Triple-testing the quality of multinationality-performance research: An internalization theory perspective

The international business literature has suggested various linkages between multinationality (M) and performance (P). A number of authors have recently put forward an S-shaped curve, allegedly describing a generalized MP relationship. However, internalization theory, in line with Buckley and Casson (Buckley, P.J., & Casson M. (1976). The future of the multinational enterprise. Macmillan: London) and Hennart (Hennart, J. F. (1982). A theory of multinational enterprise. Ann Arbor, University of Michigan Press; Hennart, J. F. (2007). The theoretical rationale for a multinationality-performance relationship, Management International Review, 47(3), 423-452), challenges the concept itself of such a generalized relationship between these two parameters. This paper adopts an internalization theory perspective, meant to improve the design of MP studies, and cautions against assuming too quickly a generalized MP relationship. In line with internalization theory, we argue that firm-level performance depends primarily on the characteristics of the companies' firm specific advantages (FSAs) rather than on their degree of multinationality. We propose triple-testing the quality of MP studies, by assessing how well they address the various challenges related to conceptualizing and measuring M, P and the MP relationship itself. (C) 2009 Elsevier Ltd. All rights reserved.