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SME internationalization and performance: Growth vs. profitability

SME internationalization and performance: Growth vs. profitability Lu and Beamish (2001) examined the effect of two internationalization strategies, exporting and foreign direct investment (FDI), on SME performance (ROA). We extend this research by examining the differential effects of these strategies on two other dimensions of SME performance: growth and ROS. We develop and test four sets of hypotheses using a sample of 164 Japanese SMEs. We find that exporting activity has a positive impact on growth, but negative impact on profitability. FDI activity has a positive relationship with growth, but a U curve relationship with profitability. Exporting activity has a positive moderating effect on the relationship between an SME’s FDI activity and firm growth, a negative moderating effect on the relationship between an SME’s FDI activity and firm profitability. An SME’s age when it starts to make FDIs has a negative moderating impact on the relationship between FDI and firm growth and profitability. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of International Entrepreneurship Springer Journals

SME internationalization and performance: Growth vs. profitability

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Publisher
Springer Journals
Copyright
Copyright © 2006 by Springer Science + Business Media, LLC
Subject
Business and Management; Entrepreneurship; Microeconomics; International Economics; Management
ISSN
1570-7385
eISSN
1573-7349
DOI
10.1007/s10843-006-8000-7
Publisher site
See Article on Publisher Site

Abstract

Lu and Beamish (2001) examined the effect of two internationalization strategies, exporting and foreign direct investment (FDI), on SME performance (ROA). We extend this research by examining the differential effects of these strategies on two other dimensions of SME performance: growth and ROS. We develop and test four sets of hypotheses using a sample of 164 Japanese SMEs. We find that exporting activity has a positive impact on growth, but negative impact on profitability. FDI activity has a positive relationship with growth, but a U curve relationship with profitability. Exporting activity has a positive moderating effect on the relationship between an SME’s FDI activity and firm growth, a negative moderating effect on the relationship between an SME’s FDI activity and firm profitability. An SME’s age when it starts to make FDIs has a negative moderating impact on the relationship between FDI and firm growth and profitability.

Journal

Journal of International EntrepreneurshipSpringer Journals

Published: Nov 22, 2006

References

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