IDEAS home Printed from https://ideas.repec.org/a/ecp/journl/v1y2014i1p4-25.html
   My bibliography  Save this article

The Correlation between the Internationalization Processes and Performance of Firms: The Case of Emerging Market Firms of the BRIC Countries

Author

Listed:
  • Aysun FICICI
  • Lingling WANG
  • Bulent AYBAR
  • Bo FAN

    (S. New Hampshire University, USA)

Abstract

In this empirical study we examine the correlation between the internationalization processes and financial performance of firms by focusing on the emerging market firms (EMNCs) that originate from the BRIC countries. We test the shape of the internationalization - performance curve and explore the differences on effectiveness of the sectors. Our sample data that is collected from the World Scope database that includes a total of 239 firms in which 13 of the firms are from Brazil, 58 of them from China, 156 from India, and 12 from Russia. The internationalization activities take place during the period of 2000 – 2010. Our results suggest that using only the first order term FSTS and second order term FSTS^2., demonstrates a positive relationship between DOI and ROA, a negative relationship between DOI and ROE, and DOI and ROS, and a positive relationship between DOI and ROA, DOI and ROS, and a negative relationship between DOI and ROE. The sign of the coefficient for FSTS are negative and for FSTS^2, positive. This result confirms the previous theories that financial performance decreases in the beginning of the internationalization processes, then increases with the expansion of international operations. These results are statistically significant and propose a U-shaped relationship between the financial performance of EMNCs and their degree of internationalization.

Suggested Citation

  • Aysun FICICI & Lingling WANG & Bulent AYBAR & Bo FAN, 2014. "The Correlation between the Internationalization Processes and Performance of Firms: The Case of Emerging Market Firms of the BRIC Countries," Journal of Economics and Political Economy, , vol. 1(1), pages 4-25, September.
    • Handle: RePEc:ecp:journl:v:1:y:2014:i:1:p:4-25
    as

    Download full text from publisher

    File URL: http://www.ijepe.com/index.php/JEPE/article/download/22/32
    Download Restriction: no
    File URL: http://www.ijepe.com/index.php/JEPE/article/view/22
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joonho Shin & Xavier Mendoza & Changbum Choi, 2022. "Do internationalizing business group affiliates perform better after promarket reforms? Evidence from Korean SMEs," Asia Pacific Journal of Management, Springer, vol. 39(2), pages 805-841, June.
    2. Henrique Correa da Cunha & Mohamed Amal & James Mark Viminitz, 2022. "Formal vs. Informal Institutional Distances and the Competitive Advantage of Foreign Subsidiaries in Latin America," Economies, MDPI, vol. 10(5), pages 1-25, May.

    More about this item

    Keywords

    Emerging Markets; Emerging Market Multinationals; Financial Performance; Internationalization and Degree of Internationalization; Foreign Direct Investment;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecp:journl:v:1:y:2014:i:1:p:4-25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bilal KARGI (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.