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How much does country matter? An analysis of firms’ growth options

Author

Listed:
  • Tony W Tong

    (Leeds School of Business, University of Colorado, Boulder, USA)

  • Todd M Alessandri

    (Whitman School of Management, Syracuse University, Syracuse, USA)

  • Jeffrey J Reuer

    (Kenan-Flagler Business School, University of North Carolina, Chapel Hill, USA)

  • Asda Chintakananda

    (College of Business Administration, Marquette University, Milwaukee, USA)

Abstract

Recent international strategy research emphasizes the importance of understanding the effects of geographic location on firms’ strategies and performance outcomes. We contribute to this research by providing empirical evidence that the interplay of country and industry effects matters substantially in explaining the variation in the value of growth options of firms based in different countries. Our results show that country–industry effects are the second largest source of variation, following firm effects, while industry and country effects are relatively small when considered in their own right. That valuable growth options are tied to country and industry interactions has important implications for international strategy research and practice. Journal of International Business Studies (2008) 39, 387–405. doi:10.1057/palgrave.jibs.8400355

Suggested Citation

  • Tony W Tong & Todd M Alessandri & Jeffrey J Reuer & Asda Chintakananda, 2008. "How much does country matter? An analysis of firms’ growth options," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 39(3), pages 387-405, April.
    • Handle: RePEc:pal:jintbs:v:39:y:2008:i:3:p:387-405
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    Cited by:

    1. Deshpande, Shreesh & Svetina, Marko & Zhu, PengCheng, 2012. "Analyst coverage of acquiring firms and value creation in cross-border acquisitions," Journal of Multinational Financial Management, Elsevier, vol. 22(5), pages 212-229.
    2. Vithessonthi, Chaiporn & Tongurai, Jittima, 2015. "The effect of leverage on performance: Domestically-oriented versus internationally-oriented firms," Research in International Business and Finance, Elsevier, vol. 34(C), pages 265-280.
    3. Dan Prud’homme & Tony W. Tong & Nianchen Han, 2021. "A stakeholder-based view of the evolution of intellectual property institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(4), pages 773-802, June.
    4. Nielsen, Bo Bernhard & Raswant, Arpit, 2018. "The selection, use, and reporting of control variables in international business research: A review and recommendations," Journal of World Business, Elsevier, vol. 53(6), pages 958-968.
    5. Sarada Devi Gadepalli & Arindam Mondal, 2018. "Sources of Business Unit Performance Heterogeneity in India: The Influence of Ownership," Vikalpa: The Journal for Decision Makers, , vol. 43(4), pages 207-221, December.
    6. Viacheslav Iurkov & Gabriel R G Benito, 2020. "Change in domestic network centrality, uncertainty, and the foreign divestment decisions of firms," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(5), pages 788-812, July.
    7. Han Smit & Enrico Pennings & Sjoerd Bekkum, 2017. "Real options and institutions," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(5), pages 620-644, July.
    8. Spyridon Stavropoulos & Martijn J. Burger & Dimitris Skuras, 2015. "Data Sparseness and Variance in Accounting Profitability," Tinbergen Institute Discussion Papers 15-014/VII, Tinbergen Institute.
    9. De Beule, Filip & Klein, Martin & Verwaal, Ernst, 2020. "Institutional quality and inclusive strategies at the base of the pyramid," Journal of World Business, Elsevier, vol. 55(5).
    10. Ioulianou, Sophocles & Trigeorgis, Lenos & Driouchi, Tarik, 2017. "Multinationality and firm value: The role of real options awareness," Journal of Corporate Finance, Elsevier, vol. 46(C), pages 77-96.
    11. Abrar Ali Saiyed & Stephanie A. Fernhaber & Rakesh Basant & Karthik Dhandapani, 2021. "The internationalization of new ventures in an emerging economy: The shifting role of industry concentration," Asia Pacific Journal of Management, Springer, vol. 38(4), pages 1467-1497, December.
    12. Tailan Chi & Jing Li & Lenos G Trigeorgis & Andrianos E Tsekrekos, 2019. "Real options theory in international business," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 50(4), pages 525-553, June.
    13. Ketelhöhn, Niels W. & Quintanilla, Carlos, 2012. "Country effects on profitability: A multilevel approach using a sample of Central American firms," Journal of Business Research, Elsevier, vol. 65(12), pages 1767-1772.
    14. Guangrui Guo, 2017. "Demystifying variance in performance: A longitudinal multilevel perspective," Strategic Management Journal, Wiley Blackwell, vol. 38(6), pages 1327-1342, June.
    15. Aabo, Tom & Pantzalis, Christos & Park, Jung Chul, 2016. "Multinationality as real option facilitator — Illusion or reality?," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 1-17.
    16. Michalis Makrominas, 2017. "Recognized intangibles and the present value of growth options," Review of Quantitative Finance and Accounting, Springer, vol. 48(2), pages 311-329, February.
    17. Jorge MONGAY, 2017. "Market Economies Potentialities and Cultural Clusters. A Global and Longitudinal Study," Expert Journal of Economics, Sprint Investify, vol. 5(1), pages 1-13.
    18. Lucian Belascu & Dan Gabriel Dumitrescu & Alexandra Smedoiu Popoviciu & Alexandra Horobet, 2021. "What Drives Profitability in the Romanian ICT Sector?," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 23(Special15), pages 899-899, November.
    19. Rachel A. Bahn & Gumataw K. Abebe, 2020. "Food retail expansion patterns in Sub‐Saharan Africa and the Middle East and North Africa: Institutional and regional perspectives," Agribusiness, John Wiley & Sons, Ltd., vol. 36(3), pages 453-481, June.
    20. Reddy, Kotapati Srinivasa, 2015. "Extant Reviews on Entry-mode/Internationalization, Mergers & Acquisitions, and Diversification: Understanding Theories and Establishing Interdisciplinary Research," MPRA Paper 63744, University Library of Munich, Germany, revised 2015.
    21. Tony Tong & Jing Li, 2008. "Real options and MNE strategies in Asia Pacific," Asia Pacific Journal of Management, Springer, vol. 25(1), pages 153-169, January.
    22. Bae, Kee-Hong & Ding, Yi & Wang, Xiaoqiao, 2020. "Relative industry valuation and cross-border listing," Journal of Banking & Finance, Elsevier, vol. 119(C).
    23. Vassiliki Bamiatzi & Konstantinos Bozos & S. Tamer Cavusgil & G. Tomas M. Hult, 2016. "Revisiting the firm, industry, and country effects on profitability under recessionary and expansion periods: A multilevel analysis," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1448-1471, July.
    24. Peregrino de Brito, Renata & Artur Ledur Brito, Luiz, 2020. "The influence of institutional changes on industry effects," Journal of Business Research, Elsevier, vol. 119(C), pages 610-618.

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