Too Slow or Too Fast? Speed of FDI Expansions, Industry Globalization, and Firm Performance

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

26 Scopus Citations
View graph of relations

Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)74-92
Journal / PublicationLong Range Planning
Volume50
Issue number1
Online published14 Jun 2016
Publication statusPublished - Feb 2017
Externally publishedYes

Abstract

We draw on an organizational learning perspective to examine how the speed of foreign direct investments (FDIs) affects firm performance. We argue that firms in general suffer from being either too slow or too fast in their FDI expansions and that the relationship between the speed of FDI expansions (SFEs) and firm performance is best captured by an inverse U-shape. Moreover, the inverse U-shaped relationship varies with the level of globalization pressure in such a way that the inverse U-shaped curve will have a steeper upward and steeper downward curvature for firms operating in global industries than for those in multidomestic industries. Using a panel data set of 1263 Japanese firms’ FDIs from 1986 to 1997, we find strong support for the arguments.