International Dispersion and Profitability: An Institution-Based Approach

Garcia-Garcia, Raquel; García-Canal, Esteban and Guillén, Mauro F. (2019). International Dispersion and Profitability: An Institution-Based Approach. Management International Review, 59 pp. 855–888.

DOI: https://doi.org/10.1007/s11575-019-00402-w

Abstract

This study examines the effect of international dispersion on profitability. We use an institution-based approach to propose that increases in international dispersion lead, on average, to profitability downturns. We also argue that this liability of foreignness will affect multinationals from infrastructure industries to a lesser extent because in these industries: 1) the importance of cultural fit in products is low; 2) firms possess regulatory expertise; and 3) firms have limited aggregation opportunities at the regional level. We test our hypotheses on a panel of Spanish listed firms (1986-2007). Our findings point to a negative linear relationship between international dispersion and profitability, which is flatter for infrastructure multinationals. These results contribute to a more context-based understanding of internationalization that highlights the shortcomings of establishing a dispersed international footprint.

Viewing alternatives

Metrics

Item Actions

Export

You can export this page using these formats Digital Object Identifier - DOI

About

• Item ORO ID
• 66832
• Item Type
• Journal Item
• Keywords
• Internationalization; profitability; liability of foreignness; regionalization; institution-based view; infrastructure firms
• Academic Unit or School
• Faculty of Business and Law (FBL) > Business > Department for Strategy and Marketing
  Faculty of Business and Law (FBL) > Business
  Faculty of Business and Law (FBL)
• Copyright Holders
• © 2019 Springer-Verlag
• Depositing User
• Ekaterina Kandelaki