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Multinationality and technical efficiency: A neglected perspective

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  • Lei Li

    (The University of Portland)

Abstract

Abstract and Key Results • 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.

Suggested Citation

  • Lei Li, 2008. "Multinationality and technical efficiency: A neglected perspective," Management International Review, Springer, vol. 48(1), pages 39-64, February.
    • Handle: RePEc:spr:manint:v:48:y:2008:i:1:d:10.1007_s11575-008-0003-2
    DOI: 10.1007/s11575-008-0003-2
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    5. Vincent Mok & Godfrey Yeung & Zhaozhou Han & Zongzhang Li, 2010. "Export orientation and technical efficiency: clothing firms in China," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(7), pages 453-463.

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