What is the Shape of the Multinationality‐Performance Relationship?

TLDR

Previous theoretical explanations and empirical analyses of the multinationality‑performance relationship have produced mixed arguments and results, including linear, inverted U‑shaped, and recently theorized three‑stage sigmoid relationships. We contribute to the debate by showing that the impact of multinationality depends on the time dimension incorporated in the performance measure, with net benefits likely higher in the longer term. We examine multinationality effects by incorporating a time dimension into performance measurement. Our sample of US manufacturing multinationals indicates a three‑stage sigmoid multinationality‑performance relationship.

Abstract

Previous theoretical explanations and empirical analyses of the multinationality‐performance relationship have produced mixed arguments and results. Linear and inverted U‐shaped relationships have been theorized and confirmed empirically. Recent research has theorized that there is a three‐stage, sigmoid relationship between multinationality and performance. We contribute to the debate by showing that the impact of multinationality depends on the time dimension incorporated in the performance measure; that is, the net benefits from multinationality are likely to be higher in the longer term. The results from our sample of US manufacturing multinationals indicate that there is a three‐stage, sigmoid multinationality‐performance relationship.