The internationalization and performance of a firm: Moderating effect of a firm's behavior

Journal of International Management 17 (2011) 83–95

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Journal of International Management

The internationalization and performance of a firm: Moderating effect of a firm's behavior☆ Wen-Ting Lin a,1, Yunshi Liu b,⁎, Kuei-Yang Cheng c,2 a b c

College of Management, Department of Business Administration, National Chung Cheng University, Chiayi, Taiwan College of Management, Department of Business Administration, National Yunlin University of Science and Technology, Taiwan College of Management, Department of International Business, National Taiwan University, 1 Section 4, Roosevelt Road, Taipei 10617, Taiwan

a r t i c l e

i n f o

Available online 26 January 2011 Keywords: Internationalization Performance Organizational slack Attainment discrepancy

a b s t r a c t Empirical studies show mixed results regarding the relationship between a firm's internationalization and performance. One reason is that these studies used various economic market firms as their research sample. Thus, this study on a firm's internationalization is based on newly industrialized economies to shed additional light on this relationship. According to the firm behavioral theory, the moderating impact of a firm's internal organizational slack and attainment discrepancy are critical for enhancing a firm's performance in the internationalization process. We tested these hypotheses using longitudinal data (2000–2005) from 179 high-technology listed companies in Taiwan. We extended the behavioral theory of the firm to explain the moderating effect on the internationalization–performance model. We found that firms tend to exhibit positive performance in internationalization when they have a higher level of organizational slack and attainment discrepancy. Crown Copyright © 2010 Published by Elsevier Inc. All rights reserved.

1. Introduction The geographical boundaries in the business world are becoming less important as globalization takes hold (Javidan and House, 2002), encouraging firms to develop an extensive international presence (Bartlett and Ghoshal, 1989). When firms consider entering foreign markets, they consider whether their foreign expansion will be profitable. Therefore, understanding the relationship between internationalization and the performance of corporations has remained a core issue among international management practitioners and researchers (e.g., Glaum and Oesterle, 2007). Some researchers have indicated that internationalization is linked to producing competitive advantages at the firm level and to superior financial success. Thus, this relationship is positive and linear (e.g., Rugman, 1981; Han et al., 1998; Tallman and Li, 1996). However, other researchers have pointed out that the expansion of foreign operations brings both costs and benefits, and have recognized that internationalization can entail risk and failure (Daniels and Bracker 1989; Geringer et al., 1989; Gomes and Ramaswamy 1999). Consequently, the literature contains five general models explaining the relationship, including positive and linear (e.g., Han et al., 1998; Tallman and Li, 1996), negative and linear (e.g., Denis et al., 2002; Geringer et al., 2000), U-shaped (e.g., Lu and Beamish, 2001; Ruigrok and Wagner, 2003), inverted U-shaped (e.g., Gomes and Ramaswamy, 1999; Hitt et al., 1997), and S-curve (e.g., Contractor et al., 2003; Lu and Beamish, 2004). Researchers in the field of international business and strategy (e.g., George, 2005; Tseng et al., 2007) argue that internal firm-specific characteristics are a crucial determinant of performance progress. This view on the importance of internal firm factors is underscored by firm behavior theorists (Cyert and March, 1963). The central tenet of firm behavioral theory highlights ☆ The authors thank the Journal of International Management Editor, Dr. Masaaki “Mike” Kotabe, and three anonymous reviewers for their detail and valuable comments and suggestions. This research was supported by National Science Council (NSC-97-2410-H-029-041). ⁎ Correspondence author. Tel.: +886 5 5342601x5218. E-mail addresses: [email protected] (W.-T. Lin), [email protected] (Y. Liu), [email protected] (K.-Y. Cheng). 1 Tel.: +886 5 2720411x34321. 2 Tel.: +886 2 33667416. 1075-4253/$ – see front matter. Crown Copyright © 2010 Published by Elsevier Inc. All rights reserved. doi:10.1016/j.intman.2010.12.004

