Edited by Hamid Etemad
Extant literature suggests that firm performance benefits from internationalization. Traditional internationalization theories such as Hymer’s foreign direct investment (FDI) theory (Hymer 1976) and Dunning’s eclectic (OLI – ownership, location and internationalization advantages) theory (1980, 1995, 2000) explain that businesses internationalize to exploit monopolistic advantages such as labor and capital, as well as ownership-specific advantages and location-specific advantages in foreign markets. Research on born-global firms and international new ventures suggest that small and medium-sized enterprises (SMEs) can also benefit from internationalization (Rennie 1993; Knight and Cavusgil 1996, 2005; Oviatt and McDougall 1994, 1997; McDougall and Oviatt 1996; McDougall et al. 2003). A number of empirical tests of the relationship between firm financial performance and internationalization appear in the literature. However, few studies measure performance from the perspective of external investors. We report the results of a study of the relationship between intensity of internationalization and post-initial public offering (IPO) share price appreciation for a group of venture-backed companies headquartered in Australia.
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