Internationalization and Performance of Retail Firms: A Bayesian Dynamic Model

This paper offers a fresh approach to the literature examining the effect of internationalization on retail-firm performance. We draw on the organizational learning theory to test the moderating effect of four variables which are hypothesized to affect the performance of internationalizing retailers through facilitating the transfer of learning in international markets. The study innovates by introducing a new performance metric, and an advanced methodology to account for the dynamic aspects of organizational learning. Testing our hypotheses on a sample of international retailers, we find that the relationship between internationalization and performance is U-shaped, and moderated by mergers and acquisitions, age at entry to international markets and country of origin. The findings extend prior research by providing more comprehensive evidence regarding the conditions under which internationalization leads to improved performance. The authors conclude by outlining the implications for practice.

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► The relationship between internationalization and retail firm performance is U-shaped.
► The impact of internationalization on retail firm performance is moderated by mergers and acquisitions, age at entry to international markets, and country of origin.
► The relationship between internationalization and retail firm performance is independent from the level of economic congruence between home and host countries.