Does managerial myopia impede corporate internationalization?

Jiamin Xu

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This study investigates whether managerial myopia—a tendency of executives to prioritize short-term gains—hinders corporate internationalization, considering both the depth (intensity) and breadth (geographic diversification) of firms' international market engagements. Using detailed data from Chinese listed firms between 2010 and 2023, our empirical findings robustly confirm that managerial myopia negatively affects corporate internationalization strategies. This core relationship, however, is shaped by a complex interplay of internal governance and external pressures. We find that executive compensation incentives and executive political connections significantly mitigate the adverse effects of managerial myopia. Counter-intuitively, firm-level policy uncertainty also weakens myopia's negative impact, suggesting that external threats can compel even short-term-focused managers to pursue internationalization as a hedging strategy. Further analysis reveals significant heterogeneity rooted in China's unique political economy. The detrimental effect of myopia is pronounced for firms in the highly marketized eastern region but is insignificant in the state-led economies of the central and western regions. Similarly, the effect is strong for non-state-owned enterprises (Non-SOEs) but disappears for state-owned enterprises (SOEs), whose strategic decisions are often driven by political mandates rather than commercial short-termism. This research highlights the critical influence of managerial temporal orientation on global strategy and underscores how internal governance, external institutional factors, and firm-specific contexts interactively shape internationalization trajectories.

Keywords: Managerial myopia; Corporate internationalization; Executive compensation incentives; Executive political connections; Policy uncertainty (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025007257

DOI: 10.1016/j.iref.2025.104562

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