How firms grow: clustering as a dynamic model of internationalization

Elizabeth Maitland, Elizabeth L Rose and Stephen Nicholas
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Elizabeth Maitland: School of Organisation and Management, University of New South Wales, Sydney, Australia
Elizabeth L Rose: Victoria University of Wellington, New Zealand, and University of Hawaii at Manoa, USA
Stephen Nicholas: University of Sydney, Sydney, Australia

Journal of International Business Studies, 2005, vol. 36, issue 4, 435-451

Abstract: This paper provides a methodology for identifying the dynamics of international firm expansion, demonstrating systematic evidence of both ‘toe in the water’ and concentrated bursts of internationalization by US multinational enterprises. We use the methodology of statistical process control to analyze initial investments in host countries and develop a numerical measure of temporal clustering or bunching. Using this measure, we identify two distinct patterns of growth; whereas some firms cluster their investments over time, others do not cluster their investments. For firms that cluster, three types of clustering strategy are identified: concentrating, hibernating, and hybrid. Arguments based on internal firm architecture, experience, and learning are advanced to explain these findings. Journal of International Business Studies (2005) 36, 435–451. doi:10.1057/palgrave.jibs.8400140

Date: 2005
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