Multinational risk and performance outcomes: Effects of knowledge intensity and industry context |
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| Authors: | Torben Juul Andersen |
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| Institution: | 1. Texas A&M University - Central Texas, 1001 Leadership Pl, Killeen, TX 76549, United States;2. Monte Ahuja College of Business, Cleveland State University, 1860 E 18th St, Cleveland, OH 44114, United States;3. University of Michigan-Flint, 303 E. Kearsley Street, Flint, MI 48502, United States;1. Marketing and Retailing, Trier University, Germany, Department of Business Administration, Universitaetsring 15, D-54286 Trier, Germany;2. Trier University, Germany;1. Department of Management, University of Miami, Coral Gables, FL 33124, United States;2. Sun Yat-Sen University Business School, Guangzhou, China;1. Department of Marketing, International Business & Strategy, Goodman School of Business, Brock University, St. Catharines, Ontario, Canada;2. School of Business, Beijing University, Beijing, China;3. Marketing and International Business, School of Business, Nankai University, Tianjin, China;4. School of Business, The Hang Seng University of Hong Kong, Lee Quo Wei Academic Building, Siu Lek Yuen, Shatin, Hong Kong;1. School of East Asia Studies, University of Sheffield, 6-8 Shearwood Road, Sheffield S10 2TD, United Kingdom;2. Henley Business School, International Business and Strategy, University of Reading, Whiteknights Campus, Reading RG6 6AH, United Kingdom |
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| Abstract: | A multinational presence can diversify corporate business activities and provide access to diverse overseas resources. This can enhance operational flexibility and create new business propositions that increase responsiveness to global market changes. Establishing an international corporate structure may also require irreversible investments and impose maintenance and processing costs that contravene the implied resilience and agility benefits. We distinguish between downside risk and upside potential as the relevant outcome measures to assess the implied advantages of multinationality. Consistent with the rationales of the OLI paradigm, we argue that multinational reach particularly in knowledge-based industries can reduce downside risk and enhance upside potential. These results introduce more nuances to the ongoing debate about multinational risk and performance effects. Based on a large cross-sectional dataset, we find that flexibility and responsiveness thrives on a multinational presence among firms operating in information-driven knowledge businesses. In contrast, internationalizing firms in capital-based network services display adverse risk effects. |
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