Strategic Management Journal

We discuss and explore the effects of internationalization, an entrepreneurial strategy employed by small and medium‐sized enterprises (SMEs), on firm performance. Using concepts derived from the international business and entrepreneurship literatures, we develop four hypotheses that relate the extent of foreign direct investment (FDI) and exporting activity, and the relative use of alliances, to the corporate performance of internationalizing SMEs. Using a sample of 164 Japanese SMEs to test these hypotheses, we find that the positive impact of internationalization on performance extends primarily from the extent of a firm's FDI activity. We also find evidence consistent with the perspective that firms face a liability of foreignness. When firms first begin FDI activity, profitability declines, but greater levels of FDI are associated with higher performance. Exporting moderates the relationship FDI has with performance, as pursuing a strategy of high exporting concurrent with high FDI is less profitable than one that involves lower levels of exports when FDI levels are high. Finally, we find that alliances with partners with local knowledge can be an effective strategy to overcome the deficiencies SMEs face in resources and capabilities, when they expand into international markets. Copyright © 2001 John Wiley & Sons, Ltd.

Prior research suggests that top management team (TMT) diversity increases strategic innovation. We extended this argument to the case of entering new geographic areas. In addition to exploring the cognitive implications of TMT diversity, as done in prior research, we explored when diversity may lead to the formation of subgroups within TMTs hampering communication and the propensity to enter new geographic areas. We also examined how these positive cognitive and negative social implications change over time as TMT members interact over the years. The hypotheses were tested using ordinal probit analysis and data on 2,159 expansions of 25 companies over a period of more than three decades. Copyright © 2007 John Wiley & Sons, Ltd.

Through an internalization theory lens, an argument is developed to suggest that the traditional concept of geographic scope should be split into two related, but more precise, elements of international asset dispersion and country environment diversity. Subsequently, these new concepts are tested using a structural equation modeling approach on a sample of 580 large multinational enterprises (MNEs). We find that the relationship between economic performance and international asset dispersion is positive, but that country environment diversity is negatively associated with performance, with a positive interaction between them. This study adds to our theoretical understanding of MNEs, and also provides a bridge between the mixed findings of prior research on multinationality by disentangling the unique effects of the latent subcomponents of geographic scope on firm performance. Copyright © 2003 John Wiley & Sons, Ltd.

Whereas much is known about the relationships between strategy and structure, and between environment and structure, too little is known about a third link—the relationship between strategy‐making and environment. An empirical study was conducted upon two distinct samples of firms. We hypothesized that increases in environmental dynamism, hostility and heterogeneity should be related to specific changes in the amount of analysis and innovation which characterizes strategy‐making activity. Most of these relationships tended to be much stronger in successful than in unsuccessful samples of firms.

We adopt a multilevel perspective to study the transfer of collective and individual knowledge. By making a clear theoretical distinction between collective and individual attributes in concepts such as knowledge, teaching approach, and absorptive capacity, this study extends the knowledge transfer literature and provides fresh insights into the ways in which collective and individual knowledge are transferred. Based on a survey of the capability transfer activities of 161 engineering units of multinationals in the Chinese automotive industry, we empirically validate the distinction between individual and collective teaching activities and absorptive capacity. More importantly, we find that the largely underexplored collective‐level mechanisms, such as collective teaching and collective absorptive capacity, are more effective in transferring both collective knowledge and individual knowledge in comparison to their individual‐based counterparts. Our findings also have important implications for management of multinationals and international joint ventures, particularly in emerging economies. Copyright © 2009 John Wiley & Sons, Ltd.

This paper proposes and tests a model of IJV learning and performance that segments absorptive capacity into the three components originally proposed by Cohen and Levinthal (1990). First, trust between an IJV's parents and the IJV's relative absorptive capacity with its foreign parent are suggested to influence its ability to understand new knowledge held by foreign parents. Second, an IJV's learning structures and processes are proposed to influence its ability to assimilate new knowledge from those parents. Third, the IJV's strategy and training competence are suggested to shape its ability to apply the assimilated knowledge. Revisiting the Hungarian IJVs studied by Lyles and Salk (1996) 3 years later, we find support for the knowledge understanding and application predictions, and partial support for the knowledge assimilation prediction. Unexpectedly, our results suggest that trust and management support from foreign parents are associated with IJV performance but not learning. Our model and results offer a new perspective on IJV learning and performance as well as initial insights into how those relationships change over time. Copyright © 2001 John Wiley & Sons, Ltd.