Multinationality and technical efficiency: A neglected perspective

Lei Li
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Lei Li: The University of Portland

Management International Review, 2008, vol. 48, issue 1, No 3, 39-64

Abstract: Abstract Abstract and Key Results • This paper addresses production function and technical efficiency in the context of multinational enterprises (MNEs). It applies the stochastic frontier production function technique (SFPF) to investigating a sample of U.S. manufacturing MNEs and finds that an MNE normally encounters two phases of “liability of internationalization” in the course of international expansion. In addition, it shows that the firms with intensive investment in R&D and advertising development tend to alleviate or even avoid the “liability of internationalization” and enjoy a prolonged period of effective international expansion. • The relationship between multinationality and meta production frontier (as well as technical efficiency) exhibits an upward horizontal S-curved relationship. • R&D and advertising intensity (RDAI) positively affects the relationship between multinationality and meta production frontier (as well as technical efficiency). In the case of very high RDAI, the S-curve transforms itself into an upward monotonous curve.

Keywords: Multinationality; Technical Efficiency; Stochastic Frontier Production Function; Liability of Internationalization; R&D and Advertising Intensity; U.S. Manufacturing Firms (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11575-008-0003-2

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