| Outward foreign direct investment(OFDI)has become one of the most important ways for multinational companies to expand their markets and enhance their global competitiveness.Based on the evidence from Orbis dataset,it should be noted that over half of global multinationals experiencing negative performance gap at least once,which means their current performance is lower than their own historical performance or their industry peers.Although they are facing negative performance gap,there is also a considerable proportion of firms making risk-taking internationalization strategis,such as a high internationalization propensity,investing into a new country or increasing their foreign subsidiaries' ownership.As to such phenomenon,exisiting researches still fail to explain above phenomenon and have following gaps.Firstly,in traditional internationalization theories,firm's performance is implicitly treated as a source of resources for buffering internationalization risks.Thus,prior studies focuses on how firm's strategic behavior influence firm's performance,ignoring firm performance itself could be an important strategic reference for internationalization decision-making.Secondly,although prior studies in strategy area have applied the behavioral theory of the firm to understand the relationship between negative performance gap and risk-taking behaviors,the findings are still inconsistent.More importantly,empirical studies which applied the behavioral theory of the firm predominantly focus on negative performance gap at the parent-firm level,ignoring the role of negative performance gap at the subsidiary level.It should be pointed out that under the internationalization context,subsidiary-level's negative performance gap also has important and non-negligible impact.In order to address above gaps,this study tries to integrate the behavioral theory of the firm with attention-based view and examine the relationship of negative performance gaps at both parent level and subsidiary level with internationalization strategies.In doing so,on the one hand,this study can offer an explanation to address above mentioned phenomenon.On the other hand,this study also can extend literatures in internationalization strategies and the behavioral theory of the firm.More specifically,this study includes three sub-studies.In Research One,it will focus on parent-level performance gap and explore how parent's negative performance gap influence firms' internationalization propensity and how external context influence such relationship.More specifically,this study tries to answer "Will parent firm increase its internationalization propensity when they face larger negative performance gap?How different dimensions of home-country industry environment,serving as external contexts,moderate such relationship?In this study,internationalization is treated as a high-risk and high-commitment strategy for firms.Based on the behavioral theory of the firm,we argue that parent firm with larger negative performance gap will have high propensity to internationalize.Through large panel data of 19199 multinational firms across 183 countries and 87 industries from the period of 2004 to 2013,we find that there is a positive relationship between parent negative performance gap and internationalization propensity.In addition,different dimensions of home country industry environment have different moderating effects.More specifically,the positive relationship between parent negative performance gap and internationalization propensity will be weaker when home country environment is munificent while such relationship will be stronger when home country environment is dynamic.In Research Two,it focuses on parent-level performance gap and explore the relationship between parent firm's negative performance gap and the likelihood of investing into new countries.The research question is "Does large parent firm's negative performance gap will prompt it to break its existing foreign location portfolio and invest into new countries?How top management team's international experience and firm decline experience,as important internal contexts,moderate such relationship?"In this study,compared with firm's existing foreign location portfolio,investing into new countries is treated as a high risk-taking strategy.Through a large panel data of 4067 parent firm across 175 countries and 87 industries,we find that there is a positive relationship between parent firm's negative performance gap and the likelihood of investing into new countries.However,such positive relationship between parent firm's negative performance gap and the likelihood of investing into new countries will be weaker when top management team has high levels of international experience and firm decline experience.In Research Three,it focuses on subsidiary-level performance gap and explore how subsidiary's negative performance gap influences the likelihood of ownership increase by its parent.This study also considers firm's internal context and external context as contingencies.More specifically,the research question is:"Does subsidiary's negative performance gap will increase the likelihood of ownership increase by its parent firm?How the business importance of the focal subsidiary,parent firm inertia and institutional distance between home country and host country moderate such relationship?" Through a panel data of 1745 parent firms and 1983 subsidiaries around 76 countries from the period of 2004 to 2013,this study empirically tested the hypotheses.It finds that there is a positive relationship between subsidiary's negative performance gap and the likelihood of ownership increase by its parent.In addition,such positive relationship between subsidiary's negative performance gap and the likelihood of ownership increase by its parent will be stronger if the focal firm is relatively large and olde.However,such positive relationship between subsidiary's negative performance gap and the likelihood of ownership increase by its parent will be weaker when parent firm is older and when the institutional distance between home country and host country is larger.Based on above theoretical and empirical analyses,this research contributes to internationalization strategy literature and the behavioral theory of the firm.Firstly,through introducing a new perspective,the behavioral theory of the firm,this study confirms the important role of firm's negative performance gap,compensating traditional internationalization theories which regard performance as either as a source of resources or an outcome.Secondly,through exploring the influence of negative performance gap on internationalization strategy,this study extends prior literature concerning the driving forces of internationalization.location choice and ownership change and shed a new light on understanding the traditional internationalization strategies.Thirdly,through integrating with attention-based view,this study argues that the extent of exploiting risk-taking internationalization strategy as a response to negative performance gap depends on the allocation of managerial attentions which is shaped by internal and external contexts.By incorporating external contexts(i.e.the munificence of home country industrial environment,the dynamism of home country industrial environment and institutional distance)and internal contexts(i.e.top management team's international experience and top management team's firm decline experience),this study extends the boundaries of the behavioral theory of the firm and offer an alternative solution for prior mixed findings.Finally,by exploring the influence of negative performance gap at parent level and subsidiary level on internationalization strategic decisions,this study also extends previous literatures,which predominantly focus on one level performance gap under the same context.Our introduction of two levels of performance gap under internationalization context provides a more comprehensive understanding of the relationship between negative performance gap and firm's strategic decision-making. |
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