Strategic Management Journal, October 2016
Abstract: Our study examines the relationship between a firm’s multinationality and its performance. In a much-cited study, Lu and Beamish (2004) found evidence of an S-shaped relationship—with firm performance first decreasing, then increasing, then decreasing again as firms internationalized—in a sample of Japanese firms from 1986 to 1997. We test for the same relationship across all U.S. MNCs from 1989 to 2007, and find no evidence of an S-shaped pattern, or indeed, of any effect of multinationality at an aggregate level. Our study thus suggests that the effect of multinationality may vary with firm capabilities and home country environments, and that managers and academics alike should focus on understanding these specifics, rather than searching for a universal effect of multinationality on performance.