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Article
Publication date: 23 May 2022

Peter Tashman, Ettore Spadafora and Dominik Pascal Manfred Wagner

The authors meta-analyze research on the diversification–performance relationship to empirically establish the impact of home-country formal institutional quality on this…

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Abstract

Purpose

The authors meta-analyze research on the diversification–performance relationship to empirically establish the impact of home-country formal institutional quality on this relationship. Prior research assumes that a country’s formal institutional quality negatively affects the diversification–performance relationship, especially when it involves unrelated diversification. However, empirical evidence for these propositions is inconclusive because existing studies consider blocks of countries with limited institutional heterogeneity. To provide more clarity, this study aims to consider the diversification–performance relationship across developed, emerging and developing countries.

Design/methodology/approach

The meta-analysis relies on a sample of 293 effect sizes of the diversification–performance relationship from 76 primary studies across 15 countries between 1988 and 2019. The sample excludes effects sizes from papers that consider both product and international diversification to control for complex interactions between the strategies, as well as papers that did not consider both related and unrelated diversification.

Findings

The results confirm that stronger home-country formal institutions weaken the diversification–performance relationship by decreasing the relative efficiency of internal markets versus external ones. Further, the effect is less negative for related diversification because this strategy can better exploit market frictions in countries with stronger formal institutions and more efficient external markets than its unrelated counterpart.

Originality/value

The study contributes to the literatures on the diversification–performance relationship and home-country governance by providing robust evidence for how formal institutional quality impacts the efficacy of related and unrelated diversification.

Details

Multinational Business Review, vol. 31 no. 1
Type: Research Article
ISSN: 1525-383X

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Article
Publication date: 15 July 2022

Ettore Spadafora, Kwabena Aboah Addo, Tatiana Kostova, Makafui Kwame Kumodzie-Dussey, Ezekiel Leo, Valentina Marano and Marc van Essen

Despite agency theory and resource dependence theory suggesting that – albeit through different mechanisms – board independence positively influences firm internationalization…

571

Abstract

Purpose

Despite agency theory and resource dependence theory suggesting that – albeit through different mechanisms – board independence positively influences firm internationalization, empirical evidence on this relationship has been mixed and inconclusive. Based on this, the purpose of the present study is twofold: first, to analyze and synthesize the existing empirical literature and, second, to develop new theoretical insights on the effect of board independence on firm internationalization.

Design/methodology/approach

The authors used advanced meta-analytic techniques that allowed them, first, to synthesize the existing empirical literature on the board independence–firm internationalization relationship and, second, to examine the effect of several contingencies on such relationship. This study relies on data from 87 primary studies (published and unpublished) carried out in multiple academic fields in the period 1998–2021 and covering 49 countries.

Findings

The results confirm the established agency and resource-dependence arguments, suggesting that higher board independence is associated with greater firm internationalization. Moreover, the results show that the focal relationship is moderated by home-country formal and informal institutional factors, and in particular, the legal protection of minority shareholders and family business legitimacy. The authors do not find evidence that CEO duality and board size moderate the focal relationship or that board independence has a stronger effect on breadth than on depth of internationalization.

Originality/value

This study lies at the intersection of the literatures on corporate governance and firm internationalization and on comparative corporate governance of the multinational firm, shedding further light on the role played by institutional environments in determining the effectiveness of corporate governance mechanisms.

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Book part
Publication date: 23 December 2010

Antonio Corvino, Giulia Romano and Ettore Spadafora

The success of a firm is usually characterized by a constant re-thinking of its strategic model. Considerable entrepreneurial tension is involved in achieving competitive…

Abstract

The success of a firm is usually characterized by a constant re-thinking of its strategic model. Considerable entrepreneurial tension is involved in achieving competitive excellence, and the achievement of a right balance between the different elements that form a corporate strategy (e.g. economic perspective and social acceptability) (Coda, 1988).

Details

New Technology-Based Firms in the New Millennium
Type: Book
ISBN: 978-0-85724-374-4

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Book part
Publication date: 23 December 2010

Abstract

Details

New Technology-Based Firms in the New Millennium
Type: Book
ISBN: 978-0-85724-374-4

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