Transnationality and Financial Performance in the Era of the Global Factory
Peter J. Buckley and
Xiaowen Tian ()
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Peter J. Buckley: University of Leeds
Xiaowen Tian: Murdoch University
Management International Review, 2017, vol. 57, issue 4, 501-528
Abstract Drawing on the core notions of knowledge augmentation and rational choice in internalization theory, the paper develops a theoretical framework to examine the relationship between transnationality and financial performance in the era of the global factory, and tests hypotheses against recent experience of leading transnational enterprises. The paper rejects a direct relationship between transnationality and financial performance, and supports a mediation model in which knowledge-based assets mediate the relationship between transnationality and financial performance conditional on R&D intensity. In making decisions on the transnationality of a firm, managers should not focus on whether it helps the firm achieve direct financial benefits because these are quickly offset by the costs in a competitive environment. Instead, they should focus on whether it helps the firm enhance knowledge-based assets and, through it, financial gains that can be long-lasting, and whether it is supported by R&D to augment such assets.
Keywords: Internalization theory; Transnationality; Performance; Global factory (search for similar items in EconPapers)
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