Breakfast Briefing Rapid internationalisation and performance: Is …business-school.open.ac.uk/sites/business-school.open.ac... · 2017-09-25 · How can managers benefit from these

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Breakfast Briefing

Rapid internationalisation and

performance: Is the sky the limit?

Tuesday 12 September 2017


Welcome

Sanjay Gandhi

Teaching Fellow


Housekeeping

• We are not expecting a fire alarm, should the alarm

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• The event is being filmed to watch at a later date


Rapid internationalisation and

performance: Is the sky the limit?

Dr Raquel Garcia-Garcia

Lecturer in Strategic Management

The Open University Business School

Finding the ‘right’ speed

5

Too slow

Too fast

The ‘right’

speed

© The Mercury News

What do we mean by this?

Speed of internationalisation

6

Year

of

establishment

Year

of

first international

venture …

Post-internationalisation speedSpeed at which a firm starts

internationalising

Slowly but surely

Traditional models

• Internationalisation starts once a company has already gathered experience

at home.

• Increased commitment.

– E.g. exporting before establishing a physical venture in the new country.

• Not many locations in a short-time span.

• Increased distance, going from neighbouring countries to more distant ones.

7

Slowly but surely

Traditional models

8

1962

1984

2017

2017

Go fast or go home

9

Traditional models: the challenge

América Móvil BYD Co. Ltd.Ocimum

Biosolutions

Go fast or go home

10

Traditional models: the challenge

América Móvil BYD Co. Ltd.Ocimum

Biosolutions

Is there an optimum speed of internationalisation?

Speed of internationalisation-performance

• Sample of 120 Spanish firms (listed in the Madrid Stock Exchange).

• Distribution by industry:

11

Source: García-García, García-Canal, and Guillén (2017)



• Short-term performance (i.e. accounting performance).

12


ROA

NO SIGNIFICANT RELATIONSHIP



• Long-term performance (i.e. market performance).

13


Tobin’s qOPTIMUM




14


Tobin’s q

• Alleviates knowledge depreciation.

• Search for new knowledge.




15


Tobin’s q

• Time-compression diseconomies.

• Limited absorptive capacity.

Are there any factors affecting that optimum?


• Technological knowledge.

16




• Technological knowledge.

– Reduction of technological obsolescence risk.

– Cost efficiency spread R&D costs over a larger sales base.

– Adaptation takes time.

– No adaptation worse fit between technology and host country.

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PROS

CONS



• Diversity of international experience.

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• Diversity of international experience.

19

CON

PRO

The more diverse the international

experience, the less probable is that the

multinational gains access to valuable

complementary knowledge.

The more diverse the international

experience, the faster managers can make

decisions about the multinational’s course of

action.

How can managers benefit from these results?

Managerial implications

• Managers cannot speed up the foreign expansion of their firms ad infinitum

without eventually experiencing a decline in their value in capital markets

(SKY IS NOT THE LIMIT).

• Knowledge-based factors can support or hinder a successful rapid foreign

expansion.

• Multinationals from the ‘old Europe’ can also benefit from a rapid foreign

expansion.

• Account for the characteristics of your firm to find the ‘right’ speed.

20

Deglobalisation trend

What does the future hold?

21

Deglobalisation trend

What does the future hold?

22


THANK YOU

23


Q&A

Facilitator: Sanjay Gandhi

Dr Raquel Garcia-Garcia


Closing Comments

Sanjay Gandhi


Thank you

Please stay for networking and refreshments

Breakfast Briefing Rapid internationalisation and performance: Is …business-school.open.ac.uk/sites/business-school.open.ac... · 2017-09-25 · How can managers benefit from these

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