Home country uncertainty and the internationalization-performance relationship: Building an uncertainty management capability

TY - JOUR

T1 - Home country uncertainty and the internationalization-performance relationship

T2 - Building an uncertainty management capability

AU - Cuervo-Cazurra, Alvaro

AU - Ciravegna, Luciano

AU - Melgarejo, Mauricio

AU - Lopez, Luis

PY - 2018/2

Y1 - 2018/2

N2 - We analyze the impact of home country uncertainty on the internationalization-performance relationship of emerging market firms. Building on organizational learning theory and the institutional approach, we argue that internationalization has a positive impact on the performance of emerging market firms, and that this relationship is strengthened for firms based in emerging countries with higher corruption and political risk. The reason is that by being exposed to high levels of home country uncertainty in the form of political risk and corruption, firms develop an uncertainty management capability at home that helps them face the challenges of internationalization better. We also propose that this uncertainty management capability helps emerging market firms perform better outside of their home region. We test our arguments on a sample of 536 firms from Argentina, Brazil, Chile, and Peru.

AB - We analyze the impact of home country uncertainty on the internationalization-performance relationship of emerging market firms. Building on organizational learning theory and the institutional approach, we argue that internationalization has a positive impact on the performance of emerging market firms, and that this relationship is strengthened for firms based in emerging countries with higher corruption and political risk. The reason is that by being exposed to high levels of home country uncertainty in the form of political risk and corruption, firms develop an uncertainty management capability at home that helps them face the challenges of internationalization better. We also propose that this uncertainty management capability helps emerging market firms perform better outside of their home region. We test our arguments on a sample of 536 firms from Argentina, Brazil, Chile, and Peru.

KW - Internationalization

KW - Performance

KW - Uncertainty

KW - Political risk

KW - Corruption

KW - Emerging markets

KW - Multinational firms

KW - Latin America

KW - Region

U2 - 10.1016/j.jwb.2017.11.002

DO - 10.1016/j.jwb.2017.11.002

M3 - Article

SN - 1090-9516

VL - 53

SP - 209

EP - 221

JO - JOURNAL OF WORLD BUSINESS

JF - JOURNAL OF WORLD BUSINESS

IS - 2

ER -