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six basic elements of firm behavior: (1) performance, (2) slack (the difference between total resources and the minimum resources necessary to produce a given output), (3) aspirations (desired level of performance), (4) expectations (anticipated level of actual performance), (5) risk (uncertainty), and (6) the size of the organization. The classic theory of firm behavior models organizations as goal-directed systems that use simple decision rules to alter their activities in response to performance feedback (Chen and Miller, 2007). This model was extended to include more issues presented by Lant and Montgomery (1987), Wiseman and Bromiley (1996), and Palmer and Wiseman (1999). Lant and Montgomery (1987) combined expected and aspired performance into a single construct called “attainment discrepancy,” and argued that risk-taking is influenced by the level of attainment discrepancy. If a firm aspires to a higher level of performance than it expects to attain (aspiration exceeds expectations), then it looks for ways to raise its expected performance. Attempts to increase performance often require changes in organizational routines and increased risk-taking. Wiseman and Bromiley (1996) discussed the perspective of the model in two ways. First, they found a direct association among attainment discrepancy, slack, and risk-taking. They also examined the influence of attainment discrepancy and slack on performance. Second, they indirectly included risk-taking (uncertainty) as a mediator explaining the association among attainment discrepancy, slack, and performance. Finally, Palmer and Wiseman (1999) postulated that a positive attainment discrepancy can induce managers to increase risk-taking, whereas slack has a negative relationship with risk-taking. That is, when slack resources decrease, managers may increase their efforts to raise resource levels by means of conservative decisions that preserve a certain level of slack. Building on these results, it is illadvised for a firm to ignore the potential impact of the firm's internal contingency plans or to ignore the effect of slack and attainment discrepancy on the internationalization–performance relationship. In other words, this theory models organizations as goal-directed systems that use simple decision rules to alter their activities in response to performance feedback (Chen and Miller, 2007). Some studies on organizations and strategy have provided ample evidence of relationships between these variables. For example, George (2005) found that organizational slack has a large influence on performance. Organizational slack is the difference between the available resources and the required payments of the organization (Cyert and March, 1963; Nohria and Gulati, 1996). Excess resources provide a cushion of actual or potential resources that firms can use to counter threats and exploit opportunities (Bourgeois, 1981; Daniel et al., 2004; George, 2005). Slack allows firms to initiate international strategies and helps to buffer international environmental shocks. Additionally, Wiseman and Bromiley (1996) found that attainment discrepancy could influence firm performance. Attainment discrepancy is the difference between the actual performance level and the aspired level (Lant and Montgomery, 1987). Firms that actually operate below their aspirations are likely to be more aggressive in seeking efficacious or efficient ways to achieve their target performance. Thus, the first objective of this study is to investigate how a firm's internal behavioral elements, including slack resources and attainment discrepancy, moderate the relationship between a firm's internationalization and its performance. Moreover, some scholars introduced several systems to classify slack and different slack components (Bourgeois and Singh, 1983; Singh, 1986; Sharfman et al., 1988), and noted that different types of slack resources have distinct effects on an organization (Geiger and Cashen, 2002; Greenley and Okemgil, 1998; Tan and Peng, 2003). Sharfman et al. (1988) suggested that different slack resources provide managers with distinct discretion and flexibility levels in their approach to reducing internal or external pressures. Similarly, Singh (1986) reported that various types of slack affect firm performance in different ways. This may be due to the fact that the relationship between internationalization and firm performance can differ between different components of slack. Therefore, the second purpose of this research is to investigate the influence of different slack resources on the relationship between internationalization and performance. 2. Literature review and hypotheses 2.1. Moderating effect of organizational slack According to the behavioral theory of the firm perspective, the first moderator of the internationalization–performance relationship is the slack resources of organizations. Slack provides a cushion of actual or potential resources that firms can use to counter threats and exploit opportunities (Bourgeois, 1981; Daniel et al., 2004; George, 2005). Several studies have recognized that different forms of slack resources have different effects on organizations (e.g., Bourgeois and Singh, 1983; Singh, 1986; Sharfman et al., 1988; George, 2005). Sharfman et al. (1988) proposed that organizational slack should be anchored along a managerial discretion continuum, and distinguished between high-discretion and low-discretion slack. High-discretion slack resources such as cash and receivables can be used in a wide variety of situations, while less discretionary slack resources such as debt and fixed assets can only be used in a few specific situations. High-discretion slack reflects the extent to which firms have readily available resources (Bourgeois and Singh, 1983; Cheng and Kesner, 1997). A higher level of high-discretion slack indicates that a firm has a greater ability to meet the firm's immediate resource needs. Previous studies have pointed out that high-discretion slack has a large influence on performance (George, 2005). On one hand, adequate or excess resources provide a firm with the flexibility to adapt to the international environment when going global. In other words, slack may buffer against international environmental fluctuations or uncontrollable contingencies by absorbing shocks that could lower productivity and harm performance. On the other hand, more readily available resources enable firms to have a greater ability to launch new initiatives in response to opportunities in new markets, and to expand globally. Bourgeois (1981) pointed out that organizations can afford to experiment with new strategies when slack is presented. Hence, the more high-discretion slack a firm has, the more likely it is that the firm is able to pursue a bold international strategy, since it will be able to buffer foreign environmental shocks. This positively affects the profits that accrue from its foreign expansion. In other words, a higher level of high-discretion slack positively moderates the relationship between internationalization and performance. Low-discretion slack refers to the extent of unused borrowing capacity that is available to firms. A higher level of low-discretion slack indicates more potential slack or greater borrowing power (Bourgeois and Singh, 1983). Previous studies have pointed out that low-

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discretion slack has a large influence on performance (George, 2005). We propose that a higher level of low-discretion slack has positive moderating impacts on the internationalization-performance relationship for two reasons. First, potentially available resources act as important catalysts for foreign performance because they cause managers experiment even in the face of uncertainty in a foreign market. In this sense, firms with more low-discretion slack are able to take more strategic actions than firms with less low-discretion slack, because these firms are not burdened with heavy debt and interest. A firm with more low-discretion slack is likely to perform better than a firm with less low-discretion slack when its internationalization remains the same because the firm can make mistakes and experiment with new international strategies. Second, low-discretion slack represents potentially available resources that could be realized when needed; thus, it could also provide a potential resource cushion to buffer organizations from environmental changes and to allow organizations to adapt to competition, thereby affecting firm performance. Based on these arguments, the moderating effect of low-discretion slack on the relationship between internationalization and company performance is positive. Therefore, Hypothesis 1. For a firm with more high-discretion slack, the association between the firm's internationalization and its performance is less negative than for a firm with less high-discretion slack. Hypothesis 2. For a firm with more low-discretion slack, the association between the firm's internationalization and its performance is less negative than for a firm with less low-discretion slack. 2.2. Moderating effect of attainment discrepancy The second moderator of the internationalization–performance relationship is attainment discrepancy, or the difference between the aspired and actual performance (Lant and Montgomery, 1987). Schneider (1992) described the aspiration level as “the smallest outcome that would be deemed satisfactory by the decision maker” (p. 1053). A firm with a negative attainment discrepancy – actual performance above the firm's aspirations – is less inclined to change (Greve, 2003). In contrast, a positive attainment discrepancy – actual performance below the aspiration level – induces firms to make a greater effort to identify alternatives to current activities that resolve performance shortfalls (Cyert and March, 1963). Attainment discrepancy is likely to have an impact on the relationship between internationalization and performance because it may affect the firms' international strategies. Iyer and Miller (2008) highlighted that actual performance falling below aspirations signals mal-adaptation, and it also stimulates a reassessment of corporate investment decisions. For example, firms with attainment discrepancy often resort to acquisitions in order to accelerate growth, and these acquisitions may contribute to the firm's performance. In other words, firms that actually operate below their aspiration level are likely to be more aggressive in seeking efficacious or efficient ways to achieve their target performance. Furthermore, strategic reference point theory (Feigenbaum, et al., 1996) proposes that individuals adopt risk-seeking behavior when the expected outcomes of their actions are below a given reference point. Firms performing below their strategic reference point will perceive new issues as opportunities, engage in open, flexible, and decentralized decision-making processes, and behave in risk-seeking and daring manners. Thus, when firms have a positive attainment discrepancy, managers tend to change current routines and have stronger motivations to search for foreign markets with cheaper labor costs, more materials, and/or lower risks (i.e., Dunning's (1977) location-specific advantage). Another reason that attainment discrepancy may affect the internationalization–performance relationship is that threats of underperformance induce psychological vigilance and effort. Vigilance and effort have a cognitive and motivational influence on managers and result in active information processing behavior regarding foreign markets or subsidiaries. In this sense, managers recognize their obligation to carefully explore and exploit new foreign markets. Additionally, strategic reference point theory (Feigenbaum, et al., 1996) proposes that individuals adopt risk-averse behavior when the expected outcomes of their actions are above their reference points. Firms that are performing above their strategic reference point will perceive new issues as threats, engage in constricted, rigid and centralized decision-making processes, and behave in a risk-averse, conservative, and defensive manner. Therefore, positive attainment discrepancy may trigger managers to look for profitable foreign markets more astutely and to internalize their ownership advantages more carefully. Consequently, the process underlying a firm's international market expansion is more likely to decrease high costs and then raise a firm's performance. Based on the above arguments, the impact of internationalization on performance may be positively moderated in a firm whose performance is below its aspired level. Hypothesis 3. For a firm with a higher attainment discrepancy, the association between the firm's internationalization and its performance is less negative than for a firm with a lower attainment discrepancy. 3. Methods 3.1. Sample and data sources To test our research model and hypotheses, we focus on the technology-intensive industry for two reasons. First, one of the key arguments made in the traditional IB literature is that a key motivation for firms to operate abroad is to exploit intangible resources (Caves, 1996). It has been argued that in this industry, international expansion is not a matter of choice, but rather is necessary for a firm's success because the firm needs to have abundant intangible resources. In other words, for high-tech industries, the main goals of firms that are expanding overseas are to achieve strategic deployment and to effectively use worldwide resources. Therefore, we felt that a technology-intensive industry would be an ideal setting in which to capture the international performance linkage. Second,

