The interplay of international alliance and subsidiary portfolios: Implications for firms’ innovation and financial performance

Mariia Koval, Viacheslav Iurkov and Gabriel Benito

Journal of World Business, 2024, vol. 59, issue 1

Abstract: The benefits of having an internationally diverse alliance portfolio are well known. However, the challenges remain overlooked, especially the potential to curb firms’ international expansion beyond such alliances. Building on global connectivity literature, we study how firms’ international footprint through their foreign subsidiaries is affected by the geographical spread of their international alliances. Using data on a sample of U.S. high-tech firms, we find that this relationship follows a U-shaped pattern and is contingent on alliance portfolio geographic distance and firms’ absorptive capacity for internationalization. Deviations from the optimal international footprint lower firms’ innovation and financial performance.

Keywords: Innovation performance; Financial performance; Subsidiary international diversification; Alliance portfolio international diversification; Internationalization absorptive capacity (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:worbus:v:59:y:2024:i:1:s1090951623000755

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DOI: 10.1016/j.jwb.2023.101500

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