ABSTRACT
Does multinationality ensure firm performance? This question has been of interest to international business scholars for a long time. The relationship between multinationality and performance in the contemporary environment of global integration has of late generated a flurry of empirical studies (Tallman and Li, 1996; Hitt, Hoskisson and Kim, 1997; Mishra and Gobeli, 1998; Gomez and Ramaswamy, 1999; Geringer, Tallman and Olsen, 2000). That is, increasing market liberalization around the globe, especially in erstwhile-protected economies, has made it easier and sometimes necessary for firms to expand into foreign markets (Aulakh, Kotabe and Teegen, 2000). This liberalization has coincided with economic integration, success of international organizations such as GATT/WTO and UNCTAD, and advances in information and communication technologies. These environmental trends and the popular buzzwords, such as “globalization of markets,” “global economy,” and “think global, act local,” found in both academic literature and popular press, point toward the growing necessity for firms to find international markets for their products and services as well as configure their value chain activities around the globe in order to achieve scale, learning and location economies—in essence, to increase their multinationality.