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firms in this industry have significant exposure to international markets, making them an ideal sample for this study. For instance, firms in this industry are steadily moving toward internationalization and are increasingly globalizing their sales.3 The “high-tech” firms in our sample include 11 three-digit SIC Taiwan high-tech industries. We adopt the SIC code of the Directorate-General of Budget, Accounting and Statistics of the ROC Executive Yuan, similar to the ISIC (International Standard Industrial Classification) organized by the United Nations in 2006. The SIC code numbers and descriptions are provided in Table 1. The sample for this study was drawn from the population of Taiwan's high-technology firms that are listed in the Taiwan Economic Journal (TEJ) database. First, we identified all of these firms (a total of 306) from the TEJ. Second, we selected a six-year window (2000–2005) because the slack of an organization accumulates and is deployed over time. Moreover, a firm's internationalization may evolve over long periods of time. The time period selected included the latest data available from the databases. This time window also maximized the number of firms reporting financial data for consecutive years, yielding a sample of 179 firms (1074 observations). Third, data regarding a firm's internationalization was obtained from two databases, the TEJ and the Market Observation Post System, and data on organizational slack and performance were collected from the TEJ database. 3.2. Measures 3.2.1. Firm performance For this study, a general measure of a firm's performance when it engaged in international operations was needed. We chose the return on assets (ROA, i.e., accounting performance) measure because a majority of past studies have used this measure (e.g., Lu and Beamish, 2004). In our models, the performance variable is the previous three-year average relative to the dependent variable. 3.2.2. Firm internationalization Previous international business scholars have proposed three attributes: performance (what occurs overseas), structure (what resources are located overseas), and attitude (the international orientation of top management) (Sullivan, 1994). The performance attribute is most commonly measured by calculating the ratio of foreign sales to total sales (FSTS) (Geringer et al., 1989).4 The structural attribute is most commonly measured by expressing foreign assets as a percentage of total assets (FATA) (Daniels and Bracker, 1989).5 Finally, a firm's internationalization can also be determined from the attitudinal attribute by measuring either the international experience of a firm's top managers or the cultural dispersion of internationalization (Sullivan and Bauerschmidt, 1989). The composite measure is typically used by Sullivan (1994) and Sanders and Carpenter (1998). This measurement was chosen because single-dimensional measures have various problems, including a failure to simultaneously reflect the breadth and depth of internationalization (Lu and Beamish, 2004). To simultaneously capture both the breadth and depth of a firm's internationalization, we used three internationalization dimensions as used by Carpenter and Sanders (2004). The first dimension is the ratio of foreign sales to total sales (FSTS). The second dimension, foreign production, reflects a firm's reliance on owning foreign stocks and is measured by foreign assets as a percentage of total assets (FATA). The third dimension, geographic dispersion, gauges the number of countries in which a firm has subsidiaries, and is expressed as a percentage of the highest number of countries with subsidiaries represented in the study sample. Thomas and Eden (2004) noted that the first two attributes, foreign sales and foreign assets, represent the “depth” of a multinational corporation's (MNC) involvement abroad. The final attribute, geographic dispersion, captures the “breadth” of the MNC. We used the following procedure to measure the degree of a firm's internationalization. First, we calculated the ratio of foreign sales to total sales, the ratio of foreign assets to total assets, and the geographic dispersion ratio, or the number of countries in which a particular firm has subsidiaries divided by the highest number of countries represented in the study sample. The sum of the three dimensions (FSTS, FATA, and geographic dispersion) formed the composite measure of the firm's internationalization. 3.2.3. Control variables The variables that were identified in previous research as being important determinants in explaining firm performance are included as control variables in this study. They include: firm age, firm size, insider shareholding, the degree of diversification, and R&D intensity. It is often assumed that younger firms exhibit a higher level of risk-taking, which in turn influences the internationalization– performance relationship. Therefore, firm age was included as a control and was calculated as the number of years since the firm's incorporation. Additionally, firm size is typically positively related to extensive international activities. Large size also indicates a strong capability and an abundance of resources to deal with complex foreign information (Quer et al., 2007). Following this reasoning, an independent control was used for firm size, the logarithm of the firm's sales in a given year. According to the convergence-of-interest hypothesis, the performance of a firm may increase with greater insider shareholding due to lower agency losses (e.g., Anderson et al., 2003). Thus, we also control for insider shareholding. Under the umbrella of insider shareholding, we include both family and nonfamily insider shareholding. Family insider shareholding is the equity holding of the largest individual shareholder and their close family. When it comes to non-family insider shareholding, we modified the measurement presented by Filatotchev et al. (2007). Nonfamily insider shareholding is the combined shareholding of the CEO and the top managers who are not members of the largest family. 3 For instance, of Taiwan's “Top 10 Global Brands” in 2007, seven of these corporations belonged to the high-technology industry, including Asus, Trend Micro, Acer, HTC, D-Link, ZyXEL, and BenQ. 4 Performance attributes include five items: foreign sales as a percentage of total sales (FSTS), export sales as a percentage of total sales (ESTS), foreign profit as a percentage of total profit (FPTP), research and development intensity (RDI), and advertising intensity (AI). 5 The structural attribute consists of the following two items: foreign assets as a percentage of total assets (FATA) and overseas subsidiaries as a percentage of total subsidiaries (OSTS).

