Multinational Risk and Performance Outcomes: Effects of Knowledge Intensity and Industry Context

    Research output: Contribution to journalJournal articleResearchpeer-review

    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.
    Original languageEnglish
    JournalInternational Business Review
    Volume21
    Issue number2
    Pages (from-to)139-152
    Number of pages14
    ISSN0969-5931
    DOIs
    Publication statusPublished - 2012

    Keywords

    • Downside Risk
    • Flexibility
    • Information-driven Knowledge
    • Responsiveness
    • Upside Potential

    Cite this

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    title = "Multinational Risk and Performance Outcomes: Effects of Knowledge Intensity and Industry Context",
    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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    author = "Andersen, {Torben Juul}",
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    Multinational Risk and Performance Outcomes : Effects of Knowledge Intensity and Industry Context. / Andersen, Torben Juul.

    In: International Business Review, Vol. 21, No. 2, 2012, p. 139-152.

    Research output: Contribution to journalJournal articleResearchpeer-review

    TY - JOUR

    T1 - Multinational Risk and Performance Outcomes

    T2 - Effects of Knowledge Intensity and Industry Context

    AU - Andersen, Torben Juul

    N1 - Available online 16 April 2011

    PY - 2012

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    AB - 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.

    KW - Downside Risk

    KW - Flexibility

    KW - Information-driven Knowledge

    KW - Responsiveness

    KW - Upside Potential

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    DO - 10.1016/j.ibusrev.2011.02.005

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    JO - International Business Review

    JF - International Business Review

    SN - 0969-5931

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    ER -