, Volume 51, Issue 5, pp 593-634
Date: 10 Sep 2011

A Contingency Theory of Internationalization

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Abstract

  • Studies of the internationalization-performance (I-P) relationship for emerging market multinational enterprises (EM MNEs) have yielded mixed results, suggesting that a contingency view of I-P for EM MNEs may be useful and timely. In particular, we suggest it is useful to analyze how the EMs’ trade liberalization can amplify or reduce the performance from foreign market penetration in the context of electronics vs. non-electronics EM MNEs.

  • Our framework suggests the I-P link is inverted-U shaped for electronics EM MNEs and linear for non-electronics EM MNEs. These relationships are further enhanced with higher trade liberalization. Our empirical tests with seven related measures of trade liberalization on a sample of 623 MNEs from 14 EMs for 2000–2006 largely support our theory.

  • Our article integrates and contributes to two small, growing, and related literatures: (1) the I-P relationship for EM MNEs per se; and (2) the effect of trade liberalization on firms’ internationalization. We conclude with fresh implications for theory, policy, and practice.