Firms from advanced emerging markets are becoming notable players in the global marketplace. This study seeks to examine how these firms expand to international markets successfully. Drawing on R&D intensity and learning capability, this study finds that an s-shaped relationship exists between firm internationalization and performance. The results also show that R&D intensity and learning capability significantly strengthen the impact of internationalization on firm performance. These results imply that R&D intensity and learning capability are the main drivers of success for firms from advanced emerging markets in foreign markets.
This study investigates the relationship between internationalization and performance for multinational enterprises (MNEs) from advanced emerging markets (FTSE classification, 2012). While previous studies extensively examine this issue, they suffer from three main problems. First, there is no consensus on the shape of the relationship between a firm's internationalization and its performance. Past studies have proposed a linear relationship (Delios and Beamish, 1999 and Tallman and Li, 1996), U-shaped (Lu and Beamish, 2001, Ruigrok and Wagner, 2003 and Thomas, 2006), inverted U-shaped (Elango, 2006 and Gomes and Ramaswamy, 1999) and S-shaped ones (Contractor et al., 2003, Johnson et al., 2009 and Lu and Beamish, 2004). Second, researchers have made little effort to identify the factors that play a critical role in moderating the relationship between internationalization and performance. While prior studies suggests that product diversity (Hitt, Hoskisson, & Ireland, 1994), innovation strategies (Kotabe, Srinivasan, & Aulakh, 2002), marketing and R&D intensity (Barsch and Krist, 2007 and Lu and Beamish, 2004) are important moderators in the internationalization and performance relationship, this paper considers that other factors are also significant. Third, previous studies focus on MNE behavior from the triad economies in the context of emerging economies (Ramamurti, 2004), with only a few studies specifically examining this issue for firms from emerging markets (Contractor et al., 2007, Elango, 2006 and Thomas, 2006). A better understanding of how such firms expand globally is vital for both academics and practitioners (London & Hart, 2004).
This paper attempts to fill gaps in the previous research by examining the internationalization–performance relationship of advanced emerging market firms. In particular, it addresses the following two questions: (1) what is the relationship between internationalization and performance for firms from advanced emerging markets? (2) What factors moderate this relationship in addition to those previously identified?
Using data from the top 200 firms from Taiwan, this paper finds that the internationalization–performance relationship is non-linear. A firm's R&D intensity and learning capability moderate the internationalization and performance relationship. In other words, a firm's mere presence in international markets does not automatically lead to superior performance, and its multinational efforts must be coupled with its strong learning ability to produce satisfactory economic outcomes.
The rest of this paper is structured as follows. First, this paper reviews the major findings of previous studies on the internationalization–performance relationship. Second, this paper develops a conceptual framework and presents the research hypotheses. Third, it discusses the research methods and provides the empirical results. Finally, it provides some conclusions along with managerial implications and suggestions for future research.
The results of this study illustrate that the relationship between internationalization and performance can be significantly moderated by intangible assets. This highlights the need for managers to consider how a firm's intangible assets leverage its competence and performance in the process of geographic expansion. By underscoring the importance of a firm's capabilities to its performance in the process of internationalization, this work advances our understanding of the relationship between internationalization and performance. In particular, while the literature rarely focuses on the role of learning capability in this process, the results of this study indicate that it has a significant impact on how successful a firm is in its efforts to expand to other countries.
