Re-Internationalization Process in Organizations

Abstract

Re-internationalization, or a firm’s re-entry into international operations after exiting from initial international operations, is a scarcely researched phenomenon, although it has been found that intentions for re-entry to international activities among firms that had exited their initial international operations may be high. There is very little detail available on the similarities and differences in firms’ approaches during their initial and later internationalization stages. And more so, the essential processes firms go through each stage leading to re-internationalization has not received much attention of researchers. This research aimed at addressing re-internationalization phenomena for developing a holistic view of re-internationalization as a process; for finding out how various resources, capabilities, and competencies a firm acquired, modified, and/or complemented during its initial international phase, the exit process, and time-out period before re-entry to international activity affect firm’s re-internationalization and its performance during that stage. We conjectured the following relations: the initial international experiences of a firm are positively related to re-internationalization and firm performance during re-internationalization; possessing re-entry intention at the time of exit is positively related to maintaining continuity in networks as well as retention of key personnel associated with initial international operations which in turn is positively related to re-internationalization; dynamic capabilities of a firm are positively related to re-internationalization; and organizational commitment towards international activities is positively related to re-internationalization. We also hypothesized that firm performance during re-internationalization is better than during initial internationalization. We used mixed research methods for elucidating the research questions to enable several different questions to be inquired that could not have been researched by limiting only to one method. A quantitative survey was directed at senior management staff of re-internationalized firms to verify our proposed relations; whereas qualitative multiple case-based studies were undertaken to understand the intricacies of the process on how and why the phenomenon has evolved. We also stretched into secondary-data based analysis to figure out the performance implications and differences of initial internationalization and re-internationalization stages. The survey data collection included direct visits to 100+ firms across 10+ cities in India based on an initial shortlist of firms identified using CMIE Prowess and Capitaline databases. Among the 73 firms that were finally identified to be part of the study, we garnered responses from 71 firms, i.e. a response rate of 97.26%. The data analysis based on PLS-SEM (partial least squares method based structural equation modeling) technique using SmartPLS software found support for the following hypothesized relationships; initial international experiences, organizational commitment to internationalization, and the presence of dynamic capabilities are positively related to re-internationalization performance. However, intention for re-entry at the time of exit, and continuity in networks and key personnel from initial through re-entry phases of internationalization was not found to have a significant effect on re-internationalization performance as hypothesized earlier. For the case studies, we selected four firms, two each from Ahmedabad and Hyderabad, spread across different industries and performed within-case and cross-case analysis with the aid of Atlas.Ti software to come up with meaningful results. Apart from bringing forth more clarity in the evolutionary process, the case studies helped us to build useful corollaries, most of which were corroborating with the results we found from other modes of analysis used in this study. On the secondary data front, we used IBM-SPSS software to analyze the financial performance data of the 73 firms from 1990 to 2012. The data analysis supported the theorized relationship that internationalization, and re-internationalization specifically, has a positive impact on firms’ financial performance, and the performance during re-internationalization period is better as compared to that during initial internationalization period. We used various sub-categories of economic indicators such as total income, export income, and profit as measures for firm performance to deduce the above results. The comprehensive nature of this study made it more complex. The triangulated research outcome supported many of our initial research hypothesis. Being one among the first ever field studies conducted on an almost unexplored phenomenon, and that too on a comprehensive scale, this study is expected to serve as a foundation for scholars to scrutinize and work further upon, besides having predictive value for practitioners and policy implications.