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Pace, rhythm, and scope: process dependence in building a profitable multinational corporation

Vermeulen, Freek and Barkema, Harry G. (2002) Pace, rhythm, and scope: process dependence in building a profitable multinational corporation. Strategic Management Journal, 23 (7). pp. 637-653. ISSN 0143-2095

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Abstract

Many potential benefits of foreign expansion have been identified in the literature, yet empirical support that multinational firms perform better than domestic firms is mixed. This paper takes a longitudinal perspective and argues that how much a firm benefits from having foreign subsidiaries depends on its process of internationalization. We argue that a firm's capacity to absorb expansion is subject to constraints: some expansion patterns increase profitability less than others, owing to diseconomies of time compression. We hypothesize that the speed of internationalization, the spread of the geographical and product markets entered, and the irregularity of the expansion pattern negatively moderate a firm's increase in profitability resulting from international expansion. Model estimations based on panel data raised strong support for these predictions.

Item Type: Article
Official URL: http://onlinelibrary.wiley.com/journal/10.1002/%28...
Additional Information: © 2002 John Wiley and Sons
Library of Congress subject classification: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HF Commerce
Journal of Economic Literature Classification System: F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
Sets: Departments > Management
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 06 Sep 2011 08:10
URL: http://eprints.lse.ac.uk/38116/

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