International attention and multinational enterprise performance

Abstract

This study examines the performance consequences of international attention, defined as the extent to which headquarters executives in the multinational enterprise (MNE) invest time and effort in activities, communications, and discussions aimed at improving their understanding of the global marketplace. Using detailed questionnaire and archival data on 135 MNEs, our analysis revealed three significant findings. First, international attention can be operationalized as a meta-construct that consists of three interrelated and reinforcing dimensions. Second, international attention has a curvilinear (inverted U-shape) relationship with MNE performance. Third, the performance benefits of international attention increase with three categories of moderating factors: the international assignment experience of top executives, the independence of value-adding activities across country locations, and the degree of industry dynamism.

Appendices

Appendix A

Qualitative Field Research

We focused our preliminary interviews on a group of 18 senior executives. Because the purpose of this qualitative study was to add insights to available theory construction, special care was taken to ensure that the sample included TMT members in a variety of functions (e.g., CEO, CFO, VP Leadership Development, VP Worldwide Sales) and industry sectors. Care was also taken to select large and heavily diversified MNEs (e.g., Bombardier), as well as small and more domestically focused companies (e.g., Campbell Aviation). Table A1 provides details of the interview sample.

Table a1 Interview participants

A semi-structured format (Butterfield, Trevino & Ball; 1996; Glaser & Strauss, 1967) was followed for all interviews. After briefly introducing the research project, we asked interviewees to describe their views and company experiences on the relevant set of issues. We found it frequently necessary to probe additional comments, illustrations, and insights along the following question lines:

• 1) How would you describe the main changes under way in the global organization?

• 2) What does it take to achieve global effectiveness?

• 3) What does the term “international attention” mean to you?

• 4) Are you getting enough international attention at the top? How do you know?

All interviews were about an hour and a half in length, and were audiotaped and transcribed. The information obtained through these interviews generated several recording units (relevant and coherent interview segments for which a single meaning structure could be generated) on the forms that international attention could take. These insights were then organized into three unifying themes, corresponding to the global scanning, overseas communications, and globalization discussions aspects of international attention. One of the authors for this study conducted a number of confirmatory post-hoc interviews with a broader audience of MNE top executives, both in the US and in Canada. This additional step allowed us to build further face validity into our conceptual framework and ensure the insights we present are likely to be useful both for theory and for practice.

Appendix B

Calculation of Inflection Points in the Attention–Performance Relationship

The analysis presented in Figures 3, 4 and 5 can be supplemented by computing the inflection points associated with each graph. These constitute the precise areas of the predicted curvilinear function in which changes in the values of international attention (noted as X) have a zero effect on MNE performance. For example, following Aiken and West (1991), one can determine a level of international attention at which MNE performance starts to produce negative performance outcomes (step 1), and across the range of particular moderators (noted as Z in step 2).

Step 1: Curvilinear effect of international attention on MNE performance

The calculation of the attention threshold begins with expressing the simple curvilinear second-order equation involving the simple and square terms of international attention (noted as X), as they were obtained from Model 3 (Table 2):

We can rewrite Eq. (B.1) to show the regression of MNE performance on international attention:

We can then calculate the first-order derivative, dY/dX, to estimate the slope of a tangent line to the attention curve:

Setting (B.3) to zero allows us to calculate the value of international attention at which MNE performance is at its highest:

Step 2: Moderating influences on this curvilinear effect

The following equation adds a linear-by-linear interaction between international attention and a moderator variable to the case considered in Step 1. While we simply illustrate our reasoning by considering the moderating influence of international attention (here noted as Z), the same mathematical logic applies to all three categories of moderator.

The regression equation obtained in Model 4 can be written as follows:

We can rearrange this expression as follows:

The expression (0.05+0.30Z) indicates the overall linear trend in the regression of MNE performance on international attention at specific values of international experience. It can be seen that when HQ have no international experience (by this we mean that Z=−0.32, since Z is centered in the regression equation), the simple regression has an overall downward linear trend. When HQ executives have an average level of international experience (Z=0), the simple regression has a slightly positive linear trend, which is further increased at higher levels of international experience (Z>0). However, it is important to note that the nature of the curvilinear relationship between international attention and MNE performance is independent of international experience, because this moderator does not interact with the square term of international attention.

We can then use Eq. (B.5) to calculate the simple slope of the regression of MNE performance on international attention at any value of international experience:

Setting Eq. (B.6) to zero and solving for X yields the following expression for the value of international attention at which MNE performance starts to drop, across different levels of international experience:

Substituting the value for conditions of “no international experience” (Z=−0.32) into Eq. (B.7), the ultimate threshold at which attention starts to produce negative performance outcomes is found at X=−0.25. For average (Z=0) and high (Z=0.32) levels of international experience, the attention thresholds are found at X=0.18 and X=0.62, respectively.