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Table 1 The category of high-tech firms. Code

Description

261 262 263 264 269 271 272 273 274 277 282

Semi-conductors manufacturing Electronic passive devices manufacturing Bare printed circuit boards manufacturing Optoelectronic materials and components manufacturing Other electronic parts and components manufacturing Computers and peripheral equipment manufacturing Communication equipment manufacturing Audio and video electronic products manufacturing Data storage media units manufacturing Optical instruments and equipment manufacturing Batteries manufacturing

Additionally, R&D intensity is included in order to control for differences in firm-specific resources. Traditional IB theory has established the importance of these firm-specific resources in influencing the choice of internationalization. Moreover, the resource-based view has demonstrated that these firm-specific resources positively affect the performance of the firm (Barney, 1991). We controlled for the R&D ratio, as it might affect a firm's performance. Finally, diversification is also positively related to a firm's performance (Lu and Beamish, 2004). We controlled for the firm's diversification using the Herfindahl–Hirschman index. 3.2.4. Moderating variables This study considers three moderating variables: high-discretion slack, low-discretion slack, and attainment discrepancy. Organizational slack is the difference between the available resources and an organization's necessary payments (Cyert and March, 1963; Nohria and Gulati, 1996), such as underutilized capacity, employees, and financial resources. We chose to follow the financial indictors adopted in prior studies (e.g., George, 2005). For high-discretion slack, we measured the level of the current ratio (current assets/ current liabilities). This proxy corresponds to currently uncommitted slack, such as idle working capital. A higher current ratio indicates a firm's greater ability to meet its immediate resource needs. For low-discretion slack, we measured the equity to debt (E/D) ratio. This proxy presents the potential resource availability rather than the resource availability for instantaneous buffering operations (Hambrick and D'Aveni, 1988). A higher E/D ratio indicates more potential slack or greater borrowing power (Bourgeois and Singh, 1983). Both of the above financial indicators are widely used in research on organizational slack (e.g., George, 2005; Wiseman and Bromiley, 1996). Attainment discrepancy was measured using a method suggested by Palmer and Wiseman (1999) and Wiseman and Bromiley (1996). Aspirations for each year were identified by comparing each firm's performance (ROA) from the previous year with the firm's industry average for that year. When performance exceeded the industry average, firm aspirations were determined by multiplying the prior year's performance by 1.05 (effectively adding a growth factor). Conversely, firm aspirations were coded as the industry average performance from the previous year when the firm's performance was below that average. The attainment discrepancy was then calculated by taking the difference between firm aspirations and the firm's actual performance. Measurements of the variables and data sources are summarized in Table 2. 3.3. Analytical approach The hypotheses presented in this paper were tested using repeated observations on the same set of cross-sectional units (i.e., panel data) (Greene, 2000). A fix effects model was used to analyze the panel data although the alternative dummy variable approach is costly in terms of the degrees of freedom that are lost. Performing a Hausman test for the orthogonality of the random effects is crucial before the individual effects can be treated as random. This test assesses the consistency of the estimation results of a fixed effects model with a random effects model. In the event that two estimates do not systematically differ, a random effects generalized least squares (GLS) regression is generally preferable because it is a significantly more efficient estimation technique (Greene, 2000: 576). In our sample, the Hausman test indicated that the estimation results of the fixed effects and random effects model were inconsistent, and that the individual effects were correlated with the other variables in the model. Therefore, this paper employs the more efficient fixed effects GLS estimation technique. Additionally, the GLS approach does not allow for calculations of the variance inflation factor (VIF). We checked for the VIF using an ordinary least squares regression. Previous studies have indicated that as long as the VIF is less than ten, multicollinearity is not a concern (Hair et al., 1998). The highest VIF was 2.49, well below the threshold of ten suggested in the literature. Therefore, multicollinearity was unlikely to be a problem in this study. We also took additional actions to avoid these problems by centering the variables used to test the predicted interactions (Aiken and West, 1991). 4. Results Table 3 presents the means, standard deviations, and bivariate correlations for all variables. The results indicate that the internationalization in Taiwanese high technology firms is 0.978. In addition, when observing the correlations between internationalization and a firm's performance, the results show significantly negative correlations. All three elements of firm behavior – high-discretion slack, low-discretion slack, and attainment discrepancy – have significant positive correlations with firm performance.

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W.-T. Lin et al. / Journal of International Management 17 (2011) 83–95 Table 2 The variables definition. Variable

Definition

Firm performance Internationalization High-discretion slack Low-discretion slack Attainment discrepancy Firm age Firm size Insider shareholding

The priori three-year average of return on assets (ROA) The sum of three items for FSTS, FATA, and geographic dispersion numbers The current ratio (current assets/current liabilities) The equity-to-debt ratio The difference between aspirations and the firm's actual performance The number of years since incorporation The logarithm of sales in a prior one year The percentage ‘insider shareholding’ in the company (i.e., the combined shareholding of family insider and non-family insider)

Diversification

Diversification = 1− ∑ S2ia , where Sia is the proportion of firm a's sales in business segment i.

