The Roles of Industry Idiosyncrasy, Cost Efficiency, and Risk in Internationalization: Evidence from the Insurance Industry

49 Pages Posted: 26 Jan 2016

See all articles by Christian Biener

Christian Biener

Institute of Insurance Economics, University of St. Gallen; University of St. Gallen - School of Finance

Martin Eling

University of St. Gallen - Institute of Insurance Economics; University of Saint Gallen - School of Finance (SoF)

Ruo Jia

University of St. Gallen - Institute of Insurance Economics; University of St. Gallen - School of Finance

Date Written: January 07, 2016

Abstract

A central matter of dispute in the internationalization literature is the existence and shape of a systematic relationship between the degree of internationalization and firm performance (I-P relationship). Considering the global insurance industry, we show that the I-P relationship depends on the industry’s idiosyncrasies and on the geographical scope of internationalization. The life insurance industry’s idiosyncrasies lead to relatively high liability of foreignness that compromise cost efficiency, and relatively low risk reduction benefits of globalization. Therefore, we observe an overall negative impact of globalization on life insurers’ performance. However, the nonlife insurance industry’s idiosyncrasies render this relationship insignificant.

Keywords: Industry Dependency, Liability of Foreignness, Risk Reduction, Data Envelopment Analysis, Financial Services

Suggested Citation

Biener, Christian and Eling, Martin and Jia, Ruo, The Roles of Industry Idiosyncrasy, Cost Efficiency, and Risk in Internationalization: Evidence from the Insurance Industry (January 07, 2016). University of St. Gallen, School of Finance Research Paper No. 2016/2. Available at SSRN: https://ssrn.com/abstract=2722426 or http://dx.doi.org/10.2139/ssrn.2722426

Christian Biener (Contact Author)

Institute of Insurance Economics, University of St. Gallen ( email )

Girtannerstrasse 6
St. Gallen, St. Gallen 9010
Switzerland

HOME PAGE: http://sites.google.com/site/bienerresearchprofile/

University of St. Gallen - School of Finance ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Martin Eling

University of St. Gallen - Institute of Insurance Economics ( email )

Kirchlistrasse 2
St. Gallen, 9010
Switzerland

University of Saint Gallen - School of Finance (SoF) ( email )

Unterer Graben 21
St.Gallen, CH-9000
Switzerland

Ruo Jia

University of St. Gallen - Institute of Insurance Economics ( email )

Kirchlistrasse 2
St. Gallen, St. Gallen 9000
Switzerland

University of St. Gallen - School of Finance ( email )

Kirchlistrasse 2
St.Gallen, CH-9010
Switzerland
+41 71 224 79 74 (Phone)
+41 71 224 79 90 (Fax)

HOME PAGE: http://www.ivw.unisg.ch/de/Lehrstuhl%20Eling/Team%20VM?person=b8b3d7ef-04dd-4693-8b9f-946e91a6bcf4&n

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