Does corporate internationalization contribute to companies’ operational efficiency? Evidence form Russian companies

Authors: Dmitry Y. Shcherbakov Corporate international diversification has become a widely used growth strategy. However, the majority of scientific researches insist on its value-destroying pattern. As most of these researches are focused on companies from the developed countries the experience of companies from developing countries remains fairly unexplored.The current paper proposes an estimation of internalization-performance relationship from operational efficiency prospect. The proposed model has been empirically tested on a sample of large Russian companies. The results identify a non-linear U-shape relationship between a degree of internationalization and companies’ return on capital employed. Overall for the majority of companies international diversification refers to diminish in operational efficiency.