Corporate Performance Implications of Multinationality

The emergence and evolution of the multinational corporation is widely viewed as one of the most remarkable economic developments of the post-war business environment. The relationship between multinationality and firm performance has been the subject of numerous empirical investigations. Results of these studies have often been contradictory, with some researchers finding a positive relationship and others a negative relationship between multinationality and firm performance. Our study highlights the importance of firm-specific moderators in understanding the main effect of the relationship between multinationality and performance. It utilizes a multi-item measure of multinationality and examines its relationship with performance in the context of firm specific moderators. Results indicate that the relationship between multinationality and performance is significantly and positively moderated by market power but not by firm-specific knowledge and product diversity.