An Empirical Examination of the Form of the Relationship Between Multinationality

This paper reports findings from a study that systematically evalu-ated the form of the relationship between multinationality and performance. In contrast to most of the prior conceptualizations that rely on linear, monotonic models of the linkage, this study examined a curvilinear model that addresses both the costs and benefits associated with multi-nationality. It used time-series techniques to capture both the static and dynamic components of the relationship. Results show that increasing levels of multi-nationality bring significant performance benefits up to a certain optimum level beyond which benefits begin to de-celerate, while costs accelerate. riven by theories of foreign direct investment that promise numerous benefits of geographic dispersion, a number of scholars have continued to examine the association between over-seas investment and firm level financia