furthermore, we show that the multinationality effect differs with regard to the performance measurement: while employing a financial performance indicator we find an inverted S-shaped relationship; for the market-based performance proxy, the link between multinationality and performance has an inverted U-shaped form. In addition, greater investments in marketing-related intangible assets can help companies to reduce the liabilities of being new and foreign, consequently leading to superior performance.
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