Top Management Team Internationalization and Firm-Level Internationalization: The Moderating Effects of Global Focus and Institutional Diversity
Journal of International Management (2018), doi: 10.1016/j.intman.2018.01.002
Posted: 6 Jan 2021
Date Written: 2018
The factors that determine firms' levels of internationalization remain a focal area of international business research. Within this research stream, studies building on the upper echelons theory have investigated the influence of the demographic characteristics of the top management team (TMT) on firms' international expansion. However, the literature to date has overlooked the TMT's overall degree of internationalization as a key driver of firm-level internationalization. In our paper, we argue that by having self-selected into careers abroad, foreign TMT members by definition have a higher cognitive tolerance of foreignness than domestic TMT members do. We theorize that foreign TMT members' higher cognitive tolerance for foreignness enhances the overall TMT's level of international attention and international trust, thereby facilitating strategic decisions that favor firm-level internationalization. Additionally, we propose two key contingencies that attenuate this relationship: the institutional diversity of the firm's home region and the firm's global focus. Analysis of Fortune Global 500 firms supports the hypothesized relationship between TMT internationalization and firm-level internationalization, as well as the two moderation effects.
Keywords: Top management team, internationalization, institutional diversity, global focus
JEL Classification: M00, M10, M12, M16, M20, M21, D21, F00, F01, F02, F2, F20, F23, F44
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