Internationalization, internalization and the performance of US biopharmaceutical SMEs

The purpose of this study is to investigate the multinationality-performance (M-P) relationship in the context of US biopharmaceutical small- and medium-sized enterprises (SMEs). The study examines the M-P relationship of SMEs from a single home country and in a specific industry. The paper finds that geographic dispersion of both foreign subsidiaries and alliances affects SME performance negatively, albeit to a varying extent. Firm-specific technological advantages alleviate the negative impact of geographic dispersion of both foreign subsidiaries and alliances, whilst firm-specific marketing advantages mitigate the negative effect of only geographic dispersion of foreign alliances. The paper also addresses the direct and joint effects of firm-specific advantages, country-specific advantages, and the degree of internalization on SME performance systematically. Further, the results reveal some interesting differences between the venturing and the development stage of SME internationalization. To the best of the authors' knowledge, there have been virtually no studies on the M-P relationship which attempt to distinguish between subsidiary- and alliance-based internationalization.