n

i=1

The ratio of R&D expenses to firm sales

R&D intensity

Table 4 shows coefficient estimates for the interaction effects of a firm's internationalization, organizational slack, and attainment discrepancy on that firm's performance. The first model contains all of the control variables. The interaction variables are included in the regressions, one at a time, in the second, third, and fourth models, respectively. Finally, the fifth model is the complete model, which includes the control and all the interaction variables. The first F-statistic indicates the overall significance of each model, and the second F-statistic provides a test of the statistical significance for the added variables (i.e., change) in a particular model. The F-statistic of Model 2 for change compared to the Model 1 is significant (ΔF = 12.22, P b .001). Additionally, for Model 3 and Model 4, the F-statistic for change compared to Model 1 are also significant (ΔF = 10.22, P b .001; ΔF = 15.46, P b .001 respectively). Based on Model 1, the five variables for firm characteristics, including firm age, firm size, insider shareholding, firm diversification, and the degree of firm internationalization have significant relationships with performance in the expected directions. The model also indicates that performance was negatively related to a firm's internationalization (β = −.016, P b .05), meaning that firms with high internationalization are more likely to have lower performance. As for the three critical moderating effects noted by firm behavioral theorists – high-discretion slack, low-discretion slack, and attainment discrepancy – interaction terms were presented in Model 2, Model 3, and Model 4. Hypothesis 1 states that high-discretion organizational slack and a firm's internationalization interact to have a positive effect on performance. Likewise, Hypothesis 2 states that low-discretion organizational slack and a firm's internationalization interact to have a positive effect on performance. The results presented in Models 2 and 3 show a positive and statistically significant coefficient for both interaction effects (β = .010, P b .001; β = .009, P b .01). These results support Hypotheses 1 and 2. Similarly, Hypothesis 3 also posits that attainment discrepancy and a firm's internationalization interact to produce a positive effect on performance. A significant positively moderating effect was observed in Model 4 (β = .005, P b .001), which supports Hypothesis 3. These results are plotted in Figs. 1–3. As shown in Fig. 1, for a firm with a high level of high-discretion slack (when the high-discretion slack lies one standard deviation above the mean), the firm's internationalization shows a positive relationship with performance. For a firm with a low level of high-discretion slack (when the high-discretion slack is one standard deviation below the mean), this relationship becomes negative. Similarly, Fig. 2 presents the positive relationship between a firm's internationalization and its performance when the firm has a high level of low-discretion slack. Fig. 2 also shows the negative relationship between a firm's internationalization and performance when the firm has a low level of low-discretion slack. Thus, these results support Hypotheses 1 and 2. Finally, as illustrated in Fig. 3, the negative relationship between a firm's internalization and performance is stronger in a firm with a low level of attainment discrepancy than a firm with a high level of attainment discrepancy (steeper negative slope). The form of the interaction illustrates that, when the attainment discrepancy is higher, the negative relationship between a firm's internalization and performance will be weaker. Thus, Hypothesis 3 is supported. In addition, we did not find any indication of quadratic and cubic relationships between internationalization and performance. In other words, we found a non-significant, S-shape relationship; hence, while our result is contradictory to the accepted view of the internationalization–performance relationship, the linear effect noted here is significant. The empirical result appears in the Appendix. Table 3 Descriptive statistic and correlations a. Variable

Mean

S.D.

1.

2.

3.

4.

5.

6.

7.

8.

9.

1. Firm age 2. Firm size 3. Insider shareholding 4. Diversification 5. R&D ratio 6. Internationalization 7. High-discretion slack 8. Low-discretion slack 9. Attainment discrepancy 10. Performance

18.327 9.701 .707 .444 .041 .978 2.396 2.304 −.049 .083

7.708 .515 18.034 .233 .057 .406 1.922 2.212 .799 .091

.058 .031 .122 −.236 .062 −.174 −.144 .032 −.214

.201 −.206 .140 .186 −.245 −.245 .026 −.019

−.040 −.026 .006 −.067 −.040 −.063 −.014

.041 −.137 .048 .025 .059 .077

.006 .513 .472 −.146 .057

−.063 .005 −.134 −.100

.747 .102 .347

.099 .330

.431

For bivariate correlations above .062 are significant at p b .05, two-tailed tests. a Number of observations = 1074 (179 cases multiplied by six years).

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Table 4 Results of GLS fixed-effect regression analyses on firm performance. Variable

Firm performance Model 1

Firm age Firm size Insider shareholding Diversification R&D ratio Internationalization High-discretion slack Low-discretion slack Attainment discrepancy Internationalization × High-discretion slack Internationalization × Low-discretion slack Internationalization × Attainment discrepancy R2 F-statistic F-statistic change in model

−.017 (.001)⁎⁎⁎ .101 (.011)⁎⁎⁎ .001 (.000)⁎ −.003 (.013) −.216 (.062)⁎⁎⁎ −.016 (.009)⁎

Model 2 −.017 (.001)⁎⁎⁎ .103 (.011)⁎⁎⁎ .001 (.000)⁎ −.002 (.013) −.200 (.061)⁎⁎⁎ −.016 (.009)⁎ .005 (.001)⁎⁎⁎

.010 (.003)⁎⁎⁎

0.23 65.05⁎⁎⁎

0.24 53.36⁎⁎⁎ 12.22⁎⁎⁎

Model 3 −.017 (.001)⁎⁎⁎ .106 (.011)⁎⁎⁎ .001 (.000)⁎ −.001 (.013) −.194 (.061)⁎⁎ −.015 (.008)⁎ .004 (.001)⁎⁎⁎

.009 (.003)⁎⁎ 0.24 52.51⁎⁎⁎ 10.22⁎⁎⁎

Model 4 −.017 (.001)⁎⁎⁎ .092 (.011)⁎⁎⁎ .001 (.000)⁎ −.005 (.013) −.174 (.061)⁎⁎⁎ −.016 (.009)⁎ .070 (.023)⁎⁎⁎

.005 (.001)⁎⁎⁎ 0.24 61.87⁎⁎⁎ 15.46⁎⁎⁎

Model 5 −.017 (.001)⁎⁎⁎ .097 (.011)⁎⁎⁎ .001 (.000)⁎ −.007 (.012) −.152 (.061)⁎⁎ −.015 (.009)⁎ .004 (.001)⁎⁎⁎ .003 (.001)⁎⁎ .069 (.023)⁎⁎⁎ .010 (.004)⁎⁎ .009 (.004)⁎⁎ .139 (.028)⁎⁎⁎ 0.26 60.38⁎⁎⁎ 16.50⁎⁎⁎

Number of observations = 1074 (179 cases multiplied by six years); regression parameter appears the standard error (in parentheses) and non-standardized coefficient. One-tailed tests with †p b 0.10, ⁎p b 0.05, ⁎⁎p b 0.01, ⁎⁎⁎p b 0.001.

Following the reviewers' suggestion, we conducted further analyses to assess the robustness of our results. First, we replicated the analyses using other performance measures (i.e., ROE and ROS). In both supplemental analyses, the results were largely consistent with the initial results. Second, we re-examined whether the results were consistent when we separately used FSTS, FATA, and FGTG as measures of internationalization. These results were similar to those found using composite measures (see Appendix). 5. Discussion and conclusion The question of whether a systematic relationship exists between internationalization and firm performance is central to the field of international business. Therefore, this study investigated the influence of organizational slack levels and attainment discrepancy on the relationship between internationalization and firm performance. Using longitudinal data (2000–2005) from Taiwan's high-technology industry, our results indicate that high-discretion slack, low-discretion slack, and attainment discrepancy have a significant positive moderating effect on the internationalization–firm performance relationship. This study has three practical implications. First, when developing international strategies, managers of firms should consider the influence of attainment discrepancy, because it may have an indirect impact on the firm's performance. Managers are more likely to take risks and initiate strategic changes in their foreign investment portfolio when a firm's performance falls short of the firm's aspirations. Managers should therefore set appropriate reference points by benchmarking their firm's performance against its past achievements and also against those of its competitors. A set of appropriate performance goals will also help managers gauge whether or not they should risk investing in further growth and engaging in internationalization. Second, firms that begin doing business internationally are in a better position to strategically deploy and leverage their resources. Other benefits associated with internationalization include risk diversification, economies of scale, and scope in operations and cost advantages (labor and material costs). However, before achieving these benefits, firms must first have access to sufficient organizational slack. By transferring slack resources to strategic activities during internationalization, firms are able to build and maintain competitive advantage. Organizational slack is not only essential to the effective execution of international business

0.16 0.14

Performance

0.12 0.10

High-discretion slack (Low)

0.08

High-discretion slack (High)

0.06 0.04 0.02 0.00 Low

High

Firm internationalization Fig. 1. Firm's internationalization and performance: the moderating role of high-discretion slack.

