The internationalization-performance relationship at Swiss firms: A test of the S-shape and extreme degrees of internationalization
Researchers have recently suggested that on average the relationship between internationalization and performance will be S-shaped. In this study, we test this pattern investigating 87 Swiss multinational companies in manufacturing industries over an 8-year period (1998–2005; N = 696).
Large Swiss companies cover the full range of internationalization, with many measuring over 90 percent foreign sales-to-total sales. This allows for a unique test of performance levels at very high degrees of internationalization.
We find that in the case of Swiss MNCs the S-curve is shifted to the right, and preceded by an initial stage of increasing performance.
We find that companies operating at extreme (very high) degrees of internationalization face lower average performance and higher average performance variation.
Key WordsInternationalization Performance Switzerland Extreme Degrees of Internationalization
Unable to display preview. Download preview PDF.
- Annavarjula, M. G./ Beldona, S., Multinationality-Performance Relationship: A Review and Reconceptualization, The International Journal of Organizational Analysis, 8,1, 2000, pp. 48–67.Google Scholar
- Coviello, N. E./ McAuley, A., Internationalisation and the Smaller Firm: A Review of Contemporary Empirical Research, Management International Review, 39,3, 1999, pp. 223–256.Google Scholar
- Daniels, J. D./ Bracker, J., Profit Performance: Do Foreign Operations Make a Difference?, Management International Review, 29,1, 1989, pp. 46–56.Google Scholar
- Forsgren, M./ Hagström, P., Ignorant Internationalization? The Uppsala Model and Internationalization Patterns for Internet-Related Firms, Working Paper Series, Institute of International Business, Stockholm School of Economics, No. 01/7, 2001.Google Scholar
- Johanson, J./ Vahlne, J.-E., Commitment and Opportunity Development in the Internationalization Process: A Note on the Uppsala Internationalization Process Model, Management International Review, 46,2, 2006, pp. 1–14.Google Scholar
- Lorsch, J. W./ MacIver, E., Pawns or Potentates: The Reality of America’s Corporate Boards, Boston: Harvard Business School Press 1989.Google Scholar
- Lu, J. W./ Beamish, P. W., International Diversification and Firm Performance: The S-Curve Hypothesis, Academy of Management Journal, 27,4, 2004, pp. 598–609.Google Scholar
- Magaziner, I. C./ Reich, R. B., International Strategies, in: Wortzel, V./ Wortzel, L. H. (eds.), Strategic Management of Multinational Corporations: The Essentials, New York: Wiley 1985, pp. 4–9.Google Scholar
- Merry, U., Coping With Uncertainty: Insights from the New Sciences of Chaos, Self-organization and Complexity, Westport, CT: Praeger Publishers 1995.Google Scholar
- Mischel, W., The Interaction of Person and Situation, in: Magnusson, D./ Endler, N. (eds.), Personality at the Crossroads: Current Issues in Interactional Psychology, Hillsdale, NJ: Erlbaum 1977, pp. 333–352.Google Scholar
- North, D. C., Institutions, Institutional Change and Economic Performance, New York: Cambridge University Press 1990.Google Scholar
- Ruigrok, W./ Wagner, H., Internationalization and Performance: An Organizational Learning Perspective, Management International Review, 43,1, 2003, pp. 63–83.Google Scholar
- Sambharya, R. B., The Combined Effect of International Diversification and Product Diversification Strategies on the Performance of U.S.-based Multinational Corporations, Management International Review, 35,3, 1995, pp. 197–218.Google Scholar
- Snyder, M./ Ickes, W., Personality and Social Behavior, in: Lindzey, G./ Aronson, E. (eds.), The Handbook of Social Psychology, New York, NY: Random House 1985, pp. 883–947.Google Scholar
- Sullivan, D., The “Threshold of Internationalization”: Replication, Extension, and Reinterpretation, Management International Review, 34,2, 1994, pp. 165–186.Google Scholar
- UNCTAD, United Nations Conference on Trade and Development, World Investment Report 1999: Trends and Determinants, New York and Geneva: United Nations 2000.Google Scholar