A longitudinal perspective of the determinants of B2B service firms' internationalisation performance

Abstract

Institutional theory suggests that firms may face heightened normative, and even possibly coercive, pressure when they operate in politically distance countries. It also takes the view that organisations may face pressure to mimic other successful firms by expanding their scope of internationalisation. However, it remains unclear regarding how these two macro-level factors (political distance and scope of internationalisation), as well as their interactions with firm size, may determine the long-term growth of B2B service firms. Drawing on institutional theory, we analysed extensive secondary data across a total of 589 B2B service firms in 45 countries over a period of 21 years (2001 to 2021). Our findings show that, compared to small firms, increasing the scope of internationalisation brings more revenue growth to large firms. While firms of all sizes would benefit by deriving more revenue share from countries with small political distance, large firms are more susceptible than small firms in countries with large political distance, especially in host countries where they derive a greater share of international revenue. With politically distant countries, a key implication for B2B marketing is that firms would need to develop dynamic and adaptive marketing-mix strategies in order to be resilient and competitive.