Home country uncertainty and the internationalization-performance relationship: Building an uncertainty management capability |
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Affiliation: | 1. Northeastern University, D’Amore-McKim School of Business, 360 Huntington Avenue, Boston, MA 02115, USA;2. King’s College, Department of International Development, London, WC2R 2LS, UK;3. Butler University, Lacy School of Business, 4600 Sunset Ave, Indianapolis, IN 46208, USA;4. INCAE Business School, Campus Walter Kissling Gam, Alajuela, Costa Rica;1. University Of Sussex, Jubilee Building, Brighton BN1 9SL, United Kingdom;2. School of Business and Law, University of Agder, Kristiansand, Norway;3. Research Institute of Industrial Economics, Stockholm and Knut Wicksell Centre for Financial Studies, Lund University, Sweden;1. School of Business, Trinity University,One Trinity Place, San Antonio, Texas, TX78212, USA;2. Department of Management Science and Statistics, College of Business, University of Texas at San Antonio, One UTSA Circle, San Antonio, Texas, TX78249, USA;1. Dipartimento di Scienze economiche e aziendali, Università di Pavia, Via S. Felice, 5 − Pavia, 27100 Italy;2. Dipartimento di Scienze dell’economia e della gestione aziendale, Università Cattolica del Sacro Cuore, Milano 20123, Italy;3. Dipartimento di Scienze Economiche, Università di Bologna, Bologna, 40125, Italy;4. Adam Smith Business School, University of Glasgow, Glasgow G12 8QQ Scotland, United Kingdom;1. The Open University Business School, Department of Strategy and Marketing, Michael Young Building (D1), Walton Hall, Milton Keynes, Buckinghamshire, MK7 6AA, UK;2. University of Oviedo, Department of Management, Avda. Cristo s/n., Oviedo, 33071, Spain;3. The Wharton School, University of Pennsylvania, 2016 Steinberg-Dietrich Hall, Philadelphia, PA 19104-6370, USA;1. The Chinese University of Hong Kong, Department of Management, Shatin, N.T., Hong Kong;2. University of Reading, Henley Business School, Department of Leadership, Organisations and Behaviour, Henley Center for Entrepreneurship, Whiteknights, Reading RG6 6UDE, United Kingdom;3. Faculty of Business Administration, University of Macau, Avenida da Universidade, Taipa, Macau |
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Abstract: | We analyze the impact of home country uncertainty on the internationalization-performance relationship of emerging market firms. Building on organizational learning theory and the institutional approach, we argue that internationalization has a positive impact on the performance of emerging market firms, and that this relationship is strengthened for firms based in emerging countries with higher corruption and political risk. The reason is that by being exposed to high levels of home country uncertainty in the form of political risk and corruption, firms develop an uncertainty management capability at home that helps them face the challenges of internationalization better. We also propose that this uncertainty management capability helps emerging market firms perform better outside of their home region. We test our arguments on a sample of 536 firms from Argentina, Brazil, Chile, and Peru. |
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Keywords: | Internationalization Performance Uncertainty Political risk Corruption Emerging markets Multinational firms Latin America Region |
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