Title: Globalisation: blessing or curse? Evidence from the insurance industry

Authors: Christian Biener; Martin Eling; Ruo Jia

Addresses: University of St. Gallen, Girtannerstrasse 6, CH-9010 St. Gallen, Switzerland ' University of St. Gallen, Girtannerstrasse 6, CH-9010 St. Gallen, Switzerland ' Department of Risk Management and Insurance, School of Economics, Peking University, Yiheyuan Rd. 5, Beijing, 100871, China

Abstract: A central debate in international business is whether there is a relationship between internationalisation and firm performance, and if so, what its shape and contingent factors are. We use a sample of European insurance companies to show that industry context and cost efficiency are contingent factors of this relationship. Life insurers, particularly those focusing on cost leadership, exhibit a negative impact of globalisation (G) on firm performance (P). We proxy cost leadership by a novel multidimensional measure of cost efficiency and show that it negatively moderates the G-P relationship in the life insurance industry. In contrast, there is no significant G-P relationship and no cost efficiency moderating effect in the nonlife insurance industry. We attribute these results to the higher liability of foreignness driven by greater distance in the globalisation process and by the greater importance of cost efficiency in life insurance as opposed to nonlife insurance.

Keywords: globalisation; liability of foreignness; cost efficiency; data envelopment analysis; cost leadership strategy; insurance.

DOI: 10.1504/EJIM.2021.113232

European Journal of International Management, 2021 Vol.15 No.2/3, pp.457 - 483

Accepted: 04 Jun 2019
Published online: 30 Jan 2021 *

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