Performance implications of multinationality: moderating role of foreign market entry mode

Previous theoretical explanations and empirical analyses of the multinationality-performance relationship have produced mixed arguments and results. Linear and curvilinear relationships have been theorized and confirmed empirically. This study aims to reconcile earlier mixed findings by incorporating the role of entry mode choice as a moderating variable.

Extensive literature survey is conducted in order to provide an explanation for the different performance patterns of internationalization via licensing, joint venture and wholly owned subsidiary.

Based on the assumptions of Transaction Cost Economics and Organizational Capability perspectives, several research propositions about the multinationality-performance relationship are formulated, which provide a more fine-tuned approach to the performance implications of multinationality.

This paper contributes to multinationality-performance debate by showing that the impact of multinationality depends on the firm-level strategies implemented while going international; to be more precise, the net benefits from multinationality are likely to vary for different modes of foreign market entry.