Profitability of Rapid Internationalization: The Relationship Between Internationalization Intensity and Firms' Export Performance

Abstract

SUMMARY Internationalization is seen as a critical ingredient in the strategy of firms to achieve growth and superior performance. Although this has been a subject of intensive research during the last few decades, there is still a scarcity of empirical research to determine when rapid, accelerated internationalization, in other words, increase in export intensity is profitable. In this paper we study a sample of 783 Finnish exporting firms and explore the relationship between export intensity and different types of performance by structural equation modeling (SEM) analysis. Our base model does not show any significant relationships between these two constructs. However, when studying small and large firms separately, the results differ. For small firms higher internationalization intensity means better sales performance, better profit performance and indirectly also better efficiency performance, whereas for large firms higher internationalization intensity reflects only better profit performance.

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