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0.08 0.07

Performance

0.06 0.05 0.04

Low-discretion slack (Low)

0.03

Low-discretion slack (High)

0.02 0.01 0

Low

High

Firm internationalization Fig. 2. Firm's internationalization and performance: the moderating role of low-discretion slack.

opportunities, but it also serves as an effective buffer allowing firms to adjust to unanticipated foreign shocks. Our findings suggest that firms with a higher level of slack perform better in executing internationalization strategies. Managers should therefore maintain or boost the levels of slack resources. One way to accomplish this involves more effective management of current assets and liabilities. Alternatively, managers can decrease dividends, divest non-core operations, and even raise slack funds via public offerings. Taking the above two points into consideration, we contend that while attainment discrepancy drives internationalization, the availability of slack provides managers with the means to pursue this strategy, thereby paving the way for better performance. Third, since newly industrialized economies attract substantial amounts of foreign investment, investors need to extend their knowledge of the factors that have an impact on the business strategies of firms operating in newly industrialized economies. Our findings may lead to a better understanding of how the relationship between internationalization and performance is moderated by different types of slack and attainment discrepancies in newly industrialized economies. The level of economic development of a firm's home country may also have some influence on its ability to respond strategically to the changing needs of internationalization. As discussed above, prior research has reported conflicting results on the relationship between internationalization and the performance of corporations. Except for internal firm-specific characteristics, another possible reason for the conflicting results of prior research studies may be the examination of different types of economic institutions (Elango and Sethi, 2007). Proponents of the economic institutions (e.g., Scott, 1995) and societal-effect approaches (e.g., Sorge and Maurice, 1990) contend that various types of economies, such as developed economies (e.g., US and UK), emerging economies (e.g., Indonesia, Ukraine, and Venezuela), and newly industrialized economies (e.g., South Korea, Taiwan, and Singapore) operate in different national resource environments. The variations of different factors and institutions constitute a distinct set of costs and benefits when a firm starts its foreign expansion (Wan and Hoskisson, 2003). For example, Wan (2005) describes how an economy's market environment shapes the relationship between diversification strategies and performance. In other words, firms perform at the level of international involvement that is appropriate for achieving a high level of performance in a specific country resource environment. Although most studies investigate the relationship between the degree of firm internationalization and performance, these studies focus on developed economies such as Japan (Lu and Beamish, 2004), the United States (Qian and Li, 2002), and Germany (Capar and Kotabe, 2003), and emerging economies such as Mexico (Thomas, 2006); few studies have examined this relationship in newly industrialized economies. It is complicated to study the effects of the home country of firms operating in a newly industrialized economy on organizational slack and attainment discrepancy. First, because most firms operating in newly industrialized economies have limited access to resources as compared with firms from developed economies, we expect the former to leverage their resources more efficiently (Baker and Nelson, 2005; George, 2005). Second, faced with limited domestic demand, Taiwanese firms including most small and mediumsized enterprises (Small and Medium Enterprise Administration, Taiwan, 2007) that have operations abroad are more likely to achieve

0.030

Performanc

0.025 0.020

Attainment discrepancy (Low)

0.015

Attainment discrepancy (High)

0.010 0.005 0.000

Low

High

Firm internationalization Fig. 3. Firm's internationalization and performance: the moderating role of attainment discrepancy.

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better performance than those that only serve their domestic market. Therefore, as predicted by the resource constraints theory, we expect slack to have a stronger and more positive moderating effect on the internationalization-firm performance relationship in newly industrialized economies. Except for economic factors, cultural differences could affect the moderating effects of attainment discrepancy on the relationship between internationalization and performance. The difference in how firms respond to attainment discrepancy may stem from their home country managers' attitudes toward risks. A risk-averse manager will exhibit different behavioral patterns from a risk-seeking manager, which results in different firm internationalization-performance outcomes. Tse, Lee, Vertinsky, and Wehrung (1988) also pointed out that a manager's international marketing decisions are highly influenced by their home culture. Taiwan scored 69 on Geert Hofstede's Uncertainty Avoidance Index (UAI), ranking in the middle among 69 countries (Hofstede, 1997). However, comparing this score to the index of the U.S. (46) reveals that Taiwanese people are more risk-averse than Americans. Previous research also showed that while Taiwanese managers regularly pursued firm stability, their American counterparts were driven by firm growth (He, 1988). Thus, we expect attainment discrepancy to have a weaker positive moderating effect on the internationalization-firm performance relationship in Taiwan than in the U.S. However, we expect Taiwanese managers to be more risk-seeking than their Japanese counterparts, as Japan has an Uncertainty Avoidance Index (UAI) of 92. In sum, it is difficult to identify how NIEs and developed economies differ in their home-country effects on attainment discrepancy because these differences are usually categorized by national cultures rather than by the level of economic development. Although we anticipate mixed results from the moderating effects of attainment discrepancy on firms in NIE as compared with firms operating in developed economies, we still believe that attainment discrepancy will positively moderate the relationship between internationalization and firm performance because of its effects on a firm's propensity for growth. This finding was statistically supported in our study. This study has some limitations which must be fine-tuned in future research. First, our empirical results were derived from a sample of public Taiwanese firms in the high-tech industry. While this sampling frame was controlled for firm size, industry, and parent nationality, it raises the issue of generalizability. For instance, Brock et al. (2006) found that a reverse U-shaped internationalization–performance relationship is characteristic of knowledge-intensive industries (global law firms). Future studies will validate our findings in other countries characterized by different national traits, such as factor-driven high growth emerging markets (e.g., South Korea) or institution-driven high growth emerging markets (e.g., Singapore) (Wan, 2005). Second, similar to previous research, this study used financial measures to assess the value of organizational slack (Bourgeois and Singh 1983, George 2005). Hence, we were unable to analyze and determine the influence of other non-financial and intangible sources of organizational slack. Third, another potential direction for future research is to broaden the concept of internationalization. A firm's internationalization strategy can vary across entry modes, ranging from alliances and mergers and acquisitions (M&A), to foreign direct investment (FDI). Future inquiry into a firm's choice of its foreign entry strategy from a firm behavioral theory point of view would be insightful. This study goes further than earlier studies by investigating the factors that affect internationalization strategies and firm performance. We also used firm behavioral theory to argue and prove that attainment discrepancy and discretionary slack levels moderate the internationalization–performance relationship. These findings enrich our understanding of how firm behavioral factors affect the growth and performance of firms in an international environment. Appendix A Table A1 shows the coefficient estimates for the liner and nonlinear effects of a firm's internationalization on its performance. Both the U-shaped and S-shaped were non-significant in this study because U-shaped is supported must the terms of linear and quadratic are significant).

