Multinationality and Technical Efficiency: A Neglected Perspective

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11 Citations (Scopus)

Abstract

This paper addresses production function and technical efficiency in the context of multinational enterprises (MNEs). It applies the stochastic frontier production function technique (SFPF) to investigating a sample of U.S. manufacturing MNEs and finds that an MNE normally encounters two phases of "liability of internationalization" in the course of international expansion. In addition, it shows that the firms with intensive investment in R&D and advertising development tend to alleviate or even avoid the "liability of internationalization" and enjoy a prolonged period of effective international expansion. The relationship between multinationality and meta production frontier (as well as technical efficiency) exhibits an upward horizontal S-curved relationship. R&D and advertising intensity (RDAI) positively affects the relationship between multinationality and meta production frontier (as well as technical efficiency). In the case of very high RDAI, the S-curve transforms itself into an upward monotonous curve.

Original languageEnglish
Pages (from-to)39-64
Number of pages26
JournalManagement International Review
Volume48
Issue number1
DOIs
Publication statusPublished - 2008
Externally publishedYes

Keywords

  • Liability of internationalization
  • Multinationality
  • R&d and advertising intensity
  • Stochastic frontier production function
  • Technical efficiency
  • U.s. Manufacturing firms

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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