Home Country Uncertainty and the Internationalization-Performance Relationship: Building an Uncertainty Management Capability

Cuervo-Cazurra, A., Ciravegna, L., Melgarejo, M., and Lopez, L. 2018. Home country uncertainty and the internationalization-performance relationship: Building an uncertainty management capability. Journal of World Business, 53 (2): 209-221.

28 Pages Posted: 27 Dec 2018

See all articles by Alvaro Cuervo-Cazurra

Alvaro Cuervo-Cazurra

Northeastern University - Department of International Business and Strategy

Luciano Ciravegna

University of London - International Development Institute

Mauricio A. Melgarejo

Lacy School of Business, Butler University

Luis E. Lopez

INCAE - INCAE Business School

Date Written: July 6, 2016

Abstract

We analyze the impact of internationalization on firm performance in emerging economies, proposing that this relationship varies with home country uncertainty. Specifically, building on organizational learning theory and the institution-based view, we argue, first, that in emerging markets internationalized firms perform better than domestic firms. We then propose that this relationship is stronger for firms based in emerging countries with higher contextual uncertainty in the form of higher corruption and political risk. The reason is that by being exposed to high political risk and corruption at home, emerging market firms build an uncertainty management capability that helps them face the challenges of internationalization. We finally propose that firms perform better when they expand in the nearby region, but the uncertainty management capability has a higher impact when they expand outside their home region.

Keywords: internationalization, performance, uncertainty, political risk, corruption, emerging markets, multinational firms, Latin America, region

JEL Classification: F23

Suggested Citation

Cuervo-Cazurra, Alvaro and Ciravegna, Luciano and Melgarejo, Mauricio A. and Lopez, Luis E., Home Country Uncertainty and the Internationalization-Performance Relationship: Building an Uncertainty Management Capability (July 6, 2016). Cuervo-Cazurra, A., Ciravegna, L., Melgarejo, M., and Lopez, L. 2018. Home country uncertainty and the internationalization-performance relationship: Building an uncertainty management capability. Journal of World Business, 53 (2): 209-221.. Available at SSRN: https://ssrn.com/abstract=3298231

Alvaro Cuervo-Cazurra (Contact Author)

Northeastern University - Department of International Business and Strategy ( email )

D'Amore-McKim School of Business
313 Hayden Hall, 360 Huntington Avenue
Boston, MA 02115
United States
16173736568 (Phone)
16173738628 (Fax)

HOME PAGE: http://cuervo-cazurra.com

Luciano Ciravegna

University of London - International Development Institute ( email )

United Kingdom

Mauricio A. Melgarejo

Lacy School of Business, Butler University ( email )

Indianapolis, IN 46208
United States

Luis E. Lopez

INCAE - INCAE Business School ( email )

Alajuela
Costa Rica

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