Table A1 Results of GLS fix-effect regression analyses on firm performance. Variable

Firm age Firm size Insider shareholding Diversification R&D ratio Internationalization Internationalization squared Internationalization cubed R2 F-statistic

Firm performance Model 1

Model 2

Model 3

Liner relationship

U-shape

S-shape

−.017 .101 .001 −.003 −.216 −.016

(.001)⁎⁎⁎ (.011)⁎⁎⁎ (.000)⁎ (.013) (.062)⁎⁎⁎ (.009)⁎

0.23 65.05⁎⁎⁎

−.017 .093 .001 −.007 −.220 −.020 .022

(.001)⁎⁎⁎ (.011)⁎⁎⁎ (.000)⁎ (.013) (.061)⁎⁎⁎ (.135) (.004)⁎⁎

0.24 58.90⁎⁎⁎

−.017 (.001)⁎⁎⁎ .092 (.011)⁎⁎⁎ .001 (.000)⁎ −.009 (.013) −.222 (.061)⁎⁎⁎ −.047 (.053) .077 (.046)⁎ −.031 (.012)⁎ 0.24 18.90⁎⁎⁎

Number of observations = 1074 (179 cases multiplied by six years); regression parameter appears the standard error (in parentheses) and non-standardized coefficient. † p b 0.10, ⁎p b 0.05, ⁎⁎p b 0.01, ⁎⁎⁎p b 0.001.

92

Table A2 shows the results of the replicated analyses using ROS and ROE items as performance measure.

Independent variables

ROA Model 1

Firm age Firm size Insider shareholding Diversification R&D ratio Internationalization High-discretion slack Low-discretion slack Attainment discrepancy Internationalization × High-discretion slack Internationalization × Low-discretion slack Internationalization × Attainment discrepancy R2 F-statistic F-statistic change in model

ROE Model 2

−0.017⁎⁎⁎ −0.017⁎⁎⁎ 0.101⁎⁎⁎ 0.103⁎⁎⁎ 0.001⁎ 0.001⁎ − 0.003 − 0.002 − 0.216⁎⁎⁎ −0.200⁎⁎⁎ −0.016⁎ −0.016⁎ 0.005⁎⁎⁎

Model 3

Model 4

0.004⁎⁎⁎

−0.017⁎⁎⁎ −0.025⁎⁎⁎ 0.097⁎⁎⁎ 0.216⁎⁎⁎ 0.001⁎ 0.001 − 0.007 − 0.063⁎ −0.152⁎⁎ − 1.503⁎⁎⁎ −0.015⁎ − 0.048⁎ 0.004⁎⁎⁎ 0.003⁎⁎ 0.070⁎⁎⁎ 0.069⁎⁎⁎ 0.010⁎⁎

0.009⁎⁎

0.24 52.47⁎⁎⁎ 10.22⁎⁎⁎

ROS Model 2

0.24 61.87⁎⁎⁎ 15.46⁎⁎⁎

Model 3

− 0.024⁎⁎⁎ − 0.024⁎⁎⁎ 0.220⁎⁎⁎ 0.220⁎⁎⁎ 0.001 0.001 − 0.06† − 0.062† − 1.477⁎⁎⁎ − 1.482⁎⁎⁎ − 0.045⁎ − 0.038† 0.004⁎ 0.003† 0.024⁎⁎

0.009⁎⁎ 0.005⁎⁎⁎

0.24 53.36⁎⁎⁎ 12.22⁎⁎⁎

Model 1

− 0.017⁎⁎⁎ −0.017⁎⁎⁎ 0.106⁎⁎⁎ 0.092⁎⁎⁎ 0.001⁎ 0.001⁎ −0.001 −0.005 − 0.194⁎⁎ − 0.174⁎⁎⁎ − 0.015⁎ − 0.015⁎

0.010⁎⁎⁎

0.23 65.05⁎⁎⁎

Model 5

0.23 28.26⁎⁎⁎ 5.25⁎⁎

0.23 27.38⁎⁎⁎ 2.45⁎

Model 1

Model 2

0.020⁎ 0.021⁎⁎⁎

0.23 35.56⁎⁎⁎

Model 5

Model 3

Model 4

Model 5

− 0.010† − 0.010† − 0.012⁎ −0.012⁎ − 0.026⁎⁎⁎ − 0.026⁎⁎⁎ − 0.107† 0.118⁎⁎⁎ 0.121⁎⁎⁎ 0.233⁎ 0.203⁎ 0.228⁎ 0.198⁎ 0.220⁎ 0.001 0.001 0.001 0.001 0.001 0.001 0.001 − 0.044 − 0.043 0.221† 0.224⁎ 0.229⁎ 0.227⁎ 0.221† − 0.582⁎⁎⁎ − 0.566⁎⁎⁎ − 2.972⁎⁎⁎ − 2.874⁎⁎⁎ − 2.852⁎⁎⁎ − 0.264⁎ − 0.265⁎ − 0.031⁎ 0.033⁎ − 0.257⁎⁎⁎ − 0.221⁎⁎⁎ −0.245⁎⁎⁎ − 0.235⁎⁎⁎ −0.228⁎⁎⁎ 0.019⁎ 0.017⁎ 0.002† 0.002† 0.170⁎ 0.153† 0.758⁎⁎⁎ 0.758⁎⁎⁎ 0.958⁎⁎⁎ 0.947⁎⁎⁎ 0.018⁎ 0.083⁎⁎⁎ 0.073⁎⁎

0.019⁎

0.139⁎⁎⁎ 0.26 60.38⁎⁎⁎ 16.50⁎⁎⁎

Model 4

0.23 36.43⁎⁎⁎ 2.83⁎

Number of observations = 1074 (179 cases multiplied by six years); regression parameter appears the non-standardized coefficient. One-tailed tests with †p b 0.10, ⁎p b 0.05, ⁎⁎p b 0.01, ⁎⁎⁎p b 0.001.

