Technological Competence and International Diversification
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This paper shows that the role of managerial incentives is highlighted by a relatively complex relationship between technological competence and international diversification. By studying a sample of Standard & Poor’s 500 member firms, we explore the relationships between technological competence, managerial pay, and international diversification.
Results indicated a curvilinear relationship (an inverted U-shape) between technological competence and international diversification.
In line with agency theory, contingent pay (stock options and bonuses) was positively related to international diversification.
Beyond these direct effects, both contingent and non-contingent pay (cash compensation) moderated the relationship between technological competence and international diversification.
KeywordsInternational strategy Corporate governance Managerial compensation Innovation
We thank Lorraine Eden, Michael A. Hitt, and Stephen Tallman as well as the editors and anonymous reviewers of the mir Focused Issue for their helpful comments and suggestions.
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