Abstract
Whether and how international diversification and cross-border arbitrage affects firm performance remains one of the major unresolved research questions in the strategy and international business literatures. We propose
that knowing how much a firm has internationally diversified tells us very little about performance implications, if we do not know, and do not ask, how the firm has diversified. Therefore, building on the two broad arguments of operating flexibility and location-specific commitment, we develop a theoretical framework that focuses on the extent to which a firm's international arbitrage strategy is characterized by specialization versus replication and argue that these different strategies may have differential impact on profitability and risk reduction. Developing a sophisticated measure of international specialization and using a unique panel data set
of 92 German MNEs to test our hypotheses, we provide a novel perspective on the relationship between international arbitrage and firm performance.
Whether and how international diversification and cross-border arbitrage affects firm performance remains one of the major unresolved research questions in the strategy and international business literatures. We propose
that knowing how much a firm has internationally diversified tells us very little about performance implications, if we do not know, and do not ask, how the firm has diversified. Therefore, building on the two broad arguments of operating flexibility and location-specific commitment, we develop a theoretical framework that focuses on the extent to which a firm's international arbitrage strategy is characterized by specialization versus replication and argue that these different strategies may have differential impact on profitability and risk reduction. Developing a sophisticated measure of international specialization and using a unique panel data set
of 92 German MNEs to test our hypotheses, we provide a novel perspective on the relationship between international arbitrage and firm performance.
that knowing how much a firm has internationally diversified tells us very little about performance implications, if we do not know, and do not ask, how the firm has diversified. Therefore, building on the two broad arguments of operating flexibility and location-specific commitment, we develop a theoretical framework that focuses on the extent to which a firm's international arbitrage strategy is characterized by specialization versus replication and argue that these different strategies may have differential impact on profitability and risk reduction. Developing a sophisticated measure of international specialization and using a unique panel data set
of 92 German MNEs to test our hypotheses, we provide a novel perspective on the relationship between international arbitrage and firm performance.
Whether and how international diversification and cross-border arbitrage affects firm performance remains one of the major unresolved research questions in the strategy and international business literatures. We propose
that knowing how much a firm has internationally diversified tells us very little about performance implications, if we do not know, and do not ask, how the firm has diversified. Therefore, building on the two broad arguments of operating flexibility and location-specific commitment, we develop a theoretical framework that focuses on the extent to which a firm's international arbitrage strategy is characterized by specialization versus replication and argue that these different strategies may have differential impact on profitability and risk reduction. Developing a sophisticated measure of international specialization and using a unique panel data set
of 92 German MNEs to test our hypotheses, we provide a novel perspective on the relationship between international arbitrage and firm performance.
| Original language | English |
|---|---|
| Title of host publication | Proceedings of the 54th Annual Meeting of the Academy of International Business |
| Editors | Susan Feinberg, Tunga Kiyak., East Lansing |
| Publication status | Published - 2012 |