0.075⁎⁎⁎

0.020⁎ 0.24 38.59⁎⁎⁎ 2.65⁎

0.21 15.88⁎⁎⁎

0.22 15.29⁎⁎⁎ 12.19⁎⁎⁎

0.22 15.59⁎⁎⁎ 9.68⁎⁎⁎

0.022 0.004⁎⁎

0.005⁎⁎

0.23 18.81⁎⁎⁎ 13.03⁎⁎⁎

0.23 15.96⁎⁎⁎ 9.77⁎⁎

W.-T. Lin et al. / Journal of International Management 17 (2011) 83–95

Table A2 Robust tests: GLS fix-effect regression analyses on firm performance.

Table A3 shows the results of the replicated analyses using FSTS, FATA, and FGTG items as internationalization measure.

Independent variables

Firm age Firm size Insider shareholding Diversification R&D ratio Internationalization High-discretion slack Low-discretion slack Attainment discrepancy Internationalization × High-discretion slack Internationalization × Low-discretion slack Internationalization × Attainment discrepancy R2 F-statistic F-statistic change in model

Internationalization

FSTS

FATA

FGTG

Model 1

Model 2

Model 3

Model 4

Model 1

Model 2

Model 3

Model 4

Model 1

Model 2

Model 3

Model 4

Model 1

Model 2

Model 3

Model 4

−0.017⁎⁎⁎ 0.101⁎⁎⁎ 0.001⁎ −0.003 −0.216⁎⁎⁎ −0.016⁎

− 0.017⁎⁎⁎ 0.103⁎⁎⁎ 0.001⁎ − 0.002 − 0.200⁎⁎⁎ − 0.016⁎ 0.005⁎⁎⁎

− 0.017⁎⁎⁎ 0.106⁎⁎⁎ 0.001⁎ − 0.001 − 0.194⁎⁎ − 0.015⁎

−0.017⁎⁎⁎ 0.092⁎⁎⁎ 0.001⁎ −0.005 −0.174⁎⁎⁎ −0.015⁎

−0.018⁎⁎⁎ 0.101⁎⁎⁎ 0.001⁎ −0.005 −0.253⁎⁎⁎ −0.017⁎

− 0.018⁎⁎⁎ 0.103⁎⁎⁎ 0.001⁎ − 0.002 − 0.248⁎⁎⁎ − 0.016⁎ 0.004⁎⁎⁎

−0.018⁎⁎⁎ 0.106⁎⁎⁎ 0.001⁎ −0.002 −0.242⁎⁎⁎ −0.015⁎

−0.018⁎⁎⁎ 0.091⁎⁎⁎ 0.001⁎ −0.002 −0.225⁎⁎⁎ −0.016⁎

− 0.015⁎⁎⁎ 0.083⁎⁎⁎ 0.001⁎ − 0.009 − 0.237⁎⁎⁎ − 0.017⁎

− 0.015⁎⁎⁎ 0.084⁎⁎⁎ 0.001⁎ − 0.010 − 0.234⁎⁎⁎ − 0.017⁎ 0.005⁎⁎⁎

−0.015⁎⁎⁎ 0.086⁎⁎⁎ 0.001⁎ −0.009 −0.226⁎⁎⁎ −0.016⁎

−0.016⁎⁎⁎ 0.081⁎⁎⁎ 0.001⁎ −0.011 −0.174⁎⁎⁎ −0.017⁎

− 0.016⁎⁎⁎ 0.097⁎⁎⁎ 0.001⁎ − 0.004 − 0.286⁎⁎⁎ − 0.015⁎

−0.016⁎⁎⁎ 0.092⁎⁎⁎ 0.001⁎ −0.005 −0.204⁎⁎⁎ −0.015⁎ 0.005⁎⁎⁎

−0.015⁎⁎⁎ 0.085⁎⁎⁎ 0.001⁎ −0.005 −2.001⁎⁎⁎ −0.015⁎

− 0.016⁎⁎⁎ 0.087⁎⁎⁎ 0.001⁎ − 0.004 − 2.208⁎⁎⁎ − 0.015⁎

0.004⁎⁎⁎

0.010⁎⁎⁎

0.070⁎⁎⁎

0.004⁎⁎⁎

0.008⁎⁎⁎

0.009⁎⁎

0.24 53.36⁎⁎⁎ 12.22⁎⁎⁎

0.24 52.47⁎⁎⁎ 10.22⁎⁎⁎

0.24 61.87⁎⁎⁎ 15.46⁎⁎⁎

0.004⁎⁎⁎

0.009⁎⁎⁎

0.010⁎⁎ 0.005⁎⁎⁎

0.23 65.05⁎⁎⁎

0.010⁎⁎⁎

0.21 52.38⁎⁎⁎ 8.78⁎⁎

0.22 57.49⁎⁎⁎ 7.96⁎⁎

0.22 65.74 16.40⁎⁎⁎

0.004⁎⁎⁎

0.007⁎⁎

0.007⁎⁎ 0.005⁎⁎⁎

0.22 74.36⁎⁎⁎

0.080⁎⁎⁎

0.007⁎⁎ 0.002⁎⁎

0.21 72.19⁎⁎⁎

0.23 58.01⁎⁎⁎ 10.38⁎⁎⁎

0.22 56.99⁎⁎⁎ 9.74⁎⁎⁎

0.101⁎⁎⁎

0.22 62.73⁎⁎⁎ 15.62⁎⁎⁎

0.002⁎⁎ 0.19 64.96⁎⁎⁎

0.20 51.70⁎⁎⁎ 9.82⁎⁎⁎

0.19 51.09⁎⁎⁎ 8.21⁎⁎⁎

0.19 57.00⁎⁎⁎ 14.84⁎⁎⁎

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Table A3 GLS fix-effect regression analyses on firm performance for the internationalization measurements.

Number of observations = 1074 (179 cases multiplied by six years); regression parameter appears the non-standardized coefficient. One-tailed tests with †p b 0.10, ⁎p b 0.05, ⁎⁎p b 0.01, ⁎⁎⁎p b 0.001.

93

94

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